Written by: Jinghann Hong, Khalisah Khairina, Malini Elango, Sean Eeshwaran

Edited by: Kah Yau Lim and Yun Qiu Wong

Climate loss and damage arises from both climate change-driven extreme events, such as floods, drought and heat waves, and slow-onset events like sea-level rise, increasing temperatures, ocean acidification and biodiversity loss. Despite efforts to reduce greenhouse gas emissions, it is becoming increasingly clear that these measures are insufficient to cope with rapid and extensive consequences of climate change. 

While adaptation and mitigation are the primary pillars of climate action, loss and damage emerges as the third, extending beyond adaptation when risks become unavoidable [1]. 

Mitigation Vs Adaptation Vs Loss and Damage

• Mitigation: Involves efforts to lower greenhouse gas emissions, with the goal of reaching the 1.5°C target temperature limit set by the Paris Agreement.
• Adaptation: Strategies to adapt to the effects of a warmer climate such as guarding coastlines from higher seas and growing heat-tolerant crops.
• Loss and Damage: Deals with irreversible losses despite emission reductions and adaptation efforts.

For more than thirty years, the idea of loss and damage from human-caused climate change has been complicated and debated on who should be held responsible. At COP27 held in Egypt in 2022, loss and damage took centre stage with the breakthrough agreement between nations to establish a Loss and Damage fund.

In this article, we delve into the concept of loss and damage (L&D) caused by human-induced climate change. We explore its different aspects, such as economic and non-economic losses, as well as the challenges in assessing its impact. Furthermore, we examine how developed and developing countries are unequally affected by L&D. Lastly, we highlight the multilateral efforts, like the establishment of a dedicated L&D fund during COP27, and examine the critical role of the upcoming COP28 in Dubai to consolidate global multilateral efforts and catalyse meaningful action. 

So, what is L&D? 

There is actually no agreed-upon definition for L&D to date within the United Nations Framework Convention on Climate Change (UNFCCC) framework. Attempts to define L&D include the categorisation between economic and non-economic losses shown in Table 1.

Economic Losses	Aspect	Non-Economic Losses
Loss of goods and services that are quantifiable in monetary values and market prices [2], for example: – Infrastructure damage – Economic disruption – Displacement	Definition & Examples	Loss that is challenging to quantify in financial terms because of its inherent intangibility [3], for example: – Loss of lives – Loss of cultural heritage and identity – Loss of biodiversity
Calculating direct financial cost using  – Market values  – Replacement costs	Common Methods of Assessment	Gauging the extent of impact through – Surveys – Expert opinions – Qualitative data
In Durgapur Upazila, Bangladesh, repeated crop failures have led to economic losses for farmers due to ruined rice crops and lost investments.	Real-Life Examples [4]	The inability to celebrate the traditional rice harvest festival in the same village has caused a profound cultural and spiritual impact, breaking the sense of community and shared identity among the people.

The lack of a proper definition has been largely attributed to the political complexity of the issue. Developed countries fear assuming endless responsibility for compensating developing nations whenever a disaster strikes, which has led to the rejection of language relating to reparations, compensation or liability in climate agreements thus far [5].

What has gained consensus is that L&D is viewed as a matter of climate justice. Given the unequal distribution of cause and effect [6], developed countries who are larger contributors of greenhouse gas emissions, should provide financial assistance to developing countries which are particularly vulnerable to the adverse effects of climate change, to aid them in recovery from the consequences of climate change.

Pakistan is one of the developing countries demonstrating this imbalance between responsibility and suffering. Despite producing less than 1% of global greenhouse gas emissions, Pakistan experienced the worst flooding in 2022 [7]. Figures 1 and 2 show the contrast between these developed and developing countries.

Figure 1: Worldwide CO₂ emissions per capita in 2021 [8].

Figure 2: Human vulnerability between countries determining climate hazards [9].

The call for collective action: multilateral efforts 

Multilateral efforts to address L&D caused by climate change have been two-pronged, namely: 

• The L&D Fund – Historic decision made at COP27 to provide financial aid to vulnerable nations to respond to L&D
• The Santiago Network – Established in 2019 for knowledge transfer and sharing of expertise

The synergistic partnership between the L&D Fund and the Santiago Network ensures that financial resources and knowledge-sharing efforts are focused on solving the complex problems presented by climate-related loss and damage.

