These definitions were developed by members of the Loss and Damage Collaboration, the Loss and Damage Network
and researchers and academics working on Loss and Damage.
to Loss and Damage
What is loss and damage (small “l” and “d”)? What is Loss and Damage (big “L” and “D”)?
The term “loss and damage”
(small “l” and “d”) is the term used to describe the manifestation of adverse climate change impacts which were not or cannot be avoided by adaptation and mitigation efforts (for example reducing emissions). The IPCC uses a narrower definition in its Sixth Assessment Report but most actors within the Loss and Damage community as well as negotiators from vulnerable developing countries define loss and damage as being beyond the limits of adaptation.
Whereas “Loss and Damage”
(big “L” and “D”) is used to describe the policies and plans that are used to avert, minimise and address loss and damage, such as those that are negotiated at the United Nations Framework Convention on Climate Change
(UNFCCC). The Sixth Assessment Report defines Loss and Damage as the policy agenda focused on addressing loss and damage under the UNFCCC while many in the Loss and Damage community favour a broader definitely which includes policies, plans and actions to address loss and damage at all levels including the local, sub-national, national, regional and global.
What are the different types of loss and damage?
When we are talking about loss and damage that has taken place or might take place in the future, a distinction is made between economic losses
which can be monetarily valued (for example the loss of things to can put a price tag on such as goods and services: commonly traded in markets, things like property, cars and belongings) and non-economic loss and damage
(NELD), items which are not commonly traded markets and which cannot be measured (for example the loss of things items which you cannot buy or sell). Serdeczny et al.
(2016) provide examples of NELD including loss of life, health, territory, cultural heritage, sense of place, agency, identity, indigenous and local knowledge, biodiversity and ecosystem services. Morissey and Oliver-Smith
(2013) propose that NELD can be differentiated by those that have material form (for example lives, biodiversity and territory) and those that do not have a material or tangible form (for example identity, physical and mental health and loss of culture).
In most parts of the world, vulnerable people, communities and countries are grappling with multiple climate hazards simultaneously and suffering a spectrum of loss and damage, both economic and non-economic in nature. To illustrate this
, imagine if an atoll state like Tuvalu disappears due to sea level rise, the people who call Tuvalu home will incur both economic and non-economic loss and damage. Economic losses and damages may include things such as the loss of a house and the property on which it stands. Non-economic losses
could include the loss of a territory, loss of cultures including traditional practices and sacred sites, connection to the land and sense of place as citizens are resettled and dispersed across many other countries. The personal and cultural identity of Pacific islanders is deeply rooted in their island homes. When communities are forced to relocate, they often experience feelings of cultural and spiritual disconnection through the loss of connection to land. This may be felt more acutely in situations where there is no option to return.
What causes loss and damage?
Loss and damage is primarily the result of the failure to mitigate and inadequate support for adaptation efforts. Human-induced climate change manifests through more intense extreme weather events
, including heatwaves, droughts and heavy rainfall as well as slow-onset climatic processes
like sea-level rise, ocean acidification, glacial retreat, increasing temperatures, desertification, land and forest degradation, and salinisation. These changes, even when they are comparably small, have large impacts on social and natural systems that have lived within a very stable climate for centuries. Importantly though, anthropogenic climate change does not affect all weather extremes in the same way. Some types of events are being made more likely and intense (for example heat waves, heavy rainfall) others like cold waves have become less frequent and intense and some have not changed in their frequency and intensity (for example droughts in many parts of the world).
The science that allows us to disentangle and in some cases quantify human-caused drivers of extreme weather events and its impacts is called climate attribution. Working Group I’s contributions to the Sixth Assessment Report
from the Intergovernmental Panel on Climate Change (IPCC) provides a synthesis of observed changes in some types of extreme events and their link to anthropogenic climate change. There is currently no systematic effort towards documenting these harms. As a result, there is no comprehensive basis to quantify and identify losses and damages from anthropogenic climate change.
