Context

Loss and damage (L&D) has been on the agenda of the international climate negotiations for years, championed in particular by the poorest and most climate-vulnerable developing countries. Despite this, a combination of factors have conspired to hamper constructive discussions, not least the highly contentious political issue of potential liability and compensation for climate impacts. Adoption of the Paris Agreement necessitated a delicate compromise on L&D but failed to address underlying concerns.

In more recent years, particularly following the establishment of the Warsaw International Mechanism on L&D at COP19, the amount of attention and focus on the issue has markedly increased. No doubt the more frequent and increasingly severe consequences of climate change around the globe have contributed to that dynamic. The scientific consensus on climate impact has as well – including in the Intergovernmental Panel on Climate Change’s Working Group II contribution to the Sixth Assessment Report, which reflects that efforts to avert, minimize, and address L&D are both necessary and urgent. By 2030 there will be 1.5 a day globally that can be blamed on human activity, according to a report by the UN Office for Disaster Risk Reduction. Countries in the Asia Pacific region lose an average of 1.3% of GDP to disasters every year.

It is clear that as climate impacts grow, the focus on L&D will also increase – and understandably so.

Another contributing factor driving the increasing focus on L&D is that more space has opened up in the international negotiations discuss the issue, now that both the Paris Agreement and its implementing guidance have been adopted.

In that context, success at COP27 will likely necessitate tangible progress on L&D. While COP27 is set to agree on the institutional arrangements for operationalizing the Santiago Network (SN), it is hard to imagine that this alone will be sufficient.

A key challenge to having a constructive dialogue on L&D will be balancing the underlying complexities with the pressure for urgent action in the face of climate impacts. Complexities arise from:

• the politically charged nature of the issue
• technicalities related to aspects such as the overall institutional ecosystem charged with addressing elements of L&D
• problems of definition and interpretation emanating from extensive use of constructive ambiguity in finding language to reach consensus in the past.

Complexities are compounded by linkages to adaptation, mitigation, and climate resilient development.

At the same time these complexities must not be an excuse for inaction. Countries and people, including the poorest and most vulnerable who are the least responsible for causing the problems they face, are already having to deal with losses.

Some of the complexities and confrontational dynamics in relation to discussions on L&D could perhaps be minimized by contextualizing issues by whether they arise ‘before’ and ‘after’ natural disasters occur. This could facilitate moving towards a shared understanding of key issues and challenges – an important starting point and foundation towards finding solutions. However, this approach could also be an oversimplification.

The Santiago Network

COP27 must deliver on the institutional arrangements needed to fully operationalize the SN, which was established at COP25 to catalyze the technical assistance of relevant organizations, bodies, networks, and experts to implement relevant approaches to avert, minimize, and address L&D for developing countries that are particularly vulnerable to climate change. Parties must set the SN up in a way that is useful to Parties, and channels technical assistance to those that really need it. It is important to get this right, including learning lessons from other relevant UNFCCC bodies (such as the Climate Technology Centre and Network (CTCN)).

There is a view held by some that the SN includes the agencies necessary to address L&D. Operationalizing the SN will be a key step towards testing that, identifying problems and gaps, and addressing them.

In terms of linking to other regimes beyond the UNFCCC, a key challenge is that many agencies were not originally set up to work on issues related to climate change. UNFCCC Parties need to have an informed conversation about what is working and what is not. Greater leadership is also needed by the UN and its various agencies, at least in part to encourage better coherence between various organizations responsible for different aspects of L&D, so as to ensure that issues don’t fall through the cracks.

At the same time, there is also a need for a much stronger focus on bottom-up mechanisms, so that issues are addressed at the full range of international, regional, national, and local levels, including the fostering of partnerships to meet challenges posed by L&D.

To ensure a successful outcome, Parties would do well to avoid operationalizing the SN through traditional negotiations, but rather focus on identifying the best options, including through submissions by Parties and observers. The Subsidiary Body (SB) meetings now underway will facilitate interactive discussions so questions can be posed to proponents of key ideas. These discussions should aim to move towards elucidating a common set of expectations that can be both translated into terms of reference and be the basis for selecting the agencies best able to take the work forward. To do so, understanding what gaps need to be filled in the L&D ecosystem is important.

