Loss and Damage Fund

Why in news?

• The countries at the COP27 of UNFCCC in Sharm el-Sheikh, Egypt have decided to establish a ‘Loss and Damages’ fund.

About Loss and Damage:

• There is no official definition of ‘Loss and damage‘. It is a general term used in UN climate negotiations to refer to the consequences of climate change that go beyond what people can adapt to; OR when adaptation is possible but a community doesn’t have the resources to access or utilise them.
• The developing countries are more vulnerable to climate change events, both due to frequency of events as well as lack of resources to adapt.
• According to a study, 6 of the world’s 10 most affected countries (between 1996-2015) by extreme weather events were in Asia.
• Under the Loss and Damage framework, developing countries demand compensation from developed countries for losses/damages suffered due to climate change events.

About Loss and Damage Fund:

• Loss and damage fund (LDF) was first floated in 1991.
• Vanuatu, a low-lying island nation in the Pacific, suggested the creation of an insurance scheme, under the auspices of the UN, to help pay for the consequences of rising sea levels.
  • For thirty years such demands were left ignored by the UN. But recently Scotland promised £2m ($2.4m) to the cause.
• At the COP 27, countries decided to establish the Loss and Damage Fund.
• The fund will be aimed at helping developing countries that are “particularly vulnerable” to the effects of climate change.
• The fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions.

PRACTICE QUESTION:

With reference to ‘Loss and Damage Fund’ under UNFCCC, consider the following statements:

1. It aims to compensate economically vulnerable countries for the damages caused by climate-linked disasters.

2. The fund includes contributions from both public and private sources.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer