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The loss and damage fund was the highlight of COP27 in November 2022 in Sharm El-Sheikh, Egypt. Nations finally agreed to create a fund to compensate for the loss and damage to climate change.

The fund will provide financial security to nations dealing with the effects of human-induced climate change. Such as the devastating outcomes of more extreme weather. But also for the so-called slow-onset events, like rising sea levels, desertification and increasing temperatures. In particular, the fund will be for vulnerable developing countries suffering the worst effects of climate change.

What is loss and damage?

“Loss and damage” does not have an internationally agreed definition. Yet, the common understanding is the devastating effects of climate change. Specifically, the impacts that nations cannot avoid by mitigation or adaptation. In the COP meetings, the sector is argued for by the least-developed countries and small island states. They are the least responsible for the emissions causing climate change while being the most affected. Therefore, they fight for climate justice. In other words, for rightful compensation for the many times’ life-changing events caused by global warming.


The idea of loss and damage was introduced around 1991 when the small-island nation Vanuatu proposed creating insurance for countries likely to be impacted by rising sea levels. Many discussions followed the topic. Finally, the UNFCCC established the Warsaw International Mechanism for loss and damage in 2013. The purpose was to simplify the dialogue around the theme. More so, to fill knowledge gaps and strengthen action.

In the latest decade, climate-vulnerable developing countries and civil society groups have worked together to enhance the presence of loss and damage at the climate talks. The work has been successful. For example, in 2019, the member countries of the UNFCCC established the Santiago Network. The purpose is to connect developing nations with technical expertise to create loss and damage solutions. More so, at COP27, it became one of the most discussed topics. Finally, it resulted in the creation of a loss and damage fund.

What is the loss and damage fund?

After prolonged discussions at COP27, nations finally agreed to establish a fund for loss and damage. The idea is to provide financial assistance to climate-vulnerable countries. The next step is to discuss all the details around the funding, which will happen at the upcoming COP28.

In particular, an essential part concerns which nations will provide financial support to the fund. More so, decide how much each country will pay. Advocates for loss and damage highlight that these decisions are urgent, as many nations are struggling with natural disasters today. For now, the loss and damage fund remains a work in progress.

Sources: Chatham HouseUNFCCCClimateAnalyticsUNEP


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