A long-sought loss and damage fund for vulnerable nations to address climate-related impacts will initially be hosted by the World Bank, despite objections from a number of developing nations and the US.
A blueprint for the fund was agreed during a two-day meeting in Abu Dhabi that ended Sunday night. It must be formally adopted at the United Nations climate change summit COP28, which runs 30 November through 12 December.
The World Bank will administer the fund as interim trustee for the first four years. While wealthy nations are urged to contribute, it is voluntary and not mandated. No target has been set for how much the fund will raise.
Loss and damage include the negative impacts from climate-related events, such as rising sea levels, desertification, increasingly extreme weather, and climate-induced migration. Loss and damage has been one of the most contentious subjects at global talks, with poorer countries, which tend to bear the brunt of climate-change impacts, arguing that larger and richer countries with the largest carbon footprints should be required to contribute accordingly. Sharing the cost of moving to a net-zero economy will help ensure a just transition, leaders from poor nations and climate advocates argue.
Poorer nations had sought language making it clearer that the burden of funding should be borne by wealthy nations but the US insisted that the contributions be voluntary. China and Saudi Arabia are also opposed to paying into the fund, insisting that they are still developing.
Poorer countries were also opposed to the World Bank hosting the fund amid concerns that it is too slow and inefficient to administer the funds and lacks independence.
While the agreed text is fair and the conditions should be met, it does “go against the historical dynamics of the World Bank,” said Ana Mulio Alvarez, a researcher at climate change think tank E3G.
“I am not sure this option will be feasible, although it is compromise,” she said. While developing countries deserve mandatory payments, “no one can force developed countries to pay”.
Alvarez expects the text will be adopted, but the issue of how the fund will be capitalized remains outstanding.
“If there is no money there is no fund. We hope to see some pledges in the upcoming weeks that will determine if the fund can succeed,” she said.
This page was last updated November 15, 2023
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