Calculating the Loss and Damage Finance Gap

With the establishment of the Fund for responding to Loss and Damage, loss and damage finance has been firmly institutionalised under the United Nations Framework Convention on Climate Change. However, little knowledge exists on the financing gap that the Fund would ideally close.

Many have voiced the need for a ‘loss and damage finance gap report’. So far, several methodological challenges have hampered the calculation of the gap. Next to challenges in quantifying lost or damaged values and related activity costs, the lack of a dedicated finance marker is at the core of analytical concerns: without agreement on what exactly constitutes ‘responses’ to loss and damage, it remains unclear which needs and financial flows for what activities should be considered.

In our report, we discuss these methodological challenges and propose solutions, covering:

• Insights from the Mitigation and Adaptation Gap Reports.
• Discussions of methodologies and sources to assess financial needs, of information on support already provided, and of potential data sources.
• The integration of slow onset events, non-economic losses and damages, and local knowledge.
• Approaches to calculating the loss and damage finance gap, including the intervention of a finance marker.
• The identification of challenges and next steps.