The loss and damage that results from intensified climate hazards are determined by vulnerability and exposure. The level of risk
is determined by the intensity of a climate hazard as well as levels of exposure and underlying vulnerability. For example, women and girls in vulnerable countries tend to experience greater levels of loss and damage than their male counterparts. One of the reasons for this is that women often have unequal access to resources
needed to avoid loss and damage and are often removed from decision making processes about climate change responses. Gender inequality
increases when families decide not to send girls to school or force them into early marriage when household income falls due to the impacts of climate change. Research has called this and other practices which increase the vulnerability and decrease the resilience of households “erosive coping strategies” (Opondo, 3013
For more information on evaluating climate change induced loss and damage, see Operational Extreme Weather Event Attribution Can Quantify Climate Change Loss and Damage
How is Loss and Damage different from adaptation?
Climate action falls along a spectrum which begins with mitigating climate change, then progresses to adapting to the impacts of climate change and managing residual risks, and finally to addressing loss and damage from those climate change impacts that are not or cannot be avoided. The relationship between mitigation, adaptation and other efforts to avoid and reduce (or in UNFCCC terms “avert” and “minimise”) loss and damage, is explained by Verheyen
(2012) as that which is avoided
(for example by building a sea wall), that which is unavoided
but which could have been through more mitigation and adaptation efforts (for example by doing such things as by preparing a community for when a cyclone hits) and that which is unavoidable
(for example when a glacier in the Himalayas is lost forever).
Adaptation plays a critical role in avoiding and reducing loss and damage to climate change impacts. However, the IPCC has recognized that there are limits to what can be avoided and reduced by adaptation. This has been supported by empirical research
and global evidence
. The IPCC defines adaptation limits
as the point at which an actor’s objectives (or system needs) cannot be secured from intolerable risks through adaptive actions. There are hard adaptation limits
where no adaptive actions are possible to avoid intolerable risks, and there are soft adaptation limits
where options may exist but are currently not available to avoid intolerable risks through adaptive action. Dow et al.
(2013) proposes that the limits to adaptation occur when risks become intolerable which means that the limits to adaptation are determined by those who decide when risk moves from tolerable to intolerable.
This theoretical framework for understanding the limits to adaptation is supported by research on the ground. In 2012 and 2013 United Nations University Institute for Environment and Human Security
in nine vulnerable developing countries to better understand how loss and damage is incurred and addressed at the household level
. The research found that households were incurring loss and damage from climate change impacts despite having implemented adaptation and coping measures (Warner and van der Geest, 2013
Why is Loss and Damage an important topic?
The Loss and Damage agenda under the UNFCCC has included a struggle to recognise the historical responsibility of countries in the global North to pay their fair share to address the climate crisis that has been caused by their historical emissions. The UNFCCC and its Paris Agreement recognise that developed countries should lead in combating climate change and addressing related impacts, in accordance with their “common but differentiated responsibility and respective capabilities”. The efforts towards ambitious outcomes on Loss and Damage under the UNFCCC aim to support developing countries to understand the scale of losses and damages they are suffering and be assisted to identify, prioritise and access technical assistance to address their needs.
The Loss and Damage negotiations under the global climate regime (the UNFCCC) are important because developing countries urgently need support to address the loss and damage they are suffering. The burden to recover from the impacts of the climate crisis should not be placed on the shoulders of the global South and impacted communities. A study in Kenya by Opondo
(2013) found that when households incur loss and damage they may be forced to sell productive assets, withdraw children from school or undertake other “erosive coping” measures which impede their resilience to future shocks and make them more vulnerable to climate change impacts. These choices are even more challenging and critical
in light of the COVID-19 pandemic which has hit the most vulnerable the hardest.
There are historical reasons
why many countries are still struggling to develop and these must also be acknowledged and addressed. In addition, many developing country decision makers are already overwhelmed with the implementation of development policies and plans such as those aimed at improving health and wellbeing, livelihoods and infrastructures. It is important to recognise Countries of the global North have a responsibility to address the injustice and inequality that has been caused by the centuries of colonisation and exploitation of communities in the global South.
How much does Loss and Damage cost and who is paying for it?
The economic costs of loss and damage in developing countries alone have been projected to be between 116 to 435 billion USD a year by 2020 rising to between 290 billion USD and 580 billion USD per year by 2030
and 1,132 to 1,741 billion USD a year by 2050. A study by Barsch et al
. estimates that the economic costs of loss and damage will be 400 billion USD in developing countries alone by 2030
and between 1 trillion and 1.8 trillion USD a year by 2050. These figures do not account for non-economic loss and damage. Furthermore, these are likely underestimates given the setbacks in development brought by the COVID-19 pandemic.
