Your bath has been leaking water into the apartment below. Do you rush down to patch their ceiling, or address the root cause and fix the broken pipe first?
If you’re a developed country and the leaky pipe is emissions-fueled climate change, the answer is clear. You leave the faucets on and twiddle your thumbs for 30 years before finally offering an embarrassingly small settlement to your increasingly sodden neighbors.
“Loss and damage” is the phrase used to describe payments from historically high greenhouse gas emitting nations to their less developed counterparts, to help them deal with the worst effects of rising sea levels, extreme weather, and ecosystem failure caused by climate change. At the recent COP28 summit in Dubai, nearly 200 countries agreed to set up a Loss and Damage Fund to help the most climate-vulnerable, with pledges totaling $725 million within two weeks.
That’s a tiny drop in a very large ocean of need—likely somewhere in the tens of billions annually. And it raises an uncomfortable question. With a limited supply of time and money, is it better to patch up the worst disasters with loss and damage cash or fix the carbon-belching systems that are driving climate change in the first place?
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Loss and damage isn’t just the right thing to spend on, it’s the best thing.
1. Take the high ground. The moral argument for loss and damage payments is unassailable. Some countries have grown their wealth by emitting hundreds of gigatons of carbon dioxide; the US alone is responsible for a quarter of all greenhouse gas emissions in history. Meanwhile, low-income countries like Vanuatu, Pakistan, and Somalia are fending off catastrophes that are not of their making. Island nation Vanuatu first asked the UN for loss and damage assistance to relocate communities away from rising seas as early as 1991. The response was a deafening silence.
2. Climate insurance for the uninsured. Loss and damage payments could be like direct insurance payouts to individuals, writes Yolande Wright, vice president of partnerships at GiveDirectly, in Time Magazine. Scotland used her charity to send $750 loss and damage payments to each of 2,700 families displaced by Tropical Cyclone Freddy in March 2023, letting individuals spend it on what they needed most. A large meta-study of 30 direct payment schemes worldwide by the UK’s Overseas Development Initiative found that such cash consistently leads to decreases in poverty, boosts food security and even helps school attendance.
3. Pay now or pay more later. Leaving developing nations to face the tribulations of climate change alone will almost certainly lead to widespread food crises and increased migration from south to north. And those could make paying for loss and damages now seem like a real bargain. “If we don’t make the Global South liveable. . . people will move, because there is a thirst in humans and humanity to stay alive,” said Patricia Scotland, secretary general of the Commonwealth, at COP28.
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We’ll never fix the past but we can fix the future
1. Idealism, meet the real world. Communities relying on the new UN Loss and Damage Fund to fix their climate woes shouldn’t hold their breath. The Guardian notes that current pledges to the UN Fund stand at around 0.2% of the annual need, with the world’s biggest polluters promising almost nothing (US $17.5 million, China $10 million). That’s because the Fund is entirely voluntary, and subject to the vagaries of political—and actual—weather. As climate change hits home domestically, payments to other countries could peter out. A $100 billion annual pledge by developed countries for climate financing made way back at COP15 has never reached its goals says the OECD (although it does continue to tick upwards).
2. The wrong kind of money. Oxfam notes that even loss and damage funds that are released could entrench inequality by flowing to UN agencies and banks rather than empowering local communities. It decries “old, top-down solutions” that play to the preferences of donors rather than affected communities.“The loss and damage fund must not become an instrument under the World Bank to serve rich countries’ continued dominance in international politics,” an Oxfam analyst wrote in the run-up to COP28.
3. So let’s look forwards, not back. Instead of making meaningless promises or propping up inefficient institutions, developed countries could push for tough carbon policies, and decarbonize their own societies and systems to help everyone in the long run. The estimated cost of that is pretty eye-watering—about $3,500 billion annually globally for the next 30 years, reports the Decarbonization Channel. Freely sharing cutting-edge climate technologies globally could help too, from agricultural tweaks to cut methane or boost yield, to innovations in nuclear and renewable power.
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What To Keep An Eye On
1. New carbon vs old carbon. A big challenge is deciding who should pay in to the Fund and who can draw from it. Developed nations would dearly love China and India, both now heavy polluters, to be big contributors. Both nations point to their own vulnerable communities as well as the West’s long history of carbon dioxide emissions. There’s also a concern that some partially developed countries, like Pakistan and Barbados, will be excluded from payouts.
2. Who is in the driving seat. The UN’s Loss and Damage Fund is overseen by a so-called Transitional Committee, made up of representatives from both developed and developing countries. The US scored a win by having the Fund hosted at the World Bank—an institution that many Global South nations are deeply skeptical of. America also wants developed nations to have a majority of seats on the Committee’s board, where developing states currently dominate.
3. A COP28 hangover. For all the upbeat talk of pledges, the acid test of the Fund will be how many countries commit serious cash and then deliver in the cold light of day. Will there be pressure on politicians to make good on their promises? Or will Loss and Damage be just another well-meaning UN agreement that doesn’t look so good the morning after?