COP28: How much does loss and damage from climate change cost? | Mint
Active Stocks
Fri Feb 23 2024 15:58:13
  1. Tata Steel share price
  2. 145.50 -0.24%
  1. State Bank Of India share price
  2. 759.40 -0.86%
  1. HDFC Bank share price
  2. 1,420.90 0.08%
  1. NTPC share price
  2. 337.70 -0.54%
  1. ITC share price
  2. 411.60 -0.65%
Business News/ Economy / COP28: How much does loss and damage from climate change cost?

COP28: How much does loss and damage from climate change cost?

COP28 in Dubai 2023: “The world is estimated to be $1.5 trillion poorer than it would have been without climate change,” revealed a study released by the University of Delaware.

The US Geological Survey initially estimated economic losses from 7.8-magnitude earthquake at 9% to 50% of Nepal. (Reuters)Premium
The US Geological Survey initially estimated economic losses from 7.8-magnitude earthquake at 9% to 50% of Nepal. (Reuters)

Several countries across the world have faced economic loss worth billions due to extreme weather conditions and climate change over the years.  In a bid to help developing and poor countries cope with climate crisis, the COP28 climate summit hit its "first major milestone" on November 30, by operationalising the "Loss and Damage" fund.

"This fund will support billions of people, lives and livelihoods that are particularly vulnerable to the effects of climate change," COP28 President Dr Sultan Al Jaber said.

What is ‘loss and damage’?

The "loss and damage" refers to the estimated economic, non-economic and ecological losses caused due to ongoing and future impacts of climate change.

"This includes losses and damages due to rapid onset extreme weather events such as floods and tropical cyclones and slow onset changes such as sea level rise and drought," the Centre for Science and Environment explains.

ALSO READ: COP28 presidency mobilizes $2.5 bn to support food-climate agenda

What is the estimated global economic loss from climate crisis?

"The world is estimated to be $1.5 trillion poorer than it would have been without climate change," according to a report titled 'Loss and Damage Today: How climate change is impacting output and capital'. This report was released by the University of Delaware.

According to the report, "Low and middle-income countries have experienced $2.1 trillion in produced capital losses due to climate change."

ALSO READ: COP 28 Dubai summit begins today: A deep dive into India's role and challenges at climate summit

Meanwhile, the Centre for Science and Environment (CSE) data estimates that by 2030, the total estimate of loss and damage for developing countries could be between $290 billion and $580 billion from all the impacts of climate change. "This could increase to $1-1.8 trillion by 2050," it added.

'Economic losses increasing'

In its recent report titled 'Provisional State of the Global Climate in 2023', the World Meteorological Organization (WMO) said that globally, "annual economic losses from climate and weather-related disasters have significantly increased since the 2000s".

The CSE report emphasised that the overall loss and damage to human lives, livelihoods, agricultural production, private and public infrastructure, and social and cultural systems will continue to rise as the frequency and intensity of these events increase".

In September this year, the US had reportedly set a new record for the most costly weather disasters in a year. "So far this year’s disasters have cost more than $57.6 billion," a Fortune report cited The National Oceanic and Atmospheric Administration as saying.

ALSO READ: COP28: PM Modi meets Israel President, emphasises India's support to two-state solution to Palestine issue

Meanwhile, the European Environment Agency revealed that between 1980 and 2022, weather- and climate-related extreme events caused economic losses of assets estimated at EUR 650 billion in the EU Member States, of which EUR 59.4 billion in 2021 and EUR 52.3 billion in 2022.

The European agency added, “As severe weather- and climate-related extreme events are expected to intensify further, it seems unlikely that the associated economic losses will reduce by 2030."

GDP loss and climate change

A study by University of Delaware suggested that incremental increases in temperature have been consistently mapped to escalating losses in the GDP. 

It said that since 1970, "we have observed nearly linear increase in global temperatures of 1°C, in pace with a corresponding reduction in global population-weighted GDP by approximately 6.3 per cent".

The report titled 'Loss and Damage Today: How climate change is impacting output and capital' added, “Globally, climate change has led to a population-weighted Gross domestic product (GDP) loss of 6.3 per cent in 2022..."

"Many coalition groups that represent developing countries at COPs have experienced average losses in 2022 of 5-10 per cent of their GDP," the report said. 

It added, "When GDP (Gross domestic product) and capital losses are combined, low and middle-income countries have experienced a total loss of $21 trillion since 1992 (the Rio Convention)."

Global inequalities

The economic impacts of climate change is believed to present a stark contrast between developed and developing nations. The report by the University of Delaware emphasised the existing global inequalities exacerbated by climate change.

According to the report, many high-income countries are currently experiencing net gains, including an average increase of 4.7 per cent to the GDP of European countries. The report further states that the population-weighted GDP loss due to climate change in 2022 globally "is substantial at 6.3 per cent, taking into account the direct, international, and capital losses related to climate".

ALSO READ: COP28, UNFCCC pledge efforts for transparency, solidarity in climate agenda

However, "the percentage of the global GDP lost is 1.8 per cent, about $1.5 trillion, as many wealthier nations have smaller impacts or benefits", it added.

It says, "For OECD (Organization for Economic Cooperation and Development) countries, climate change has had little net impact (0.3 per cent gain). These countries are collectively seeing a net gain of approximately $636 billion (constant 2015 USD). Meanwhile, the rest of the world has experienced an estimated net GDP loss of

$1818 billion and countries in the Global South have experienced an average 8.3 per cent loss of GDP (3-14 per cent)."

ALSO READ: India's millets push may feature at COP28

COP28: How much countries have offered for Loss and Damage Fund?

More than $400 million has been pledged initially to the new "loss and damage" fund for countries impacted by climate change since it was approved by nations attending the UN's COP 28 climate summit in Dubai on Thursday, news agency AFP reported.

The UAE announced $100 million toward the loss and damage fund, "paving the way for other nations to make pledges to the critically important Fund", a press release said. This fund will help countries cope with "loss and damage" caused by climate change.

The press release further informed about other countries making notable commitments. These countries included:

> Germany, which committed $100m million

> The United Kingdom (UK), which committed £40million for the fund and £20million for other arrangements

> Japan, which contributed $10million

> The United States (US), which committed $17.5million

> The European Union, which committed $246 million

> Italy said it will provide $108.91 million

> Netherlands said it will contribute 15 million euros

However, the amount so far falls well short of the $100 billion developing nations say are needed to meet the costs of changing climate, but more pledges are expected in coming days, the AFP report said.

The formal establishment of the "loss and damage" fund long sought by climate-vulnerable nations provided an early win at COP28, where sharp divisions over the phasing out of fossil fuels were immediately apparent, news agency AFP reported.

The Loss and damage Fund was first agreed upon during COP27, held in Sharm El Sheikh, Egypt, and became operational on November 30 following the agreement reached by parties during five transitional committee meetings.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
More Less
Published: 02 Dec 2023, 06:08 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App