The paper, published on 27 October 2021 by a team of SEI experts in climate finance and equity issues, is based on direct observation of meetings on loss and damage, an in-depth literature review, and interviews with stakeholders, including climate negotiators, members of the WIM Executive Committee, representatives of marginalised groups, and civil society actors.

It starts with the recognition that loss and damage “is already a lived reality for the poorest communities in the world”, and even worse climate change impacts are ahead. Pointing to projections that these costs could reach $200–580 billion by 2030 and climate change could force 216 million people to migrate by mid-century, the authors stress that timely action on loss and damage is essential “to avert humanitarian crises and ensure equitable transitions”.

Moreover, the authors note that tangible progress on loss and damage finance at COP26 is a top priority for many developing country Parties, and thus essential for safeguarding the perceived legitimacy of the climate negotiations and upholding the core principles of the global climate policy regime.

As the Hon. Molwyn Joseph of Antigua and Barbuda, chair of the Alliance of Small Island States (AOSIS), said in advance of the paper’s publication, “Small island developing states (SIDS) face the reality of having to respond to climate disasters now, not in the future… The COP cannot be considered successful unless SIDS receive adequate and predictable support from the international community in order to adapt and adjust to loss and damage caused by the adverse effects of climate change… We must take a firm decision that the issue of climate justice is an issue that requires immediate attention.”

The question is how to move forward. After recognizing disagreements over liability as a key obstacle to progress on the WIM to date, the authors propose that, instead of waiting to resolve those differences, countries can agree to start providing loss and damage finance on the basis of solidarity, accounting for local needs, and the principle of “common but differentiated responsibilities and respective capabilities”.

“Practical, pragmatic solutions exist for loss and damage finance that don’t politicize the issue and instead focus on the needs of vulnerable countries and communities,” said Zoha Shawoo, an associate scientist at SEI US and lead author of the paper. “Providing finance on the basis of solidarity and in line with already established principles of historical responsibility underpinning the Paris Agreement enables us to make real concrete progress right away.”

In Glasgow, the authors note that a group of developed countries could take the lead by announcing pledges of bilateral finance for loss and damage. The Executive Committee for the Warsaw Mechanism can also initiate a process to identify the most viable near-term options for channelling finance.

The parties could also agree to start setting up national-level loss and damage systems to thoroughly assess needs within countries, ensure that finance flows respect principles of country ownership, additionality and transparency, and ensure that finance reaches the most vulnerable communities.

“COP26 is going to be the first COP in the new era of actual loss and damage from human-induced climate change,” said Saleemul Huq, director of the International Centre for Climate Change and Development in Bangladesh and a prominent expert in the issue who reviewed the paper. “This is the new agenda for every COP and every country to address going forward.”

Given the scale of global needs, the paper’s authors note, a formal, dedicated loss and damage finance mechanism still needs to be developed in the long term. A first step towards this, they suggest, would be to include loss and damage as part of the post-2025 climate finance target under the Paris Agreement.

“Millions of people in poor countries and communities face devastating losses from climate change,” said Sivan Kartha, a senior scientist at SEI US, climate equity expert and co-author of the paper. “Wealthy countries have a choice at COP26: do they continue to stall or step up with urgently needed finance, supporting a just response to the climate crisis based on global cooperation?”