On the opening day of the COP28 climate conference in Dubai, a loss and damage fund to help vulnerable countries cope with the impact of climate change has been officially launched.
About loss and damage fund
- The loss and damage fund was first announced during COP27 in Sharm el-Sheikh, Egypt.
- The initial funding is estimated to be $475 million — host UAE pledged $100 million, the European Union promised $275 million, $17.5 million from the US, and $10 million from Japan.
- The loss and damage fund is a global financial package to ensure the rescue and rehabilitation of countries facing the cascading effects of climate change.
- The term refers to the compensation that rich nations, whose industrial growth has resulted in global warming and driven the planet into a climate crisis, must pay to poor nations, whose carbon footprint is low but are facing the brunt of rising sea levels, floods, crippling droughts, and intense cyclones, among others.
- The changing climate has impacted lives, livelihoods, biodiversity, cultural traditions, and identities.
- Loss and damage is often categorised as either economic or non-economic.
- Economic loss and damage are negative impacts that we can assign a monetary value to. These are things such as the costs of rebuilding infrastructure that has been damaged due to a flood, or the loss of revenue from agricultural crops that were destroyed due to drought.
- Non-economic loss and damage are negative impacts where it is difficult or infeasible to assign a monetary value. These are things such as trauma from experiencing a tropical cyclone, loss of community due to displacement of people, or loss of biodiversity.
How much damage has been caused by industrialisation?
- The Industrial Era started in 1850, disrupting Earth’s natural mechanism for the production and absorption of greenhouse gases.
- Today, the US, the UK and the EU are considered to be responsible for 50% of all emissions. Bring Russia, Canada, Japan, and Australia into the picture and it jumps to 65%, i.e. two-thirds of all emissions.
- India is responsible for only 4% of historical emissions.
- China, the world’s biggest emitter in the last 15 years, is responsible for 30% of global emissions every year.
- Greenhouse gases comprise methane, nitrous oxide, water vapour, and carbon dioxide (CO2) — with CO2 responsible for most of the global heating.
- Carbon particles are being released in extremely large quantities and they have the ability to linger in Earth’s atmosphere seemingly endlessly, at least for a millennium or more, and warm it.
How much loss and damage is the world facing?
- Research shows that 55 vulnerable countries have suffered $ 525 billion combined climate crisis-fuelled losses in the last 20 years.
- The number is estimated to reach $ 580 billion per year by 2030.
- Global warming has changed the way the world lives, with vulnerable communities being the worst affected.
- According to the IPCC, losses and damages will increase in future as global warming continues to rise.
- It will be unequally distributed and impact developing nations the most and, in them, the socially and financially weaker sections.
How big is the fund and how will it operate?
- The World Bank will oversee the loss and damage fund in the beginning, with the source of funds being rich nations, such as the US, the UK and the EU, as well as some developing countries.
- The scale or the replenishment cycle of the fund remains unclear, but the need of the hour is several trillion dollars.
- Previously, the developing nations were not keen to have the World Bank manage the fund as they saw this as a means by which richer nations could have more control over the finances.
- They have accepted this term now.
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