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All You Need to Know about Loss and Damage Fund

Nov 21, 2022


Today’s edition of our Current Affairs will comprise a discussion on Loss and Damage Fund. Read further to upgrade your UPSC CSE knowledge and also understand the topic’s relevance to the UPSC syllabus.

For Prelims: General issues on Environmental Ecology, Biodiversity and Climate Change. Loss and Damage, Climate Change, CoP27.

For Mains:: GS III- Biodiversity and Environment.

 Loss and Damage fund, UNFCCC, COP27.


Recently UNFCCC COP 27 concluded with the creation of the Loss and Damage Fund.

Probable Question

With the creation of the Loss and Damage fund, do you think that vulnerable countries have obtained climate justice? (10 Marks, 150 Words)

About Loss and Damage Fund

  • Delegates at the UNFCCC COP-27 in Sharm el-Sheikh, Egypt thrashed out an agreement on 20th November to establish a Loss and Damages fund to compensate the most vulnerable countries for damages from climate-linked disasters.
  • It was proposed by the G77(largest intergovernmental organization of developing countries in the UN) and China (India is part of this group), least developed countries, and small island states.
  • India engaged constructively and actively on the subject of loss and damage, which refers to the destruction caused by climate change-induced disasters, during the course of discussion at COP-27.
  • Financing or a new fund to deal with loss and damage — for example, the money needed for relocating people displaced by floods — was a long-pending demand of poor and developing countries, including India.
  • Crucial questions — such as who will manage this fund, whether contributions are expected from large developing countries, and what the fair share of contributors will be — have been left to a “transitional committee” that will make recommendations to enable the actual adoption of the fund at the next Conference of the Parties (COP) of the U.N.’s Framework Convention for Climate Change, to be held in the United Arab Emirates next year.
  • The expected monetary compensation from the L&D fund is estimated to be nearly $500 billion and rising by $200 billion annually.

Also Read: Economic Development and Glasgow Climate Action

New IPCC Climate Report: What is in it for India?

About Loss and Damages 

  • The phrase refers to costs already being incurred from climate-fuelled weather extremes or impacts like rising sea levels.
  • Loss and Damage funding is expected to cover the cost of damage that countries can not avoid or adapt to.
  • A report by 55 vulnerable countries estimated that their combined climate-linked losses in the last two decades totaled USD 525 billion or 20% of their collective GDP. This could go up to 580 billion USD by 2030.
  • Vulnerable countries argue that rich countries that caused climate change due to their historical GHG emissions should pay for it.
Note:About UNFCCC:

It stands for United Nations Framework Convention on Climate Change. 

Origin: It originated in UNCED(United Nations Conference on Environment and Development) i.e. Earth Summit or Rio Summit.

It entered into force in 1994.Members: 197 nations. Paris agreement was signed in COP 21.

Secretariat: Bonn, Germany. 

Objective: To achieve, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.

It aims that the above objective should be achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.


Kyoto Protocol

Paris Agreement.

Green Climate Fund.

The Conference of the Parties (COP): 

CoP is the highest decision-making body of the UNFCCC.It meets annually and the latest meet is CoP 27.

News Source: The Hindu, 

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