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Loss and Damages Fund

Loss and Damage Fund COP27

  • It will be a dedicated fund to compensate the most vulnerable developing countries that are already bearing the brunt of climate change-linked natural disasters.
  • It will provide support to developing countries in efforts to avert, minimise and address loss and damage associated with the adverse effects of climate change in the light of continued global warming.
  • Corpus: The expected monetary compensation from the L&D fund is estimated to be nearly $500 billion and rising by $200 billion annually.
  • The proposal for a loss and damage finance facility was put forward by the G77 and China (India is part of this group), least-developed countries and small island states.
  • Establishing a transitional committee: It will decide the modalities, sources etc which will be considered at COP28 in November–December 2023.
    • It will have 23 members, comprising 10 members from developed country Parties and 13 members from developing country Parties.
  • The Committee will consider:
    • Establishing institutional arrangements, modalities, structure, governance and terms of reference of the fund
    • Defining the elements of the new funding arrangements
    • Identifying and expanding sources of funding
    • Ensuring coordination and complementarily with existing funding arrangements.
  • Setting up Santiago Network: It will provide technical assistance in averting, minimising and addressing loss and damage.

Read about: PESA Act

About 27thedition of the UN-Conference of Parties (UN-COP)

  • The participants include representatives of the 195 member-countries of the UN-COP, business persons, scientists, and members of indigenous and local communities and activists.
Loss-and-Damages-Fund-UPSC
Loss-and-Damages-Fund-UPSC

Loss and Damage Fund Details

  • L&D refers to impacts of climate change that cannot be avoided either by mitigation (cutting greenhouse gas emissions) or adaptation (modifying practices to buffer against climate change impacts).
  • They also include not only economic damage to property but also loss of livelihoods, and the destruction of biodiversity and sites that have cultural importance.
  • This broadens the scope for affected nations to claim compensation.

 

Concerns with Loss and Damage Fund

  • COP27 only commits to a fund being created and leaves discussions for how it is to be set up and, most importantly, who will pay how much to it.
  • Developed nations, particularly the US, had opposed this new fund over fears that it would hold them legally liable for massive damages caused by climate change.

 

Loss and Damage Fund Significance in India

  • It’s a positive outcome of the climate change conference as this fund would be a lifeline for low-income families.
  • It acknowledges the impact of climate change particularly warming of 1.1 degree C till now on people’s lives and livelihoods.
  • It states that keeping the global average temperature rise to below 1.5 degree C will be essential to limiting future loss and damage.
  • It is seen as a progressive step towards climate justice, recognising that the most vulnerable, facing the irreversible effects of climate change.
  • It has sent a warning to polluters that they can no longer go scot-free with their climate destruction.

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