1. The emergence of non-economic loss and damage

The concept of climate-related ‘non-economic losses’ emerged from technical work undertaken under the United Nations Framework Convention on Climate Change. Under this work program, it became clear that not all loss and damage that people experience can be readily expressed in monetary terms. At the request of countries, a technical report on the conceptualization of ‘non-economic losses’ was prepared. Herein, the authors, three environmental economists, deduce that ‘Non-economic losses can be understood as the remainder of items that are not economic items; that is to say that non-economic items are those that are not commonly traded in markets’ (UNFCCC, 2013, p. 3). Proposed examples of ‘non-economic items’ include ecosystem services, cultural heritage, and psychological health (Serdeczny et al., Reference Serdeczny, Waters and Chan2016). Non-economic loss and damage has featured in almost every decision on loss and damage over the past decade, is an established theme of work under the Warsaw International Mechanism for Loss and Damage, and will be considered under the Fund for responding to Loss and Damage.

Researchers and policy-makers have largely embraced the separation of ‘economic’ and ‘non-economic’ loss and damage. Indeed, extensive studies have assessed non-economic loss and damage and identified appropriate responses. Intangible aspects of life also appear in other discourses related to climate change and disasters (UNDRR, 2015), but are often treated in silos (e.g. cultural heritage or psychological health). In comparison, loss and damage scholars have explored and theorized the interconnected nature of so-called ‘non-economic items’ more holistically (Tschakert et al., Reference Tschakert, Ellis, Anderson, Kelly and Obeng2019; Westoby et al., Reference Westoby, Clissold, McNamara, Latai-Niusulu and Chandra2022).

2. A false dichotomy

The dichotomization of economic and non-economic loss and damage is often applied uncritically. However, empirical research shows that it is difficult to distinguish between economic and non-economic loss and damage due to the complexity of the socio-ecological systems in which loss and damage occurs.

Items traded on markets can simultaneously carry subjective meaning. A house is not only a physical structure but also a home that provides ontological security and a sense of belonging to its inhabitants. Participants interviewed following the Black Summer wildfires in Australia mentioned the economic implications of losing their homes, but they foregrounded the sense of safety and memories and experiences that had been lost (Jackson, Reference Jackson2023). In Burkina Faso, when pastoralist families lost their cattle to drought, this entailed an obvious loss of economic assets, but the non-economic aspects were deemed even more important. In pastoralist culture and societies, losing the family cattle can be shameful for herdsmen, and damage their self-esteem, as they cease to be independent pastoralists. The concomitant harm to their social and cultural identity has serious mental health implications, which in turn undermine their adaptive capacities to reduce further risks (van der Geest & Warner, Reference van der Geest, Warner, Akinyoade, Klaver, Soeters and Foeken2014).

Recognizing the multifaceted nature of loss and damage helps to address it effectively and avoid inflicting further harm. For instance, in the case of planned relocation, rebuilding a village in a different location may restore the physical buildings but does not in itself address impacts on sense of place, community cohesion, or identity. The harmful consequences of ignoring this can be seen in Fiji, where several years after resettlement, people are still deeply emotionally affected by a relocation project that dismissed the subjective values people attached to their homes and customary land (van Schie et al., Reference van Schie, McNamara, Yee, Mirza, Westoby, Nand, Ranon, Clissold, Anderson and Huq2023). To avoid this, an approach to resettlement that also focuses on ‘non-economic’ consequences, such as changes in cultural and social life, is needed (Durand-Delacre et al., Reference Durand-Delacre, Cherop, van der Geest, Jacobs, Nansam-Aggrey, Nizar, Pill, Shekhar, Alaniz, Bower, Bronen, Fry, Gini, Khan, Koeltzow, Link, Neu, Owusu-Daaku, Piggot-McKellar and Zivdar2023; UNEP, 2023).

Loss and damage often has knock-on effects on the broader livelihoods and well-being of affected populations. In northern Bangladesh, floods in 2022 caused widespread loss of rice production, on which people's economic security depends. Economic insecurity inhibited people from showing full hospitality to guests, which is deeply ingrained in the social fabric of Bangladeshi society. People could also not afford education for their children, which can have long-term implications on household income. In the same area, a confluence of unsustainable development and climate-related hazards has degraded ecosystems. Now trees and plants are struggling to grow, providing fewer vegetables, fruits, and flowers that people sell or use in religious practices (van Schie et al., Reference van Schie, Jackson, Ranon, Mirza, Hossain, Bakhtaoui and Anderson2024). These examples show how one loss or damage can cause others, creating a cascading effect.

