A policy framework for Loss and Damage finance

This policy brief proposes a comprehensive climate risk finance framework that expands the focus of Loss and Damage with provisions for transformational risk management to reduce risk and curative options to address residual impacts ‘beyond adaptation’. Faced with increasing climate-related risks, decision makers across the globe need to strengthen and transform climate risk management approaches before limits to adaptation are met. Adapted social protection and national and global loss distribution schemes are suggested to attend to sudden-onset climate-related risks and impacts, such as those triggered by flooding. Instances ‘beyond adaptation’, such as retreat, need to be considered in addition to insurance-focused risk transfer. However, funds are needed for ecosystem and livelihood restoration, as well as rehabilitation support to address slow-onset climate-related impacts and risks, such as loss of biodiversity and ecosystem services due to increasing heatwaves.

This paper posits an entry point for a comprehensive risk management and finance approach that can inform international Loss and Damage and adaptation deliberations, as well as policymaking on disaster risk reduction at the country-level. Pilot testing at the scale of risk management can lead the way. In a world of increasingly systemic and existential risks, IIASA is helping to find solutions through enhanced research and engagement in UNFCCC expert groups, through its Loss and Damage research network, as well as by supporting community implementation as part of the Flood Resilience Alliance.