Minding the Money: Governance of climate change adaptation finance in Nepal

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This is an Oxfam International report. The affiliates who have contributed to it are Oxfam GB and

Oxfam Hong Kong.

First Published by Oxfam International in March 2011

© Oxfam International 2011

Oxfam International is a confederation of fourteen organizations working together in more than

100 countries to find lasting solutions to poverty and injustice: Oxfam America, Oxfam Australia,

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Kong, Intermon Oxfam, Oxfam Ireland, Oxfam New Zealand, Oxfam Novib, Oxfam Quebec and Oxfam

India.

Copies of this report and more information are available at www.oxfam.org and at

Lead Authors: Katie Wiseman and Raju Pandit Chhetri

Contributors: Michel Anglade, Anthony Scott Faiia, Binay Dhital and Prabin Man Singh,

Shanta Upadhyaya and all individuals interviewed

Support: Environment and Public Health Organisation (ENPHO)

Design and Printing: Graphic Plus Printers

Photographs: Oxfam GB Nepal archive

DISCLAIMER

Country Programme Office, Nepal

Jawalakhel-20, Lalitpur

GPO Box 2500, Kathmandu

Tel: +977-1-5530574/ 5542881

Fax: +977-1-5523197

E-mail: [email protected]



TABLE OF CONTENTS

TABLE OF CONTENTS I

ACRONYMS III

METHODOLOGY AND LIMITATIONS IV

ACKNOWLEDGEMENTS IV

SUMMARY 1

Outline and purpose of this paper 1

The problem and the need: the big picture 1

Action: the progress, the weaknesses and the challenges 2

Recommendations 4

1. CONTEXT 7

1.1 Poverty, development and aid effectiveness 7

Box 1: Findings from national adaptive capacity... 81.2 Politics and the State 9

1.3 Climate change vulnerability 10

1.4 Land Access and Distribution 11

2. EXISTING AND EMERGING NATIONAL SITUATIONON CLIMATE CHANGE ADAPTATION 12

2.1 International position on climate change 12

2.2 Overview of national structure and programmes 12

Box 2: Findings from National Adaptive Capacity 2010 14

2.3 Technical Assistance Projects and Capacity Strengthening 14

MINDING THE MONEY: GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE IN NEPAL I



2.4 Government Policy and Coordination Mechanisms 15

2.5 National Adaptation Programme of Action (NAPA) 15

Table 1: Prioritised Projects under NAPA 17

Figure 1: Framework for NAPA Implementation 18

Box 3: NAPA and National Planning 19

2.6 Strategic/Pilot Programme for Climate .......... 19

Box 4: PPCR Component and Corresponding NAPA ..... 21

Table 2: NAPA and PPCR: overview of key features 23

2.7 Adaptation Fund (AF) 24

2.8 Sources outside the UNFCCC through donor ...... 24

2.8.1 Local Adaptation Programme/Plan of Action (LAPA) 25

Figure 2: NAPA+ and LAPA - a framework for ...... 26

Box 5: Case Study: piloting LAPAs in Nepal from ...... 26

2.9 Civil Society Programmes and Coordination 27

Table 3: Main Climate Change programmes and ...... 29

3. CONCLUSIONS 32

4. RECOMMENDATIONS 36

Figure 3: International climate funding architecture and 38

Figure 4: Proposed Country Level Outline for National 41

REFERENCES 43

MINDING THE MONEY: GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE IN NEPALII



ADB Asian Development Bank

AEPC Alternative Energy Promotion Centre

CDM Clean Development Mechanism

CER Certified Emission Reduction

COP Conference of the Parties

DANIDA Danish International Development Agency

DDC District Development Committee

DFID UK Department for International Development

DHM Department of Hydrology and Meteorology

DP Development Partner

EFA Education for All

EPC Environment Protection Council

EU European Union

FAO Food and Agriculture Organisation

GEF Global Environment Facility

GDP Gross Domestic Product

GNI Gross National Income

GoN Government of Nepal

LAPA Local Adaptation Programme of Action

LDC Least Developed Country

LDCF Least Developed Countries Fund

MCCICC Multi-Stakeholder Climate Change Initiatives Coordination Committee

MDB Multilateral Development Bank

MoAC Ministry of Agriculture and Cooperatives

MoE Ministry of Environment

MoFSC Ministry of Forests and Soil Conservation

MP Member of Parliament

MPI Multi-dimensional Poverty Index

MPPW Ministry of Physical Planning and Works

NAPA National Adaptation Programme of Action

NIE National Implementing Entity

NPC National Planning Commission

ODA Official Development Assistance

OECD-DAC Organisation of Economic Co-operation and Development Assistance Committee

PPCR Pilot Program for Climate Resilience

PIU Project Implementation Unit

SPCR Strategic Programme for Climate Resilience

SWAp Sector Wide Approach

UNDP United Nations Development Programme

UNEP United Nations Environment Programme

UNFCCC United Nations Framework Convention on Climate Change

VDC Village Development Committee

WB World Bank

ACRONYMS

MINDING THE MONEY: GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE IN NEPAL III



The research was conducted from October to December 2010. The enquiry was framed by

a global research framework with guiding questions that were adapted for the Nepal context.

