The United Nations COP27 climate change summit in Egypt have adopted a final agreement that establishes ‘loss and damage’ fund to help poor nations cope with the extreme weather events caused by global warming.
Key points
- The adoption of the fund is a big victory for vulnerable countries which have long called for financial compensation because they are often the victims of climate change – such as worsened floods, droughts, heat waves, famines and storms – despite having contributed little to the pollution that is heating up the planet.
- The fund would be largely aimed at the most vulnerable nations, though there would be room for middle-income countries that are severely battered by climate disasters to get aid.
- The fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions.
- While major emerging economies such as China would not initially be required to contribute, that option remains on the table and will be negotiated over the coming years. This is a key demand by the European Union and the United States, who argue that China and other large polluters have the financial clout and responsibility to pay their share.
- Parties also agreed on the institutional arrangements to operationalize the Santiago Network for Loss and Damage, to catalyze technical assistance to developing countries that are particularly vulnerable to the adverse effects of climate change.
- The “loss and damage” refers to costs the industrialized and developed countries, who are majorly responsible for industrial emissions that pollute the environment, should pay to poorer nations that have made negligible contribution to pollution but are more vulnerable to extreme climate events — for example, the devastating floods in Pakistan.
