Do you realize how much money you owe to developing nations to compensate for all the harm your extravagant car-driving, food-refrigerating, detached-housing, lifestyle has caused?

“Loss and Damage.”

These are typically terms we use for insurance matters about houses, cars, boats and other personal property items. For the delegates gathered in Bonn, however, this “loss and damage” concept is being elevated to a bizarre new level — nation states are claiming damages for their alleged losses from man-made global warming.

Leading the charge is the Alliance of Small Island States (AOSIS) representing a host of islands including Tuvalu, Kiriabati, St. Lucia, the Maldives and others. For years they have been harping at climate meetings about getting money from Tier 1 (industrialized) nations to grant them coverage for purported “damages” being cause to their shorelines by climate change. According to the AOSIS, not only has global warming ravaged their islands with super-hurricanes as never seen before, but even worse, some of them are actually being swallowed up into the sea because of melting Antarctic glaciers. If it were true (which many scientists say it is not), it would be very bad for a nation like the Maldives: roughly 80% of their land mass is one meter or less above sea level! A while back the Maldives staged an underwater cabinet meeting as a publicity stunt to try and hurry the funds along.

AOSIS has taken the liberty to identify those they want to hold responsible. And like good lawyers, they just happen to be nations with the deepest pockets: the United States, Western Europe and Japan. Although China is now the world’s leading emitter of carbon dioxide, they don’t seem to matter to AOSIS (as though China would compensate them anyway). And since the UN climate conference in Bonn is giving AOSIS its day in court, their attitude appears to be, “why only talk about present and future damage,” let’s make a play for past compensation and damages from the West as well and really cash in.

This idea of being compensated for past carbon crimes has also inspired others to take an interest in Loss and Damage. Shortly before COP15 met in Copenhagen in 2009, Bolivia made submissions to the UNFCCC demanding that historical climate debts be repaid by the West. They were joined by several other Latin American nations. A Philippine governmental official said his country should be compensated by the West for harms inflicted on it, and an African Union representative pegged the pricetag owed to developing nations as being in the trillions.

The Tier 1 nations were not (to say the least) enthusiastic about taking on this burden of historical compensation. But after Copenhagen fell apart, the follow up meetings in Cancun and Doha re-energized the AOSIS’ Loss and Damage issue, and today it is a point being looked at and given serious consideration by the Subsidiary Body for Implementation in Bonn.

While a spokesman for the Secretariat’s office told CFACT that no one proposal is being given priority at present, it appears that the Greens, led by groups like the Climate Action Network as well as AOSIS, are all on the same page. In essence, all the proposals that we’ve seen break Loss and Damage down into three components: An insurance component, a damages component, and a risk management component.

The insurance component, according to the Greens, would subsidize small island nations purchases of private and public insurance against damages caused by severe storms. The damages component would address the matters of sea level rise, storm damage and items linked to longer term climate change. And the risk management component would be primarily about information gathering on potential risks and problems a developing nation may face. The biggie of these three is the damages component, which would actually be the one where the largest payouts would take place. And where would such payouts come from? Purportedly from the $100 Billion in the Mitigation and Adaptation fund recently set up after Copenhagen – though no one is exactly certain.

Of course trying to figure out which nation pays what is going to be tricky if Damage and Loss comes into force. For example, if a major tropical hurricane – say a category 4 – hits Tuvalu, how will UN officials determine what portion of that hurricane was caused by the US or Japan or Australia? How will they determine whether it was man-made global warming which transformed a category 1 or 2 hurricane into a nasty category 4? How much of the sea level rise, which has been going on naturally (very slowly) for centuries, is caused by SUV’s in America vs. coal plants in Australia? International lawyers are going to have a field day!

One solution being offered is to apportion liability according to a nation’s greenhouse gas contribution to the atmosphere. If the U.S. contributes 20% of the world’s GGH, say proponents of this idea, it would pay 20% into the fund. But one can argue if this becomes the case, why should China, the world’s leading emitter, be excluded? The whole thing gets sillier and sillier in the absence of a genuinely scientific method for assigning Loss and Damage responsibility. That it is extremely unlikely that global warming is actually responsible for any of the harms attributed to it does not seem to signify. It is interesting to note that at the same time warming pressure groups are claiming islands are sinking into the ocean, others are building luxury resorts.

Loss and Damage is just one of the potentially expensive mistakes CFACT is keeping its eye on in Bonn. We’ll keep you posted on further developments and continue to report on what the climate conference is up to. To again quote CFACT adviser Alan Caruba, “what happens in Bonn unfortunately will not stay in Bonn.”