Loss and Damage Finance is Not About Charity

8 December 2021 – by Ole Ter Wey

On the penultimate day of COP26, a representative from the Climate Action Network presented Scottish First Minister Nicola Sturgeon with an award called ‘Ray of the Day’. This symbolized recognition for a long overdue action: during the conference, Scotland became the first country in the world to contribute to a Loss & Damage fund, to help countries in the Global South respond to damage caused by climate change. Initially limited to one million pounds, shortly before the award was presented, First Minister Sturgeon even doubled the amount. A great act that deserved the rousing applause in the room as well as the award. Right?

What Constitutes a ‘Loss’ or ‘Damage’?

The term ‘Loss & Damage’ refers to destruction which has already occurred that can be attributed to climate change, despite mitigation and adaptation efforts. ‘Losses’ are permanent and cannot be recovered; loss of human life, extinction of biological species or destruction of cultural assets or culturally important places are among them. ‘Damages’ however, are reversible, at least in theory; examples might include damaged infrastructure or monetary losses from a collapse in the economy.

The History of Loss and Damage

Loss & Damage first came up in international policy in 1991, when the Alliance of Small Island States promoted climate insurance in the drafting of the United Nations Framework Convention on Climate Change (UNFCCC), which can be understood as the most important international agreement aiming to reduce anthropogenic harm to our climate system. Though the term ‘insurance’ did in fact make it into the UNFCCC document as an option requiring consideration , it took more than two decades for a Loss & Damage mechanism to actually be created.

Following protracted, acrimonious negotiations, the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM) was finally drafted in 2013. Its main task is to promote “implementation of approaches to address loss and damage associated with the adverse effects of climate change…in a comprehensive, integrated and coherent manner.”[i] In reality however, the means of WIM are limited to research and dialogue, not implementation at all. And whilst research and the initiation of conversations surrounding climate-induced loss and damage are two urgently needed components in the response to climate change, WIM makes no direct provisions for liability or compensation for loss and damage. Therefore, it must be stated that WIM is by far not as meaningful as the originally proposed climate insurance mechanism.

The case is similar for the so-called Santiago Network, which was established as part of the WIM in 2020. It is focused on ‘the implementation of relevant approaches [for averting, minimizing and addressing loss and damage] at the local, national and regional level, in developing countries that are particularly vulnerable to the adverse effects of climate change”[ii]. Though for too long the lack of implementation of any compensation or liability mechanisms has hindered global progress in this sphere, in a positive move, COP26 discussions have now provided steps towards the operationalization of the Santiago Network.

COP26

At COP26 itself, the words of sympathy were consistently strong, with everyone claiming that they really do want to help. However, it seems that nobody wants to pay for it. Not only is this completely unacceptable, but it’s also tragically ironic. The Global North, with their reticence to contribute financially, is responsible for an unbelievable 92% of climate change[iii], and has made gigantic economic profits through some of the most environmentally damaging activities. To the Global South, on the other hand, devastating damage has been done, with almost no recompense, financial or otherwise. People, cultures, and animal species are dying, local economies are collapsing, and people are forced to flee their homes. Loss & Damage is not about charity, but rather about reparation payments. The money that the affected countries and their populations require should be seen as a duty; something that is owed to them as opposed to a goodwill gesture.

At a side event at the conference, an NGO representative shared his difficult mission back home in Norway. The Norwegian government appears to be of the belief that by agreeing to contribute to what are known as adaptation payments of 100 billion USD per year, they will  no longer be required to talk about Loss & Damage, being under the impression that the two payments basically constitute the same thing. The reality couldn’t be further from the truth, though the distinction is actually quite simple.

Adaptation aims to increase resilience in affected areas in a way that makes it possible to live with the consequences of climate change. Examples might include new crop varieties that can cope with changes in precipitation, or the construction of sea walls to protect against rising sea levels. Loss and damage payments, on the other hand, are due when such adaptation measures have failed. For example, if agriculture becomes completely impossible because of droughts, or people are forced to leave their homes and possessions behind because of flooding. Hence, the adaptation fund (which in itself is far from being provided fully) cannot be used as an excuse for not providing money for the Loss & Damage fund.

Author’s Note

It is noted that Scotland’s contribution to the climate fund is a step forward, albeit only a baby step. But at least a start has been made. However, I find it more than questionable that Scotland is being applauded, and its contribution being positioned as a great act of philanthropy. In reality it is only a partial fulfilment of the state’s international duty, and in the grand scheme of things, I believe it constitutes relatively very minor progress towards what is right, just and long overdue. In contrast, there isn’t enough applause for the young people who are fighting tirelessly for climate justice and who were the ones able to persuade Scotland’s First Minister Sturgeon to at least take this first step. I do trust that they will continue their fight and this step will soon be followed by many others.


Ole ter Wey is currently studying International Law and Human Rights at the UN-mandated University for Peace in San José, Costa Rica. He previously lived with a local community in Kiribati for over a year. There, he experienced first hand the consequences of climate change endangering the existence of an entire state. It was then that he began thinking about how to address forced migration and dedicated his Liberal Arts Bachelor to the topics of migration and integration.


This article was originally published in the Earth Refuge Archive as part of our collaboration with Human Rights Pulse on the COP26 Summit.

References

[i] United Nations (2013): FCCC/CP/2013/10/Add.1, Report of the Conference of the Parties on its nineteenth session, held in Warsaw from 11 to 23 November 2013, paragraph 5. https://unfccc.int/resource/docs/2013/cop19/eng/10a01.pdf#page=6

[ii] UNFCCC (2019): Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts and its 2019 review, paragraph 43. https://unfccc.int/documents/209506

[iii] Hickel, Jason (2020): Quantifying national responsibility for climate breakdown: an equality-based attribution approach for carbon dioxide emissions in excess of the planetary boundary, page e399. In: The Lancet Planetary Health, Volume 4, Issue 9, September 2020, Pages e399-e404. https://doi.org/10.1016/S2542-5196(20)30196-0