COP27 establishes ‘Loss and Damages’ fund for climate reparations

Source: The post is based on the article “COP27 establishes ‘Loss and Damages’ fund for climate reparations” published in The Hindu on 20th November 2022

What is the News?

The countries at the COP27 in Sharm el-Sheikh, Egypt have decided to establish a ‘Loss and Damages’ fund.

What is Loss and Damage?

Click Here to read

What is the origin of the idea of Loss and Damage Fund?

​​The idea of a “loss and damage” fund (LDF) was first floated in 1991.

Vanuatu, a low-lying island nation in the Pacific, suggested the creation of an insurance scheme, under the auspices of the UN, to help pay for the consequences of rising sea levels.

For thirty years such demands were left ignored by the UN. But recently Scotland promised £2m ($2.4m) to the cause.

What has been decided at COP27 related to Loss and Damage?

At the COP 27, countries decided to establish the Loss and Damage Fund.

The fund will be aimed at helping developing countries that are “particularly vulnerable” to the effects of climate change.

The fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions.

What is the issue with this fund?

Crucial questions such as who will manage this fund, whether contributions are expected from large developing countries and what the fair share of contributors will be — have been left to a “transitional committee” that will make recommendations at the next COP to be held in the UAE.

Will India be a donor to the Loss and Damage fund?

Developed countries had been asking to expand the donor base of the loss and damage fund by including big economies like India and China as contributors to the fund.

However, India during the discussions made its stand clear that though the country has voluntarily been doing its bit to help vulnerable countries through a different mechanism, it will not be mandatorily contributing to the proposed fund.

On the question of whether India would be one of the beneficiaries of the fund as it’s primarily meant for most vulnerable countries, India argued that the country too has many vulnerable areas.