Loss and Damage: The unpaid debt of the climate crisis
Will COP30 settle the debt asks Prof Dr Ioannis Tsipouridis, a Senior Research Fellow at Strathmore University in Kenya
The climate crisis is not an equaliser. Its gravest impacts—from sudden catastrophic storms to slow-onset desertification and sea-level rise —fall disproportionately on developing nations, small island states, marginalised communities and indigenous populations, that have contributed the least, if anything at all to the Green House Gas (GHG) emissionsi causing global warming.
The global discourse around “Loss and Damage” addresses the permanent and unavoidable impacts of climate change, economic and non economic that are impacting communities everywhere and especially in the Global South, such as the loss of homes and lives or the forceful abandonment of what once they called home, to become climate refugeesii.
This discourse has evolved from a 1991 negotiation pointiii to a moral and legal imperative for reparations. The Loss and Damage Fund, was finally established at COP27 and operationalized at COP28, which although a historic step, it is indicative of the denial of liability from wealthy nations. Its continued underfunding and resistance from the climate crisis culprit developed nations reveals a deep-seated denial of liability.
However, to any well meaning person the liability of major emitters is more than obvious, making thus demands for reparations not merely political rhetoric but a matter of climate justice and overdue financial reckoning.
The moral and legal case for reparations
The foundation of climate reparations rests on several pillars of justice:
- Historical Responsibility: Since the Industrial Revolution, a small group of developed nations and fossil fuel corporationsiv has overwhelmingly benefited from and driven the emissions causing climate change. This historical injustice means that those who have benefited most from carbon-intensive development have a moral and ethical obligation to pay for the resulting damage.
- Common but Differentiated Responsibilities (CBDR): The 1992 Rio Declarationv and the UNFCCC recognise CBDRvi, stating that while all countries must address climate change, they do not share equal responsibility. This principle underpins the argument that high-emitting, wealthy nations should bear a greater financial burden for addressing climate impacts.
- The “Polluter Pays” Principle: A cornerstone of environmental law, this principle asserts that those who produce pollution should bear the costs of managing itvii. This is being applied in a growing number of climate litigation cases where courts are holding governments and fossil fuel companies accountable for climate-related harms.
- Human Rights: International and regional courts are increasingly ruling that states have a human rights obligation to protect their populations from the effects of climate change. In 2024, the European Court of Human Rights affirmed that insufficient climate action violates human rights, and in July 2025 the International Court of Justicevii in a historic ruling stated that:
“…..states have a legal duty to prevent harm from climate change, which is an “urgent and existential threat”. The ruling confirmed that all countries, regardless of their participation in climate treaties like the Paris Agreement, are bound by this obligation under both treaty and customary international law. The ICJ found that states can be held legally accountable for their climate-related actions, including the production and consumption of fossil fuels, and may be liable for damages if they fail to act.”
The role of the NCQG and the continuing financial gap
The New Collective Quantified Goal (NCQG)ix, agreed upon at COP29 in Baku, replaces the old, unfulfilled $100 billion per year climate finance target agreed at COP21. The NCQG sets a new floor of at least $300 billion annually in climate finance from developed nations to developing countries by 2035. It also includes a larger objective of mobilising $1.3 trillion per year from all sources—public and private—by the same deadline.
However, the NCQG and its figures, unless implemented without any delay, highlight, rather than solve, the fundamental problem of underfunding for Loss and Damage:
- NCQG shortfall: The NCQG of $300bn annually by 2035 is widely recognised as far below the actual needs of developing countries, which are estimated in the trillions. UNCTAD suggests that developing countries need at least $1.1 trillion for climate finance from 2025, rising to $1.8 trillion by 2030x, with developed nations’ fair share of that being potentially higher.
- Voluntary vs Mandatory: Crucially, while Loss and Damage was acknowledged in the negotiations, developed countries have resisted including it as a mandatory component of the NCQG, arguing that contributions to the Loss and Damage Fund are voluntaryxi. This voluntary nature perpetuates the narrative of philanthropy and aid rather than reparations for obvious liability.
- Finance quality concerns: Developing nations express and underline a major concern that much of the funding comes as loans, exacerbating debt rather than providing grants or concessional terms. It is an understatement to say that it is unfair to expect a developing country to seek loans to deal with the consequences of the climate crisis, caused by the emissions of the lender country, more often than not. The NCQG does not set concrete targets for the portion of finance that should be grant-based, which is essential for Loss and Damage.
The scale of the climate debt: Estimated costs
Quantifying the total accrued sum for Loss and Damage up to 2024 is challenging due to varying and often conflicting – for obvious reasons – methodologies, but available estimates provide quite a clear picture of the scale of the financial need.