A detailed literature review was conducted and quantitative data collated from secondary

sources. This was supplemented by a series of semi-structured interviews with key people

in Kathmandu and the UK with some follow up over email and further interviews. The

draft research was discussed and refined following an Oxfam workshops in Bangkok in

Kathmandu on governance of climate finance.

Detailed qualitative analysis from primary sources was limited by people�s availability and

disclosure of information.

The authors would like to express gratitude to those interviewed for their time and insights.

Support and input was received from Michel Anglade in the Oxfam GB South Asia regional

centre in New Delhi (India), from Anthony Scott Faiia Country Director and from Prabin

Man Singh in the Oxfam in Nepal office. We also thank Environment and Public Health

Organisation (ENPHO) for the support.

METHODOLOGY AND LIMITATIONS

ACKNOWLEDGEMENTS

MINDING THE MONEY: GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE IN NEPALIV



OUTLINE AND PURPOSE OF THIS PAPER

This paper hopes to provide the reader witha clear overview of the current situationregarding funding for climate adaptationprogramming and policy in Nepal. It is linkedto an Oxfam global policy brief and series of country researches on the governance of climate

change funding in developing countries. Theresearch is designed to inform Oxfam�s advocacyon how climate change adaptation fundingshould be managed in developing countries sothat it fulfils the goals and needs of themarginalised and most vulnerable communities,with a particular focus on smallholder womenfarmers.

This paper focuses chiefly at the nationallevel, though is cognisant of the great bearing

that decision making and action at theinternational level has, particularly on LeastDeveloped Countries (LDCs). The first sectiondescribes the context looking at poverty, aidand development factors, the current politicalsituation and climate change vulnerability. Thesecond section details the national situation onclimate change adaptation policy andprogramming, highlighting key areas of progress, weakness and challenges. The third

section draws together some conclusions andthe final section presents a set of recommen-dations to key players together with diagramson the financing architecture and a proposedmodel for Nepal.

THE PROBLEM AND THE NEED: THE BIG PICTURE

Despite notable gains in humandevelopment, Nepal remains one of the poorestcountries in the world. Patterns of inequalitypersist. The majority of the population areengaged in subsistence agriculture yet landaccess and distribution are extremely unequaland large parts of the country are uncultivable.Poverty and exclusion were significant driversof the decade-long conflict. The country�s diversetopography, fragile ecosystem and poverty makeit extremely vulnerable to the negative impacts

of climate change.

Women in Nepal tend to have lower statusand heavier workloads. As a consequence Nepalis one of the few countries in the world wherewomen have a lower life expectancy than men.With increasing numbers of men migrating tofind work, the responsibility for feeding thefamily falls to women. Although women makeup the majority of the agricultural labour force

SUMMARY

MINDING THE MONEY: GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE IN NEPAL 1



they are largely unpaid family workers, withlimited access to land. Poor communities, oftenliving in areas most at risk to floods andlandslides, are already feeling the impacts of climate change. A recent Climate Change

Vulnerability Index calculating vulnerability

to impacts of climate change over the next 30years places Nepal 4th out of 170 countries.1

Nepal is poised at a stage of state transfor-mation. The shift toward a more participatoryand decentralised form of governance and thewriting of a new constitution, offer considerableopportunity. Yet, given more than seven monthsof leadership vacuum and political stalematewhich has only recently shifted with the electionof a new Prime Minister progress is extremely

challenging; impacting significantly on donortrust and the delivery of aid. This is in a countrywhere foreign aid makes up half the nationaldevelopment budget.

ACTION: THE PROGRESS, THE WEAKNESSES ANDTHE CHALLENGES

The urgent need for focused, coordinatedaction to support poor communities to adapt toclimate change is immense and has clearly been

recognised by government and key decisionmakers at the highest level. This can be seenby the considerable progress that has beenmade over the past eighteen months to twoyears on critical areas of climate anddevelopment policy and planning. Against thebackdrop of such huge political domesticuncertainty and slow progress on funding andgovernance at the global level, this is no smallfeat. Significant national level programming isin early stages of development. With the many

positive steps that have been taken, there arestill a number of key weaknesses and challengesahead. These are highlighted below.

KEY AREAS OF PROGRESS

The Ministry of Environment (MoE) hasbeen put forward by government as the clearfocal point on climate change. A new divisionhas been created to lead on climate policyand programming.

The Prime Minister established and headsthe Climate Change Council, tasked withhigh-level policy and strategic oversight. TheCouncil has convened a number of timessince its inception.

The Council has overseen the drafting of aClimate Change Policy, which has beenrecently approved by the cabinet.

National Adaptation Programme of Action(NAPA) has been completed with donorssupplementing Global Environment Facility(GEF) funding to ensure a focus onknowledge management, planning andstakeholder coordination. The process hasbeen credited with being widely consultative,

incorporating strong gender analysis andpaying attention to the structures needed toensure resources reach down to thecommunity level. A multi-stakeholdercoordination forum, web-based informationportal and a knowledge management centrehave been established.

No funding has been committed as yet foridentified NAPA projects but recentindications are that LDCF will have $10 �12 million for Nepal to be split betweenUNDP and UNEP and PPCR will fund someNAPA identified initiatives.

