Background

Nepal is one of the most vulnerable countries in the world to climate change (CC) and climate-related disasters. An increase in flash flooding, glacial outbursts, droughts, landslides heat waves and cold waves in recent years have challenged lives and livelihoods.

As a country very dependent on ecosystem services and natural capital, climate change undermines future results and plans and could reverse recently hard won development gains. Higher temperatures have accelerated the recession of glaciers and snowfields, and more erratic and extreme precipitation is playing a role in water-induced disasters and agricultural output losses.Already the country suffers an economic loss of approximately NRS. 28-38 billion per year due to climate change. Past studies endorsed by the Government of Nepal show that the direct cost in key sectors from climate change could reach 2% or more of GDP.

At the same time, government spending on activities related to advancing the government’s climate and disaster management response is increasing. The share of the 2017/18 federal budget allocated to this thematic area topped 30 percent (NRS. 393 Billion)—a seven-fold increase from four years back. An increasing share of resources and funds earmarked toward climate action are also being directly planned and overseen by local and provincial governments.

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Inter-linkages between climate change, gender and human rights in Nepal

Nepali women are highly vulnerable to climate change for a number of reasons. They make up a large percentage of the agricultural workforce, and therefore their incomes are directly affected by a worsening of yields and crop losses. Women are predominantly responsible for tending to and maintaining animal sheds. Absent CC adaptation measures such as constructing plastic ponds or durable shelter for livestock, women can be more prone to food insecurity and, in some areas, may have to travel up to 3 hours to fetch just one bucket of water.

Women are also more vulnerable when climate-related events such as droughts, floods and other natural disasters do occur. They can find it more difficult to secure housing and work if affected as compared to men.

Nepal is committed to use gender-responsive budgeting as a tool to promote gender equality and guidelines have been put in place for line ministries and local governments. Measures are also being implemented to promote gender equality and womens’ empowerment through the Agricultural Development Strategy (2014) including:

• Increasing market access and exposure to financial management
• Increasing food security
• Increasing opportunities to access additional income sources
• Building social networks as community level through organised groups

Through these measures, Nepali women are increasing their involvement in market related discussions, and learning new techniques and skills on farm management.

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Nepal’s climate policies and targets

The Government of Nepal is responding to climate related challenges that have affected and will continue to affect the social and economic development objectives of the country. In addition to adopting a National Climate Change Policy, and ratifying the Paris Agreement, Nepal is also developing a National Adaptation Plan to build resiliency among climate-vulnerable communities. This builds upon a Local Adaptation Plan of Action (LAPA) planning framework that has already been piloted in some 100 local governments across the country in recent years. Other villages have conducted community-based adaptation plans.

The Government has started to mainstream climate change in planning and budgeting processes, providing ministries the opportunity to prioritize, allocate and track climate finance allocation and expenditure. Under its national climate policy, 80 percent of climate finance is expected to be delivered at the local level.

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Theory of change

The UNDP “Governance of Climate Change Finance for the Poor and Vulnerable” project aims to enhance the ability of the Government of Nepal to effectively integrate climate change (CC) into national fiscal policy and budgetary systems. Our work has been improving Nepal’s ability to:

• Mobilise additional finance (domestic and international) to address climate change
• manage the budget and improve accountability over resources for climate change
• target and direct those limited resources toward specific population groups, including those most at risk and climate-vulnerable

There are three key pillars of our work in Nepal. The first relates to advancing budget policy reforms such as the Climate Change Financing Framework and using tools such as sub-national CPEIRs. The second is accountability. The programme is collaborating with CSOs and parliamentarians to implement a number of measures to ensure that ‘everyday’ people understand and have a voice in climate finance. For example, we assisted the CSO Freedom Forum with the creation of a Citizens Climate Budget which is a small guide book outlining which regions of the country are most climate vulnerable and where climate dollars are going, including which sectors are receiving what amount of funding. The third pillar of our work in Nepal involves facilitating knowledge sharing through south-south exchanges, supporting training of civil servants on climate finance and budgeting, and facilitating Nepal’s participation in regional policy dialogues. For example, the Regional Dialogue in Bangkok in 2018 was attended by representatives from the Ministry of Finance, Local Government, Tourism, and Agriculture, who met with their counterparts in the region to share their successes and challenges.

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Previous Work in Nepal

The Government of Nepal is committed to addressing CC through increased understanding of and capacity for climate finance management. To date, the Government has made significant efforts to explore appropriate funding mechanisms and to develop institutional capacity to manage climate finance and integrate climate change into development planning and budgeting.

In 2011, a Climate Public Expenditure and Institutional Review (CPEIR) was conducted with UNDP support, for which Nepal won an international award presented by the Head of the UN General Assembly. Based on the CPEIR findings, the Government then developed a climate budget code to track climate-change related expenditure on a regular basis.

The programme has also undertaken a CPEIR for five districts. A summary report of the district CPEIRs was published in Nepali and English and distributed to all 753 local governments. This exercise is being used as an input for budget formulation (i.e. new policy and programme development) at the sub-national level, which is increasingly critical given governance reforms and increased autonomy for the provinces and local municipalities.

With these foundations in place, UNDP has assisted the government to formulate a Climate Change Financing Framework (CCFF). The CCFF outlines a strategy for improving the planning, execution and reporting of climate finance, including measures to involve civil society organizations and parliamentary committees to improve accountability. The efforts so far have shown positive results in some areas of the public administration of climate finance, while also revealing gaps that require attention for the effective governance of climate finance.

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Our upcoming activitie

Our programme will continue to support the government at various levels. A new inter-ministerial committee has been established on climate finance, to improve national climate finance management. UNDP will facilitate meetings of this committee to better coordinate climate budget oversight. We will also continue to work with sub-national level actors to ensure that the CCFF reforms road map endorsed at central level is implemented on the ground.

We also plan to provide strategic input to the design of future provincial development plans, supporting key stakeholders on prioritizing programmes well-placed to address integrated climate-poverty-environment challenges. This would draw upon the results of past and ongoing collaborative research.

By empowering key accountability stakeholders such as CSOs and parliamentarians with new tools and capacity building, an additional level of external involvement will also be in place to undergird the reforms being implemented by government actors and to challenge all actors to raise the bar on the quality and gender targeting of CC public investments.

Some of the key activities that will take place include:

• Developing climate change related policy briefs informing budget formulation: a policy brief on managing climate finance at sub-national level will be developed to support provincial development plans and other sub-national financing mechanisms. UNDP will draw in government experiences elsewhere in the Asia Pacific to provide inputs, including Bangladesh, Indonesia and Pakistan.
• Working with Nepal’s Ministry of Agriculture, Land management, and Cooperatives to strengthen the design of an existing programme in such a way that the percentage of climate sensitive budget is increased as a result of programme intervention
• Disseminating reports on the effectiveness of climate finance in agriculture, including a collaborative research study and a Public Expenditure Tracking Survey
• CSO capacity building engagement during budget formulation in the agriculture sector to ensure that findings of the collaborative research are being used as input for planning. The programme will also continue to engage with CSOs to ensure that findings from collaborative research are being used as an input for planning

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