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Denmark becomes first U.N. member to pay for ‘loss and damage’ from climate change

Floodwaters surround a family and their belongings in Jaffarabad, Pakistan, in August. Recovery from the devastating floods could cost $10 billion. (Zahid Hussain/AP)

Denmark will direct about $13 million to assist vulnerable countries that have suffered “loss and damage” from climate change — the first time in U.N. history a wealthy member state has pledged compensation for the consequences of emissions in the developing world.

The landmark announcement came Tuesday as diplomats and world leaders gathered in New York for the United Nations General Assembly. Earlier in the day, U.N. Secretary General António Guterres called on nations to tax fossil fuel companies and use the revenue to help people struggling with climate change’s irreversible harms.

In a statement, Danish development minister Flemming Møller Mortensen said that a visit to flood-stricken areas of Bangladesh this spring helped inspire the pledge.

“It is grossly unfair that the world’s poorest should suffer the most from the consequences of climate change, to which they have contributed the least,” Mortensen said.

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Loss and damage funding has long been a rallying cry for climate justice advocates and leaders from vulnerable countries. Wealthy nations, including the United States, have rebuffed those calls, worried that any kind of financial commitment would imply legal liability for climate change’s escalating toll.

But the issue has gained traction amid increasing devastation from climate disasters, such as the drought-fueled famine in East Africa and Pakistan’s recent deadly floods. Some 400 activist groups released a letter this month demanding that finance for loss and damage be added to the agenda for this November’s U.N. climate negotiations in Sharm el-Sheikh, Egypt.

At last year’s talks in Glasgow, Scotland became the first government contributor to a loss and damage fund. (As a constituent country of the United Kingdom, Scotland is not a U.N. member state.) Belgium’s Wallonia region pledged another million euros to the cause.

Denmark’s investment is the biggest yet — though it pales in comparison to the financial toll wrought by climate change each year, activists say. Recovery from the floods in Pakistan alone is estimated to cost upward of $10 billion.

Climate change brings irreversible harm to poor countries. At COP26, rich ones face pressure to foot the bill.

According to an announcement from the Danish foreign ministry, the pledge includes 40 million Danish kroner — about $5.4 million — to work with civil society groups on helping communities adapt to climate change and addressing loss and damage, especially in Africa’s Sahel region. It also sets aside millions for “strategic efforts” around loss and damage negotiations ahead of the upcoming talks in Egypt.

Harjeet Singh, head of global political strategy at the nonprofit Climate Action Network, called Denmark’s pledge “significant.” But he pointed out that about a third of the promised funding will go to the InsuResilience Global Partnership, a U.N.-organized program through which private companies provide disaster insurance to those most vulnerable from climate change.

This setup “will create business for European corporations in the developing countries, eventually making vulnerable people pay for the premium toward losses and damages from climate disasters,” Singh said.

The Danish embassy was not immediately available for comment.

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