Financing for 'Loss and Damage': fair resources to address climate impacts.
A technical note details the evolution of the topic since the 1990s and reinforces the need to guarantee adequate resources for countries most vulnerable to global climate change.
26/11/2025
The theme of Loss and Damage addresses the impacts of climate change that cannot be avoided, even with mitigation and adaptation efforts. It encompasses both economic losses – such as infrastructure destruction and agricultural damage – and non-economic losses – such as human lives, culture, and biodiversity. Although vulnerable countries had been warning about the problem since the 1990s, the issue only gained prominence in international climate negotiations from 2007 onwards, with the Bali Action Plan, and was strengthened in 2012 with the Doha Plan, which recognized the need for specific and structured responses to address these impacts, especially in the most vulnerable countries.
“Starting in Doha, the debate evolved into the creation of the Warsaw International Mechanism in 2013, which institutionalized the issue within the UN Climate Convention. In 2015, the Paris Agreement, signed during COP21, consolidated loss and damage as one of the three pillars of global climate action, alongside mitigation and adaptation,” highlighted the study's author, José Miguez. “With this, the need for a specific financial mechanism gained strength, aimed at guaranteeing adequate, predictable, and fair resources to support affected countries and communities – strengthening international solidarity and the global response to the increasingly severe effects of climate change,” added Luciano Schweizer, co-author of the study.
Demands from vulnerable countries
Developing countries – especially small island states and least developed countries – have been demanding financial, technical, and institutional support to address the losses and damages caused by climate change. They argue that rich countries must acknowledge their historical responsibility for the emissions that have exacerbated global warming and call for climate justice with adequate, accessible, and transparent resources.
Funding is central to these demands. Vulnerable countries are calling for the creation of a robust, predictable, and additional fund, separate from resources already allocated to mitigation and adaptation, capable of covering the increasing costs of climate disasters. They also advocate for quick, simple, and fair access to resources, especially in emergency situations, where bureaucracy can exacerbate losses.
On the other hand, developed countries recognize the importance of the issue, but maintain a cautious stance in international negotiations. Their main concerns are financial, legal, and political – these governments seek to avoid commitments that could be interpreted as legal liability for climate impacts and reject any obligation for financial compensation. Instead, they advocate an approach based on technical cooperation, prevention, and risk management, prioritizing knowledge sharing, capacity building, and the use of early warning systems.
Brazilian perspective
This topic is of great importance to Brazil, which is already feeling the effects of climate change in several regions. The country faces droughts, floods, landslides, wildfires, and rising sea levels, events that cause economic, social, and environmental damage, primarily affecting vulnerable populations. In addition to directly suffering the impacts, Brazil has a strategic role in international negotiations, potentially acting as a bridge between developed and developing countries in the search for fairer and more effective global solutions.
Brazil's regional and social diversity makes the challenge even greater. Indigenous communities, riverside dwellers, and family farmers are particularly exposed to the impacts and have fewer resources to adapt. In many cases, adaptation measures are not enough to prevent losses, which include biodiversity, productive land, and even traditional ways of life. Given this, access to international financing mechanisms and technical support becomes essential, as they can help in the recovery of affected areas and the reconstruction of infrastructure after climate disasters.
At the same time, Brazil's engagement in this debate reinforces its role as a climate leader in the Global South. The country can contribute to the design of policies and mechanisms that guarantee effective support for the most vulnerable, both within and outside its territory. Domestically, the discussion about loss and damage also drives the strengthening of national public policies, such as civil defense, risk management, and social protection, making the country more prepared and resilient in the face of growing climate challenges.
Sensitive topic for negotiations
Financing for loss and damage is one of the most sensitive issues in climate negotiations, marked by the resistance of developed countries to making binding financial commitments.
In 2022, the Loss and Damage Fund was created, which should be fully operational by COP30, with shared management between rich and developing countries. The fund seeks to guarantee rapid, fair and transparent access to resources, prioritizing the most vulnerable, and provides monitoring and evaluation mechanisms to ensure its effectiveness.
There are still debates about funding sources – public, private, or innovative – and about access and governance criteria. Despite the challenges, the fund represents an important step forward in international climate justice, with expectations of strengthening and greater integration into national policies to address the climate crisis.
Learn more about the loss and damage financing mechanism by downloading the full study 'Bases for the consolidation of the loss and damage financing mechanism' in Portuguese or English .
