The Fund for responding to Loss and Damage, created by agreement at COP27 in Sharm el-Sheikh in 2022 and operationalised at COP28 in Dubai, has launched its first call for funding requests. The call was announced at COP30 in Belém, Brazil, under what the fund calls the Barbados Implementation Modalities, a start-up phase named after the Barbados meeting of the fund's board at which the approach was agreed.
According to the fund, $250 million has been allocated for 2025 and 2026 under the modalities. Individual funding requests can range from $5 million to $20 million. The submission window opens on 15 December 2025 and runs until 15 June 2026.
What the fund will pay for
The fund supports developing countries that are particularly vulnerable to the adverse effects of climate change in responding to economic and non-economic loss and damage. That includes damage from extreme events, such as floods, storms and heatwaves, and slow-onset events, such as sea level rise and desertification. Eligible uses listed by the fund include emergency response, reconstruction and recovery, and support related to displacement and migration.
Unlike most climate finance, which supports mitigation, such as renewable energy, or adaptation, such as flood defences, loss and damage finance addresses harm that has already occurred or cannot be avoided by adaptation. That distinction was central to the long negotiation that led to the fund's creation.
How much money is available
Pledges to the fund since COP28 have totalled several hundred million dollars, from countries including the United Arab Emirates, Germany, France, Italy, the United Kingdom, Japan and others. The $250 million allocated for the first two years is a small fraction of estimates of loss and damage in developing countries, which various studies put at hundreds of billions of dollars a year.
The scale of the first call means it is unlikely to fund large reconstruction programmes on its own. A grant of up to $20 million could support specific recovery projects, such as restoring water systems or rebuilding schools and clinics, or could complement larger financing from development banks and governments.
Pakistan and the origins of the fund
Pakistan played a central role in the creation of the fund. It chaired the G77 and China negotiating group in 2022, the year its catastrophic floods caused damages and losses that a post-disaster needs assessment led by the government and the World Bank put at more than $30 billion. The floods became a reference point in the COP27 negotiations that produced the agreement to establish the fund.
Pakistan suffered further severe floods during the 2025 monsoon, with the National Disaster Management Authority reporting 1,006 deaths by late September. Countries like Pakistan, Bangladesh, small island developing states and least developed countries are expected to be among the first applicants.
Energy infrastructure in loss and damage
Energy infrastructure is often among the assets damaged in climate disasters. In Pakistan's 2022 floods, grid stations, transmission lines and distribution networks were damaged across Sindh and Balochistan. In Jamaica, Hurricane Melissa in October 2025 knocked out power to more than three-quarters of the utility's customers. Restoring power is typically one of the first priorities after a disaster, because electricity is needed for water pumping, health care and communications.
Whether loss and damage funding is used for energy reconstruction will depend on country priorities and on the fund's criteria. Many governments seek to rebuild energy infrastructure to higher resilience standards, which can cost more than like-for-like replacement. Combining loss and damage grants with concessional loans from development banks is one way to cover the difference.
How a request reaches the fund
Under the start-up modalities, requests come from developing country governments, which identify the loss and damage they want to address and the entities that will implement the response. The fund's criteria emphasise country ownership, meaning that the request should reflect national priorities and be channelled through national systems where possible. Requests are expected to explain how the funding complements other sources, such as humanitarian aid, insurance payouts and development bank lending, rather than duplicating them.
The size range of $5 million to $20 million per request suggests the fund is aiming to spread its first allocation across a number of countries, rather than concentrating it in a few large grants. That design reflects both the limited resources and the political importance of showing that the fund can deliver money to a range of vulnerable countries quickly.
Why the speed of disbursement matters
The value of disaster finance depends heavily on timing. Money that arrives in the weeks after a disaster can restore power, water and health services and limit secondary harm, such as disease outbreaks and lost livelihoods. Money that arrives years later is more useful for long-term reconstruction. Parametric insurance and catastrophe bonds are designed for speed, while development bank loans and grant funds typically take longer to approve. The loss and damage fund's place in that sequence will become clearer once its first requests are processed.
The broader finance picture
The loss and damage fund is one part of the international climate finance architecture. At COP29 in Baku, countries agreed a new collective goal for developed countries to provide or mobilise at least $300 billion a year by 2035 for developing countries, along with a call to scale up finance from all sources to $1.3 trillion a year. That goal does not include a specific allocation for loss and damage.
The United States, which made a pledge to the fund under the previous administration, has since withdrawn from the Paris Agreement and rescinded its international climate finance plan. The fund's board includes representatives of developed and developing countries, and its trustee and host arrangements are linked to the World Bank.
What COP30 delivered on finance
At COP30, negotiators discussed adaptation finance, the roadmap toward $1.3 trillion and other finance issues. Developing countries pressed for a tripling of adaptation finance. The final outcomes on these issues will shape how much money flows to vulnerable countries over the next decade, and how loss and damage fits alongside mitigation and adaptation finance.
What to watch
The number and quality of funding requests in the first window, the speed of approval and disbursement, and whether new pledges are made to replenish the fund will indicate whether it can become a significant source of support. Observers will also watch how the fund coordinates with existing humanitarian and disaster risk financing, including parametric insurance such as the catastrophe bond that paid Jamaica $150 million after Hurricane Melissa.