Data-Driven Modeling and Data Processing for Loss-and-Dawage Adaptation in Cities: Where Should Funds Go?

Adaptation is crucial. Some cities desperately need it. Experience gained in other countries should be shared and used to create resilient urban habitats.

The proposed methodology is based on cities. We call on networks such as C40 Cities to explore the possibilities of intercity collaborations on funding, expertise and data. Low- and middle-income countries like to have real-time weather data.

Improving the physical-risk data that go into these models is a priority, too. The goal is to set up a basic mechanism by next year, as well as to have a working platform by the year 2025. To gain the trust of participants in the loss-and-damage fund, the methods, data and code need to be peer reviewed and transparent.

The insurance and financial sectors have already used models of physical risks to translate temperature anomalies into climate impacts and the cost of damage. Such models are used to future-proof investments9. But they are proprietary, and would need upgrading to assess where loss-and-damage payments should go. Climate trends such as El Nio and tipping points in Earth system10 have yet to be added. A UN-led effort would need transparent software code for models, and hefty data processing.

The use of physical risk models should be considered by negotiators in the COP28 to provide a framework for determining who should pay and who should get what.

To prevent politics from stalling the establishment of the fund, we propose that decisions about who pays (and how much they give) should be made on the basis of trusted data and analysis. The loss-and-damage fund has to assess the areas most likely to be hit by climate change before any damage is done. If funds were dispersed in advance, people would have enough money to deal with disasters or invest in adaptation.

Some of us have begun to develop such a model (namely R.H.C. and B.K. at Ortec Finance, a Netherlands-based global provider of technology and advisory services for risk and return management, and D.L. at QuTec, an Italian technology start-up firm that is developing cutting-edge solutions for climate change).

Fundraising Mechanisms for Climate Change and Climate Risk Mitigation: Challenges for the UN and the Low-Energy Lower Ninth Ward

Practical mechanisms are needed to collect funds. The tax on insurance in the UK is 12% or 20% depending on the product. This and other revenues could be directed to the UN loss-and-damage fund. Although contentious, taxing fossil fuels is another option.

And fourth, granularity matters. A nation-only approach is insensitive to local problems and resource levels. The calculations should be detailed enough to reveal needs in net-donating countries as well as in net-recipient countries. Granular data provide information that governments can use in deciding where to allocate funds. For example, the Lower Ninth Ward of New Orleans in Louisiana, home to many low-income families, was particularly badly hit during Hurricane Katrina in 2005. Many residents never returned.

The mechanism needs to be seen as fair and trustworthy. It is best if it is introduced through a UN protocol and supported by experienced actors. The Office for the Coordination of Humanitarian Affairs, along with the Red Cross, Red Crescent and the UN World Food Programme could place materials in advance to help reduce disaster impacts. At COP28, negotiators would need to decide how to supervise these efforts, if adopted.

Ensuring financial mechanisms do not cause harm is a priority of the loss-and-damage fund. It should refrain from offering loans or other instruments that could increase the debt or exposure to financial volatility of countries that are already highly indebted. In the year 2016 and then again in the year 2020, almost all of the climate finance was in the form of loans.

The second question is who pays. Responsibility for loss and damage must be assigned. The UN’s concept of ‘common but differentiated responsibilities’ — that all states are responsible for addressing environmental destruction, yet not equally responsible — frames the narrative but does little to aid calculation. Does history matter more than the recent emissions of a country? How can such calculations be translated into monetary terms? How do richer nations help poorer ones adapt?

The authors recognize that this idea would need good data, which, in turn, would require a much better network of weather monitoring stations in the right places: there are only 37 for all of Africa. These monitoring stations are also a priority for UN secretary-general António Guterres — and will need much more international support to get off the ground.

