Loss and Damage (L&D) Fund cleared on the COP 28 summit of the UNFCCC
The Loss and Damage Fund is a global financial package to help countries that are already experiencing the effects of climate change. The fund aims to compensate for the losses incurred by communities, countries, and ecosystems.
These losses can include:
- Rising sea levels
- Extreme weather events
- Mass displacement
- Trauma from experiencing a tropical cyclone
- Loss of community due to displacement of people
- Loss of biodiversity
The fund can be used for:
- Rebuilding communities and economies
- Ecological restoration
- Relocation
The Loss and Damage Fund was launched at the UN’s COP28 climate conference in Dubai. Vulnerable nations like small islands and African states have long demanded a dedicated fund to support recovery from climate change.
Why is loss and damage important?
The Loss and Damage Fund is important because it addresses gaps in climate finance. In 2020, the combined adaptation and mitigation finance flows fell short of the US$100 billion pledged to developing countries.
The term “loss and damage” is used by the United Nations to describe the harms caused by climate change that people can’t adapt to. It can include:
- Lives lost
- Monetary costs from the destruction of infrastructure, buildings, crops, and other property
- Loss of entire places or ways of life
- Loss of family members
- Disappearance of cultures
The idea behind loss and damage compensation is that countries hit by climate change-induced disasters are compensated for the costs they can’t avoid.
What is the significance of loss and damage fund?
The Loss and Damage Fund (LDF) is important because it provides financial and technical assistance to developing nations that are experiencing losses and damages due to climate change.
The losses include:
- Economic losses
- Human casualties
- Degradation of ecosystems and cultural heritage
- Lives lost
- Monetary costs from the destruction of infrastructure, buildings, crops, and other property
- Loss of entire places or ways of life
The LDF was created in 2013 at COP 19 in Warsaw, Poland. The fund aims to help low- and middle-income countries cope with the extreme impacts of climate change.
L&D fund: It is meant to compensate countries already dealing with climate change.
It will be based at the World Bank but managed by an independent secretariat.
Several countries including UAE, Germany, UK, Japan, etc., pledged money to the fund.
It will be based at the World Bank but managed by an independent secretariat.
Several countries including UAE, Germany, UK, Japan, etc., pledged money to the fund.
Challenges in compensation for Loss and damage
- Absence of a mutually agreed upon definition to categorize L&D activities that overlap with humanitarian support.
- Poor data availability and processes for systematically collecting, recording, and reporting information on L&D.
- Low technical capacity – especially in developing countries – to scientifically model L&D.
Warsaw International Mechanism (WIM) for L&D
- WIM for L&D was established at COP19 in 2013 in Warsaw (Poland) to address L&D associated with climate change in developing countries.
- Functions of WIM
♦ Enhance knowledge and understanding of comprehensive risk management approaches
♦ Enhance action and support, including finance, technology, and capacity building, to address L&D.
UN Framework Convention on Climate Change (UNFCCC)
- UNFCCC is a multilateral treaty adopted in 1992 to measure progress and negotiate multilateral responses to climate change.
- It entered into force in 1994
- Currently, 198 countries (near-universal membership) have ratified the Convention, called Parties to the Convention.
- This year’s COP (COP28) is being hosted by the UAE.