Climate finance and new Fund for Responding to Loss and Damage

CLIMATE-INDUCED loss and damage comes in a multitude of forms and is often highly localised and context-specific. For example, it includes direct damages to infrastructure, properties, and livelihoods caused by extreme weather events and other climate-related disasters.

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In addition to such economic impacts—which also encompass reduced productivity, costs of recovery and reconstruction, or opportunity costs—, climatic events and long-term changes can cause a variety of non-economic losses which are harder to quantify in monetary terms, such as loss of health, loss of life, degradation of ecosystem services, or cultural loss, including tangible and intangible cultural heritage.

Climate-induced loss and damage has long been a topic in the multilateral climate negotiations, which recently resulted in the establishment of a dedicated Fund for Responding to Loss and Damage. This fund was established in 2022 and 2023 and is now in the process of full operationalisation, with its secretariat hosted under the World Bank and situated in the Philippines. So far, the board of the fund has met five times: four times in 2024 and now for the first time in 2025 during a three-day meeting in Bridgetown, Barbados from 8-10 April, 2025.

Climate finance and loss and damage

Especially for climate-vulnerable developing countries, loss and damage can cause significant costs and put an additional strain on national and local budgets and resources. The Fund for Responding to Loss and Damage aims to reduce this strain and support countries and communities in developing and implementing effective responses to unavoidable or unavoided climate change impacts. As of now, a total of $ 765 million has been pledged to the fund for this purpose.