Introduction
The operationalisation of the Loss and Damage Fund at the twenty-eighth Conference of the Parties (COP28) held in Dubai in November and December 2023 represents one of the most consequential institutional developments in international climate law in a decade. For the first time since the United Nations Framework Convention on Climate Change (UNFCCC) entered into force in 1994, a dedicated financial mechanism exists with the express purpose of addressing losses and damages that developing countries suffer from the unavoidable consequences of climate change. Yet the architecture of this fund, the legal character of the claims it is meant to address, and the political tensions embedded within its design remain profoundly unresolved.
India occupies a peculiar position in this emerging legal landscape. As a country that is simultaneously among the most climate-vulnerable nations on earth and among the top five cumulative greenhouse gas emitters globally, India’s negotiating posture reflects a careful calibration between solidarity with developing nations, assertions of historical injustice against industrialised countries, and the quiet anxiety of a rising economy that may one day find itself on the contributing rather than the receiving end of this mechanism. This article examines the legal architecture of the Loss and Damage Fund, interrogates the theoretical foundations of developing country claims under international law, and analyses India’s multifaceted negotiating position across the COP28 negotiations and their aftermath.
Legal Framework
The legal foundations for loss and damage as a concept within the international climate regime are older than is commonly appreciated. The UNFCCC’s Article 4(8) and 4(9) oblige parties to give full consideration to actions necessary to meet the specific needs and concerns of developing country parties, including those that are vulnerable to the adverse effects of climate change. However, these provisions do not create enforceable rights to compensation. They establish obligations of consideration rather than obligations of outcome.
The Warsaw International Mechanism for Loss and Damage (WIM) was established at COP19 in 2013, following years of pressure from small island developing states and least developed countries. The WIM was conceived principally as a knowledge-generating and capacity-building mechanism rather than a compensation fund. Its mandate encompasses enhancing understanding, coordination, and implementation of approaches to address loss and damage associated with the adverse effects of climate change. Critically, the WIM contains no provision for financial transfers from developed to developing countries.
The Paris Agreement of 2015 included Article 8, which formally recognised loss and damage as a distinct pillar of the international climate response alongside mitigation and adaptation. However, a decision accompanying the Paris Agreement, Decision 1/CP.21, explicitly stated that Article 8 does not involve or provide a basis for any liability or compensation. This language was inserted at the insistence of the United States and the European Union, who feared that acknowledging loss and damage as a compensable injury would expose developed countries to legal claims in domestic and international courts.
The Santiago Network, established at COP25 in 2019, was designed to catalyse technical assistance to developing countries in implementing approaches to avert, minimise, and address loss and damage. It was formally operationalised at COP27 in Sharm el-Sheikh in 2022. The Santiago Network functions primarily as a matchmaking mechanism connecting countries with technical expertise and financial resources but does not itself disburse substantial funding.
The decisive shift came at COP27, where parties agreed to establish a fund specifically dedicated to loss and damage. The transitional committee established to design the fund met four times through 2023, producing recommendations that were adopted at COP28. The fund was initially housed at the World Bank for an interim period of four years, a decision that proved deeply controversial among developing country negotiators who associated the World Bank’s governance structures with donor-country dominance.
Judicial Developments
The legal character of loss and damage claims has begun to receive judicial and quasi-judicial attention from multiple directions simultaneously. The International Court of Justice (ICJ) is currently hearing a landmark advisory opinion request on state obligations regarding climate change, initiated through a resolution of the United Nations General Assembly in March 2023. This opinion, which is expected sometime in 2025 or 2026, will be the most authoritative international legal statement on whether states have obligations under international law to prevent climate harm to other states and to their own populations.
The Philippines Commission on Human Rights completed its landmark investigation in 2022 into the responsibilities of major carbon producers for human rights violations attributable to climate change. The investigation, launched in 2015 following petitions from communities affected by Typhoon Hainan, examined whether forty-seven major fossil fuel companies bore moral and legal responsibility for foreseeable climate-related harms. While the Commission found that these companies may be held liable under domestic Philippine law, it acknowledged the limitations of domestic law in capturing the transboundary character of climate harm.
