$33bn funding gap for climate ‘loss and damage’

Funding needed for UN humanitarian appeals linked to extreme weather has increased eight-fold over the past two decades, with donor countries falling desperately short of meeting the demand, according to a new analysis.

Reports by the Intergovernmental Panel on Climate Change (IPCC) have made clear that climate change impacts are already widespread and intensifying, and that developing countries are paying the highest price.

But since 2017, about half (54 per cent) of all UN appeals for climate disaster requirements such as droughts and floods have gone unmet, according to the Footing the bill report released by the charity Oxfam. For every US$2 a country responding to extreme weather asked for, they received only around $1 — a shortfall of up to $33 billion, the report says.

“There have been over 30 years of discussions on loss and damage finance. The need is clear — we can’t delay any further.”

Lyndsay Walsh, Oxfam climate policy adviser

Oxfam and other campaigners are urging governments at UN climate talks in Bonn, Germany to pledge funding for loss and damage in addition to existing climate finance and aid commitments. The 6-16 June talks are seen as a precursor to the COP27 climate summit in Egypt in November.

The three-day Glasgow Dialogue on Loss and Damage during the Bonn meeting highlighted the gaps between the experiences of people on the frontlines, and the current structures in place (or lack of them) to respond to these climate impacts.

Lyndsay Walsh, Oxfam climate policy adviser and co-author of the report, said the Bonn negotiations “must pave the way for a finance facility for loss and damage to be established at COP27”.

“There have been over 30 years of discussions on loss and damage finance. The need is clear — we can’t delay any further,” she told SciDev.Net.

At COP26 in Glasgow last November, rich nations pledged to double the amount of funding provided to developing countries for climate change adaptation, but the issue of compensating for loss and damage was left unresolved.

Climate activists have accused rich nations of trying to block loss and damage from the main agenda in Bonn.

According to Oxfam’s report, estimated loss and damage costs could increase to between $290 billion and $580 billion a year by 2030, rising to the trillions by 2050. Much of this will be shouldered by developing countries, which are most vulnerable to the effects of climate change.

Annual extreme weather-related funding appeals amounted to at least $1.6 billion for 2000-2002 and increased by 819 per cent to reach $15.5 billion in 2019-2021, the report says.

The cost of extreme weather-related events in 2021 alone is estimated at $329 billion globally, the third-highest year on record behind 2017 and 2005, the report says. This is nearly double the total aid given by rich nations to developing countries that year.

Ethiopia, Kenya, Somalia and South Sudan are currently facing extreme hunger, fuelled by climate change, and yet are responsible for only 0.1 per cent of global emissions, the authors note. The entire continent of Africa accounts for less than 4 per cent of emissions.

Meanwhile, wealthy countries are responsible for 37 per cent of current emissions and some estimates say they are responsible for 92 per cent of excess historical emissions.

“Going by the ‘polluters pay’ principle and climate justice tenets, historical emitters and corporations should be responsible to pay up for climate damages,” says Harjeet Singh, strategic advisor on global partnerships to the Fossil Fuel Non-Proliferation Treaty Initiative.

Singh told SciDev.Net that there were several other potential sources of finance for loss and damage such as a pollution tax, air passenger levy and public finance.

Finance facility

Oxfam proposes establishing a finance facility under the UN Framework Convention on Climate Change (UNFCCC) to coordinate an effective and equitable global response to climate-induced loss and damage.

Only Scotland and the Wallonia region in Belgium have explicitly committed finance to address loss and damage so far. Some humanitarian and development aid, and insurance, may relate to loss and damage, but there are no estimates of what this adds up to.

Most developed countries have steadfastly blocked progress on support measures to address loss and damage, says Singh.

“While loss and damage was recognised as a ‘third pillar’ of the Paris Agreement, developed countries led by the United States refused to acknowledge any responsibility due to the fear of unlimited liability and compensation towards addressing loss and damage,” he said.

Walsh explained: “They are afraid that if they do commit money to loss and damage, it will imply they are liable for the loss and damage and this could lead to legal challenges — which they are very afraid of.”

Developed countries —  in the absence of a clear, multilaterally agreed definition on climate finance —  have interpreted a wide range of financing activity, such as that channeled to export credit entities or for use of “cleaner” fossil fuels, as climate finance, according to Liane Schalatek, associate director of the Heinrich Böll Stiftung in the US.

“Unfortunately, while the provision of finance for developing countries by developed countries under the UNFCCC is an obligation, the UNFCCC lacks any enforcement mechanism,” Schalatek told SciDev.Net.

Both Singh and Schalatek believe that the Egyptian presidency has a critical role in ensuring that COP27 results in a commitment on a loss and damage finance facility.

“The incoming presidency can help by placing the issue of loss and damage high on its own political agenda for COP27 priorities,” said Schalatek. “For an African COP, the focus should be on adaptation, and what is needed to address losses and damages, and the added, adequate and sustained financial support that both climate areas deserve.”

This piece was produced by SciDev.Net’s Global desk.