The gap between the costs of loss and damage and the level of funding vulnerable developing countries receive to address loss and damage continues to widen. In the meantime, developing countries are making considerable efforts to address loss and damage at both the national and sub-national levels at their own expense. An article published in BBC Future
highlights the fact that vulnerable developing countries on the frontlines of climate change are paying for the cost of addressing loss and damage. Within developing countries, research by the International Institute for Environment and Development
has found that vulnerable households in Bangladesh are paying 2 billion USD a year to address loss and damage, which is twice what the national government spends and 12 times what is covered by international climate finance. These efforts to address loss and damage have opportunity costs because these resources could be used to support sustainable development and to fund public education and health initiatives.
Within the global climate change regime under the UNFCCC developing countries and their allies are advocating for finance to address losses and damages from climate change. It is important that finance for Loss and Damage is new and additional to existing pledges
of climate finance: funds should not be shifted away from important work on mitigation and adaptation.
For more information on Loss and Damage finance, see Loss and Damage Finance Facility: Why and How
and Spotlighting the Finance Gap
What is the difference between Loss and Damage and liability and compensation?
is a legal term that, in this context, refers to the legal responsibility of those that have contributed to climate change by making large contributions to greenhouse gas (GHG) emissions. Compensation
refers to payment to those that have been impacted by climate change in recognition of their loss and suffering. Developed countries are liable
for loss and damage because they have historically been high emitters and therefore they should be required to compensate
those who are now suffering loss and damage from climate change. How liability and compensation for loss and damage is calculated is a complex matter that requires more research and agreement. For example, how far back we go in calculating emissions makes a difference to who is liable because countries have “developed” at different rates.
Developed country Parties have worked hard to ensure that the concept of liability and compensation
is not tied to Loss and Damage in the negotiations and this remains a red line that they are unlikely to cross. They fear that acknowledging their historical liability for loss and damage will mean they will be on the hook to pay the trillions of dollars required in compensation. Paragraph 51
within the decision adopting the Paris Agreement
gives an interpretation of Article 8 on Loss and Damage. It states that Article 8 does not imply or give room for discussion of any form of legal liability or compensation with respect to loss and damage caused by climate change. This seeks to prevent formal negotiations through the Paris Agreement that would facilitate a compensation mechanism or discuss countries’ legal liability for loss and damage. However, Mace and Verheyen (2016)
argue that despite paragraph 51, all options remain open for the development of a system under the climate regime that can address the underlying concerns raised by small island developing States and others in calling for a system of compensation and liability. It is also important to note that paragraph 51
does not alter or limit general rules of customary international law and therefore legal action remains a pathway.
Political and Financial Action
on Loss and Damage
How much will climate change induced loss and damage cost?
Who is currently paying for loss and damage?
A recent article
published in BBC Future highlights the fact that vulnerable developing countries on the frontlines of climate change are paying for the cost of addressing loss and damage. Within developing countries, research
by the International Institute for Environment and Development
has found that vulnerable households in Bangladesh are paying 2 billion USD a year to address loss and damage, which is twice what the national government spends and 12 times what is covered by international climate finance.
What kind of support do developing countries need to address loss and damage?
Vulnerable developing countries need support on several fronts to address loss and damage. First and foremost they need finance, technology and capacity building which meets the scale of the evolving needs to reduce and address loss and damage from the impacts of climate change. They need technical assistance to address loss and damage, including developing comprehensive frameworks of action, and they need funding to help decision makers, already overwhelmed with the need for such things as disaster reduction and sustainable development, develop strategies to develop and implement measures to reduce and address loss and damage.
How can support be provided to the climate vulnerable developing countries?
There are a few ways in which we can support vulnerable developing countries in our collective effort to ensure that they have the support they need to address climate change. When speaking about the impacts of climate change we should ensure that we use the phrase “loss and damage” and emphasize both the economic and non-economic costs of climate change. This will help amplify loss and damage as a cause and increase its profile in the global climate change regime under the UNFCCC.
