8 - “Money for the Poor”

Summary

Despite experiencing particularly severe and potentially irreversible climate change impacts, Peru has not yet developed explicit national policies on loss and damage. This chapter draws on the analysis of government policy and legislative documents, as well as twelve semi-structured interviews with key public and civil society actors, and identifies two key factors which contribute to limiting Peru’s engagement with loss and damage at the national level: national identity and policymaking politics. With respect to the former, the chapter argues that the issue of loss and damage is perceived as inconsistent with Peru’s identity and status as an upper middle-income country. National actors tend to frame loss and damage as “money for the poor” and thus something concerning Small Island Developing States and least developed countries, and there is also a fear that, as a middle-income nation, Peru might potentially be liable for claims against the nation state for the impacts of climate change. Moreover, Peru’s extractivist development and economic model limits the discussion and uptake of bold climate-related policies. With respect to (party) politics, the chapter finds that loss and damage is seen as highly contentious in Peru’s policymaking process and that it lacks the necessary support from civil society organizations.

8.1 Introduction

Peru is one of the countries in Latin America most vulnerable to the impacts of climate change. Its glaciers are melting at an alarming rate, its rich biodiversity is affected by increasing temperature and changing precipitation patterns, and its population is exposed to increasingly frequent and intense floods, droughts, and landslides. Although considered an upper middle-income economy, its inequality and poverty rates are high and concentrated among rural and indigenous populations. Most of these populations rely on subsistence and rain-fed agriculture, and climate change poses significant threats to their livelihoods and food security. Combined with ongoing challenges like deforestation, environmental pollution related to the mining sector, and export-oriented agricultural expansion, climate risks threaten Peru’s development (USAID 2017).

Peru’s vulnerability to climate change is recognized and highlighted both in the context of national policy processes (Government of Peru 2015, 2018, 2021) and international climate change negotiations (Government of Peru 2016, 2020; Republic of Peru 2015). For instance, in its updated Nationally Determined Contribution (NDC), the country outlines how it features seven out of the nine characteristics recognized by the United Nations Framework Convention on Climate Change (UNFCCC) for “particularly vulnerable” countries: (a) low-lying coasts; (b) arid and semi-arid areas; (c) areas liable to floods, drought, and desertification; (d) fragile mountainous ecosystems; (e) disaster-prone areas; (f) areas of high urban atmospheric pollution; and (g) economic dependence on fossil fuel production, use, and exportation (Government of Peru 2020).

This (self-) recognized high vulnerability to climate change impacts has prompted the country to develop policy instruments to increase climate resilience, including through the National Adaptation Plan (NAP) adopted in 2021 (Government of Peru 2021). Yet despite the particularly severe and potentially irreversible climate change impacts the country is suffering (e.g., glacier retreat), Peru has not yet developed any explicit policies on loss and damage at the national level. Its international engagement with loss and damage is also modest. This is in contrast to proximate Caribbean countries, as well as Bolivia, Venezuela, and Nicaragua, which have taken a climate justice perspective on the loss and damage issue and made explicit international calls for financial compensation for climate-related losses.

This chapter draws on government policy and legislative documents and twelve semi-structured interviews with key public and civil society actors to explore the reasons behind Peru’s limited engagement with loss and damage – at both the national and international levels.¹ It identifies two key factors: identity and policymaking politics. With respect to identity, we find that loss and damage is perceived as inconsistent with Peru’s status as an upper middle-income country. National actors frame loss and damage compensation as “money for the poor” and therefore see it as an issue for Small Island Developing States (SIDS) and least developed countries (LDCs). There is also a fear that as a middle-income nation Peru might potentially be liable for claims against the nation state for the impacts of climate change. We also find that Peru’s extractivist development and economic model is limiting the discussion and uptake of bold climate-related policies, including those dealing with loss and damage. With respect to politics, the chapter shows that the process leading to the adoption of the 2018 Framework Law on Climate Change (Ley Marco sobre Cambio Climático, LMCC) was marred by party politics: There is no reference to loss and damage in the LMCC largely because the proposal to include it came from a minority left-wing party. There has also been a lack of support for loss and damage from civil society organizations, which has further marginalized the topic during policymaking processes.

