Expectations rise as loss and damage fund gets off to a stumbling start

The newly appointed board of the United Nations Loss and Damage Fund, the latest entrant in the world of climate finance, will likely hold its first meeting in late April after delays in reaching an agreement among its members. But despite the surge in need, the fund itself is not expected to provide funding until 2025 at the earliest, officials say.

The World Bank, the fund’s prospective host, said on its website last week that its board of directors expects to approve a formal plan to become the fund’s “financial intermediary” by mid-April, and that a final operating agreement is in place with the fund by mid-April. announced that it plans to do so. By the end of July.

But those who want to receive compensation fund money are already jockeying for position in a growing list of countries seeking aid. And the board faces the unenviable task of figuring out how to fairly distribute too little money to too many people in desperate situations. The need is growing as climate impacts accelerate in a warming world.

Timetable of steps the World Bank will take to become a recipient of the new United Nations Reparations Fund (Source: World Bank)

Pakistan, for example, is still seeking about $16 billion to rebuild roads, bridges, schools and more after 2022 floods inundated a third of the country. Zambia, in southern Africa, has been hit by a severe drought that has wiped out half of this season’s staple maize crop and is asking for help to shore up dwindling water supplies.

Vulnerable countries, from Pacific and Caribbean islands to Bangladesh, are looking for funds to offset mounting losses as rising ocean temperatures make hurricanes and cyclones stronger. And in Senegal, where coastal erosion is accelerating due to rising ocean levels, families watch the remains of their ancestors float out to sea from flooded cemeteries as they seek cash to rebuild crumbling coastal areas. .

“What we need is trillions of dollars, but what we have is millions of dollars, not billions,” said Climate Finance at the UK-based International Institute for Environment and Development.・Governance researcher Ritu Bharadwaj says: Evolution of funds. To date, it has attracted approximately $700 million in pledges.

According to a 2018 study, the residual costs of loss and damage are expected to total between $290 billion and $580 billion by 2030, and the Loss and Damage Fund primarily provides donor governments with access to funds. Through persuasion, we aim to significantly increase that funding. Use your money effectively.

It is also working with a new task force on international taxation to explore ways to tap innovative but politically difficult sources of funding, such as taxes on fossil fuels, aviation, shipping and financial transactions.

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To make more use of limited funds, fund watchdogs like Mr. Bharadwaj have urged boards to provide direct relief to vulnerable populations, including cash transfers upon passing preset trigger points. We are asking you to consider ways to reach out to us. risk zone.

This approach would cut out the intermediaries that critics say currently overrepresent the flow of climate finance, reducing the amount of money going to the front lines.

Mr. Bharadwaj and several others also said that in order to curb future aid demand, the fund should not only respond to climate shocks once they occur, but also build resilience to worsening climate change. We believe that we should consider supporting efforts that are insufficient.

This could include helping Zambian farmers build regional irrigation systems to avoid having to keep coming back to the fund to make up for crop losses due to warming droughts. .

“We need to be more responsive to the comprehensive risks facing our communities,” Bharadwaj said.

Between security and resilience

But Avinash Persaud, a member of the Barbados Loss and Damage Fund board representing countries in Latin America and the Caribbean, said the fund is less focused on responding to climate change than on recovering and rebuilding the hardest-hit communities and countries. He said the focus should be on the core mission of supporting the A plea for goodwill to expand that effort.

“This fund is not meant to replace relief agencies. This is not a resilience-building fund,” he told Climate Home. “This is doing half-hearted things. This is what happens the day after relief agencies pack up their bags and put them under blue tarpaulins while giving food and water to the population.”

The fund could help rebuild destroyed towns to safer places, repair roads, bridges and schools, or do anything else to “restart communities,” the international community said. said Persaud, an economist known for helping design the Bridgetown Initiative to rebuild. Financial flows to help debt-stricken countries strengthen climate protection.

Damage to the Miskito indigenous community called Wawa Bar on the Caribbean side of Nicaragua, which was the epicenter of Hurricane Eta. The Northern Caribbean region, one of Nicaragua’s poorest regions, has been plunged into uncertainty and despair after the double whammy of hurricanes Eta and Iota, which brought death and destruction to Central America. Cabezas, November 23, 2020 (Photo: Katlyn) Netherlands/CRS/Latin American Press, via Reuters)

The Loss and Damage Fund’s 26-member board is now in place, and although it has been delayed for several weeks, a developing country member has yet to be named, with only an alternate from India filling that seat. listed, but work is expected to begin in April to establish operations.rule.

The board will address a range of contentious debates, including whether some of the support should be given as concessional loans rather than simple grants.

Also, whether funds should go directly to governments and local organizations or through international partners, including development banks and United Nations agencies, and to what extent vulnerable communities should have direct access to funds. is also undecided.

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For example, in the United Nations-backed Green Climate Fund, about three-quarters of funding goes to countries through international organizations, and only a quarter goes directly to developing countries and regions for projects. Only 1.

“This fund is unlike anything we’ve ever set up before,” said Harjeet Singh, who has tracked the fund’s efforts for more than a decade and is now global engagement director for the Fossil Fuel Nonproliferation Initiative. “It will happen,” he said. There has been so far. ”

A “blank slate” fund

Michai Robertson, climate finance negotiator for the Alliance of Small Island States and a research fellow at the UK-based Overseas Development Agency, said the language in the agreement establishing the fund ensures it will be managed in new ways. He said it should be helpful.

For example, in making allocations, the Council, which aims to disburse funds much faster than existing climate change funds, will focus on the needs of countries that have suffered the greatest losses from climate change, and on the needs of poor and highly vulnerable countries. A balance needs to be struck with ensuring a basic minimum level of support for countries. While the overall bill will be lower, some communities have been hit very hard.

Currently, small island developing States receive only 2% of international climate finance, while least developed countries, mainly in Africa, receive about 8-10%, Robertson noted.

“We don’t want one country to monopolize all the scarce resources,” he says.

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The Fund agreement also states that vulnerable countries and local communities should have a greater say in prioritizing the use of the Fund, and should prioritize local risks, particularly where climate risk modeling is lacking. It also states that the knowledge of indigenous peoples and other local communities should be considered as a valuable source of information. In some countries.

The fund will also help address some “non-economic” issues, such as the loss of natural and cultural facilities that local communities depend on, in the form of funds to help rebuild abandoned museums and replant lost mangroves. Loss and damage will also be addressed, Singh said.

Bharadwaj said he hopes the fund will act in a catalytic manner and help countries fill gaps in other funding streams, from climate adaptation and resilience to development and humanitarian assistance. Stated.

“When existing institutions and organizations do things a certain way, it takes a lot of effort to change that. But the loss and damage fund is not loaded with any baggage. There is no blank sheet here. “We have a chance to get back to where we are,” she said.