In discussions on the resilient recovery from COVID-19 we need to ensure that there is emphasis on both the impacts of COVID-19 on the ability of vulnerable countries to build resilience to climate change as well as the importance of ensuring that the resilient recovery provides support for vulnerable developing countries to address loss and damage.
Loss and Damage
in the UNFCCC
What is the UNFCCC?
The United Nations Framework Convention on Climate Change
(UNFCCC) was established in 1992 after the UN General Assembly
recognized that loss and damage represents a threat to humankind.
The ultimate objective
of the UNFCCC is to ensure that collective mitigation efforts stabilize greenhouse gas levels in the atmosphere in a timeframe that allows ecosystems to adapt naturally, does not threaten food production and allows economic development to proceed unimpeded. The UNFCCC includes 197 Parties (or countries which have ratified the Convention) which make up what is called the Conference of the Parties (COP). Typically there are two negotiating sessions each year; an intersessional which takes place in Bonn, Germany in the spring and the COP, the term used for the biggest meeting of the UNFCCC each year, which takes place in a different region each year according to the country that is currently the president of the COP. Initially, after it was established in 1992, the UNFCCC was focused on mitigation to reduce greenhouse gas levels in the atmosphere and limit climatic change to avoid loss and damage altogether. When it was clear those efforts were inadequate, developing countries advocated for more focus on adaptation. Eventually it became clear that loss and damage from climate change would not be avoided (and was already occurring in many countries).
What is the history of Loss and Damage within the UNFCCC?
The United Nations Framework Convention on Climate Change
(UNFCCC) was established in 1992 after the UN General Assembly
recognized that loss and damage represents a threat to humankind. While the UNFCCC was being negotiated, Vanuatu on behalf of the Alliance of Small Island States (AOSIS) submitted a proposal
for a mechanism to address loss and damage from sea level rise in small island developing states (SIDS). This proposal did not move forward, though the UNFCCC does acknowledge the obligation of developed countries to support developing countries in their efforts to address climate change.
The ultimate objective
of the UNFCCC is to ensure that collective mitigation efforts stabilize greenhouse gas levels in the atmosphere in a timeframe that allows ecosystems to adapt naturally, does not threaten food production and allows economic development to proceed unimpeded. The UNFCCC includes 197 Parties (or countries which have ratified the Convention) which make up what is called the Conference of the Parties (COP). Typically there are two negotiating sessions each year: an intersessional which takes place in Bonn, Germany in the spring and the COP which is the biggest meeting of the UNFCCC. The COP takes place in a different region each year according to the country that is currently the president of the COP.
Initially, after it was established in 1992, the UNFCCC was focused on mitigation to reduce greenhouse gas levels in the atmosphere and limit climatic change to avoid loss and damage altogether. When it was clear those efforts were inadequate, developing countries advocated for more focus on adaptation. Eventually it became clear that loss and damage from climate change would not be avoided and need to be addressed (Roberts and Huq, 2015
In 2007 at COP 13 in Bali
, the term “loss and damage” was first seen in a UNFCCC decision, driven by AOSIS and other vulnerable developing country Parties. In 2010 at COP 16 in Cancun
a work programme was established to increase the understanding of how to assess and address climate related loss and damage. That led to the establishment of the Warsaw International Mechanism on loss and damage (WIM) at COP 19 in Warsaw, Poland
with the objective of addressing loss and damage associated with impacts of climate change, including extreme events and slow onset events in countries particularly vulnerable to the impacts of climate change. The implementation of the functions of the WIM is guided by the Executive Committee (or ExCom)
which includes ten individuals from developing countries and ten from developed countries.
In 2015 at COP 21 in Paris, Loss and Damage was included in a dedicated article in the Paris Agreement
. This elevated Loss and Damage as the “third pillar” of climate policy under the UNFCCC, alongside mitigation and adaptation. While it is important that Loss and Damage is recognized as separate from adaptation in the Paris Agreement it also includes reference to “averting, minimizing and addressing loss and damage.” It is understood by civil society organisations that averting loss and damage is mitigation, and minimising loss and damage is adaptation. Since Loss and Damage is the third pillar of climate change policy alongside adaptation and mitigation, action on loss and damage must focus on addressing loss and damage (Achampong and Roberts, 2022
). A focus on averting or minimising loss and damage is used to distract from real action to address loss and damage.
