$2 billion yearly spent on climate damage, prevention in rural Bangladesh: Report 

The recently published report "Operationalising finance for loss and damage: from principles to modalities" by the Stockholm Environment Institute highlighted that in countries like Bangladesh, vulnerable communities bear the greatest costs of climate impacts. 

Households in rural Bangladesh spend almost $2 billion yearly on repairing climate-related damage and prevention measures – twice as much as the national government spends and over 12 times higher than multilateral international financing to Bangladesh's rural population.

The report shows that despite increasing demand for financial support, finance for addressing loss and damage has been largely absent and falls far short of the scale of needs, reads a press release.

It highlights several current climate finance architecture gaps, including largely inaccessible and complicated funding modalities for vulnerable communities. 

Often the funds are loan-based and project-based, which increases the debt burdens for vulnerable countries and may fail to reach the most vulnerable communities in need.

Ines Bakhtaoui, the lead author of the paper and Research Associate at Stockholm Environment Institute, mentioned, "The challenge with loss and damage finance is not only to determine how much is needed but also how that money should be delivered. Inappropriate funding mechanisms might hurt the victims of climate change even more. Our report is one of the first to explore the issue."

The report makes key recommendations for negotiating loss and damage finance at COP27 to be prioritised. 

Including simplified and directly accessible funds for communities and marginalized groups. 

The report highlighted the potential of unconditional cash transfers to the communities, as vulnerable communities know their needs best. Also, representatives of the most vulnerable and discriminated communities should be engaged in all the decision-making stages.

Dr Saleemul Huq, one of the paper's authors and Director of the International Centre for Climate Change and Development (ICCCAD), stated, "The issue of how to operationalize modalities for mobilising and disbursing finance for loss and damage is extremely relevant right now. This report starts the ball rolling."

The report emphasises adopting a climate justice lens to operationalise the loss and damage finance facility. 

It highlights the need to focus on the historical responsibility of polluter nations and enacting the polluter pays principle. The climate finance modality should ensure gender equality, and human rights, while funding is available on a grant basis.

The report showcases examples of some countries that have already taken steps to incorporate loss and damage into national plans. Including the recently developed Mujib Climate Prosperity Plan (MCPP) in Bangladesh, identifying and quantifying potential climate-induced loss and damage.

Moreover, working with local actors has been prioritised in the report however, it mentions the challenges to addressing local-level vulnerabilities due to the redistribution of power in disfavour of poor and vulnerable communities. 

The report uses Bangladesh's Local Disaster Risk Reduction Fund as an example of this since this was aimed to provide adaptation funds to local communities based on risk. 

However, strong political and economic elite capture was prevalent due to a lack of local capacity and reliance on the government for technical support. 

Hence, the report highlights the importance of creating a financial structure that prioritizes power dynamics at local level, reinforcing marginalisation and exclusion of communities. 

Zoha Shawoo, lead author of the paper and Associate Scientist at Stockholm Environment Institute, said, "Any decision on loss and damage finance at COP27 must center the needs and priorities of vulnerable communities most affected by loss and damage. This involves giving them sufficient decision-making power over how finance is used; be directly accessible, and give autonomy to affected communities to utilize it following their needs."

In recommendation, the report states that a loss and damage finance facility is time-consuming for implementation, however, it has the advantage of offering a blank slate for modalities tailored to principles grounded in climate justice.

Highlighting that the COP27 decision could include a phased approach of establishing a facility in the medium term and mobilizing finance through existing mechanisms in the immediate term.