91 STUDY Analysis Climate Finance for Addressing Loss and Damage How to Mobilize Support for Developing Countries to Tackle Loss and Damage Published by Brot für die Welt Evangelisches Werk für Diakonie und Entwicklung e. V. Caroline-Michaelis-Straße 1 10115 Berlin Phone: +49 30 65211 0 [email protected] www.brot-fuer-die-welt.de Lead Author Thomas Hirsch, Climate & Development Advice With contributions from Mizanur Rahman Bijoy, Ojelel Benjamin Etubi, Lilian Kantei Joseph Imuton, Genevieve Jiva, Andrew Masaba, Sabine Minninger, Sixbert Mwanga, Kenedy Orach, Mohammad Mahbubur Rahman, Wande Rajabu, Gerold Schmidt Editors Elena Cedillo, Johannes Grün, Sebastian Landsberger, Maike Lukow, Athena Peralta, Lisa Binder, Isaiah Toroitich Legally responsible for content Klaus Seitz Photos Jörg Böthling (p. 41); Climate Action Network Tanzania (p. 18); Jens Grossmann (p. 24, 47, cover); Thomas Lohnes (p. 34); Lutheran World Federation (p. 16); Network on Climate Change, Bangladesh (p. 13); Frank Schultze (p. 5); Thomas Venker (p. 11) Layout Katja Tränkner (Write Now) Printed by Druckhaus Berlin-Mitte Art. Nr. 129 503 060 Donations Brot für die Welt Bank für Kirche und Diakonie IBAN: DE10 1006 1006 0500 5005 00 BIC: GENODED1KDB November 2019 STUDY Climate Finance for Addressing Loss and Damage How to Mobilize Support for Developing Countries to Tackle Loss and Damage Content Preface ..........................................................................3 Executive summary ...............................................................5 Introduction......................................................................8 1 Relevance and urgency of mobilizing climate finance to address loss and damage ...................................................9 1.1 Relocation of villages endangered by sea level rise in Fiji .......................... 11 1.2 Loss and damage of small-scale salt producers in Bangladesh .....................12 1.3 Climate-induced loss and damage in Peribán, Mexico ............................14 1.4 Climate-induced loss and damage facing livestock keepers in Turkana county, Kenia ..................................................... 15 1.5 Climate-induced loss and damage affecting South Sudanese refugees and their host communities in Lamwo and Palorinya, Uganda.....................16 1.6 Climate-induced loss and damage in coastal Tanzania............................ 17 2 A brief history of the financial dimension in the loss and damage discourse . 22 2.1 Loss and damage in international climate policies................................22 2.2 “Elaboration of the sources and modalities for accessing financial support for addressing loss and damage” ‒ Technical paper by the UNFCCC secretariat . .23 3 Climate justice criteria for assessing financial sources to address loss and damage ..................................................28 3.1 Solidarity ...................................................................28 Pro-poor principles...........................................................28 Humanitarian principles .....................................................30 3.2 Accountability............................................................... 31 Human rights principles ...................................................... 31 Gender equality principle ..................................................... 33 Polluter pays principle ........................................................ 33 3.3 Conclusions on climate justice criteria ..........................................34 4 Possible financial sources in light of climate justice ............................ 36 4.1 International Airline Passenger Levy or bunker fuel levy ..........................36 4.2 Financial Transaction Tax (FTT) ..............................................37 4.3 Climate Damages Tax (CDT) ....................................................... 38 4.4 Carbon levy .................................................................39 4.5 Other innovative public sources ...............................................40 4.6 National mechanisms in developing countries ...................................41 4.7 Other voluntary contributions .................................................42 4.8 Conclusion on possible sources ................................................42 5 Options for funding mechanisms to address loss and damage ...................44 5.1 The Green Climate Fund (GCF) ...............................................44 5.2 The UN Adaption Fund (AF) ..................................................45 5.3 Other climate funds ..........................................................45 5.4 Other possible funding mechanisms ...........................................46 5.5 Global Loss and Damage Fund ................................................47 5.6 Global solidarity fund to address loss and damage ...............................48 5.7 The possible role of the WIM ..................................................48 5.8 Conclusions on possible funding mechanisms . .49 6 Concluding recommendations ...............................................50 Abbreviations.................................................................... 53 Bibliography.....................................................................54 Preface As faith-based and humanitarian networks, we under- With this publication, we wish to contribute to the stand that climate change will challenge all parts of discussions on loss and damage finance, specifically society. Our particular focus is on the well-being and highlighting the needs of the most vulnerable population protection of creation and the poorest and most vul- groups and the responsibility of the polluters as well nerable people in developing countries. The need for a as of rich countries. Our faith-based humanitarian and comprehensive protection agenda is accelerating day development work, as well as our continuous interac- by day with runaway climate change. tion with, and presence in, communities through our The injustice of climate change means that the churches and partners, enable us to provide important world’s poorest countries, which have done the least to facts and bear witness to the urgent need for loss and cause the climate crisis, are hit the hardest by climate damage finances. change impacts and driven deeper into vulnerability, If world leaders fail to deliver on this, the deepening poverty and debt. The financial support and action climate and debt crises will make it impossible for poor towards climate change mitigation and adaptation are countries to ever meet the Sustainable Development too little to respond to the climate emergency and in- Goals, and the climate injustice gap will continue to creasing climate-related loss and damage. grow. This is unacceptable for us, both from a faith and Frequent droughts, cyclones, flooding and other ethical imperative and from a human rights perspective. climate-related disasters are putting a strain on our capa- city and that of other humanitarian and development agencies. Even when the humanitarian system works, Rev. Dr. h. c. Cornelia Füllkrug-Weitzel it can be cumbersome, causing delays in getting funds President, Bread for the World to those who need them most for relief and recovery. Often this financial support to address climate change Rudelmar Bueno de Faria impacts in vulnerable developing countries is insuffi- General Secretary, ACT Alliance cient, delayed and given in the form of loans, thus in- creasing these countries’ debt burden and putting full Rev. Dr. Olav Fykse Tveit recovery further out of reach. General Secretary, World Council of Churches There is currently no international mechanism that provides support to developing countries to recover from Rev. Dr. h. c. Dr. h. c. Martin Junge climate-induced “loss and damage” linked to the polluter General Secretary, The Lutheran World Federation pays principle. Developing countries continue to push hard within the UNFCCC process for an improved loss and damage mechanism that provides much-needed finance. This year the UN climate summit (COP25) in Madrid presents an important opportunity for progress on financing to support vulnerable developing countries and communities to comprehensively avert, minimize and address climate-induced loss and damage and to build their resilience to the impacts of climate change. 3 Executive summary Bangladesh is one of the countries most affected by extreme weather events. Heavy flooding has become a recurrent phenomenon in the southern districts. The planet is burning. Devastating droughts, hurricanes, happen, climate vulnerable countries and their popula- wildfires and floods, dying corrals, melting glaciers, and tions have every right to call for climate-induced loss and thawing of permafrost provide overwhelming evidence damage to be redressed as an additional core issue of that dangerous climate change is happening ‒ and it is climate justice and global stability. hitting faster and harder than ever predicted by scientific It is shown that higher capital costs caused by cli- researchers. 2019 is likely to become another year of mate vulnerability, increasing stranded assets due to record-high climate-induced loss and damage, making it high climate risk exposure, and higher economic inequa- hard to adapt and leaving more than one hundred poor lity among nations resulting from climate change are not and vulnerable countries and hundreds of millions of only future risks, but experiences we have seen both past people largely