Climate Change Loss and Damage

The Environmental and Energy Study Institute (EESI) invites you to view our briefing on what you need to know about loss and damage from climate change in the lead-up to the international climate negotiations in Egypt (COP27). The topic of loss and damage, defined as climate impacts that cannot be adapted to, is expected to be one of the most discussed issues at COP27. Impacts like land loss in Louisiana and homes falling into the ocean in North Carolina are being felt around the world. Leaders are reckoning with how to address this growing challenge, particularly in countries without the financial and technical tools needed to respond.

Panelists discussed the tools the international community designed so far to address loss and damage, the current status of international climate negotiations on this issue, expectations of what might happen next on the topic at COP27, and why the international conversation on loss and damage matters for U.S. policymakers.

Highlights

KEY TAKEAWAYS

Loss and damage is defined as harm from observed impacts and projected risks due to climate change. Such loss and damage can be either economic (i.e., harms where a monetary value can be assigned), or non-economic (i.e., harms incurred on things not traded in markets or which are hard to assign a monetary value to).
Losses and damages are already happening. Current levels of global warming at 1.1°C (1.98°F) above preindustrial levels have already caused dangerous and widespread losses and damages to nature and billions of people, despite efforts to adapt to climate change.
The "Impacts, Adaptation and Vulnerability" section of the 6th Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) provides the most robust assessment of research on loss of damage that the IPCC has conducted to date.
“Forced displacement” and “distress migration” are common consequences of loss and damage across different types of climate impacts and geographies.
In recent years, the United States has been increasingly constructive on the substance of loss and damage in negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). The two main issues at COP27 are operationalizing the technical assistance network for loss and damage, called the Santiago Network, and creating a loss and damage finance facility.
Current forms of foreign assistance, like humanitarian aid and disaster relief, normally only cover immediate responses right after a disaster happens. These forms of support also do not address loss and damage coming from slow onset events, such as drought, sea level rise, desertification, and freshwater salinization.

Adelle Thomas, Senior Fellow, Climate Analytics; Director, Climate Change Adaptation and Resilience Research Centre, University of the Bahamas; Lead Author, Intergovernmental Panel on Climate Change (IPCC) 6th Assessment Report Working Group II

The Intergovernmental Panel on Climate Change (IPCC) Working Group II covers climate impacts, adaptation, and vulnerability. The Working Group II section of the 6th Assessment Report, published in February 2022, provides the most robust assessment of research on loss of damage that the IPCC has conducted to date.
The IPCC report refers to loss and damage as harm from observed impacts and projected risks due to climate change. Such loss and damage can be either economic (i.e., harms where a monetary value can be assigned), or non-economic (i.e., harms incurred on things not traded in markets and which are hard to assign a monetary value to).
Economic losses include the cost of repairing a building or rebuilding a road or the cost of economic losses to a particular sector due to a climate impact.
Non-economic losses include health impacts, such as trauma, changes to biodiversity, and loss of sense of community and culture. The scientific literature on non-economic loss and damage is not as advanced. As a result, the IPCC authors relied on examples to show that non-economic losses are already occurring.
Losses and damages are already happening. Current levels of global warming at 1.1°C (1.98°F) above preindustrial levels have already caused dangerous and widespread losses and damages to nature and to billions of people, despite efforts to adapt to climate change.
At a 1.5°C (2.7°F) threshold, more irreversible losses are expected to happen. Limiting global warming to 1.5°C would substantially reduce projected losses and damages, but it will not completely eliminate them.
Risks of future losses and damages are highest in areas that already have high temperatures, such as tropical regions, and places along coastlines.
Adaptation does not prevent all losses and damages. Despite climate action on adaptation, losses and damages are already being experienced and will continue to rise with global warming.
Losses and damages are unequally distributed. They are more severely affecting developing countries and vulnerable populations within all countries.
Losses and damages are not comprehensively addressed by current financial, governance, and institutional arrangements. This is particularly the case in vulnerable developing countries. Current finance policies, strategies, and other solutions to address loss and damage are simply not sufficient.

