What is loss and damage?
The term ‘loss and damage’ refers to the tangible impacts of climate change and their financial cost. The consequences of climate change-induced natural disasters can be quite sudden, for example during a flood or wildfire. Or, the onset may be slower, like the gradual damage caused by rising sea levels.
Losses and damage are not only financial; there can be physical losses, cultural losses and also severe impacts on the health and wellbeing of individuals through death, trauma and other psycho-social consequences. This makes the actual impacts difficult to measure and quantify. For example, a farmer whose crops wither away in a drought has a direct loss: income. Whereas a bridge that collapses during a hurricane is a physical loss with many indirect consequences: until the bridge is repaired it could prevent members of the community from reaching markets to sell produce, make access to healthcare more difficult, or stop children from getting to school.
In some places the impacts of climate change are destroying historical and cultural heritage or altering people’s culture and traditional way of life. Many Small Island States are at risk of disappearing completely under the sea. Irretrievable losses such as these are impossible to put a price tag on.
Many of the communities we work with at Practical Action are severely affected by climate change and vulnerable to a wide range of impacts and losses. In 2021, intense monsoon rains hit Nepal unusually late in the year, destroying rice paddies which were almost ready to harvest. This led to huge economic losses for farmers. In the arid region of Turkana in Kenya, smallholder farmers face the opposite challenge; years of very little rainfall have led to severe droughts which result in food shortages and the loss of livestock that many depend on to make a living.
Loss and Damage vs losses and damage: what’s the difference?
Those all-important capital letters denote an important difference. While ‘losses and damage’ broadly refers to the destruction caused by climate change, Loss and Damage (capitalised) is used by the media and global community in reference to the political debate regarding who should pay for such impacts.
At its core, the Loss and Damage issue is about global justice. Loss and Damage campaigners think the responsibility should lie with those whose lifestyles have contributed the most to global warming, and those who have the resources to pay. Wealthier countries generally have a longer history of emitting greenhouse gasses and upsetting the balance within ecosystems. But many of these countries are not keen to foot the bill.
The debate has raged for decades but is often pushed to the backburner amidst the pressing issues of cutting global emissions and mitigating the effects of climate change.
What is the cost of climate disasters?
Between 2000 and 2019, there were more than 7,300 disasters related to natural hazards, amounting to a cost of US$2.97 trillion. Almost 6,700 of them were climate related.
Scientists analysing the 2022 floods in Pakistan argue that human-induced climate change is making rainfall more intense and increasing the likelihood of devastating disasters. The losses and damage caused by these floods alone are estimated at £26 billion – more than 10% of Pakistan’s GDP.
On a global level, the cost of disasters tend to be higher in wealthy countries (UK, the US and Europe). But this is because infrastructure is more expensive to repair, and damaged assets are worth ‘more’ in monetary terms. Calculations can also be skewed by local standards of living and economies. Ultimately, the costs of damages need to be seen in relation to people’s ability to pay. There is no escaping the fact that the world’s poorest tend to inhabit regions which are the most vulnerable to climate-related disasters.
In 2015, people in rural Bangladesh spent about US$2 billion on managing the risks and impacts of climate change-related disasters. That’s twice what the Bangladeshi government spent on supporting them in the same timeframe, and twelve times the amount received from overseas aid. For families with unreliable, low income, these cost comes at the expense of food, education and healthcare. Furthermore, when faced with the strain of paying for post-disaster repairs, it’s often girls who pay the highest price, being forced to cease their education to make ends meet.
It is impossible to quantify the financial cost of climate change. The stress of rebuilding the family home, the grief of losing loved ones, the fear of the next disaster and the emotional toll of futures hopes being dashed, simply do not have a price tag.
Who should pay for the impacts of climate change?
So far, the world’s poorest people have paid the highest price for the impacts of climate change. Like those in rural Bangladesh, these are communities with very low incomes who have contributed little towards the global emissions causing global warming.
