By Faridat Salifu
The recent United Nations loss and damage fund’s inaugural board meeting showcased promising signs of empowering developing countries.
At its first meeting, the Board decided to fast-track the selection of its host country so money can be disbursed as fast as possible to disaster-hit people
During the meeting, which held at Abu Dhabi, the 26-member Board sought to finalize operations and its partnership with the World Bank.
It was gathered that discussions centered on the administrative steps needed to get the fund up and running, and giving out money as soon as possible.
The board said it is set to pick its host nation in July as it speeds up the process to ensure hard-hit countries can directly access money to help them recover from the unavoidable effects of climate change.
Selecting the host country for the board is a priority because only then will it be able to take up legal responsibility and enter into formal arrangements with the World Bank, which governments have asked to host the loss and damage fund “on an interim basis” despite the initial reluctance of developing countries, observers noted.
The World Bank has until mid-June to confirm it is willing and able to take on this role. The decision rests largely on the bank’s ability to meet 11 conditions, including allowing developing-country governments and organisations working with vulnerable communities to receive money directly without going through intermediaries like multilateral development banks or UN agencies.
Daniel Lund, a loss and damage board member from Fiji, was quoted as saying that overhead costs and management fees from multiple layers of middlemen swallow up a high proportion of development funding in general.
“For small island developing states, it is always too many cooks and not enough ingredients. A lack of direct access is a particularly unacceptable scenario when it comes to finance for addressing loss and damage because much of what we need to do is direct support [to] the individuals and communities that bear the burden [of climate change],” he told Climate Home.
Research estimates current loss and damage costs in developing countries at between $290 and $580 billion per year, which will up to between $1 trillion to $1.8 trillion by 2050.
The fund has the potential to revolutionize climate finance by expediting relief funds to regions grappling with the ravaging effects of fossil-fuel-induced climate disasters such as floods, heatwaves, and droughts.
Lien Vandamme, a policy expert from the Center for International Environmental Law, hailed the meeting as a potential game-changer, noting a shift towards a more inclusive decision-making process.
Developing nations, who have been advocating for a shift away from consultant-driven projects, stand to benefit from more direct access to funds, strengthening their capacity to address climate crises within their communities.
The establishment of the fund, agreed upon at COP27 in Egypt and further ratified at COP28 in Dubai, marks a pivotal step towards tangible action.
With 12 members from developed countries and 14 from developing nations, the fund’s board is poised to ensure equitable representation.
Notably, pledges totaling $661 billion from 19 countries have been made, with an envisioned annual payout goal of $100 billion to kickstart the initiative.
Harjeet Singh, an observer with the global Fossil Fuel Non-Proliferation Treaty Initiative, emphasized the imperative for funds to be disbursed as grants rather than loans, ensuring swift assistance to affected countries.
Singh urged a forward-looking approach, citing research estimating loss and damage costs in developing countries to escalate to trillions by 2050.
Looking ahead, the fund’s board faces the daunting task of setting ambitious finance goals and identifying sustainable funding sources.
Mia Mottley, Prime Minister of Barbados, proposed innovative finance measures, including global financial services taxes and levies on fossil fuel profits and shipping value, underscoring the need for a cohesive governance framework.
While contributions from nations like France, Germany, and Italy signal solidarity, the stance of the United States remains pivotal. The U.S. has refrained from framing loss and damage finance as reparations, leaving room for diplomatic maneuvering. However, uncertainties persist regarding congressional approval for funding allocation.
Amidst these challenges, the momentum gained from the recent board meeting heralds a transformative shift towards equitable climate finance, offering hope for vulnerable communities grappling with the relentless impacts of climate change.