TWN Info Service on Climate Change (Sept23/06)
7 September 2023
Third World Network

All developing countries entitled to access loss and damage fund

New Delhi, 7 Sept (Radhika Chatterjee): Developed country members of the UNFCCC’s Transitional Committee (TC) for loss and damage, made attempts to restrict access to the Loss and Damage Fund (LDF) to only countries that are part of Small Island Developing States (SIDS) and Least Developed Countries (LDCs). They argued that in the face of the limited availability of funds, it was important that some criteria be followed for prioritising who could access the funds.

This stance was strongly countered by developing country members who argued that all developing countries are particularly vulnerable to loss and damage, and therefore, all of them should be able to access money from the LDF. They asserted that this was related to the issue of ensuring equity in access to the LDF. Instead of country groupings, they suggested the criteria should be based on events, triggers and impacts faced by communities.

These discussions took place at the third meeting of the TC that in Santo Domingo, Dominican Republic that began on August 29^th and ended on September 1^st. The first two days of the meeting were held behind closed doors (not open to observers), at the request of some members to facilitate a more open exchange of views. The remaining two days were open to all. An overview of what transpired in the meeting can be read in this TWN update.

Discussions included the question of access to and modalities of the fund. This refers to the issue of how countries would draw money from the LDF, and relates to what would be funded (scope of the fund), who can access the fund (eligibility), and how to access it (modalities).

The issue of how to prioritise or target the funds took centre stage in the discussions on access and modalities of the fund that were held on the third day (August 31) of the meeting.

CRITERIA FOR PRIORITISING LOSS AND DAMAGE FUNDS

On what should be the criteria for prioritizing loss and damage funds, the United States (US) submission to TC3 specifically says that “countries that are particularly vulnerable to the adverse effects of climate change are eligible to receive resources from the Fund.”  This position was reaffirmed by the US representative during the discussions on determining the criteria and eligibility on the flow of funds.

Heike Henn (Germany) said during that in the face of scarce finance and huge needs, how to prioritize and allocate funds has to be addressed. The submission made by Germany and Ireland also focuses on addressing the loss and damage needs of the particularly vulnerable developing countries.

Developing country members on the other hand expressed that the target of funds has to be all developing countries vulnerable to loss and damage. Instead of relying on country groupings for determining who is eligible, they suggested events, triggers and impacts faced by communities as the criteria for receiving funds.

Another point that was made is that there cannot be a one size fits all approach in identifying triggers. Rather, these had to be identified by the affected countries according to their community needs and requirements. This is because triggers need to be viewed considering specific local contexts, said developing country members.

The LDC submission has proposed three windows for the LDF: one for addressing extreme events that require immediate response, a second window for supporting recovery and rehabilitation from a specific extreme event; and a third window for rehabilitation and activities to deal with impact of slow onset events through programmatic grants.

They have proposed two types of access modalities: event based and programme based. The element of trigger would apply for both immediate responses and support for rehabilitation and reconstruction, while the programmatic modality would provide grant based support to countries for dealing with the impact of slow onset events.

Avinash Persaud (Barbados) said prioritising should be about significant events, which could be both slow onset or rapid (extreme event). He also suggested that an impact on GDP could receive priority, for instance, impact of 5% of GDP.

Michai Robertson (Antigua and Barbuda) mentioned that it was important to ensure that non-economic damage is also included. He linked the issue of prioritising funds to identifying key areas affected by an event. Some of the areas he mentioned include biodiversity hotspots, atolls, loss of human lives, impact on mental health (society), critical infrastructure and so on. He said there was a need to “identify thresholds in nationally determined programmes and key areas”.

Responding to Robertson, Christina Chan (US) said there might be an overlap between developing country members’ perspective on triggers and the section on allocation in the US’ submission. The relevant section from the US submission is as follows: “In allocating resources, the Board (of the LDF) is to take into account the needs of developing countries that are particularly vulnerable to the adverse effects of climate change and the importance of accessibility in all regions. (The Board will annually allocate contributions to the Fund to individual sub-funds in a balanced way that takes into account factors that include vulnerability and demand.)”

Mohamed Nasr (Egypt) responded to the intervention made by the US representative by insisting that the discussion should not be shifted away from triggers to allocation, saying that “the issue of triggers is about eligibility, and allocation is about how much funds”.  In the context of triggers, he mentioned three timelines: projection of hazards, building resilience and capacity of a country; and sustainability of livelihoods when disasters (slow or extreme) hit.” He further stated that the criteria for prioritising funds should be the impact faced by communities and that its not about competition on resources, the latter depending on the scale of the Fund whether in millions or billions..

