New Zealand has joined just a handful of other countries in giving money to developing countries for the loss and damage wrought by climate change.
Climate Change Minister James Shaw and Foreign Affairs Minister Nanaia Mahuta have announced $20 million will be ring-fenced from a climate fund filed from revenue gathered from the emissions trading scheme.
It took all-night negotiations to get the topic onto the official agenda for the first time at this year's UN climate summit in Egypt.
Pacific countries and other developing nations have been pressing for compensation for the emissions caused by richer nations over hundreds of years and its consequence on developing states' economies.
Wealthy nations, including the US and EU, have repeatedly blocked, worried they could be on the hook for billions of dollars in ongoing compensation.
Some estimates put the the figures at half a trillion US dollars' worth of damage in just the past decade alone.
Mahuta said the dedicated funding for loss and damage puts Aotearoa New Zealand at the leading edge of wealthy countries.
"It strongly signals our support for Pacific priorities."
She said climate change threatened the basis for Pacific peoples' lives, but also their culture, language and mental and physical wellbeing.
Shaw said comparatively wealthy countries like Aotearoa had a duty to support the countries most at risk from climate change.
"It is a bit of a downpayment," Shaw said of the $20m committment, and was timed for COP27 to try to get progress in these talks.
"The argument about whether it's compensation or historical liability for emissions ... has actually been the reason why no one's been able to make any progress. We do want to see progress, the Pacific Islands want to see progress, so what we're saying is let's crack on with it and try and hope that injects some good faith into negotiations and will actually get some movement from that."
Germany, Belgium, Denmark and Scotland are the only other countries to kick in on loss and damage, with the contributions seen as being of more symbolic than financial significance.
The money for New Zealand's funding comes from revenue gathered from the emissions trading scheme.
Developing countries are expected to push at COP27 for a centralised fund to distribute loss and damage funds.
"While New Zealand is not opposed to this, we also support a wide range of funding arrangements to make best use of our contribution.
"We will work with our partners, in particular Pacific governments, to support areas they identify as priorities," Mahuta said.