This year has given ample evidence of how emerging economies are bearing the brunt of climate change. In February and March, Cyclone Freddy raged across the Indian Ocean for 5 weeks and made landfall 3 times, killing more than 1,400 people in Malawi and elsewhere in southeastern Africa. In July, Algeria experienced 50 °C heat and fires that killed dozens of people and displaced thousands. In September, more than 11,000 people died in the Libyan port city of Derna when a hurricane and torrential rains caused dams to burst1. Extreme heat, and melting ice, arewreaking havoc from the Pole to the small Pacific islands.

Negotiations are ongoing and it will take some time for the details to be worked out. Nonetheless, we argue, it’s crucial that aspects of the fund start to operate in 2024, including the release of small grants to support the most vulnerable people experiencing climate impacts.

Laura and her co-authors analyse the workings of the Green Climate Fund to see what lessons it has to offer. Established in 2010 and funded by higher-income countries, this is the world’s largest fund for climate mitigation and adaptation projects in low- and middle-income countries. The researchers found that its processes are anything but fast: the average length of time taken to approve a project is two years. Roughly one fifth of projects take less than 5 years. It allocated more than $11 billion in grants and loans, but only got over $6 billion out the door.

But it hasn’t been all smooth sailing: the GCF has been widely criticized for being too slow, difficult to access and risk averse. On average, the fund takes more than two years to approve projects; one-fifth of the projects take 3–5 years. The International Federation of Red Cross and Red Crescent movement respond to disasters in hours, unlike humanitarian organizations which do not respond to disasters until days after.

In our view, the loss-and-damage fund should adopt a learning-by-doing approach, with initial allocations treated as experiments, demonstrations or pilots. The fund should work with researchers and community-based organizations to document experiences — such as how the money was spent and how effective the measures were. The goal should be to deepen knowledge about how to address loss and damage effectively. Larger awards and alternative financing can be added later.

First, to get going, an initial call for proposals should be developed for disbursing small grants of $50,000–100,000 by the end of 2024. Simple rules for accessing those funds should be developed in consultation with countries.

A wide range of organizations, including non-governmental organizations, need to be able to access loss-and-damage funds. Climate outcomes are stronger when communities are involved in decision-making and responsible for their own adaptation2. For example, in one mangrove-forest restoration scheme in Vietnam, community engagement led to a mangrove survival rate of 70–90% over 3 years, higher than earlier projects achieved in the same area3.

accreditation processes should not be overly bureaucratic. National governments could nominated eligible organizations to access support from the fund. By contrast, the lengthy processes used by the GCF can take years and require resources that many groups do not have — such as three years of audited accounts and evidence of past experience managing similar projects. If they do not have enough information to apply, many LMICs and sub-national groups are effectively shut out of the GCF.

Such processes might be modelled on the Global Environment Facility’s small-grants programme, which has given out $725 million to more than 26,000 projects since it began in 1992. Lessons can also be drawn from the Climate Justice Resilience Fund, the director of which had authority in an initial round to approve funding at levels below $100,000 without going through a full board review and approval process. The loss-and-damage fund could also assign people to approve small proposals and move the positions around each two years in order to be fair.

Applicants should also be able to get funds pre-approved for specific purposes, such as cash transfers to people forced to relocate after a flood. Bangladesh, for example, receives anticipatory cash transfers from the UN World Food Program. These transfers have enabled livestock owners to purchase fodder for their animals in advance of a monsoon without having to sell their assets (see go.nature.com/3sy54cx).

Bangladesh has a one page form that it uses in the initial hours after a disaster to estimate losses and assess emergency-response needs. Detailed assessments can be done within three weeks.

The Loss-and-Damage Fund of a Small Island Adaptation Fund: Community Engagement, Collaborative Action, and Model-Building

The fund should use clear, simple language in its proposal requests; technical language can be a barrier. What exactly is required to demonstrate the ‘paradigm shift potential’ of a GCF project, for example? Even members of the GCF board have admitted not knowing.

