What Challenges Might the Loss and Damage Fund Face at COP28?

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The Loss and Damage Fund, established at the 2022 United Nations Climate Change Conference (COP27), aims to provide fast, accessible, non-debt finance to the growing number of Africans displaced by escalating climate impacts.

The World Bank is set to launch a climate change fund at COP28, starting on 30 November in Dubai. However, disagreements within the committee over modalities could hinder progress. The committee failed to issue recommendations and discussions broke down over who would host, administer, and contribute to the fund. Developing countries agreed to the US’s insistence on the bank hosting and administering the fund, citing its history of using revenue-generating transactions and lack of a strong climate change record.

They wanted the Loss and Damage Fund to operate as an independent United Nations body, similar to other climate funds. The fund aims to provide fast, accessible, non-debt finance to the growing number of Africans displaced by escalating climate impacts who desperately need support.

The US, Australia, and Canada have opposed the Loss and Damage Fund, arguing that it would open the door to legal liability and compensation. They also argued that the fund should only be eligible for funding from the least developed countries. The 2015 Paris Agreement’s ‘polluter pays’ principle requires wealthy countries to provide financial assistance to developing countries, who are now being asked to forego growth to slow climate change.

A 2022 report by the Vulnerable Twenty Group estimated that poor countries, including 24 from Africa, lost one-fifth of their wealth over the past two decades and would have been 20% wealthier today without climate change. However, only US$6 billion out of the global total of US$30 billion of adaptation finance flows to Africa. Forced displacement can trigger significant social and environmental losses, such as livelihoods, community ties, food, water, education, healthcare, and safety.

The Loss and Damage Fund should acknowledge and address displacement incurred by vulnerable people, mobilize funding to avert and address forced displacement due to climate change, and be rooted in equity and justice. In 2021, Scotland made the first bilateral contribution of £2 million, becoming the first country to break the taboo and commit funding. At COP27, 200 nations agreed to establish a Loss and Damage Fund to compensate vulnerable countries and communities.

Scotland has pledged £1 million to the Climate Justice Resilience Fund to address loss and damage across multiple continents. The balance will go to the International Centre for Climate Change and Development and the Stockholm Environment Institute for research on strategic loss and damage plans. The Loss and Damage Fund could be a significant development for African communities, and decision-makers should be informed about climate-linked mobility in Africa and ensure disbursement modalities are climate justice-based for easy, rapid access.