The Fund for responding to Loss and Damage, created at the COP27 climate conference in 2022, has deferred its first project funding approvals to December 2026, Climate Home News reported on 10 July. The fund's board, meeting for the ninth time in July, did not approve any proposals under its initial funding window, known as the Barbados Implementation Modalities, and instead set its tenth meeting in December as the target for a first package.
The board received 176 requests totalling about $2.8 billion, far more than the resources available. It increased the funding available under the initial window from $250 million to $342 million and expects to approve roughly 15 to 20 projects, subject to a cap of $20 million per request, according to reports from the meeting. Requests that are not funded in the first package may be carried forward or resubmitted under later funding windows, depending on decisions still to be taken by the board. Four advanced proposals, from Jamaica, Nigeria, Côte d'Ivoire and Haiti, are expected to be considered in December.
What the fund is for
Loss and damage refers to the impacts of climate change that cannot be avoided through mitigation or adaptation, such as destruction from extreme storms and floods, or slow-onset changes such as sea level rise. Developing countries, led by small island states and countries such as Pakistan, campaigned for years for a dedicated fund. Pakistan chaired the G77 negotiating group at COP27, when the decision to create the fund was taken, months after floods covered large parts of the country.
The fund is hosted by the World Bank as a financial intermediary fund, with its own board and secretariat based in the Philippines. Its operating rules were agreed over 2023 and 2024, and the Barbados Implementation Modalities set out a simplified approach for an initial period, offering grants for rapid response and recovery.
Scale of the gap
The gap between the $342 million available and the $2.8 billion requested illustrates a wider problem. Pledges to the fund have totalled several hundred million dollars, much less than estimates of the losses developing countries face each year. The 2022 Pakistan floods alone caused damages and losses estimated at more than $30 billion by a post-disaster needs assessment led by the government with the World Bank. Hurricane Melissa, which hit Jamaica in October 2025, caused severe damage to homes, roads and the power grid.
Donor budgets have been under pressure. Several large donors have cut development aid, and the United States, which withdrew from the Paris Agreement in January 2026, has ended contributions to multilateral climate funds. At the Bonn climate talks in June, developing countries pressed for clearer commitments on climate finance, while few developed countries pledged new money for 2026 and beyond.
Why approvals were delayed
Observers said the board needed more time to review proposals, agree criteria for ranking proposals and ensure fair distribution among regions and types of countries, given the large number of requests. Approving a first package in December, just after COP31 in Antalya, means the fund will arrive at the conference without having disbursed project money. The board's report to COP31 will set out its progress and resource mobilization plans.
Energy infrastructure and loss and damage
Climate disasters often hit energy infrastructure hard. Hurricane Melissa damaged much of Jamaica's power grid. Pakistan's floods in 2022 damaged transmission lines, substations and power plants, and recovery was still incomplete when floods struck again in 2025. Rebuilding power networks is one of the costliest parts of disaster recovery, and the speed of restoration affects health services, water supply and economic recovery.
Loss and damage funding is intended mainly for immediate response and recovery rather than large infrastructure reconstruction. Larger rebuilding needs are typically financed by development banks, governments and, where available, insurance. Few developing countries have significant insurance coverage for public infrastructure, which leaves governments to fund reconstruction through borrowing or budget reallocations.
Links to insurance and pre-arranged finance
Climate finance discussions increasingly focus on financing that is arranged before disasters strike, such as catastrophe bonds, parametric insurance and contingent credit lines. Jamaica has used catastrophe bonds with the World Bank, and Caribbean countries participate in a regional parametric insurance facility. The loss and damage fund is expected to work alongside these instruments rather than replace them. In Pakistan, the IMF's Resilience and Sustainability Facility includes a commitment to develop a federal-provincial disaster risk financing framework by the end of August 2026.
Types of requests
Requests under the initial window cover a range of needs, including recovery after storms and floods, support for communities affected by drought and coastal erosion, and measures to restore livelihoods. Small island states and least developed countries have been among the most active applicants.
Who decides
The board has 26 members, with a majority from developing countries, including seats for small island states and least developed countries. Decisions are generally taken by consensus. Balancing requests from different regions and types of disasters is politically sensitive, because every proposal comes from a country facing real losses, and the available money covers only a fraction of them. The $20 million cap per request is designed to spread resources across more countries, though it limits the scale of support any single country can receive.
Lessons from other funds
The fund's first disbursements will be closely watched as a test of whether a new multilateral body can deliver money quickly to communities after disasters.
Other multilateral climate funds, such as the Green Climate Fund and the Adaptation Fund, took years to build up project pipelines and disbursement capacity after their creation. Developing countries have urged the loss and damage fund to move faster, given the urgency of disaster response, while donors have stressed the need for sound safeguards and accountability. The simplified Barbados modalities were meant to strike a balance by allowing quicker approvals for an initial set of projects.
What to watch
Key items include new pledges to the fund before and at COP31, the board's December decisions on its first projects, how resources are distributed among regions, and whether the fund can move to a longer-term resource mobilization strategy. For countries such as Pakistan, the timing and scale of approvals matter as the 2026 monsoon season unfolds.