Loss and Damage Fund Launched at COP28 with Paltry Pledge from US

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Yesterday, at the opening plenary of COP28, the UN climate talks underway in Dubai, nations agreed to operationalize the Loss and Damage Fund that was established a year ago at COP27.

The fund is aimed at helping low- and middle-income countries cope with extreme impacts of climate change that are already causing billions of dollars of damage and immense human suffering. Large questions still remain—the biggest one being whether richer nations, including the United States, will contribute adequate resources to the fund. (For now, the answer to that is a resounding no, unfortunately).

A historic but flawed agreement

Getting the Loss and Damage Fund up and running is a significant step forward in a decades-long fight to get a measure of justice for countries who are bearing the brunt of impacts caused by heat-trapping emissions primarily from wealthier nations. Meanwhile, heat-trapping emissions have continued to rise and climate impacts have worsened around the world.

Yet the terms of the agreement adopted contain significant compromises. These were arrived at through contentious negotiations within the Transitional Committee that was tasked with developing recommendations for operationalizing the fund—with the US playing a particularly unconstructive role.

For example, all contributions to the fund are voluntary and there are no firm ongoing financial commitments from richer nations. And, despite their concerns about the World Bank, developing nations conceded that the fund would be hosted by the Bank on an interim basis, assuming it can meet a set of conditions laid out in the agreement.  

Paltry initial monetary pledges

Now that the fund is operational, some countries have started to announce funding pledges toward it, and others may come forward in the days ahead. The overall total as of today is a little over $400 million, with pledges coming in from the UAE, Germany, the EU, UK, US, Japan, Denmark, Italy, France, Canada, the Netherlands, and Italy thus far.

The United States’ pledge of $17. 5 million—which will have to get approval from Congress—is frankly pathetic and amounts to an insult given the scale of losses and damages being experienced around the world.

For comparison, the floods in Pakistan in 2022 are estimated to have cost that nation in excess of $30 billion. And, as another point of comparison for scale, the US annual military budget was $816.7 billion in FY2023.

Funding for loss and damage represents a responsibility—it’s what we should be willing to pay, given the harm our heat-trapping emissions are imposing on nations that have contributed practically nothing to causing climate change. It should not be viewed as ‘aid’ to be donated if, and when, we choose. (And it’s worth examining these enduring myths about US foreign aid).

These initial pledges fall far short of the urgent needs and must be quickly ramped up, otherwise the Loss and Damage Fund will just be an empty shell. The funding must also be grant-based and in addition to existing resources for other climate and development priorities. Developing countries do not need more expensive debt.

What’s next for the Loss and Damage fund?

Under the terms of the agreement, a board will soon be set up for the fund which will be responsible for overseeing the fund, including determining criteria for prioritizing funding requests. The World Bank has six months to certify whether it can meet the conditions laid out in the agreement for hosting the fund. If it can, it will be designated the interim host, with an evaluation done after four years to make a decision about whether it will be the permanent host. If it cannot, the fund will then be set up as an independent entity.

At COP28, there will be other important negotiations underway for the Global Stocktake. Among other issues, that should also include a forward-looking assessment of the scale of funding that will be needed for loss and damage, which has been estimated to be $150-400 billion per year by 2030.

There’s a long way to go for the Loss and Damage Fund to truly deliver climate justice. Now that it’s finally operational, our task is to ensure policymakers live up to their promises.