Loss and Damage Associated with the Effects of Climate Change: Recent Developments

Loss and Damage Associated with the Effects of Climate Change: Recent Developments

February 9, 2023
Loss and Damage Associated with the Effects of Climate
Change: Recent Developments
Repeated scientific assessments have concluded, with
Developing countries—the large majority of Parties—had
increased confidence over time, that greenhouse gas (GHG)
insisted the meeting address the topic in order to proceed.
emissions associated with human activities have led to
rising global temperatures and other changes to the climate.
The Parties concluded two decisions with provisions
Small changes to the climate may bring benefits to some
regarding loss and damage: (1) the Sharm el-Sheikh
entities and adverse effects to others. Ongoing climate
Implementation Plan, and (2) a decision specifically
change would be increasingly adverse, and potentially
regarding funding arrangements for responding to loss and
catastrophic, for a widening scope of populations and
damage. Among items in the latter, the Parties decided
ecosystems. Both slow onset changes (e.g., desertification)
and extreme events contribute to an array of losses and
to establish new funding arrangements for assisting
damages.
developing
countries
that
are
particularly
vulnerable to the adverse effects of climate change,
Many low-income countries, especially small island states,
in responding to loss and damage, including with a
have long sought assistance and recourse through the
focus on addressing loss and damage by providing
United Nations Framework Convention on Climate Change
and assisting in mobilizing new and additional
(UNFCCC, 1992) and its subsidiary Paris Agreement (PA,
resources, and that these new arrangements
2015) to cope with climate change-related loss and damage.
complement and include sources, funds, processes
In the early 1990s, some negotiators of the UNFCCC
and initiatives under and outside the Convention
proposed means to address loss and damage that were not
and the Paris Agreement; [and]
adopted. Now, many Parties and stakeholders view
in the context of establishing the new funding
addressing loss and damage as the “third pillar” of climate
arrangements [ ... ], to establish a fund for
action, along with GHG mitigation and adaptation.
responding to loss and damage whose mandate
includes a focus on addressing loss and damage[.]
Loss and damage was first adopted in a negotiated
UNFCCC text at the 13th Conference of the Parties
Two other initiatives were launched at COP27 to address
(COP13) in 2007, in Bali, Indonesia. Negotiations on “new
loss and damage, the Global Shield Against Climate Risks,
funding arrangements” to address loss and damage began,
largely an insurance and capacity-building approach, and
for the first time, in November 2022 at COP27 in Sharm el-
the United Nations Secretary General’s Early Warnings for
Sheikh, Egypt. While COP27 decided to establish “new
All, to extend early warning systems to all countries,
funding arrangements” and “a fund,” these items are largely
particularly in Africa.
procedural: they call for a series of meetings and reports in
2023, with potential decisions among Parties to
Not Liability, Compensation, or Reparations
operationalize both the new funding arrangements and the
Despite portrayals by some stakeholders and media, the
fund expected at COP28 in November 2023. Many expect
language in the Sharm el-Sheikh decisions does not connote
delivery of funding shortly thereafter, if not before.
new funding arrangements to be “liability,”
“compensation,” or “reparations.” The U.S. delegation and
Decisions that Parties make under the PA may lead to
others have consistently and successfully opposed inclusion
expectations that the U.S. government would pledge or
of these concepts in negotiated texts. In the PA, Article 8
provide funding to address loss and damage. Members of
concerns loss and damage and emphasizes cooperation
Congress may convey views to the executive branch about
through the Warsaw Mechanism for Loss and Damage
the merits, scope, structure, eligible recipients and uses of
Associated with Climate Change Impacts (WIM). The
funds; criteria and priorities; and other choices that Parties
Parties agreed in the corresponding 2015 decision to adopt
are to consider in 2023 and beyond. Views may concern
the PA that “Article 8 of the [Paris] Agreement does not
whether to authorize contributions to a fund or other means
involve or provide a basis for any liability or
of assistance and/or whether to appropriate funding.
compensation.” In accordance, the language agreed in
Sharm el-Sheikh makes no reference to liability or
Sharm el-Sheikh: New Funding Arrangements
compensation.
Established and, in That Context, a Fund
At COP27, the Parties agreed to put on the conference
While some stakeholders, including some governments,
agenda the issue of funding arrangements to address loss
continue to press for establishing compensation, liability, or
and damage associated with the effects of climate change.
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Loss and Damage Associated with the Effects of Climate Change: Recent Developments
reparations under the UNFCCC, many do not, including
expanding sources of funding” and “ensuring coordination
many developing countries seeking assistance. Outside of
and complementarity with existing funding arrangements.”
the UNFCCC processes, nonetheless, several small island
It tasks the Secretariat with producing a report that
states are making efforts toward seeking legal judgments
identifies relevant existing funding arrangements and
based on alleged liability under international law.
