Charity or Reparations: How Will Colonial Powers Compensate the Global South for the Consequences of Climate Change?

The key questions at this year’s United Nations COP27 climate change summit are whether developed countries will agree to start compensating poorer countries for the loss and damage they incur as a consequence of climate change and whether they will call it “aid” or reparations.

The countries of the Global South have come together to demand large-scale financial compensation and insist on calling a spade a spade. Wealthy countries – whose industries are disproportionately more responsible for greenhouse gas emissions than the lagging economies of “developing countries”, depleted and plundered by colonisation – refuse to label the “aid” they are willing to give to victims of the climate crisis as reparations, fearing that in so doing they will be setting a precedent that could open up the possibility of poorer countries filing lawsuits against them.

This year’s COP was not the first time loss and damage were mentioned, but it does signify a turning point in terms of how much of the conference will be devoted to them. Representatives of wealthier countries and some wide-eyed idealists might interpret this as a sign that the public and decision-makers are becoming more sensitive to the problems faced by vulnerable countries, the principles of equality and the consequences of colonialism. The real motives are, however, rather more ominous.

The scale of the ongoing migrant crisis demonstrates that it could assuredly get worse. Making it clear that the willingness wealthy countries have displayed this year to negotiate loss and damage in a manner they had thus far rejected, is not an expression of a newfound humanity among the “developed democracies” but rather a product of their fear that they will be inundated by climate refugees. A series of studies show that we have passed the point at which climate change can be prevented or reversed, and that we can now talk only of mitigating and remedying its worst effects, while extreme climactic events make it impossible even for otherwise hypocritical and sluggish national bureaucracies to ignore the shift in the narrative on the Earth’s climate.

A stark example of a country from which refugees could originate came in the form of an unfortunate Pakistan, which was struck this year by monsoons that appeared on the back of a record-breaking spring heatwave and flooded a third of its territory, endangering 33 million people, killing 1,700 and causing tens of billions of dollars in damage to the country’s economy and infrastructure. Scientists have confirmed links between climate change and Pakistan’s August rainfall being three to eight times higher than the norm. According to the World Meteorological Organisation, climate change increased the likelihood of the heatwave that preceded the floods by as much as 30 times.

Meanwhile, experts from the Global Climate Risk Index, point out that Pakistan is responsible for just one percent of the emission of greenhouse gases, while the countries of the Global North have produced 92 percent of carbon emissions.

Necessity is the Mother of Legal Change

As we are reminded by CNN, the concept of compensation for the loss and damage caused by climate change is not a new one. Developing countries have been advocating it since 1991, when the Pacific island of Vanuatu proposed that the largest polluters direct funds to those most at risk from rising sea levels. Nevertheless, it has been discussed (as a compensation mechanism) more vociferously only in recent years, as the damage done has become increasingly impossible to deny and since the UN International Panel on Climate Change (IPCC) has become more focused on it. Antonio Guterres, the UN Secretary-General, described this year’s IPCC report as an “atlas of human suffering”.

Nor is this undermined by the fact that China has supported the demands of the injured parties out of naked self-interest and from its own conveniently contradictory, not to say schizophrenic, position. Formally, China still belongs to the category of low and middle income countries (LMIC) that are requesting compensation from wealthy countries. In practice, however, it is the second largest economy in the world and manifestly the largest polluter, responsible for 30 percent of the world’s annual CO2 emissions. While developed countries criticise the conduct of Chinese representatives and characterise the pressure they exert on the Global North as hypocritical – pointing to the fact that China pollutes the world’s atmosphere more than all of the developed nations combines – the Chinese are keen to remind us that this is a recent phenomenon and that the developed West has at least 170 years of accumulated misconduct. Parenthetically, developing countries occasionally deploy the argument that climate justice implies that they too should be given the opportunity to develop their economies at the expense of the climate and the environment, as developed countries have done before them.

