By Beverly Musili
Beverly is the current Executive Director of the Kilimani Project Foundation in Nairobi, Kenya. She is a lawyer by profession and a widely published researcher in public policy, climate governance, and human rights.
The paper reviews complex discussions on loss and damage (L&D) and conducts an in-depth evaluation of the corresponding scope and award criteria. Specific attention is paid to the origins of L&D negotiations, ranging from the 1991 proposal of an insurance mechanism for climate change impacts to the historic establishment of the Loss and Damage Fund in 2022.
Assuming loss and damage to be two different types of harm, this paper examines their scope that covers both economic and non-economic losses. Overall, while the assessment of the economic costs of L&D—which is traditionally calculated as the sum of adaptation costs and macroeconomic damage—has been a relatively straightforward task, determining non-economic costs has been more contentious.
The factors that contribute to difficulties in evaluating and assessing non-economic losses include the global politicization of the debate, divergence of interests, as well as legal challenges in attributing liability.
This paper established that, in many developing nations, the amount of non-economic losses significantly surpasses that of economic losses, making the former a cornerstone of climate change policy. A particularly remarkable gap here is the lack of a definition within the United Nations Framework Convention on Climate Change (UNFCCC), which has led to disparate interpretations and perspectives on L&D compensation. Along with the importance of the establishment of a unified definition of L&D, another important challenge that needs be addressed is the absence of clarity on compensation.
Furthermore, this article also outlines the gendered impacts of L&D, highlighting that, as compared to their male counterparts, women are more adversely impacted by climate change. Accordingly, in order to promote gender-responsive interventions, stakeholders should gather gender-disaggregated data and incorporate gender-sensitive approaches into L&D initiatives.
Another key concern identified in this paper is that the Loss and Damage Fund may not be sufficient to cover all losses and damages that follow a climate event. This emphasizes the need for a balanced and transparent disbursement mechanism that would ensure a timely and efficient delivery of support to affected communities. However, although the fund may not be sufficient to cover all damages and losses following a climate shock, the amount of funding should be adequate to assist vulnerable countries to respond and rebuild accordingly. Based on this evidence, this paper recommends establishing standardized evaluation guidelines that would consider both economic and non-economic losses to effectively promote consistency across different regions and contexts. It is imperative to establish a transparent and accountable disbursement mechanism, along with unambiguous and robust compensation criteria. Such criteria should specify the percentage of losses and damages covered by the fund in the event that not all losses and damages following a climate event are covered. They should also transparently establish how to quantify non-economic losses and damages in a manner that would promote equity and a just transition.
Finally, a key recommendation formulated in this paper is the need for a nuanced approach in evaluating L&D by considering sector-specific impacts. An additional insight is the urgent need for specifically African states to critically evaluate challenges in the current financing mechanisms and global financial architecture. Particular attention should be paid to ensuring that L&D financing is equitable and fair and does not increase the debt burden or impose unjust or unfavorable conditions on developing countries that are already bearing the brunt of the climate crisis.