Loss and Damage
A Concept Overview: Loss and Damage
Definition: With respect to the climate crisis, loss and damage is defined as “permanent loss or repairable damage caused by the manifestations of climate change, including both severe weather events and slow-onset events, such as sea level rise and desertification. It can also refer to economic or non-economic harm, such as loss of life, livelihoods, ecosystems, or cultural heritage.”
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International Policy History: Loss and damage was first introduced as an international concept by the UNFCCC in November of 2013. It would be best used in cooperation with attribution science, but the concept has remained in contentious debate because of questions in equity and fairness. It’s most widely recognized as part of the Warsaw Mechanism, introduced in Article 8 of the 2015 Paris Agreement. More recently, it has been reviewed at COP25 and COP26 negotiations.
What is the Warsaw International Mechanism? According to the UNFCCC, the Warsaw Mechanism was established in order “to address loss and damage associated with the impacts of climate change, including extreme events and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change.” The Warsaw Mechanism was established in 2013 but has not been implemented close to a decade later. This is because priority has not been accorded to loss and damage.
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Addressing Loss and Damage
International Level
Addressing loss and damage can be accomplished through finance, knowledge sharing, and international collaboration both within and outside of the UNFCCC.
Regional Level
Cooperation on climate migration and displacement - interstate and intrastate- is crucial. Nationally, mitigating climate change, the development of relief funds, social programs, and developing a more localized definition of loss and damage are all paths with potential.
Local Level
Disaster preparedness, micro-level insurance, and mutual aid funds are able to address specific, economic, localized loss and damage.
The 4 Main Perspectives on Loss and Damage
Economic Loss and Damage
Economic loss and damage is much more easily defined than the non-economic component. It’s directly related to physical and financial assets that can be assigned specific monetary values. Lost earnings or productivity are included in this concept as well.
A Specific Example: The Agricultural Sector in Myanmar
As the climate crisis continues to worsen, the farming season in Myanmar has been significantly shortened and production is put at risk with a longer, more intense monsoon season. The climate crisis and the severity of its impacts on the South East Asian region has been perpetually increasing over the last few decades. The agriculture industry and total agrarian production has taken a huge hit. Ultimately this production loss is quantifiable, and compensation could be provided to the impacted individuals if loss and damage initiatives were put in place and enforced.
"95 percent of farmers surveyed say that [climate change] has led to lower, or non-existent crop yields."(1)
Potential for Insurance: Benefits and Flaws
Insurance also has the potential to be useful in addressing economic loss and damage. Micro-insurance programs and regional insurance pools are easier to implement than international mechanisms such as the Warsaw Mechanism. Pooling risks through the use of insurance “collectively reduces loss volatility” and effectively “can guarantee post-disaster liquidity to those individuals at risk.” While insurance alone will likely fall short of the aspirations set out by the Warsaw Mechanism regarding loss reduction and equitable compensation, it remains valuable due to the overall lack of implementation and action surrounding international agreements.
There are some significant issues with using insurance as the main means of addressing loss and damage, too. Insurance outsourcin claims can lead to improper management of climate related costs. Additionally, there's alway a risk of insurance failure or bankrupcy. That risk could become exponentially larger in a largely catastophic event, and people's loss and damage claims and loss and damage insurance policies would be rendered useless.
Non-economic Loss and Damage
Non-economic loss and damage is concerned with that which is not directly quantifiable. For many harms inflicted by the climate crisis, there’s a general debate as to their value. Given that value is relative in many aspects of our existence, this gets very complicated very fast.
How should we quantify a human life? Can we justify differing that from person to person?
How should we compensate people for damaged health as a consequence of pollution exposure?
How should we calculate the value of the ability to remain on native lands?
These questions are incredibly difficult to answer, and almost every individual will answer them differently.
Ultimately, the complications with non-economic loss and damage are characterized by two main processes: “Not knowing how much of something has been lost or damaged [and] not knowing the value of that which has been lost or damaged.” Non-economic loss and damage is also significantly harder to pinpoint using attribution science, making it even more difficult to provide appropriate compensation or reparations. The Warsaw Mechanism sought out to address non-economic loss and damage through mechanisms that seek to avoid risk and create a central mechanism and definition through which they can be addressed. Like most of the provisions in the Warsaw Mechanism, this has been ineffective due to an overall lack of implementation. Others have cited a more ethical framework as a potential solution to the problem of addressing these non-economic losses and damages. While this framework may be more suited to capture the full range of non-economic loss and damage and the inherent value of it, it would be of much better use proactively to develop adaptation policy than retroactively to quantify losses and provide compensation.
