As the Madi River tumbles down from Nepal’s Annapurna range, it passes four hydropower plants built in a cascading sequence. One of these projects forced the indigenous Gurung people from their ancestral home in Chansu, a once-thriving village now left behind. The Gurung are not alone—across Nepal, infrastructure projects have pushed indigenous communities off their lands, relocating them to areas increasingly exposed to landslides, floods, and the intensifying impacts of climate change. These stories echo across the globe, from the Himalayan foothills to the Amazon basin, where the world’s leaders recently gathered for the COP30 climate summit in Belém, Brazil.
At COP30, Nepal’s delegation stood alongside representatives from other developing nations, demanding meaningful compensation for loss and damage caused by climate-related disasters. According to Nepali Times, the summit has become a focal point for those who have suffered most from climate breakdown, but who have seen little in the way of promised support. The urgency is palpable: as extreme weather events grow more frequent and devastating, the need for effective, accessible climate finance has never been greater.
This year, for the first time, there’s a glimmer of hope. The Fund for Responding to Loss and Damage (FRLD) has officially launched, putting $250 million on the table in a pilot run. As reported by The New Humanitarian, the FRLD’s pilot phase—dubbed the Barbados Implementation Modalities (BIM)—will accept funding requests of up to $20 million each, beginning December 15, 2025, and continuing for six months. "This first call aims to test, learn, and shape the Fund’s long-term model," said Jean-Christophe Donnellier, co-chair of the FRLD, in a statement marking the launch.
The Fund’s establishment comes after years of contentious negotiations. High-income countries have historically resisted the idea, wary that it might open the door to large-scale reparations or financial demands from the Global South. Despite these concerns, the FRLD has received pledges totaling $788.8 million, though only $431.14 million is currently available for disbursement. The gap between need and reality is staggering: the Loss and Damage Collaboration campaign group estimates that $724.43 billion in funding is required every year to adequately address loss and damage worldwide.
"There’s a need for significantly more resources to meet the vast scale of need on the ground," Ibrahima Cheikh Diong, executive director of the FRLD, emphasized in the same statement. The shortfall is especially troubling given the favorable advisory ruling earlier this year from the International Court of Justice, which found that countries harmed by climate change are owed reparations. Still, according to the Loss and Damage Collaboration, loss and damage was notably absent from the Brazilian presidency’s core agenda at COP30. "We seem to be witnessing the failing star of Loss and Damage, with very little political attention given to the issues," the group warned.
Despite the lack of prioritization at the summit, humanitarian agencies are determined to keep the issue front and center. Aid budgets have been slashed in recent years, while the frequency and severity of climate disasters have only increased. As a result, humanitarian organizations are keen to access the new Fund, hoping it will help fill critical gaps between emergency relief and longer-term development. The FRLD’s pilot phase is designed to support projects that complement immediate humanitarian actions and address priority gaps, with decisions made by the Fund’s Board on a case-by-case basis.
"The Fund for Responding to Loss and Damage must consider humanitarian contexts," said Zinta Zommers, climate science lead at the UN’s emergency aid coordination body, OCHA, during a recent webinar. She noted that the UN has officially accepted that global warming will exceed 1.5°C, meaning humanitarian agencies will face even greater demands. "We’re going to overshoot. The NDCs aren’t sufficient to avoid that… as a humanitarian community, we need to also think about ‘what does this period of overshoot look like?’ It’s going to be a lot of burden on the humanitarian community, a lot more loss and damage, a lot more need for adaptation."
Displacement is already a major area of concern for humanitarians, who see the Fund as a potential lifeline for supporting communities forced from their homes by climate impacts. "I think it might be strategic for us to work with some countries to encourage them to also make proposals that include displacement considerations, because that will be also a test to see how the Fund is effectively able to respond," said Alice Baillat, a policy adviser at the Internal Displacement Monitoring Centre.
The competition for funding is fierce. "It’s like the Hunger Games… all funding is a target independently of core mandates: The competition between agencies is fierce," Mauricio Vazquez, head of policy at ODI's Global Risks and Resilience programme, told The New Humanitarian. Some agencies are already working their connections to get ahead as "front-runners," though these claims have not been independently verified.
Fragile and conflict-affected states, such as Somalia, are also eyeing the Fund. Abdihakim Ainte, head of climate and food security in the Somali prime minister's office, told The New Humanitarian, "We’ll see which window is more acute and pressing for us." Allocating loss and damage finance to such contexts is complicated and expensive, especially given the limited scale of the pilot phase. However, Dan Lund, an FRLD board member, said, "It doesn't mean that there isn’t potential for proposals to support these contexts," noting that a broader focus on fragile areas will be a high priority as the Fund’s long-term modalities are developed in 2026.
One of the thorniest issues is ensuring that grassroots organizations and groups close to frontline communities can access loss and damage finance as easily as governments. Many climate activists have long argued for this, particularly in places where state capacity is weak or where non-state armed groups control territory. "It’s not something the Fund is yet mature enough to deal with, but certainly part of the scope of what the Fund needs to have a solution for," said Lund. In such cases, humanitarian agencies may need to be empowered to request funding on behalf of vulnerable populations.
Still, removing governments entirely from the process may be unrealistic. "It’s hard to remove governments from the picture of a fund set up by international convention," Lund admitted. This tension—between the need for locally led action and the realities of international climate finance—remains unresolved, even as the FRLD’s pilot phase gets underway.
For indigenous communities like the Gurung in Nepal, and for millions more on the frontlines of climate change, the stakes could not be higher. The world’s response to loss and damage is still in its infancy, and the gap between promises and action remains wide. Yet, with the launch of the FRLD and the persistent advocacy of those most affected, there is at least the beginning of a path forward—a chance, however slim, that finance might finally follow the suffering.