Recent flooding in the southern Brazilian state of Rio Grande do Sul has forced more than 500,000 people from their homes, turning them into climate refugees and causing millions of dollars in crop and livestock losses.

Meanwhile, in Panama, some 300 coastal families had to leave Cartí Sugdupu, an island threatened by rising sea levels, and be relocated to a government-built settlement off the Caribbean coast.

These types of negative impacts of extreme weather events, which occur despite or because of the lack of mitigation and adaptation measures, are technically referred to as "loss and damage" of the climate crisis.

Scientific evidence shows that these losses and damages are already occurring, will increase, and are unevenly distributed, with a disproportionate impact on developing countries and vulnerable groups.

This issue - key to international climate negotiations - is closely linked to the concept of climate justice, as it raises the question of who should pay for the losses and damages in the poorest countries, which bear little historical responsibility for the climate emergency.

In this text, we address the basic aspects of this issue, which is becoming increasingly relevant and requires urgent action.

What counts as loss and damage?

Let's start by breaking down the term a little further:

• "Loss" refers to what is permanently lost due to the climate crisis, such as human and other species’ lives, territories, water sources, ecosystems, livelihoods, cultural heritage, and languages.
• "Damage" refers to what has been affected by the climate crisis but can be restored or rebuilt, such as impacts on physical and mental health, soils, roads, schools, homes, health centers, and businesses.

Loss and damage are usually divided into two categories, which may overlap:

• Economic. Loss and damage can be assigned a monetary value: destruction of assets such as houses or cars, loss of livelihoods such as crops or livestock, reduced productivity due to lost working hours, damage to basic infrastructure or disruption of supply chains. This can occur at the international, national or local level.
• Non-economic. Loss and damage that is difficult to measure in monetary terms. They include loss of human life, damage to health, the trauma of forced displacement, and impacts on culture, language, heritage, identity, etc. This category also includes the loss or reduction of biodiversity, the extinction of species, and the disruption or loss of ecosystem services, such as the production of oxygen by a forest.

In international climate negotiations, however, the term takes on a different meaning. The United Nations Framework Convention on Climate Change refers to efforts to "avert, minimize and address loss and damage associated with climate change impacts, especially in developing countries that are particularly vulnerable to the adverse effects of climate change."

The terms "avoid" and "minimize" generally refer to mitigation and adaptation, respectively, while the word "address" refers to actions to deal with the impacts of the climate crisis that could not be avoided.

How much money is needed to address loss and damage?

Discussions on loss and damage, which address issues such as liability and compensation, have been contentious in international negotiations. Developed countries – historically responsible for most of the greenhouse gases that have warmed the planet – have resisted possible agreements that would hold them accountable and make them pay for the loss and damage their emissions have caused and continue to cause.

How big is the bill?

According to a report published by the Loss and Damage Collaboration, 55 of the most climate-vulnerable economies will suffer losses of more than $500 billion between 2000 and 2020, and this could increase by a similar amount in the following decade. Other estimates put the annual cost of loss and damage at $400 billion by 2030.

In Latin America, according to a 2019 study, losses and damages due to the climate crisis are expected to reach $462 billion by 2050 and could rise to $891 billion by 2070.

What is being done to address loss and damage?

Although the issue of loss and damage has emerged in international climate negotiations for more than three decades, it only gained momentum in 2013. That year, at the 19th United Nations Climate Change Conference (COP19), countries established the Warsaw International Mechanism on Loss and Damage with a mandate to share knowledge, strengthen dialogue among stakeholders, and mobilize expertise to strengthen action and support on the issue.

In 2015, developing countries successfully lobbied for the inclusion of an article on loss and damage in the Paris Agreement (a legally binding international treaty in force since 2016), but the issue of finance was left out.

This brings us to the next milestone, which occurred at COP27 in Egypt in 2022, when it was agreed to establish a Loss and Damage Fund to provide financial support to developing countries.

A year later, at COP28 in Dubai, the launch of the fund was agreed, including the rules of operation and other key aspects, like an invitation to the World Bank to act as interim manager for the first four years.

In June 2024, during the Bonn negotiations, the World Bank accepted the invitation to manage the fund, and discussions began to make it operational.

Civil society is calling for loss and damage to be recognized as the third pillar of climate action (alongside mitigation and adaptation), but developed countries are resisting, suggesting that the creation of the fund would be sufficient and even suggesting that loss and damage should not be part of the new global finance goal.

While welcome, the existence of the fund is only the first step in making it what is so desperately needed by countries suffering the worst impacts of the climate crisis. Challenges include:

• Financing. Developed countries have so far pledged US$700 million, less than 0.2% of what is needed ($400 billion).
• Governance. Among other things, the World Bank must ensure the independence and integrity of the fund's Board and Secretariat, that all countries party to the Paris Agreement have direct access to resources (even if they are not members of the Bank), and that resources are delivered in a sufficient and efficient manner.
• Participation. The Fund requires a decentralized structure and the participation of civil society, indigenous communities, youth, women and other vulnerable groups from the outset to ensure that the money reaches those who need it.
• Access. The fund should provide direct access to funding, not only to national authorities, but also to civil society organizations and affected communities.
• Inventories. Developing countries need to monitor and report losses and damage on their territory, which requires economic and technical resources.

sources

- United Nations Environment Programme, "About Loss and damage".

- Preety Bhandari, Nate Warszawski, Deirdre Cogan y Rhys Gerholdt, "What Is 'Loss and Damage' from Climate Change? 8 Key Questions, Answered", World Resources Institute.

- United Nations, "Loss and Damage: A Moral Imperative to Act".

- The Loss & Damage Collaboration, "WHAT IS LOSS AND DAMAGE?".

- The London School of Economics and Political Science, "What is climate change ‘Loss and Damage’?".

- Navin Singh Khadka, "COP27: what does the concept of 'loss and damage' mean for extreme weather pitting rich and poor countries against each other," BBC Mundo.

- Alejandra Cuéllar, "COP27: What are losses and damages, and what do they mean for Latin America?", Climate Tracker.

- Adriana Abramovits, “The Loss and Damage Fund, why is it not what civil society expected?”, Dejusticia.