“Loss and Damage” and “Liability and Compensation” – What’s the Difference and Why Does It Matter?

“Loss and Damage” and “Liability and Compensation” – What’s the Difference and Why Does It Matter?

When wildfires become unstoppable, consuming forests, farmlands, communities, and anything else in their path, how will those affected cope? When typhoons slam coastal populations, dumping over a foot of rain in a single event, who will be there to help mop up? When seas rise up, drowning centuries-old communities, where will the displaced go?   The international community’s answers to these questions, so far, are rooted in the concepts of loss and damage, liability and compensation, risk transfer, and climate financing. The distinctions between these mechanics, which operate variously through the United Nations Framework Convention on Climate Change (UNFCCC), individual governments, NGOs, and the private sector, are sometimes blurred.   In particular, loss and damage is a term that is often associated with liability and compensation. Both are used in the jargon of climate policy, predominantly in the context of finance transfers from polluter nations to highly impacted vulnerable nations. How are these two key terms related and why does it matter?   Loss and damage is a term that is used to describe total losses, such as death and land lost due to climate induced sea-level rise, and repairable damage, such as destroyed infrastructure. While loss and damage typically refers to the economic consequences of climate change, the term can also apply to cultural and traditional practices that are lost due to climate impacts.   Liability refers to the legal culpability of nations that have made large contributions to greenhouse gas emissions. Compensation, as the word suggests, are payouts to poor and highly impacted nations. If a court determined that a nation was liable for the impacts of climate change, then that nation could be required to compensate others who are now suffering the consequences. This is a chain of events that most industrial countries have sought to avoid.     To the more casual observer the distinction between these two sets of terms is not always clear. To negotiators, however, the differences between “loss and damage” and “liability and compensation” are not only distinct, but represent embattled red lines. More