In 2019 at COP 25 in Madrid
the WIM was reviewed and as developing countries had hoped, it was strengthened. The Santiago Network on averting, minimising and addressing loss and damage
(SNLD) was established as part of the WIM under the COP and the Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement (CMA), the body which governs the implementation of the Paris Agreement. The SNLD’s objective is to catalyse the technical assistance of relevant organizations, bodies, networks and experts, for the implementation of relevant approaches for averting, minimising and addressing loss and damage at the local, national and regional level. For developing countries it is critical that the Santiago Network mobilize action and support (the third function of the WIM) to address loss and damage. Additionally, finance for Loss and Damage must be provided and at the scale of the needs. The economic costs of loss and damage in developing countries alone have been projected to be between 290 billion USD and 580 billion USD by 2030 (Markandya and González-Eguino, 2018
). This is likely a vast underestimation given the setbacks in development brought by the CoVID-19 pandemic and additional non-economic loss and damage (Stamp Out Poverty et al., 2021
Why is it important to discuss Loss and Damage under the UNFCCC?
Addressing loss and damage within the multilateral process of the UNFCCC is an avenue to recognise that the global North is historically liable for the climate crisis and they have a responsibility to compensate and assist those in the global South that are suffering the impacts of climate change. It is important to note that the UNFCCC recognises that historical responsibility for climate change is not equal: countries have “common but differentiated responsibility and respective capabilities.” The UNFCCC differentiates between countries that have historically benefited from emissions and have become wealthy as a result and those developing countries that will be most adversely affected by climate change and that have contributed marginally to total global carbon emissions.
To support developing countries it is important to use the phrase “loss and damage” when referring to the impacts of climate change that are unavoided or unavoidable. It is important to emphasise both the economic and non-economic costs of climate change. This creates solidarity with vulnerable developing countries and those on the frontlines of climate change within them including Indigenous peoples and local communities and also helps raise the profile of Loss and Damage with global change makers. Additionally, in discussions on the resilient recovery from COVID-19 we need to ensure that there is emphasis on the impacts that COVID-19 has had on the ability of vulnerable countries to build resilience to climate change and address loss and damage.
What is the Warsaw International Mechanism?
The Warsaw International Mechanism
(WIM) was established at the nineteenth session of the Conference of the Parties (COP 19) in Warsaw, Poland in 2013 under the Cancun Adaptation Framework. The WIM has a mandate “to address loss and damage associated with climate change adverse impacts, including extreme weather events and slow-onset climatic processes, in vulnerable developing countries”. The WIM is the body that oversees Loss and Damage under the UNFCCC and the Paris Agreement. The WIM is governed by both the COP and the Conference of the meeting of the Parties to the Paris Agreement (CMA). The WIM has three functions:
1. Enhancing knowledge and understanding of comprehensive risk management in addressing loss and damage;
2. Strengthening dialogue, coordination, coherence and synergies amongst relevant stakeholders; and
3. Enhancing action and support to address loss and damage.
The implementation of the functions of the WIM is guided by its Executive Committee (ExCom) which is a technical subsidiary body of the WIM. The ExCom is the “policy arm” of the WIM. The ExCom consists of 20 members: ten from developed (Annex I) countries and ten from developing (non-Annex I) countries. The activities of the ExCom are informed by its workplans which are negotiated by the ExCom members and agreed by the Conference of the Parties (COP) to the UNFCCC and/or the COP serving as the Meeting of the Parties to the Paris Agreement (CMA).
The interim ExCom of the WIM developed an initial two-year workplan in 2013 which spanned from 2015 to 2017. The ExCom agreed on a five-year rolling workplan in 2017 which was up for renewal in 2022. The ExCom’s workplans were internally reviewed at COP 22
in 2016 and COP 25
in 2019. In response to the reviews, developing countries called for a stronger focus on the WIM's third function: enhancing action and support. The outcome of the review in 2019 included several provisions to strengthen the WIM and its capacity to deliver on its mandate and led to the establishment of the Santiago Network: the “implementation arm” of the WIM. The third review is scheduled to take place in 2024 at COP 30.
