Thorny Issue of Who Will Pay for Climate Damage Simmers at U.N. Talks

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Smoke is released into the sky at a refinery in Wilmington, California March 24, 2012. Picture taken March 24, 2012. REUTERS/Bret Hartman/File Photo

By Megan Rowling

BARCELONA, Nov 11 – Bangladesh is set to make a splash at the U.N. climate talks in Morocco when experts and officials present a proposal for a national body to deal with the losses and damage the low-lying South Asian nation expects to suffer from climate change.

The body, if established, would be a first among developing countries vulnerable to worsening droughts, floods, storms and rising seas – all threats to development in Bangladesh, where about a third of people live beneath the poverty line.

Saleemul Huq, director of the Dhaka-based International Centre for Climate Change and Development – who chaired an expert group on developing a “National Mechanism on Loss and Damage” – said the proposal had been given to the Bangladeshi prime minister, who is due in Marrakesh early next week.

“I am pleased to see that the government of Bangladesh is taking such a pro-active position at the national level on this important topic,” Huq said.

“Loss and damage” from climate change has been a controversial topic at the U.N. talks over the past decade, mainly because it asks a tough question: Who should pay to repair the harm done by planet-warming emissions?

Aid agencies say “loss and damage” occurs when stresses made worse by climate change – such as creeping deserts or rising seas – are too severe for people to overcome.

That can mean losing your home as shores and river banks crumble, no longer being able to farm a degraded plot of land, or even the disappearance of culture after communities are scattered by repeated weather disasters.

Following push-back from industrialised countries worried about being forced to pay for the cost of climate damage, governments agreed in 2013 to create the “Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts” (WIM).

At the Paris climate summit last year, developing countries won a hard-fought battle to secure its existence as part of the new global climate change accord.

But for that happen, they had to accept a stipulation that the loss and damage provision in the agreement “does not involve or provide a basis for any liability or compensation” – a demand from the United States backed by other rich nations.

At the Nov. 7-18 climate change talks in Marrakesh, negotiators are sparring over when and how to conduct a planned review of the WIM, which has had little more than a year to get going on its key tasks.

They include setting up a clearing house for information on climate risk insurance and a task force on climate-linked displacement.

‘HOT POTATO’

But it is the financing of measures to address loss and damage that remains the key sticking point.

“Who should pay for it? The ‘hot potato of responsibility’ is being moved around,” said Olivia Serdeczny, a research analyst with Climate Analytics and an advisor to vulnerable countries on loss and damage. “The sources of finance is an issue that remains untouched.”

Most of the discussions around finance for loss and damage have focused on providing insurance against disasters – a popular measure with rich nations.

In June 2015, for example, G7 states announced an effort to increase by up to 400 million the number of people in low and middle-income countries with access to insurance coverage against climate-related hazards, by 2020.

But aid experts argue insurance cannot be the only financial tool to help people faced with loss and damage.

Harjeet Singh of the global charity ActionAid said insurance does not work well for longer-term shifts such as sea-level rise and melting glaciers.

But “there is a reluctance to move beyond insurance” on the part of developed states in the U.N. loss and damage discussions, he noted.

CARE International says the WIM should develop instruments that can generate $50 billion in new cash annually by 2020.

Sven Harmeling, climate change advocacy coordinator for the development agency, said there was a growing awareness that other types of funding would be needed, beyond insurance.

“At this stage, no one denies there is a problem,” he said. “There is a bit of a progress in terms of willingness to discuss what process might work, but not in terms of ‘We will pay for the damage’.”

ADAPTATION LIMITS

That is a key reason for this week’s hiccup in Marrakesh over the review of the WIM, which was due to be completed at these talks.

Developing countries want the review to happen over the next year and cover the future of the mechanism, while developed countries fear that could trigger new demands over finance.

Either way, it is clear the thorny problem won’t just disappear, and needs more work.

In a recent paper, Austrian researchers Reinhard Mechler and Thomas Schinko at the International Institute for Applied Systems Analysis said major scientific challenges remain, in particular to better understand the physical and social limits of adaptation – in other words, where loss and damage starts.

Making more accurate projections of rising climate risks and the associated costs of measures to prevent and respond to loss and damage could help move the discussion forward, they added.

In the meantime, Bangladesh is not waiting around. A 2010 World Bank study estimated the country would lose some $121 billion, or 5 percent of national GDP, between 2005 and 2050 due to climatic variability, including impacts such as a fall in rice production.

Singh said the proposal to set up a national mechanism for loss and damage was a way of trying to speed solutions.

“It is saying we need to make progress faster at the international level, and we are ready to act at the national level,” he said.

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