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Financing climate change induced loss and damage in Bangladesh

  • Published at 12:51 pm January 11th, 2021

The scope for public-private partnerships

The impacts of climate change are becoming increasingly apparent with rising sea levels, warming temperatures, and increased frequency and severity of extreme weather events already being observed across the globe. There is an overwhelming body of evidence which suggests that these hazards will intensify in coming years, triggering far-reaching consequences on human health, livelihoods, infrastructure, ecosystems, biodiversity and the broader society.

Over the past couple of decades, significant global efforts have been made to address the issue through mobilizing resources towards reducing greenhouse gas emissions and building resilience of vulnerable communities. However, it is now widely acknowledged that there are physical and social limits to adaptation. The capacity of economies and communities to cope is only finite, beyond which certain residual impacts from human induced climate change will be inevitable. In the climate change discourse, these impacts are collectively termed as “loss and damage”. 

Loss and damage refers to irreversible losses (eg loss of human life, species, land, etc) as well as repairable damages (eg destroyed embankments, roads, buildings, etc) that are caused by the impacts of climate change. It can be economic in nature, encompassing losses that can be quantified, and also non-economic, which could include loss of health, cultural heritage, indigenous knowledge and ecosystem services. Non-economic losses often amount to far more than economic losses in the case of many developing countries. 

The issue of loss and damage first emerged in international climate policy discussions nearly three decades ago in 1991, when the United Nations Framework Convention on Climate Change (UNFCCC) was being established. However, for the next twenty years, the issue continued to be raised in international climate negotiations without reaching any concrete agreement, and only insubstantial developments being made on how it should be financed. 

“The issue of loss and damage first emerged in international climate policy discussions nearly three decades ago in 1991, when the United Nations Framework Convention on Climate Change (UNFCCC) was being established”

Eventually, in 2013, the Warsaw International Mechanism on Loss and Damage (WIM) was set up at the annual 19th UN Climate Conference in 2013, which formally institutionalized the issue. An Executive Committee (ExCom), was put in place to oversee the mechanism. They were tasked with three major functions - enhancing knowledge and understanding of loss and damage; strengthening dialogue and coordination; and enhancing action and support, including finance and technology. In the years following the establishment of the WIM, the ExCom largely focused their efforts on the first two functions. However, the issue of financing loss and damage continued to be a topic of contention in climate negotiations and only limited progress has been made in terms of furthering the agenda.

Adoption of the landmark Paris Agreement in 2015, saw loss and damage being included as a separate, stand-alone article within the agreement. This development was vital as it effectively established loss and damage as one of the three pillars of international climate policy, alongside adaptation and mitigation. This also indicated that financing for loss and damage should be considered as separate and additional to adaptation finance. However, while several global funding mechanisms have been introduced over the years to address climate change mitigation and adaptation, a dedicated financing facility for loss and damage is yet to be in place.  

Bangladesh, attributing to its geophysical and socioeconomic characteristics, is highly susceptible to a range of climate change impacts. As climate change continues to exacerbate, it is apparent that loss and damage, both economic and non-economic, from climate induced shocks and stresses will be unavoidable for the country.  The Government of Bangladesh (GoB) has made remarkable strides over the last decade or so by devising necessary strategic policies and mobilizing substantial financial resources towards combatting climate change issues in the country. 

There is also a vital need to explore means and approaches through which loss and damage in Bangladesh can be addressed. At COP24 in 2018, a decision to set up a National Mechanism on Loss and Damage was taken by the Ministry of Disaster Management and Relief (MoDMR). The mechanism will entail a two year pilot phase that will experiment with different aspects of loss and damage, including both fast onset and slow onset impacts, insurance as a potential coping mechanism, enabled migration, etc. This marks a step in the right direction.

“While several global funding mechanisms have been introduced over the years to address climate change mitigation and adaptation, a dedicated financing facility for loss and damage is yet to be in place”

Concurrently, the Government of Bangladesh has also been placing a lot of emphasis on public-private collaboration for advancing socioeconomic development in the country over the last decade or so. In 2010, the "Policy and Strategy for Public-Private Partnership (PPP)” was issued and subsequently a Public Private Partnership Authority (PPPA) was set up under the Prime Minister’s Office. In the following years, the national budget has seen substantial amounts allocated for taking PPPs forward in the country. Several large scale projects, across a range of sectors, have also been financed through PPPs.

Recently, the potential of PPPs for financing climate action has been gaining traction in climate change discussions. PPPs provide frameworks to ensure public leadership and accountability towards addressing climate change, while enabling ownership of certain components of financing to be transferred to private hands. PPPs facilitate optimal allocation of risks between the public and private party, and can therefore generate discernible “value for money”. Private sector involvement also provides an enabling environment for innovative solutions to emerge, which would be crucial for fostering long-term resilience. Therefore, PPPs are increasingly being recognized as a prospective vehicle for financing climate action. Mobilizing PPPs towards addressing loss and damage from climate change in Bangladesh offers a promising way forward. 

Riadadh Hossain is a Programme Coordinator at ICCCAD, working on climate finance and impact evaluation of adaptation actions.

Prof Saleemul Huq is the Director of International Centre for Climate Change and Development (ICCCAD).

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