Last year at the annual U.N. Climate Change Conference (COP27), countries agreed to establish funding arrangements responding to climate-related losses and damages. The agreement represented a historic win for climate-vulnerable countries who have been fighting for acknowledgement and compensation for losses and damages since the 1990s.
This year, countries will produce recommendations on how to operationalize this new loss and damage fund through a Transitional Committee. In these discussions, the United States should champion climate justice and center the needs of the most vulnerable communities, offering solidarity, constructive negotiating positions, and credible finance solutions.
The losses and damages of climate change
As the Earth hits 1.1 degrees Celsius of warming, vulnerable communities across the world are suffering losses and damages from climate change. Some losses and damages can be quantified, such as the economic costs to crops, livelihoods, and property. Others—such as fading cultures, unperformed traditions, emotional trauma, and lives lost—are invaluable. The Biden administration’s stated priority of climate justice should extend beyond U.S. borders, recognizing that climate change impacts amount to a global crisis. Addressing loss and damage is an opportunity for the United States to take up the mantle of climate leadership and realize a safer and more prosperous world for all.
Unfortunately, loss and damage costs have and will continue to increase dramatically. Approximately 3.3 billion to 3.6 billion people live in areas that are highly vulnerable to climate change. In the past 20 years, funding needed for extreme weather events increased by 800 percent globally; by 2030, estimates predict that loss and damage costs will range from $290 billion to $580 billion per year. The impacts of climate change are not linear with temperature rise; rather, they become exponentially worse with each fraction of a degree of warming. Frighteningly, in the status quo emissions scenario, there will be 3.2 degrees Celsius of warming by 2100—far past the 1.5 degree Celsius limit of the Paris Agreement, which enshrines the global goals for the fight against the climate crisis, including on emissions, climate impacts, and climate finance. This level of temperature rise will result in an existentially calamitous world with country-destabilizing floods, sea-level rise, droughts, and extreme heat.
See also: The "Comprehensive Multilateral Approaches to Loss and Damage" event
These climate impacts are perpetuating and exacerbating socioeconomic inequities—harming the most vulnerable and marginalized communities—and will increasingly drive migration, political and social unrest, cross-border conflict, famine, and poverty. Take gender inequality as an example: 80 percent of people who are displaced by climate change are women, and gender-based violence against women increases after natural disasters. For small island developing states, additional degrees of warming determine their ability to continue to exist: The cities of Malé in the Maldives and Fongafale in Tuvalu, for example, see the risks to habitability significantly increase from low-emissions scenarios (0.9–2.3 degrees Celsius of warming by 2100) to high-emissions scenarios (3.2–5.4 degrees Celsius of warming by 2100), with both islands potentially in the high-risk category by 2090 in the latter scenario. The loss of these small islands means the loss of livelihoods, territory, cultures, ceremonial practices, languages, and traditions that can never be replaced. Last year, flooding devastated Pakistan, where one-third of the country was submerged, more than 1,700 lives lost, and 33 million people displaced. Climate change contributed to the disastrous floods, with warmer air temperatures melting glacier ice and causing heavier downpours. The costs of climate change are extraordinary and potentially insurmountable for climate-vulnerable countries.
The costs of climate change are extraordinary and potentially insurmountable for climate-vulnerable countries.
From agreement to action
This year, countries will decide on the institutional arrangements of the new loss and damage fund. To do so, the U.N. Framework Convention on Climate Change has set up a Transitional Committee with members from both developed and low-income countries to discuss the details; a member of the Office of the Special Envoy for Climate (SPEC) at the U.S. State Department will represent the United States on the committee. While the Transitional Committee is tasked with providing its recommendations by COP28 at the end of this year, this step will mark only the start of the process to fully operationalize the fund and funding arrangements agreed upon at COP27. As such, climate advocates are calling for the Transitional Committee to finalize the decision on institutional arrangements as soon as possible so as to operationalize the fund before or by 2025, making its work all the more urgent to do well and get right.
The success of the loss and damage fund will rely on significant and growing contributions of capital and a structure that allows for responsive, equitable, and effective disbursement. Overall, both public and private climate finance must drastically increase in the next decade, with a 20 percent year-on-year increase, or at least $4.3 trillion in annual finance flows by 2030, to avoid the worst climate impacts. Financing must also benefit the most vulnerable communities—low- and middle-income countries received less than 25 percent of climate finance flows in 2011–2020—and address both the slow-onset impacts of climate change as well as natural disasters.
The success of the loss and damage fund will rely on significant and growing contributions of capital and a structure that allows for responsive, equitable, and effective disbursement.
Progressing climate mitigation ambition
The United States must show up to the Transitional Committee with solidarity, constructive negotiating positions, and viable options to mobilize finance, so that the world can not only address the losses and damages of climate change, but also continue prioritizing climate mitigation ambition. Climate mitigation is crucial for averting and minimizing loss and damage—but even in the most optimistic trajectories for current emissions pathways, the world will see an exacerbation of climate impacts, highlighting the urgency of tackling loss and damage and other climate impacts.