Ritu Bharadwaj, Principal Researcher, Climate Change, International Institute for Environment and Development (IIED)

Loss and damage has been part of the international climate change agenda since 1990, but there has been little progress made towards solutions because the issue has always been politically contentious.
Loss and damage needs to be addressed now because of unprecedented extremes in intensity and frequency of climate change impacts.
Loss and damage does not occur in isolation. It occurs on top of the development deficits that countries and communities are already facing. Countries with weak governance and poor social protection face more intense loss and damage.
The least developed countries are most prone to the effects of loss and damage.
The IIED report, Loss and damage case studies from the frontline: a resource to support practice and policy, looks at the issues 12 geographies face in terms of climate risk, how the regions deal with the risks, community and society level impacts, and what infrastructure, finance, technology, or knowledge gaps they face.
“Forced displacement” and “distress migration” are common consequences across different types of climate impacts and geographies. A follow-on impact is that the most poor and vulnerable people often become victims to slavery and human trafficking.
Loss and damage creates physical health, mental health, and well-being issues for people pushed into distress migration and those left behind.
Displacements result in the overcrowding of refugee camps and outbreaks of hygiene-related diseases, like cholera, due to the lack of latrines and the use of contaminated water. Displacement can also lead to drug and alcohol abuse and gender-based violence.
To understand the nature of loss and damage risks, an operational framework must be developed. Secondary and tertiary impacts need to be integrated in loss and damage framing and response. Responses to loss and damage need to be dynamic and implemented early to prevent loss of life.
A successful framework for managing loss and damage risks will learn from existing approaches to loss and damage risk management (e.g., social protection and forecast-based finance); strengthen institutional capability for dealing with loss and damage; integrate risk into national planning processes; and consider gender and intersectionality in responding to different types of loss and damage impacts.
To address climate change loss and damage, climate science must be tailored for decision makers at different levels of government based on their needs. There must be an interaction between adaptation and loss and damage policy.
Loss and damage finance must be separate from adaptation finance and it must reach the most vulnerable and the poorest communities. Needs-assessments are critical.
Principles can bring people together to understand how and why finance should flow between and within countries to reach the most vulnerable people.

Kaveh Guilanpour, Vice President for International Strategies, Center for Climate and Energy Solutions (C2ES)

Two main deliverables were mandated at COP26 in Glasgow, Scotland, in 2021 that are relevant for COP27 on loss and damage:
- COP27 needs to operationalize the Santiago Network, a technical assistance network for loss and damage.
- The Glasgow Dialogue, established at COP26, will bring together countries to discuss arrangements for funding of activities to mitigate loss and damage. The first Glasgow Dialogue was held in June 2022.
The Glasgow Dialogue was established in response to developing countries pushing for a loss and damage finance facility. Negotiators at COP26 did not reach consensus on whether such a facility should be established, so the dialogue was created to further these negotiations.
Subsequent concerns that the Glasgow Dialogue is a ”talk shop” with no real political oversight, accountability, or clear mandate for deliverables has led developing countries to come forward as a united group of more than 140 countries to propose a new agenda item for COP27 centered on establishing a new finance facility.
This push for the new agenda item is opposed by developed countries because it prejudges the outcome of the Glasgow Dialogue, which was set to discuss this issue over a two-year period, and it is not clear how establishing a new finance facility would be effective or efficient.
While the conditions may not be right for consensus to establish a new finance facility at COP27, there is increasing recognition of the need for increased finance for loss and damage. It is possible that countries will agree on a broader agenda item on this issue at COP27 that looks at the issue of addressing loss and damage from a finance perspective, but also at minimizing and averting loss and damage.
The United States, in the past, has had particular concerns over ensuring that no basis for compensation or liability is established through the work on loss and damage. The United States insisted on making this clear in crafting the Paris Agreement. Other developed countries hold a similar position.
In recent years, the United States has been increasingly constructive in engaging on the substance of loss and damage, including advocating for loss and damage to be taken forward as an issue at COP26.
While the Paris Agreement was clear on the issue of compensation and liability and also moved away from a blunt division of obligations between developed and developing countries on issues such as finance, the overarching convention, the United Nations Framework Convention on Climate Change (UNFCCC) does not have those assurances.
This is going to become a top geopolitical issue that will shape the foreign policy of the United States and many other countries around the world.

