What you need to know about Loss and Damage
Although the historic decision was applauded, this is only the first step, and the success of the fund will depend on how quickly it starts operating.
Over the next year, representatives from 24 nations will collaborate to decide how the fund should be structured, which nations should contribute, and where and how the money should be distributed.
You should be aware of the following regarding loss and damage and what it entails for addressing the climate crisis:
The term “loss and damage” dominated COP27. What does it mean exactly?
Loss and damage are the inescapable dangers of climate change that have negative effects including rising sea levels, extended heatwaves, desertification, acidification of the sea, and catastrophic occurrences like bushfires, extinction of species, and crop failures. These occurrences will grow more common as the climate catastrophe progresses, and the results will worsen.
For instance, while making the least contribution to climate change, the African continent is the most susceptible to its effects. African nations with low contributions will have to spend up to five times as much on climate change adaptation as on healthcare.
Meanwhile, the G20 countries account for over 75% of global greenhouse gas emissions. However, Pakistan only contributes 1% of the world’s emissions, while suffering damages from catastrophic flooding of US$30 billion.
According to studies by the United Nations Environment Programme (UNEP), there is insufficient funding for adaptation.
According to the 2022 Adaptation Gap Report, by 2030, poor nations would need more than US$300 billion annually in international adaptation money, which is now five to 10 times below predicted needs.
Our capacity to mitigate and adapt to climate change is intimately correlated with our financial demands for loss and damage. To deal with loss and damage, certain conventional financial techniques might be applied.
Social safety nets, emergency funds, catastrophe risk insurance, and catastrophe bonds can all offer some cushion and speed up payouts following catastrophes. However, in order to address the scope of the loss and destruction, a larger donor base and cutting-edge financial instruments would be required.
A Loss and Damage Fund must address the gaps left by present climate financing organizations like the Green Climate Fund.
The total amount of money for adaptation and mitigation in 2020 was at least US$17 billion less than the US$100 billion promised to developing nations. For the creation and administration of the fund, the Transitional Committee will offer suggestions. The Committee will also make recommendations about who should contribute to the fund and which nations should receive funding. All of that requires decision-making.
However, addressing the underlying cause of climate change is necessary for the fund to be effective, which entails cutting emissions.
More and more nations will experience the terrible consequences of climate change unless emissions are dramatically cut.
In order to prevent climate change from impairing humanity’s ability to achieve the Sustainable Development Goals, the world urgently needs to find additional resources for mitigation, adaptation, loss, and damage.