At COP28, negotiations on mitigation ambition will include topics such as phasing out fossil fuels, transitioning to clean energy, reducing methane emissions, and bridging climate and conservation work through nature-based solutions. However, climate advocates are concerned that ambition may be limited at COP28, given the growing presence and influence of oil and gas lobbyists at climate negotiations; the United Arab Emirates (UAE), the sixth-largest exporter of crude petroleum in the world, as the host country; and Sultan Al Jaber, CEO of the Abu Dhabi National Oil Co., serving as the COP president this year. By arriving at COP28 with just, equitable, and finalized recommendations from the loss and damage Transitional Committee, the United States can ensure that sufficient discussion time and significant progress is made for climate mitigation ambition.
Recommendations
Center vulnerable communities
The United States, through the State Department, should center the needs of vulnerable communities in loss and damage discussions. SPEC and the team of U.S. climate negotiators should proactively and regularly engage with representatives from climate-vulnerable countries to demonstrate good faith efforts and to identify what type of funding arrangements and solutions are most needed and effective for the loss and damage fund. The SPEC representative can do this through official channels with developing country representatives at the Transitional Committee as well as between committee sessions to show its leadership and proactively pursue common-ground solutions. The State Department should hear directly from local communities and stakeholders in the development community, gathering feedback about what funding arrangements are most effective for Indigenous peoples, women and children, and low-income and marginalized communities. By hearing, valuing, and responding to the voices of the most vulnerable, the Biden administration can uphold its climate justice priorities while promoting procedural justice in the loss and damage negotiations.
Host open conversations with allies and stakeholders
The United States, through the State Department and SPEC climate negotiators as well as foreign service climate officers at U.S. embassies and regional bureaus, should have open conversations with allies and stakeholders to align loss and damage stances at the Transitional Committee. In 2022, loss and damage negotiations were fraught, in part because the United States and its allies were viewed by climate-vulnerable countries as not having a common, constructive position on loss and damage that was responsive to the needs of climate-vulnerable communities. Because of this, the negotiations were combative and drawn out, with less bandwidth for climate mitigation goals. To avoid this scenario at COP28, climate negotiators should have strategic meetings with key allies at the Transitional Committee and throughout the year to push for joint, strong, and equitable recommendations from developed countries.
To ensure that these positions reflect the needs of climate-vulnerable communities and to better identify responsive finance policies, climate officers at embassies and regional bureaus should build relationships with local communities and development organizations; identify context-specific needs related to loss and damage; track environmental and climate data; and develop strategies for optimally disbursing finance when it becomes available. Information from these conversations should directly inform the U.S. and allied positions within the Transitional Committee. These consultations will ensure that the U.S. position is equitable, fulfilling the Biden administration’s whole-of-government approach to tackling the climate crisis. Meaningful and long-term engagement can also lead to more trust with climate-vulnerable communities within loss and damage discussions.
Reform the international financial institutions (IFIs)
The U.S. Department of the Treasury should demonstrate bold support to reform IFIs for climate action, including but not limited to debt relief and concessional lending for climate-vulnerable countries and issuing and reallocating special drawing rights—a reserve asset at the International Monetary Fund. With U.S. leadership on IFI reform, trillions of dollars can be mobilized for climate action. President Biden and other high-level U.S. officials should attend the Summit for a New Global Financial Pact in June 2023, where countries will discuss the Bridgetown Initiative—a financial plan, proposed by Barbadian Prime Minister Mia Mottley, to reform global development finance to address climate change and loss and damage—and other financing proposals for climate action and loss and damage. In addition to attending the summit, the Biden administration should align agency support on the Bridgetown Initiative with a broad and ambitious vision for IFI reform.
Propose credible finance solutions
The Biden administration should consider how it can contribute meaningfully to a loss and damage fund and other funding arrangements, given the ongoing inability of Congress to appropriate sufficient amounts of public finance for international climate programs. The Biden administration should strategize cross-agency pathways to contribute new capital to a loss and damage fund, collaborating with allies to leverage taxes on the soaring profits of oil and gas companies, incentivize private and philanthropic finance, and increase resilience and emergency funding over time. In the long term, the United States should aim to increase both the quantity and flexibility of resilience and emergency funding in order to have funds available and make credible contributions to a loss and damage fund.
Conclusion
With the establishment of a loss and damage fund, the United States will have the opportunity to lead in the negotiations to establish institutional arrangements through the Transitional Committee. As countries experience the devastating losses and damages of climate change, the United States should strive for the efficient and effective development and implementation of the fund. By finding alignment with leading allies, centering the needs of the most vulnerable, and engaging with opportunities to increase loss and damage funding and reform the IFIs, the country can demonstrate its commitment to global climate justice, creating a safer and more prosperous world for all.
The author thanks Carolina Herrera and Joe Thwaites at the Natural Resources Defense Council; Dennis Tänzler at adelphi; Nate Warszawski at the World Resources Institute; and Anne Christianson, Frances Colón, and Kate Donald at the Center for American Progress for their contributions to this piece.