Taylor Dimsdale, Programme Director, E3G

Climate risk is a geopolitical issue.
Countries are increasingly facing high levels of debt distress. They are spending a significant share of their GDP, often well above 100 percent, on disaster recovery.
Climate is one of the drivers of second- and third-order impacts causing food insecurity and water scarcity, which informs global stability.
Climate change is rising up the list of political priorities for many developing countries, including some countries that are strategic U.S. allies. They are not seeing climate change as separate from other foreign policy or diplomatic issues. It is in the same arena as trade and security relationships.
The Global Climate Security Index, produced by the American Security Project, finds that about 70 percent of countries recognize climate change as a national security issue.
Climate change loss and damage, as it is understood and discussed within the UNFCCC, is not a security issue, and nor should it be. Security, defense, and foreign policy analysts, however, have been clear that a failure to address climate impacts is a matter of national and international human security.
The National Intelligence Council released its first National Intelligence Estimate on Climate Change in 2021, saying they “assess that climate change will increasingly exacerbate risks to U.S. national security interests as the physical impacts increase and geopolitical tensions mount about how to respond to the challenge.” They predict that “elsewhere, as temperatures rise and more extreme effects manifest, there is a growing risk of conflict over water and migration, particularly after 2030.” Additionally, they note that “intensifying physical effects of climate change … will be most acutely felt in developing countries, which we assess are also the least able to adapt to such changes. These physical effects will increase the potential for instability and possibly internal conflict in these countries, in some cases creating additional demands on U.S. diplomatic, economic, humanitarian, and military resources.”
There is a significant overlap between countries that are most vulnerable to climate impacts and those that are at high risk of conflict.
The total cost of U.S. billion-dollar disasters over the last five years (2017-2021) is $742.1 billion, or an average of $148.4 billion per year, both of which are new records. The average annual cost of these disasters over the past five years is nearly triple the 42-year inflation-adjusted annual average cost.
State and local governments have been warned by credit rating agencies that their credit rating is at risk. Given the increasing risk of climate change, the sovereign credit of the United States, which allows it to borrow money cheaply, could also be at risk.
The United States is not immune to climate impacts, and yet it lacks a coherent approach to loss and damage. Many low- and middle-income countries have built up experience in loss and damage approaches without the benefit of large public budgets. There is an opportunity to learn from what these countries are doing.
The conversation surrounding loss and damage is about finance, technical assistance, and broader international cooperation.

Q&A

Q: What is the global stocktake? How could loss and damage be built into the process of the first global stocktake and what would that mean for future efforts to address loss and damage?

Guilanpour

The Paris Agreement has a built-in ambition mechanism, which operates on a five-year cycle. Every five years, countries and other stakeholders come together to assess where the world is in terms of delivering on the long-term objective of the Paris Agreement [keeping global warming well below 2°C or 3.6°F] in a process called the global stocktake.
COP26 launched the first global stocktake, and the process is currently in a technical information gathering and assessment phase. The first global stocktake should conclude at COP28 in December 2023.
The mandate for the global stocktake in the Paris Agreement mentions loss and damage as a cross-cutting issue. The difficulty is that it is still not clear how that will intersect with the global stocktake on an operational basis.

Thomas

The technical dialogue phase of the global stocktake is currently broken down into three areas: adaptation, mitigation, and means of implementation and support.
In the technical dialogues, developing countries are pushing for loss and damage to be in the conversation.

Bharadwaj

In an assessment conducted by IIED, Harnessing Nationally Determined Contributions to tackle loss and damage in Least Developed Countries, they found that, of 46 nationally determined contributions (NDCs) from least developed countries, only 12 mentioned loss and damage in any form.
Nationally determined contributions are the documents in which all countries commit to emission reduction goals and in which developing countries also put forth their needs and demands for technology, infrastructure, and financing. By putting loss and damage in NDCs, it would create more impetus for the global stocktake to incorporate loss and damage.