Similarly, insurance-based mechanisms for loss and damage should be framed around the principles of mutuality, solidarity and accountability5. People who are vulnerable often cannot afford to pay for insurance. It is believed that insurers may set a high bar for triggering payment, making people unable to claim after a disaster. In 1991, the Alliance of Small Island States suggested setting up an insurance pool for small islands and low-lying LMICs, which was supported by HICs.

Co- financing should not be a condition for funding, because it would limit the amount of support given to loss and damage. This differs from the GCF, which seeks to mobilize additional funding for climate action from the private sector.

The fund will not be able to cover all losses and damages, which might amount to more than $435 billion by 2030 and $1 trillion by 2050 for LMICs (see go.nature.com/3fpzmqm). To make sure expectations are set correctly and applicants don’t waste time, energy and capital, it’s important to provide guidance on what and who the fund can support.

It is recommended that the loss-and-damage fund avoid the issue of showing ‘additionality’, which has been a problem for GCF adaptation projects. That is, separating climate change from development and to fund only the climate portion, which is challenging8. As one survey respondent articulated: “For a small island developing state, ‘development’ and ‘climate change’ has become a consolidated and integrated approach by the necessity of its small population and dispersed isolated geography.”

Vulnerability is multifaceted and such reductionist approaches do not account for social drivers such as poverty and social exclusion9. If human influence was found to have contributed to extreme climate events, it would be limited to physical impacts and would cause similar issues.

We recommend that the fund embrace the principles of locally led adaptation and enable recipients to articulate their needs on their own terms. This has never been done before, making it hard to say what this will look like, but a commitment to community engagement and collaboration, risk-taking and an appetite for learning from mistakes will be key.

There should only be one consensus for decisions. One is very important in approving decisions of the UNFCCC. That leads to delays and the board members are able to block decisions. If the board fails to come to a consensus, a two-thirds majority can approve a funding decision, according to our view.

The GCF shows equal representation does not mean equal participation in funding decisions. 12 LMICs, the same number from HICs and 4 observers from civil society make up the board. HIC board members had more disagreements with the proposal than LMICs did. More time was spent talking about the critiques from HICs.

Civil-society participation needs to be given greater authority. In the GCF deliberations, observers drew attention to human-rights and gender concerns, such as weak gender integration in implementation plans and possibilities of labour violations. They also spotted problems — for example, the GCF rules do not explicitly prevent the funding of fossil fuels.

Although they were vocal, observers’ points were rarely incorporated into final board decisions. The board attached conditions to 49 of the 181 projects. Of these, only 14 included conditions that were based on the concerns raised by civil society. HIC board members raised conditions for all 49 projects.

Therefore, we suggest, if the loss-and-damage fund has a 24-member board, it should include 12 members from LMICs, 8 members from HICs, and 4 members from civil society, including representatives of Indigenous groups and young people. Guidance on approaches that are not permissible should be developed by the fund.

Climate Finance in a New Arena: Modeling Loss-and-Damage Funding for Climate Recovery and Recovery in the Era of Extreme Weather Events

Huq passed away last month at the age of 71. Throughout his life, he was committed to advocating for environmental policy decisions to be built on science. He helped to create institutions in Bangladesh and other climate-vulnerable countries where people who are not scientists work hand-in-hand with researchers in the search for answers to their problems.

Teams of researchers all over the world are working night and day, searching for ideas to break the log-jam. Huq is a co-author of two commentaries intended to do that.

It is not known who will pay and how much, who will be eligible for funding, and on what grounds. The higher income countries don’t want to be legally bound to contribute but they do want to be compensated for their losses. That is what many climate-vulnerable countries want. Higher-income countries would also prefer that only the lowest-income countries be eligible for funding — but that would rule out middle-income countries such as Libya and Pakistan, both of which have needed international help to deal with the effects of devastating climate-related flooding.

Loss-and-damage funding puts climate finance into a new arena. It is intended to support recovery from the losses — of jobs, for example — and damage, such as that caused to infrastructure, that occur when climate-vulnerable countries are hit by more frequent and more ferocious extreme-weather events as a result of climate change.