The most salient signal of progress from COP27 was the decision to establish a new fund and funding arrangements for loss and damage, something sought by climate-vulnerable countries over 30 years ago. While the terms of how this fund will work have yet to be resolved this year at COP28 in the United Arab Emirates, the decision represents a historic breakthrough that should be followed by ensuring financial flows to developing countries in order to respond to their losses and damages with the use of these new funding arrangements.
It is important to recognize that big financial gaps exist within the spectrum of averting, minimizing, and addressing loss and damage, particularly when it comes to “addressing” loss and damage.
There are also major gaps related to actions related to non-economic loss and damage, as well as loss and damage that results from slow onset events, and how those impacts can be funded.
It is clear that those who are bearing the burden of the costs of loss and damage are the most vulnerable people, households, and communities, as well as the economies of developing countries. Over 70% of financial instruments being used for climate action take the form of loans, reducing developing countries´ fiscal space to invest in climate action, and deepening levels of indebtedness that further impede their development trajectory.
It is relevant to underscore that there is no explicit financing of loss and damage in any of the operating entities of the Financial Mechanism of the United Nations Climate Change Convention nor from the Global Environment Facility, Adaptation Fund, or the Green Climate Fund. The amount of funding that is currently being provided to avert and minimize losses and damages is a drop in the ocean for current needs in the developing world, estimated to be at least $400 billion per year by the Loss and Damage Collaboration.
Conversations around the Loss and Damage Fund have emphasized the need to provide developing countries that are “particularly vulnerable” with the support and financial means to deal with the adverse impacts of climate change. Ambiguities around the criteria for what it means to be “particularly vulnerable”, is a question that arises at every meeting of the Transitional Committee (TC). The TC was established, to make recommendations for consideration and adoption by COP 28 on areas like:
- Establishing institutional arrangements, modalities, structure, governance and terms of reference for the fund;
- Elements of the new funding arrangements
- Sources of funding
- Coordination and complementarity with existing funding arrangements
“While we have made considerable progress, we have yet to receive consensus on sources of funding”
Key questions must be answered before COP28 to sustain the momentum and ensure the full operationalization of the fund at the end of the year, such as:
- Who is eligible to receive funding from the fund?
- What types of events and needs should funding?
- What actors should be eligible to receive support?
- Who should contribute?
The recommendation set forth at the fifth Transitional Committee meeting in Abu Dhabi gives the fund a broad scope that encompasses both extreme weather events and slow-onset events. It also enables to allow developing countries to directly access resources from the Fund, including small grants funding for communities.
While we have made considerable progress, we have yet to receive consensus on sources of funding. We must bring the fight to Dubai with a continued push for grant-based funding from developed countries.
It is important to highlight that developed countries advocate for all forms of financing to take vulnerability into account. Is it the correct way to deal with this matter when there is a historical responsibility on climate change?
“Vulnerability-related rankings are increasingly cited in the context of climate negotiations“
The truth of the matter is that frontline communities of the Global South are all vulnerable. We all deserve access to the fund. Finance for loss and damage is a fundamental pillar of climate justice, and we must deliver for everyone in the developing world.
The United Nations is leading efforts towards developing a Multidimensional Vulnerability Index (MVI) that would attempt to capture economic, environmental, and social dimensions, distinguishing between structural weaknesses and those resulting from current policies.
However, the concept of vulnerability is thought only in the recurrence of external shocks, which goes against the conceptual framework and technical precepts demonstrated by the Intergovernmental Panel on Climate Change (IPCC), ratified in its latest report, where socio-economic variables are part of the sensitivity.
Additionally, the index leaves out structural gaps for developing countries such as indicators of inequality, poverty, and institutional capacity.
The truth of the matter is that frontline communities of the Global South are all vulnerable. We all deserve access to the fund.
Other efforts to develop a multidimensional index include the Environmental Vulnerability Index (EVI) developed by the UN Committee for Development Policy, which limits its focus to more narrow external shocks.
Vulnerability-related rankings are increasingly cited in the context of climate negotiations and go beyond the two mentioned above, as well as in discussions around assessing eligibility for mechanisms to support. Perhaps these efforts have the potential to improve the overall understanding of vulnerability but are not able to support developing countries’ ongoing efforts to address previous or current loss and damage impacts. Moreover, questions around methodological limitations on the accuracy of predictions around physical climate risks and the future scale of climate impacts are still on the table.
Those indices have a differentiating purpose to benefit particular geographies on the planet. By reducing vulnerability to a mere number, these figures can lead to more disputes among Global South countries rather than taking a more holistic approach to address the vulnerabilities faced by all developing countries, communities, and populations around the world.
The international community must recognize the limitations of such rankings and the blind spots they can create. They cannot be the only framework used to assess vulnerability or impacts, climate risks, or indeed to determine eligibility for support.
Authors: Angela Rivera is an advisor for Colombia’s Ministry of Environment and Sustainable Development. Angela Rivera is the lead loss damage negotiator for the Independent Association of Latin America and the Caribbean (AILAC) that includes 8 countries in the Latin American and Caribbean region.