The draft proposal for the Pilot Program forClimate Resilience (PPCR), managed by the

Asian Development Bank (ADB) and WorldBank, has been tentatively approved with afocus on four components. In an effort notto duplicate what had already beenestablished under NAPA, PPCR used thesame thematic working groups for planningand analysis.

There are several active civil society forumsthat are increasingly given seats at the tablein planning and policy processes. Mediaattention is increasing. The Climate ChangeCouncil and main coordination forumestablished under NAPA include a broadrange of stakeholders at the national level,including from civil society organisations.

MINDING THE MONEY: GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE IN NEPAL2

1Climate Change Vulnerability Index, Maplecroft, http://www.maplecroft.com/about/news/ccvi.html



The National Planning Commission hasdeveloped a �climate resilient� nationaldevelopment plan, through a technicalassistance programme supported by the

Asian Development Bank (ADB).

14 donors signed a compact in 2009 toimprove coordination and alignment withgovernment.

A Local Adaptation Programme of Action(LAPA) is being developed as part of NAPA,focused on mainstreaming adaptation at thelocal level and strengthening local and midlevel institutions. The programme is in itspilot phase, funded by the UK Departmentfor International Development (DFID),

outside of government.

KEY AREAS OF WEAKNESS AND CHALLENGES AHEAD

Although set to increase considerably thelevel of financial resources for climateadaptation is still tremendously inadequateto meet current needs.

Lack of faith in the public financialmanagement system means that largeamounts of aid are still off budget and inthe form of stand-alone projects and verticalfunding. This has largely been the same forclimate funding, which is fragmented anddonor driven. There is no mechanism to poolfunding for climate work, although thegovernment is currently working on optionsfor this. National systems are not beingsufficiently strengthened. Establishing aclear picture on climate funding and relatedprogrammes currently, from both donorsand government, is difficult.

An effective institutional framework doesnot currently exist.

MoE is understaffed and under resourced.The set up of a new division to lead on climatechange was not accompanied by thenecessary resources and personnel.

Additionally there is lack of clarity onresponsibilities of key personnel within thedivisions of the ministry. The new climate

change division for example does not haveresponsibility for PPCR.

Over the past two years there have been aseries of donor-funded capacity buildinginitiatives to the Ministry of Environment

and National Planning Commission, largelyin the form of technical assistance throughinternational and national consultants.Sustaining these initiatives beyond theoutputs of consultants and institutionalisingcapacity within the ministry remains achallenge.

Qualified technical personnel and scientificknowledge on climate change and riskmanagement are lacking across government.

Climate risks are not sufficiently consideredand integrated into planning in key sectors.

Although the NAPA process went some wayto addressing this through sector technicalworking groups and vulnerabilityassessments, the gap is still wide. This iscore to some of the components of PPCR andcurrent ADB technical assistance.

The donor compact brought some level of coordination but funding is still largelyunharmonised and unaligned to countrysystems. There is a current danger of furtherfragmentation.

The NAPA plan was completed in Septemberbut there is no funding flowing as yet forprojects.

The Government of Nepal (GoN) expectedPPCR to be used as the financing vehicle todeliver NAPA priorities and there has beena struggle against the rigours of PPCR forit not to be a separate, parallel process.PPCR has faced criticism in country frommany quarters over its lack of flexibility andheadquarter-driven priorities, over whichthere is limited national control. The struggleto not duplicate NAPA�s efforts did result inthe use of the same technical working groupsand it now looks certain that PPCRcomponents will come in to fund some NAPA initiatives.




The issue of loans as a vehicle for climatefinancing is highly contentious with sharplydivided opinions both for and against. A clear majority of local civil societyorganisations are firmly opposed to loans.The government�s own recently issued

climate change policy clearly speaks of �climate justice� and the principle of �PolluterPays�. It will be a challenge for thegovernment to forge a broader consensus onthis issue taking into account the views of civil society and Nepal�s position as a leadingLDC affected by climate change.

LDCF funding for NAPA projects, if andwhen it comes, will be split between two UNagencies. This will mean extra work for GoN

and MoE to coordinate.

Tension is developing on the funding andmanagement structure for LAPA. The pilotprogramme is contracted out to a UK consultancy firm and implemented by NGOsin Nepal. DFID views LAPA as its funding

vehicle for NAPA, considering a fiduciaryrisk assessment concluded its institutionalfunding could not currently go through MoE.However MoE recently expresseddissatisfaction at the probability that LAPA funding will not come through government.Ensuring that MoE and other keygovernment institutions remain central tothe development and implementation of LAPA is critical.

NAPA and the new Climate Change policystate that 80% of funds will be spent at the

village/municipal level. Ensuring the deliveryof large amounts of resources to the locallevel remains a great challenge. Althoughthere have been improvements in financialmanagement at the local level there aremany bottlenecks at the district level andfiduciary and procurement systems are weak.

Existing funding mechanisms are notdesigned to deliver resources that prioritisethe most vulnerable. Gender and

vulnerability considerations do not seem tomove sufficiently beyond analysis to be built

into implementation and translate intoaction.

Adaptation actions that are happening onthe ground are not being documented andthere is insufficient capacity to share lessons

widely. Learning from LAPA piloting shouldhelp to plug some of this gap but resourcesand capacity are still lacking. Although thereare active civil society forums that areincreasingly being invited into planningspaces, coordination is a challenge and theirlack of legal status limits legitimacy and thepossibility for more effective policy dialogue.

