RENDEZVOUS
Despite its negligible emission of global greenhouse gases, Nepal ranked fourth most vulnerable country to global climate change, according to Climate Change Atlas 2010. Moreover, the recent studies by the Asian Development Bank suggest Nepal faces losing 2.2 per cent of annual GDP due to climate change by 2050. Arnaud Cauchois, ADB country director for Nepal, shared with The Himalayan Times the risks facing the country, the challenges as well as opportunities in mitigating and managing climate change risks, among other issues. Excerpts:
The recent extreme weather events are impacting lives, livelihoods and infrastructure across the country. What urgent measures are needed to address the challenges posed by climate change?
My heartfelt thoughts and prayers are with those who have lost their loved ones in the recent disaster brought on by the heavy rains that relentlessly struck Nepal over the weekend. We are deeply saddened to see the impact felt across the country, with lives and livelihoods lost, accessibility disrupted and communities facing immense challenges.
Scientists say that rainfall events are becoming more intense due to climate change, which is evident in Nepal as the country faces the devastating consequences of increasingly severe and frequent weather events.
Communities are now at greater risk than ever before, and the critical infrastructure meant to support them is literally being washed away. There has never been a greater urgency to adapt and build resilience against the impacts of climate change.
The immediate focus must be on relief and rehabilitation, prioritising the saving of lives and restoring connectivity. Rapid damage assessments could help identify the extent of the destruction and inform targeted relief and rehabilitation efforts.
Going forward, Nepal must strengthen its disaster risk management systems to effectively mitigate the impacts of geophysical and extreme weather events. Risk management includes risk identification as risk is dynamic, risk avoidance, disaster preparedness including early warning systems, risk transfer and risk retention. At the moment, adaptation is of paramount importance. A comprehensive understanding of multi-hazard risks is essential, given the country's vulnerability to geophysical and climate-related disasters such as floods, landslides and glacial lake outburst floods (GLOFs). By implementing robust multi-hazard risk assessments, Nepal can enhance infrastructure planning and build resilience in projects, particularly in climate-sensitive sectors like hydropower, which is crucial for the country's economy.
It is evident that we can no longer pursue development without integrating effective climate action. ADB is committed to supporting the government of Nepal in addressing climate change challenges. This commitment includes developing initiatives and programmes that enhance resilience and facilitate climate adaptation strategies.
How have climate change-related disasters in the past affected ADB-funded projects in Nepal?
The Melamchi Water Supply Project reached the commissioning stage in 2021, but catastrophic floods and debris flows from June to August 2021 damaged the headworks and jeopardised the planned year-round diversion of water. This situation is not isolated to ADB-supported projects; climate-induced disasters are on the rise, impacting lives, livelihoods and infrastructure across the country and the region. The recent floods in Thame village, resulting from a glacial outburst, serve as a stark example. The 2023 flood in eastern Nepal caused significant damage to multiple hydropower projects and severely affected lives and livelihoods. As we have just seen, persistent rainfall across the country over the past week has resulted in devastating floods affecting both rural and urban areas, tragically claiming hundreds of lives and severely damaging critical infrastructure.
The Melamchi hazard mapping and restoration study conducted by the government of Nepal and supported by ADB after the Melamchi disaster emphasised that conventional design approaches are inadequate to mitigate the climate-induced risks and there is no unique solution. Insufficient data, research and knowledge on climate change impacts hinder effective planning and decision-making. A more holistic approach at three levels - project, river basin and regional - is needed to identify risks in the Hindu Kush Himalaya and develop new techniques and customised solutions to mitigate risks. It is clear that development planning needs a new paradigm - a more resilient approach.
How is ADB supporting Nepal in mitigating and managing climate change risks?
Nepal faces significant climate change risks, including annual floods, landslides, glacial retreat and permafrost melting. To address these challenges, ADB is advancing three key initiatives to help Nepal strengthen its climate resilience and sustainable development. First is better assessing risks at the planning stage. ADB's partnership with the governments of Nepal and Bhutan through the 'Building Adaptation and Resilience in the Hindu Kush Himalayas' (BARHKH) initiative addresses critical gaps in climate and disaster risk management. This initiative, which was launched at COP28 in November last year, leverages scientific data to better assess and manage climate risks, enabling policymakers to make informed decisions for enhancing resilience. With the support of the Swiss government and Swiss technical institutes, and other international and national partners and experts, ADB is bringing global knowledge and resources to strengthen Nepal's capacity to withstand climate impacts.
Second is support for policy and legal reforms to facilitate GRID and NDC implementation. ADB is working closely with the Nepal government to advance policy and legal reforms that facilitate the implementation of Nepal's Green, Resilient, and Inclusive Development (GRID) strategy and its Nationally Determined Contributions (NDC). This involves integrating climate change and disaster risk management into national frameworks, ensuring that Nepal's development path aligns with its climate goals. We are supporting the government in creating an enabling environment for long-term environment sustainability and climate action.
