Current affairs explainers · Note 080
Loss and damage: the fund that has not yet paid out
Study context: GS III — Conservation, environmental pollution and degradation; disaster and disaster management.
Background explainer from the November 2026 study collection. Events discussed may predate the collection; this is not a monthly news update.
Some climate damage cannot be adapted to: a village swallowed by the sea, a glacier lake that bursts, a harvest lost to a heatwave that no irrigation can fix. For decades, developing countries argued that the countries most responsible for emissions should help pay for such “loss and damage”. At COP27 in 2022, countries agreed to create a Fund for responding to Loss and Damage, and at COP30 in Belém in 2025 they agreed to a just-transition mechanism to support workers and communities through the shift away from fossil fuels. By late 2026, the fund's record showed how slow the move from agreement to money can be.
As reported ahead of COP31, the Fund for responding to Loss and Damage deferred its first project approvals to its December board meeting, after receiving 176 requests worth about 2.8 billion dollars against about 342 million dollars available. The gap between demand and money is the point: requests outnumbered available funds by roughly eight to one. The fund's first approvals, when they come, will therefore be a rationing decision as much as a funding decision, and the criteria for choosing among requests will matter as much as the total.
The finance argument runs in parallel. Developing countries have pressed for the new climate finance work programme agreed at Belém to have its own agenda item at COP31, focused on Article 9.1 of the Paris Agreement, which says developed countries shall provide financial resources to assist developing countries. The distinction between finance for cutting emissions, finance for adapting, and finance for loss and damage is not bureaucratic: each has different recipients, different urgency, and different politics, and lumping them together lets providers claim progress while the most urgent needs go unfunded.
For India, loss and damage is not abstract. Cyclones, floods, droughts, and heatwaves already impose costs that state budgets absorb, and the question of who pays for the next Arnab or the next failed monsoon will recur at every COP. The fund's December board meeting, after COP31, will be the first real test of whether the institution created in 2022 can move money at the speed of the disasters it was created for.
Key takeaways
- The Fund for responding to Loss and Damage, agreed in 2022, deferred its first project approvals to December 2026, with 176 requests worth about 2.8 billion dollars against about 342 million available.
- Loss and damage is distinct from mitigation and adaptation finance: it covers harm that cannot be adapted to, and it is the most politically contested category.
- Developing countries want the Belém climate finance work programme to have its own COP31 agenda item under Paris Agreement Article 9.1.
Why it matters for civil studies
Climate finance is a test of whether international agreements deliver resources or only language, and the fund's first approvals will set precedents for decades.
Think it through
Should loss-and-damage money be allocated by vulnerability, by recent disaster losses, or by a formula agreed in advance, and who should decide?
From the Public Notes companion study collection. Editorial context and corrections.