The cost of emissions

What are climate reparations, and which countries should pay?

At COP27, world leaders will officially debate "loss and damage" for the first time
Delegates arrive at the Sharm El Sheikh for COP27.
Delegates arrive at the Sharm El Sheikh for COP27.
Photo: JOSEPH EID/Getty (Getty Images)
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For decades, rich countries have fended off efforts to officially negotiate reparations for poor countries that have contributed the least to climate change, but suffer some of its most violent effects. This year, following 48 hours of intense talks, UN member states agreed to include a debate on “loss and damage” at COP27, the agency’s annual summit on climate change.

The inclusion of loss and damage on the agenda is seen as a breakthrough, but not one without compromise. Egypt’s foreign minister Sameh Shoukry said the discussion would focus on “cooperation and facilitation” in absorbing the losses inflicted by human-induced climate change. The phrasing dials down the original aim of the proposed loss and damage mechanism: ascribing responsibility for damages and hammering out payouts to those who have suffered from climate disasters.

What is loss and damage?

Climate change is conventionally seen as a challenge of adaptation and mitigation—one that involves taking action to avoid the climate impacts we can, and adapt to those that we can’t prevent.

But as years of increasingly severe climate disasters have made clear, there’s a vast category of impacts that we can’t mitigate or adapt to. These fall under the term “loss and damage.”

They include economic costs—like the losses from fields left barren by drought and dying coral reefs due to ocean acidification—and non-economic costs, such as lives lost to strengthening cyclones and worsening floods, or cultures disappearing as their lands become uninhabitable.

Countries would need to agree on a way to measure and attribute loss and damage, and create an international insurance pool that could compensate victims of disasters like sea level rise.

A contentious history

Vulnerable countries, spearheaded by the Alliance of Small Island States, a coalition of countries threatened by sea level rise, have been highlighting the need to address loss and damage since the 1990s.

Over the following three decades, the concept inched its way into the UN system. The first mention of it in a formally negotiated UN text was in 2007. Six years later, in 2013, the UN formed the Warsaw International Mechanism on Loss and Damage, an effort to explore what loss and damage would entail. Since then, the concept has become increasingly accepted, even if progress on it has been halting. For COP27, the US and EU have formally agreed to start negotiating loss and damage.

Adding up the cost of loss and damage

The floods that swept through Pakistan this August resulted in an estimated $30 billion in damage. Cyclone Idlai, which struck Mozambique, Malawi, and Zimbabwe in 2019, caused $2.2 billion in economic losses and over 1000 deaths. This year’s drought in Somalia—the worst the country has seen in 40 years—has displaced 1.1 million people, and is expected to put 6.7 million people in acute food insecurity as crops fail and herds starve.

One study projects the most vulnerable nations will need between $290 billion and $580 billion a year to pay for unavoidable climate losses by 2030.

Who would be responsible for paying?

Back in 2009, during COP 15, rich countries pledged $100 billion a year in climate financing to help poorer ones adapt to climate change. The system is voluntary, and is for adaptation and mitigation rather than reparations for damages already caused.

Carbon Brief, an outlet that covers climate issues, analyzed how much countries owed relative to their historical emissions. Its estimate, which is based on the $100-billion climate finance target, offers some guidance on emissions’ share and financial responsibility. For example, it found the US had contributed $8 billion in climate financing by 2020, leaving it with a shortfall of $32.3 billion if the country were to pay its relative share for its historical emissions.

COP15's $100-billion climate pledge is instructive of something else: It falls far short of the trillions of dollars climate adaptation is expected to cost each year, and so far, countries have failed to meet even this modest amount. It bodes poorly for how much countries may be willing to agree to pay for the damages caused by their emissions.

Meanwhile, the most vulnerable countries continue to shoulder the costs. “We do not want to be treated as though you are doing us a favor by adding an agenda item or creating a voluntary fund,” the Alliance of Small Island States said in a statement. The loss and damage discussion at COP27, “reflects the floor of what is acceptable; it is our bare minimum,” it added.