Calculating the losses and damages from climate change would strike any economist as a daunting task.
As global warming exacerbates extreme weather and natural disasters, developing countries are gaining ever more ammunition for the argument that China, the United States, and other wealthy world powers responsible for most greenhouse gas emissions need to foot the bill for the Global South’s recovery.
This push has unique relevance for the Arab world, which is battling desertification, heat waves, forest fires, water scarcity, and often far worse.
At the 2022 United Nations Climate Change Conference, an alliance of developing countries is pressing the case for a “loss and damage” fund financed by major contributors to greenhouse gas emissions.
The Group of 77, a coalition that includes all 22 Arab League member states, oversaw a successful, landmark campaign to put “matters relating to funding arrangements for addressing loss and damage” on the agenda of a gathering better known as “COP27.”
Egypt, the host of COP27, has gone to particular lengths to frame itself as an advocate for compensation for losses and damages resulting from global warming.
An August document prepared by the Egyptian Foreign Ministry for COP27 urged “action to address loss and damage from climate change,” calling the topic “of crucial importance for countries in” Africa.
At a meeting of the Group of 77 the following month, Egyptian Foreign Minister Sameh Shoukry then highlighted the significance of the reparations for the climate crisis in the Global South.
UN Climate Change, the secretariat of the UN Framework Convention on Climate Change, has a broad definition for “loss and damage arising from the adverse effects of climate change,” which can comprise “those related to extreme weather events but also slow onset events, such as sea level rise, increasing temperatures, ocean acidification, glacial retreat and related impacts, salinization, land and forest degradation, loss of biodiversity and desertification.”
Frequent targets of the calls for reparations, namely the United States and Europe, worry that any initial agreement to cover developing countries’ losses and damages from climate change could create a precedent for a flood of claims.
Nonetheless, several European countries have used COP27 as an opportunity to pledge millions of dollars to assist the Global South with addressing losses and damages. European Commission President Ursula von der Leyen also voiced support for “minimizing and averting loss and damage from climate change.”
The Western world has shown more resistance to the creation of a dedicated, long-term fund for losses and damages, which would raise fraught questions about who would qualify for compensation and how much.
At the same time, the Stockholm Environment Institute, a research centre sponsored by Norway and Sweden, warned in a 2021 report on the prospects of such a fund that developing countries “urgently need finance to support their recovery.”
The Arab world, for its part, can hardly afford to wait. Researchers concluded last year that Algeria was losing about $11 million dollars a year to forest fires alone, and an August report from the World Bank estimated that natural disasters tied to climate change cost Morocco $575 million every year.
As far back as 2014, a study in the journal Climate Research predicted that global warming’s impact on sectors such as agriculture and tourism could cost Egypt between $36 billion and $64 billion, a massive blow to the Arab world’s most populous country.
A fund for losses and damages, while novel, could incorporate any number of mechanisms already available to the international community.
A range of voices inside and outside the World Bank and the International Monetary Fund is pushing the development banks to offer more grants and lower-interest loans to developing countries recovering from the climate crisis. Barbados, a leading proponent of the “loss and damage” fund, is spearheading this effort too.
A more challenging aspect of this plan, for the Arab world, in particular, involves determining who would bankroll the fund. Much of the Global South is looking to the West, but Qatar, Saudi Arabia, the United Arab Emirates, and other Arab energy superpowers – top sources of fossil fuels for the West – may also face calls to pay for their poorer neighbours’ losses and damages.
The monarchies of the Persian Gulf are financing expensive initiatives for climate change mitigation at home while facilitating devastating greenhouse gas emissions abroad.
The Organization of the Petroleum Exporting Countries, an international organisation all but led by Saudi Arabia, has demonstrated an ironic but crucial commitment to climate finance.
The OPEC Fund for International Development noted in September that it intends to increase its “support for sustainable, low-carbon, inclusive and climate-resilient investments in partner countries,” a potential stepping stone to participation in a wider “loss and damage” fund.
The estimates of losses and damages from climate change in the Arab world speak to the costs that developing countries are covering with only limited assistance from the international community.
A “loss and damage” fund, in its most effective form, will necessitate buy-in from countries that bear direct responsibility for greenhouse gas emissions, among them China and the United States.
Countries with indirect responsibility, like the Gulf’s energy superpowers, will likely have to participate as well. The broadest coalition will yield the strongest results.