What is ‘Loss and Damage’ and why demand to include it in COP27 agenda grows

Over the last year or so, the world has witnessed extreme weather events due to climate change. The least developed, developing and other vulnerable countries have suffered serious loss and damage compared to the industrialized countries because of the disproportionate impacts of climate change. 

Recently, catastrophic floods have led to the displacement of around 33 million people in Pakistan, drought and impending famine in some parts of Africa threaten the livelihood of 50 million people and record-breaking heatwaves and drought in parts of China and Europe have grabbed international headlines. 

This has, once again, brought the focus back on the topic of ‘loss and damage’ and there is a growing demand across the world at present that ‘loss and damage’ should be included in the formal agenda of COP27, the upcoming UN climate summit in November. 

What is Loss and Damage?

‘Loss and Damage’ refers to the impacts of climate change felt when people cannot adapt to climate change any further or a ‘limit’ has been reached. It signifies both permanent or repairable damage caused by various manifestations of climate change and can mean both economic and non-economic harm. It is used in UN climate negotiations to refer to the consequences of human-induced climate change. 

The demand to include ‘Loss and Damage’ in COP27 agenda

Over 400 organizations from all over the world have recently signed a letter, initiated by Climate Action Network, demanding that ‘Loss and Damage’ finance be included on the formal agenda for COP27. Meanwhile, the incoming COP27 Presidency is convening an informal Heads of Delegations meeting of governments and negotiating groups for an informal consultation on ‘Loss and Damage’ in Cairo, Egypt, on September 10, 2022.

“By 2050 the economic cost of Loss and Damage in developing countries is conservatively estimated to be between USD 1 to 1.8 trillion, and this does not include non-economic losses such as loss of life, culture, territory amongst others,” a press release from the Climate Action Network stated. 

The Climate Action Network press release further stated that ‘the issue of Loss and Damage has consistently been blocked or reduced to mere dialogues or side events, with rich polluter countries like the EU, the USA, Norway and others consistently refusing to discuss details on finance.’

“While climate impacts are being experienced all over the world, it is clear that a Finance Facility dedicated to addressing Loss and Damage is essential for poor countries who have done the least to cause the climate crisis yet face intensifying and frequent climate catastrophes,” the Climate Action Network press release further observed. 

The Origin

The demand for ‘loss and damage’ finance actually originates in the concept of ‘historical emission’ and ‘polluter pays’ principle. It has been argued that the developed countries which were mainly responsible for GHG emissions in the recent past have a historic and moral responsibility to pay not just for remedial measures but also for compensating for the damage caused by their actions to the environment. 

“Developed countries, with a historic and moral responsibility to act, are failing to phase out fossil fuels fast enough resulting in escalating and more intensive climate disasters,” the Climate Action Network press release mentioned in this regard.  

The burden of responsibility thus falls on those rich developed countries that have made the majority of the GHG emissions since 1850. The United States and the European Union, including the UK, account for over 50% of all emissions and combined with Russia, Canada, Japan, and Australia, the combined emissions are around 65% of all emissions.

Since carbon dioxide, the main component of the GHGs causing global warming, remains in the atmosphere for hundreds of years, the concept of ‘historical emission’ gains importance and so has the demand for ‘loss and damage’ to be financed by the historical emitters. The poorer nations which have contributed negligibly to historical emissions are the ones that are suffering greatly from the impacts of climate change even though the impact of climate change is global. 

‘Loss and Damage’ in the ‘UN’

Vulnerable nations have been requesting developed countries to provide financial assistance since the formation of the United Nations Framework Convention on Climate Change (UNFCCC) in the early 90s. However, the topic of loss and damage received proper highlight during the COP19 conference (2013) in Warsaw, Poland. 

The Warsaw International Mechanism for Loss and Damage was established in Warsaw under the UNFCCC, to address climate-related impacts in particularly vulnerable developing countries. It can be termed as the first formal acknowledgment of the need to compensate developing countries struck by climate disasters. 

Next, under the Paris Agreement (Article 8), some new elements and dimensions of ‘loss and damage’ were added which reaffirmed ‘the Warsaw International Mechanism (WIM) for Loss and Damage as the main vehicle under the UNFCCC process to avert, minimize and address ‘loss and damage’ associated with climate change impacts, including extreme weather events and slow onset events’. 

However, the discussions under WIM so far have not yielded results on the funding mechanism. Developed countries, who are historically responsible for the majority of GHG emissions have mostly stayed away from agreeing to any ‘international treaty’ that might bind them to paying for the loss and damage their emissions have caused. 

At the COP26 climate conference in Glasgow last year, a three-year task force was set up to finally discuss a funding arrangement. The momentum, to some degree, continued at the Bonn UN climate negotiations in Germany in June 2022 but the view on having a separate financing facility demanded by least developed countries and other groups of vulnerable countries was opposed by the developed countries like the US, Australia and the European Union. 

The COP27 summit in November, 2022 is crucial given the fact that it will provide a chance to finally establish a mechanism to address the growing ‘loss and damage’ finance demand. 

India and ‘Loss and Damage’

Reports state that India intervened strongly, multiple times during the Bonn UN climate negotiations to emphasize ‘loss and damage’ and the finances needed to mitigate the impacts of global warming. 

‘The efforts in India and other developing countries that require these large investments have to be supported by wealthy nations through a loss and damage finance facility,” the Indian delegates demanded, according to a Hindustan Times report. 

This intervention by India comes at a time when the country is recently facing extreme weather events like prolonged and severe heatwaves and drought across many regions. According to a report, India witnessed two of the world’s ten most financially devastating climate events in 2021 and both caused financial losses worth more than $1 billion, apart from the loss of lives and livelihoods.