China has also buttressed its moral position by drawing up a plan, published last October, that aims to limit greenhouse gas emissions post-2030. Making good use of its status as a developing country or LMIC, at COP27 China has simultaneously supported the establishment of a loss and damage mechanism and has also calmly announced that it intends to contribute to it financially. The world’s second largest economy will, however, be able to take part in such an arrangement only after 2023, when it will become a developed country according to World Bank nomenclature – i.e. one with higher than average incomes.

Photo: Igor Ripak /

The concept of loss and damage has been mentioned before, over the last few decades, but more commonly in the context of reducing future harm through adaption to climate change. More to the point, the Mechanism for Loss and Damage Associated with Climate Change Impacts (the Loss and Damage Mechanism) was signed in 2013 at COP19 in Warsaw. It aimed to improve risk management and minimise future harm. About a third of the funds from the Green Climate Fund have been invested in assistance to communities that are adapting to climate change. The Fund was established ten years ago by the signatories of the United Nations Framework Convention on Climate Change (UNFCC) and has so far been the main source of funding for international projects combating climate change. Even though it has never seen the initially planned investment of 100 billion dollars per year.

At COP26 in Glasgow last year, a significant change in the interpretation of the term loss and damage was announced, when developed countries finally agreed that some kind of mechanism will be needed to cover already incurred loss and damage. This year, individual countries, such as Denmark, Scotland and the Belgian region of Wallonia, also released funds to assist the world’s poorest regions that were symbolic in both senses of the word – being both inspirative and small. “It is grossly unfair that the world’s poorest should suffer the most from the consequences of climate change to which they have contributed the least”, Denmark’s development minister said in late September, when his country decided to donate 13.4 million euros to developing countries affected by climate change.

Liability Disclaimer

What has remained unclear since 2021 is the proposed appearance of the aforementioned mechanism. The journal Nature states that, with the support of Germany, the V20 Group, which includes the countries most threatened by climate change, advocates an insurance-based scheme called Global Shield. Information available so far suggests this would involve insured countries paying into a fund and then claiming compensation in the event of incurred damage or loss. According to Nature, other countries back a model that is more clearly reminiscent of humanitarian aid. Many vulnerable countries are, however, opposed to this approach, believing that it goes against the spirit of financing loss and damage and insisting on the principle that polluters should pay, rather than offering charity in the form of humanitarian aid.

It is precisely this model, according to which the historical polluters should pay reparations for activities from which they have profited at the expense of the rest of humanity, that gives rise to the greatest contention. Let us not forget that the developed world is responsible for around four fifths of greenhouse gas emissions released into the atmosphere since the start of the industrial revolution (from 1850 to today), and that half of these emissions were produced by the most developed countries – i.e. those inhabited by just over a tenth of the world’s population. Fearing an avalanche of lawsuits, however, developed countries are doing everything in their power to avoid the mention of “legal responsibility” and “compensation” for harm in the context of the future financial transactions of funds established for vulnerable and threatened countries.

As the Guardian’s COP27 correspondent reports, developed countries are committed to ensuring that any documents drafted explicitly exclude ideas about responsibility and compensation. In doing so, they refer to Article 8, Paragraph 51 of the decision on the Paris Agreement, which states that liability and compensation are excluded from discussion on loss and damage. This point of view also found its way into the agenda drawn up for this year’s summit. The representatives of the Global South do, however, have something to fall back on in legal terms, stating as they do that there are no such restrictions in the 1992 United Nations Framework Convention on Climate Change.

It was revealed in June that, over the past twenty years, the most vulnerable 55 countries have lost around a fifth of their GDP to climate change, some 525 billion US dollars. According to calculations by the London School of Economics, the loss and damage developing countries could suffer as a result of climate chance, and which exceed the cost of adaptation, could increase by another 290-580 billion dollars by 2030, and could reach up to 1-1.8 trillion dollars by 2050. If one day they succeed in winning the right to compensation, their demands from developed countries will be enormous.

Translation from Serbian: Ivan Kovanović

This article was ORIGINALLY PUBLISHED in Serbian on November 11, 2022.


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