Caribbean leaders want to see the creation of a new climate change loss and damage fund for developing countries, but they are far from certain it will get done as planned.
The fund, announced at the UN climate change conference meeting in Egypt in 2022, or COP27, called for the creation of the fund at COP28, which will be held in Dubai in December. It is an ambitious effort to mobilize capital, but many doubts remain about how it would operate and, if created, what amount of funds would be made available.
The initiative could be critical for small Caribbean countries being whacked by natural disasters that are becoming more deadly and frequent.
Hyginus “Gene” Leon, president of the Caribbean Development Bank, said he was not convinced the fund would be established this year or how it would work.
“Failure to create the fund would mean pushing back all the ideas we have been talking about,” he told LatinFinance on the sidelines of the World Bank/IMF annual meetings in Marrakech, Morocco. “It means the ability to change or replace what is lost would be delayed.”
Leon said the Caribbean requires around $15 billion a year for climate resilience and transition, though that number could be greater since there are costs that have yet to be considered.
“The amounts we are talking about are only referential, because we need a number. It is based on our thinking today, but climate change has all kinds of costs that have not been identified. It all depends on what we do and how quickly we can manage this crisis,” he said.
Barbados Finance Minister Ryan Straughn said his country has been involved in the negotiations for the loss and damage fund but cautioned that how it will work has not been decided and past experiences are not encouraging.
“The precedent is clear. They agreed to pledge money and then did not follow through. A loss and damage fund requires international cooperation and we have not seen enough evidence of this,” Straughn said in an interview. “The truth is, people seem to find money for wars long before they deal with the climate war.”
Still, the minister said the fund must be created, despite the headwinds and doubts.
“Something needs to be done. No one wants to use a loss and damages fund because it implies disaster, but we need to have it even if it is not the most ambitious plan,” he said.
Barbados is an example of the scope of the climate problem. Since the pandemic, it has been hit by a hurricane as well as a drought that caused it to restrict water use for four months this year. And a volcanic eruption on a neighboring island showered Barbados with ash, affecting health, agriculture and tourism, the economic motor.
While he also has doubts, the Caribbean Development Bank’s chief agreed that the fund has to materialize.
“We need the fund, but we need to decide how much is put in and by whom,” Leon said.