Loss and damage

Also called: L&D · Topic: Environment and Sustainable Development · NCERT: Beyond NCERT

Meaning

Loss and damage (L&D) is the harm from climate change that cannot be avoided, because it goes beyond what adaptation (steps taken to cope with climate impacts) can prevent. Examples are an island that goes under the sea or a harvest that is lost.

It matters because it is the third pillar of climate action, after mitigation and adaptation. It is recognised in Art. 8 of the Paris Agreement (2015). Since COP27 (2022), it has its own global fund. Poor, climate-vulnerable countries see it as a question of climate justice: the countries that caused the least warming often suffer the most harm.

Explanation

Where L&D sits: the three layers of climate response

• Mitigation means cutting emissions so that less warming happens.

• Examples: NDC targets, net zero, carbon markets.

• Adaptation means building resilience (the ability to cope with and recover from climate shocks).

• Examples: flood defences, drought-tolerant crops.

• Loss and damage is the harm that remains after mitigation and adaptation have done what they can.

• Chain: too little mitigation → more warming → adaptation reaches its limits → the leftover harm is loss and damage.

• Key point: L&D is the harm itself. A fund that pays after the harm is the response to it. That is why the fund is officially called the "Fund for responding to Loss and Damage".

Types of loss and damage

• Economic losses are things that can be priced in money.

• Examples: destroyed crops, houses, roads and income.

• Non-economic losses are hard to price.

• Examples: loss of life, health, culture, homeland and biodiversity. A submerged island takes away a community's land and its way of life.

• By speed of the event:

• Extreme events strike suddenly, such as cyclones, floods and heatwaves.
• Slow-onset events build up over years, such as sea-level rise and glacier retreat.

How the global system on L&D developed

• Warsaw International Mechanism (WIM), 2013 was the first formal UNFCCC body on loss and damage.

• UNFCCC is the United Nations Framework Convention on Climate Change (1992), the parent climate treaty.

• Paris Agreement, 2015: Art. 8 recognises loss and damage as a separate issue from adaptation.

• COP27 (Sharm el-Sheikh, 2022): countries agreed to create a loss and damage fund.

• COP is the Conference of the Parties, the yearly meeting of all member countries.

• COP28 (Dubai, 2023): 198 countries agreed to make the fund work [5].

• Hosting and management [5][6]:
• The World Bank is the interim host. The fund is a World Bank-hosted Financial Intermediary Fund (FIF) for 4 years.
• The Bank runs the fund's secretariat (the office that manages its daily work).
• The Bank is also the trustee (the body that holds and manages the fund's money).
• The Philippines is the host country of the fund's Board. The first Executive Director started work on 1 November 2024 [5].

What makes L&D rise or fall

• It rises when mitigation falls short.

• Higher emissions → more warming → more extreme and slow-onset events → more harm.

• It rises when adaptation is underfunded.

• Less spending on resilience → more harm goes past what adaptation can handle.

• Adaptation finance was only $33.6 bn in 2023 and $34.7 bn in 2024. It grew by only about $1 bn a year from 2022 to 2024 [4].

• The ability to recover gets weaker when finance comes as loans.

• In 2024, 67% of public climate finance was loans ($68.5 bn) and 29% was grants ($29.7 bn) [4].

• A country hit by a disaster that takes a loan → more debt → less money for rebuilding, health and education.

• Scale gap: the fund has pledges of only a few hundred million dollars. This is tiny compared with the need.

In India

• India's status: India is a non-Annex I (developing) country under the UNFCCC. It is also highly exposed to climate harm, so it has a direct stake in the loss and damage debate.
• Who in India faces the risk:
• Farmers: lost harvests from drought, floods and heat.
• Coasts: cyclones and sea-level rise.

• Himalayan states: glacier retreat and disasters.

• Domestic tools that reduce or manage this harm:

• NAPCC (National Action Plan on Climate Change), 2008. It has 8 missions, including Sustaining the Himalayan ecosystem, Water, Sustainable agriculture and Green India.
• SAPCCs (State Action Plans on Climate Change) apply the national plan at state level.
• NAFCC (National Adaptation Fund for Climate Change), 2015 is a domestic fund for state-level adaptation projects.

• Disaster-management financing pays for relief and rebuilding after climate disasters.

• India's NDC for 2031-35 (submitted April 2026) [1][2]:

• An NDC (Nationally Determined Contribution) is a country's own climate pledge under Paris.
• India commits to invest more in adaptation in agriculture, water, the Himalaya, coasts, health and disasters [2].

• It calls for "new and additional" finance from developed countries [2].

• India's stance on finance: India called the NCQG (COP29, Baku, 2024) goal of at least $300 bn a year by 2035 inadequate and objected to its adoption [3]. It argues that developed countries have not provided enough finance, especially as grants.

Don't confuse with

• Adaptation: adaptation acts before harm, to prevent it (for example, sea walls). Loss and damage is the harm that remains beyond what adaptation can prevent.
• Adaptation Fund: this fund was created under the Kyoto Protocol and pays for adaptation projects. The Fund for responding to Loss and Damage was agreed at COP27 (2022) and made operational at COP28 (2023).
• Warsaw International Mechanism (2013): this is an institutional body on L&D and does not pay out money. The L&D Fund is the money channel.
• Green Climate Fund (GCF): the GCF is the largest dedicated climate fund, set up under the UNFCCC in 2010. It mainly funds mitigation and adaptation. It is not the L&D fund.

Prelims Hooks

• Art. 8 of the Paris Agreement covers loss and damage. Art. 6 covers carbon markets and Art. 9 covers finance.
• The Warsaw International Mechanism (2013) was the first formal UNFCCC body on loss and damage.
• Fund timeline: the decision to create the fund came at COP27, Sharm el-Sheikh (2022). It was made operational at COP28, Dubai (2023), where 198 countries agreed [5].
• Host and trustee: the World Bank hosts the fund as a Financial Intermediary Fund (FIF) for an interim period of 4 years. It is also the trustee [5][6].
• Trap: the Philippines is the host country of the fund's Board. The World Bank, not the Philippines, is the host of the fund itself. The first Executive Director started on 1 November 2024 [5].
• Trap: L&D means harm beyond adaptation. It is not the same as adaptation finance, which was $34.7 bn in 2024 [4].

Mains Points

• L&D as climate justice. Under CBDR-RC (Common But Differentiated Responsibilities and Respective Capabilities, Art. 3.1 of the UNFCCC), developed countries caused most historical emissions.
• Vulnerable countries bear the harm → they argue that the polluters should help pay for it.

• This links to India's case on per capita emissions (about one-third of the world average) and a "mitigation ambition gap" left by developed countries [2].

• The fund is too small and depends on loans. Pledges of a few hundred million dollars are tiny compared with needs.

• Loans still make up 67-73% of public climate finance (2023-24) [4].
• Loans after a disaster → more debt → less fiscal space for rebuilding → the country becomes even more vulnerable.

• So the quality of finance (grants, not loans) matters as much as the amount.

• Linking L&D to domestic policy (GS-III). Weak adaptation finance, stuck at about $34-35 bn in 2023-24 [4], pushes more harm into loss and damage.

• For India, the answer combines global advocacy with domestic resilience: NAPCC missions, SAPCCs, NAFCC and disaster-management financing.
• This protects farmers, coasts and Himalayan states.

Related concepts

• Common but differentiated responsibilities
• Nationally determined contributions
• Carbon intensity
• Net zero
• Carbon neutrality
• Carbon negative
• Climate finance
• New collective quantified goal
• Adaptation finance

Read more

• The global climate regime and climate finance