Understanding losses and damages
The climate crisis is wreaking havoc on some of the world's most vulnerable communities. More support is urgently needed.

Top - Pekalongan, Indonesia, December 2022. Increasingly severe flooding has heavily impacted the area in recent years, destroying houses and forcing families to relocate.

Video: Ezra Millstein, Mercy Corps

Dashain is the largest and most anticipated festival in Nepal, coinciding with the end of the monsoon season in September or October. It is a time of celebration, after which farmers in rural communities begin harvesting their paddy crops. During the 2021 festival in Nangapur, in the Terai lowlands near the border with India, an early-warning siren raised the alarm; flooding was on the way.

"Many people didn’t believe the warning at first," said one member of the community. "Who would believe it would flood in late October, after the government had declared the monsoon season was over in Nepal?" Once the urgency of the situation became clear, farmers raced back to their fields and homes to saves what they could. "Both our fields and homes were inundated up to five metres. We were torn if we should save our harvests and crops at the field or save our stored grains and valuable items at home," remembers one farmer. "We lost at both ends."

"Who would believe it would flood in late October?"

The rains claimed at least 120 lives across 26 districts of Nepal. In Nangapur, many were left reliant on limited assistance in the form of food packages and emergency shelter. Speaking several months after the disaster, many in the community were frustrated that they had not received any financial support to make up for the devastating loss of their crops. "We still haven’t recovered from the shock and loss of the October floods. We are in no way prepared for other uncertain events," continued the farmer: "The government isn’t prepared either."

For those in Nangapur, the impact of the flooding will be felt for years to come. Even a community such as this one, engaged in disaster management at the local level and with an established early-warning system, was left powerless in the face of an unprecedented weather event.

It is one of too many stories from around the world in which those who have contributed the least to the climate crisis, and who are the least prepared for its consequences, bear the largest burden.

Incidents like this are the catalyst for the debate around how to address climate-related losses and damages. Compared to the ongoing discussions and actions around mitigation (such as reducing emissions though the increased use of renewable energy) and adaptation (equipping communities with the knowledge and resources to become more resilient to climate-related shocks and stresses), the subject of losses and damages has only recently begun to attract significant attention. Its origin can be traced back to 1991, when Vanuatu, a Pacific island state particularly vulnerable to rising sea levels, proposed a system of compensation for countries affected by sea level rise.

However, it wasn’t until 2007 that Loss and Damage was first mentioned in a formally-negotiated United Nations text. The Bali Action Plan, negotiated in Indonesia during COP13, called for “disaster reduction strategies and means to address loss and damage associated with climate change impacts in developing countries that are particularly vulnerable to the adverse effects of climate change”. It was a further six years before the establishment of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM) at COP19 in Poland. Two years later at COP21, it was included in the Paris Agreement.

It wasn’t until 2007 that Loss and Damage was first mentioned in a formally-negotiated United Nations text

The issue gained the greatest attention to date at COP26 in Glasgow in 2021, with significant pressure put on developed nations to set up a specific fund for addressing losses and damages. Scotland, the host nation, committed £1 million for the purposes of such a fund, subsequently increased to £2 million. The regional government of Wallonia in Belgium followed suit with an offer of €1 million, with philanthropic organizations collectively pledging a further US$3 million. Despite the best efforts of negotiators, ultimately the fund was not established. Instead, a compromise was found in the establishment of the Glasgow Dialogue, committing relevant parties, organizations and stakeholders "to discuss the arrangements for the funding of activities to avert, minimize and address loss and damage associated with the adverse impacts of climate change".

Heading into COP27 in Sharm-el-Sheikh, the expectation was that the issue would remain contentious - perhaps too much so for any real breakthrough to be made in Egypt. However, momentum came from a united block of developing countries, who had made clear their desire to see real progress. The issue made it onto the official agenda, and plans to operationalize the Sanitago Network (designed to provide technical support to developing countries on Loss and Damage) were confirmed. Then, in the closing stages of the conference, the news broke that an agreement on a Loss and Damage fund had indeed been reached.

While this was initially seen by many as cause for celebration, the process of turning the plan into tangible financial support will be extremely challenging - and even if progress is made quickly, it is already too late for many communities suffering the consequences of the climate crisis. 

Below left - heavy monsoon rains that hit Bangladesh in May 2022 resulted in enormous upheaval to lives and livelihoods, with significant long-term consequences. 

Photo: Concern Worldwide

Below right - The Roman Theatre in Amman, Jordan, experiencing heavy flooding in December 2021. Photo: Mercy Corps

It’s not hard to see – and in many cases, measure – the scale of the problem. In June 2022, Pakistan witnessed the most devastating and destructive floods in recent memory. By early October, the UN estimated that 33 million men, women and children – roughly one in seven of the population – had been affected. Nearly 8 million people had been displaced from their homes, and over a thousand lives had been lost. As in Nepal in 2021, the unprecedented nature of the flooding caught many off-guard. The province of Balochistan, which isn’t usually affected by the monsoon season, experienced a five-fold increase in its average rainfall.

