Non-market valuation of loss and damage under climate change

Summary:

This project addresses the epistemological and methodological challenges of non-market valuation of loss and damage under climate change. Loss and damage (L&D) is a complex and contested topic within the UN Framework Convention on Climate Change (UNFCCC). An Executive Committee of the Warsaw International Mechanism on L&D (WIM) has been formed to consider the various angles to L&D and appropriate methodologies to assess what may count as damage and what as irreversible loss. Non-market valuation is tricky because prominent monetary approaches to judging damage to and permanent loss of, for example, lives, health, sense of belonging, and cultural heritage have inevitable biases and are potentially in conflict with what people value, why, and how. Our goal is to develop a more holistic lens and identify what stakeholders in different geographical, cultural and socio-economic contexts value and what they are likely to experience as loss, in the past, present, and future, to ensure more ethically responsible L&D valuation.

Loss and damage (L&D) is generally defined as the residual cost of climate change to societies, after mitigation and adaptation. Some aspects of LD can be given an economic value (e.g. damage to infrastructure), but other aspects are difficult or impossible to value economically (e.g. identity and place), and are termed non-economic or non-market loss and damage (NMLD).

Some NMLDs may be the most highly valued by individuals and communities, but their incommensurability means that they are in danger of being ignored or undervalued when considering LD, especially in the context of prioritising adaptation.

We explore possible frameworks to NMLD “valuation” that are consistent with recent thinking about limits to adaptation, tolerable and intolerable losses. Drawing on case studies of climate change impacts from across the developed and developing world, we re-interrogate previous literature to define a typology of NMLD through the lens of what people value, and the potential for loss. We use case studies that represent different livelihoods and climatic stressors, for instance from the Western Australian Wheat Belt, New Orleans, Niue Island in the South Pacific, dryland farming systems in Northern Ghana, and indigenous populations in the United States and Australia.

Instead of starting with current and future impacts from climate change and assessing economic and non-economic losses for all possible loss categories, we start with what people in specific places value and how these aspects are affected by climate change. Not every potential loss is valued the same, and some losses might be larger and harder to avoid, than others. “Intolerable” loss might occur when, despite adaptive action, a highly valued private or social norm is threatened.

However, what people value might change over time, with new understandings of risk, adaptation options, and likely impacts, and with social and cultural change. Hence, any useful analytical framework for NMLD has to be iterative and reflexive, and it has to have a time dimension.

Some of our main questions for deliberation:

• What are the domains of L&D under climate change?
• What is a meaningful baseline for determining loss?
• When, where, and for whom are L&D irreversible?
• What methodologies and approaches exist or need to be amended to best assess harm, in monetary and non-monetary terms?
• What is the basis for estimating and allocating reparation and compensation?