Loss and damage – the multibillion-dollar question at the COP27 talks
4 min read
For the first time since the United Nations started its COP climate change summits in 1995, discussion of loss and damage financing has been added to the agenda. But what is loss and damage, and why is it proving to be one of the hottest potatoes at the COP27 global warming talks in Egypt?
After years of discussion and pressure for compensation from developing countries that are already being hit by disasters attributed to climate change, the agenda of the talks in Sharm el-Sheikh included the entry: “Matters relating to funding arrangements responding to loss and damage associated with the adverse effects of climate change, including a focus on addressing loss and damage.”
Loss and damage — a term that has been used in environmental discussions for some time — refers to the idea that richer developed nations that have emitted the most planet-warming gases should compensate less wealthy and vulnerable countries for climate change-related disasters they suffer.
Some experts have warned that the debate about loss and damage must not be a blame game.
"Climate impacts lead to a wide range of losses and damages from whole villages, cities, and even countries underwater as we have seen this year in Pakistan, to more gradually increasing heat making agriculture untenable in previously arable lands and whole geographic areas uninhabitable,” Sophie Rigg, Senior Climate and Resilience Adviser at ActionAid UK charity, told Dods Political Intelligence.
Although a loss and damage mechanism was agreed at COP19 in 2013 and put into the Paris Agreement in 2016, there is still no agreement on how to finance it. At COP26, countries agreed to have a two-year dialogue on loss and damage via what was called the Glasgow dialogues.
For some island nations who face an existential threat from climate change, the issue of loss and damage is hugely emotive.
Mia Mottley, the prime minister of Barbados, told COP27 that adding loss and damage to the agenda this year was a significant achievement that “recognises that countries such as ours who have not contributed greatly to the emission of greenhouse gases, should not be crowding out our fiscal space in order to finance the reconstruction after a climatic event.”
The world’s top emitters, the United States and China, have signaled their willingness to consider the issue.
China’s top official COP27, Xie Zhenhua, said the country was “willing to make our contribution”, though it remains to be seen what that means in practice.
John Kerry, United States Special Presidential Envoy for Climate, said in a 26 October interview with Time that it was up to the developed world to be honest about loss and damage and help, calling it “a moral obligation.”
Does this mean there will be a deal on loss and damage at COP27?
Saleemul Huq, Director of the International Centre for Climate Change and Development (ICCCAD), a leading climate change research institution in Bangladesh, argued in his chapter in The Climate book compiled by Greta Thunberg that the term loss and damage was a “diplomatically negotiated euphemism,” because rich nations refused to talk in terms of “liability and compensation”.
Developing a suitable financing mechanism for loss and damage is complicated by fact that the idea of liability is not ruled out in some international climate change treaties but is excluded in others.
“At a fundamental level the richer nations do not want to transfer money to the poorest countries,” said Mark Maslin, professor of geography at University College London. “The only way the loss and damage agreement could be signed off at COP27 is if it is a fund which rich countries put money into and then poorer countries can make requests to that fund to support recovery from extreme climate events or even adaptations to protect against the changing climate.”
Even if a financing mechanism can be agreed, it is unlikely to end international debate about how to calculate the value of loss and damage, for example for the extinction of a species or the loss of homes caused by climate change. There is also the question of how far back emitters are liable for payments, and how to fund efforts to boost climate change resilience.
The Vulnerable Twenty Group (V20), a coalition of the world’s most climate-vulnerable countries, said in a report in June that their economies had lost an estimated $525 bn (£446.8bn) in the last 20 years—about one fifth of their wealth--due to the impacts of climate change. The Chatham House policy institute has said the costs of loss and damage are projected to top $1tn by 2050.
“There is no one way to address loss and damage and responses need to be determined by the needs and priorities of those that are impacted,” Rigg said.
Some experts have warned that the debate about loss and damage must not be a blame game.
“It’s about taking seriously the reality that climate harms are impacting some people in the world sooner and worse than others, and determining the least unjust way to help them,” said Catriona McKinnon, professor of Political Theory at the University of Exeter.
Dr Joshua Wells is a Political Consultant for Dods Political Intelligence (click to find out more about our service)
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