General view of Al Wasl during the UN Climate Change Conference COP28 at Expo City Dubai on 30 November 2023 in Dubai, United Arab Emirates. (Photo by COP28 / Mahmoud Khaled)

The long overdue fund to assist low- and middle-income countries' response to climate disasters has become a huge political question on the first day of the United Nations-backed COP28 summit after a decade of negotiations.

The so-called Loss and Damage Fund, which was to become operational this year as agreed upon by many countries, is a welcome development for many. However, disagreements between developing and developed countries remain, including the World Bank’s designation as the host and trustee for the fund, as poorer nations foresee difficulties in accessing the money they need.

Another ongoing debate is whether the fund should distribute the fund as grants or loans. If as loans, it will mean that wealthy countries get to consolidate their position as creditors.

The fund is expected to help poorer countries deal with the losses and damages caused or worsened by climate change. The draft of the fund clarifies that it will help the “most vulnerable countries” first.

Since the start of COP28, US$ 726 million has been promised to the Loss and Damage Fund.

More nations have promised to contribute to the Fund, but it is “a drop in the bucket," COP28 Director-General Majid Al Suwaidi told CNN.

Estimated climate adaptation costs and needs for developing countries range from US$215 billion to US$387 billion annually throughout the coming decade. Loss and damage occur when communities and countries face disasters beyond their ability to adapt – there is no credible estimate of how much money is being spent to deal with it.

When the Loss and Damage Fund gets going, 58 Small Island Developing States (SIDS) and 46 Least Developed Countries (LDC) will likely be prioritized for funding. Some small island nations claim they have been waiting for 30 years.

With limited funding in hand, the competition will be fierce. Developing countries will now have to prove how vulnerable they are.

“In addition to pledges from developed countries, it will be essential to leave COP28 with clear pathways forward on new sources of funding that are based on the polluter pays principle — such as taxing the fossil fuel industry, a frequent flyer levy, a tax on international shipping fuel, a global wealth tax or financial transaction tax. Such taxes and levies should be fairly implemented so that costs fall on the big polluters that can afford them, and not on ordinary citizens,” declares a statement from the climate activist group Loss and Damage Collaboration (L&DC).

In Southeast Asia, Myanmar, Laos, and Cambodia are listed as LDCs, while Singapore is the only SIDS member.

The Thailand Development Research Institute think tank reported that between 2000 and 2019, the country faced 146 climate abnormalities, leading to losses of US$7.7 billion. Thailand is not among the countries being prioritized for funding, but it is a member of G77, the largest intergovernmental bloc that negotiates climate issues. Despite the name, it actually consists of 134 countries and accounts for 80% of the global population.

Nithi Nesadurai, Director and Regional Coordinator of Climate Action Network Southeast Asia (CANSEA), believes the region has a promising chance of accessing loss and damage funding.

“The region [is home to the] world’s top ten countries faced with harsh climate impacts. If the fund’s criteria are to prove vulnerability, some data will prove it,” said Nithi.

CANSEA is the Climate Action Network’s regional node, with over 1,500 member organizations in over 130 countries.

“It’s not that the small islands are always the most hit. Countries in the region have faced harsh impacts of climate change. The climate risk index confirms it. Countries like the Philippines, Myanmar, Vietnam, Thailand, and Indonesia are vulnerable in that sense,” said Nithi, who is optimistic that the region would obtain assistance from this initiative.

As a leading member of Thailand‘s negotiation team at COP28, Phirun Saiyasitpanich, Director of Thailand’s Department of Climate Change and Environment , says Thailand’s position is that access to funding should be based on who has been hard hit, not who is poor. 

“The negotiation is that it has to be based on proof of the loss and damage, not your GDP.” As for his country, Phirun states the historical data has proven its vulnerability. “So what we are defending on the negotiation table is we are vulnerable in that sense.”

The 2021 Global Climate Risk Index put Myanmar, the Philippines and Thailand among the top ten countries most affected by climate change between 2000-2019. Of the three countries, Myanmar is ranked as most affected on the Index, though media reports have described Vietnam as the most vulnerable.

In 2021, the Swiss Re Institute put Thailand, the Philippines, Malaysia, and Indonesia among the least prepared countries in the world to face the economic shock of climate change.

Some developed countries, such as Norway, showed their disappointment over the lack of human rights as one of the criteria for accessing the Loss and Damage Fund. They are expected to raise this issue in subsequent discussions.

Wanun Permpibul from the climate justice NGO Climate Watch Thailand agrees that human rights should be taken into consideration.

“Not only that, but people’s rights, especially those marginalized and vulnerable should be taken into account,” she said.

Asked about the ethics and practices of the World Bank in relation to the Fund, its president Ajay Banga said that it was not the World Bank’s job to steer the fund. That will be the responsibility of a 26-country board scheduled to be set up and to hold its first meeting within two months after COP28. Twelve of the Board members will come from developed countries.