Despite an existing committee under theinterim legislature and an informal MP

network, current political priorities and weaklegislative infrastructure mean that oversightis lacking and that wider ownership andunderstanding outside key executivepositions has not been sufficiently built.

RECOMMENDATIONS

GOVERNMENT OF NEPAL

Immediate areas to address regarding the

organisational structure of Ministry of

Environment and climate change activities

Decide exact mandate of MoE, its role andfunctions and how it will interlink with otherministries, agencies and departments onclimate change. Communicate this withingovernment.

Map existing resources with current andplanned programmes to clearly assess thecapacity gap in terms of financial and humanresources and what would be need to fillthis.

Fill current vacant positions within MoE.

Furthering Climate Change Planning and

Policy

Develop a long -term climate change strategicplan to underpin the climate change policy.

Review current relevant legislation and




consider where this can be strengthened.Consider drafting of new legislation to betterenforce areas of the climate change policy.

Development of an institutional structure

and national funding entity

Take greater leadership in developing andagreeing a detailed roadmap with milestonesfor expediting the establishment of a nationalclimate finance entity that garners sufficienttrust, is transparent and robust and alignedclosely with national systems. Look to betteraid effectiveness models where these do existand draw lessons for climate funding.

Put forward immediate interim options forchannelling funding through another entity

outside of government that MoE can have arole in terms of administration and oversight.

In the establishment of an institutionalframework develop clear principles andstrategies around promotion of gender andsocial equity, considering how theseprinciples can be reflected within thegovernance structure as well as distributionof resources, thematic areas andprogramming. Build these into anymonitoring and evaluation framework.

Build in windows for on-budget (for publicsector projects) and off-budget (for civilsociety projects).

Ensure these processes incorporate broadconsultation and progress towardsdeveloping the institutional framework iscommunicated widely to stakeholders.

Develop detailed terms of reference and cleararrangements for decision making bodiesand coordination fora under government.Clarify how the MCCICC, Climate ChangeCouncil, Climate Change KnowledgeManagement Centre and planned ClimateChange Centre will interact and coordinate.

Oversight and Accountability

Revive the Natural Resources andEnvironment Committee with dedicatedresources, ensuring cross party expertise.

Conduct information sessions in parliamenton key climate change issues, programmesand policy.

DONORS

Capacity Building InitiativesJointly commission an external independentreview of current capacity building initiativesto assess areas of progress and weaknessand make recommendations going forward

Re-examine the current fragmentedapproach to capacity building and work

jointly on pooling assistance, using therecently approved Climate Change Policy asan overarching framework from which to

develop a convergent long term strategy forstrengthening climate change capacity withinthe MoE and other agencies.

Support further strengthening of thegovernment�s financial and procurementmechanisms with suitable monitoring totrack improvements.

Finance and Coordination

Develop one pooled multi-donor trust fund

as an interim mechanism that can begin tofoster alignment and harmonisation. As aninterim measure agree options with GoN forchannelling this through an entity outsideof government.

Clearly communicate minimum conditionsfor channeling current funding through anational level climate fund.

Ensure experiences and constraints of

institutional practices as they play out at anational level are fed back to headquarters.

Donors should ensure that climate changefinancing is in addition to and does notdisplace any existing ODA commitments.

CIVIL SOCIETY

Formalise and improve coordination,

broaden coalitions and build evidence

Prioritise joint working to improve knowledge




management and evidence building onadaptation efforts.

Agree on common policy objectives andprioritise joint actions across networks andadvocate on these with policy makers.

Consider organising a regular forum to bringnetworks together.

Consider legalising networks and puttingdedicated resources behind a nationalsecretariat. Seek funding and support outsideof Nepal.

Reach out to make linkages withparliamentarians, educational and research

institutions and media organisations.

Ensure country experiences on finance,governance, policy and programming isfeeding into and informing internationalforums.

Finance Model and Governance

Push for consultation and participationin decision making with government anddonors on a national funding entity andgovernance structure. Ensure positions areclear and informed and have buy-in of

members.

Advocate for dedicated resources in climateadaptation projects for gathering evidenceand sharing information.

Advocate for need for sufficient oversightand accountability mechanisms to bebuilt into the institutional structure and aclear role and legitimacy for civil society.

Advocate for civil society resource envelopand a clear decision making structure onresource allocations.




1.1 POVERTY, DEVELOPMENT AND AIDEFFECTIVENESS

Nepal has a per capita GDP of US$ 427,placing it 157 of 164 countries worldwide2. 31%of the population falls below the poverty lineaccording to the national poverty line. 55% of the population lives on less than $1.25 per dayand the new Multi-dimensional Poverty Index(MPI) measures 65% of the population as multi-dimensionally poor3.

There has been significant progress in humandevelopment. A child born today can expect to

live 25 years longer than in 19704. While humandevelopment has improved over the past decadeand the proportion of Nepalis living in povertyhas lowered, through increase in remittances,higher wages and urbanisation, patterns of inequity largely remain the same and gapsbetween the advantaged and disadvantagedhave widened or remained constant5. Povertyand exclusion were significant drivers of thedecade-long conflict. Nepal is a country of hugeethnic diversity with the 2001 census

enumerating 103 distinct castes and ethnicgroups. Social indicators are heavily influencedby gender, caste and where people live.

