On Loss and damage(L&D) Fund-Finding funds-The ‘loss and damage’ fund is finally online but more needs to be done

Source: The post on loss and damage(L&D) Fund has been created based on the article “Finding funds-The ‘loss and damage’ fund is finally online but more needs to be done” published in “The Hindu” on 2nd December 2023.

UPSC Syllabus Topic: GS paper3– environment – climate change

News: The article talks about the L&D fund for climate change, decided at COP28 in the UAE. It highlights challenges such as funding shortfalls and operational issues, including World Bank management and the need for transparent, accessible, and sufficient support for impacted nations.

What is the loss and damage(L&D) Fund?

The L&D fund, a longstanding demand for climate justice (since COP-19,2013), aims to provide financial and technological resources to countries impacted by climate change. This fund is replenished by developed nations and used by others to address the unavoidable effects of climate change.

At the COP28 climate talks in the UAE, member-states agreed to operationalize the L&D fund. This decision follows the COP27 talks in Egypt, where the launched of the fund was agreed upon, largely due to the efforts of the G-77 bloc and China, spearheaded by Pakistan.

COP28 has overseen the commitment of $475mn to the loss and damage fund.

Note: Conference of Parties (COP)- The COP is the decision-making body of the UNFCCC. All States that are party to the Convention are represented at the COP. They review the implementation of any legal instrument that the Convention adopts.

For more information on COP read here

For more information on L&D Fund read here

What are the concerns related to the L&D Fund?

High overhead fee: The World Bank charges a high overhead fee for maintaining any fund with it. The developing countries want a dedicated funding mechanism and an independent secretariat.

Insufficient Funding: The amounts committed are insufficient, totaling $450 million (for now) against an actual demand of several billion dollars. Apart from this, periodic replenishment of these funds remains unclear.

Previous Commitment Shortfalls: Developed countries previously missed a 2020 deadline to mobilize a promised $100 billion in climate finance, achieving only $89.6 billion in 2021.

Voluntary Contributions: All countries are invited to contribute, but it’s not mandatory.

For more information on concerns to L&D Fund read here

Way forward

While the L&D fund is now operational, its effectiveness remains uncertain. Issues like accessibility, bureaucratic hurdles, and sufficient funding are concerns that need to be addressed to ensure the fund meets its intended goals.

Question for practice

Evaluate the effectiveness of the L&D Fund.