Key points
- Event: On 9 November, the New Zealand government announced that it would allocate NZD20 million (USD11.82 million) as part of a climate fund to help address climate change-related damage in developing countries
- Significance: Between 2000 and 2019, climate-vulnerable countries worldwide have lost approximately USD525 billion owing to changes in temperature and precipitation resulting from climate change
- Outlook : It is likely that the major beneficiaries of New Zealand's allocated climate funding will be the Pacific Island countries
Event:
On 9 November, the New Zealand government announced that it would allocate NZD20 million (USD11.82 million) as part of a climate fund to help address the impact of loss and damage from climate change in developing countries across the world. The announcement was made against the backdrop of the COP27 conference being held in Egypt from 6 to 18 November. This COP (Conference of Parties) event is the 27th meeting of countries that are party to the United Nations Framework Convention on Climate Change drafted in 1992.
Significance:
The 9 November declaration places New Zealand among a small group of countries that have agreed to commit funds to help developing countries address the effects of climate change. Other countries that have committed to setting up similar climate loss and damage funds include Belgium, Denmark, and Germany.
In 2015, at COP21 the term “loss and damage” was formalised in Article 8 of the Paris Agreement and refers to the costs incurred from the adverse effects of climate change. Developing countries, through coalitions such as the Group of 77 and the Alliance of Small Island States (AOSIS), have called on developed countries with large greenhouse gas emissions to create a loss and damage fund, which would help compensate developing countries affected by climate change. However, no agreement has been reached at the UN climate summits regarding the scope of a loss and damage fund and who the sponsors and beneficiaries of such a fund would be.
On 7 June, the Climate Vulnerable Forum (CVF) – a grouping of 58 countries from Africa, Asia, the Caribbean, Latin America, and the Pacific – released a Climate Vulnerable Economies Loss Report. The report estimated that between 2000 and 2019, climate-vulnerable countries lost approximately USD525 billion owing to changes in temperature and precipitation patterns likely caused by climate change. The report noted Tuvalu as a case study where international aid had made a positive difference in a climate-related emergency. In 2011, Tuvalu had suffered from a severe drought, but a significant increase in Official Development Assistance (ODA) from international donors (from USD13.9 million in 2010 to USD37.3 million in 2011) “totally offset the negative consequences of the drought at the macroeconomic level”.
Outlook:
It is likely that the main beneficiaries of New Zealand's allocated climate funding will be the Pacific Island countries. New Zealand's Foreign Affairs Minister Nanaia Mahuta announced on 9 November that the New Zealand government would work with the Pacific Island governments to support them in priority areas. According to the New Zealand Ministry of Foreign Affairs and Trade, between 2018 and 2021 nearly 60% of New Zealand's ODA funding went to the Pacific Island countries. The government of New Zealand has made clear its commitment towards maintaining regional security within the Pacific and has stated that security – including climate security – forms a core component of its relations with the Pacific Island countries.
This emphasis on regional security comes as China also competes for influence in the Pacific region. China signed a bilateral security deal with the Solomon Islands in April 2022 and has been involved in the training of police forces of the Solomon Islands. The 2022 annual report of the New Zealand Ministry of Defence notes that strategic competition and climate change are the principal challenges to New Zealand's security interests. It further states that China's rise globally is the major driver for this strategic competition.
However, global economic pressures mean that it is unlikely that the issue of loss and damage funding will be completely resolved at the COP27 summit. With developed countries focusing on supporting their own economies in the wake of the Covid-19 pandemic and facing financial challenges relating to the war in Ukraine, it is likely that these pressures will constrain their capacity to provide additional climate funding for developing countries.