Loss and damage fund approved at COP28: why this is a major step forward

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Last Updated04/12/2023

The COP28 climate conference in Dubai inaugurated the loss and damage fund.
The initial funding is estimated to be $475 million, with contributions from the UAE, EU, US, and Japan.

The loss and damage fund was first announced during COP27 in Sharm el-Sheikh, Egypt.
Objective: To aid vulnerable nations facing climate change impacts, addressing differences between rich and poor countries.

It is a global financial package to ensure the rescue and rehabilitation of countries facing the cascading effects of climate change.
The term refers to the Compensation from industrialized nations for the consequences of global warming on low-carbon footprint countries.
There is no agreed upon definition within the United Nations Framework Convention on Climate Change (UNFCCC).
Loss and damage is often categorised as either economic or non-economic.
Economic loss and damage are negative impacts that we can assign a monetary value to.
- For e.g. costs of rebuilding infrastructure damaged due to a flood, loss of revenue from agricultural crops destroyed due to drought etc.
Non-economic loss and damage are negative impacts where it is difficult or infeasible to assign a monetary value.
- For e.g. trauma from a tropical cyclone, loss of community due to displacement of people etc.

The Industrial Era started in 1850 has disrupted Earth’s natural mechanism for the production and absorption of greenhouse gases.
The US, the UK and the EU are considered to be responsible for 50% of all emissions; with Russia, Canada, Japan, and Australia, it's 65%.
India is responsible for only 4% of historical emissions.
China, is the world’s biggest emitter in the last 15 years, responsible for 30% of global emissions every year.

Research indicates 55 vulnerable countries faced $525 billion in climate crisis losses in the last 20 years.
The number is estimated to reach $ 580 billion per year by 2030.
According to the IPCC, losses and damages will increase in future as global warming continues to rise.
It will be unequally distributed and impact developing nations the most and, in them, the socially and financially weaker sections.

The World Bank will oversee the loss and damage fund initially, sourced from rich and some developing nations.
The scale or the replenishment cycle of the fund remains unclear, with the urgent need for trillions of dollars.