In India, no court has yet directly addressed the legal basis for loss and damage claims in the international sense, though the Supreme Court’s recognition in M.K. Ranjitsinh v. Union of India (2024) of a right against adverse climate effects under Articles 14 and 21 of the Constitution creates a domestic legal foundation that could, in theory, support future arguments about the government’s obligations to seek international climate finance for adaptation and loss and damage. The National Green Tribunal has heard numerous cases involving climate-related extreme events but has consistently framed its analysis in terms of domestic environmental law rather than international climate obligations.
Contemporary Issues and Analysis
The central conceptual difficulty in operationalising loss and damage as a legal category is the problem of attribution. Climate attribution science has advanced remarkably since the early 2000s. Studies by the World Weather Attribution group and others have established, with increasing statistical confidence, that specific extreme weather events are made more likely, more intense, or more prolonged by anthropogenic climate change. The 2022 Pakistan floods, for instance, were shown to be rendered five times more likely by climate change. The 2021 Indian heatwaves and the recurring severe cyclones in the Bay of Bengal have been subjected to similar attribution analyses.
However, attribution science, even at its most sophisticated, establishes probabilistic causation rather than the but-for causation that most legal systems require for compensation claims. Proving that a specific cyclone was caused by a specific country’s emissions, rather than merely being made more probable by cumulative global emissions, remains legally problematic. Moreover, the doctrine of state responsibility under international law, as codified in the International Law Commission’s Articles on State Responsibility (2001), requires attribution of a wrongful act to a specific state. Given that climate change results from the cumulative emissions of all countries over centuries, establishing individual state responsibility for specific loss and damage events is an extraordinarily difficult legal undertaking.
The distinction between the Loss and Damage Fund as a compensation mechanism and as a humanitarian assistance mechanism is not merely semantic. If the fund operates as compensation, it acknowledges legal responsibility and creates entitlements. If it operates as humanitarian assistance, it is a voluntary act of charity that does not imply any admission of liability. The current fund design, consistent with the explicit exclusion of liability in the Paris Agreement, treats contributions as voluntary and does not establish a formula-based entitlement system. Developed countries contributed approximately 700 million US dollars in pledges at COP28, a figure that climate economists estimate represents less than one percent of the annual loss and damage costs that developing countries already face.
Comparative and International Perspective
Comparative analysis reveals that the Loss and Damage Fund is structurally more analogous to existing multilateral development finance mechanisms than to compensation regimes. The Green Climate Fund, established in 2010, also operates through voluntary contributions and has faced persistent underfunding and governance controversies. The Adaptation Fund, which predates the Paris Agreement, similarly relies on voluntary contributions supplemented by a two-percent levy on Clean Development Mechanism credits.
The contrast with the Montreal Protocol’s Multilateral Fund is instructive. The Multilateral Fund, established in 1991 to assist developing countries in phasing out ozone-depleting substances, operates on a formula-based contribution system with agreed replenishment cycles. It has been widely regarded as a successful model of multilateral environmental finance, precisely because its financial obligations were clearly defined and legally enforceable within the treaty framework. The Loss and Damage Fund lacks these features.
The EU’s approach to loss and damage has been cautious. European negotiators at COP28 supported the fund’s establishment while resisting any language that could be construed as acknowledging legal liability. Germany and France have made bilateral pledges, but these are framed as solidarity contributions rather than reparative payments. The United States, which contributed 17.5 million dollars at COP28 while simultaneously being the world’s largest historical emitter, exemplifies the political constraints that prevent the fund from operating as a genuine compensation mechanism.
