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Costing the Earth? An Overview of Loss and Damage

By Harriet Bradley

The concept of loss and damage due to the impacts of climate change first entered into the United Nations Framework Convention on Climate Change (UNFCCC) negotiating text in 2008. Eight years on, the issue still appears to be little known to people outside of a specific community of policy actors, NGOs, and academics working on the issue.

What is loss and damage?

Under the UNFCCC, there are currently two official pillars: mitigation (reducing emissions in order to prevent climate change) and adaptation – strategies that enable people to adapt to those climatic changes that cannot be prevented. Loss and damage has emerged as a third paradigm, commonly referred to as ‘beyond adaptation’. It represents the idea that some of the climate changes predicted by scientists will not be able to be adapted to. This includes impacts termed ‘slow onset events’ like sea-level rise, ocean acidification and desertification. It also includes extreme weather events that countries or peoples lack the resources to prepare for, such as Cyclone Pam that hit Vanuatu in March 2015, destroying an estimated 90% of buildings, or Cyclone Winston in Fiji in February this year, the worst storm on record in the Southern Hemisphere.

What are the latest policy developments?

At the 19th Conference of the Parties (COP) to the UNFCCC in 2013 in Warsaw, the Warsaw International Mechanism on Loss and Damage associated with Climate Change Impacts (the WIM) was set up. Since then, an Executive Committee of the WIM has been established to implement a two-year workplan on loss and damage. It consists of 10 ‘Annex I’ members and 10 ‘non-Annex I’ members.[1]

COP21 in Paris in December 2015 made the Warsaw International Mechanism and its Executive Committee permanent in a distinct article from adaptation. It also charged the Executive Committee with setting up a task force on migration and displacement, and creating a clearing house for risk transfer mechanisms (to enhance information, action and support for finance options such as climate disaster insurance). On the other hand, the Paris Decision text explicitly ruled out the possibility of liability and compensation for loss and damage to be addressed under the UNFCCC.

The Executive Committee of the WIM held its first meeting from the 24 — 26th September 2015, its second meeting from the 2 — 5th February 2016 and its third meeting from the 26 — 30th April this year. At these meetings, the Executive Committee members ostensibly proceed in implementing their work-plan. However, from attending its second meeting and talking with country representatives and observers, it was clear to me that underlying controversies over loss and damage continue to complicate this process.

What are the key controversies?

Loss and damage gets to the heart of questions of who is responsible to pay for the impacts of climate change that cannot be prevented or adapted to. Therefore, in the Executive Committee of the WIM there is a broad divide between Annex I members, who see loss and damage as a potential blank cheque for financing climate impacts, and non-Annex I members, who do not want to, and in some cases cannot, pay for a problem that they are far less responsible for creating.

A key fault line, for example, is the attempt by Annex I members to steer the loss and damage debate towards disaster risk reduction, since this is a national financial responsibility. This is probably based on a fear that setting the response to loss and damage in an international setting will lead to a heavy financial bill for industrialised countries. Another argument made by Annex I members is that promising international finance for loss and damage could create a ‘moral hazard’ in vulnerable countries, meaning that they will have less incentive to prevent damage from climate disasters if they know it will be paid for by international funds. However, not accepting international financial responsibility for loss and damage could lead industrialised countries to take less responsibility for preventing it from occurring, for the same reasons

On the other hand, non-Annex I members are keen to make references to the anthropogenic and international causes of loss and damage associated with climate change in order to place the issue within an international legal framework. It is still unclear how the ability to discuss such concepts relating to international finance and responsibility will be impacted by the decision in Paris to exclude discussion of liability and compensation.

Another fault line is over whether loss and damage is framed as an adaptation issue or a ‘beyond adaptation’ issue. Whilst the Paris Decision separated loss and damage from adaptation, many of the Annex I members and other observers in the second Executive Committee on Loss and Damage still referred to the WIM’s role as being the prevention of loss and damage, presumably through mitigation and adaptation. Whilst this could add impetus to these two pillars, it will not provide mechanisms for the international community, or at least the UNFCCC, to deliver action and support for losses and damages due to climate change that are already occurring or are likely to occur in the future.

Nevertheless, finance is not the only consideration of the Executive Committee. One of eight action areas in the Committee’s work-plan is the issue of non-economic loss and damage.

What is non-economic loss and damage?

Whilst loss and damage is little known outside its policy community, non-economic loss and damage (NELD) is little known even within its own policy community. Indeed, one of the first tasks of the Executive Committee of the WIM on NELD is to mainstream the idea within relevant policy circles.

NELD is a fascinating concept that challenges conventional wisdom and policymaking in market economies, which all too often reduce issues to an economic calculation, and view peoples’ lives and habitats through the lens of statistics. In contrast, NELD relates to ideas such as human life, biodiversity, loss of culture and identity (for example accompanying displacement), or the loss of territory or statehood that many countries will experience due to sea-level rise.

The reflex reaction in marketised economies might be to put a price tag on such things. Ironically, this would significantly increase the potential loss and damage bill, suggesting that assigning an economic value to everything may come back to haunt those countries who have propagated this approach. However, the concept of NELD challenges this thinking, requiring that action on climate change does not only boil down to an economic calculus: ‘we can move these people over here, rebuild their homes, it will cost this much…’. It challenges thinking on issues such as the idea of moral hazard mentioned above, as it shows that people will lose much more than simply the economic value of their homes and habitats if they are destroyed or made uninhabitable by climate change; losses which are over and above any financial compensation they may receive.

NELD is a way of beginning to reflect more accurately the enormity of the impacts of climate change and the additional need for non-economic policy responses, such as working out the legal status of states that have lost their territory. It is also possible that conceptualising this enormity, along with the financial enormity of addressing loss and damage, could help to increase efforts on the prevention of climate change impacts. However, this must not preclude mechanisms being put in place for addressing loss and damage when it does occur.

Conclusion

While loss and damage is still a relatively new issue in international climate change negotiations, the controversies that surround it seem to represent more than simply teething issues. Loss and damage forces us to ask ourselves how much of climate change, or its impacts, we can realistically prevent. It then asks: who will pay for this? And what will the institutional architecture look like that will deal with it?

Given that liability and compensation were explicitly excluded from discussions of loss and damage in the Paris Decision text, the coming years will provide crucial answers about how and whether the issue will be dealt with under the UNFCCC, or what alternatives exist for those on the frontline of climate change impacts, most of whom have the least responsibility for the problem and the least capacity to pay.

 

Notes

[1] The terms are based on the distinction made between countries that signed up to the Kyoto Protocol, where Annex I represented countries for whom the emissions reduction targets were binding (broadly speaking, industrialised countries), and non-Annex I which represented countries for whom targets were non-binding.

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Costing the Earth? An Overview of Loss and Damage

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