While there is a divergence of views in relation to the SN, a review of submissions shows there is also some emerging common ground:

• Several submissions have suggested that the SN could be modeled on the CTCN, noting that the governance questions and challenges it faces are similar to those the CTCN faced. Important lessons could be drawn, including in relation to resourcing issues.
• There is also common ground in submissions on having an open competition in relation to organizational issues. Parties need to be aware that a competition process could affect timelines – but it is as important to get things right as responding to the urgency.

A UNFCCC Secretariat paper that pulls together and describes the known and emerging ideas on operationalizing the SN could be useful.

On the way forward, Parties should take stock of progress after the June SBs and, if necessary, an additional workshop before COP27 should be convened.

The Glasgow Dialogue

The “Glasgow Dialogue” (GD), established at COP26, will discuss arrangements for the funding of activities to avert, minimize, and address L&D annually at the meetings of the Subsidiary Bodies. Developing country Parties who have sought a dedicated fund for L&D will no doubt use the GD as a forum to pursue that aim. To be helpful and constructive, the GD will need to be structured to ensure that it is, in fact, a dialogue, rather than a repetition of well-known negotiating group positions and redlines expressed in other settings. Care must be taken in the design and preparation stage of the GD to facilitate real dialogue – not just a process – that is more than a talking shop.

In that context it will also be important to remain focused on the need to deliver on the GD’s mandate and avoid an endless loop of information gathering. While breaking down problems into components could be helpful in facilitating progress, the GD must not get stuck in only defining problems either.

The GD must generate real outcomes that are clear and avoid ambiguities that allow for different competing interpretations. Lessons need to be learned from past experiences, including in relation to the Warsaw International Mechanism.

At the same time, outcomes should not be prejudged at the outset. In that context, starting discussions on the basis of a set of specific options or proposed solutions would not be helpful.

There is a potential tension – which will need to be overcome – between taking the time to set up a dialogue that is inclusive, facilitative and effective, and the urgency on dealing with the L&D.

To facilitate a constructive dynamic, it would perhaps be helpful to:

• Avoid prejudging the outcome
• Initiate discussions by first examining and recognizing the complexity of underlying issues, before putting specific options on the table
• Start by examining issues related to minimizing and averting L&D before diving into approaches to addressing L&D
• Conduct the dialogue in a manner that is expert and agency driven, rather than negotiator-led
• Ground the dialogue in the latest science
• Commission an institutional gap analysis
• Be informed by the SN
• Structure discussions:
  • by topic and/or conceptually (e.g., possibly around ‘before’ and ‘after’ L&D occurs, recognizing some issues could fall into both camps, and ‘during’)
  • to examine gaps and needed actions, including related funding
  • to try to break down silos between institutional responsibilities (e.g., disaster risk reduction, human rights, and L&D), including in relation to funding
  • in a way that is inclusive, open and allows for brainstorming and creativity
  • to share and build on experience
  • around slow onset events as well as extreme events
  • to highlight linkages to other issues, including adaptation, mitigation, the global stocktake, and sustainable development
  • to consider initiatives by non-Parties and Parties outside of the multilateral framework (e.g., risk insurance)
  • to avoid binary ‘yes/no’ discussions.

Planned sessions of the GD could be organized as follows:

• L&D projections under different scenarios based on the work of the IPCC, using IPCC definitions as a starting point and informed by the forthcoming IPCC SBs presentations
• L&D activities
• Examination of finance needs:
  • current financing for L&D
  • financial needs for averting and minimizing L&D
  • financial needs for addressing L&D
• Consideration of modalities and arrangements for responding to identified needs, including finance.

C2ES papers

In its most recent paper on L&D, C2ES provides background and poses options and questions around four key L&D issues:

• The development of the institutional arrangements of the Santiago Network
• The Glasgow Dialogue
• The institutional ecosystem for Loss and Damage
• Loss and Damage in the global stocktake.

A second paper, to be published shortly, will provide an overview of the institutional structure and processes for L&D under the UNFCCC and Paris Agreement and broadly assesses relevant institutions and their frameworks outside the UNFCCC that address elements of L&D. This report contextualizes an assessment of the strengths, gaps, and weaknesses of the UNFCCC’s and Paris Agreement’s approach to L&D and concludes by making recommendations to strengthen the cooperation, coordination, and coherence between the different institutions and how institutions can better streamline climate risk management.