Loss and damage finance: The third pillar of climate finance

Mitigation/carbon finance seeks to limit climate change. Adaptation finance tries to help communities adjust and live with the impacts of climate change. However, what about those impacts that are beyond adaptation? For example, what if a storm surge breaks past sea walls, or drainage systems break due to extremely excessive rainfall? Finance to address these situations – situations where adaptation also has limits – is being called loss and damage finance.

Calls for loss and damage finance as a dedicated stream of climate finance is growing from developing countries as they face some of the worst impacts of climate change with limitations to how much they can adapt. Some entities and countries are beginning to address these demands. Operationalizing a Loss and Damage Finance Facility and/or operationalizing the Santiago Network is going to be one of the big negotiation points at COP27. How do you think this discussion will fare?

Some of the key questions that will need addressing is:

  1. What is the scale of finance needed?
  2. How can loss and damage finance be routed to those who need it most? And quickly?
  3. How can the financing need for loss and damage be met when even mitigation and adaptation finance is hard to come by?


  1. Discussion paper: The Loss and Damage Finance Facility: Why and How https://us.boell.org/en/2022/05/31/loss-and-damage-finance-facility-why-and-how
  2. https://www.reuters.com/world/denmark-becomes-first-offer-loss-damage-climate-funding-2022-09-20/
  3. https://www.carbonbrief.org/cop26-key-outcomes-agreed-at-the-un-climate-talks-in-glasgow/

Images from Pixabay and Freepik. Background music from Pixabay (Forest Lullaby). Featured image: Image by storyset on Freepik

Author: Saurab Babu

Usually found sitting with a good book, nibbling on a piece of dark chocolate. Always ready for a good story.

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