Valuation of climate change loss and damage

Assigning ‘values’ to climate change loss and damage can be used prospectively as a tool to decide between policy options, and retrospectively to assess compensation when harm has occurred. Some losses are permanent, or at least very, very long-term, and cannot be replaced by financial compensation. In those situations, valuation and compensation are best used as tools to optimize future ecological and social conditions, not to recover the past. Valuation’s chief contribution, from this perspective, may be to scope and scale transformative and curative interventions. Guidance on valuing climate change loss and damage can be found in judicial and legislative remedies associated with environmental catastrophes where some form of loss and damage compensation has been requested and provided. The legal outcomes presented here reflect political and judicial decisions that synthesize equity and other subjective concerns of stakeholders with the results of economic analysis. What is lost or damaged often cannot be monetized in a meaningful way. People subjectively regard the value of some kinds of loss - such as loss of life, culture and identity, and earth system functions - as infinite and zero, simultaneously. Such things are not traded in markets, so they are valued at zero; they are so precious they are priceless. If something is not traded in a market, surrogate monetary equivalents often need to be constructed. Techniques like ecosystem service valuation are increasingly sought as a basis for policy decisions about providing finance, reducing vulnerability, or increasing resilience, for example, when deciding whether to initiate solar radiation management.