Even in the best mitigation and adaptation
scenarios, the global costs of residual damage
– the loss and damage – of climate change is
expected to be high. The best available models
to date predict an average of US$1.2 trillion
(US$2,000) per year by 2060, with a range of
$0.3 to $2.8 trillion, and with costs increasing
every following year. Although calculations still
need to be made at regional and national levels,
we know from the reported cost of recent
natural disasters that developing countries will,
at least in terms relative to their GDP, carry
a huge portion of the burden despite having
contributed little to climate change.
Increasingly, developing country
governments and civil society are calling for
fi nancial compensation from rich countries for
the damage caused by climate change beyond
the fi nancing of mitigation and adaptation
efforts. However, mechanisms based purely
on a compensatory approach are unlikely
to be viable politically, and actual proposals
put forward to the UNFCCC are, at least in
great part, based on insurance solutions. The
insurance industry itself has become a key
player in the debate on loss and damage from
climate change, promoting specifi c insurance
solutions, making alliances with NGOs and
academics, and calling for a better regulatory
environment in developing countries.
The fi rst UN discussions negotiating the
AOSIS proposal made it clear that views
between developed and developing countries
are still at opposite ends, and that diffi cult
choices will have to be made to enable eventual
agreement. These include whether mainly
compensation or mainly insurance-based
approaches should be used, whether private
losses should be included, and how technical
issues (such as moral hazard) can be best
addressed in a climate context.
What should not be negotiable at all,
however, is whether poor people are a
primary concern in this debate. Already the
most vulnerable, their resilience is likely to be
stretched beyond repair by climate change
impacts. Although current proposals to deal
with loss and damage focus on the most
vulnerable and poorest countries, it is not yet
clear how any potential benefi ts will trickle down
to poor people themselves.