President Biden’s Leaders Summit on Climate over Earth Day has just wrapped, and while some encouraging commitments were made, overall, those pledges did not rise to meet the challenges faced by those on the frontlines of climate change.

Perhaps best exemplified is this press release from the Climate Action Network International, civil society representatives decried the failure to announce any new and additional finance (on top of existing pledges, much of it unmet) to drive climate action, and progress on the issue of loss and damages sustained by vulnerable countries.

These calls were echoed by Bangladesh, South Africa and Indonesia, while climate vulnerable countries repeated calls for debt relief to navigate the disproportionate climate impacts they are suffering, though very little contribution to harmful emissions on their part.

In testament to CAN’s assessment, last month, a survey of 730 climate economists by New York University’s Institute for Policy Integrity revealed nine in 10 global experts believe climate change will deepen global inequality between rich and poor countries.

Moreover, 70% of respondents believe that climate change will also worsen inequality within nations — leaving the poorest people living in the poorest nations doubly impacted by climate change. Not only are they the ones most likely to be physically impacted by natural disasters and slow-onset climate events, but these events are then likely to push them further into economically dire situations. 

Forced displacement plays a significant role in triggering the climate-change induced cycle of poverty for individuals: it is both an effect of climate change (80% of the 12.6 million forced displacements of the past six months have been caused by environmental reasons), and a cause of poverty — when forced to move, people leave behind assets, livelihoods, and lose savings throughout the process. 

Living on the Margins of Society

For people already in poverty, climate change will prove devastating, as detailed in the UN Special Rapporteur on extreme poverty and human rights’ 2019 report, Climate Change and Poverty. For many Bangladeshis displaced by floods and cyclones over the past thirty years, this is a daily fear. Morzina Begum, has been displaced six times, and has lost approximately $30,000 USD equivalent throughout the process — she now lives on a roadside. Another interviewee, Farooq Hossain Sardar, explains how, in the aftermath of Cyclone Amphan, he has had to switch professions and abandon his home: 

“I was making a living raising crops and doing shrimp farming. But I had to leave my home after Cyclone Amphan hit us last May. Now, I drive a van in the suburbs of Khulna, about 220 km from Dhaka. I have suffered losses in every disaster since the cyclone of 1988.” 

He now lives in an overcrowded room, and his story demonstrates the compounding effects that repeated natural disasters have on those forcibly displaced. 

While entire nations typically can’t get up and relocate from the damage caused by rising sea levels and tropical storms like individuals can, (though some nations, like Kiribati, are making such contingency plans) climate change causes a parallel downward economic spiral for climate-vulnerable countries of the Global South. In the same way that repeated natural disasters led to repeated displacements and compounding economic effects for the individuals interviewed in Bangladesh, compounding disasters similarly force nations into debt, then make it increasingly difficult to escape the debt trap. 

When Debt Becomes Odious Debt

Further compounding stressors for countries are its high debt burdens as climate change batters nations like Belize, Mozambique, and Fiji both physically and economically. As we know, a glaring climate finance gap exists, and the inadequacy of climate financing in its current form to ameliorate the debt crisis is also clear.

The NY Times Somini Sengupta pointed out some glaring discrepancies in this system, “rich nations are nowhere close to delivering the promised $100 billion a year to help poorer countries deal with the effects of global warming. Low-and middle-income countries alone owed $8.1 trillion to foreign lenders in 2019, the most recent year for which the data is available — and that was before the pandemic.”

Economic policies have been proposed to combat the debt crisis, including various forms of debt swaps, where debt forgiveness would be granted in order to fund sustainable development, adaptation measures, and health care investments. 

A recent UNDP report revealed that of 120 developing (low-and middle-income) countries, 72 are economically vulnerable, likely facing increased future development costs as a result of the amount of debt they hold. In total, these 72 identified vulnerable nations hold $595 billion in “risky-total debt service”, defined as external public debt which is owed to foreign lenders.

Notably, six percent of this debt ($36.2 billion) is held by low-income countries, while 49% ($294.1 billion) is held by lower-middle income countries, and 45% ($268.1 billion) is held by upper-middle income countries. 

While low-income countries are the most in-need of debt relief, attention must be paid to lower-middle income countries and middle-income countries, home to many people highly vulnerable to climate threats. Recent debt relief programs like the IMF’s Catastrophe Containment and Relief Trust (CCRT) are unlikely to have a large effect on reducing global debt burden: only select low-income countries are eligible to benefit.

G20 initiatives, the Debt Service Suspension Initiative (DSSI) and the Common Framework for Debt Treatments Beyond the DSSI (CF) have similar limitations: of the 72 highly vulnerable countries, 49 are covered by either the DSSI or the CF, leaving 23 vulnerable countries with high risk total debt of $387 billion — 65% of the total —uncovered by either program. 

The Covid-19 pandemic threatens to push 100 million people globally into extreme poverty, undoing a decade of development, while destabilizing already financially unstable regions of the world. It has created mounting pressure from the Global South on lending institutions and creditors to relieve developing nations debt, especially relevant because massive debts have human costs. Of 121 low and middle income-countries, 64 spend more of their government’s revenue on debt repayment than on public health, a disparity that demonstrates the massive strain debts place on vulnerable nations, harming their capacities to respond to the pandemic and other social issues. 