This cascading nature of loss and damage also implies that addressing non-economic loss and damage can mitigate economic loss and damage. Evidence from a landslide in Nepal shows that untreated mental health issues reduce people's ability to work and cause losses to people's economic security (van der Geest & Schindler, Reference van der Geest and Schindler2016). Adequate psychological support in the aftermath of this disaster would have reduced this economic impact. Similarly, addressing economic loss and damage can alleviate non-economic loss and damage. In Bangladesh, people highlighted how repairing roads would restore access to markets for trade, but also to religious buildings and hospitals (Van Schie et al., Reference van Schie, Jackson, Ranon, Mirza, Hossain, Bakhtaoui and Anderson2024).

3. Research and policy implications

For the analytical benefits of the dichotomy not to outweigh its risks, research to inform loss and damage policy must be better attuned to the multifaceted and cascading nature of loss and damage. Beyond the examples above, few loss and damage studies include evidence of multiplicity of value and cascading effects related to loss and damage (e.g. Morrissey and Oliver-Smith, Reference Morrissey and Oliver-Smith2013; Pill, Reference Pill2022; Roe et al., Reference Roe, Holland, Nisi, Mitchell and Tasnim2023; Westoby et al., Reference Westoby, Clissold, McNamara, Latai-Niusulu and Chandra2022). However, these studies rarely focus on these more complex dynamics, or still dichotomize economic and non-economic loss and damage. We therefore formulate three research recommendations that account for these dynamics.

First, although research commonly categorizes and simplifies reality, it is paramount to recognize the multiple meanings and dimensions of lost and damaged items. To avoid misdiagnosing the causes, consequences, and potential treatment of loss and damage, research must be sensitive to this complexity. Such research has demonstrated, for example, that roads in Bangladesh are not just crucial for economic activities, but also enable people to attend religious sites and access social services. In Nepal, it was found that unaddressed psychological issues after a landslide were having a significant impact on people's livelihoods. Research on planned relocation in Fiji further showed that failure to recognize the multiple values of ‘home’ caused harm that could have been avoided. In order to enable better-designed interventions to reduce loss and damage, we call for further empirical research that illuminates how items hold multiple meanings for people. Methodologically, this requires investigating both the economic and non-economic consequences of climate change in future studies.

Second, long-term studies are needed to capture the knock-on effects of climate-related disasters across the economic and non-economic dimensions and their interlinkages. More longitudinal studies – qualitative or quantitative research that observes and records lived experiences of loss and damage at multiple points of time, from months to years – will also help identify ‘loss and damage catalysts’: types of loss that trigger many others (Westoby et al., Reference Westoby, Clissold, McNamara, Latai-Niusulu and Chandra2022). Devising policies, based on longitudinal data, to prevent such catalysts from being triggered early on will prevent or reduce loss and damage over time. For instance, restoring ecosystems in Bangladesh could have prevented the loss of natural products, which could then have prevented loss of income and allowed people to conduct religious practices. Identifying these catalysts can help prioritize loss and damage interventions, which is particularly important in light of limited resources (Wise, Reference Wise2023).

Third, understanding how different loss and damage interact requires culturally sensitive, multi- or transdisciplinary research. Expertise on topics such as debt, displacement, infrastructure, ecosystems, and health can help to understand how loss and damage cascades into each other. Also, as values starkly differ across and within cultures, close familiarity with the culture at hand is a requirement if values are to be adequately captured and weighed (van Schie et al., Reference van Schie, McNamara, Yee, Mirza, Westoby, Nand, Ranon, Clissold, Anderson and Huq2023). Ideally, this entails a participatory approach to research. Recognition of the need to collaborate across disciplines and work with and for climate-affected people is necessary for research that can accurately capture the inherent interrelations between economic and non-economic loss and damage.

Each of these three recommendations would apply to a wide range of social science disciplines. However, in the case of loss and damage, a nuanced, longitudinal and multi-disciplinary understanding is particularly important as this research field has significant material and political implications given its strong connotation with the policy processes of the United Nations Framework Convention on Climate Change and, increasingly, national governments. It is therefore a scientific and political imperative to ensure that research recognizes the multiple meanings of items, identifies loss and damage catalysts, and builds on decades of research demonstrating the value of co-production and cultural understanding.

In this paper, we acknowledge that the distinction between economic and non-economic loss and damage in research and policy has helped attract attention to the often ignored intangible impacts of climate change on societies. However, we have argued that a strict adherence to this dichotomy could blind us to identifying and formulating optimal policies that alleviate harm. Instead, conceptualizing loss and damage as a dynamic concept, where impacts are seen as multidimensional, interwoven, and evolving over time, will open up new avenues for research that better reflects reality and therefore better informs policies to address loss and damage.