UN Climate Fund Grants $20 Million to Nepal for August Flood Recovery

What Happened

The United Nations climate convention's Loss and Damage Fund has set aside $21.6 million for Nepal to help fix the damage from the Bhotekoshi floods that hit the country in August. This decision, made at an extraordinary meeting by the Fund's Board on Thursday, marks the first time the Fund has set aside money for a specific country to fix climate damage. The provisional amount includes $1.6 million in oversight fees paid to the organisations that carry out the projects. On August 26, an ice-and-rock avalanche caused heavy debris and flooding along the Bhotekoshi-Trishuli-Narayani river system. Nepal's government says initial recovery and reconstruction needs will cost at least $4.71 billion, with total economic losses self-assessed at $5 billion.

Official Request and Board Action

On August 31, Nepal's Finance Minister Swarnim Wagle and Agriculture, Forests and Environment Minister Gita Chaudhary wrote a letter to the Board's co-chairs asking for a quick and direct response. Their letter pointed out that Nepal contributes very little to global emissions yet suffers severe climate effects, and that the total loss is still being figured out. Board members from Africa, Asia-Pacific and least developed countries called for the extraordinary meeting, while members from Latin America, small island states, Eastern Europe and developed countries sent letters of support. Ajay Mathur, former Director General of the International Solar Alliance, noted that the $20 million is less than half a percent of Nepal's $5 billion reconstruction cost, and warned that funds will only be released after Nepal clears more project proposals.

Context

The Loss and Damage Fund was created at COP27 in 2022 to help vulnerable developing countries deal with climate-related losses. The Fund currently has pledges of over $820 million from mostly developed countries, with $342 million promised for its start-up phase, but it has received 176 requests worth about $2.8 billion from 119 countries. Actual payouts depend on donor countries fulfilling their financial pledges on time.