Practical Action, along with many other organisations, has been making the case for a fairer compensatory system. People living in poverty cannot meet the costs of prevention, damage mitigation and recovery alone; their governments shouldn’t have to either. The climate crisis is a global emergency which calls for shared responsibility and a global solution.
In 2009, during COP15, developed countries committed to collectively mobilising US$100 billion per year by 2020 for climate action in developing countries. This target has not yet been met. At COP27 (2022) in Egypt, global leaders agreed to set up a Loss and Damage fund. This was a historic moment and a step in the right direction, but the details are still to be worked out. It is hoped that world leaders will take inspiration from countries like Scotland, who have already made small but important commitments to pay for losses and damages, and create a global fund that’s fair.
Loss and Damage in the UN climate negotiations
The timeline below shows the history of the debate around Loss and Damage, and progress so far:
A group of small-island states struggling with rising sea levels suggested the establishment of a fund to pay for the impacts of climate change. The UN Framework Convention on Climate Change (UNFCCC) did not include such a fund in their treaty, which focused more on mitigation and reducing emissions to slow the rate of global warming.
The term loss and damage was first used at COP13 in Bali, and an action plan for reducing and paying for losses and damages was put together.
At COP19 in Poland, the Warsaw International Mechanism for Loss and Damage (the WIM) was created. The WIM acknowledged more is needed to address losses and damages caused by climate change, but it does not mention who should finance this.
At COP21 in France, Loss and Damage is included in the Paris Agreement as one of three pillars, alongside mitigation and adaptation. Unfortunately, the agreement focuses on preventing and reducing losses and damages (which should arguably come under the mitigation and adaptation pillars). Responsibility and who should pay remains unclear.
At COP25 in Spain, the Santiago Network on averting, minimising and addressing loss and damage (SNLD) was established. The network was designed to coordinate the technical assistance needed to avert, minimize and address loss and damage. It took until COP27 in Egypt at the end of 2022 for the network to move from the idea phase to reality.
In a real breakthrough for the Loss and Damage debate, Scotland became the very first country to commit to a Loss and Damage fund. This happened during the COP26 in Glasgow. The Scottish government pledged £2 million, nowhere near the billions needed, but the move encompassed a landmark recognition of the responsibility of industrialised nations in compensating those who pay the price for their ‘progress’.
At COP27 in Egypt, an operational arm of the SNLD was set up, and also an international Loss and Damage fund. This is a historic step towards greater climate justice. But much work is still needed and the debate is far from over.
The nation states gathering at COP28 in the United Arab Emirates are expected to work out what this fund will look like in practice, who will contribute and how. This could prove to be a watershed year for Loss and Damage, depending on the actions taken relating to the fund, as explored in this article by Practical Action’s Colin McQuistan.
Why does Loss and Damage matter to Practical Action?
At Practical Action we work with some of the world’s poorest people. For over 50 years we’ve collaborated to create ingenious solutions that allow people to thrive in challenging conditions. We pioneer and establish solutions like solar-powered lighting in refugee camps, efficient, safer cooking stoves, and small-scale agroforestry that work for people and the planet.
Throughout the last half-decade, we’ve seen life getting harder for many of the communities we work with. Prolonged droughts and severe floods, heatwaves and wildfires, rising sea levels and extreme storms have all become more common, increasing the devastating impacts on families who were already struggling to make ends meet.
That’s why so much of our work is focused on helping people adapt to climate change. The Early Warning Systems we’ve developed are helping to save lives when disasters strike. Integrated Water Resource Management schemes are ensuring there’s enough water for people, cattle and crops in arid regions like Sudan. In the deltas of Bangladesh, we helped communities establish floating gardens where they can grow crops without the need to access farmland.
But despite our efforts, for an increasing number of people across the globe it’s too late to adapt. The damage is too severe, and they are losing their homes, incomes and traditional way of life.
It’s for and with these people that we speak up in global forums like the UN climate change conferences. The people who are being hit the hardest by climate change. Those for whom no amount of ingenuity is enough to stop the rising sea, unmanageable heat or melting glaciers that are destroying their lives.
People who deserve to be compensated by those who have caused the climate emergency.