Climate loss and damage: practical action

Executive Summary

Devastating loss and damage^[1] due to the adverse effects of climate change include human casualties, economic and non-economic impacts on livelihoods and wellbeing, forced displacement and loss of cultural heritage. The Sixth Assessment report of the Inter-governmental Panel on Climate Change (IPCC) provides scientific evidence of the scale and severity of climate change impacts which are causing loss and damage across every region of the world.^[2] These losses and damages are happening now and are forecast to increase in severity and frequency as global temperatures rise.

At COP27 in Egypt, 2022, Parties agreed to establish a fund for Loss and Damage as part of broader funding arrangements, or "mosaic of solutions", both inside and outwith the UNFCCC. Some initial funding has been pledged for addressing loss and damage, as summarised in Table 1, though this is a fraction of the scale of finance required. There are different estimates of the finance needed by developing countries each year to address losses and damages. These estimates are orders of magnitude above what is currently available and well above the USD 100bn per annum agreed (but yet to be fully realised) under the UNFCCC for climate mitigation and adaptation.

This report analyses issues of finance, needs assessment and delivery of interventions, and synthesises evidence from examples of practical action from a broad spectrum of actors working on loss and damage. It considers how to mobilise the vast scale of finance necessary to address escalating needs and deliver the array of actions required. The purpose is to increase shared understanding and to guide the urgent actions needed to scale up finance for and deliver interventions to address loss and damage. There is a particular focus on the intersectional and gendered aspects of economic and non-economic loss and damage, so as to reflect the disproportionate impact of climate change on women and girls.

This report does not represent the views of the Scottish Government. Rather it brings together a range of experiences and analyses to inform and guide practical action for addressing loss and damage. The discussion and recommendations presented in this report are relevant to the work of the newly established Transitional Committee on the operationalisation of the new funding arrangements for Loss and Damage under the UNFCCC. As agreed at COP27, the Transitional Committee will make recommendations on the new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change.

The Transitional Committee has been tasked with accessing information on the institutional landscape, gaps therein, prioritisation of solutions, effective ways to address for the most vulnerable, and sources of (innovative) funding. From the evidence provided, the following findings may be of particular relevance:

i. Measures to directly address loss and damage are in their infancy and coverage is negligible as compared to need, notwithstanding the measures that those facing loss and damage are taking autonomously.

ii. National policy frameworks and local to national mechanisms will be central to creating an enabling environment for addressing loss and damage.

iii. Knowledge and national level experiences in disaster risk reduction, response and recovery, and adaptive social protection provide a good basis for developing effective measures that incorporate loss and damage. Similarly, knowledge on risk transfer and insurance, nature-based solutions, and livelihoods rehabilitation following external shocks can be adopted and adapted to address loss and damage.

iv. Measures to manage internal and cross border migration, assisted relocation and providing support to people and households straddling origin and destination locations need to be developed for people displaced by climate change.

v. Addressing non-economic loss and damage is a gap across all types of climate impacts and current responses. Yet these impacts are ubiquitous, especially in marginalised and impoverished communities. Different approaches need to be developed to those that have focused on economic costs, and could include market-driven, technological solutions.

vi. Vulnerability-focused, gender-responsive and transformative, and intersectionally-conscious measures are needed if loss and damages are not to impact large sections of society disproportionately.

An analysis of ways to address loss and damage is presented in Section 5, which demonstrates how important national mechanisms are and will continue to be in drawing down finance from the UNFCCC Loss and Damage Fund once established. These agencies should be able to assess needs, design interventions, coordinate implementation, and manage the monitoring, evaluation, reporting and learning processes. The mapping draws attention to how the role of sub-national authorities would benefit from being enhanced to take on delegated mandates from national government, in order to facilitate bottom-up local to national ways of addressing loss and damage.

Both national and sub-national components of the loss and damage landscape rely on the capacity to successfully govern a complex, vulnerability-focused and largely social process. Civil society organisations are involved in fostering local collective action for ecosystem-based measures, achieving resiliency through livelihoods rehabilitation and curative measures. They may also act as a more direct recipient of some forms of finance mobilised outside the UNFCCC.

Section 6 proposes 10 insights on good practice, including on mobilising finance, assessing needs and delivering loss and damage interventions. These were deliberated through a multi-stakeholder process and have been widely consulted upon. The insights proposed are: urgency of action; being equitable and targeted; responsive to context; adequate to meet real need; accessible to all; historical responsibility and polluter pays; creative communication and shared learning; transparency and accountability; far-sighted and do no harm; and no additional indebtedness.

Several practical solutions are presented which draw on case studies and secondary literature related to mobilising public sector finance, exploring innovative finance, and pioneering work on determining needs and delivering actions. These include actions around Mobilising public sector finance for addressing loss and damage; Innovative finance for addressing loss and damage; Determining needs; and Delivering actions.

The task of comprehensively addressing loss and damage, and putting right the climate injustice it represents requires a scale of funding that far exceeds the USD 100 billion that was previously pledged for climate mitigation and adaptation through the UNFCCC.

Concurrent work is required at different levels. At the global level, the finance system reforms set out by Prime Minister Mottley of Barbados in her address to the seventy-seventh session of the UN General Assembly^[3] are critical to release the trillions of dollars needed to comprehensively address loss and damage. Sovereign debt and fiscal flexibility for climate vulnerable countries requires debt management through restructuring, cancellation where possible and innovative mechanisms such as debt for climate swaps. The important COP27 decision to establish a global Loss and Damage Fund for the most vulnerable countries demands to be implemented in full and with urgency.

At the national level, countries need to review their institutional frameworks and mandates for addressing loss and damage. Then, national mechanisms to interface with and link to global finance can be established. National mechanisms will vary according to context and will need to be integrated into existing institutional structures for climate action, disaster risk reduction and management, social protection and development planning.

At the local level on the climate frontline, ways to address loss and damage that focus on the most vulnerable are needed. It is especially necessary to develop gender-responsive and intersectional approaches to assess and address both non-economic and economic loss and damage that take account of the differentiated impacts on women and girls from slow and sudden onset events.