Establishment of L&D Fund

The L&D Fund requests that developed countries who are also major carbon emitters to accept responsibility for their actions and give the resources needed to assist the more vulnerable, often financially-disadvantaged developing countries.

By placing a price tag on the real-world repercussions of climate change, pressure is applied to galvanise action within major polluters to assist vulnerable countries in need [10]. 

Although the idea was first conceived in 1991 (Figure 3), its execution faced significant barriers, most notably the lack of a financial mechanism and political resistance by wealthier nations hesitant on being held liable for the damages caused. 

Figure 3: Timeline on the establishment of the L&D fund

To be truly effective in its goal, the L&D Fund must obtain sufficient buy-in from developed countries around the world. COP27 holds promise with some European countries pledging symbolic amounts as shown in Table 2.

Country	Amount Pledged (Symbolic)	Specific Use
Scotland	7 million pounds	Not specified
Denmark	100 million Danish crowns	Focus on fragile areas including the Sahel region in northwestern Africa
Germany	170 million euros	“Global Shield” initiative*
Austria	At least 50 million euros	Not specified
Ireland	10 million euros	“Global Shield” initiative
Belgium	2.5 million euros	Mozambique from 2023 to 2028

*The Global Shield is a G7/ V20 collaborative partnership empowering countries with the tools, knowledge, and support to financially prepare themselves against climate risk.

The Santiago Network 

The Santiago Network connects vulnerable developing countries with providers of technical assistance, knowledge and resources needed to address L&D-related climate risks. The Santiago Network has six distinct functions:

• Catalysing technical assistance
• Prioritising and connecting technical needs
• Facilitating discussions
• Promoting collaboration
• Disseminating knowledge
• Aiding access to support for addressing L&D

This network acts as a forum for fostering international cooperation at the local, national and regional level (Table 3). 

Organisation		Region	Type of Stakeholder	Weblink
	African Development Bank	Africa	Multilateral Development Finance Institution	Further information
	Africa Risk Capacity	Africa	Intergovernmental/Regional	Further information
	Southern African Science Service Centre for Climate Change and Adaptive Land Management	Africa	Joint Initiative	Further information
	The Caribbean Catastrophe Risk Insurance Facility	Latin America and Caribbean	Private Sector	Further information
	Pacific Community	Asia-Pacific	Intergovernmental/Regional	Further information
	Green Climate Fund	Global	Multilateral; Headquartered in Incheon, South Korea	Further information
	Munich Climate Insurance Initiative	Global	Charity/NGO; Headquartered in Bonn, Germany	Further information

Figure 4: History of Santiago Network

Maarten van Aalst, director of the Red Cross Red Crescent Climate Centre and a scientist with the World Weather Attribution initiative, points out that developing nations are also responsible to ensure that communities are designed to withstand the severity of climate change effects. The Santiago Network is a step in the right direction towards strengthening the vulnerability of communities. [11]

COP28: A pivotal step forward for L&D

COP27 saw the establishment of the Transitional Committee, composed of 24 members from various geographical regions. This committee is tasked with developing recommendations for an effective implementation of the L&D Fund ahead of COP28. This includes but is limited to:

• Scope of the L&D Fund – What type of L&D is covered, which developing countries are eligible 
• Financing sources and guidelines – What developed countries are obliged to put in how much money
• Operational mechanism for the L&D Fund – What is the process of claims

The Committee held its first meeting in March 2023 and its second just before SB58** in June 2023. Key climate-related L&D highlights from SB58 that took place from 5-15 June [12]:

• Developed countries still pushing focus for funding arrangements outside the L&D Fund itself (eg. multilateral development banks, insurance schemes and humanitarian organisations);
• Developing countries possess strong intent and will to see through L&D Fund being set up as an operating entity of the UNFCCC;
• Agreement that existing systems, currently largely based on loans, would not be sufficient.

