A Loss and Damage Fund in the Pacific?

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With internationally managed climate finance on one side and small-scale communities on the other, how do communities in the Pacific access support for damage caused by climate change?

At last year’s COP27 in Egypt, an agreement was reached to establish a Loss and Damage Fund for countries, such as those in the Pacific, vulnerable to the “adverse effects” of climate change. Pacific leaders were among the leading voices advocating for the establishment of the fund. Potentially, this fund will exist in addition to the international aid the Pacific receives for disaster response, mitigation, adaptation, and climate “resilience”.

What will a loss and damage fund support and how will it work? A UNFCCC transitional committee has been deliberating on what the funding is for as well as how it will be delivered in the lead up to the upcoming COP28 meeting. Currently, there is much ambiguity around what the fund will look like while negotiations are reportedly stalled.

The question of who defines what constitutes ‘loss’ is fraught. How do wealthier countries with larger carbon footprints compensate for losses which are not only financial but encompass the destruction of ancestral homes. Loss cannot be defined in purely economic terms as the land and ocean hold not only financial but also relational, cultural and spiritual values. This is a major dilemma facing the idea of compensating for loss.

‘Damage’, however, can perhaps be defined in a more tangible sense. Compensation for damage caused by extreme weather events, such as cyclones, and for the reduced productivity of agriculture systems, which the subsistence farmers of the region rely upon, may contribute to addressing climate injustice faced by Pacific communities. Additionally, support to people facing climate-induced migration, including those pushed to relocate to poorly serviced urban areas, is also widely needed.

Therefore, the question of how a loss and damage fund will work is critical.

Questions such as how financial resources are distributed, the institutional arrangements and delivery modalities, are currently being considered by the transitional committee. Commentators have pointed out there are different options for how this fund might work, for example, through debt relief or tax schemes. Yet, in all likelihood the existing institutions and structures of international aid seem to be the most convenient mechanism for the international community to employ should they be willing to support the fund.

Working through existing international aid structures comes with significant challenges. Development aid agencies of the Global North rearrange a view of Pacific realities in line with their own agendas, frameworks and capacities. This can lead to ineffective or inappropriate forms of support for those who need it.

Currently, the majority of aid to the Pacific is programmed through multilateral organisations and bilateral government aid. Multilateral aid is often based on global frameworks built on assumptions about how governance (should) work in any particular country. Bilateral aid is complicated by the domestic concerns of donor country, their (geo)political relationships, and increasingly, by the use of for-profit companies―‘managing contractors’―to deliver aid. The one-size-fits all approach is problematic as is the politicisation or corporatisation of aid resulting in a focus on short-term delivery to ‘clients’ rather than on long-term effectiveness. Moreover, the fragmented nature of the aid sector, and of climate finance, consisting of a range of donor and multilateral organisations working within the region, can lead to confusion and duplication.

High expectations are placed on Pacific governments, the major recipients of aid, to deliver results. On the one side you have international pots of funding, and on the other, Pacific communities. In the middle, Pacific governments are left mediating the competing demands of their political leaders and their international partners while at the same time navigating their own internal capacity. Donors often take for granted that the relationship between the state and communities is one of access and legitimacy, but this is not always the case. Inevitably there are significant bottlenecks.

As the designated beneficiaries, community members at the receiving end are invited to ‘consult’ and ‘participate’. Yet, ‘consultation’ and ‘participation’ do not take place on an equal playing field. Community inputs are massaged through aid-bureaucracy mechanisms in order to fit within existing aid frameworks and government policies. Many community members find the language and bureaucracy of aid inaccessible for fully informed participation.

There is a gap in knowing how to work with communities, how to access their knowledge of not only the environment but also the social, political and livelihood systems embedded in landscape and seascape. Where the power to make decision sits within the donor–recipient–beneficiary relationship needs a complete overhaul. The change needed requires much more than one UN committee producing another set of top-down and generalised frameworks. It requires thought and creativity generated through dialogue with affected communities.

Finding the right mechanisms for a loss and damage fund will require the involvement of a range of actors, not only government but also community leaders and organisations, civil society, and churches who are able to facilitate the movement of information and resources to and from communities. The mechanisms will not look the same in each Pacific locale, even within each country. An effective mechanism will also need commitment from donors to step back from the urge to control the aid process, including through tight timeframes and complex bureaucratic process. Donors will need to let go of their inherent fear of risk.

In designing how a fund will work, we can learn from the current challenges of aid delivery.

A loss and damage fund is an opportunity to get resources to affected communities. It represents a chance to do something outside of the entrenched and bureaucratic structures of aid. However, if funding for loss and damage is to reach those who are disproportionately affected by climate change impacts in the Pacific, the real climate change adaptation that is needed is to how climate finance is delivered.

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