innovative sources, among other topics.
Sorting Out Existing and New Arrangements
Potential Providers and Recipients of Funding
The Sharm el-Sheikh decisions to establish new funding
The COP27 decisions do not identify who might provide
arrangements and a fund for loss and damage add to
new and additional funding either through (1) the new
existing and past processes. One task for 2023 is to evaluate
funding arrangements “for assisting developing countries
and propose relationships and coordination among them.
that are particularly vulnerable to the adverse effects of
Parties established the WIM in 2013 to enhance knowledge,
climate change” or (2) the fund established in that context.
dialogue, and action and to provide support for addressing
The COP27 decisions do not suggest that providing funding
loss and damage, including regarding risk management.
would be mandatory for any Party, which is consistent with
While many Parties consider the WIM useful for
other financial commitments under the UNFCCC.
developing and sharing information, many also view its
functions—as instituted—to be limited, particularly in
Frequently cited potential sources of new funding to
supporting actions to address loss and damage effectively.
address loss and damage include governments of relatively
high-income Parties, such as the United States and the
Parties mandated the Suva Expert Dialogue in 2018 to
European Union. Other proposed candidates include China,
explore information and views on ways to facilitate
Saudi Arabia, and other countries that emit relatively high
mobilization and securing of expertise and enhancement of
levels of GHG emissions either within their boundaries or
support, including finance, technology and capacity‐
indirectly through sales of fossil fuels. Additional
building to address loss and damage. Among its findings,
candidates include nongovernmental sources, such as
the Suva report concluded that “[f]inancing should target
philanthropies, businesses, and others.
disaster preparedness, including early action, so that
policymakers move from a position of ‘risk responders’ to
The language in Sharm el-Sheikh decisions appears to limit
that of ‘risk managers.’” It highlighted the value of
provision of new funding to developing countries (not
sustained investments to address challenges in risk
defined under the UNFCCC) that are “particularly
assessment, local capacities, and intergovernmental
vulnerable” to the adverse effects of climate change. Many
coordination, among others. Regarding finance issues, it
consider that such a scope would not include countries such
concluded that levels of finance were insufficient to
as China. Options and perspectives may be elucidated in the
implement risk reductions, along with the challenges of
2023 processes and may be addressed in COP28 decisions.
indebtedness of some developing countries and timing of
financial flows following disasters. The Suva final report
Estimates of Loss and Damage Associated with the
highlighted risk transfer and finance options, such as
Adverse Effects of Climate Change
insurance, while noting issues of accessibility and
There is broad consensus among countries and experts that
affordability. It identified existing and potential financial
human-induced climate change is already resulting in losses
mechanisms, including the Financial Mechanisms of the
and damages to humans and ecosystems. There is also
UNFCCC—the Green Climate Fund and the Global
broad agreement that some particularly vulnerable
Environment Facility. Parties recognize that funds also have
populations in developing countries have inadequate
flowed through, and continue to flow through, humanitarian
resources to avert or respond to loss and damage and that
assistance and recovery efforts after disasters.
the magnitude of losses and damages may be impeding the
development of some economies. There is not agreement on
In 2019, Parties established under the WIM the Santiago
the magnitude of loss and damage under discussion in the
Network for Averting, Minimizing, and Addressing Loss
UNFCCC framework. While estimates exist—some as high
and Damage. Its role is to catalyze technical assistance to
as several trillion dollars annually by 2050—many scope
support approaches at the local, national, and regional
and methodological differences and questions remain. For
levels to address loss and damage. The 2021 COP26
example, how would future loss and damage be contingent
established the Glasgow Dialogue to “discuss the
on efforts to abate GHG emissions and to adapt to
arrangements for the funding of activities to avert, minimise
anticipated climate change? Which countries might be
and address loss and damage.” While this dialogue
included in cost estimates? How could one attribute costs to
continues, the pressure on negotiations regarding finance to
climate change versus other contributing phenomena, such
address loss and damage led to the COP27 decisions to
as growing populations in high-risk locations? The
establish new funding arrangements and a fund.
Intergovernmental Panel on Climate Change in 2022 called
loss and damage estimates “highly speculative” until
The Sharm el-Sheikh decision provides that the “new
methodological questions are resolved.
arrangements complement and include sources, funds,
processes and initiatives under and outside the Convention
Jane A. Leggett, Specialist in Energy and Environmental
and the Paris Agreement.” The decision tasks a Transitional
Policy
Committee with, among other things, “identifying and
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Loss and Damage Associated with the Effects of Climate Change: Recent Developments

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