Third is attracting increased financing. ADB has initiated the establishment of the Nepal Green and Resilient Financing Facility (GREFF), a transformative effort to attract increased financing for climate-related projects. GREFF aims to bridge financing and capacity gaps by connecting Nepal with global and regional funding sources for adaptation and mitigation. With strong government backing, GREFF is under design, and consultations with stakeholders are underway to finalise its structure, ensuring effective mobilisation of resources to tackle climate risks.
Through these initiatives, ADB is committed to supporting Nepal's transition to a climate-resilient and sustainable future.
Please share your experience in implementing the GRID strategy. Were there any hurdles? If so, how were they overcome?
ADB is partnering with the World Bank and other development partners to support the government of Nepal in the GRID initiative. While the government is on-track to process a number of policy and regulatory reforms for a more greener, resilient and inclusive development pathway, implementing the GRID framework faces several challenges. These include institutional capacity limitations as executing complex policy frameworks requires strong coordination across sectors like public finance management and climate resilience. Ensuring seamless collaboration among stakeholders - government, development partners, and civil society - remains challenging, as does securing adequate financial resources amid budget constraints. Policy coherence is another hurdle, as integrating climate resilience and public finance policies across different government levels is demanding, particularly in translating national strategies into effective actions at the local level. Monitoring and evaluation systems are crucial but hindered by limited data and reporting capacity, weakening progress tracking.
Can you point to some other areas where Nepal needs significant improvement to mitigate and manage climate risks?
Nepal is already making progress in mitigating and managing climate risks, and there have been several successful pilot projects that could be scaled up across the country. However, there are still some areas for improvement. I have already mentioned in detail that understanding of multi-hazard risks is essential for Nepal's infrastructure planning.
Additionally, Nepal needs to reform its disaster risk finance and insurance systems. Currently, hydropower insurance premiums are tariff-based and not risk-based, providing no incentives for companies to assess or manage risks, which discourages investment from national and international sources of funding. More innovative financing mechanisms, such as blended finance, should be leveraged to address the shortfall in climate finance. The private sector must play a greater role in driving resilience and adaptation efforts, supported by incentives like reduced taxes or risk-sharing mechanisms. Lastly, while Nepal has made progress with policies like the National Adaptation Plan and NDC, stronger implementation and coordination among stakeholders, as well as continued support from international development partners, are crucial for building a climate-resilient future.
Another area of improvement is the engagement and investment of the private sector in climate and disaster risk management. The private sector is both innovative and well-resourced to make investments. However, the discussion between the private sector and the government seems limited at the moment. In most countries, climate mitigation efforts are typically driven by the private sector. Although Nepal has its NDC, the private sector actors were not adequately consulted and remain largely unaware of the country's mitigation targets. There is a huge opportunity for the Nepal's private sector to invest in climate adaptation and thereby accessing climate finance and making their business processes more resilient. Additionally, by investing in climate mitigation efforts, they can access carbon financing through carbon emission reduction. There needs to be more consultations between the private sector and the government, and a clear roadmap should be developed for private sector opportunities for investment in climate adaptation, mitigation and resilience.
How is ADB's engagement with the private sector for climate change financing in Nepal? Is there any reason for all climate financing projects to be sovereign? Is it due to low private sector participation in climate issues in Nepal?
ADB is actively increasing its engagement with the private sector in Nepal, including mobilising climate finance. Supporting the private sector requires ADB to consider both development impact and commercial viability, necessitating numerous preparatory activities before a project becomes investment-ready.
In terms of priority, ADB will focus on financing climate adaptation initiatives in partnership with the private sector. We are implementing a technical assistance project to enhance Nepal's banks' capacity to mobilise climate resources for renewable energy and energy efficiency initiatives.
Under the GREFF, ADB intends to establish a financing window for private sector actors for climate change adaptation and mitigation. The aim of this window is to provide financing support in the form of grants, concessional loans and guarantees to the private sector for some of their projects that relate to climate change. The GREFF may also provide appropriate technical assistance to the private sector actors to prepare, package, access financing and implement the project.
What challenges and opportunities do you see for climate financing in Nepal?
Limited resources and access to financing large-scale climate-resilient infrastructure development, including hydropower projects, remain significant constraints in Nepal. However, there is an opportunity to leverage private sector involvement through partnerships, investments, and better risk assessment and management.
The government of Nepal, alongside development partners, has been actively pursuing large-scale climate funding, but these efforts have yet to achieve the desired results. There are currently over a dozen projects in the pipeline that will be submitted to the Green Climate Fund (GCF). However, some of the projects have been in the pipeline for over five years, and the approval by the GCF is expected to take at least another year or more due to GCF's strict processing requirements. We also see a notable lack of coherence and complementarity between the pipeline projects, even though they may be in the same geographical location or in the same sector. This dis-integrated approach towards accessing climate finance needs reform, which is one of the challenges that the GREFF aims to address.