8.2 National Circumstances

Peru’s diverse geography translates into thirty-eight different climates, which are grouped into three categories: coast, mountains, and jungle. The coast between the ocean and the Andes is a dry region, with low rainfall except during phases when the climate phenomenon El Niño brings wetter weather. The mountains are a varied climate region that ranges from mild to polar. The jungle is a flat area with abundant rainfall and high temperatures (Government of Peru 2021).

Climate change in Peru has resulted in rising temperatures all over the country, with the largest increases in the Southern Andes (up to 0.3 degrees Celsius per decade since 1981), with this posing particular threats to national glaciers (Bergmann et al. 2021). The country is home to 71 percent of tropical glaciers globally (Kaser 1999), among which the Cordillera Blanca is the largest tropical glaciated mountain range worldwide. Between 1970 and 2000, Peru glaciers shrank by 43 percent (ANA 2014), and climate change is – and will increasingly be – a major driver in the recession. Loss of glaciers’ volume is already affecting water storage capacity and modifying the seasonality of runoffs in several Andean catchments (Drenkhan et al. 2015). Moreover, rapid melting is increasing the number and volume of glacial lakes, which – combined with slope destabilization, ice detachments, avalanches, and rock falls – are increasing the risk of glacial lake outburst floods (GLOFs) (Harrison et al. 2018). As an example, recent research around Lake Palcacocha showed that anthropogenic climate change has affected temperature, glacier change, and associated lake growth in the past few decades and thus has increased the likelihood of GLOFs in the downstream city of Huaraz (Huggel et al. 2020).

Glaciers are an important water source for many uses, including human consumption, agriculture, and energy production. The lack of glacial buffers during the dry season will significantly affect downstream users, especially in rural regions (Buytaert et al. 2017). Studies in the Cordillera Blanca also show the potential for severe cultural losses, where glaciers and glacial lakes have religious, spiritual, and identity meanings for local communities (Motschmann et al. 2020; Zommers et al. 2014). Increasing temperature and changing precipitation patterns will also affect the rich biodiversity in the Andes (Báez et al. 2016; Herzog et al. 2011) and in other national biodiversity hotspots, such as the Amazon (CBD Secretariat 2017).

Peru is also exposed to extreme weather events, including floods, landslides, and long-lasting droughts (Government of Peru 2021). Their frequency and/or intensity is compounded by climate alterations, including the El Niño Southern Oscillation, which is expected to increase under future climate scenarios. In 2014, 64 percent of disasters in the country were climate-related, and their number increased by 25 percent compared to 2003 (Government of Peru 2016). Extreme temperatures as well as droughts pose particular challenges to livelihoods, especially in the agriculture sector. More intense rainfall patterns, sea-level rise, and flood events are also increasing the risk of displacement both in coastal zones and Andean regions (Bergmann et al. 2021).

The high reliance of the national economy on ecosystem resources makes Peru’s economy particularly sensitive to climate impacts (Government of Peru 2021). Sectors like hydropower generation, agriculture, livestock, and tourism are projected to be severely affected (BID & CEPAL 2014). While systematic and up-to-date economic impact assessments are currently missing, a 2009 study estimated an average annual gross domestic product loss between 7.3 percent and 8.6 percent up to 2050 (Vargas 2009).

