Climate Change: Adaptation Projects and Major Activities on Climate Financing in Nepal

Nepal, with its diverse topography, fragile ecosystem and poverty, is one of the most vulnerable countries to the impacts of climate change. Though it has contributed least to the increasing greenhouse gases in the atmosphere, it is financially burdened further to cope with the adverse impacts of climate change when it has been struggling to provide its people with the basic amenities. It is the responsibility of international community in general and those countries in particular which have been contributing significantly in greenhouse gas emission, to provide adequate support for building capacity and the resilience of the poor and climate vulnerable communities in line spirit of the Articles 4.8, 4.9 and 11 of the UNFCCC. Nepal being the LDC and a Party to the UNFCCC is entitled for technological and financial supports.

Implementation of UNFCCC and Kyoto Protocol got political momentum in Nepal since 2009 along with the establishment of the Climate Change Council, institutional strengthening, and necessary instruments like National Adaptation Programme of Action (NAPA), Climate Change Policy, and National Framework on Local Adaptation Plan for Action (LAPA) during 2010 and 2012. With the chairmanship of LDCs coordination group on climate negotiations for 2013 and 2014, Nepal is now in a better position to advocate for climate finance.

Nepal has accessed climate finance from both within and outside the Convention regime for adaptation, mitigation, capacity building, renewable energies, raising awareness and knowledge generation and management. National public finance (government revenue), carbon finance and international public finance (multilateral and bilateral funds) are the major sources of climate finance in Nepal. Approximately 30 donor agencies (development partners) are working in Nepal, UK being the largest OECD bilateral donor and the World Bank being the largest multilateral donor. Nepal has tapped sources from dedicated climate funds such as LDC Fund, Strategic Climate fund of Climate Investment Fund (PPCR and SREP), Global Climate Change Alliance, Forest Carbon Partnership Facility, UK’s International Climate Fund, Japan’s Fast Start Finance and Germany’s International Climate Initiative for adaptation and mitigation activities. Adaptation fund (AF), Green Climate Fund (GCF) and Special Climate Change Fund (SCCF) are among other potential funds that Nepal can have access to. Grants (used by all Funds), concessional resources (PPCR, Japan), budgetary support and private financing (Japan) are the current modes of financing. Most climate adaptation projects in Nepal are funded through grants except for PPCR which has a loan component too.

The NAPA in 2010 and the LAPA in 2011 are some of the major momentums in Nepal for climate change-related activities, adaptation in particular. The NCCSP, PPCR), and Hariyo Ban Programme are other important projects being implemented that address the adaptation needs of the vulnerable people of Nepal. Nepal started benefitting from the provisions of UNFCCC after it became a Party in 1994. Finance for both adaptation and mitigation activities from multilateral and bilateral sources are flown mostly in between 2009 and 2011. It is observed that climate finance for adaptation actions has been increased after 2010 suggesting how NAPA has been instrumental in securing funds for adaptation activities. The fund flow, however, has been reduced from 2012 onwards, especially for adaptation actions. The projects solely for building capacity and raising awareness are very few in numbers although these components are somewhat reflected in adaptation and mitigation projects and Nepal intends to integrate capacity building as an integral part of the projects.

Climate financing is emerging as a complex challenge in Nepal due to the lack of definition, use of various terms in climate expenses and the availability of different sources of climate finance. It is difficult to track consolidated spending on climate change activities. There are a lot of projects related to climate change and are facing difficulty to separate the same from normal developmental activities. The Government of Nepal introduced a climate change budget code from the fiscal year 2013/14 to tract the public finance flowing into the country and is expected to differentiate the funding received between climate change work and normal development assistance. However, tracking private finance would still be a challenge. Developed countries have provided more funds in mechanisms operating outside the Convention regime. Most of the climate change projects are either funded directly by the donor institutions or implemented through UN agencies and INGOs. These agencies are largely interested in channeling the funds through the traditional channel or institutions that make their conditions easier. The project preparation and supervision services given by those agencies require service charge which could have been provided to recipient countries. Nepal’s capacity building of her institutions and development practitioners seems very crucial for enabling it to have direct access to the dedicated climate funds like the Adaptation Fund.

It is recommended that such funding mechanism should ease the accreditation process so that national institutions could have that facility efficiently and in time. Countries like Nepal should be exempted from the obligation of proving additionality for adaptation activities taking into consideration the data shortage, poor data management practices, and less research studies. Accessing the funds under the Convention is a complex process requiring significant time for project endorsement and fund disbursement. GEF IAs and MIEs should provide ‘fast track’ services for financing the adaptation actions in the LDCs as a matter of high priority.

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Ms. Monica Maharjan
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