Designing a Loss and Damage fund for the UNFCCC Warsaw International Mechanism

Background

The Warsaw International Mechanism (WIM) for Loss and Damage (L&D) was first established in 2013 at the nineteenth Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). The WIM is the result of several years of demands from Small-Island Developing States (SIDs) and Least Developed Countries (LDCs) to address the residual, unavoidable losses and damages from climate impacts that are not being tackled through adaptation and risk reduction strategies alone. The WIM has an Executive Committee (ExCom) tasked with the mandate of exploring implementation approaches to address L&D, and the main functions of the WIM are to enhance knowledge and understanding of risk management, strengthen dialogue and coordination and enhance action and support to address L&D, including through finance and technology.

In recent years, the WIM has faced increasing criticism for focusing primarily on knowledge-gathering and coordination of bodies as opposed to finance, with no funding mechanism as yet in place to address climate justice or provide compensation to countries already facing losses and damages.

At COP25 in Madrid, a clear demand emerged from the international community, particularly LDCs and SIDs, for the WIM ExCom to establish a loss and damage fund to provide finance and compensation to vulnerable countries. This project aims to address this demand by developing a design for such a loss and damage fund.

Overview

The overall aim of the project was to provide a set of options for the design of this fund to be presented to and considered by the Executive Committee of the Warsaw International Mechanism under the UNFCCC.

Through a combination of literature review, policy analysis, key expert interviews and stakeholder consultation, this project:

• Defined how a loss and damage fund can be created within the WIM, including the target of the fund
• Developed principles and governance mechanisms to guide both contributions into the fund and distribution out of the fund
• Explored whether and how loss and damage can be funded in a way that gives credibility to additionality
• Explored whether the fund should be liability-based, and how it can account for increasing climate damages over time

A multidisciplinary team of researchers across three SEI centres engaged with policymakers, climate negotiators, activist groups and other relevant stakeholders to develop a policy-relevant design of the fund that addresses climate justice needs.