Loss and Damage fund renamed; Philippines to oversee operations
The Board for Loss and Damage fund unanimously decided to call it the “Fund to respond to Loss and Damage“(FrLD) during its second meeting in Incheon, S Korea
The Board for Loss and Damage fund unanimously decided to call it the “Fund for responding to Loss and Damage“(FrLD ) during its second meeting in Incheon, South Korea, and also decided that Philippines will be the host country for operations of the fund.
Now, observers are demanding that the fund be be filled at scale as per the real needs of the most vulnerable people facing climate disasters. How much money the fund is able to mobilise will be key for developing and vulnerable countries including India.
On Wednesday and Thursday, the board’s discussions were focused on the scale of funds that would be available. This especially after a year of several climate extremes and disasters linked to record warming. Currently, some countries including UAE, Germany, Italy, France have pledged around $700 million to the fund. The US, which is historically the highest greenhouse gas polluter pledged $17.5m.
The pledges came in during the UN Climate Conference in Dubai last year. According to an assessment in Springer led by International Institute for Applied Systems Analysis, the economic cost of loss and damage is between $ 290 and 580 billion in developing countries alone. By 2050 the economic cost of loss and damage in developing countries is estimated to be between $ 1- 1.8 trillion.
“Loss and damage” is a term used in UN climate negotiations to refer to the consequences of climate change that go beyond what people can adapt to; for example, the loss due to rising sea levels or the loss of homes and lives during extreme floods. It covers both immediate climate disasters and slow onset events includin cyclones, droughts and heatwaves, sea level rise, desertification, glacial retreat, land degradation, ocean acidification and salinization according to World Resources Institute.
“Despite making progress in the administrative groundwork through a cooperative approach to operationalise the Loss and Damage Fund, there is a real fear that this will merely become another fund with a few hundred million dollars — woefully inadequate to address the escalating costs of climate damages driven by historical emissions from wealthy nations,” said Harjeet Singh, Climate Activist and Global Engagement Director for the Fossil Fuel Non-Proliferation Treaty Initiative who is at the meeting as an observer.
“Developed countries consistently avoid committing to providing the hundreds of billions of dollars urgently needed by developing nations to recuperate their losses. What we need is a simplified and efficient system that ensures immediate access to funds for governments and communities, with amounts sufficient to truly support their recovery from climate impacts. The current piecemeal approach, without articulating a clear vision for the new Fund, risks failing the most vulnerable and perpetuating the cycle of inequity in climate action,” he added.
“It’s hard to believe that resources are scarce [for the #LossAndDamage Fund] when during COVID-19 an astounding $16 trillion USD in fiscal stimulus was quickly mobilized to support developed country economies.” Nada Elbohi of the Women and Gender Constituency, an observer organisation said according to Loss and Damage Collaboration which is tracking the meeting.
The board menber from Egypt for example, stressed the need to indicate the scale of the Fund will be in the billions.
“The reposes available [for the #LossAndDamage Fund] currently are a drop in the ocean compared to what we are seeing yearly… reflecting the necessity of response at scale is in line with what the governing instrument says,” the member from Guinea said. Observers also pointed that the fund had to be renamed because US did not want it to be called a Loss and Damage Fund, it had suggested ‘Resilient Futures Fund’ instead.
To ensure that the fund is well funded, several board members from developing countries wanted the fund’s Executive Director’s job description to mention resource mobilization at the scale of billions. Developed country members however did not want this according to observers. Laying down the criteria for selection of the Executive Director for the fund, is on the agenda of the board meeting. Other issues on the agenda include matters relating to the operationalization of the fund as a World Bank-hosted financial intermediary fund; and access modalities, including in relation to the development of relevant indicators, financial instruments, and facilities.
Observers expect that vulnerable countries and communities will be able to access funds by early 2025, following the selection of the ED and transfer of funds to World Bank.
The UN Climate Conference (COP27) in Egypt’s Sharm El Sheikh made history in 2022 with a decision to create a Loss and Damage fund which will provide support to developing countries in efforts to avert, minimise and address loss and damage associated with the adverse effects of climate change. Countries then agreed to operationalise the fund. It was also decided that the World Bank will be interim trustee of the fund which will be conferred with legal personality and capacity as necessary for discharging its roles and functions; in particular, it will have the legal capacity to negotiate, and conclude and enter into a hosting arrangement with the World Bank.
HT reported that during the Loss and Damage funding negotiations last year, there was a deep trust deficit between rich and emerging economies over historic responsibility, climate reparations and making money available for compensation. The US, one of the developed nations pushing for the fund to be located in the World Bank also said there is no obligation for any party under Paris Agreement on providing funds for Loss and Damage and that all contributions are to be voluntary. Developing countries finally agreed to locate the fund in the World Bank but for a pre-determined interim period following which it will become an independent entity.
