Can Loss and Damage Fund Strike a Responsive Chord in Global Climate Finance?

Abstract

The June 2023 column “COP27 Loss and Damage Fund—financial band aid or effective mechanism?” outlined the definition, evolution and potential establishment of a Loss and Damage Fund (LDF) to financially aid least developing countries (LDCs) and small island developing states (SIDS) and others countries impacted by sea level rise from climate change, while the January 2024 column “Loss and Damage Fund—operationalized at COP28 but funding and allocation process unresolved” outlined the initial funding and allocation process challenges. Since COP28 both the LDF Board and World Bank have been addressing elements required to operationalize the Fund. A key challenge is that only $661 million has been pledged to the Fund, while up to $400 billion is needed annually to address economic and non-economic loss and damage. While it is recognized that the initial pledges are “financial resources for commencing operationalization of the Fund,” they are “by no means enough for an initial resource mobilization effort.”