8.3 Policy Landscape

8.3.1 Recent Climate Policy Developments

Peru published its LMCC on April 18, 2018 (Congress of the Republic of Peru 2018). The process leading to its adoption proved to be long and complex; it featured debates over twenty-two legislative proposals across two parliamentary periods. Twelve legislative proposals were presented for discussion in the 2011–2016 parliamentary period, in the context of a first attempt to pass a climate law while Peru held the presidency of the UNFCCC around the twentieth Conference of the Parties (COP20) (Casavilca 2015). The parliamentary period ended with these proposals still being discussed within the relevant commissions and, following Peru’s constitutional law, they did not overrun to the next period. In the 2016–2021 parliamentary period, ten new legislative proposals were put forward, including one from the newly elected government, which had included the adoption of climate change legislation as a commitment during the electoral campaign. The proposals were assigned to a thematic commission – the Commission of Andean, Amazonian and Afro-Peruvian Peoples, Environment and Ecology (Comision de Pueblos Andinos, Amazonicos y Afroperuanos, Ambiente y Ecoligia, referred to here as CPAAA) – which considered them jointly in two steps. First, the CPAAA produced two draft legislative proposals (predictamenes), which were discussed by its members. Based on this, a final one (dictamen) was put to congress and passed.

The LMCC identifies two key policy instruments for managing climate change, namely the National Strategy on Climate Change (Estrategia Nacional ante el Cambio Climático, ENCC) and the NDC. The current ENCC was adopted in 2015 and “reflects the commitment of the Peruvian State to act against climate change in an integrated, transversal and multisectoral manner” (Government of Peru 2015). It includes two objectives: (a) to prevent the adverse impacts of climate change by reducing the vulnerability of the economy and society, raising awareness among the population, and implementing adaptation actions at appropriate scale and (b) to reduce greenhouse gas (GHG) emissions while taking advantage of the opportunities associated with the transformation of key sectors such as forestry, energy, transport, and industrial and solid waste management. At the time of writing, the ENCC is being updated and its timeframe will extend to 2050 (Government of Peru 2022).

The Peruvian NDC, which was submitted in its updated version in December 2020, builds on two commitments (Government of Peru 2020). First, the mitigation commitment for 2030 includes an unconditional emission cap of 208.8 million tons of carbon dioxide equivalent (a metric used to compare greenhouse gas emissions: MtCO₂eq) and a conditional one of 179.0 MtCO₂eq based on the availability of international finance and the existence of favorable circumstances. Some observers, while recognizing that the new mitigation target is more ambitious than the previous one, stress that it would nevertheless fall short of meeting the 1.5 degrees Celsius temperature goal of the Paris Agreement (Climate Action Tracker 2022). At the same time, it is worth noting that Peru has been one of the first developing countries to commit to a mitigation target despite its low historical and current contribution to global GHG emissions (Pereira 2022). Second, the adaptation commitment prioritizes five thematic areas and related adaptation measures: (a) agriculture, (b) forestry, (c) fishery and aquaculture, (d) health, and (e) water (Government of Peru 2020). In addition, tourism and transport feature in this updated version of the NDC as the two new thematic areas contributing to the overall goal on adaptation. The 2021 NAP is tasked with setting the implementation framework up to 2050.

The LMCC does not include any reference to loss and damage. Yet the issue featured prominently in one of the legislative proposals and was also mentioned in the two predictamenes produced by the CPAAA. In particular, the legislative proposal N.729 contained several references to “loss and damage” (pérdidas y daños) (e.g., Article 2 and Article 9) and a dedicated loss and damage article (Article 16):

Article 16 Loss and Damage (Pérdidas y Daños). The State, in its three levels of government identifies, reduces and addresses impacts resulting from unforeseen events (such as climate disaster, like intense rain and flooding) as well as slow onset events (such as rising sea level and coastal erosion, desertification and biodiversity loss or drought). The state prioritizes actions to address loss and damage that affect the livelihoods of population, as well as ecosystems and natural systems. Losses are determined in economic and non-economic terms.

(Comision de Pueblos Andinos, Amazonicos y Afroperuanos 2017)

