Mureni Alakija, 68, a Nigerian businessman displaced by an ocean surge, stands on the shore of the Alpha beach, amidst the rubble, where his home was previously located, in Lagos, Nigeria June 21, 2022. Picture: Reuters
By Andrew Gilder and Olivia Rumble
African countries are already encountering significant losses and incurring costs as a result of unavoidable climate impacts.
It is anticipated that these ‘residual’ costs will be twice the amount required for adaptation between 2030 and 2050. In the developing world, annual loss and damage finance needs will reach $200–580 billion by 2030. Although the term has been variously defined, ‘loss and damage’ is often referred to as the impacts of climate change that cannot (or have not) been avoided through mitigation or adaptation.
Some have also framed it as ‘climate reparations’. It can take the form of sudden onset events such as hurricanes or floods, or slow onset events such as sea-level rise, which impose both economic costs (such as loss of income) and non-economic losses (such as loss of life, cultural heritage and ecosystem services).
Conference on the Environment (AMCEN).
Since 2012, the African Group of Negotiators (AGN) has repeatedly sought to affirm that compensation loss and damage is necessary.
The AGN has presented to the UNFCCC a list of actions requiring finance for loss and damage and called for technical support for African countries to be better equipped to face the challenges of loss and damage. It also has called on the UNFCCC’s Standing Committee on Finance (SCF) to provide more grant-based funding for loss and damage under the Green Climate Fund. During the June 2021 inter-sessional of the UNFCCC Gabon, on behalf of the AGN, it again underscored that loss and damage was a priority issue for the African continent in the lead-up to COP26. Similarly, in 2018, Gambia, on behalf of least developed countries (LDCs), affirmed the need to promote improved assessments of loss and damage at national/regional and global levels and requested compensation for residual or unavoidable loss and damage.
The push from African countries for more progress on loss and damage comes in response to a failure of the existing mechanisms under the Paris Agreement and the UNFCCC.
These include a failure to deliver action and provide relief, the political hurdles encountered in seeking new sources of finance and concerns regarding historical liability, as well as the slippery nature of the concept of loss and damage. We discuss these issues in turn, and their implications for Africa, concluding with a series of recommendations on how African stakeholders and governments may want to prioritise the loss and damage agenda ahead of COP27.
Perceived ineffectiveness of existing institutions
At COP19 in Warsaw in 2013, negotiators laboured to agree to the Warsaw International Mechanism for Loss and Damage (WIM). The main function of WIM is ‘strengthening dialogue’ and enhancing ‘action and support’. To date, its focus has been on promoting understanding and strengthening co-ordination; it has been criticised for failing to take meaningful action to enhance action and support for existing losses and damages.
In 2015, the Paris Agreement built on WIM by recognising that it operated to enhance ‘understanding, action and support’, with the caveat that the recognition of loss and damage did not impute any liability or provide a basis for compensation.
More recently, the Santiago Network was conceptualised at COP25 in Madrid, with the purpose of supporting access to and ensuring the availability of technical assistance to developing countries. Its longer-term vision is to support access to planning instruments and solutions, to facilitate knowledge exchange and partnership formation, and to convene organisations and experts to leverage additional resources and eliminate duplicated efforts.
At this point in time, the network is simply a website with links to bodies such as development banks that can support loss and damage. The key agenda item at COP26 was to operationalise the Santiago Network, as developing countries felt it had the potential to address the long-overlooked ‘action and support’ element of WIM, particularly when it came to accessing finance.
After heated negotiations, it was agreed that the network would identify and connect interested countries with technical assistance, and that further operationalisation would happen at subsequent meetings. It was agreed that funding would be put forward for the network to provide technical assistance, with some funding received from Germany to do so. Although these developments were welcomed by the Global South, the perennial issue of finance for actual sustained losses and damages remained unresolved.
Activities that seek to address loss and damage remain largely unfunded, with the exception of some funds for disaster risk reduction and humanitarian aid. There are multiple reasons for this. Historically, loss and damage have been separated from discussions on climate finance. Finance for loss and damage is not expressly mentioned in the commitments for developed countries to collectively mobilise $100 billion per year to support climate action in developing countries, and typically it is treated as a subset of adaptation.
The focus to date has been on identifying possible risk transfer and risk retention instruments to provide the necessary financial support, in the form of insurance or catastrophe bonds. (A catastrophe bond is a security or debt instrument that pays the issuer when a predefined disaster risk occurs, such as a tornado.)
