Loss and Damage Fund cleared on Day One of COP-28 summit

Subject: Environment

Section: International Conventions

Context:

On the first day of COP 28, member countries agreed to make operational a Loss and Damage (L&D) fund that is meant to compensate countries already dealing with climate change.

Loss & Damage (L&D):

IPCC defines L&D – The term ‘losses and damages’ refers to the economic and non-economic impacts of climate change, including extreme and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change. It’s destructive, irreversible, and cannot be addressed by mitigation and adaptation measures.
CoP19 of UNFCCC- 2013: held at Warsaw, Poland.
- Countries agreed to formally establish the L&D fund.
- Warsaw mechanism- It was being created to provide financial and technical assistance to economically developing nations that were incurring L&D due to climate change.
CoP25 of UNFCCC: held at Madriad, Spain in 2019
- The Santiago Network for L&D was set up, but countries didn’t commit any funds.
- The vision of the Santiago Network is to catalyze the technical assistance of relevant organizations, bodies, networks and experts, for the implementation of relevant approaches for averting, minimize and addressing L&D at the local, national and regional level, in developing countries that are particularly vulnerable to the adverse effects of climate change.

Loss & Damage (L&D) Fund:

First announced in 2022 at the conclusion of COP-27 in Sharm El-Sheikh, Egypt.
A ‘transitional committee’ was setup to decide the working conditions of the fund.
It will be based at the World Bank but managed by an independent secretariat. The World Bank will be the “interim host” of the fund for a period of four years.
Payments are voluntary and a certain percentage has been set apart for a category of countries called Least Developed Countries and Small island developing states.
Commitments worth atleast $450 million have already been made by countries.
Contributors include: European Union, United Arab Emirates, Germany, the United States, the United Kingdom, and Japan.

Cost of L&D due to Climate Change:

Reports suggest a Loss and damage from climate change cost about $1.5 trillion ($1,500 billion) in 2022.
Several developing countries and some of the poorest lost an average of about 8.3% of GDP due to climate change.