Nepal is one of the few countries in the worldwhere women have a lower life expectancy thanmen. Women tend to have lower status and

heavier workloads. Discrimination againstwomen remains in all areas of life principallyrelated to access and control over resources

especially property rights and inaccessibilityto services like health and education. Althoughlegal amendments have improved rights forwomen, many discriminatory provisions remainand actual practices are closely linked to maritalstatus, such as inheritance and land rights.

Nepal�s economy is marked by negative tradebalance and dependence on foreign aid. Totalnet official development assistance providedby members of the Organisation of Economic

Co-operation and Development AssistanceCommittee (OECD-DAC) amounted to US$716,310,000 in 20086 , amounting toapproximately 34% of central governmentexpense; approximately 6% of Gross NationalIncome (GNI). There has been a significantdecline in Overseas Development Assistance(ODA) between 2000 and 2008 and with thepolitical instability there has been a significantreduction in aid commitments this year.Proportionate funding to the health, education

and social sectors has increased substantiallywith a resulting decline in agriculture, forestry,and other sectors7.

There are approximately 30 donors workingin Nepal. The UK is the largest OECD bilateraldonor, with USAID, Japan, Norway, Denmark

2Ethiopia $345/159th; Cambodia $677/142nd. Data of 2009, World Development Indicators database, World Bank 3http://www.ophi.org.uk/policy/multidimensional-povery-index/, Multidimensional Poverty Index, Oxford Poverty and Human Development Initiative, Universityof Oxford.42010 Human Development Report: Asian countries lead development progress over 40 years, UNDP

5Nepal Human Development Report 2009; State Transformation and Human Development, UNDP6World Bank http://data.worldbank.org/indicator/DT.ODA.ALLD.CD?cid=GPD_547Joint Evaluation of the Implementation of the Paris Declaration, Phase II Nepal Country Evaluation Ministry of Finance, Nepal, 2010

1CONTEXT




and Germany providing around half the UK volume. India provides substantial aid,including in-kind, China is also a donor, butaccurate figures are not known for either. ADBhas been the largest multilateral but is nowbeing overtaken by the World Bank8.

The long-running conflict severely disruptedNepal�s development agenda and planning cycle.Following the end of the conflict, Nepal hasbeen able to take stronger leadership over itsnational aid effectiveness agenda. There havebeen some successes in strengthening countrysystems, but the fiduciary risk remains high.Most aid is still in the form of bilateral projectschannelled outside the budget. Alignment andharmonisation of development assistance is

problematic. The extent to which aid flows areon budget and detail on disbursements provided

to the government is limited. There is limiteduse of programme-based and sector wideapproaches, the most significant of which aresector programmes in education and health(see Box 1. below)9. Trust in the public financialmanagement system amongst donors is low.

Indicative of this is the fact that Nepal hasdropped to 146 out of 178 countries onTransparency International�s CorruptionPerception Index in 2010.

Following the Accra Agenda for Action, theForeign Aid Policy from 2002 has been revisedand updated, and the Ministry of Finance hasprepared a draft National Action Plan on AidEffectiveness.

Consultations on these have taken place andthe documents await approval.

BOX 1: FINDINGS FROM NATIONAL ADAPTIVE CAPACITY ASSESSMENT CARRIED OUT UNDER PPCRNOVEMBER 201010

8OECD DAC Aid Statistics, http://www.oecd.org/departmentand DFID Country Business Plan in Nepal 2009 - 2012

9Paris Declaration 2008 Monitoring Survey10Joint Evaluation of the Implementation of the Paris Declaration, Phase II Nepal Country Evaluation, Ministry Of Finance, Nepal, 2010 and The Sector-Wide Approachin the Health Sector; Achievements and Lessons Learned, Ministry of Health and Population, Government of Nepal, May 2010

The only real sector examples of

budget support in Nepal are in healthand education. Progress towards

greater aid effectiveness has been

made, though not without considerable

challenges. There are salutary lessons

to be drawn. In consideration of any

future climate fund that hopes to

channel harmonised donor funding in

support to national systems, the

government must take leadership in

demonstrating how it will build on these

lessons and overcome the challenges

that have been encountered.

The education sector was the first

sector in Nepal to adopt a programme

approach and the Education for All

(EFA) Programme (2004-2009), was

developed and implemented through

a Sector Wide Approach (SWAp).

Donor resources are mostly channelled

through the national system and a

separate project implementation unit(PIU) has not been used since 2004.

According to the recent Joint Evaluation

of the Paris Declaration, the education

sector is one of the few sectors in

which the government has shown

substant ia l leadersh ip in a id

coordination.

All major donors in the sector decided

to pool their resources in support of

EFA. Even non-pooling donors worked

within the overall sector wide

framework, and activities supported

by them were aligned with sector

strategies and priorities. However, their

support did not use the national

system.

The School Sector Reform Programme

(SSR) (2009-2015) is the follow-up

programme to EFA and the number

of pooling donors has increasedsignificantly to 9 donors with 5 who

are non-pooling partners but work

wi th in the SWAp framework.

