Compensation off the table at COP climate talks

Compensation climate talks
Basey, Samar (in the Philippines) after the devastation wrought by Typhoon Haiyan (local name: Yolanda) in 2013. Copyright: Wikipedia

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  • Climate models could identify companies responsible for emissions
  • Insurance set to fail the poor and make flood-prone houses unsellable
  • Money alone won’t work — better warning and infrastructure are part of solution

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As world government leaders hang up their suits following the latest round of the annual UN climate talks — the 23rd UN Conference of the Parties on climate change (COP23) in Bonn, Germany — there is one question that remains unresolved: how will communities be compensated for the losses they suffer due to extreme weather events?
In policy speak, this is called ‘loss and damage’. It refers to the irreparable harm that people and governments can face suffer from climate change, such as rising sea swallowing up low-lying Pacific islands, or hurricanes wiping out entire towns in the Caribbean.After the US reneged on its financial commitments to the Green Climate Fund, leaving a funding gap of US$2 billion, the private sector stepped in to fill the gap. A myriad of non-state actors such as cities, businesses and NGOs are now reclaiming their place at the UN negotiating table.

“These companies are still producing pollution and causing loss and damage, they need to pay”

Saleemul Huq

However, while progress was achieved on a roadmap for implementing the Paris Agreement — which aims to cut enough emissions to keep global warming within 2 degrees Celsius over pre-industrial times — and business-led solutions are now on the table, questions on how to tackle multifaceted issues, such as disaster preparedness and loss and damage, remain open.
Admitting responsibility
The main intergovernmental effort to tackle climate change, the UN Framework Convention on Climate Change (UNFCCC), includes two work streams, addressing both mitigation and adaptation. Although loss and damage is acknowledged in the Paris Agreement, the idea that it should be at the core of a separate financial plan was met with resistance by policymakers during the Bonn discussions.
"The moment you say ‘loss and damage’ you talk about compensation, which means admitting responsibility for climate change," Kashmala Kakakhel, a climate finance expert working on new finance models for disaster preparedness in her home country Pakistan, told SciDev.Net. "[Negotiators] seem to be afraid of the c-word.” 
Instead, Kakakhel says, they prefer to pass the responsibility on to paid insurers. 
The initiative InsuResilience, introduced this year, was meant to be a complementary solution to the sluggish response of public bodies when it comes to loss and damage and disaster risk reduction. It was founded by the G7 countries, later joined by the European Union and the Netherlands, with a total commitment of US$550 million. The goal is to be able to insure 400 million vulnerable people in the developing world by 2020.

The problem is that insurance has proved ill-suited to poor communities.
"I am not against the idea of insurance in principle," said Harjeet Singh, global lead on climate change for Action Aid, in an interview with SciDev.Net. "But so far, it has not worked for the poor”. 
Singh points to affordability of the premiums, accessibility to the right information and ability to claim compensation as three major hurdles for vulnerable people. “The main objective of private companies is to make money, so they will naturally try to dispute your claim.” 
He also pointed out how the insurance model cannot work for every type of disaster — explaining that when a house is predicted to end up underwater due to sea level rise, for example, the negative impact is certain and no company would provide insurance.
Private companies need clear return prospects and measurable outcomes, while improved urban planning, capacity building and training are tasks too complex and fraught with uncertainties.
"When it comes to adaptation, only public finance can work,” said Singh. “If you talk about activities such as early-warning systems, what private company is going to give you money away just for that?"

Not just about money
“Part of the bank's climate action plan for Africa involves providing finance for better hydro-meteorological [forecasting] systems across the continent,” Ijjasz-Vasquez told SciDev.Net. "We also want to make sure that all the data are translated in usable format so every farmer can have practical information about the weather in the coming weeks and months.” 
Better early-warning systems and weather data could be a lifeline for threatened communities. Not only do they improve weather forecasts locally, but data collected from the ground also increase the accuracy of global climate models.
"A lot of the infrastructure in developing countries is still to be built, [and] cities are growing at a tremendous pace," added Ijjasz-Vasquez. "Over the next 30 years there will be more new houses built than in the whole human history, therefore where and how you build them will matter”.
Local masons are tasked with building houses in slums, "and sometimes teaching them simple techniques to improve their work can make a big difference in terms of resilience", he said. “These are low-cost measures that won’t have an immediate, ground-breaking effect, but can help in the long run”.

Vital research
The lack of funding for vital research that underpins humanitarian response, as well as disaster risk preparedness, is something the international community is still grappling with.
During the talks in Bonn, ideas for alternatives started to emerge. “There is a big campaign launched by civil society organisations that calls for a loss and damage tax on polluting companies," said Saleemul Huq, director of the International Centre for Climate Change and Development at Bangladesh's Independent University, and a senior fellow at the International Institute for Environment and Development. 
The idea is that this money could compensate people who suffer as a result of their products, in this case fossil fuels, Huq explained. "These companies are still producing pollution and causing loss and damage — they need to pay." 
Until recently, the issue of compensation was contentious because there was no way to prove the responsibility of a single big polluter in any one extreme event, or a slow-onset disaster. But the science of extreme weather attribution is now so sophisticated that researchers can put their finger on human responsibility for a given weather event, and call out individual companies.
Brenda Ekwurzel, a senior climate scientist with the Union of Concerned Scientists in the United States, is the author of a study that names and shames the 90 fossil fuel giants that are responsible for nearly 50 per cent of the global temperature rise that has occurred since 1880.
"We have known for a long time that fossil fuels are the largest contributors to climate change, but people haven't really tied it back to specific products," she told SciDev.Net.
"They [the companies] knew their product was going to be used for energy, which releases carbon dioxide into the atmosphere,” added Ekwurzel. “We have lots of evidence that the companies knew the harm they were causing by at least the 1980s”.
The world is close to missing the target set in Paris, of keeping global warming within 2 degrees Celsius. New studies suggest that at the current rate of emissions, global warming would remain below 1.5 degrees for just two decades — a tight deadline but still achievable, if implementation of the Paris commitments is sufficiently scaled up in the coming years. 
The alternative of failing to curb global temperatures involves extreme events such as floods and intensely hot summers becoming so frequent, that without a plan to address loss and damage and prepare, the consequences could be catastrophic.