In November 2022, Caribbean small island leaders will travel some 10,000 kilometers to lobby for their economic rights before diplomats and dignitaries from more than 200 countries, at the United Nations Climate Change Conference (COP27) in Egypt. As representatives of some of the most vulnerable nations in the world to climate change, regional heads of state will request “Loss and Damage” (L&D) funding to help pay for what has become an out-of-control climate-related debt crisis.
UN Secretary General, António Guterres has referred to L&D as the “moral responsibility” of rich G20 countries that are responsible for 80% of total greenhouse gas (GHG) emissions.
Small Island Developing States (SIDS), by contrast, contribute less than 1% to total GHG emissions, but are disproportionately affected by and vulnerable to destructive and economically devastating climate impacts.
Each year, SIDS experience estimated losses from climate related events equivalent to almost 20% of total social expenditures, as compared to 1.2% in North America and less than 1% in Europe and Central Asia.
Caribbean SIDS are seven times more likely to be impacted by natural disasters than larger countries, and when they are hit by disaster, their average cost of damages relative to Gross Domestic Product (GDP) is 6 times higher than that of larger countries, causing them to turn to international markets for funding— a practice that has become increasingly unsustainable, constraining the region’s long-term prospects for growth.
In 2017, for example, category 5 Hurricane Maria made landfall in Dominica, resulting in estimated damages of $1.3 billion or 226% of GDP. By 2020, Dominica had the 7th highest debt to GDP ratio among Small Island Developing States.
Similarly, in 2019, The Bahamas was devastated by category 5 Hurricane Dorian, creating $3.4 billion in destruction— a quarter of the country’s GDP— making it impossible to meet a budgeted $340 million debt servicing on $8.4 billion of outstanding debt. By 2021, the national debt of the Bahamas had grown to around $10.2 billion or 103% of its GDP.
For the Caribbean, the climate crisis has become an economic crisis that calls into question the fairness, equality, and justice of sociopolitical processes, on a global scale.
Asking Caribbean SIDS and other vulnerable nations to assume liability for destruction that they did not cause is like asking someone to pay for damages incurred at a party that they were not invited to.
In August 2022, when Caribbean Regional Heads of Government met in The Bahamas to collectively strategize for COP27, the leaders agreed that they would jointly push for the establishment of a loss and damage response fund as its top priority “and a commitment to further operationalize a facility/ fund in 2023.”.
“What we’ve been lacking regionally is a strategy that would aid us in our negotiation process when we go to the conferences of the parties referred to as COPs,” said Rochelle Newbold, The Bahamian Government’s Special Advisor on Climate Change and Environmental Matters, of the region’s new collaborative stance on strategic climate priorities such as L&D, ahead of the conference.
Among the key issues on the regional agenda, mentioned in the final report of the Bahamas Caribbean Regional Heads of Government Meeting, was for the inclusion of a sub-item pertaining to loss and damage under “Matters pertaining to finance” on the COP27 agenda.
The heads of government also recorded a need to shift to financing that is “largely grant based or highly concessional” and called for “the adoption of a 2% levy on oil exports to fund loss and damage for climate-vulnerable countries.”
L&D provides remedial funding in cases where climate adaptation measures have not provided adequate protection, or in instances where there have been existing response mechanisms, but these have not been equally accessible to all countries or communities.
From the perspective of climate vulnerable countries such as Caribbean SIDS, L&D is not assistance but rather, reparation.
Loss and Damage— put quite simply— is a matter of climate justice.
“Will they mourn us on the front line?” Barbados’ Prime Minister, Mia Amor Mottley asked during her remarks at COP26 in 2021, echoing the words of Guyanese singer Eddie Grant, as she questioned the leaders of rich nations, many of whom have looked away as vulnerable countries continue to pay the price for a problem that they did not create.
Mottley has been the face of a growing movement advocating for the reformation of the international financial system and its 527 development banks and development finance institutions— which together control assets of $13 trillion— to bring them into alignment with the Sustainable Development Goals and climate action, demanding that they apply natural disaster clauses to all debt, and employ a multidimensional vulnerability index in lieu of Gross National Income (GNI) per capita, as a measure to determine eligibility for grants and other concessional resources.
In October, the International Monetary Fund announced the launch of a new $45 billion resilience trust of which Barbad0s— as one of the first beneficiaries— is set to receive $183 million for climate-focused spending.
For countries in which money owed to lenders is greater than the size of their entire economy— such as Barbados, Jamaica, Suriname, Belize, Antigua & Barbuda and Dominica— a correction has been a long time coming.
In July, the United Nations Secretary-General’s report on follow-up to and implementation of the outcomes of the International Conferences on Financing for Development revealed that during the period of 2015 to 2021, Small Island Developing States’ public debt as a share of GDP increased from 80% to 112%. SIDS’ external debt stocks accumulated to the record level of $66.1 billion, essentially depleting whatever fiscal space was previously available for climate-related priorities.
At a two-day SIDS conference which took place in Antigua & Barbuda in August, President of the United Nations General Assembly (UNGA), Abdulla Shahid referred to the debt obligations faced by global SIDS as “unsustainable and immoral” and advocated for the streamlining of the global financial system to take into account “the vulnerabilities faced by countries in special situations, and the impact of onerous debt in their efforts to recover better.”