During the legislative discussion within the CPAAA, the topic was further developed and directed toward the establishment of a national loss and damage compensation mechanism (Interview 4). The predictamen called the Presidency of the Council of Ministers (i.e., the cabinet), in coordination with the disaster risk management authority (Centro Nacional de Estimación, Prevención y Reducción del Riesgo de Desastres) and the civil society–government roundtable for the fight against poverty, to “establish a National Mechanism for Loss and Damage” (Comision de Pueblos Andinos, Amazonicos y Afroperuanos 2017). The reference to compensation, which was present during the discussions, was scrapped as it was seen to have faced opposition by the Ministry of Economy and Finance (Ministerio de Economia y Finanzas, MEF) (Interviews 7, 8). Other legislative proposals also contained references to loss and damage, as reflected in the second predictamen produced by the CPAAA which included the term as part of the glossary. However, the final version proposed by the CPAAA did not include any mention of loss and damage and ended up broadly reflecting the government’s original proposal. As further elaborated in Section 8.5, party politics played a key role in the exclusion of loss and damage from the text. The issue had been proposed by a minority left-wing party, and it was not possible to find any convergence with the newly elected conservative government (Interviews 6, 7, 12). Eventually, parties agreed to the text proposed by the government as a way of finding consensus and passing the legislation (Interview 7).

8.3.2 Loss and Damage Policymaking

While many of the current and projected climate change impacts in Peru are consistent with the loss and damage framing at the UNFCCC level (loss of ecosystems services, biodiversity, cultural identity, health, economic losses to agriculture, tourism, and infrastructure), the country has not devised any explicit loss and damage policy package (Interview 9). Even when loss and damage is mentioned in policy documents, this is mostly done in passing and in the context of adaptation measures.

Peru’s 2015 intended NDC did not refer to loss and damage or to the Warsaw International Mechanism on Loss and Damage (Republic of Peru 2015). The technical document prepared by the Multisectoral Working Group for the Nationally Determined Contribution, which served as the basis of the 2020 NDC, mentions “pérdidas y daños” six times. Yet a closer look reveals that the expression is used to refer to the benefits or co-benefits of adaptation measures in terms of avoided economic impacts. The subsequent 2020 NDC includes a reference to pérdidas y daños but again in the context of the role played by adaptation measures in reducing or avoiding “severe alterations” caused by climate risks (Government of Peru 2020). The document refers to losses (pérdidas) and damages (daños) separately, pointing to economic and noneconomic losses and risks associated with climate change. It also mentions a disaster risk reduction mechanism and governance as key for implementing adaptation policies in order to avert and prevent losses.

The 2021 NAP frames loss and damage in a slightly different way, by explicitly connecting it to discussions under the UNFCCC. The document includes an indicator on “damage, disruptions and losses due to the effects of change” in its monitoring and evaluation system to assess the effectiveness of implemented adaptation measures in reducing climate change impacts on people, natural resources, and economic sectors (Government of Peru 2021). In justifying the inclusion of the indicator, the document notes that pérdidas y daños features among “emerging themes in negotiations, research and policy on climate change” and that “it connects the fields of climate change adaptation and disaster risk reduction.” It further stresses how adequate assessments are important to “provide a solid foundation to policies aimed at preventing, minimizing and addressing future loss, disruption and damage” and that “the evaluation and reporting of loss and damage is a requirement of the Enhanced Transparency Framework (MTR) under the Paris Agreement” (Government of Peru 2021). This shows an emerging recognition of the link between international processes and national policymaking. It is worth noting, however, that loss and damage is framed in the document as something that can be reduced by adaptation and disaster risk reduction and not as something requiring additional and ad hoc instruments.

8.4 International Engagement

Peru engages in the UNFCCC through the Independent Alliance of Latin America and the Caribbean (AILAC), a negotiating group within the UNFCCC including Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay, and Peru. The group was launched in 2012 to differentiate AILAC members from other Latin American players, and in particular from the Bolivarian Alliance for the Peoples of Our America (ALBA) group and Brazil (Edwards et al. 2017). AILAC is characterized by an explicitly conciliatory and constructive approach to negotiations, which calls for ambitious responses to climate change by all parties (thus overcoming the North–South division in climate politics), with developed countries taking the lead and providing adequate financial resources to developing countries to address the issue (Watts & Depledge 2018). As a high-level Peruvian negotiator noted: “AILAC has been more of a facilitator, … a good facilitator, a negotiation block that has been able to bring countries or parties together, more than just put a very specific and concrete domestic question or need” (Interview 2). A key focus for AILAC in negotiations has been mitigation, despite the low GHG contributions from its members. Peru, in particular, has placed attention on reducing emissions from deforestation and forest degradation. This is related not only to the recognition of land-use change and forestry sectors accounting for more than half of GHG national emissions (UNFCCC 2020) but also to opportunities for international support (Pereira 2022), for instance through schemes for “reducing emissions from deforestation and degradation” (Interviews 2, 5). In recent years, adaptation has also become a key concern and the country has considerably advanced in this policy domain (Interviews 2, 3, 4, 8) as the development of the NAP shows.