The Transitional Committee will meet two more times at COP28, as well as have a ministerial meeting. 

With the recent shift in political determination to actualise climate financing into action, the upcoming COP28 in Dubai will play a critical role in the operationalizing of the new L&D Fund. In that, COP28 presents a critical opportunity to consolidate global multilateral efforts and catalyse meaningful action to address climate-related L&D.

**The 58th meeting of the Subsidiary Body for Scientific and Technological Advice (SBSTA) conference referred to as SB58, which took place in Bonn, is the link between the scientific information provided by expert sources such as the Intergovernmental Panel on Climate Change (IPCC) and the policy-oriented needs of  COP.

Concluding thoughts

Recognizing that historical emissions and disparities in resources exist, it becomes crucial to strike a balance that considers the varying capacities and interests of nations.

Ultimately, addressing climate-related L&D requires a global cooperative effort, acknowledging the principle of common but differentiated responsibilities between developing and developed countries. 

Whatever the ultimate form climate financing takes, COP28 is an opportunity to establish an ambitious and fair process for countries to work as partners, not as adversaries, to resolve the climate crisis.

Reference 

[1] Stout, S. (2023, May 23). “Beyond Adaptation”: Coming to Terms with Loss & Damage – CPI. CPI. Retrieved July 25, 2023, from https://www.climatepolicyinitiative.org/beyond-adaptation-coming-to-terms-with-loss-damage/

[2] Loss and Damage: Online Guide. (n.d.). UNFCCC. Retrieved July 27, 2023, from https://unfccc.int/sites/default/files/resource/loss_and_damage_online_guide.pdf

[3] Non-economic losses. (n.d.). United Nations Climate Change. Retrieved July 27, 2023, from https://unfccc.int/wim-excom/areas-of-work/non-economic-losses

[4] Ranon, R. J. K. (2023, July 19). The non-economic impacts of loss and damage: destroying the spirit, breaking the soul. International Institute for Environment and Development. Retrieved August 17, 2023, from https://www.iied.org/non-economic-impacts-loss-damage-destroying-spirit-breaking-soul

[5] Harvey, F., Lakhani, N., & Gayle, D. (2022, November 18). Cop27: Is it right to talk of ‘reparations’? The Guardian. Retrieved June 24, 2023, from https://www.theguardian.com/environment/2022/nov/18/cop27-is-it-right-to-talk-of-reparations

[6] Loss and damage: A moral imperative to act. (n.d.). United Nations: Climate Action. Retrieved August 19, 2023, from https://www.un.org/en/climatechange/adelle-thomas-loss-and-damage

[7] Lakhani, N. (2022, November 20). ‘We couldn’t fail them’: how Pakistan’s floods spurred fight at Cop for loss and damage fund. The Guardian. Retrieved August 20, 2023, from https://www.theguardian.com/environment/2022/nov/20/loss-and-damage-pakistan-flooding-climate-justice-cop27

[8] Ritchie, H., Roser, M., & Rosado, P. (n.d.). CO₂ and Greenhouse Gas Emissions. Our World in Data. https://ourworldindata.org/co2-and-greenhouse-gas-emissions

[9] Climate Change 2022: Impacts, Adaptation and Vulnerability. (n.d.). IPCC. Retrieved August 20, 2023, from https://www.ipcc.ch/report/ar6/wg2/

[10] COP27 – ‘Loss and damage’ success tempered by lack of implementation. (2022, December 7). United Nations Environment: Finance Initiative. Retrieved August 15, 2023, from https://www.unepfi.org/themes/climate-change/cop27-loss-and-damage-success-tempered-by-lack-of-implementation/

[11] Sommer, L. (2021, November 11). Developing nations say they’re owed for climate damage. Richer nations aren’t budging. NPR. Retrieved June 24, 2023, from https://www.npr.org/2021/11/11/1054809644/climate-change-cop26-loss-and-damage

[12] Utz, C. (2023, July 7). Key takeaways from the Bonn climate conference. Lexology. Retrieved August 19, 2023, from https://www.lexology.com/library/detail.aspx?g=b0c54e05-d4ac-4e30-9f76-828d79bc4472