A Fossil Fuel-Funded Climate Disaster Response Fund under the Warsaw International Mechanism for Loss and Damage Associated with Climate Change Impacts

Abstract

Three sets of social institutions deal with catastrophic risk: government regulation through rule making, the market, and civil liability. Climate disasters expose the limitations of all of these social institutions and often result in extensive uncompensated losses, particularly in developing countries. The author proposes the establishment of a fossil fuel-funded Climate Disaster Response Fund to compensate victims for the ‘residual’ risk of climate disasters in developing countries that are particularly vulnerable to the impacts of climate change. This Fund, established under the UNFCCC’s Warsaw International Mechanism for Loss and Damage Associated with Climate Change Impacts, would comprise levies placed on the world’s top 200 fossil fuel companies. This proposal is modelled on various domestic and international funds which have been established to overcome the difficulties posed by tort law and which require companies to pay for the hazardous consequences of their activities and products. Precedents include funds to compensate for the damage caused by toxic chemicals, oil pollution spills, asbestos and nuclear accidents.

Climate justice, loss and damage and compensation for small island developing states

“…110 This problem may also be overcome by Rosemary Lyster's proposal for a Climate Disaster Response Fund under the Warsaw Mechanism to compensate victims in particularly vulnerable developing countries for residual risks of climate disasters. 111 Her proposal is based on domestic and international funds established to compensate victims of toxic chemicals, oil pollution and nuclear damage, and on acceptance that common tort law litigation is not an appropriate mechanism for determining liability and compensation for climate-related loss and damage. 112 Lyster notes that it is not uncommon for governments to establish compensation funds while holding actors involved in hazardous activities strictly liable, sometimes on an unlimited basis.…”

Protection of Climate Displaced Persons under International Law: A Case Study from Mataso Island, Vanuatu

“…165 These social and developmental factors can in turn undermine institutional capacity through low tax revenues, low rates of foreign direct investment and diversion of government funds to other sectors, creating a selfreinforcing cycle of underdevelopment. 166 These data confirm that reducing social vulnerability in developing states is key to preventing climate displacement and enhancing the protection of the rights of climate displaced persons. 167 The Mataso case study underscores the importance of ensuring that developing states like Vanuatu are equipped to deal with the unavoidable consequences of climate change that have already been 'locked in' by current emissions, including climate-related disasters that could result in involuntary displacement.…”

Loss and damage from climate change and implicit assumptions of sustainable development

“…The weak sustainability perspective represented in cluster 1 is the base version of capital theory, where the primary aim of sustainable development is to maintain (or grow) generalized capacity to produce economic well-being. Here, major impacts from climate extremes are viewed as a concern because they disrupt production processes by depleting some capital, thus reducing the productive capacity of society, and as a result lower the ability to meet individual and collective needs (Lyster 2015;Lashley and Warner 2015;Lassa et al 2016;Kemp-Benedict et al 2019). Addressing L&D through the weak sustainability perspective is fundamentally about retrieving (at least) the initial level of capital stock, thus resuming the level of production that existed before the experience of, e.g., an extreme event.…”

“…These tools facilitate the management of financial risks to reduce loss of capital (Hochrainer-Stigler et al 2017). They also facilitate capital investment and substitution postdisaster (Lyster 2015;Hochrainer-Stigler et al 2017;Kehinde 2014;Emmerling 2018;Mayer 2014), even in situations where avoiding L&D may not "comply with cost-benefit principle" (Ma et al 2015;Sharma 2017). The private sector sees these as posing "business opportunities" in the areas of "insurance, modelling, reconstruction" (Surminski and Eldridge 2015).…”