Loss and Damage fund: a long way to go

A flooded residential area in the Dadu district of Sindh Province. One third of Pakistan was under water. Photo : Getty Images
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Kathmandu –  A  prolonged negotiation at COP-27, the UN Climate summit in Sharm el-sheikh—finally brought the much awaited result with the parties agreeing to create a loss and damage fund.

The breakthrough came as a pleasant outcome of the COP-27’s concluding session Sunday Morning (Nepali time). All the participants agreed to operationalize the Santiago Network, and establish a Fund to address the loss and damage.

COP-27 presidency described it ‘historic’.  “After two weeks of extensive negotiations, COP-27 has concluded with a hallmark implementation plan and a historic deal for agenda item and outcome on loss and damage funding”.

The Santiago Network for loss and damage was established in COP-25 back in 2020 in Chile to provide technical assistance to countries and communities impacted by climate-induced extreme events, but it made little headway at COP-26 in Glasgow last year.

The fund aims to assist developing countries that are vulnerable to the adverse effects of climate-fueled extreme events giving many reasons for its advocates and negotiators to cheer about.

According to Secretary-General of the UN, António Guterres; COP-27 has taken an important step towards justice. ”I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period,” he said after the agreement.

But, is it enough?

‘No’, Guterres who is vocal about climate justice and a supporter of the loss and damage funding said, ”Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust.”

The deal isn’t clear about the funding process. Issues like who will pay, and how it will work are yet to be defined. The agreement reads, ”Acknowledging that existing funding arrangements fall short of responding to current and future impacts of climate change and are not sufficient to address the existing funding gaps related to providing action and support in responding to loss and damage associated with the adverse effects of climate change.”

Climate analyst and the advisor to the LDC chair, Dr. Manjeet Dhakal said, it is a landmark decision a political commitment, but still a long way to go, the funding process needs clarity. How much fund will be directed and who will be responsible for that, are issues they still need to be sorted out. He said parties that have agreed to address the loss and damage fund need to sort out confusions and ambivalence by next year. ”Deal on dedicated fund definitely is historical” Dr. Dhakal said.

Developed countries were against dedicated funding for loss and damage, saying existing mechanisms was more than enough to mobilize finance to address the issue. Doubts prevail as developed countries have yet to fulfill their previous funding commitment. ”The previous funds like GEF and adaptation fund are almost empty because of very little contributions from developed countries,” Dr Bimal Regmi, a Nepali Delegate at the COP-26 said.

The deal isn’t clear about the funding process. Issues like who will pay, and how it will work are yet to be defined.

‘Too much focus on loss and damage”

The recent flood in Pakistan and the trail of devastation it left behind, was the main talking point.

Loss and Damage are adverse impacts of human-induced climate change. UN explains loss and damage as, ”Loss and damage arising from the adverse effects of climate change can include those related to extreme weather events but also slow onset events, such as sea level rise, rising temperatures, ocean acidification, glacial retreat and related impacts, salinization, land and forest degradation, loss of biodiversity and desertification.”

COP-27 however, made very little progress on phasing out fossil fuel and cutting emissions to be on track for a 1.5c temperature rise limit, attracting concern from world bodies. The International Non-profit Center for International Environmental Law said, COP 27 delivers long-awaited action on loss and damage, but continues inaction in the fossil fuels that cause that damage.

“The outcome of this year’s climate talks turned on two central issues: phasing out fossil fuels and funding loss and damage. The colossal failure on the former undercuts progress on the latter,” says Nikki Reisch, Director of Climate & Energy at the Center for International Environmental Law (CIEL).

The views of Dipesh Joshi, Head of Climate and Energy Programs at WWF Nepal, were no different.  ” Much of focus seems to have been put on Loss and Damage ignoring the fact that  cutting down the emissions and funding for adaptation are as important.”

Joshi said, ”An agreement on the Loss and Damage deal is positive but there is a long way to go on the finance facility. This will also require the country to prepare an architecture for the Loss and Damage governance.”


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