Background

Nepal ranks among the world's most vulnerable countries to climate change and natural disasters. This vulnerability is heightened by the fact that much of its population relies heavily on agriculture, which is dependent on natural resources for their livelihood. Climate-related hazards like landslides, floods, droughts, and glacial lake outburst floods (GLOFs) significantly impact lives and threaten the progress made in poverty reduction and key Sustainable Development Goals (SDGs) indicators, according to a 2022 UN Development Programme (UNDP) report.

The Government of Nepal (GoN) has implemented various initiatives, policies, acts, programmes, and institutional frameworks to address climate risks, promote low-carbon economic growth, and achieve SDGs. As a signatory to the Paris Agreement, Nepal has committed to reducing greenhouse gas emissions and enhancing adaptive capacities. Climate finance is crucial in these efforts, supporting policies and projects aimed at mitigating climate risks, promoting renewable energy, and protecting biodiversity. UNDP Nepal together with other development partners are directing resources towards disaster risk reduction, sustainable agriculture, and community-based adaptation programmes, which help protect the environment and improve the livelihoods of vulnerable populations. The government collaborates with institutions such as the Green Climate Fund (GCF), Global Environment Facility (GEF), and Adaptation Fund to secure funding for climate adaptation and mitigation. UNDP is assisting the Government of Nepal in enhancing its climate finance readiness and capacity.

Summary

Since 2011, the UN Development Programme, Nepal has been pivotal in advancing climate finance initiatives, aligning with Nepal’s commitments under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. Recognizing the importance of integrating climate considerations into national planning and budgeting, UNDP Nepal has supported the Government of Nepal (GoN) in several key areas to enhance climate resilience and promote low-carbon development.

In collaboration with the National Planning Commission (NPC), UNDP Nepal introduced the climate change budget code system in 2012. This system tags climate-related budgets within the Line Ministries Budget Information System (LMBIS), allowing for better prioritization, allocation, tracking, and reporting of climate finance across various sectors.

Furthermore, UNDP has been instrumental in developing and operationalizing the Climate Change Financing Framework (CCFF), endorsed by the Ministry of Finance (MoF) in 2017. The CCFF aligns national strategies for climate mitigation and adaptation with bottom-up planning and budgeting processes, ensuring a coordinated response to climate change at both national and local levels. It also supports the horizontal and vertical expansion of climate budget coding and expenditure tracking systems, enhancing the transparency and comprehensiveness of climate finance.

UNDP Nepal has contributed to significant reforms in Nepal's Public Finance Management (PFM) System, aiding improvements in budget call circulars and guidelines that incorporate climate considerations into development programs. This includes making the Medium-Term Expenditure Framework (MTEF) climate-responsive and enhancing the Budget Management Information System (BMIS) and Financial Management Information System (FMIS) for real-time tracking and reporting of climate expenditures.

Through these initiatives, UNDP Nepal has facilitated a more transparent and effective allocation of resources for climate change mitigation and adaptation, supporting Nepal’s efforts to achieve its Nationally Determined Contributions (NDCs) and Sustainable Development Goals (SDGs).

Climate Finance Projects

UNDP Nepal's climate finance initiatives are supported by multiple sources, encompassing various projects designed to enhance the country's climate resilience and sustainability. 

Climate Finance Network (CFN)

The CFN is UNDP Bangkok Regional Hub’s primary programme on climate finance. The network brings a wide range of stakeholders including ministries of finance, regulators, accountability actors, the private sector, civil society and regional and international development partners to forge partnerships for mobilizing and managing climate finance effectively.  

CFN also aims to develop Provincial Level Climate Change Financing Frameworks (CCFFs), representing a significant Public Finance Management (PFM) reform. This initiative integrates climate change considerations into provincial planning, budgeting, the Medium-Term Expenditure Framework (MTEF), and monitoring and evaluation systems.

Strengthening the Governance of Climate Finance to Promote Inclusive Climate Resilience in Asia Pacific-Phase III (GCCF III)

GCCF-III aims to address gaps and mismatches in climate financing, institutional capacity constraints, and fiscal weaknesses, aiming to strengthen Nepal's capacity to effectively mobilize, manage, and utilize climate finance for improved climate action at all levels. 

Publications