What has the WIM done since it was established?
The implementation of the functions of the WIM is guided by the WIM ExCom
. In turn, the ExCom delegates many of the activities in its workplan to its expert groups. Many activities in the two-year workplan were carried over into the five-year workplan
because they were either not completed or not commenced. Some activities under the five-year rolling workplan were paused while waiting for the establishment of the relevant expert group.
The ExCom, under its five year rolling workplan, established five strategic workstreams to implement its activities. The five workstreams also form the basis of the thematic work carried out by its five expert groups.
The workstreams of the ExCom are:
a. Enhanced cooperation and facilitation in relation to slow onset events;
Enhanced cooperation and facilitation in relation to non-economic losses;
c. Comprehensive risk management
approaches to address and build long term resilience of countries, vulnerable populations and communities to loss and damage, including in relation to extreme and slow onset events;
d. Enhanced cooperation and facilitation in relation to human mobility
, including migration, displacement and planned relocation; and
e. Enhanced cooperation and facilitation in relation to action and support
, including finance, technology and capacity-building, to address loss and damage associated with the adverse effects of climate change.
The five expert groups of the ExCom are:
1. The expert group on slow onset events;
2. The expert group on non-economic losses;
3. The technical expert group on comprehensive risk management;
4. The task force on displacement;
5. The expert group on action and support;
The ExCom has been able to enhance the understanding and knowledge of comprehensive risk management approaches, as well as strengthen coordination and synergies among stakeholders working on loss and damage. However, little progress has been made
in addressing loss and damage on the ground. There is a lot of work to do to understand how to address non-economic losses and loss and damage from slow-onset events. In assessing the activities
, it has been identified that most of the implemented activities have fallen into the first two functions of the WIM, rather than delivering on the third function: enhancing action and support.
Methods to address loss and damage
What tools and approaches are needed to address loss and damage?
While addressing loss and damage is complex, the needs of developing countries are clear and involve finance, technology and capacity building. Vulnerable developing countries need adequate climate information services, risk and needs assessments to inform planning, support to develop and implement approaches to address loss and damage from both extreme weather events and slow onset climatic processes, support to develop and implement financial tools including social protection and measures to support people and communities displaced by loss and damage at all levels.
There must be focus on approaches to address irreversible losses which cannot be recovered from including supporting migrants and displaced people and communities. The tools and approaches that vulnerable developing countries need will differ depending on the country context and the nature of the climate hazards that the country is exposed and vulnerable to. In order to deliver urgent and vital assistance to people on the ground, finance must be mobilised and delivered in the form of grants, and financial tools must be developed to support those who incur loss and damage.
For more information on Loss and Damage needs, see Why do developing countries need support to address loss and damage?
Also see submissions on the type and nature of actions to address loss and damage for which finance may be required
What is comprehensive risk management?
Comprehensive risk management
is a multifaceted approach to deal with the risks of loss and damage associated with the adverse effects of climate change. It includes multiple components, which progressively build on one another to create a holistic approach to risk management. The components of comprehensive risk management as defined under the UNFCCC include risk assessment, risk reduction, financial risk transfer and sharing, risk retention, and transformational approaches: • Risk assessment
is a set of methods that help characterise risks to inform risk management decisions and actions. It helps to determine the nature and extent of a risk by analysing potential hazards and evaluating existing conditions of vulnerability that together could potentially harm exposed people, property, services, livelihoods and the environment on which societies depend. The development of a range of approaches to manage risk depends on risk assessment. Risk assessment
includes: a. Hazard mapping involves a review of the technical characteristics of hazards including their location, severity, frequency and likelihood of occurrence. Hazard mapping is used to highlight areas that are affected by or vulnerable to a particular hazard;
b. Assessments of vulnerabilities and impacts to determine the exposure and susceptibility of people and structures to be harmed by hazards, including the physical, social, health, economic and environmental dimensions. Vulnerability assessments involve consultations with a wide range of stakeholders, such as community groups and policy makers, so that the design and implementation of the assessment incorporates local knowledge.
c. Assessments of risk tolerance to determine the level of potential losses that a society or community considers acceptable given existing conditions, including social, economic, political, cultural, technical and environmental conditions.
