Partner Blog

The key solutions raised at the ‘Addressing Loss and Damage: Practical Action’ conference

Following on from our previous post, this blog outlines the practical solutions that emerged from discussions at the Addressing Loss and Damage conference.

As growing climate catastrophes have made the news this year, loss and damage is expected to be a top item on the agenda at COP27. But for many these discussions come too late. Loss and damage was first raised in international negotiations in 1991 by the Alliance of Small Island States, asking for an insurance pool to compensate for the catastrophic losses soon to come. Today, little progress has been made, and loss and damage continues to meet huge resistance. 

Contributing the least and paying the most 

Societies on the front lines of climate catastrophes are expected to adapt to rapid changes to their environment despite frequently being least responsible for creating them. Funding is critical for successful adaptation, but many communities are now beyond adaptation, and are grappling with the loss of and irreparable damage to infrastructure, but also to culture, history and their way of life. 

“Climate change isn’t just climate change. It’s climate chaos.”– Lawyer and Climate Activist delegate

Five potential solutions to plug the funding gap

The feasibility of several financing mechanisms were discussed during the conference, including:

1. The establishment of a finance facility at COP27: 
A financial body dedicated to loss and damage would take finance beyond the idea of aid. This could create more public support for global investment in loss and damage by appealing to the domestic interests in developed countries. One delegate from Bangladesh said: “All would contribute, all would decide, all would benefit.” 

2. Pollution taxes and levies: This could include both redirecting vast subsidies for the fossil fuel industry and using the revenue from carbon taxation to fund loss and damage. The use of revenues from carbon markets was also thought to be a viable solution. A delegate from the Netherlands commented: “If these funds are not turned around then we will never solve the climate crisis.”

3. Insurance: For some states, loss and damage insurance can be an effective tool to ensure finance is readily available when climate disaster strikes, and some countries have already developed mechanisms to help share risk. 

For example, 16 Caribbean states have established The Caribbean Catastrophe Risk Insurance Facility, which provides short term liquidity to address the impacts of extreme weather events when they happen. Money gets to where it is needed quickly, there is collaboration and support between countries, and states can identify their own risks and needs. 

4.Philanthropy: Following the pledge of the Scottish Government to contribute GBP 2 million for loss and damage, the Children’s Investment Fund and its associated philanthropies committed USD 3 million in kick-start funds to support the establishment of a loss and damage facility. 

5. Debt relief: Relieving countries hit by climate impacts of their existing debt could help to provide cash needed to address crises as they occur, allowing states to manage their own funds. 

So which solutions should we prioritise?

Each of these solutions comes with their own set of challenges. Many delegates are concerned about the conditions often attached to debt relief, are unsure how insurers could cover the guaranteed costs of climate disasters, aren’t clear how the most vulnerable states could afford to pay insurance premiums, or don’t know how countries in the global north would agree to pay additional finance for loss and damage when they are already reluctant to pay for both adaptation and mitigation. 

There is no one-size-fits-all approach to loss and damage, nor one pot to pull from. A panellist from the UK summed it up well: “We will need to use all tools available and exit COP with a list of things that can be done now.” 

What did emerge is that it is less about the individual solutions, and more about ensuring they adhere to certain key principles that were raised consistently throughout the conference. 

Five key principles to strive towards 

1. The polluter pays, and funding should be based on solidarity rather than blame. 

Low and middle income countries have already been paying for the damage caused by climate change. It is now time that all, especially those who have contributed to climate change the most, contribute towards the cost of loss and damage. 

2. The finance must reach the most affected by climate change, with an awareness of the intersectionality of vulnerabilities. 

Any funding application must be led by local groups and make use of existing and available structures and institutions. A delegate from Bangladesh said: “It’s about getting the money where it needs to go today. We need to stop talking about it, and make it happen.”

One case study explored was Kenya’s County Climate Change Fund supported by IIED, which used the existing national system to channel funding directly to the counties that needed it. Committees were set up or continued at ward level to decide how this funding was used, and women were encouraged to take up chair and treasurer roles to ensure that, as the most vulnerable to climate impacts, they had control over how loss and damage funding was used. 

3. Loss and damage funding should be additional and not a burden to recipients.

Small grants and cash transfers were broadly considered as the most directly effective, but it was appreciated that this type of funding wouldn’t always be possible or available. Crucially, the money allocated must be based on need, rather than on donor targets.

4. Recipients should be able to access funding directly and have ownership of it. 

Throughout the many case studies presented, it emerged that project-based models do not tend to work at a country level as there is rarely time to delve deep into community and cultural assessments. It is better for countries to develop their own programmes so that the sub-national grassroots structures already fighting loss and damage could be given access to cash when needed.

5. Transparency and accountability are vital for impact

Whatever the type of finance raised, those providing it must first and foremost be accountable to the people most affected by climate change. Reporting and transparency about how the funds are spent is also key, but we need a system of reporting that is not burdensome for these states.

What’s next and what needs to be done at COP27

The most pressing takeaway from all discussions was that the need to reduce harm is overwhelming. There is no single solution to global loss and damage, and it is most likely only with the implementation of all of them, strategically and deliberately, that we can address this mounting problem.

The communities most vulnerable to these catastrophes need less talk, and more action. They need the support of additional finance, and adequate and holistic community consultation to ensure this finance is being used to genuinely benefit the communities affected.In the words of one climate activist during the opening plenary: “We have decades of dialogue behind us. We need to put loss and damage on the agenda at COP27”.