COP27: a milestone for loss and damage?

By Martha Stokes

Aji Styawan / Getty Images Climate Visuals Grant recipient

In a historic move, nations have agreed to add ‘loss and damage’ talks to the COP27 agenda. This means that loss and damage will be formally discussed by over 200 countries at the annual climate change summit which, this year, is being held in Sharm el-Sheikh in Egypt. 

This comes as promising news to many nations including those in the G77 group (a group of 134 developing nations currently chaired by Pakistan) who, along with China and the Alliance of Small Island States (AOSIS), proposed to formally add loss and damage negotiations to the COP27 agenda. 

What is ‘loss and damage’? 

‘Loss and damage’ refers to the consequences of climate change that go beyond what people can adapt to. Some consequences are economic, such as when crops are flooded or infrastructure is damaged. There are very few studies into the total cost of loss and damage, but one report suggests it could reach $1-2 trillion by 2050. Consequences can also go beyond direct financial impact to include trauma, and loss of life and culture. These impacts are particularly painful and difficult to address, and are most commonly felt in countries who have historically contributed the least to CO2 emissions. 

In some cases the need for loss and damage funding results from a single extreme event such as an unexpected hurricane or flood. Just earlier this year, one third of Pakistan was flooded, resulting in severe loss of life and economic turmoil. In other cases, loss and damage occur from slow changes such as desertification and sea level rises. Micronesia, for example, has already lost culturally important burial grounds to sea level changes. 

The need for loss and damage funding is more critical than ever. Many of the G77 and AOSIS countries have experienced the destructive effects of climate change just this year, and the crisis is expected to worsen. Historic emissions from G20 countries have already induced a series of climate reactions that will result in future damage, even if all other emissions were stopped immediately. Action is needed to limit further harm as far as possible. 

Is this a new topic?

Discussions of loss and damage are not new. Vanuatu, on behalf of AOSIS, first proposed a form of insurance against sea level rises in 1991 but this proposal was rejected. The phrase “loss and damage” itself was specifically mentioned in the 2007 Bali Action Plan and again in 2013 when the parties formed the Warsaw International Mechanism (WIM), a loss and damage knowledge sharing mechanism. However, these initiatives did not translate into financial support.

More recently, a plea to commit to a financial support mechanism in COP26 (held in Glasgow, Scotland, in 2021) was rejected by developed nations. Instead, a two-year discussion period, known as the Glasgow Dialogue, was counter-proposed and accepted. The purpose of this period was to allow nations to discuss and agree on what future financial support could look like in more detail. Critics say that the conclusion of the Glasgow Dialogue, which is expected in June 2024, comes too late for many. 

Why isn’t there already a financial commitment in place?

Developed nations, who make up 10% of countries but contribute to over 75% CO2 emissions, have been historically apprehensive to formally include loss and damage in COP negotiations. One reason for this is that developed nations do not want to be held legally responsible for climate change-induced destruction. Such was this apprehension that Article 8 of the 2015 Paris Agreement explicitly states that reference to loss and damage “does not involve or provide a basis for any liability or compensation.” 

Some nations also argue that enough financial mechanisms already exist in the form of humanitarian funds, disaster-risk management initiatives and insurance schemes. However, these fall short. Firstly, they are not designed to respond to the scale or frequency of today’s climate change impacts. Funding appeals linked to extreme weather events are already eight times higher than they were 20 years ago, and are expected to increase. 

Secondly, many of the climate problems are complex and interconnected. This makes it difficult to identify who is liable to pay. Who, for example, should provide compensation if tuna populations migrate to cooler waters as sea temperatures rise, leaving Pacific Island fishing communities with no income? Does it fall to the individual to organise insurance (if an insurance company will even cover such events), or national governments? Is this not unjust if the Pacific Islands are one of the least responsible nations for climate change? A more holistic approach is essential. 

What will happen next?

Negotiations are unlikely to be straightforward. This year has seen severe climate disasters, but also health, security, energy and economic crises. Some worry that resulting tensions may distract from important climate discussions. This could impact how willing nations are to prioritise loss and damage debates. 

Adding loss and damage talks to the formal COP27 is a progressive step. It remains to be seen, though, how developed nations will address these issues. Key to this will be persuading developed nations that loss and damage is being viewed as separate to liability and compensation, but that those who can provide financial support should be doing so. This is a complex and sensitive message.  

There is some promise: in 2021, Scotland and the Wallonia region of Belgium pledged funds for loss and damage of $2.2m and $1m respectively. Denmark pledged $13m earlier this year. These are small sums compared to the total required but such actions have set an important precedent. There also appears to be political will amongst climate leaders from the USA and UK. All eyes will now be on the outcome of these talks.