- Annual Losses by 2030:
A 2022 UNEP reportxii cited research projecting that economic losses in developing countries due to climate change could reach $290–$580 billion annually by 2030. These projections highlight the growing financial impacts of climate change, including property damage and reduced productivity, and underscore the need for urgent climate action, including both mitigation and adaptation efforts. The research also noted that the costs could escalate to $1.1–$1.7 trillion annually by 2050. These losses are driven by the unavoidable impacts of climate change, such as extreme weather events and their consequences on assets and productivity. The report emphasised that these financial and non-economic impacts disproportionately affect developing nations, many of which are already highly vulnerable to climate change.
A 2024 Nature study xiii projects that the global economy could be committed to an average annual income reduction of $38 trillion dollars by 2050 due to climate change, which represents a 19% loss of global real income. This is a stark increase from previous, less comprehensive projections and highlights that current economic damage from past emissions is already substantial, even in the near-term, and will worsen significantly without drastic and immediate emission cuts.
- Annual loss estimate: The study estimates a $38 trillion annual loss by 2050, equivalent to a 19% reduction in global real income.
- Drivers of loss: The losses are attributed to past emissions and are projected to occur across most countries, even highly developed ones.
- Impact of inaction: The study warns that this economic loss could increase to a 60% reduction by 2100 if drastic emission cuts are not made.
- Economic vs Non-Economic Losses: These figures often focus on economic impacts, such as damage to property and infrastructure. They do not account for non-economic losses, such as the loss of life, forced migration, biodiversity loss, cultural heritage destruction and indigenous lands, which are equally profound but difficult to monetise.
- Accrued Sum to 2024: Based on escalating annual damage figures, and recognising that costs have been mounting for decades, the total accrued sum for Loss and Damage up to 2024 is substantial. While no single official figure exists, it can be reasonably estimated in the trillions of dollars. For instance, a 2018 study noted that 55 climate-vulnerable nations had lost a fifth of their wealth over the preceding 20 years due to climate-fueled disasters. A 2024 report in Nature calculated an average annual loss of $395 billion, and if we project that backward based on rising trends, the accumulated debt is enormous. Some studies have found that the richest 21 fossil fuel companies would owe a cumulative $5.4 trillion in reparations over 25 years.
Projecting the future financial burden
The cost of inaction will escalate exponentially. By 2050, the annual economic cost of Loss and Damage in developing countries alone is estimated to rise to between $1 trillion and $1.8 trillionxiv.
Projecting the annual increase over the next 20 years is complex, but we can model a conservative estimate based on current trends.
A 2024 study suggests an annual loss of $395 billion.
To illustrate, using the $395 billion baseline and a growth rate of 4% annually (a modest increase on the EEA figure), the annual costs would increase, at a conservative rate, to reach an annual financial demand of nearly $1 trillion annually by 2044. If the growth rate accelerates as predicted, the actual figures would be far higher.
From funds to full reparations in the spirit of justice
The NCQG and the Loss and Damage Fund are crucial first steps, but they are currently not only underfunded but also structurally inadequate to deal with the magnitude of the problem.
The move from the current cooperative-voluntary framework towards a legally-backed reparations model is the next logical step toward true climate justice.
Demanding reparations means not only holding historically responsible nations and corporations accountable, but also those who continue to this day to fuel the climate crisis and exasperating impacts and causing Loss and Damage.
It is a necessary shift that reframes climate finance not as charity, but as the fulfillment of a long-overdue debt. As climate litigation against major emitters proliferates and international courts clarify the legal obligations of states, the groundwork for a globally coordinated, legally grounded and ethically robust reparations framework is being laid.
The climate crisis is a problem decades in the making, fueled by the disproportionate actions of a few and it will be decades before it is dealt with successfully.
True climate justice requires a reparative approach that acknowledges the history as well as the perspectives and ensures those who bear the least responsibility are not left to face the financial and human costs alone.
It is the foundation of our justice system and it should be respected and practiced by all.
Hence COP30 should deliver more than hot air promises. ESI
About the author
Prof Dr Ioannis Tsipouridis, a Senior Research Fellow at Strathmore University in Kenya. He is a Renewable Energy Consultant Engineer and Climate Action Advocate, Director at RECCReC (Renewable Energy & Climate Change Research Center at TUM) and Visiting Professor at the Technical University of Mombasa (TUM), Visiting Professor at Kisii University, Editor of the “Energy Matters to Climate Change” Emc2 portal, Member of Fossil Fuel Non Proliferation Treaty and Member of Loss and Damage Collaboration Group