The Peruvian delegation at the UNFCCC has not yet designated a specific loss and damage negotiator. This is not uncommon for AILAC countries, which usually engage on the topic through AILAC representatives – with the exception of Chile, which has taken a more prominent role in these negotiations since 2019 (Interviews 1, 8; see also Chapter 9 of this volume). One research participant noted that resorting to AILAC is necessary given the complexity of the negotiations and the small size of the national delegation: “I saw the negotiations in 1999. There was a small number of topics. When I came back twenty years later, the number of issues to follow was enormous. For a small delegation it was very difficult to follow. China had 300 people in the delegation. Our voice as a country was taken by AILAC” (Interview 4). Yet another interviewee explained how, within AILAC, Peru does not participate much in loss and damage discussions and tends to contribute more on issues related to adaptation (Interview 8). Several research participants suggested that loss and damage is not perceived as a priority for the country (Interviews 2, 4, 8) despite the common practice of Peru foregrounding its vulnerability – that is, by identifying itself as a “particularly vulnerable” country – in a number of UNFCCC-related documents (Government of Peru 2016, 2018; Republic of Peru 2015). Yet according to some interviewees, loss and damage is framed as relating to the countries most affected by climate change impacts, “like island states, LDCs, African countries” (Interview 1) and not to a “middle-income country” like Peru (Interviews 2, 4).

Another explanation points to the highly contested nature of the loss and damage issue as perceived by some interviewees. When tracing the emergence of the topic in climate negotiations, a research participant who had a high-level role in the Ministry of Environment (Ministerio del Ambiente, MINAM) describes it as a “political position to balance … the power of negotiations” and for some groups of developing countries “to be defined as a priority to receive … funds” (Interview 2).

It is worth noting that even within AILAC, loss and damage has not featured as a priority until recently (Interviews 1, 4). One research participant suggested that this was because some of the most assertive framings on the loss and damage issue were not seen as consistent with the conciliatory approach to North–South politics characterizing the group since its establishment (Watts & Depledge 2018):

I wouldn’t think that AILAC would have been interested in the historic discussions on loss and damage under the framework of the Convention, because those were clearly, clearly about having a response: compensation and liability. And AILAC … has always been of the view that it is not a beneficial position to make the Global North responsible, or to [take the position that a country will] not do something about climate if the others do not compensate you.

(Interview 1)

Yet AILAC’s interest in loss and damage is reported to have slightly changed since the establishment of the Santiago Network, which is perceived as bringing the discussions to a “more practical” level rather than one related to “compensation and liability claims” (Interview 1). As one interviewee suggested, states see it as an opportunity to get technical assistance: “Oh wow, it’s wonderful. Bring me an expert … now I work on loss and damage” (Interview 1).

8.5 Institutions

The development of the 2018 LMCC, and particularly the exclusion of any reference to loss and damage, illustrates the ways national actors (do not) engage with the issue of climate change. Interviewees put forward several understandings for the exclusion of loss and damage from the final text of the law. A first set of interviewees noted that setting up a mechanism like a national loss and damage fund would have been institutionally difficult to achieve. Reflecting on the development of the climate change law, an interviewee with a high-level position at MINAM recalled: “There was an article on loss and damage but we thought it was not well oriented because it was a national fund on loss and damage. This was a signal of how some people coming from NGOs [non-governmental organizations] see this: It is like a compensation fund. … And to have a national fund on that was complicated” (Interview 4). Another interviewee identified the need for additional public financial resources for setting up a loss and damage fund as a key problem, given the opposition of the MEF to supporting any additional public spending by other ministries irrespective of the issue being addressed: “It is harshly and strongly criticized by the Ministry of Economy and Finance, and it is almost as if it was forbidden, because the first thing they say is that something similar already exists” (Interview 9). The same interviewee also reflected on the relative power of the MEF compared to MINAM, where the former – together with the Ministry of Energy and Mining – is labelled as a “super ministry” while the latter is identified as a “third-order ministry” despite “the enormous goodwill” of its officials (Interview 9). Another research participant noted that MINAM “is a relatively young institution that has been there for more or less twelve or thirteen years, against forty years of exploitation and execution of extractive activities in Peru” (Interview 5).