Although the pooling donors in the

education sector are using the

country�s financial management system

they are still using World Bank

procurement systems as donors

remain unhappy with procurement law.

In September 2010, the donor fund

flow to the education sector was put

on hold because the audit report

pointed out anomalies in expenditure

in schools in some districts. Instead of

withholding just those amounts to

those schools, the whole grant amount

was put on hold, adversely affecting

the activities of the entire programme.

The recent Paris evaluation found that




1.2 POLITICS AND THE STATE

Nepal is at a cross-road. The decade-longconflict formally ended in November 2006 withthe signing of the Comprehensive Peace Accord.Peace remains extremely fragile. In 2008, thecountry voted in a Constituent Assembly (CA),named a President, elected a Prime Minister,formed a coalition government, and set aboutthe writing of a new Constitution, with a newround of elections planned for 2011. The

Constituent Assembly primarily charged withwriting of the new constitution also functionsas a unicameral parliament. However a politicalstalemate since June 2010, with a feudingparliament unable to elect a new Prime Ministerhas only just shifted after seven months withthe election of the new Prime Minister,Jhalanath Khanal, the chairman of theCommunist Party of Nepal - Unified MarxistLeninist (CPN-UML). The outgoing Prime

Minister Madhav Kumar Nepal resigned inJune but continued to fill the role in a caretakercapacity. With the government not fullyfunctioning and leadership positions in manyof the main offices unfilled, the country hassurvived on emergency funds. Donors havebecome impatient and warned that their abilityto deliver aid and commit to future resourceswithin the current vacuum is severelychallenged. Drafting the constitution, advancingthe peace process and ensuring peace and

stability are key immediate priorities of thenew Prime Minister.

Nepal is divided into 5 development regions,14 zones and 75 districts. Each district has aDistrict Development Committee (DDC) and isfurther divided into Village DevelopmentCommittees (VDC). Each VDC has 9 wardswhich is the smallest administrative unit.However, elected political bodies are currently

education officials saw a positive side

to this as they believe it forces the

whole system to become more

accountable.

A Sector Wide Approach (SWAp) has

been followed in the health sector from

2004/05 with the formulation of the

Nepal Health Sector Programme �

Implementation Plan 2004-2010

(NHSP-IP). Initially funded by two

pooled partners in 2004/05 (DFID and

World Bank), it increased to four in

2010 (DFID, WB, AUSAID and GAVI).

Various significant structural and policy

changes were made after the

introduction of the SWAp, reducing

fragmentat ion and enhancing

coordination. A free healthcare policy

was instituted in 2006, with free

services made available at district

hospitals at first and then extending to

the primary health care centre level by

2009. The overall spend on health

increased significantly (tripling the last

three years) as did the allocation as a

proportion of the budget. Ten donors

have signed a Letter of Intent with

agreement that all assistance made

by them to the sector would be

consistent with the Health Sector

S t r a t eg y , w o r k i n g t o w a r d s

harmonisation of donor support in

planning, budgeting, reviewing and

reporting. However the number of

donors work ing through th is

mechanism is still small. The pooled

fund represents less than half of donor

expenditure in the health sector. Non-

pooled donors make little use of

g o ve r n men t s ys t ems . W i t h

achievements of the increasing health

budget, better absorption and related

improvements in health outcomes,

fiduciary risk has also increased, with

considerable leakage found in the

system11.

The health and education sectors are

dogged by the same problems

affecting development overall in the

country. Political uncertainty means

frequent changes of Ministers, senior

positions remain unfilled and financial

management systems are weak.

11Ministry of Health and Population, Government of Nepal (May 2010) The Sector-Wide Approach in the Health Sector; Achievements and Lessons Learned




absent at the local level, having been dissolvedduring the conflict.

The country is undergoing huge politicalchange having emerged from ten years of conflict: from a monarchy to a republic; from a

hegemonic to an inclusive and participatorysystem of governance; from a heavily centralisedunitary system to one characterised bydecentralisation and autonomy at the regionaland local levels. The structural dynamics of governance at the local level are likely to changedramatically.

1.3 CLIMATE CHANGE VULNERABILITY

Nepal is largely an agrarian economy, withthe agriculture sector providing over 30% of GDP and supporting the livelihoods of morethan 86% of the population12. Nepal can bedivided into three ecological zones: mountains(arctic/alpine), hills (cool/warm), terai (sub-tropical). Three quarters of the population areengaged in agriculture yet only about 25% of the total area is cultivable; around 40% isforested; most of the rest is mountainous13.The main food crops are rice and wheat. Dueto the dependence on agriculture, the level of the annual monsoon rain strongly influenceseconomic growth. Nepal�s diverse topography,fragile ecosystems and poverty make itextremely vulnerable to the negative impactsof climate change. In a recent global ClimateChange Vulnerability Index (CCVI), preparedby UK firm Maplecroft, on the basis of calculated

vulnerability of 170 countries to the impacts of climate change over the next 30 years, Nepalranks fourth14.

There is limited reliable and consistentclimate science data and technology capacity.