Q: How is funding for loss and damage different from or complementary to other forms of foreign assistance that the United States provides to developing countries?

Thomas

In discussions of funding for loss and damage, developed countries, including the United States, have highlighted that they already provide assistance to address loss and damage through humanitarian aid and overseas development aid. Studies show that this assistance is not enough to support the levels of loss and damage that are being experienced now and that will be experienced in the future.
Humanitarian assistance normally only covers immediate responses right after a disaster happens. It also does not address loss and damage coming from slow onset events, such as droughts, or support for ecosystems, such as loss of biodiversity.
There are some countries that are not eligible for these other forms of aid. Many small island states’ income levels preclude them from being eligible for aid although they are facing disproportional loss and damage due to climate impacts.

Bharadwaj

Anticipatory action is needed along with humanitarian response.
Developing countries facing losses and damages cannot wait for two- or three-year years to receive funds. They need a mechanism where they can receive funds promptly and build on development aid, private sector finance, and insurance finance.
The nature of loss and damage is that it needs a comprehensive response. There must be a range of solutions, not just one. Solutions must be tailored and nuanced to different types of needs. Funds must be provided at the local level to support what is needed in specific contexts.

Dimsdale

Existing support through disaster response, for example, is falling short of developing countries’ needs.

Q: When a country, community, or region experiences loss and damage, what are the ripple effects that can result?
Bharadwaj

Slow-onset events like drought, sea level rise, desertification, and freshwater salinization have little media attention compared to rapid-onset events such as floods, heat waves, and cyclones. This results in no humanitarian response or support for those facing slow-onset events.
Climate migrants are migrating internally and externally. As they travel farther distances, they are subject to higher levels of human trafficking.

Dimsdale

Climate change is a systemic risk. It is transboundary, nonstationary, and it cascades across society in sometimes predictable, but often unpredictable, ways.
Climate change brings lots of secondary and tertiary effects around financial instability, either at an individual or macroeconomic level, including loss of livelihoods, displacement, conflict, and instability.

Thomas

When developing countries need to borrow from their national budgets to cover the cost of loss and damage that was not covered by foreign assistance, it diverts money away from other sustainable development priorities such as health, education, good governance, and capacity building.
These countries then become more vulnerable to the next set of climate impacts. We start to see an unvirtuous cycle of loss and damage being experienced, which erodes sustainable development capacities and leads to greater vulnerabilities.

Q: What are some efforts underway to figure out how to measure loss and damage?

Thomas

Some countries have some methodologies in place to capture immediate damages that happen right after an extreme event. There are not many methodologies that are available that capture non-economic losses or the actual costs of rebuilding and recovery that come after those immediate damages are experienced.
The G20 has asked for the IPCC to do a special report on loss and damage that would potentially come up with methodologies that countries can use.

Bharadwaj

There is a research gap on understanding and quantifying cultural loss.
Loss and damage pushes countries into debt causing them to divert money from development funds. Loss and damage is much higher the following times countries experience climate disasters because of lack of development.

Dimsdale

Insurance companies are assessing their models against different temperature thresholds.
A recent Dartmouth College study, National Attribution of Historical Climate Damages, put an economic cost on historical emissions at the individual country level.
While metrics and science continue to improve and get fairly precise, there can still be a lot done to help the most vulnerable countries based on the climate impacts we see today.

Compiled by Shreya Agrawal and Nick Solis and edited for clarity and length. This is not a transcript.

This briefing is part of a Congressional briefing series, What Congress Needs to Know About COP27:

Key Findings from the Newest Global Assessment Report on Climate Change

Climate Change Loss and Damage

Natural Climate Solutions

What’s on the Table for the Negotiations?

Climate Summit Recap: Key Outcomes and What Comes Next

To learn about all the briefings in the series, visit eesi.org/cop27-briefings.