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New loss and damage fund means many things to many people

‘We need to dispel this narrative that we now need to be grateful and be quiet.’

Activists march in major climate crisis protest in the conference venue, Blue Zone during the COP28, UN Climate Change Conference, held by UNFCCC in Dubai Exhibition Center, United Arab Emirates on December 9, 2023. Dominika Zarzycka/NurPhoto
Climate activists march to demand loss and damage funding for vulnerable countries at the COP28 conference venue in Dubai on 9 December 2023.

Loss and damage is more than just a concept for Grace Dorong. She lost her childhood and much of her family after being displaced by a conflict in her home community in Budi County in South Sudan – violence triggered by an influx of people escaping flooding elsewhere.

“A lot of the damage is not just on property,” Dorong told The New Humanitarian last week on the sidelines of COP28 in Dubai. “As a child, what was damaged in my life? My healthy life that I knew as a child – very vibrant, smiling – was damaged. So it changed from being that to [being] something else. My name changed [when they got it wrong in the camps]. I was called the wrong Grace. And now I was called a refugee.” 

Dorong’s story not only illustrates the link between climate change and conflict, but the growing expectations being placed upon the loss and damage fund, which was approved by COP parties on day one of the UN climate summit after a year of tough talks

This was a critical step to get the fund up and running, but it also marks the beginning of a crucial and potentially contentious new phase: The next year or two will decide what exactly the fund responds to, how it will raise money, and how it will give it out.

“I think the first year or even two years will require very heavy lifting to draft and adopt the policies for the new fund,” said Dan Lund, negotiator for Fiji.

For many, the new policies will also be a crucial expression of climate justice. Losses and damages are the result of emissions produced mostly by high-income nations that have an obligation under the Paris Agreement to provide financing to lower-income countries to help them adapt to climate change, even if that money has so far fallen short.

From donor governments to frontline countries and vulnerable communities, from traditional humanitarian groups to newer NGOs, there are many competing visions for how loss and damage funding should be used. As work begins to sharply define the fund’s role, some could be left disappointed.

Simplifying access 

While COP28 represents a promising start for the fledgling fund, experts and climate rights advocates say it’s essential to keep up the momentum, especially on financing.

"We need to dispel this narrative that we now need to be grateful and be quiet,” Michai Robertson, loss and damage negotiator for the Alliance of Small Island States, told a press conference during the gathering in Dubai. “That is the undertone going on in this COP." 

The fund received $665.9 million in pledges at COP28 – a fraction of the hundreds of billions of dollars that vulnerable countries say is needed to respond to climate disasters. 

Avinash Persaud, negotiator for Barbados, described the pledges as the “first capitalisation to get it going” and said “new sources of revenues” were needed, ideally linked to carbon emissions such as on shipping. “You can design a tax so that it doesn't disproportionately impact anybody,” he explained.

Many of the difficult questions around how the fund will work will be answered by an organisational board, made up of 26 people from 14 developing countries and 12 developed countries, as per the UN categories that organise nations in climate talks.

Getting representatives on the board is being organised through elections within the COP country groupings, and its first meeting should take place by the end of January 2024.

Lund said it will be really important for the board to be composed of people “with the right technical backgrounds and expertise to design the required policies”. He hoped it wouldn’t be made up primarily of negotiators: “There's very technical work that needs to be done to shape the resource allocation frameworks, access modalities, and overall operational governance of the new fund.” 

In the talks, the Least Developed Countries (LDCs) negotiating bloc was “very vocal about simplified access and simplified operation so that [the fund] doesn't leave anyone behind”, Sneha Pandey, an adviser to the LDCs, told The New Humanitarian.

The shadow of the Green Climate Fund – notoriously tricky to extract money from – hangs over the loss and damage finance discussions. “No one wanted to recreate the processes” of the GCF, said Persaud, adding that the world’s largest climate fund was “too slow”.

The loss and damage fund’s board will also select an executive director to run the body, and a country to give the organisation a legal identity. “Where you meet always has some degree of relevance from a political perspective... so there will be politics around that as well,” according to Lund.

Despite months of controversy before COP28 surrounding the role of the World Bank, the institution has been chosen to host the fund, but it must confirm to the board that it can meet 11 conditions set out during the negotiations.

Many conditions are “deviations from normal World Bank policy, so the complexity is that we're requiring things of the World Bank that they don't usually do”, said Lund. But “we know they are motivated to make it work,” he added, echoing other sources consulted by The New Humanitarian who predicted the Bank would agree to the fund’s requirements.

Funding should shrink needs, not fill budget shortages

The success of the loss and damage fund hasn’t gone unnoticed by big humanitarian agencies, though they’ve been careful in their language as they express interest in an entity mostly intended to support the governments of countries affected by climate disasters.