Expressing support for Nasr’s comment, Sumaya Zakieldeen (Sudan) said the need for sustaining livelihoods is a key issue in different parts of Africa.

In an earlier discussion on principles for the fund, Angela Rivera Galvis (Colombia) said that the Group of 77’s position is that targeting should be based on an event – approach, not particularly of groups of countries. Triggers should be based on magnitude, scientific approach, ecosystems services, biodiversity losses, non-economic loss, and they are opposed to country-based criteria for targeting funds.

Speaking in the context of slow onset events, Debbie Palmer (United Kingdom) said that since prevention is cheaper than humanitarian work, the possibility of carrying out preventive work before a slow onset event cumulative trigger is reached could be done.

Responding to this intervention, Nasr (Egypt) said there is a “need to focus on addressing loss and damage in terms of dealing with the gap of recovery and livelihoods, not minimising [it] and focusing the discussion on prevention”.  Adao Soares Barbosa (Timor Leste) also pointed out that the issue of prevention is a part of adaptation, and not loss and damage.

WHO ARE ‘VULNERABLE DEVELOPING COUNTRIES?

In the discussion on principles for the LDF, developing country members mentioned the principles that were most relevant for determining eligibility for accessing funds. In their submission, they have specified that “in accordance with the Convention, including Article 4.3, all developing countries that have suffered climate-related loss and damage, without discrimination or any form of exclusion, are eligible to receive financial resources from the Fund”.

Robertson (Antigua and Barbuda) brought up the need for upholding the principle of equity and drew reference to Article 3.2 of the Convention. (Article 3.2 of the Convention states: “The specific needs and special circumstances of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change, and of those Parties, especially developing country Parties, that would have to bear a disproportionate or abnormal burden under the Convention, should be given full consideration”).

He asserted that this principle of the Convention embodies the ideas of equity and fairness while considering the needs of developing countries that are facing adverse effects of climate change. Keeping this principle in mind, the LDF should also ensure that no country is left behind in dealing with loss and damage, he added further.

Yinghzhi Liu (China) stated that all developing countries should be eligible for the fund. He also mentioned Articles 4.8 and 4.9 of the Convention, to make the point that all developing countries are vulnerable in the context of loss and damage.  (Article 4.8 of the Convention states: “In the implementation of the commitments in this Article, the Parties shall give full consideration to what actions are necessary under the Convention, including actions related to funding, insurance and the transfer of technology, to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change…especially on:

(a)  Small island countries;
(b)  Countries with low-lying coastal areas;
(c)  Countries with arid and semi-arid areas, forested areas and areas liable to forest  decay;
(d) Countries with areas prone to natural disasters;
(e) Countries with areas liable to drought and desertification;
(f)  Countries with areas of high urban atmospheric pollution;
(g)  Countries with areas with fragile ecosystems, including mountainous ecosystems;
(h)  Countries whose economies are highly dependent on income generated from the production, processing and export, and/or on consumption of fossil fuels and associated energy-intensive products; and
(i)  Land-locked and transit countries….”).

(Article 4.9 states: “The Parties shall take full account of the specific needs and special situations of the LDCs in their actions with regard to funding and transfer of technology.”

COUNTRY OWNERSHIP

Another topic that was dealt with was on country ownership. Most TC3 members expressed that they were in favour of a country driven approach in the functioning of the LDF. Developing country members emphasised on adopting an approach that is country-based and country-led.

The stance of developing country members was similar on the aspect of modalities for accessing funds. Most members firmly supported the need for embedding modalities in national systems.

Among developed country members, the US reiterated from its’ submission of three sub funds as operational modalities for accessing funds: (i) slow onset events sub fund; (ii) recovery and rehabilitation sub fund; and (iii) small markets sub fund.

According to the US, the slow onset sub fund would respond to activities related to slow onset events. This would include adaptation related work. It would also address economic and non-economic loss and damage. The recovery and rehabilitation sub fund would address the needs for any additional concessional finance for recovery and rehabilitation. The finance for this sub fund would be provided by the multilateral development banks. The small markets sub fund would address loss and damage needs for countries whose population is equal to or less than five million.

The submission by Germany and Ireland expressed a preference for a programmatic approach that “strengthens national systems, institutions and policies.”

Similarly, France too in its submission has stated the need for a programmatic approach that is bottom-up or country-led is what would work best in terms of access modalities of the LDF.

The issue of access and triggers is likely to witness further rounds of discussion in the fourth and final meeting of the TC to be held in Aswan, Egypt on 17-20 October, 2023. +