In September of 2020, Climate Refugees wrote about how the Alliance of Small Island States (AOSIS), ahead of the 75th session of the UN General Assembly, called upon donor governments and development banks to step in and alleviate these nations’ debt crises. Included in the June 2020 AOSIS Statement on Debt was the fact that, for many AOSIS countries, up to 40% of their GDP comes from tourism, a sector decimated by the pandemic. As Lois Young, the Permanent Representative of Belize to the UN put it, “SIDS (small island developing states) are sinking, and it’s not due to just the sea level rise and climate change. We are actually sinking in debt.”

Not long ago, the world faced another pandemic that disproportionately ravaged some regions more than others, and arguably continues so in some cases. In the 1990’s to mid 2000’s, the AIDS pandemic devastated Africa — sub-Saharan Africa in particular — and then, like now, debt relief became a major rallying cry as a means of addressing duress, and then increasingly, redress for unjust structural adjustment programs contingent in the loan schemes that proved devastating.

Those same civil society campaigners see the negative imbalance of climate change on debt in vulnerable countries, now echoing the same calls for debt relief when a climate disaster strikes.

It is a double injustice to force environmentally-and economically-vulnerable nations, battered by disasters exacerbated by climate change caused primarily by wealthy, developed nations, to then borrow money, often from private institutions and even the same countries that have contributed the most to climate change, thus perpetuating a cycle of debt and further disempowerment. 

Economic Reparations Through Loss and Damages

The economic fallout of the pandemic provides a glimpse into a near future, and for many nations, into the present-day, where climate change is exacerbating inequalities on a macro and micro level. With 75-80 percent of economic costs to be borne by developing countries, having contributed only 10 percent to global carbon emissions, the countries with the most to lose, and the least to spend on resilience and adaptation measures, will be the ones bearing the cost of the Global North’s development. 

A human rights-based approach to addressing climate change is incomplete without addressing the debt-crisis and larger inequities in development financing. Given that climate finance is anticipated to be a key issue at COP 26, the meeting of all parties to the UNFCCC and Paris Agreement occurring in November 2021. It is significant that attention be paid not only to how much money developed nations are contributing to the Green Climate Fund and other climate financing mechanisms, but to the means through which developing nations are receiving this funding, and whether, too, this funding is strictly separate to other funding streams such as development aid.

To a larger extent, the reform of the Warsaw International Mechanism for Loss and Damages to include economic compensation paid by the greatest historical greenhouse gas emitters to nations disproportionately harmed by climate change would be a major step towards achieving global climate justice.

Frequently described as the unavoidable impacts of climate change beyond the limits of adaptation measures, loss and damage is a contested issue, simply because high-polluting developed nations contest it. As explained in depth by Olivia Serdeczny of the German Development Institute in a 2017 paper, prior to the signing of the Paris Agreement, loss and damage was discussed as a mechanism through which “collective loss-sharing” could occur — however, this definition was controversial and contested by developed nations hesitant to engage in compensatory actions for their contributions to climate change. Article 8 of the Paris Agreement shifted this understanding by stating:

“Parties recognize the importance of averting, minimizing and addressing loss and damage…”

The terms “averting” and “minimizing” loss and damage widened the focus of the mechanism, away from retrospective compensation and towards a broader definition encompassing adaptation and mitigation measures as well. Additionally, while early conversations on the topic loss and damage indicated collective action, Serdeczny notes that the inclusion of adaptive activities, which are agreed to follow a “country-driven approach” under the Cancun Adaptation Framework, has the potential to shift conversations on the topic of loss and damage away from the international stage. 

This must be changed if we are to address the forces driving inequality in the age of climate change. Currently, there is no designated fund that covers the costs that low-and middle-income countries shoulder, often in the form of increased debt burden, as a result of displacement and migration caused by climate change.

Reforming the Warsaw International Mechanism for Loss and Damages to concentrate on economic reparative actions related to losses caused by climate change that have already happened and cannot be averted or minimized would create a justice-oriented funding mechanism within the UNFCCC to address issues like displacement.

Deepening inequality on global, national, regional, and local scales exacerbated by climate change indicate the failures of growth-centric trends in global economic policy to take into account the environmental and economic effects of “limitless” growth. Ricardo Mastini, Girogos Kallos, and the degrowth advocate, Jason Hickel, propose a “Green New Deal without Growth”, arguing that two commonly discussed solutions to climate change: a Green New Deal, and degrowth, can be combined in a policy that would, “....place at its centre the reduction of throughput to facilitate a rapid decarbonisation of the economy and to avoid environmental problem-shifting and further extractivism in the Global South.”

A Green New Deal without growth would accomplish decarbonization without relying on GDP, or claiming that GDP growth is necessary to achieving climate change mitigation. By reallocating public funds, increasing taxes on the wealthy, and creating a sovereign money system, this policy would accomplish not only the curbing of climate change, but it would reduce inequality by redistributing wealth and public resources. While growth is often unevenly distributed, carbon emissions generate benefits that serve everyone, especially those who are the most vulnerable to climate threats — the type of policy we need moving forward.

Urgently, as natural disasters increase in intensity and slow-onset climate events progress globally, the international community must act to ensure that the debt crisis does not further compound upon existing climate crises, limiting already-vulnerable countries' abilities to provide for their citizens and adapt to climate threats. Climate Refugees has long advocated for rights-based approaches to addressing climate threats, migration, and displacement. Through reducing the Global South’s capacities to provide adequate public health services to its citizens, adapt its cities to climate threats, and develop necessary social infrastructure, debt, in addition to climate change, becomes a force in and of itself driving inequality.

With contributions by Amali Tower