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LOSS AND DAMAGE FUND AT COP-28

Why in the News?

• On the inaugural day of COP-28, participating countries reached an agreement to activate the Loss and Damage (L&D) Fund.

Source: Reuters

Loss and Damage Fund:

This fund is designed to provide financial assistance to nations especially susceptible to the negative impacts of climate change, aiding them in recovering from and dealing with losses and damages that surpass their capability to handle.

Fund’s Objectives and Commitments:

• The L&D Fund, hosted at the World Bank but independently managed, aims to support countries already dealing with the impacts of climate change.
• Commendably, commitments totaling nearly $250 million were secured on the first day, though substantial funding is still required to fulfill its purpose.

Long-awaited Fund:

• The concept of the L&D Fund was introduced at COP-27 in Egypt.
• The demand for such a fund has persisted for nearly three decades.

Financial Commitments and Host Country Support

• Host country UAE and Germany each pledged $100 million, with

the U.S. contributing $17 million The European Union committed $145 million, reinforcing a collaborative effort.

World Climate Action Summit and Prime Minister’s Presence:

• The World Bank will serve as the “interim host” for the Fund for four years.

Study on Climate Change Costs

• A study from the University of Delaware estimates climate change costs at about $1.5 trillion in 2022.
• Developing countries, especially the poorest, experienced an average loss of about 8.3% of GDP due to climate change.

Concerns and Sustainability:

• The absence of a defined replenishment cycle prompts serious questions about the Fund’s enduring effectiveness.

Calls for addressing underlying concerns emphasizes the need for long-term sustainability and a replenishment framework for the L&D Fund.