Loss and Damage Fund

02 Dec 2023 Loss and Damage Fund

This article covers “Daily Current Affairs” and the topic details “ Loss and Damage Fund”. This topic has relevance in the Environment section of the UPSC CSE exam.

GS 3: Environment

Why in the news?

• The COP28 climate conference in Dubai marked the official launch of a loss and damage fund aimed at assisting vulnerable nations in managing the effects of climate change.

Background:

• The announcement of the loss and damage fund initially took place at COP27 in Sharm el-Sheikh, Egypt, the preceding year.
• The fund’s initial financial support is anticipated to total $475 million.
  • The UAE, serving as the host, committed $100 million to the fund.
  • The European Union demonstrated significant support with a pledge of $275 million.
  • The United States contributed $17.5 million to the fund.
  • Japan, in a show of commitment, allocated $10 million to support the initiative.

Loss and Damage Fund Overview:

• Global Financial Package: The Loss and Damage Fund is a global financial package designed to support the rescue and rehabilitation of countries experiencing the cascading impacts of climate change.
• Responsibility and Compensation: Rich nations, deemed responsible for the climate crisis due to their industrial growth, are obligated to pay compensation to poorer nations facing the adverse effects.
• Impact on Vulnerable Countries: Despite having a low carbon footprint, some nations are disproportionately affected by rising sea levels, floods, droughts, cyclones, impacting lives, livelihoods, biodiversity, cultural traditions, and identities.

Complexity of Loss and Damage:

• Lack of UNFCCC Agreement: There is no universally agreed-upon definition of loss and damage within the United Nations Framework Convention on Climate Change (UNFCCC).
• Categorization: Loss and damage are often classified as economic or non-economic. Economic losses involve quantifiable monetary impacts, while non-economic losses are challenging to assign a monetary value to.

Industrialization’s Role in Climate Change:

• Historical Responsibility: The Industrial Era since 1850 has disrupted Earth’s natural mechanisms for greenhouse gas production and absorption.
• Emission Responsibility: The US, the UK, and the EU contribute to 50% of all emissions, while India’s historical emissions account for only 3%. China, the largest emitter in recent years, is responsible for 30% of global emissions annually.

Extent of Climate Crisis-Induced Loss and Damage:

• Financial Impact: Over the past two decades, 55 vulnerable countries have collectively suffered $525 billion in losses due to climate crisis-induced events.
• Future Projections: Estimated losses are expected to reach $580 billion annually by 2030, with projections indicating a continued increase as global warming persists.

COP28 Summit’s Climate Disaster Fund:

• Positive Development: The COP28 climate conference in Dubai saw a positive start with member countries agreeing to establish a climate disaster fund.
• Fund Source: Rich nations like the US, the UK, and the EU, along with some developing countries, contribute to the fund.
• Interim Host: The World Bank will serve as the interim host for four years, although some developing nations initially expressed concerns about potential financial control by richer nations.
• Fund Scale and Operation: The scale and replenishment cycle remain unclear, but the urgency necessitates a fund in the trillions. Key aspects, such as contributors and fund size, are yet to be determined.
• Voluntary Payments: Contributions to the fund are voluntary, and all developing countries are eligible to directly access the resources.

Source: Loss and damage fund approved at COP28 summit: All you need to know | Explained News – The Indian Express

Download Yojna daily current affairs eng med 2nd Dec 2023

Q.1 With reference to the Loss and Damage Fund established during the COP28 climate conference, consider the following statements:

1. The World Bank will serve as the interim host for the Loss and Damage Fund.
2. Contributions to the fund are mandatory for all member countries.

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: A

Q.2 Discuss the critical role of financial mechanisms in addressing the challenges posed by climate change. Examine the necessity for a robust financial framework to support climate adaptation and mitigation efforts globally, considering the recent developments at the COP28 conference in Dubai. 

rishabh