d. Risk reduction is the concept and practice of reducing disaster risks through systematic efforts to analyse and manage the causal factors of disasters, including through reduced exposure to hazards, decreasing the vulnerability of people and property, wise management of land and the environment, and improved preparedness for adverse events. Risk reduction can be achieved through a range of structural and non-structural measures. • Financial risk transfer and sharing
is a process of shifting the financial consequences of particular risks from one party to another. Financial risk transfer can occur informally within family and community networks where there are reciprocal expectations of mutual aid, or formally where governments, insurers, multilateral banks and other large risk-bearing entities establish mechanisms to help cope with losses from major events. Such mechanisms include insurance and reinsurance contracts, catastrophe bonds, contingent credit facilities and reserve funds, where the costs are covered by premiums, investor contributions, interest rates and past savings. • Risk retention
means that a country, community or organization explicitly or implicitly chooses to absorb the impacts of a climatic hazard if it occurs. Risk retention involves accepting risk: even if the risk is mitigated, if it is not avoided or transferred, it is retained. Risk retention can take a variety of forms, mostly in terms of organisational and financial planning, ranging from diverting federal budgets, depleting savings, incurring debt, or establishing ex ante reserve funds for the purpose of absorbing unexpected financial claims. • Transformational approaches
: In situations where the impacts of climate change are particularly extreme or rapid, and where populations are especially exposed or vulnerable to these impacts, a more radical response referring to fundamental changes to a social-ecological system may be needed. These may be called transformational approaches. It is important to note that notions of what is and is not transformation differ and transformation can also be used by developed countries to deflect responsibility for loss and damage and place it on developing country governments (Roberts and Pelling, 2019
Approaches and measures needed to address loss and damage
Setting up financial protection measures
Including but not limited to:
• Setting up, scaling up, or capacity building for insurance schemes
• Integrating climate change risks and impacts into or setting up, scaling up, or capacity building for social protection schemes
• Setting up, scaling up, or capacity building for contingency funds
Recovery and rehabilitation
Including but not limited to:
• Reconstruction and reparation of destroyed infrastructure to restore the supply of and access to basic health, education, and water and sanitation services (including health, education, transport, communication, environment, water supply and sanitation, and public buildings) – with priority on building back better
• Rebuilding/restoring of livelihoods (assist affected people in recovering their pre-disaster levels of household income, including recovery of production in the agriculture, industry, commerce, and other sectors [e.g. reconstruction of plantations, provision of seeds and other inputs, and restoration of equipment and gear])
• Restoration of ecosystems and landscapes (rehabilitation of damaged unique ecosystems, such as mangrove areas)
• Reconstruction of housing
• Restoration of cultural assets
• Capacity building in the context of recovery and rehabilitation
Displacement, migration, and alternative livelihoods
Including but not limited to:
• Support measures for planned relocation/resettlement (e.g. if areas can be foreseen as no longer inhabitable or manageable, and safe alternative localities are available), including, for example:
◦ Monetary costs of relocating infrastructure and people
◦ Psychological support
◦ Social support for vulnerable groups
◦ Language and educational support
◦ Ensuring housing, property, and land
◦ Ensuring access to jobs, schools, medical services, and sustainable living
◦ Establishing legal protection for displaced persons
◦ Support for preserving culture and language
• Support measures for climate-induced displaced persons and people affected by forced migration ( detailed measures similar to the point above)
• Building up alternative livelihood provisions/developing alternative livelihoods, such as from fishing to agriculture systems
• Measures to address the root causes of vulnerability, such as through social protection that addresses multi-dimensional inequalities by enhancing capacities, and reduces dependencies and vulnerabilities
• Capacity building in the context of displacement, migration and alternative livelihoods
Addressing non-economic loss and damage
Including but not limited to:
• Recognition of loss (accompanied/unaccompanied by financial payments)
• Active remembrance (e.g. through museum exhibitions, school curricula)
• Counselling (e.g. for people experiencing trauma related to loss and damage)
• Capacity building to address non-economic loss and damage
Table taken from: Schäfer, L./Jorks. P/ Seck, E. 2021: Financing Instruments and Sources to Address Loss and Damage from Slow-onset Processes. Germanwatch.