For SIDS in particular, loss and damage has negative implications for sustainable development . The costs of loss and damage, particularly from extreme events, can deplete national capital reserves . Thomas and Benjamin  show how loss and damage can lead to an 'unvirtuous cycle of climate-induced erosion of development and resilience'. In this cycle, addressing loss and damage strains limited national resources, diverting public funding and other resources to address negative climate impacts. This in turn reduces resources and capacities which could be allocated to adaptation, building resilience and sustainable development, thereby increasing vulnerability to climate change and leading to further loss and damage where the cycle begins again. The cascading and cumulative impacts of extreme events experienced in Pacific and Caribbean SIDS exemplify that this cycle may already be in effect.
IPCC
Climate Change 2022: Impacts, Adaptation and Vulnerability
IPCC Report