It is estimated that in 2020 alone, 30 million people were thrown out of their houses by various climate events. Activists argue that their plight is a human rights violation by countries that grew rich by emitting greenhouse gases and causing global warming.
The call for making developed countries “pay up” for their depredations (even if unintended) reached a milestone at the just-concluded COP27 climate conference that took place in the Egyptian leisure city of Sharm el Sheikh—a “loss and damage fund facility” has at last been set up.
Logically, the establishment of such a fund should have been a non-event, a matter of routine, but it became a big deal because of the intransigence of the developed world, who were dragged kicking and screaming into even agreeing to take up ‘loss and damage’ on the discussion agenda.
‘Loss and damage finance’ is an euphemism for “reparations” or “compensation” -- blame words that the developed world would not allow.
COP27 agrees to set up ‘L&D’ fund, fails to agree on phasing out fossil fuelsA ‘transitional committee’ has been set up to operationalise the fund, which will look at the composition, mandate and timelines of the fund
Small countries, many of them islands, which could disappear underwater when sea levels rise due to heat-caused expansion of water and melting of polar and glacial ice, have long been asking for a mechanism for assistance if they are hit by a climate event.
The first milestone happened in 2013, when the Warsaw International Mechanism (WIM) addressed the loss and damage that happened due to climate change. Subsequent deliberations resulted in the establishment in 2019 of a Santiago Network that would connect developing countries to providers of technical assistance, knowledge, and resources. The Santiago Network was meant to be a sort of a technical arm of WIM.
But finance was missing. In a way, the Loss and Damage Finance Facility (LDFF) that has been decided to be set up at COP27 seeks to plug this crucial gap. The big challenge is to get it going by filling it with money, identifying fair recipients, and offering them timely help (compensation).
Thus, while the Santiago Network for L&D will catalyze technical assistance to implement the functions of the WIM, the LDFF will contribute by providing the necessary finance, according to a paper on “Loss and Damage Finance Facility: Why and how”, produced by a group of climate activist bodies, including the Climate Action Network (CAN).
The paper calls for “full cost grant funding” as opposed to ‘beat around the bush’ instruments, such as loans and insurance. Such an insurance was proposed at COP27 by Germany and a few other countries and the move has been criticized as a “distraction” from the main theme, which is giving money to those whose lives have been violated by climate events.
As such, the LDFF is only a milestone, not a destination, and there is a long and arduous journey ahead.
As for India, only the mindless optimist will believe that the country will get anything out of the fund. India would be lucky, if not forced, to contribute to the fund. If India is hit by floods, heat waves, or droughts, don’t hope to get any financial assistance from the fund.