As the costs of the climate crisis continue to mount each year, they have multiplied the burden of preexisting issues such as weak infrastructure, dependence on imports and global markets, over-dependence on tourism, growing food insecurity, poverty, densely populated coastal areas, and of course, extreme indebtedness— which has in turn lead to the piling on of more debt— leading to further instability, greater inequality, and debt defaults.
The Inter-American Development Bank says that in 2030, climate resilience in Latin America and the Caribbean will require annual spending of up to $1,300 billion, but under the current financial system, climate-related reconstruction costs and social spending crowd out scarce resources that could otherwise be spent on becoming more resilient.
“We cannot even speak about climate change, if we have people who are hungry, people who don’t have access to water, people who don’t have access to wages and earnings then they have no other alternative but to seek out every possible way to survive,” said Guyanese President Dr. Mohamed Irfaan Ali in his World Environment Day Message in June.
The pervasive cycle of disaster and growing indebtedness is enough to make one dizzy— particularly against the backdrop of COVID-19, and the current cost of living crisis.
Each year, climate-related environmental impacts threaten the region in patterns that are hard to predict, bringing hurricanes, floods, droughts, heatwaves, sea level rise, land degradation, ocean acidification and salinization, causing property loss, reduced food security and tourism decline, as well as human impacts such as impaired physical and mental health, reduced livelihoods, and loss of cultural heritage.
According to the Caribbean Community Climate Change Center, “Facing first-hand stronger and more frequent, extreme weather events, the human, health, infrastructure, and overall economic costs for Small Island Developing States (SIDS) in the Caribbean are not only higher, but cumulative, uneven, and many times exceeding the size of their own economies.”
Sadly, in cases where tipping points have already been reached— the losses will be felt forever.
According to the Intergovernmental Panel on Climate Change (IPCC), even if temperature rise is contained at the aspirational level of 1.5 degrees Celsius
“Many of the effects of climate change will be irreversible during our lifetimes and will result in impacts that are beyond the ability to adapt, leading to loss (often irreversible) of natural and cultural assets and jeopardizing the ability of these countries to thrive, or even survive,” says Dr. Didacus Jules, Director General of the Organization of Eastern Caribbean States, an inter-governmental organization dedicated to supporting the development of countries and territories in the Eastern Caribbean.
By 2050, sea levels in the region are projected to rise as high as 40 centimeters and could exceed 1 meter by 2100, which would lead to coastal erosion, reduction of land space, forced relocation and threatened agricultural and water resources due to saline intrusion in soils and aquifers. UN estimates for capital GDP loss to the Caribbean Community (CARICOM) due to sea level rise are projected to be as high as $187 billion or 19.2% of projected GDP by 2080.
The Caribbean is one of the world’s most diverse biodiversity hot spots, home to large numbers of endemic species that contribute to healthy ecosystems and drive tourism— but due to the cumulative effect of human activity and climate impacts, the region has suffered the highest rate of species extinctions globally.
In 2021, Trinidad & Tobago’s Planning Minister Camille Robinson-Regis revealed that the government was trying to avert a potential $1 billion in losses in biodiversity resources and services, tourism and other economic activity associated with climate change.
L&D, in idealistic terms, is a fair and equitable response to some of the most devastating impacts of the climate crisis.
“Finance for loss and damage is not expressly or adequately addressed under the existing financing mechanisms and, as such, this situation needs to be put on the table and addressed accordingly,” says Dr. Jules.
But resistance from rich countries has been high.
In September, Denmark became the first country in the world to pledge funds towards such reparations, offering $13 million in support. To date, no other developed nations have pledged funds.
In October, Germany’s Foreign Minister Annalena Baerbock said that her country “will work toward a fair sharing of the costs at the COP27 in Egypt, putting the question of climate adaptation, but in particular also the question of loss and damage, on the agenda.”
On October 4th, Economy ministers from EU member states issued a statement advising that they expect that a 13-year-old promise to provide $100 billion per year in financial assistance to developing nations— which has never been met— to be met in 2023.
UN Secretary General, António Guterres has referred to attitudes toward L&D as “the number one test of how seriously governments take the growing climate toll on the most vulnerable countries.”
Loss and damage payments— which would be applied on top of the $100 billion per year pledged by rich nations— are projected to amount to $580 billion by 2030 and $1.8 trillion by 2080, and would provide some degree of correction for the systemic drivers that impede resilience, causing the most severe climate impacts to be disproportionately felt within the poorest and most vulnerable communities.
And time is of the essence.
The annual cost of inaction to the region from hurricane damage, climate-related tourism decline and infrastructure losses as a percentage of GDP is disproportionately higher for Caribbean nations. The Caribbean Community Climate Change Center estimates the cost of climate inaction to be $10.7 billion (or 5% of GDP) by 2025, $22 billion (or 10% of GDP) by 2050, and $46 billion (or 22% of GDP) by 2100. In comparison, the United States’ cost of inaction by the turn of the century is projected to amount to 10% of its GDP.
“The biggest carbon emitters have postponed taking real responsibility for the loss and damages they’ve caused,” says Bahamas’ Prime Minister Philip Davis of the need for accountability.
“Pledges and commitments have been made, but not kept. We’re now in a race against time. I will continue to make the case that keeping the billion-dollar promises they’ve made isn’t just the right thing to do, it’s the smart thing to do. If they don’t find fairness and justice provide sufficient motivation, they should look to their own self-interest. As climate disasters proliferate, the pressure on borders, food production, and geopolitical stability will increase, too. Urgent action is needed now–- it can’t wait any longer.”