Party politics is a second explanation for the lack of engagement with the concept of loss and damage in Peru. The LMCC was adopted after the 2016 general elections, which brought Pedro Pablo Kuczynski from Peruanos por el Kambio (PPK) – a conservative, center-right party – into power as the president and resulted in Fuerza Popular – a fujimorist, populist, and conservative party – dominating congress, with 73 seats out of 130. The legislative proposal (Number 729), which explicitly referred to loss and damage, was put forward by a minor left-wing party. One research participant noted that suggestions put forward by certain minority groups will have little chance of receiving backing from majority groups: “In Peru we are very sensitive. … Everything left wing is too convoluted, very difficult. The mere fact that something is presented by this congress person and that parliamentary group makes it more difficult to achieve consensus with the other majority groups” (Interview 5). This idea that the proposal was “too convoluted” – or rather that the majority parties used their difficulty in understanding it as a reason to edit the bill – was echoed by one of the proponents of the proposal, belonging to the minority left party:

The fujimorist group in the commission and in the plenary session of the congress – where it held majority – devoted itself to retire all references to loss and damage, as they would not understand the link between risks and climate change … The Ministry for Environment itself step[ped] aside after a political decision of the minister [elected by the PPK] who wanted a “light bill.”

(Interview 12)

Another interviewee backed this reading, noting how MINAM was “obviously” trying to keep as much as possible from the text proposed by the executive (Interview 6). On a similar note, another representative from the minority left party highlighted how references to climate justice disappeared, being perceived as “very political” by most of congress – as dominated by the fujimorist party: “The climate justice issue scared them, and the [idea of] ‘buen vivir’ [good living, wellbeing] evoked how things are in Bolivia. Hence, everything they could take out … I mean, they took many things out of it” (Interview 7). The reference to Bolivia is made to emphasize the alternative framework for dealing with social and environmental issues that is promoted in the country, rejecting the neoliberal logic of extractivism, valuing the participation to community life, and stressing the importance of living in harmony with nature (Cappelli et al. 2022).

Finally, some interviewees identified the lack of uptake of the loss and damage issue among civil society organizations as one of the key reasons it did not make it into the final text. A government representative noted that more engagement from civil society could have made a difference (Interview 4). Stakeholders from local NGOs acknowledged their lack of engagement with the concept and the process (Interviews 6, 9). Yet one of them stressed that these “flags of struggle … cannot be raised every day, but rather take years to be built” and pointed to the example of the years-long work they have been doing on the issue of energy transition (Interview 9).

At the same time, the work undertaken by some international NGOs on loss and damage does not seem to have considerably raised the profile of the issue at the national level. An example is the “Huaraz case,” brought in 2016 by the Peruvian farmer Saúl Luciano Lliuya, together with the NGO Germanwatch, against the German energy company RWE over its contributions to climate change impacts in the Andes region of Huaraz (Frank et al. 2019). Huaraz is home to Lake Palcacocha in Cordillera Blanca and to 120,000 people. Glacier retreat is leading to significant risk of GLOFs, placing the lives and livelihoods of the local population at threat. As the owner of a small farm in Huaraz, Lliuya, with the support of Germanwatch, decided to sue RWE for its historical contribution to GHG emissions and thus to increased flood risk in the Huaraz area. Despite RWE having no operations in Peru, Germanwatch’s lawyers resorted to a German civil code action used to make negligent neighbors responsible for reparations (Frank et al. 2019). RWE was asked to reimburse 0.47 percent of the total costs for enhancing safety measures to help avoid the outburst of the glacial lake – the same percentage as RWE’s estimated contribution to global industrial GHG. These numbers are symbolic, but establishing attribution would represent an unprecedented victory (Huggel et al. 2020). On November 30, 2017, the appeal court recognized the complaint as well-pled and admissible. At the time of writing, the case is still pending resolution.

