Photo: Recent floods in Pakistan covered a third of the country, with devastating consequences for families and the economy. Credit: UNDP Pakistan floods - Photo: 2022

Finding The Right Money for Vulnerable Countries

The Importance of Loss and Damage Fund (LDF)

Viewpoint by Inge Kaul

The author is a fellow at the Hertie School of Governance, Berlin, Germany. Comments are welcome and can be addressed to

BERLIN (IDN) — For decades, there have been non-conclusive deliberations regarding how the international community can support poor and vulnerable countries in their efforts to cope with and recover from the havoc wreaked on their territory by the ill-effects of global warming, such as severe droughts, floods, storms, or rising sea levels.

At COP27, this issue figured for the first time as a separate item on the agenda, and, as one of their very last-minute decisions, delegations agreed to establish a dedicated loss and damage fund (LDF).

However, its operationalization, including its resourcing, was left open. A “transitional committee” is to be established by the end of March 2023 to examine possible funding options and report to COP28, which could then, eventually, decide on the LDF’s operationalization in about a year’s time.

Remembering the many press photos showing the despair written into the faces of people whose houses and fields were destroyed by floods or the blank stares of those sitting next to the cadavers of their cattle killed by severe drought conditions, I feel that, in the present case, business as usual—namely, taking it easy in announcing and delivering on new, additional funding promises—would be extremely immoral and unethical.

Therefore, we should not lose any time but start right away to discuss what key characteristics an LDF assistance package ought to possess to offer qualifying vulnerable countries not only a “band-aid” but meaningful support to their rebuilding efforts.

Money fit for the purpose

Disaster may strike many countries, and any affected country, rich or poor, vulnerable or not, may need or at least benefit from immediate and fast­disbursing, short-term humanitarian assistance in cash or kind. However, despite the rising number of natural disasters, we are still rather ill-prepared to meet the corresponding increase in immediate relief needs. []

In my view, short-term humanitarian assistance should, in all cases, come out of a general—preferable standing and replenishable global crisis—response fund and be clearly distinguished from the longer-term humanitarian assistance and other types of external support that “climate victims” need to rebuild their communities and economies.

Turning then to the special case of “climate victims”, the vulnerability of a country typically is a multi-dimensional phenomenon. Structural factors may come into play, such as …, and non-structural factors, including, among others, also play important roles. Thus, by implication, meaningful loss-and-damage assistance is likely to be required for several years, maybe, even a decade or more, given that affected communities and economies need to be rebuilt.

This should not come as a surprise because even in many developed countries, the rebuilding phase has often been lengthy. Moreover, in the case of small island countries, it could even be that parts of the population need to be resettled to start their life anew somewhere else.

In short, the financial support offered by the LDF should ideally be designed for the longer term and comprise adequate amounts of relatively predictable and stable public funds. Initially, the latter may constitute the most important source of funding. As the rebuilding process advances, public funds could also play an important role in helping to mobilize other resource inflows, notably private investments, adaptation finance and other types of climate finance. After all, the aim should be not just to rebuild – but “to rebuild better”.

The most appropriate source to tap: assessed UN climate-security contributions

There exists by now broad-based agreement that our security today depends on more than the security of our countries’ external borders and/or the control of within-country conflicts and violence. As US President Joe Biden noted in his statement to COP27, military security today is only one dimension of our security, next to climate and food security, and, as COVID-19 taught us, global health security.

The security threats we face are global in their reach; they tie us together in a web of manifold interdependencies. They require all hands on deck, or no one will be secure. The United Nations Secretary-General António Guterres is therefore correct in pushing for a “Climate Solidarity Pact.” []

Thus, it is timely to ask: Why do we have within the UN an established system of assessed contributions to support efforts aimed at restoring, keeping, or building only military security? Why not also assessed—the solidarity-based approach to climate security?

Among the reasons that speak for this financing option are especially the following. First, such contributions could be introduced for, say, an initial period of 20 years, subject to regular monitoring of their functioning and impact. They would thus provide the type of long-term public finance that the L&DF would need.

Second, an agreement on a UN funding scale for climate security would help end the present continuous tussle among countries over who should contribute how much. Clearly, besides income (capacity to pay), one would, in the present case, certainly also consider past and current per-capita emission levels.

Clearly, the existence of such a scale would make loss-and-damage financing more predictable and transparent for all the parties concerned.

Many aspects of the proposed funding instrument still need further elaboration. However, let’s start at the beginning and encourage a worldwide discussion on the pros and cons of the following issues. Should we: (1) consider climate security, notably that of vulnerable countries, as a global security issue, and (2) grant climate security the same financing privilege that military security enjoys, namely, to benefit from assessed contributions from the UN membership?

It is true that some aspects of the assessed contributions for peace need improvement. However, this is no reason not to have assessed contributions for climate security. Let us decide to make both work well! [IDN-InDepthNews — 27 November 2022]

Photo: Recent floods in Pakistan covered a third of the country, with devastating consequences for families and the economy. Credit: UNDP Pakistan floods

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