Climate Change

Who will pay or claim loss and damage money? COP27 agreed on a fund; but questions remain

The COP27 decision does not mention equity and common but differentiated responsibilities, making things tricky

By Rohini Krishnamurthy
Published: Monday 21 November 2022
Frans Timmermans of the EU (Left) with Antonio Guterres (Right). Photo: UNFCCC
Frans Timmermans of the EU (Left) with Antonio Guterres (Right). Photo: UNFCCC Frans Timmermans of the EU (Left) with Antonio Guterres (Right). Photo: UNFCCC

A loss and damage fund was created at the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC), focusing on particularly vulnerable countries. But questions remain about who is eligible to receive money and who has to pay it.

Funding arrangements will be made for assisting developing countries that are “particularly vulnerable to the adverse effects of climate change” in responding to loss and damage. This is according to the agreement reached at COP27.

But the previous version of the document said the fund would be open to all developing countries. Also, the definition of “particularly vulnerable to the adverse effects of climate change” is unclear.

Climate and weather extremes increasingly have been driving displacement in all regions, according to the IPCC Sixth Assessment Report. It disproportionately impacts Small Island Developing States (SIDS).

Many communities in Africa, Asia, central and South America, Small Islands and the Arctic bear the brunt of acute food insecurity and reduced water security due to climate extremes.

The report identified global hotspots of high human vulnerability such as west, central and east Africa, south Asia, central and South America, SIDS and the Arctic.

The climate crisis has unleashed devastating cyclones on SIDS in particular, according to the UN.

“Before you can deal with one disaster, there is another at your doorstep,” Shawn Edward, Saint Lucia’s minister for education, sustainable development, innovation, science, technology and vocational training, said at a side event during COP27.

Sea-level rise poses an existential threat to low-lying atoll nations in the Pacific, like Kiribati and the Marshall Islands, which are only about six feet above sea level.

In 2019, Mozambique, Zimbabwe, the Bahamas, Japan, Malawi, Afghanistan, India, South Sudan, Niger and Bolivia were the 10 most affected countries, according to Global Climate Risk Index (CRI) developed by Germanwatch, a non-profit.

The climate crisis also threatens the health, education and protection of children.

A 2021 Children’s Climate Risk Index (CCRI) report found that children from four south Asian countries — Afghanistan, Bangladesh, India and Pakistan — suffer the most from climate change.

India experienced extreme weather events on 241 of the 273 days from January 1 to September 30 this year, according to a DTE analysis. These events claimed 2,755 lives and damaged 1.9 million hectares of crop area.

Pakistan’s heavy monsoon rains this year affected around 33 million people, including approximately 16 million children.

China, too, was not spared. The country witnessed record-breaking heatwaves, severe drought and deadly rainfall since June, the World Meteorological Observation found.

Who pays?

At COP27, the European Union proposed that the fund “needs to draw from a broad base of contributors since this is a global effort”. It added that nations in a position to do so should contribute to the fund.

Antigua and Barbuda also demanded that China and India, who are among the biggest polluters, should pay up.

But an analysis from the Overseas Development Institute (ODI), a global affairs think-tank, found that China should not be initially included in any negotiations about an expanded contributor base.

This is because both per capita incomes and per capita cumulative territorial emissions in China are below Annex II countries such as France, Germany, Japan, the United Kingdom and the United States. Annex II countries include developed countries and the European Community.

It added that many current and past oil-exploring nations could contribute to climate finance.  These countries include Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Kuwait, Libya, Malaysia, Qatar, Saudi Arabia, Trinidad and Tobago, and the United Arab Emirates.

Among SIDS, Singapore, due to its high per capita income, could also provide climate finance, it added.

The adopted decision does not mention the principles of equity and common but differentiated responsibilities enshrined within the UNFCCC and Paris Agreement, as well as reference to historical cumulative emissions, Avantika Goswami, programme manager, climate change, Centre for Science and Environment, New Delhi, wrote.

 “This makes it tricky for payment obligations to be placed on developed historically polluting countries by the polluter-pays principle as originally envisioned,” she added.

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