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Last year, Pakistan was hit with floods so devastating that they were hard to comprehend. In some areas, 15 inches of rain fell in a single day. And the rain went on for months, inundating one-third of the country, spreading disease, and displacing nearly 8 million people. Six months later, Pakistan is still in crisis–nearly 2 million people are living near stagnant floodwater. Pakistan has estimated that it needs about $16. 3 billion to recover from the floods, a sum that does not take into account so many ripple effects of the crisis: grief over those who died, education abruptly ended, the struggles of girls married off young as their families coped with a sudden plunge into poverty.
But these floods were not a “natural disaster.” The monsoon rains were up to 50 percent more intense than they would have been without climate change. So although Pakistan has to foot this bill, or at least most of it, the country bears little responsibility: Pakistan contributes less than 1 percent of global greenhouse-gas emissions, while the United States is the world’s second-biggest emitter, accountable for about 20 percent of emissions since 1850. But there is no mechanism for the United States or any other country to pay for the loss and damage that it is at least partially responsible for.
That may be changing. In November, world leaders at the most recent big climate meeting, known as COP27, agreed to set up a “loss and damage” fund, bankrolled by rich countries, to help poor countries harmed by climate change. Now comes the hard part of figuring out the details: This week, a special United Nations committee set up to plan the fund will meet for the first time, in Luxor, Egypt. Delegates will start negotiating which nations will be able to draw from the fund, where it will be housed, where the money will come from, and how much each country should pitch in. Lien Vandamme is a senior campaigner with the Center for International Environmental Law and is currently in Egypt for negotiations. “Everything is still open.” Other meetings will follow, and the committee will make its recommendations to the world this fall in Dubai at COP28.
If the past several decades of climate negotiations are anything to go on, the loss-and-damage fund will be poorly endowed, or filled with money that got moved over from some other fund and relabeled, or in the form of loans rather than grants. If that happens, it will likely be perceived by poorer nations as yet another inadequate response by the same countries that messed up the climate in the first place. And those that are wronged are unlikely to simply suffer in silence.
The loss-and-damage fund would be separate from what is currently the dominant form of climate funding that flows to the global South: money to help low-income nations reduce their emissions. It would be distinct from the “adaptation” fund, which funds areas to prepare for natural disasters and avoid the effects of global warming. The new fund will be funded by wealthy countries in order to help poorer countries who have suffered loss. In a word, it would be reparations.
The agreement to establish a fund for this purpose was initially opposed by some rich countries. The U.S. climate envoy John Kerry said in the fall that helping the developing world cope with climate change is “a moral obligation”–but he wanted that help to flow through existing funds and institutions, including the World Bank and the International Monetary Fund. The developing countries demanded that a dedicated fund be created. They won. Almost all the details were left to be finalized at COP28 in Dubai, after the committee has worked to iron out specifics. But by agreeing that a loss-and-damage fund should exist, countries seem to be reluctantly acknowledging that they bear some moral accountability for climate change. Liane Schalatek, climate-finance specialist at the Heinrich Boll Foundation, Washington, D.C., said that it is clear that developed nations have an historical responsibility. She is also visiting Luxor this week.
Funds are especially needed for the “day after” problems–the ongoing work of rebuilding and recovering after a flood or a heat wave is over and the emergency foreign aid has dried up, Mohamed Nasr, Egypt’s delegate to this week’s meeting, told me. Not everyone needs tarp tents or bowls of rice. They need “social support, a way to return livelihoods,” Nasr said. But how much? One analysis suggests that the true scale of the financial losses due to climate change outside of the West may be as much as $580 billion a year by 2030, and some groups are considering a figure in that ballpark to be the minimum acceptable amount. Another analysis estimated that America owed $20 billion for global climate losses in 2022, a number that would rise to about $117 billion annually by 2030. Nasr refused to name specific amounts and suggested that negotiations be started about the operation of the fund. He said that the needs for this fund are immense and that mentioning numbers at this stage would “scare people”. He said that if you start with a number, then the emphasis will be only on the numbers. But he did add that “it will be in the billions.”
Given that the standing UN goal for all types of climate funding from rich countries to poorer ones–$100 billion–has never been met, filling the loss-and-damage fund with hundreds of billions of dollars feels like an almost impossible lift. “It will be a huge challenge to get countries to agree on the amount that is needed,” says Leia Achampong of the European Network on Debt and Development. For many delegates from the global South, a key demand is that the fund not come in the form of loans. Many countries in the global South, including Pakistan are struggling with debt. This is making it difficult for them to be able to support their citizens. More loans would just add to this debt burden. Schalatek said to me that if a country has debts, the World Bank or the IMF will call for austerity. The first thing that often goes is the social security net.
A central issue going into the meeting in Egypt is that, despite broad agreement that rich countries responsible for the most emissions should pay in and that poor countries feeling the brunt of the effects should receive the funds, the globe cannot be neatly divided into just two categories–“developed” and “developing.” The trickiest case is undoubtedly China. Historically classified as a developing country, China is getting richer by the month and has emitted 11 percent of historical emissions, second only to the United States. At COP27, a coalition of developing countries rallied around China’s claim that it should be a recipient rather than a donor, to the consternation of the European negotiators. It is likely that the U.S. would be reluctant to spend money on a fund China could draw from. The question of whether the contributions will become legal obligations or voluntary donations to the fund is another unanswered issue. Any legality would need congressional approval, which is not an easy task. (The State Department did not respond to a request for comment on the loss-and-damage negotiations. )
If the loss-and-damage fund are skimpy, communities and nations will likely seek restitution for their losses through national and international courts. An early test case began in 2015, when a Peruvian farmer sued the German energy giant RWE. The farmer, Saul Luciano Lliuya, says his home is at risk of being washed away by meltwater from a glacier, and he wants the company to pay 0. 47 percent of his adaptation costs, on the basis of a study that attributes that fraction of emissions to the company’s activities. RWE has denied culpability, and the case is ongoing. In an example of targeting nations rather than companies, Indigenous people from four low-lying Australian islands–Boigu, Poruma, Warraber and Masig–submitted a petition to the UN Human Rights Committee arguing that the country had done little to stop the climate change threatening their homes. In September, the committee agreed, ordering Australia to compensate the islanders for their losses.
But legal action might actually be a best-case scenario for the West. A stable world is not possible for poor, indebted countries that are struggling to cope with the climate crisis. In 2021, a U.S. Department of Defense report on climate change warned that “the physical and social impacts of climate change transcend political boundaries, increasing the risk that crises cascade beyond any one country or region.” People who lose homes and livelihoods to climate-caused disasters will do what they can to improve their situation. As far back as 1995, the Bangladeshi dignitary Atiq Rahman warned, “if climate change makes our country uninhabitable, we will march with our wet feet into your living rooms.” Hundreds of millions of people may be displaced by 2050.
Mass migrations, resource scarcity, and poverty can lead to global conflicts. No country, no matter how rich, can build a seawall high enough to keep out that kind of chaos. Fear is a powerful motivator force that has been around for a long time and can be used to move rich nations to fund this loss-and-damage pool by appealing to the justice system.
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