In many cases, the economic toll of climate-related disasters is being paid disproportionately by the people most affected.

Indonesia is no stranger to natural hazards, with earthquakes, tsunamis and volcanic eruptions a regular occurrence. On top of this, rainy seasons and flood events are intensifying. By 2100, the impacts of climate change could cost between 2.5% and 7% of the country’s gross domestic product (GDP). Coastal regions such as the Greater Pekalongan Area have been profoundly affected, with total losses projected to amount to US$27 billion between 2020 and 2024.

In many cases, the economic toll of climate-related disasters is being paid disproportionately by the people most affected. In 2015, rural households in Bangladesh spent just under US$2 billion on climate and disaster management. This was more than double what the national government spent, and over 12 times the total received from multilateral international financing for the Bangladeshi rural population as a whole.

Of course, not all losses and damages can be readily assigned a monetary value. Losses such as human pain, suffering, and casualties; cultural heritage and social and cultural identity; and biodiversity must be included to fully understand the extent of the impact of climate change.

Climate-related disasters cause around 65% of all disaster-related annual deaths in Nepal

Losses of life and ecosystems are the most devastating and irreversible, yet tend not to be properly captured in the analysis. Climate-related disasters cause around 65% of all disaster-related annual deaths in Nepal, and nearly 100,000 people are currently at extremely high risk of future displacement due to either earthquakes or flooding. In Indonesia, rising sea levels have claimed more than 24 islands since 2005, with a further 115 at risk of disappearing within the next decade. The country’s coastal mangrove ecosystems are being destroyed, with consequences for climate mitigation efforts (they absorb more carbon per hectare than inland forests) as well as biodiversity. Not only that, they prevent erosion and have great potential as a flood defence, as proven when the devastating ‘Boxing Day Tsunami’ struck Sri Lanka in 2004.

Below left - The unexpected arrival of the floods that hit Nangapur, Nepal in 2021 proved the importance of early warning systems. Photo: Practical Action 

Below right - People in the Rajshahi district of Bangladesh moving to a safer place with their valuables and domestic animals during the 2020 floods.

Photo: IFRC IPTC / Farid Akter Parag

Right - Schoolgirls in El Salvador participate in an exercise looking at flood prevention interventions.

Photo: Plan International

Where a financial cost can be calculated, as in Bangladesh in 2015, this can often mask the non-economic losses experienced by the community. The aforementioned billions spent by rural Bangladeshi communities was drawn largely from money that would otherwise have gone towards basic necessities such as food, healthcare and education. Such scenarios disproportionately impact women and girls, who often contend with increased domestic responsibilities when men have to leave and seek income opportunities elsewhere. Girls are often forced to abandon their education to take care of siblings, or marry early to help improve the family’s economic situation.

The full impact of the 2022 flooding in Pakistan is not yet known, but where communities were already facing increased food prices and malnutrition, existing health issues are likely to have been made much worse. In such situations, a holistic approach must be taken to develop a sufficient level of understanding of both economic and non-economic losses.

One identified obstacle to making significant progress on losses and damages is the absence of robust data on the economic and non-economic costs of losses and damages at the national levels. Simply put: why do some natural hazards develop into disasters? Why, also, did a specific disaster unfold in the manner that it did? And how can we most effectively measure the true impact on human lives?

Evidence of lived experience can complement the tally of physical losses and damages in order to reveal the full picture

Only by gathering this vital information can the right path be identified. Crucially, this must be drawn first and foremost from the community level. One tool that can help with this is the Post-Event Review Capability (PERC) developed by the Zurich Flood Resilience Alliance. This gathers important data to ensure that lessons can be learned and procedures can be improved before the next flood.

In 2020, while already reeling from the COVID-19 pandemic, Bangladesh was hit by Cyclone Amphan. Rivers overflowed, and embankments were overwhelmed, flooding communities across the country. The storm made the impact of the subsequent monsoon season even worse, as the already-saturated land could not absorb the heavy rains. Over 5 million people in the country were affected, with significant losses to crops, livestock, fisheries and infrastructure. To inform their PERC study, in late 2020 and early 2021 Alliance partners ISET-International and Practical Action conducted a series of interviews and focus group discussions with several affected parties, including community representatives and government officials. The research aimed to identify gaps in disaster preparedness and response, as well as any successful practices that may have prevented further losses.

The PERC’s recommendations included strengthening existing early-warning systems, improving co-ordination among institutions responsible for river management, and creating new communication channels between upstream and downstream communities. Evidence of people's lived experience can complement the tally of physical losses and damages and help reveal the full picture – and thus develop a comprehensive insight into the scale of the disaster’s impact. As well as providing the evidence needed to inform decision-making in that specific location, many of the findings can also be applied in other parts of the world facing similar systemic problems.  

Left - A member of Mercy Corps' response team in Indonesia surveys the damage caused by the Seroja Tropical Cyclone in 2021, which destroyed vital infrastructure and displaced over 10,000 people.