One of the main issues that has hindered progress on loss and damage is a concern by developed countries that providing any form of finance will amount to a concession of liability for causing climate change. In its original conception, loss and damage was framed as a form of compensation in the call by the Alliance of Small Island States (AOSIS) in 1991. In the eyes of many developing countries and small island states since then, it has retained this moral character.
Developed countries have consistently resisted these claims, partially out of a concern that conceding to financial demands for loss and damage amounts to a concession that they are liable for causing climate change and associated damages.
For this reason, the accompanying text on the dedicated loss and damage provision in Article 8 of the Paris Agreement expressly eschews the possibility that it can be used as a basis for any liability for climate change and associated compensation in future. The legality of this position remains in doubt, and it has been suggested that all it does is outsource the question of liability and compensation to international, regional and domestic courts.
And this is exactly what is taking place, with a proliferation of climate litigation worldwide.
At present, more than 1 841 climate-related court challenges have been filed across the globe, a handful of which have been brought by vulnerable countries, NGOs and affected communities, exploring legal avenues to obtain recourse for loss and damage.
The Intergovernmental Panel on Climate Change (IPCC) has predicted that this form of litigation will increase as ‘improved understanding of impacts and risks as climate science evolves’. At present, there are no dedicated cases brought by African countries against the Global North or the ‘carbon majors’ seeking compensation for loss and damage, but this may well change. Recently, Vanuatu has announced plans to seek an advisory opinion from the International Court of Justice on the right of both present and future generations to be protected from the impacts of climate change.
Moreover, at COP26, the government of Antigua and Barbuda, and Tuvalu announced the establishment of a joint commission that would, among other things, request advisory opinions from the International Tribunal for the Law of the Sea (ITLOS) on the legal responsibility of states for carbon emissions, marine pollution and rising sea levels.
In the end, strong opposition from developed countries has seen the issue of a Loss and Damage Finance Facility largely delayed until COP27 this year, despite some progress being achieved on the provision of technical support. Although successive submissions have been made over the past decade by the AGN to the UNFCCC on the topic of loss and damage, the nature of the issues to be addressed has evolved, particularly in relation to the level of detail and breadth of the matter. Moreover, the influence of other stakeholders such as civil society, local government and the private sector has heightened in recent years.
Although there are many elements to the discussion, there is a need for an updated, transparent and inclusive African position on some of the defining and most contentious elements of loss and damage, in particular:
- the ideal form, function and mandate of a potential Finance Facility or mechanism for loss and damage, including rules on how developing countries can access it; the role of national systems to ensure in-country ownership and modalities to ensure that the funds can be equitably accessed; and fast disbursement mechanisms to facilitate post-disaster access to support;
- the quantum of a loss and damage financial target, the nature of the finance and its addition to other forms of finance, as well as the need for a resource mobilisation strategy; the specific implications, limitations and possibilities of the so-called ‘innovative instruments’ to fund loss and damage in African countries, including the payment of insurance premiums, catastrophe bonds or special levies/taxes and the extent to which these are feasible and fit-for-purpose for African countries;
- the importance of having loss and damage as a stand-alone agenda item during COP27. This ties in with the call by African think tanks and the civil society organisations of developing countries to establish loss and damage as a permanent stand-alone agenda item under the UNFCCC’s subsidiary bodies;
- ∙the review and update of African NDCs, to the extent practically and financially feasible, to include needs assessments for countries facing losses and damages, treated separately from adaptation, including how these could be funded and national, regional and local mechanisms for funding distribution; and
- the inclusion of an assessment on the progress of loss and damage in the Global Stock Take in 2023.
African governments and stakeholders should also explore the use of climate litigation against carbon majors and developed countries as a means to obtain recourse for losses and damages sustained as a result of climate change, including potential regional collaborations similar to those between Tuvalu, Antigua and Barbados.
Given the momentum to date, COP27 presents a watershed moment to transcend the political challenges relating to loss and damage and to make meaningful progress.
Building on this impetus, it is crucial for African countries, and the various stakeholders within them, to both articulate and clarify their positions on loss and damage, and to advance these robustly at negotiations and in the media.
Gilder is the Director of Climate Legal – an environmental and climate change legal advisory consultancy at the South African Institute of International Affairs (SAIIA).
Rumble is also at Climate Legal, specialising in climate change law and policy, climate finance and development, and carbon tax at the same organisation.
This article is an extract of a report published on SAIIA.
