IMPLEMENTING INNOVATIVE FINANCE INSTRUMENTS FOR LOSS AND DAMAGE

Estimates suggest that loss and damage (L&D) finance needs in lower-income countries could amount to USD 400 billion to 1.6 trillion per year by 2030. Currently, however, global pledges to the newly created Fund for responding to Loss and Damage (FRLD) only amount to USD 745 million as of December 2024 – a mere 0.04-0.1% of finance needs per year.  Responding to this significant gap, this brief identifies different innovative instruments that could be implemented to generate additional finance for L&D. The authors synthesize existing knowledge and assessments on the suitability of these instruments for raising sufficient L&D finance in a manner that adheres to the equity principles of historical responsibility for climate change. Following this synthesis, the experts recommend how high-income countries, who have historically been major polluters, can push for the implementation of these instruments by engaging in various international forums.