One of the most celebrated outcomes of the 2022 United Nations Climate Change Conference (COP27) in Sharm El-Sheik was the agreement to establish a Loss and Damage Fund. The continued resistance from wealthy countries meant it took over 30 years to achieve. But many questions remained about who would contribute, who would have access and under what conditions. 

‘Loss and damage’ refers to consequences of climate impacts that are separate from adaptation and mitigation measures. ‘Damage’ denotes items that can be recovered or repaired, such as infrastructure, housing, agricultural land, crops and livestock. ‘Loss’ refers to things that cannot be retrieved, including lives, damage to biodiversity, disrupted education or forced displacement from ancestral homes.

The Loss and Damage Fund should provide fast, accessible, non-debt finance to the growing number of Africans displaced by escalating climate impacts who desperately need support. So far in 2023, extreme weather has killed at least 15,700 people in Africa and impacted at least 34 million more. 

Climate disasters include a ‘medicane’ in Derna, Libya, flooding and landslides in the Democratic Republic of the Congo and Rwanda, record-breaking Cyclone Freddy and unrelenting drought across East Africa, the Horn and the Sahel. Despite contributing only 3-4% of historical global carbon emissions, Africa suffers the worst climate change impacts globally. 

A Transitional Committee comprising 14 members from developing countries and 10 from developed, was tasked at COP27 with getting the Loss and Damage Fund started. The fund is expected to be launched at COP28, which starts on 30 November in Dubai. However, disagreements within the committee over modalities could prevent progress. 

Read more in Daily Maverick: What South Africa will tell the world at COP28

The committee failed to issue recommendations as planned at its fourth and final meeting in October. Discussions broke down over who would host, administer and contribute to the fund. At an unscheduled fifth meeting in early November, a draft framework was eventually reached despite tense negotiations. 

Liability, compensation opposition

Developing countries capitulated to the United States’ (US) insistence that the World Bank host and administer the fund. They argued that the bank, housed in Washington DC, had a history of operating as a US policy tool, used revenue-generating transactions, and lacked a strong climate change record. Like other climate funds, developing countries wanted the Loss and Damage Fund to operate as an independent United Nations body. 

The US, Australia and Canada further insisted on delinking the fund with liability or compensation. Wealthy countries have opposed the fund over concerns that agreements would open the door to legal liability and compensation. They also insisted that the pool of contributors includes high-polluting nations such as China, India, Russia and Saudi Arabia and that only the least developed countries be eligible for funding. 

One of the cornerstones of the 2015 Paris Agreement was the ‘polluter pays’ principle. Wealthy countries with historic responsibility for causing the climate crisis must provide financial assistance to developing countries now being asked to forego growth to slow climate change. 

A 2022 report by the Vulnerable Twenty Group (58 poor countries including 24 from Africa) estimated that they had lost one-fifth of their wealth over the past two decades and would have been 20% wealthier today without climate change. This totals around $525-billion. The most at-risk states have lost 51% of GDP growth since 2000 due to climate change. Yet only $6-billion out of the global total of $30-billion of adaptation finance flows to Africa. 

Forced displacement can trigger cascading social and environmental losses such as livelihoods, community ties, food, water, education, healthcare and safety. People incur significant economic and non-economic loss and damage when forced to flee their homes. If they cannot return, the costs rise exponentially.

In the face of competing priorities over limited funds, the Loss and Damage Fund should acknowledge and address displacement incurred by vulnerable people. Its decisions on structure, governance, terms of reference and disbursement should mobilise funding to avert and address forced displacement due to climate change. Funding should be rooted in equity and justice, and be rapidly accessible to African communities. 

Breaking the cycle

In 2021, Scotland made the first bilateral contribution of £2-million, becoming the first country to break the taboo and commit funding. At COP27 a year later, 200 nations agreed to establish a Loss and Damage Fund to compensate vulnerable countries and communities. 

In March 2023, the first payment went from Scotland to Malawians affected by climate change. Of the £2-million pledged in 2021, a grant of £500,000 was given to the Scottish Catholic International Aid Fund for projects in six Malawian villages to build new flood embankments and repair schools affected by tropical storms. 

A further £1-million of Scotland’s pledge went to a partnership with the Climate Justice Resilience Fund to address loss and damage across multiple continents. The balance went to the International Centre for Climate Change and Development and the Stockholm Environment Institute to fund research on strategic loss and damage plans and principles.

Loss and damage funding could be a major development for African communities. COP28 is a pivotal moment to determine how, when, where and how much the Loss and Damage Fund can provide relief for the most vulnerable people. 

Decision-makers at every level should be well-informed about the evidence and many nuances of climate-linked mobility in Africa. They must ensure disbursement modalities grounded in climate justice that allow simple, rapid access. DM

Aimée-Noël Mbiyozo, Senior Research Consultant, Migration, Institute for Security Studies (ISS) Pretoria.

First published by ISS Today.