Part of the Loss & Damage fund’s objectives and purpose should be to promote coherence and complementarity with new and existing funding arrangements in the global financial landscape. Existing funding streams include climate finance, disaster risk reduction, overseas development assistance and humanitarian aid (among others). This Issue Brief provides an overview of this ‘mosaic of solutions’ and explores gaps and opportunities in the context of the current reform agenda of the global financial architecture.
- International transfers (developed to developing countries; public and private contributions) of existing funding streams are steadily rising. In 2020, all flows were estimated at: climate finance (US$ 83.3 bn, of which US$ 29 bn for adaptation), overseas development assistance (US$ 172.32 bn, of which US$ 8 bn for disaster risk reduction) and humanitarian assistance (US$ 32.7 bn) culminating in about US$ 277.2 billion. L&D costs are estimated to reach US$ 290-580 billion per year by 2030; while Least Developed Countries call for a minimum floor of US$ 100 billion for the L&D fund in addition to existing funding streams.
- Existing funding streams contribute to minimising avoidable L&D as set out in activities under Article 8 of the Paris Climate Agreement. Accessibility to these funds is on the global financial reform agenda, along with how International Financial Institutions can contribute to funding arrangements for addressing L&D. So far, no concrete proposals are on the table. Coherency and complementarity of existing streams with the establishment of the new L&D fund can support improving accessibility and demonstrate replenishment needs.
- Two key yet much underdiscussed issues relate to identifying i) additional sources to finance L&D (e.g. innovative sources such as taxes, levies), and ii) what the fund will target, that is separate and additional to existing funding streams, especially since L&D taxonomies are still developing. For example, addressing permanent and irreversible climate change impacts and Non- Economic Loss and Damage as well as irreversible biodiversity loss are areas lacking dedicated funding.