As our return flight touched down in New York City, and we turned our phones off of airplane mode, a huge news story flashed across our screen. A few hours ago, during the extended overnight negotiations, delegates at COP27 had agreed on a loss and damage fund, through which developing nations could receive funds to deal with the devastating effects of climate change.
Having been in Sharm el-Sheikh for the past week before the deal was announced, I have to admit I was skeptical. Though loss and damage had become the #1 issue of this COP—with it immediately being added as an agenda item, significant media buzz, and in-person rallies at COP27 itself—it seemed unlikely that hundreds of nations would come to an agreement. Specifically, the perception was that bigger nations, like the US and some European countries, did not want to agree to a loss and damage fund because it could open the door to action related to historic liability for climate change-related disasters. Furthermore, there didn’t seem to be a consensus about how it would work in practice.
Being at COP27 myself, I guessed that there would be some general statement agreed upon that would essentially recognize the need for a loss and damage fund, but push off the details until a future date. The negotiations I attended had progressed slowly and seemed to get bogged down in small disagreements over language. However, I was clearly wrong.
Looking at the 5-page text that was accepted by party delegates, I honestly feel pretty good about the agreement. Though it doesn’t detail any of the specifics of how it would work just yet, it establishes a transitional committee to do so over the next year, before COP28. It gives them relatively specific guidance over what they should figure out. Furthermore, I was particularly interested to see that the agreement also called for the assistance of “international financial institutions” such as the World Bank or the International Monetary Fund to “consider… the potential for [them] to contribute to such funding arrangements.”
Going forward, I think that the transitional committee’s success will hinge on the following factors. First, the committee must decide how to attribute climate change-related disasters. There are a couple of questions here, including: “What adverse effects of climate change will we cover (extreme one-time weather events, long-term drought, infectious diseases, etc.)?” “How will we determine the extent to which this effect has been caused by climate change?” Second, the committee must decide how they will encourage parties to contribute to the fund, and other specifics related to funding. Will contribution be mandatory or voluntary? Will it be based on historical emissions? Will there be an enforcement mechanism? How will private and non-party stakeholders be encouraged to contribute? Finally, it must decide how the funding will be used by the affected country. Will the government be given discretion over how to spend the money or will there be restrictions? To what extent will this money be used to protect against future similar disasters (more along the lines of adaptation)?
Over the next year, I look forward to following the progress made by the transitional committee on loss and damage funding. And finally, as important as loss and damage funding is for developing countries, I do hope there is a renewed focus on limiting global greenhouse gas emissions as well as ramping up action on adaptation. Given that we have already reached at least 1.1 degrees Celsius of global warming and that the effects of climate change will only get worse and worse with the coming years, we must push for rapid decarbonization of our economies and urgent adaptation to unavoidable effects at the local, regional, national, and international level.