New Zealand has committed $4 million to establish a fund aimed at addressing climate-related loss and damage in Vanuatu. This announcement was made during a panel discussion at COP29 in Baku, Azerbaijan, with plans for a Crown agreement to be signed this week.
“We acknowledge the support from (the New Zealand Ministry of Foreign Affairs and Trade) MFAT, which is one of our largest donors in the space of loss and damage, and of course other complementary climate interventions that Vanuatu is leading at this point in time,” acting director of the Vanuatu Department of Climate Change, Nelson Kalo, said.
“MFAT has pledged an amount of $4 million to support the establishment of a national loss and damage fund, and we are hoping to sign the Crown agreement next week, here at COP29.”
Climate-related loss and damage, also called climate reparations, involves funding aimed at assisting developing nations in coping with and recovering from the impacts of climate change. Unlike adaptation finance, which focuses on enhancing resilience against future climate events, loss and damage specifically addresses the losses and damages incurred from current climate-related events.
While developed countries spent decades resisting discussions on loss and damage funding at UN climate summits, the conversation around it has evolved significantly since COP27 in Sharm El-Sheikh in 2022, where New Zealand played a pivotal role by pledging $20 million towards this cause.
Since then, developments have progressed rapidly, culminating in the announcement of a global fund for loss and damage at COP28 in Dubai last year.
At the ongoing COP29 climate summit, countries have advocated for further progress on loss and damage funding, highlighting the urgency of addressing climate impacts. It currently holds only $720 million in funding, while annual losses in developing countries due to climate change are estimated in the hundreds of billions, if not trillions.
New Zealand’s commitment of $4 million aimed at establishing a dedicated fund to assist Vanuatu in addressing its loss and damage costs related to climate change. This funding is crucial for Vanuatu, which has projected a need for $177 million over the next decade to effectively respond to the impacts of climate change.
Todd Croad, who leads New Zealand’s delegation at COP29, expressed that New Zealand perceives the landscape of loss and damage funding as a “mosaic.”
“The (global) fund is a big part of that, but there’s also other funding arrangements in that space. There is an ongoing role for bilateral or regional-type initiatives. We see that with adaptation at the moment as well. Off the top of my head, I think there are three main things that that could do,” he said.
“One is as a direct source of funding to make the type of work we’re doing ready in the Pacific, in terms of setting up these pilot programmes in a number of areas. The second way is that we can be part of it by delivering things bilaterally, and that’s potentially a useful thing for us to have in our toolkit. Thirdly, that role of trying to use bilateral funding to make the countries ready to access larger amounts of funding from a wide range of sources is potentially one of those unlocking things that bilateral assistance can help with.”
Kalo emphasised the importance of allowing recipients to have control over how the funds are utilised.
“Within the space of negotiation, there is yet to be an agreed definition of loss and damage. We believe, in the case of Vanuatu, that we can frame the definition in regards to our present circumstances, in terms of our vulnerability, our exposure,” he said.
“We want to domesticate loss and damage. We want to say, ‘This is the definition.’ Not you coming forward, telling us, ‘You have to go this way or that way.’ We want to show you the leadership where Vanuatu drives its own intervention, its own intention about loss and damage.”
Ongoing Negotiations
While discussions on loss and damage have not dominated COP29, they remain a critical aspect of negotiations surrounding a new global finance goal. Regardless of the outcomes at COP29, funding for loss and damage will continue to flow. However, whether it is prioritised or overlooked in favour of other financial mechanisms may depend on its inclusion in overarching climate finance goals.