• In a major breakthrough on the first day of this year’s UN climate conference in Dubai (COP28), delegates agreed on the operationalisation of ‘Loss and Damage Fund’, that would help compensate vulnerable countries coping with loss and damage caused by climate change.

• The Fund has been a long-standing demand of developing nations on the frontlines of climate change coping with the cost of the devastation caused by ever-increasing extreme weather events such as drought, floods, and rising seas.

• Following several years of intense negotiations at annual UN climate meetings, developed nations extended their support for the need to set up the fund last year during COP27 in Sharm el-Sheikh, Egypt. 

• However, the decisions on funding allocation, beneficiaries and administration were referred to a committee. Differences between countries were so stark that it necessitated additional meetings to resolve these issues.

• A draft agreement was arrived in November and a revised agreement was released. It asked the developed countries to contribute to the fund but said other countries and private parties could also make contributions.

What is Loss and Damage Fund?

• Loss and damage refers to the negative consequences that arise from the unavoidable risks of climate change, like rising sea levels, prolonged heatwaves, desertification, the acidification of the sea and extreme events, such as bushfires, species extinction and crop failures. As the climate crisis unfolds, these events will happen more and more frequently, and the consequences will become more severe.

• Some development and adaptation efforts have reduced vulnerability, but the rise in weather and climate extremes has led to some irreversible impacts as natural and human systems are pushed beyond their ability to adapt.

• Acknowledging that loss and damage includes, and in some cases involves more than that which can be reduced by adaptation, COP19 established the Warsaw International Mechanism for Loss and Damage. 

• Since then, it has been serving as the main catalyzer under the UNFCCC process for enhancing knowledge, coherence, action and support to avert, minimise and address loss and damage associated with climate change impacts in developing countries that are particularly vulnerable to the adverse effects of climate change.

• In the broadest understanding, all efforts being taken to curb the global average temperature increase and to adapt to the adverse effects of climate change can contribute to preventing or reducing the risks of loss and damage associated with climate change borne by societies and individuals.

• Article 8 of the Paris Agreement enshrines the importance of averting, minimising and addressing loss and damage and the role of sustainable development in reducing the risk of loss and damage.

• Creating a specific fund for loss and damage marked an important point of progress, with the issue added to the official agenda and adopted for the first time at COP27.

• Governments took the ground-breaking decision to establish new funding arrangements, as well as a dedicated fund, to assist developing countries in responding to loss and damage.

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