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COP27 in November 2022 saw the landmark decision to set up a fund for loss and damage for vulnerable countries hit hard by climate disasters—a very welcome outcome for those that have been calling on polluting nations to contribute to the costs of these disasters, albeit several years too late. Despite only making it onto the official agenda recently, loss and damage has been a regular feature at COP meetings since it was first brought to the attention of the international community by the Alliance of Small Island States members in 1991.
Countries have seen hard-won development gains be reversed or lost by the impacts of climate change. In January this year, Malawi lost 300 MW of its electricity—almost a third of its electricity production—due to damage caused by tropical storm Ana, which also led to a cholera breakout due to damaged sanitation systems. Climate-related loss and damage also extends beyond physical impacts, causing severe psychological trauma, splitting families and preventing children from gaining an education. It can also fundamentally change ways of life and cultural norms, for example when places of religious importance or loved ones’ burial sites are lost to floods or fire.
Only a few nations—Scotland, Wallonia, Denmark and, since COP27, Belgium, New Zealand and Australia—have so far made significant pledges of cash to meet the estimated USD 400 billion needed by 2030 for loss and damage.
COP27 would have been a failure without this concession on loss and damage. But what happens now?
Only a few nations—Scotland, Wallonia, Denmark and, since COP27, Belgium, New Zealand and Australia—have so far made significant pledges of cash to meet the estimated USD 400 billion needed by 2030 for loss and damage. With most developed nations yet to fulfil their previous commitment to raise USD 100 billion in international climate finance, as well as an impending global recession, raising the scale of funds needed and developing smart financing mechanisms must be a priority. Political will and peer pressure are key to unlock these commitments; Scotland’s commitment was a catalyst but the big emitters are integral to making this work at scale, and they have yet to pull their weight.
Read more on the Forum Network: In My View: Reinventing Official Development Assistance: From an Arlequin tapestry to a more inspiring Kandinsky-Kasse moment by Abdoulaye Mar Dieye
Official development assistance has had an indisputable instrumental value in supporting developing countries’ progress on their development paths, but is increasingly experiencing diminishing returns. It is therefore high time to revisit and reinvent the way ODA is conceived and delivered, highlights Abdoulaye Mar Dieye.
Determining who should pay for loss and damage has always been and will continue to be one of the thorniest issues as the fund is operationalised. But of equal importance is how to distribute this finance equitably and how it reaches those who need it most. A financing facility is only the beginning. We know from funds like the Global Environmental Facility, the Adaptation Fund and the Green Climate Fund that money is too often inaccessible and slow moving, especially in reaching local people. The flexibility and ability of a fund to provide direct access to finance in the wake of a climate disaster will define its success. Unlike larger and longer-term adaptation and mitigation programmes, the ability of a nation or community to bounce back from a climate event is dependent on access to support in the immediate aftermath.
At the same time, funding should not exclusively flow through government bodies since this could prevent the money from reaching those who need it most, especially in countries with high levels of corruption.
Research by the Stockholm Environment Institute carried out ahead of COP27 highlights the need avoid creating excessively bureaucratic or complex systems to channel loss and damage funding to countries that need it. One way of doing this is by ensuring existing national and subnational climate monitoring and funding systems are built on, rather than developing new ones that in turn require additional resource and capacity. Rwanda and Seychelles, for example, have their own climate change funds as well as monitoring and oversight processes that could be utilised to channel loss and damage finance.
At the same time, funding should not exclusively flow through government bodies since this could prevent the money from reaching those who need it most, especially in countries with high levels of corruption. We are quick to think that new institutions and mechanisms need to be established, when in reality they may already exist. For example, funding could be channelled to existing community groups such as agricultural co-operatives, community disaster committees or women already in charge of savings and microloans.
The design of this loss and damage fund will be key to its success and have a wealth of knowledge and lessons learned from previous funds and facilities. It would be a real shame to not put what we’ve learned so far to good use.