The Huaraz case has received a great deal of media attention, particularly in the Global North, with outlets from The New York Times magazine (Jarvis 2019) to France 24 (2022) covering the developments of the legal claim. Despite this international profile, most people we interviewed felt that the case did not have much relevance in Peru (Interviews 2, 4, 6, 7, 8, 9). As one participant put it: “The level of recognition of the importance of the case has been modest in Peru. Probably, it has not been well understood, the importance of this case. You will see probably a couple of news from la Republica; that was the only newspaper that covered that case” (Interview 9). Another interviewee (Interview 6), commenting on how academia has little engaged with the case, observed that other cases, “like the Colombia climate litigation case or the Astrato river protection case,” are discussed more often.

8.6 Ideas

The idea of identity plays a key role in explaining the lack of engagement with loss and damage at the national level. Research participants identified – without prompting – two important facets of Peru’s identity that come into play: (a) the country’s status as a middle-income country and (b) its development and economic model.

Several interviewees referred to loss and damage as something that is not consistent with Peru being a middle-income country (Interviews 1, 2, 4, 5). In the words of a high-level negotiator: “Tell me if I am wrong, I haven’t heard any time that loss and damage is a priority for a country like Peru, that it is a middle-income country. I am not sure if loss and damage is a priority for Chile or for Colombia, I’ve never heard that it is a priority” (Interview 2). The “middle-income country” argument plays out in different ways. First, referring to the international dimension, it relates to the way national actors frame loss and damage as “money for the poor” (Interview 1) and thus something concerning SIDS and LDCs. Emblematically, one interviewee noted, “As a middle-income country, we did not want to take the resources that were meant for poorer countries” (Interview 4). In a similar vein, it was highlighted that Peru’s economic status does not imply a need for international cooperation but rather for technical support and assistance (Interview 5). Another argument put forward related to compensation and the idea that a middle-income status means that the state may need to find resources to compensate its own population if they are affected by climate change impacts (Interview 1). The interviewee went on noting that “the risk is too high for countries to blindly incorporate the term [compensation] without safeguards on what can be done against us as nations and what cannot” (Interview 1).

Second, Peru’s development and economic models were brought up by some interviewees as a key factor limiting the discussion and as a barrier to the uptake of bold climate-related policies, including those dealing with loss and damage. The country’s extractivist economic model was highlighted as a particularly relevant constraint. Reflecting on the issue of energy transition, one research participant noted that achieving it “is not possible because you are going against development and development in Peru is driven by extractive activities … which is where Peru gets its main revenues” (Interview 5). The strong reliance on mining as a source of income is also used to explain the relative power across ministries, with the MEF being the strongest, followed by the Ministry of Energy and Mining (Interviews 5, 9). Given this power structure, the climate change law is not simply deprioritized but seen as an active threat to the country’s economy. One interviewee observed that any calls for climate change policy are seen as “anti-development” and against national interests:

[Those insisting for] a change in the economic model, again, they are left wing, they are revolutionaries, they are against the system, anti-development, and we must carry on with our current economic model. This is how they have polarized, so to speak, these messages, these languages and somehow they do not let us open again [the discussion] and identify the priorities and urgencies. So, that’s why I say that this context helps to understand that what was achieved with the Framework Law on Climate Change was really an important advance, but of course, we are still missing something.

(Interview 5)

Finally, an interviewee critically reflected on Peru’s economic model by defining it as “deeply neoliberal” and affirming that the importance of each public sector depends on how much it can yield in terms of private investments or foreign investments in the Peruvian state. They said, “The Ministry of Environment does not escape this logic and the discussions of environmental public policy do not either” (Interview 9).

