The UN plan to compensate poorer countries for climate change

Countries at last year's UN climate conference made a "historic" agreement to set up a fund to compensate poorer countries for climate-related extreme weather events.
compensate poorer countries climate change

Countries at last year’s UN climate conference made a “historic” agreement to set up a fund to compensate poorer countries for climate change and its related extreme weather events.

The specifics of that agreement were delayed, to be confirmed during this year’s conference, scheduled for later this month in the United Arab Emirates.

With that conference weeks away, details are now emerging about how the deal might work. However, controversies remain.

Here’s where things stand.

‘Loss and damage’

The fund agreed to at last year’s conference is a ‘loss and damage’ fund.

Developing countries have been calling for a fund of this nature for years, arguing that developed countries have a moral obligation to compensate them for the impacts of climate change.

They pointed out that developed countries have contributed the most to historic emissions, and also have the means to compensate developing nations.

Developed countries had previously been reluctant to support such a fund. However, Denmark, Belgium, Germany and Scotland were among those in favour of the idea and promised to contribute funding.

Senior UN representative Simon Stiell called the agreement “historic” and said it would help “vulnerable people around the world”.

Unanswered questions included exactly who would pay and what sort of climate effects would be eligible for payment.


A series of talks concluding this week outlined more detail about how the fund would work.

The proposed model, which is likely to be adopted at this year’s conference, would see funding controlled by a 26-member independent board. The board would have its own decision-making powers, but the World Bank would supervise it for its first few years.

It would be made up of 12 members from developed countries and 14 from developing countries, with specific quotas for geographic areas.

The fund would support developing countries with responding to one-off climate-related events (e.g. natural disasters) and also to “slow-onset” events such as rising sea levels or forced displacement of people as areas become uninhabitable.

Funding would prioritise countries with the least capacity to respond.

The fund could receive money from government or private sources.


Some elements of the proposal have split UN member states.

Developing countries were reluctant to accept World Bank supervision, an international financial institution over which the U.S. wields significant power.

Developed countries were concerned the proposal did not clearly state that contributions to the fund shouldn’t be mandatory. The text agreed in the meetings “urged” developed countries to contribute, and U.S. efforts to explicitly recognise the fund’s voluntary nature were rejected.


The Federal Government has not made any financial commitments to a loss and damage fund.

Last year, Treasurer Jim Chalmers said Australia supported “the principle” of the fund and had a “responsibility” to help.

Opposition Leader Peter Dutton indicated he would not support Australian contributions, saying “charity begin[s] at home”.

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