Loss And Damage Fund:
A crucial conversation has recently emerged around whether subnational entities can seek compensation through the United Nations Framework Convention on Climate Change (UNFCCC)’s Loss and Damage Fund (LDF).
- Loss and Damage Fund (LDF) was established at the 2022 UNFCCC Conference (COP27) in Egypt.
- To provide financial support to regions suffering both economic and non-economic losses caused by climate change.
- Economic loss and damage are negative impacts that one can assign a monetary value to.
- These are things such as the costs of rebuilding infrastructure that has been damaged due to a flood, or the loss of revenue from crops that were destroyed due to drought.
- Non-economic loss and damage are negative impacts where it is difficult or infeasible to assign a monetary value.
- These are things such as trauma from experiencing a tropical cyclone, loss of community due to displacement of people, or loss of biodiversity,”
- It was designed to provide crucial support to vulnerable nations facing the brunt of climate-related challenges.
- The LDF is overseen by a Governing Board that determines how the fund’s resources are disbursed, with the World Bank serving as the interim trustee tasked with hosting the fund for four years.
- Financial support will be provided in the form of grants and concessional financing that can be utilized by any eligible country.
- The fund encourages voluntary contributions from developed countries but invites developing countries to contribute to it too.
