Loss and damage (in the context of climate change) is a concept to describe results from the adverse effects of climate change and how to deal with them (beyond climate change adaptation). There has been slow progress on implementing mitigation and adaptation. Some losses and damages are already occurring, and further loss and damage is unavoidable. There is a distinction between economic losses and non-economic losses. The main difference between the two is that non-economic losses involve things that are not commonly traded in markets.

The appropriate response by governments to loss and damage has been disputed since the UNFCCC's adoption of the term and concept. Establishing liability and compensation for loss and damage has been a long-standing goal for vulnerable and developing countries in the Alliance of Small Island States (AOSIS) and the Least Developed Countries Group in negotiations. However, developed countries have resisted this. The present UNFCCC mechanism to address loss and damage, the "Warsaw International Mechanism for Loss and Damage", focuses on research and dialogue rather than liability or compensation. At COP 27 in 2022, after years of negotiation, nations agreed on a proposal to establish a multilateral loss and damage fund to support communities in averting, minimizing, and addressing damages and risks where adaptation is not enough or comes too late.

Despite the increasing dialogue and attention to the topic, it is also noted that there is 'not one definition of L&D'. In fact, the UN distinguishes between L&D (Loss and Damage) as the dialogue under the negotiations for the UNFCCC and 'losses and damages' as the impacts seen and researched.

The exact wording in the IPCC Sixth Assessment Report is: "Research has taken Loss and Damage (capitalised letters) to refer to political debate under the United Nations Framework Convention on Climate Change (UNFCCC) following the establishment of the Warsaw Mechanism on Loss and Damage in 2013, which is to 'address loss and damage associated with impacts of climate change, including extreme events and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change.' Lowercase letters (losses and damages) have been taken to refer broadly to harm from (observed) impacts and (projected) risks and can be economic or non-economic (Mechler et al., 2018)."

Loss can be understood as irreversible harm caused by climate change, for example, through the complete destruction or permanent reduction in the functioning of assets, infrastructure, or resources, the complete submergence of small island nations due to sea-level rise, the irreversible extinction of a species, or the permanent loss of cultural heritage sites due to erosion caused by extreme weather events.

Damage refers to harmful effects and costs associated with climate change that can be quantified and potentially compensated (including economic, social, and environmental costs). Damage can be temporary or partially reversible, and it often involves repair, restoration, or compensation, for example, the destruction of infrastructure by hurricanes, economic losses due to crop failure caused by drought, or the costs of relocating coastal communities due to erosion and rising sea levels.

Loss and damage is connected to provision of climate finance and support, including liability, compensation and litigation. Loss and damage is also connected closely to mitigating greenhouse gas emissions and adapting to climate risks. Losses and damages arise when mitigation and adaptation actions to reduce climate impacts fail. They include the damages (and the risks of future damages) beyond those addressed by mitigation and adaptation. These losses and damages are sometimes referred to as 'residual' impacts or risks. Given the slow progress on implementing mitigation and adaptation, some losses and damages are already occurring, and further loss and damage is unavoidable.

The UNFCCC has defined loss and damage to include harms resulting from sudden-onset events (climate disasters, such as cyclones) as well as slow-onset processes (such as sea level rise). Loss and damage can occur in human systems (such as livelihoods) as well as natural systems (such as biodiversity), though the emphasis in research and policy is on human impacts. In human systems, a distinction is made between economic losses and non-economic losses. Economic losses and damage affect resources, goods and services that are commonly traded in the market. Non-economic losses and damage contain loss of family members and disappearance of cultures. The main difference between the two is that non-economic losses involve things that are not commonly traded in markets.