Compensation fund for climate change impacts: study explores fund architecture

06/10/2013 - International climate policy is increasingly aware of the need of compensation for “loss and damage associated with the adverse effects of climate change”, as it has been put in the final text of the recent world climate summit in Doha, Qatar. However, a practical mechanism is missing. Now scientists outline options for a voluntary, international compensation fund with specialized, independent climate courts to elucidate how damages should be actually compensated. The purpose of the fund is to compensate those who experience anthropogenic climate impacts in a structured way.
Compensation fund for climate change impacts: study explores fund  architecture
Damaged crop field. (Photo: Thinkstock)

“Funding the fund would demonstrate credible commitment to climate policy and justifies payment for adaptation. It also replaces charity by a more predictable compensation mechanism,” says Detlef Sprinz, a political scientist at the Potsdam-Institute for Climate Impact Research and lead-author of the study now published in Weather, Climate and Society. “The fund’s architecture is set up to be applicable to all countries on Earth. However, mitigation is the central action variable to reduce one’s contribution to the fund, so the suggested mechanism would provide additional incentives to reduce emissions.”

Contributions to a compensation fund could follow a double proportionality to limit its exploitation, the authors suggest. Members would have to pay in proportion to their past greenhouse-gas emissions, and the fund compensates the share of emissions that members are collectively responsible for.

"Our ideas matter both in the legal scholarly and the political realm," says co-author Steffen von Bünau, consultant to the World Bank Group. They have been discussed, for instance, by Bangladesh and Germanwatch. The concept builds on earlier proposals within the framework of the UNFCCC, for example the Brazilian approach to the allocation of liability. “The need to fill an institutional gap is quite obvious," von Bünau explains. "Loss and damage are an ever more pressing issue, and as the debate moves beyond theory, practical solutions such as designing effective judicial mechanisms become relevant."


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