Perhaps the most complicated aspect of non-economic loss and damage is seen in the loss of culture, social cohesion, identity, and knowledge. As the climate crisis worsens, it becomes increasingly likely that countless individuals and communities, especially in small island developing states (SIDS), will be forced to relocate. Sea-level rise is a primary driver for this risk. Speaking on behalf of many indigenous communities, former UN special reporter Vicky Tauli-Corpuz stated that this non-economic loss and damage is “damage that has already happened and you cannot adapt anymore because your island has sunk.” How can we quantify the loss of culture? Given that many indigenous cultures are centered around the land and the environment that they were built upon, this is an incredibly difficult question to answer. People are being involuntarily stripped of their culture due to factors that they cannot control. This topic is addressed more on this website here.
A Non-economic Loss and Damage Case Study: The Value of Human Life
In the wake of 9/11, the value of human life came into direct question as an attempt to compensate the families of those lost began. Multi-million dollar compensation funds were established after the tragedy, and Washington attorney Kenneth Feinburg was recruited to quite literally determine the value of each individual human life. His account of the task is as follows: “After Sept. 11, I confronted the challenge of placing value on human life by calculating different amounts of compensation for each and every victim. The law required that I give more money to the stockbroker, the bond trader and the banker than to the waiter, the policeman, the fireman and the soldier at the Pentagon…Our system of justice has always been based upon this idea - that compensation for death should be directly related to the financial circumstances of each victim.” This approach to non-economic loss and damage directly converts it to something that is accountable for through an economic standpoint. While this may have seemed like a logical approach at first, it completely ignored the moral side of non-economic loss and damage that makes it so complicated.
Ultimately, Kenneth Feinburg realized that this approach to valuing human life was morally corrupt at best. While meeting with various families, surrounded by the issue of valuing lives lost, he “found the law in conflict with [his] growing belief in the equality of all life.” After years of working in law and doling out countless monetary compensations for human lives lost, Feinburg came to the conclusion that this economic conversion of a non-economic loss. His concluding statement on the matter was this: “I believe that public compensation should avoid financial distinctions which only fuel the hurt and grief of the survivors. I believe all lives should be treated the same.”
Political Influence and Implementation
The Warsaw Mechanism has been addressed fleetingly throughout this conversation about loss and damage, but its failure doesn’t leave all that much to discuss. While the initiative had a lot of potential as the first of its kind when formally established at COP19, it has failed to follow through on any of its goals and has remained widely ineffective. The executive committee appears to have made little to no effort “to enhance action and support to address slow onset loss and damage.” The Warsaw Mechanism has been a failure thus far and has truly not evolved past the point where people claim it has potential and hope that it will actually be implemented in some capacity.
There was a lot of hope for the Warsaw Mechanism going into COP26, but it didn’t lead anywhere valuable. After a lot of discussion about a Glasgow Climate Pact, results were underwhelming at best; developing countries that are being most adversely impacted by the climate crisis and loss and damage pushed for the establishment of a Glasgow Loss and Damage Facility but were ultimately overcome by the strong resistance of more developed nations. Once again, it’s being said that loss and damage legislation has a lot of potential if it maintains its momentum, a sentiment that hasn’t changed since 2013.
Different Countries' Perspectives
There is a gap in how nations view loss and damage legislation and finance proposals that is highly based on their development levels. In general, least developed countries (LDCs) and more specifically small island developing states (SIDS) are proponents for these initiatives, and more westernized, developed nations oppose them under the guise of equity and fairness concerns.
Since the 1990s, the Alliance of Small Island States (AOSIS) has been advocating and campaigning for the establishment of a compensation mechanism through which loss and damage can be addressed. AOSIS claims that international loss and damage initiatives should be “able to indemnify the developing countries for those unavoidable impacts that materialize when both mitigation and adaptation actions have been undertaken.” LDCs and SIDS also maintain that they should not be financially responsible for reparations and compensation measures because of the degree to which developed nations effectively caused the problem. Alternatively, many developed countries “refuse the idea that [loss and damage] is something qualitatively different than adaptation” and therefore choose to include it within the same scope. If loss and damage is looked at as a failure in adaptation rather than an indefinite, inevitable issue, then LDCs and SIDS are at a major disadvantage.
A Loss and Damage Case Study: The Maldives
SIDS are working incredibly hard to stress the importance of addressing the climate crisis and implementing effective loss and damage legislation before it is too late. A really interesting example of this was seen in October of 2009 when President Mohammad Nasheed and 13 cabinet members held their meeting underwater in the Maldives. They did this in order to stress the importance of addressing sea level rise, showing that the islands would be underwater, displacing thousands of people if we remain on this global climate trajectory. If we don’t take immediate action, UN predictions show the Maldives submerged by 2100. President Nasheed had declared that he would “establish a sovereign fund to relocate his countries’ 350,000 people if sea levels rise,” but later it was revealed that this plan would not be feasible due to the economic state of the country as a developing nation. Without loss and damage compensation, it’s almost impossible for SIDS to finance their inevitable relocation or any sort of effective prevention measures.
“The developing world wants rich countries to shoulder most of the burden, on the grounds they contributed most to the problem.”(2)