The agreement reached at the final meeting of the Transitional Committee (TC5) in Abu Dhabi in early November on recommendations to operationalise the Loss and Damage Fund is fragile—a delicate compromise around eligibility, scope and responsibility.
What we have from Abu Dhabi is that all developing countries can receive grant-based support from the Fund after an extreme weather event or an equally substantive slow onset event to support reconstruction and rehabilitation, including addressing relocation and non-economic losses. The Fund’s Board will set thresholds and ceilings to ensure the Fund prioritises the most vulnerable, is not overly concentrated and is sustainable. If it meets certain conditions, the World Bank will host the Fund’s secretariat in the interim, which could become a longer-term arrangement. Still, the Fund will have its independent board —roughly evenly split between developed and developing countries— and its own rules on eligibility and other matters. The agreement urges developed countries to support it and take the lead in its capitalisation.
This was likely the best outcome for developing countries in the current political climate. Assuming this fragile compromise is not re-opened, we should expect to see pledges of public sector funds in the region of $500m (USD) at COP 28, maybe more. This isn’t meant to be the size of the Fund, just its start-up capital. The World Bank’s Board will decide whether it can meet the agreed conditions to host the independent secretariat. The Fund’s Board will be appointed —probably early in the New Year—with an early mandate to develop the scaling-up financing plan, including potentially emissions-related levies.
Loss and damage exceeds $150bn per year already, and most of this is being met by the poorest, most vulnerable countries, often through unsustainable debt. The purpose of this Fund is to help break that climate-debt nexus. It’s good that it’s starting after a long wait. Time will tell whether it will be sufficient size, pace and accessibility.
Avinash D. Persaud is the Chair of the CARICOM Commission on the Economy and Emeritus Professor of Gresham College. He was a member of the Transitional Committee for Barbados from July to December 2023, including for the fifth meeting. This blog was originally provided as a supporting statement for the Loss and Damage Collaboration brief: Standing in solidarity with those on the frontlines of the climate crisis: a Loss and Damage Package for COP 28.