Greg Puley, head of climate at the UN’s emergency aid coordination arm, OCHA, acknowledged that loss and damage finance has “a much broader scope than humanitarian funding” and said there were “no humanitarian solutions to the climate crisis”.

But Puley also pointed out that humanitarians are “increasingly involved in anticipatory action… a proactive approach acting ahead of an impending disaster based on an early warning and data analysis… [which can] contribute to minimising and addressing loss and damage.”

This link between preventative approaches to disasters and loss and damage was also emphasised by Gernot Laganda, director of climate and disaster risk reduction at the World Food Programme (WFP).

He likened the loss and damage agenda to a “re-emergence” of disaster risk reduction, “something that we always had under the Sendai Framework of action, but it was never sufficiently financed.”

“This is where we hope to see some of these [loss and damage] investments going,” Laganda told The New Humanitarian. He added that WFP would like loss and damage funding to “really go into systems that reduce humanitarian needs, but not fill a humanitarian financing gap”, which is now so big “you really cannot protect everyone”. 

WFP could play a role in places like Afghanistan, where “the only pathways to localise aid is the humanitarian delivery system”, previously used for food delivery or cash transfers, Laganda said.

That system could be adapted to deliver early warning information to help local communities set their own priorities. That's a bit of a change in thinking,” Laganda said. “This is not WFP delivering aid; it's WFP enabling local institutions to localise aid.”

This work will be most needed in fragile and conflict-affected areas, where the biggest lack of protection is, he added. 

Beyond humanitarians: A longer-term vision

But some loss and damage experts view the role of humanitarian agencies differently. 

Persaud, who is also climate envoy to Barbadian Prime Minister Mia Mottley, is not the sole definitive voice of loss and damage, but he is a very influential one.

For him, the framing of loss and damage responses is key: a reaction to disastrous climate impacts. “We would often say, during the negotiations, it's about what happens the month after [a disaster],” he told The New Humanitarian. 

Persaud continued: “What we're thinking of this fund is, after three months [post-disaster], a government may go to the loss and damage fund with a plan of how to address what's in the preliminary loss and damage report [assessing a disaster’s impacts].” 

The funds will then deal with “what happens when the humanitarians leave” – longer-term issues such as rebuilding housing, clinics, and schools. In Persaud‘s vision, humanitarian agencies may access loss and damage funding depending on their job, and they could play a “very important role” in tasks like relocating communities and rebuilding homes, particularly as part of a government’s plan.

“It’s not that we think humanitarian agencies are not trying to do something good. It’s just that money is scarce and therefore needs to be focused. Donors do not give money to broad things.”

Avinash Persaud, negotiator for Barbados

“But if those agencies had direct access [to loss and damage funding], they'd have to say to the board, ‘we are following the government's plan’, in which case, why is the government not part of this application?” asked Persaud.

In conflict-affected states or where there is no government, there “will need to be a solution, but that has not been determined yet”, he added.

Persaud cautioned humanitarians that the roughly 800 million people living amid conflict are “not the central issue” the fund is dealing with. Instead, it aims to be able to respond to disasters affecting 3.5 billion people – most of them currently unaffected by conflict. 

"One of the key things we have to do in this task is not to miniaturise the problem. Developed countries were keen as donors to make the problem as contained as possible,” said Persaud. “It's not that we think [humanitarian agencies are] not trying to do something good. It's just that money is scarce and therefore needs to be focused. Donors do not give money to broad things.”

Straight to the ground

Some want loss and damage to go beyond funding either governments or humanitarian agencies.

With the success of the fund has come increased advocacy of groups like Give Directly, an NGO specialising in cash transfers, which is now campaigning for funds to go directly to individual people affected by climate disasters. 

“Loss and damage from a justice perspective demands that a substantial portion of the funds go directly into the hands of those most affected,” Tom Mtenje, senior manager for external relations at Give Directly, told The New Humanitarian.

It's a view that has support from some loss and damage negotiators.

“One of the things we talked about was accessing the funds with dignity,” said Diann Black-Layne, negotiator for Antigua and Barbuda. “Cash transfer is really the best way, especially for women who are with their children… it's much easier, it just works.”

Persaud agreed that “part of the recovery might include cash transfers to communities that have been very [badly] impacted”, especially where a disaster has wiped out livelihoods.

For Dorong, who has had much first-hand experience with humanitarian aid programmes, cash is king.

“The money cannot buy me the self-esteem that I lost as a child. I grew up as this child who has lost the smile that I had before, to this. Money cannot buy that,” said Dorong. “But what money can do [is] repair at least those broken parts and connect bit by bit.”

Edited by Irwin Loy and Andrew Gully.

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