China’s position is particularly complex. As the world’s largest current emitter that is also classified as a developing country under the UNFCCC, China benefits from developing country solidarity narratives in loss and damage discussions while deflecting pressure to become a significant contributor. This ambiguity has become increasingly untenable as China’s per capita emissions approach and in some metrics exceed those of European countries.
Practical and Policy Implications
For India, the Loss and Damage Fund presents both an opportunity and a long-term strategic challenge. In the short term, India stands to benefit as a recipient country. The Economic Survey 2022-23 estimated that climate-related extreme events cost India approximately 3.75 trillion rupees between 1998 and 2017. Cyclones in Odisha and Andhra Pradesh, floods in Assam and Bihar, glacial lake outburst floods in Uttarakhand and Himachal Pradesh, and heatwaves across the Deccan plateau impose growing annual costs that India’s National Disaster Management Authority has struggled to quantify comprehensively.
However, India’s trajectory as a major emitter creates a long-term interest in ensuring that the fund’s design does not evolve into a liability-based system. India’s cumulative historical emissions are substantially lower than those of the United States, the European Union, and China, but its absolute emissions are large and growing. A future in which attribution science becomes legally sufficient for compensation claims, and in which major emitters are compelled to contribute in proportion to their historical emissions, would create significant financial obligations for India.
India’s position in COP28 negotiations was therefore characterised by strong support for maximising the fund’s capitalisation and accessibility while simultaneously resisting any legal language acknowledging emitter responsibility. Indian negotiators pushed for the fund to be accessible through direct access modalities that do not require recipient countries to navigate World Bank conditionality. India also advocated for a broader definition of loss and damage that encompasses slow-onset events such as sea-level rise, desertification, and glacial retreat, which are particularly relevant to India’s Himalayan and coastal ecosystems.
Suggestions and Reforms
The fundamental reform needed in the loss and damage architecture is a credible, rules-based capitalisation mechanism that does not depend on the annual voluntary pledges of donor countries. Several proposals merit serious consideration. A levy on international aviation and maritime transport, both of which are significant unregulated emission sources, could generate dedicated climate finance. The International Maritime Organisation’s recently adopted carbon levy for shipping, while modest, demonstrates the feasibility of this approach.
A second reform priority is the integration of attribution science into the fund’s project assessment framework in a manner that is legally and scientifically credible without requiring individual country liability determinations. The fund could operate on the basis of aggregate attribution findings that establish the share of specific climate events attributable to anthropogenic forcing in general, without requiring plaintiff-defendant style causal chains.
Third, India should lead efforts to establish a permanent, formula-based replenishment cycle for the fund analogous to the Green Climate Fund’s replenishment negotiations. The current ad hoc pledge model is inadequate for planning the large-scale infrastructure and social protection investments that loss and damage finance should support.
Fourth, the Santiago Network’s technical assistance mandate should be expanded and better resourced, with particular attention to climate-proofing legal frameworks in developing countries. India’s experience with disaster management law, coastal zone regulation, and flood control infrastructure offers valuable lessons that could be systematised through the Santiago Network.
Conclusion
The Loss and Damage Fund operationalised at COP28 represents a genuine, if limited, achievement of multilateral climate diplomacy. It acknowledges, for the first time in an institutionally concrete form, that the physical and economic consequences of climate change impose costs on vulnerable countries that mitigation and adaptation cannot fully prevent. Yet the fund’s current architecture reflects the political compromises necessary to secure its establishment rather than the principled legal framework that the scale of climate-related loss and damage demands.
India’s negotiating position, sophisticated in its recognition of short-term interests and long-term vulnerabilities, will need to evolve as attribution science matures, as India’s own emission trajectory continues, and as the ICJ advisory opinion clarifies the contours of state obligation in international climate law. The challenge for Indian climate diplomacy is to champion a loss and damage architecture that is adequately funded and accessible for developing countries today, while avoiding the precedents that a future emissions trajectory might render costly. This tension is not merely India’s problem; it reflects the fundamental equity paradox at the heart of international climate governance.
