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The Loss And Damage Fund, What Exactly Does It Mean ?

“Loss and Damage” is a term used in the context of climate change to refer to the negative impacts that are caused by climate change, particularly in vulnerable communities that are disproportionately affected by its effects. It includes both the economic losses and non-economic damages caused by climate change.

African countries have the least contributions to global emissions, yet they are the most vulnerable to climate change and have to spend up to five times more on adapting to the climate crisis than on healthcare. G20 countries, meanwhile, represent around 75 per cent of global greenhouse emissions.



The Loss and Damage Fund, on the other hand, refers to a proposed mechanism to provide financial assistance to countries and communities that suffer loss and damage as a result of climate change. The fund would be used to support activities such as disaster risk reduction, adaptation, and compensation for losses and damages that cannot be addressed through other mechanisms.


COP27 reached a breakthrough agreement on new Loss and Damage fund for vulnerable countries. “This outcome moves us forward,” said Simon Stiell, UN Climate Change Executive Secretary. “We have determined a way forward on a decades-long conversation on funding for loss and damage — deliberating over how we address the impacts on communities whose lives and livelihoods have been ruined by the very worst impacts of climate change.”


Creating a specific fund for loss and damage marked an important point of progress, with the issue added to the official agenda and adopted for the first time at COP27. But is it worth mentioning that this was after culmination of decades of pressure from Alliance of Small Island States (AOSIS) and the climate-vulnerable developing countries. It is important that a Loss and Damage Fund tackles the gaps that current climate finance institutions such as the Green Climate Fund do not fill.


Governments took the ground-breaking decision to establish new funding arrangements, as well as a dedicated fund, to assist developing countries in responding to loss and damage. Governments also agreed to establish a ‘transitional committee’ to make recommendations on how to operationalize both the new funding arrangements and the fund at COP28 next year. The first meeting of the transitional committee is expected to take place before the end of March 2023.


Loss and Damage Fund Transitional Committee

The Transitional Committee will provide recommendations for the set up and operations of the fund. The Committee will also recommend which countries should receive funding and who should be paying into the fund. Read more about the TC here


Transitional Committee Meeting

The first Transitional Committee Meeting was held at Luxor, Egypt from 27–29 March 2023. The Committee is composed of 24 members from all geographical regions, and has selected Richard Sherman (South Africa) and Outi Honkatukia (Finland) as its Co-Chairs. Please see the web links below to visit the days

See all documents related here: https://unfccc.int/event/T


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