The deaths of more than 1,700 people in Pakistan’s floods, as well as the 4,000 casualties caused by drought and floods on the African continent, are just some of the terrible events that will shape the debate around climate finance, and in particular climate compensations. upcoming COP27 climate summit in Egypt. If countries had worked harder to reduce carbon emissions and improve their adaptation strategies, some of these casualties may have been avoided, says Saleemul Huq, director of the Bangladesh-based International Center for Climate Change and Development. “But unfortunately, we haven’t done enough,” he says. “When people lose their lives, their livelihoods and their homes, then adaptation is no longer possible.” According to research by the NGO Oxfam, the need for financial assistance after weather disasters has increased eightfold compared to 20 years ago, and the funding gap continues to grow. Oxfam estimates a gap of up to $33 billion over the past five years, a figure reduced by “loss and damage” costs after recent disasters such as the 2021 European floods, which caused $45 billion in damage, or Hurricane Maria in 2017. wiped out the equivalent of 226 percent of Dominica’s gross domestic product (GDP). A man carries some belongings as he wades through floodwaters in Jaffarabad, a flood-affected area in Pakistan’s Balochistan province [File: Zahid Hussain/AP] Researchers in Spain have estimated that by 2040, the cost of loss and damage to developing countries alone could reach $1 trillion. Who pays the bill is a question that the rich economies responsible for most past emissions and for current global warming have resolutely avoided for years. But things may change at the COP27 summit from November 6 to 18. In September, representatives of 30 negotiating groups under the United Nations climate change framework held a meeting focused on the topic of loss and damage, the diplomatic term used to denote the irreversible environmental damage caused by extreme climate impacts. Delegates managed to include loss and damage funding in this year’s COP provisional agenda, to discuss aspects such as the timing, scope and placement of funding, as well as potential sources and eligibility criteria to receive support.
“Uncomfortable” countries
Last year, climate talks held in the UK failed to deliver a financial relief for loss and damage, something a group of 134 developing countries (known as the G77) plus China now intends to fight for under the leadership of Pakistan. The issue of financing climate compensation was not even on the COP26 agenda, explains Harjeet Singh, head of global policy strategy at the NGO Climate Action Network (CAN) International. Historically, loss and damage have been treated as a form of adaptation, although the Paris Agreement highlights this as a separate issue. “The countries were so uncomfortable [the idea of monetary compensation] which even just putting [loss and damage] on the website was not acceptable to them and they were using the excuse that the Paris Agreement was not yet operational to avoid the discussion,” says Singh. A COP27 sign on the road leading to the conference area in Egypt’s Red Sea resort of Sharm El-Sheikh [File: Sayed Sheasha/Reuters] After last year, when a rulebook was signed to guide the implementation of the Paris Agreement, Singh says, the argument will no longer stand, and funding for loss and damage is expected to be included in the COP’s final agenda for the first time. Although this is a historic step, “not even the most optimistic person will believe that a financial facility will be approved and all its processes will be decided,” says Nisha Krishnan, a climate resilience expert at the non-profit World Resources Institute Africa. If the financing facility is approved this year, “it will be up to the parties to negotiate its design, especially from developing countries,” he says. “I think the inclusive process matters, because otherwise there would be no legitimacy to this facility.” At the earliest, this work will begin in the next round of climate talks, starting a multi-year process before any funding reaches affected communities on the ground. While climate diplomacy can only proceed slowly in order to build consensus and establish strong policy frameworks, the frequency and severity of climate-related disasters is accelerating.
“Substantive discussions” are needed.
That’s why at COP27, negotiators and civil society groups will be pushing not only to see more money on the table, but also to open new avenues for faster capital flow and influence. The Working Group on Access to Climate Finance is one such example, created in March 2021 to help simplify and accelerate access to finance for developing countries. Bangladesh, Fiji, Jamaica, Rwanda and Uganda have volunteered to participate in the pilot phase of the program, the results of which should be evaluated this year. Krishnan also mentions the Santiago Network on Loss and Damage, created in 2019 to help countries access technical assistance to deal with climate disaster. “[The Santiago Network] it still needs to be operational, it doesn’t have a governance structure yet,” he explains. When it comes to formal negotiations, apart from the main goal of creating a facility to finance loss and damage, Krishnan says, “special windows could be opened on existing funds, including the Glasgow Dialogue documentation.” forum created last year to discuss irreversible environmental degradation, currently with a broad, detailed mandate. “Right now, the concern is that the Glasgow Dialogue will remain just that, a dialogue without results,” says Krishnan. “Is there any outcome that can be enforced? Can there be more meaningful discussions instead of meeting once a year? These are some of the things we would like to see come out of COP27.”
