Economic and non-economic loss and damage: a harmful dichotomy?

In research and policy, climate-related loss and damage is commonly categorized as either ‘economic’ or ‘non-economic’. One clear benefit of this dichotomy is that it has raised people's awareness of the often under-discussed intangible loss and damage. However, empirical research shows that these two categories are inextricably linked. Indeed, ‘economic’ and ‘non-economic’ loss and damage often overlap, with items that are valued in monetary terms also having non-monetary significance. For example, the loss of a home due to flooding is not only a financial loss but can also have a profound impact on identity and well-being. Moreover, ‘economic’ loss and damage can cascade into ‘non-economic’ loss and damage, and vice versa. For example, when a household incurs economic losses due to drought, this may prevent their children from attending school, which has long-term financial consequences. We argue that rather than dichotomizing loss and damage, recognizing that it is multidimensional, interwoven, and evolving over time will open up new avenues for research that better reflect reality and can therefore better inform policies to address loss and damage.