An above-ground open coal pit in Africa. Fiona Barclay Smith/ShutterstockThe longer it takes to transition away from fossil fuels such as coal, the more costs accrue as climate change accelerates. Climate change caused at least US$2.8 trillion (£2.1 trillion) in global costs known as loss and damage between 2000 and 2019, according to the UN Environment Programme. Loss and damage refers to the social, economic, cultural and environmental harms experienced by people or communities as a consequence of disruptive events or processes, such as mining. In climate change governance, loss and damage impacts are more specifically those that can’t be avoided or mitigated, and should ideally be compensated. Projected loss and damage costs for developing countries alone could reach US$290-580 billion per year by 2030. Our ongoing research focuses on how the opening of new coal mines prevents the ending of a fossil fuel-reliant global economy. A key part of this involves investigating how loss and damage is calculated in communities affected by coal mining and who pays, or doesn’t pay, for it. Read more: We can finally measure the damage each new coal, gas or oil project will do to people and nature Mostly calculations of loss and damage in the mining context use a market replacement price model. At best, this pays the owner – of the field, cow, sheep etc – the local market price for the thing that will be lost at the time it is lost. Economists also sometimes use income and production approaches, which add changes to future income streams or production functions to show more aggregated economic effects. Our new method is more holistic than these.Each fossil fuel asset has a lifecycle: oil, gas and coal assets cause loss and damage when they are established, throughout their working lives and also in decommissioning – and then more in their aggregated effect on climate change. The last is often calibrated to the social costs of carbon emissions. We judge that if coal mine owners paid correctly for the loss and damages they cause, through the whole lifecycle (establishment, working, decommissioning) then coal mines would simply be a poor investment choice relative to renewables. Coal would then be phased out more quickly, avoiding the substantial costs of climate change later. Loss and damage, explained by expert Professor Mark Maslin at UCL. Traditionally, coal assets have been cheap to set up, as communities are expected to move aside in the name of national economic development. Sometimes affected people have received a market replacement for something lost – a cow or a house – but often not, and livelihoods are rarely replaced in totality.But in our ongoing research we have piloted a fairer, more realistic accounting method that focuses on treating what people lose as an asset underpinning a livelihood with future income streams – an asset-based livelihoods approach. We applied this to the affected households living near an opencast coal mine in Somkhele in northern KwaZulu-Natal, South Africa. The mine has been operating since 2007. We used surveys conducted by All Rise (the pro-bono attorneys representing this community), taken in 2018 which counted the losses from 2007 to 2018. On the basis of these, we estimated that households had lost more than R80 million (£3.7 million) in land, crops and cattle. But only 22% of the 115 affected households we spoke to report receiving any compensation at all. Reported compensation to date added up to R3.6 million – that’s only 4.7% of the losses we counted.The gap between what the mining company paid and what households deserve stems from different methods of measuring the value of loss and damage. By modelling the continued losses of income from lost cattle, sheep, goats and maize, using herd size projections and predicted future maize prices (to 2028), we estimate the compensation owed to reach at least R157 million by 2038.A mining company will value compensation by estimating the market price of what is visibly destroyed for the mine to open on a given day: a demolished structure, a field taken, a pig. This doesn’t include the ongoing human costs, for example the cost of ill health from pollution, and all the loss of future income.We counted differently, using a model that a bank might use if it viewed the households as ongoing commercial businesses – which they are. This values things as assets, that can be used to provide income into the future. A cow is not just one animal that can easily be replaced. It contributes to the future herd, with calves, milk and sales compounding over decades. Lose 15 cattle, as the average affected household here did, and many years of future income are lost.By using this new model, the losses look stark.Households that held 270 hectares of land before mining began were left with 68. That’s a 75% reduction worth around R60.6 million. Crop yields collapsed by 94% on average. Yields of maize, the staple, dropped by 97%. Livestock numbers of cows, goats, pigs, sheep and chickens fell from 7,574 animals to 2,643. More than 200 houses and rondavels (a round traditional thatched building) were lost. People were forced to buy water that was once free. A cow is not just one animal that can easily be replaced. It contributes to the future herd, with calves, milk and sales compounding over decades. EcoPrint/Shutterstock Counting assets and their income lost from the mine opening in 2007 to the time of the original surveys in 2018 adds up to R80 million. We then projected the income lost because of no longer having the sheep, goats and cows to 2038, using a deterministic herd growth model, which predicts growth using parameters for breed fertility, mortality, kidding mortality, and offtake rates (through sales, slaughter, gifts, transfers, or other forms of disposal). We added projections of losses from no longer being able to grow maize until 2028. We used market prices and projections – after this future date they are unreliable. The bill reaches R157 million by 2038. Against that figure, the mine’s payments amount to just 2.3% of its loss and damage. The compensation gapValuation is never neutral. Our calculations based on costs and compensation in Somkhele make some of the missing income visible. But some things cannot be priced: the relocation of ancestors’ graves, the loss of 15 Indigenous plants used for food and medicine, the ill health and psychological trauma people experienced. Numbers cannot be put on these ongoing losses. Coal mining is often reported as having adverse effects in rural Africa. Profits and economic growth are frequently prioritised over livelihoods of rural South Africans with pollution effects affected communities in a coal-dependent country.Our new methodology can help communities and governments to ensure future loss and damage claims are more accurate.Sarah Bracking receives funding from various research councils as a public academic. This study was funded by King's College London under the Climate & Sustainability Seed Fund, and received institutional support from the School of Social Science, Centre for Civil Society, University of KwaZulu Natal. The views expressed in the report are those of the authors and do not necessarily reflect the official policy or position of the institutions who supported the research. Any errors or omissions are the sole responsibility of the authors.Danford Chibvongodze does not receive funding from any institution.