Climate Adaptation Financing in Nepal

Abstract

Nepal as a country vulnerable to the effects of climate change, and with limited domestic resources must priorities adaptation actions and relies on international support to finance its need. There have been substantial amounts of climate finance flowing into the country from a multitude of sources mainly in the form of grants and debt instruments, with over US$3 billion committed by international providers over the last decade. Commitments to finance adaptation have been steadily increasing over the same period, however not all commitments translate to results on the ground, as over half of reported adaptation finance can be considered over reported. Specific challenges have been identified in absorbing climate finance in Nepal, including governance issues, lack of internal capacity, lack of coordination, inadequate climate finance management and lack of legislation and implementation strategies. This paper proposes reforms along the lines of transparency and accountability, localization and government ownership, capacity building, coordination, climate budgeting, monitoring and legislation to tackle these challenges and ensure better efficacy of climate finance in adaptation programs in the country.