8.7 Conclusion

This chapter has explored the reasons behind Peru’s limited engagement with loss and damage – both at the national and at the international level – despite its self-identified high vulnerability to climate change impacts. From a theoretical point of view, this case challenges the “ecofunctionalist hypothesis” (Edwards & Roberts 2015), which posits that concerns among political leaders and citizens around climate change impacts can lead them to take action, especially within international climate talks. The Peruvian case shows that while this is true to some extent there are also other factors at play.

Table 8.1 synthetizes the main results from our analysis along the four dimensions of the analytical framework we developed in Chapter 2. This chapter shows that Peru’s policy landscape is characterized by a growing prioritization of adaptation, suggesting that the country is moving beyond the traditional focus on mitigation. Despite attempts to include a provision for a loss and damage fund in the proposal for the 2018 LMCC, any measures explicitly addressing loss and damage are absent from Peru’s national climate policies. We have identified several political factors that explain this exclusion: the rejection of ideas that are regarded as “leftist”; the lack of support by civil society organizations on the issue; and a strong interest from the executive branch in promoting its own legislative proposal. From an institutional perspective, the relatively “weaker” position of MINAM compared to the MEF, which is traditionally concerned with any additional budget expenditure, also creates a broader context of constraints within which climate policy is formulated.

Table 8.1 Summary of Peru

Key climate change hazards, risks, and impacts	Key policies in adjacent policy domains	International influences	Institutional insights	Ideas
Glacial retreat Biodiversity loss Temperature increase Sea-level rise and coastal erosion More intense rainfall patterns, floods, and landslides Droughts Desertification	Climate Change Framework Law (2018): the law does not include loss and damage but featured prominently in one of the legislative proposals and was also mentioned in the two predictamenes produced by CPAAA) ENCC NDC (2020) NAP (2021): the document shows emerging recognition of the link between international processes and national policymaking on loss and damage Disaster risk management system	UNFCCC through AILAC	Growing prioritization of adaptation (moving beyond the traditional mitigation focus) The exclusion of any reference to loss and damage within the Climate Change Framework Law provides insights about the way national actors (do not) engage with the issue When framed through the issue of compensation policymakers were somewhat wary of loss and damage in terms of what it would require the state to provide at the national level Power differences between ministries: relative power of the Ministry of Economy and Finance compared to the Ministry of the Environment, where the former – together with the Ministry of Energy and Mining – is labelled as a “Super ministry” while the latter is identified as a “third-order ministry” “despite the enormous goodwill” of its officials Politics matter: loss and damage has been opposed because its inclusion in the climate change law was proposed by a left-wing party High-level cases like Saul Lliuya v. RWE have limited relevance within Peru	Identity matters: loss and damage is perceived as inconsistent with Peru’s status as an upper middle-income country Peru’s extractivist development and economic model is perceived as limiting discussion and uptake of bold climate-related policies, including those dealing with loss and damage Lack of support for loss and damage from civil society organizations The case of Peru highlights that concerns about climate change impacts will not necessarily translate into the adoption of the full spectrum of actions required to address them

In addition to these political factors, we found that Peru’s perceived identity as a middle-income country plays the most important role in explaining the lack of engagement with loss and damage. In the UNFCCC context, Peru frames loss and damage as “money for the poor” and stresses how its economic status does not imply a need for international cooperation but rather for technical support. Furthermore, when framed through the issue of compensation, policymakers were wary of loss and damage in terms of what it would require the state to provide. In particular, they were concerned about the additional burden it could imply for the national budget.

The Peruvian case study highlights that concerns about climate change impacts will not necessarily translate into the adoption of the full spectrum of actions required to address them. Even the most severe consequences of climate change that the country is already experiencing, including melting glaciers, loss of biodiversity, and more intense and/or frequent weather extremes, are still framed as being firmly situated within the adaptation domain. The chapter shows the key role of ideational and political conditions in shaping the way limits to adaptation, and resulting losses and damages, are and will be addressed at the national level.