Observed data indicate consistent warmingand rise in the maximum temperatures whichis more pronounced in high altitude regionscompared to other regions. Accelerated snowand glacial melt has increased. There havebeen more intense rainfall events causing

landslides and floods. Weather patterns areincreasingly unpredictable. Climate scientistsexpect existing trends will continue, includingmore intense monsoons, severe and frequentfloods. Glacial retreat and the threat of glaciallake outburst floods pose unprecedented threatsto water supplies and lives15. The impact of increasingly variable monsoons and intenserainfall on those living in the floodplains of theHimalayas� rivers could be catastrophic,potentially affecting up to 1.5 billion people,

600 million in the Ganges river basin alone16.

The poor are often living in areas most atrisk to floods and landslides and are morereliant on local natural resources. According tothe Food and Agriculture Organization up to3.4 million people are highly to severely foodinsecure. The World Food Programme andMinistry of Agriculture report declining foodharvests and rising food prices. As increasingnumbers of men are migrating seasonally forwork, the responsibility for feeding the familyfalls to women. They are walking longerdistances to fetch water, fuel and fodder andare increasingly taking on additional heavyburdens as wage labourers and domesticworkers17 . According to a study by theInternational Food Policy Research Institute(IFPRI) using different climate scenariomodelling, decline in crop production due toclimate change will be especially pronouncedin South Asia: �In South Asia the climatescenario results in a 14-percent decline in riceproduction relative to the no�climate-change

12Central Bureau of Statistics, National Planning Commission, Statistical Yearbook Nepal .13 The Future of Nepal's Forests, Outlook for 2020, Ministry of Forests and Soil Conservation, Government of Nepal: The last National Forest Inventory (NFI) wascarried out in the early 1990s. According to that inventory, forest and shrub together cover about 5.83 million ha, which is 39.6% of the total land area of the country.

The rate of forest area decreasing was 1.7% per annum during 1978/79 to 1994, whereas rate of forest and shrub depleting rate was 0.5% per annum during thesame period. Since then NFI has not been done. However, recent studies from 20 Terai districts revealed that the rate of forest cover changed was at an annualrate of 0.06% during the period of 1990/91 to 2000/2001. Macro level studies and visual interpretations revealed that Nepal�s forest coverage and condition issignificantly improving due to the Community Forestry (CF) intervention.14http://www.maplecroft.com/about/news/ccvi.html15

Immerzeel W W, Van Beek L P h and Bierkens M F P (2010) Science 328: 1382-1385.16South Asia Sustainable Development Department, World Bank, (2009) Shared Views on Climate Change , Chapter 3, p 3417Oxfam International (August 2009), Even the Himalayas have Stopped Smiling: Climate Change, Poverty and Adaptation in Nepal .




18Gerald C. Nelson, Mark W. Rosegrant, Jawoo Koo, Richard Robertson, Timothy Sulser, Tingju Zhu, Claudia Ringler, Siwa Msangi, Amanda Palazzo, MiroslavBatka, Marilia Magalhaes, Rowena Valmonte-Santos, Mandy Ewing, and David Lee, Climate Change, Impact on Agriculture and Costs of Adaptation, Food PolicyReport, p. 6, IFPRI, October 200919

Wily, Chapagain and Sharma (Nov 2008) Land Reform in Nepal: Where is it Coming from and Where is it Going? 20Central Bureau of Statistics, National Planning Commission, National Population and Housing Census , Nepal, 200121Wily, Chapagain and Sharma, Land Reform in Nepal: Where is it Coming from and Where is it Going?, Nov 2008

scenario, a 44- to 49-percent decline in wheatproduction, and a 9- to 19-percent fall in maizeproduction�18.

1.4 LAND ACCESS AND DISTRIBUTION

Land access and distribution remainextremely unequal. Around 7.5% of ruralhouseholds retain over a third of the cultivatedland area, and a much greater proportion of the private property estate overall, withsignificant parts of it remaining idle.Characteristics of feudal land relations remain,such as �high level of absentee landlordism,large areas of underutilised farmland, andfailure to reform the conditions of those whofarm others� land, some of whom...remain in

debt peonage until today...despite repeatedlegislation against this. Insecurity of tenureafflicts the entire farming sector, a main causeof its stagnation�19. Around 90 percent of women

in the country contribute to agriculture. Thoughwomen make up a majority of the agriculturallabour force most are unpaid family workers.Women�s access to land is extremely limited,accounting for only 10.83 per cent of totallandowners and with a combined share of only

4 per cent of arable land, according the lastnational census in 200120.

Following the first land reform legislationin the 1950s, progress has been slow.Community forestry in Nepal has demonstratedthat forests controlled and used by communitiesare better conserved than those owned bygovernment. Researchers have argued thatlooking to these achievements and building anew approach to land reform with each

community determining and managing its ownceilings and redistribution plan is a logical nextstep21.




2

2.1 INTERNATIONAL POSITION ON CLIMATE CHANGE

Nepal has signed numerous international

treaties and instruments. Nepal became a partyto the United Nations Framework Conventionon Climate Change (UNFCCC) in 1992, enteringinto force in Nepal in July 1994. The KyotoProtocol came into force in December 2005. Inmost international fora and instruments,including in climate change Nepal positionsitself with a group of countries with similarinterests. As a Least Developed Country (LDC)Nepal is a member of the 49 country LDC Groupand tends to negotiate as a group with other

LDC countries. Nepal is also a member of theG77 and China, however is often dormantwithin the group.

