Cover of LDFF Why and How Discussion Paper
Discussion Paper

The Loss and Damage Finance Facility: Why and How

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We are in the era of Loss and Damage (L&D). The hard limits to adaptation are being realized and the scale of the challenge ahead is significant as impacts of climate change are greater than previously expected. The recent IPCC impacts report shows extreme climatic events have been observed in all regions, with unprecedented consequences, especially related to 127 key risks identified by the IPCC. Complex, compounding and cascading risks are sweeping across sectors and regions and amongst this “atlas of human suffering” it is those regions and people with considerable development constraints who have the highest vulnerability and who have contributed the least to climate change that are suffering the disproportionate impacts.

At the climate change conference, COP26, the negotiating bloc G77 & China proposed a solution to the gap in finance available to address their needs in the form of a L&D Finance Facility (LDFF) which will be able “to provide new financial support under Article 9 of the Paris Agreement (PA), in addition to adaptation and mitigation finance, to developing countries to address loss and damage”. However, agreement could not be secured for the LDFF’s establishment or a process to do so. Instead, the Glasgow Dialogue was established which presently remains to be defined with clear milestones and outcomes.

The objective of this discussion paper, a collaboration by CAN International, Stamp Out Poverty, Christian Aid, Practical Action and the Washington Office of the Heinrich Böll Stiftung, is to contribute to achieving the establishment and operationalization of an LDFF that delivers on the needs of developing countries at speed and scale by explaining the why and how. The paper explains why the LDFF is necessary before turning to an analysis of the governing arrangements and core operational functions for the LDFF. Scenarios that elucidate the potential transformative value of the LDFF are described before the paper concludes with recommendations and a way forward to COP27 and beyond.

Both the discussion paper and executive summary are available for download.

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Date of Publication
May 2022
CAN International, Christian Aid; Heinrich Böll Stiftung (Washington, DC); Practical Action & Stamp Out Poverty
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