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UN loss and damage mechanism needs reboot to protect climate victims

Tuesday, 9 April 2019 16:57 GMT

Women walk past flattened crops near John Segredo north of Beira, Mozambique, in the aftermath of Cyclone Idai, March 24, 2019. REUTERS/Mike Hutchings

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The body should consider innovative financing solutions that can repair the soaring costs of climate change and address global inequality

Harjeet Singh is ActionAid’s global lead on climate change. He supports countries across the world on policy advocacy related to climate change.

Harpreet Kaur Paul is a policy and campaign strategist. She is exploring avenues to ensure justice for victims of loss and damage associated with climate change through her PhD research at Warwick Law School.

It has been a long struggle to get the United Nations to help the countries and communities worst impacted by rising global temperatures – those living on the frontlines of climate change who did the least to cause the crisis but are already suffering the most.

In 1991, the South Pacific archipelago of Vanuatu, a member of the Alliance of Small Island States (AOSIS), raised demands at U.N. climate talks to compensate small island nations for the impacts of rising sea levels. This was flatly rejected by rich, early industrialised countries.

The devastating impacts of climate change, collectively known by the term “loss and damage”, were then pushed into oblivion for over two decades. Eventually, after a bitter fight in 2012, an institution named the Warsaw International Mechanism for Loss and Damage (WIM) was established in 2013, drawing its name from the Polish city that hosted that year’s climate summit (COP19).

But so far, the WIM has failed to respond to rising global temperatures, already wreaking havoc around the world, with proposals for concrete financing mechanisms that would enable hard-hit communities to receive rights-based reparations.

Estimates drawn from policy modelling at the University of Cambridge, and undertaken by Climate Analytics, suggest that by 2030 the global annual cost of repairing loss and damage associated with climate change will reach at least $300 billion, increasing to about $1.2 trillion a year by 2060.

This week, the executive committee of the WIM meets for the ninth time. ActionAid is in Bonn, urging the committee to consider innovative financing solutions, alongside public finance, that have the capacity to repair the soaring costs of climate change and address growing global inequality. 

The WIM was established with three key mandates: firstly, to enhance knowledge of the scale and nature of climate impacts; secondly to strengthen dialogue and coordination among stakeholders; and thirdly to enhance action and support, including finance for addressing loss and damage.

While it has made modest progress on the first two, it has failed to make any headway on the issue of finance. Despite the growing needs of developing countries to respond to worsening climate disasters, rich nations have bullied their way to block urgently needed discussion and decisions on finance for addressing loss and damage for five long years.

The developed-country members of the Executive Committee to the WIM have lobbied to push only market-based solutions, such as insurance against loss and damage.

As new research published by ActionAid demonstrates, no market-based solutions, such as catastrophe risk insurance and climate-themed bonds, are compliant with a human rights-centred approach to meeting the cost of repairing the harmful impacts of climate change.

The market solutions reviewed put the financial burden back on developing countries, which are least responsible for causing the climate crisis. These mechanisms also fail against transparency and accountability measures, and do not involve the people most at risk in decision-making to protect their rights.

They are also unable to cover full, rights-based reparation for loss and damage suffered due to sudden events or provide redress for slow-onset events, such as sea level rise and increasing salinity and desertification.


We propose three steps to start repairing the harmful impacts of climate change and to prevent unmanageable crises for future generations. These must also ensure the participation of those most impacted by climate change in deciding how finance is allocated:

- Establish a standalone finance arm under the WIM: There has been a long-standing demand from poorer nations and civil society to have a dedicated workstream looking into the sources of finance that could generate enough funding to address the costs of loss and damage and how it could be made available to developing nations.

A technical paper on this topic, due in June 2019, is to inform the scheduled review of the WIM later this year. December’s climate summit in Santiago must set up this arm without further entangling it in endless U.N. processes. The arm must undertake analysis of finance needs and the growing gap, considering rising temperatures and associated impacts as they overwhelm the capacity of developing countries.

- Climate financing that meets human rights criteria: Rich countries’ unwavering love of market-based solutions such as insurance is an open secret. Our research shows these options fail the human rights test. Therefore, the WIM must adopt ways to generate finance through public and innovative sources that adhere to human rights principles.

Ending state subsidies for fossil fuels and introducing progressive taxes such as a Climate Damages Tax on major oil, gas and coal companies, together with a Financial Transaction Tax, a small levy to raise revenue from the trading of financial instruments, emerge as clear winners. They not only help mobilise billions - and potentially trillions -  for addressing loss and damage but can also fund a ‘just transition’ towards a greener economy.

- An institution that is fit for purpose: It is evident that that the WIM has not been working at its full potential to address the impact of mounting climate disasters. It must upgrade itself to retrieve, receive and allocate funds in a transformative way that redresses the fundamental social, economic, political and material exclusions climate victims face. It must be allocated adequate resources for research and to fulfil its mandate.

As the executive committee meets in Bonn this week, its members must rise above the rich-poor country divide and join hands to avert the climate crisis. They have a historic opportunity to become a landmark institution that respects, protects and promotes human rights as global temperatures heat up.