Photo: Mercy Corps

When examining the fallout from disasters, the heartbreaking conclusion is often that swifter action on both mitigation and adaptation could have drastically minimized the losses and damages experienced by communities. It is clearer than ever that climate-vulnerable countries cannot avert, minimize and address losses and damages alone; significant international support is needed in order to meet the challenges.

As part of the Copenhagen Accord, produced in 2009 at COP15, developed countries committed to “a goal of mobilizing jointly US$100 billion a year by 2020 to address the needs of developing countries. This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.”

At subsequent COPs – Paris in 2015 and Katowice in 2018  Parties agreed to maintain the target until 2025. Unfortunately, this target has been missed consistently; it is not expected to be met until 2023 at the earliest.

One of the most significant obstacles to meeting the target is a lack of accountability, a consequence of the loose wording of the agreement which was considered a necessary political compromise. Recent attempts to assign a value to what each country should contribute have shown that while some are indeed meeting their obligations – including Sweden, Norway, the Netherlands and Germany – others have a long way to go.

We know that for every $1 spent on reducing the risk of floods, $5 is saved on future costs

Another concern is the quality of climate finance being provided. In many cases, contributions that count towards the $100 billion total have been made as loans rather than grants, leaving low-income countries with an unnecessary additional financial burden. Even more significant is the question of where that money is going. Of the international climate finance already provided, less than 10% has made it to the local level, and less than a third is channelled towards adaptation programmes that provide the greatest opportunity for preventing future losses.

The sums of money involved can be daunting – for example, by 2030 the costs of climate adaptation efforts in developing countries could reach up to $300 billion per year. However, it’s important not to lose sight of what is at stake. We know that for every $1 spent on reducing the risk of floods, $5 is saved on future costs relating to emergency response, reconstruction and other rehabilitation efforts. Failure to sufficiently fund efforts to address the climate crisis through adaptation – and, of course, mitigation – will lead to much, much higher bills in the future.

While it is only part of the picture, it was promising to see signs of progress on the issue of losses and damages during the latter half of 2022. In September, Denmark pledged over US$13 million for climate-related losses and damages in low-income countries. This relatively small figure nevertheless served as a welcome signal to others (and crucially, the country is also prioritizing adaptation in its approach to climate aid). The following month, Scotland hosted a two-day conference on Loss and Damage - the first of its kind - which explored what actions can be taken to scale up actions already underway, and fill gaps in existing systems. Then of course, there was the historic agreement at COP27.

We are now on the road to COP28, by which time it is hoped that the Transitional Committee will have determined exactly how the proposed Loss and Damage fund will operate. It will be no mean feat - but failing to deliver is not an option. This is an unmissable opportunity to ensure that those who are bearing the brunt of climate-related shocks can get the resources and assistance they urgently need.

Below - Data gathered in Jordan using the FRMC tool led to targeted interventions, such as the planting of trees to prevent soil erosion and reduce the water flow rate towards flood-prone communities. Video: Mercy Corps

Left - A member of Practical Action's team in Peru examines a river monitoring station. Photo: Michael Szoenyi, Zurich Insurance

We believe in the power of adaptation. We know there are solutions that work, and across the world our teams are implementing them every day. Using data gathered by our Flood Resilience Measurement for Communities (FRMC) process, our teams have partnered with those affected by flooding to take stock of their existing levels of resilience, so that they can take the most effective action.

The resulting interventions come in many forms. In Peru, Practical Action’s simple, low-cost river-monitoring technology is providing a vital early-warning system, and one that has the potential to be scaled up and replicated in other parts of the world; in the Philippines, the International Federation of Red Cross and Red Crescent Societies supports flood-prone communities to raise environmental protection concerns at the local level; Plan International is helping young people in El Salvador overcome barriers to healthcare that become particularly challenging in emergency situations; Mercy Corps’ team in Jordan has begun implementing activities to prevent flash-flooding after significant community consultation; and Concern’s work in Bangladesh has led to the creation of forward-thinking action plans in several communities.

We know there are solutions that work, and across the world our teams are implementing them every day

The collection and analysis of vital data is ongoing, as are our efforts to make progress on the issues of adaptation and losses and damages by influencing key stakeholders. IIASA, ISET-International and the Grantham Research Institute at LSE are leading on vital research, including conducting further PERC studies and exploring how climate finance for loss and damages might be delivered. Meanwhile Zurich Insurance is making the case for increased climate adaptation across the private sector.

We remain committed to our vision of a world in which floods have no negative impact on people’s or businesses’ ability to thrive. However, it is clear that even if adaptation efforts are upscaled significantly, climate-related losses and damages are going to occur. The momentum from COP27 must be sustained in order to achieve real progress on Loss and Damage funding, and ensure that poverty is not perpetuated further by disasters caused in large part by the failure of the international community to act decisively.

Learn more about the Zurich Flood Resilience Alliance here.