A historic proposal to form a special fund to compensate for damages caused by natural calamities in developing countries was adopted on Sunday at the United Nations Conference of Parties, or COP27, in Egypt.

The proposal was finalised after an overnight negotiating session in the Egyptian resort town of Sharm el-Sheikh.

Several developing nations, mainly small island countries, had demanded a new fund to help them cope with the irreparable damage from floods, drought and other climate impacts. It was first proposed during the signing of the United Nation framework convention on climate change in 1992.

On Friday, the European Union had told the COP27 summit that the 27-nation bloc will not be financing the loss and damage fund alone and sought a broad donor base.

On Sunday, the Association of Small Island States – a group of 39 small island and low-lying coastal developing states – said that a mission 30 years in the making has been accomplished, reported The Indian Express.

“We have literally exhausted all of our efforts here at COP27 to bring home the climate action commitments our vulnerable people desperately need,” the group said in a statement. “Our ministers and negotiators have endured sleepless nights and endless days in an intense series of negotiations… But after the pain comes the progress.”

United Nations Secretary-General Antonio Guterres said that with the decision to form a loss and damage fund, the COP27 has taken an important step towards ensuring justice.

“I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period,” he said. “Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust.”

Ani Dasgupta, president of the environmental think tank World Resources Institute, said that the proposed fund is an important step towards rebuilding trust with vulnerable countries, reported The Associated Press.

“This loss and damage fund will be a lifeline for poor families whose houses are destroyed, farmers whose fields are ruined, and islanders forced from their ancestral homes,” Dasgupta said.