Climate vulnerable nations stand up to mobilize funding facilities for Loss and Damage

Let 2022 be the year when the issue of L&D from human-induced climate change is recognized with utmost urgency and importance

A woman walks in floodwaters as she holds a sac following heavy monsoon rains at a flood affected area in Gaibandha on July 19, 2019 AFP
Photo Credit: Md Abul Kalam Azad

Loss and damage from human induced climate change has been around as early as 1991, when the Alliance of Small Island States (AOSIS) called for a mechanism that would help to compensate countries affected by the rise in sea levels. Despite its long lingering history, why does the issue of L&D stand out in today’s climate scenario?

Heavy rains swept across western Germany in July 2021, and had given rise to horrendous flash floods. Dams threatened to break while electricity and cellphone networks were shut down in what became one of the region’s worst natural catastrophes in recent generations. What happens if developed countries don’t put their money for such losses and damages? If we raise our voice for L&D, will it take share from adaptation?

These questions lead us to ask further whether we could define loss and damage yet. Loss and damage is simply the adverse impact of climate change. Climate change has an impact when adaptation to it, and mitigation of it, are unable to avoid negative consequences. The UNFCCC has not precisely defined the term “loss and damage,” mainly because it was negotiated in the 1990s when the impact of climate change was more a hypothesis. Now, of course, it is a reality that affects billions of people worldwide.

L&D is now generally understood to encompass both sudden-onset impacts — the results of extreme weather events like cyclones, droughts and heatwaves — as well as slow-onset impacts — such as the repercussions of sea-level rise, desertification, glacial retreat, land degradation, ocean acidification, and salinization. According to UN climate negotiations, the term “loss and damage” is used to refer to the aftermaths of climate change that are beyond the ability of people to adapt to, or when solutions exist but a community lacks the resources to take advantage of them.

Even though a formal L&D mechanism has been established with the Warsaw International Mechanism for loss and damage (WIM), unclear language leaves considerable leeway to its interpretation — some countries frame L&D as residual risk when mitigation is insufficient and when the full potential of adaptation is not met, while others frame it as the residual losses and damages after mitigation and adaptation choices have been made. Nevertheless, L&D has secured its place in Article 8 of the Paris Agreement, where it is clearly indicated to be a standalone      pillar of the climate change arena, separate from adaptation and mitigation. The $100 billion per year finance commitment under the Paris Agreement is specific to adaptation and mitigation and does not include L&D.

The latest IPCC Working Group II report highlights large gaps between adaptation action taken and what is actually needed in many regions, and considering the scope of climate change impacts, actions on implementing adaptation are insufficient. In this context, and in addition to a lack of funding, political commitment, reliable information, and a sense of urgency, the most vulnerable people and ecosystems are being hit hardest by climate change.

Vulnerable communities are disproportionately exposed to experience losses and damages due to a lack of finance for climate adaptation efforts, or because they may live in areas that are experiencing climate impacts beyond what adaptation can offer protection from. Instead of labeling L&D to liability and compensation, it is important to tackle the issue and shift the paradigm towards solidarity, where the scientific community can best prove the case by giving uncompromising evidence of attribution of human-induced climate change resulting in losses beyond adaptation efforts.

Therefore, it has become clear that L&D is not the same as adaptation and requires its own funding stream. Adaptation finance can reduce losses and damages but does not cover all funding needs. Financial support for L&D is, therefore,           additional to adaptation funding, and also differently structured. For example, for responding to damage caused by extreme weather events, finance needs to be available at short notice.

L&D financing needs to be discussed and tackled at a political, rather than negotiating, level. In this regard, the Government of Bangladesh has an important role to play as Prime Minister Sheikh Hasina is the current chair of the Climate Vulnerable Forum (CVF), which is a high-level political forum of 55 of the most vulnerable developing countries, where the agenda of L&D is a priority.

The CVF was launched over 10 years ago, by then-President Mohamed Nasheed of the Maldives, and has been operating since then with a different head of government in charge of it for a two-year tenure. The current chair of CVF is Prime Minister Sheikh Hasina of Bangladesh, whose term is scheduled in the next 2 months this year, and the president of Ghana will take over the position. However, Bangladesh’s involvement with the CVF will continue for two more terms as a member of the governing Troika of past chairs who continue to support the current head of the forum.

Climate vulnerable countries have been adversely affected by a series of most extreme climate disasters during this pandemic; therefore, L&D has emerged as a significant concern for the CVF countries, and we need to take substantial result-oriented steps urgently to address this subject.

Under the current Presidency of the CVF, several initiatives and dialogues have taken place. The Expert Advisory Group of the CVF had convened an Expert Consultation on the L&D agenda in August 2021, where eminent speakers put forth their ideas of how to mobilize action on the way to COP26. Subsequently, a number of Regional Dialogues followed through, the result of which was used to formulate the Dhaka-Glasgow-Declaration, which outlined the key asks of the CVF member countries from COP26.

Another important group of actors is the Vulnerable 20 Group which now consists of the finance ministers of all 55 CVF countries, chaired by the Finance Minister of Bangladesh. One of the highly innovative actions taken by the CVF finance ministers was the creation of the CVF and V20 Joint Multi-Donor Fund, with an initial funding from the CVF countries themselves, and then further contributions from international foundations. The fund is managed by the United Nations on behalf of the CVF and V20.

One of the most recent and applaudable developments under the CVF and V20 Joint Multi-Donor Fund has been the set up of a new funding window to support the communities suffering the climate impacts in CVF countries, and get support to address the impacts of climate change after they have occurred. As the world has now entered the new era of losses and damages, the CVF and V20 fund is now the first UN fund to explicitly work on climate-related L&D, which will serve as a programme of assistance to the victims of climate change that welcomes contributions from others in the spirit of solidarity, and without invoking any liability or compensation.

V20 finance ministries are already allocating significant and growing proportions of our public budgets to fund L&D in our affected communities. Thus, to further strengthen efforts, a study to build evidence on existing public expenditure in V20 countries is a welcome step. We believe this will support the channeling of funds from the V20 Loss and Damage Financing Facility, as well as inform the Global Shield initiated by the G7 Presidency of Germany.

It is expected that this L&D fund and other programmes of the CVF and V20 can kick-start both funding and actions to address L&D from climate change, which might have a positive influence on the upcoming discussions on setting up a facility for financing L&D at COP27. In the absence of international support to help communities recover from climate disasters, the facility aims to practically demonstrate why it is needed and how it can help affected communities.

The V20 is expecting to present its facility design at COP27 climate talks in Sharm el-Sheikh in Egypt in November. By then, it hopes that some of the funds would have been disbursed to communities hit by climate impacts in V20 countries as part of pilot projects, taking the idea forward to stand as the center of discussions during the mandated Glasgow Dialogue and COP27 and beyond.

Let 2022 be the year when the issue of L&D from human-induced climate change is recognized with utmost urgency and importance, and governments and civil societies around the world rise to the occasion for the victims of climate change.

Originally this article was published on August 4, 2022 at Dhaka Tribune

Md Abul Kalam Azad is the Special Envoy of the Climate Vulnerable Forum (CVF) Presidency of the Government of Bangladesh and Commissioner of the Global Commission on BiodiverCities by 2030 of the World Economic Forum (WEF).