At the start of this week, the United States announced its intention to withdraw from the United Nations’ fund to respond to loss and damage. Loss and damage has been on the climate agenda for decades. The main idea behind the fund is for many of the heaviest-polluting industrialized countries to help less developed nations that are most vulnerable to extreme heat, storms, and drought. The hard-won, international decision to create a fund was a critical signal toward real action on responding to climate change.
While the fund was officially established at the 2022 United Nations Climate Change Conference in Egypt, known as COP27, it was operationalized this past year at COP29 in Azerbaijan. An executive director of the fund was appointed and initial financing agreements with the World Bank were finalized. The decision to operationalize the fund moved the conversation on loss and damage from a fringe issue to a prime example of what global collaboration on climate must look like.
Now, however, just fifteen weeks after COP29 ended, the Trump administration has decided to withdraw the United States from the management of the fund. The withdrawal was marked “effective immediately,” and the consequences will be, too.
In its withdrawal from the fund’s management, the United States has given up its seat at the international table. It has limited its long-term ability and credibility to shape debate and take leadership on climate finance. As one of the future managing members of the board for the government of Peru, I am deeply aware that this withdrawal marks a striking missed opportunity.
But even more immediate, the United States has damaged its own economic resilience.
The underlying reasons for the fund have not changed. Climate change is disproportionately affecting countries on the frontlines. Between 2000 and 2019, climate change cost an estimated $2.8 trillion in loss and damage. Notably, loss and damage is the last threshold of climate costs. When countries prepare for the impacts, most look first to mitigate the emission of greenhouse gases into the atmosphere. However, the planet now faces locked-in costs, so leaders then have to turn to adaptation to prepare people for impacts such as hotter average temperatures.
Still, these adaptation actions are also limited. At some point, humanity’s ability to adapt to climate change moves beyond what is feasible—becoming losses (permanent) and damages (reversible in principle). This accounts for property loss and damage for individuals, or severe damage to infrastructure. It can also capture lost earnings or irreparable harm to entire sectors. While these costs are staggering, they are also borne unequally. Often, those countries that have contributed the least to global emissions are the same ones dealing with the worst impacts of climate change. The African continent, for example, faces devastating and disproportionate climate costs but has contributed the least to greenhouse gas emissions.
If the United States continues to reduce its investments in and focus on climate, it comes with an economic cost for its own economy. In an interconnected world, inaction on climate means lower growth worldwide. Not only will climate inaction negatively impact global trading routes (for example, the noted and increasing traffic jams at the Panama Canal, which handles 5 percent of sea-based trade), but it will also cost the United States in terms of its own imports.
The less countries invest—especially high-emitting countries, including the United States—on addressing the causes of climate-related losses and damages, the more it will cost countries on the climate frontlines to produce essential goods and resources. Whether it’s an immediate realization or revealed in the years to come, these policies and inaction will hurt the United States and its ability to source agricultural products, manufacturing goods, or raw resources.
Climate change transcends borders. It’s impossible to build invisible walls around its impacts. The Trump administration has an opportunity and obligation to reconsider its climate policies and to fully recognize the economic costs associated for the country if it continues down an isolationist climate path.
Jorge Gastelumendi is the senior director of the Atlantic Council’s Climate Resilience Center. He previously served as chief advisor and negotiator to the government of Peru, and he will serve as board member of the UN Fund for responding to Loss and Damage, representing the government of Peru.
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