Nepal has attended all several Conferenceof Parties (COP) meetings under the UNFCCCin order to raise national issues and negotiatean international agreement. Climate changereally became a national agenda following thepeace agreement and in time for the 13thConference of Parties meeting held in Bali,

Indonesia in 2007. Nepal regards the Bali ActionPlan as the basis of negotiations forany international instrument under theUNFCCC.

Nepal strongly advocates, with others, thatdeveloped country parties must immediatelyfulfil the commitment made in Article 4.10 of the UNFCCC. The article states that "theParties shall take full account of the specificneeds and special situations of the least

developed countries in their actions with regardto funding and transfer of technology."

Mitigation and carbon market relatedactivities have been the main response toclimate change but there is now an emergingemphasis on adaptation.

2.2 OVERVIEW OF NATIONAL STRUCTURE AND

PROGRAMMES

Climate change awareness is growing withincreasing government and civil societyengagement. There has been relative success

in building broad ownership across governmentover the past two years. However publicawareness is low. There has been no informationcentre in existence until very recently and keypolicies and documents are not available in anaccessible form to the public. There is also noenvironmental monitoring mechanism or legalprotection for environmental rights.Consequently accountability and oversight islacking.

There are several Acts and Regulations thatlink directly or indirectly to climate change:the Forest Act (1993) and Forest Regulation(1995), Environment Protection Act (1996),Environmental Regulation (1997) and WaterResource Act (1992). Various sector policiesand strategies underpin these. Major national-level development and sector plans such as theMaster Plan for Forestry Sector and NationalWater Plan are relevant to adaptation butclimate risks have not been directly addressed

EXISTING AND EMERGING NATIONAL

SITUATION ON CLIMATE CHANGE ADAPTATION




in them. The interim three year plan 2008-2010 addressed climate change risks andadaptation directly for the first time22. GoNalso made environmental impact assessmentsmandatory.

Under the last Prime Minister leadership aClimate Change Council was established anda Climate Change Policy agreed in the cabinet.

A Natural Resources and EnvironmentCommittee was also previously establishedunder the House of Representatives to evaluatepolicies and programme. It continues underthe interim legislature; however it has beenlargely inactive. In addition there is an informalnetwork of MPs on natural resources andclimate change. In 1992 the Environment

Protection Council (EPC) was established andchaired by the then Prime Minister to serve asthe highest decision making body on all mattersrelated to the environment. The EPC ratified

various climate related conventions anddeveloped vehicle emissions standards, but thisbody has also been largely dormant23 .

Nepal�s National Capacity Self-Assessmentto the UNFCCC in 2008 highlighted severalchallenges in relation to adaptation activitiesincluding insufficient financial, technologicaland human resources. A review of differentsectors highlighted a number of barriers suchas incomplete implementation of existing plansand policies, decreasing budget allocations(agriculture and irrigation) and limited andunclear guidelines regarding mandates androles of devolved structures.

The Ministry of Environment (MoE) is thefocal point for UNFCCC and climate relatedwork in Nepal. It became a separate ministryin June 2010. The Government of Nepal hascreated a new division under the MoE calledthe Climate Change Management Divisionheaded by the Joint Secretary. This divisionshould be specifically responsible forcoordinating climate change work. Althoughthe move towards creating a clear focal pointand dedicated capacity for climate change is a

positive step, the necessary human and financialresources have not yet accompanied this change.More fundamentally the mandate of MoE hasnot been clearly decided. It currently overseesrules and regulations and serves as a focal pointfor climate work. Many stakeholders have been

demanding a dedicated institution that has theauthority to coordinate and implementenvironmental and climate change laws andpolicies at the central and sub national levels24.

As it stands currently, MoE is a small, nascentMinistry with limited technical and operationalcapacity. MoE has stated in various fora thatit sees itself as a coordinating agency and givenits current limited capacity, implementationshould be carried out through line agencies.However a coordination role in itself still needs

significant resources and capacity.

Nepal is eligible to access finance from theUNFCCC Global Environment Facility specialfunds: the Least Developed Countries Fund(LDCF), Special Climate Change Fund (SCCF),and the Adaptation Fund under the KyotoProtocol. So far it has obtained a small amountof funding through LDCF for the developmentof the NAPA plan. Nepal has received a smallamount of climate change funding through theGEF Trust Fund for capacity building,implemented through UNEP25 . The mostsignificant national level adaptationprogrammes under development are theNational Adaptation Programme of Action(NAPA), with funding from LDCFsupplemented by UNDP, DFID and Danida,under UNDP administration; and the PilotProgram for Climate Resilience (PPCR), fundedby the Climate Investment Funds/StrategicClimate Fund, under administration of theWorld Bank and ADB. The Ministry of Environment leads on both of these. At thepresent time there is no funding flowing toeither of these programmes. The InternationalCentre for Integrated Mountain Development(ICIMOD) works with MoE to promote theMountain Alliance Initiative with funding fromNorway and Switzerland. There are a numberof other significant adaptation programmes

22Dixit, A, Scoping Assessment on Climate Change Knowledge Platform in Nepal , ISET-Nepal, 2010

23Ibid24ADB Technical Assistance Report: �Federal Democratic Republic of Nepal: Strengthening Capacity for Managing Climate Change and the Environment�25http://www.gefonline.org/projectListSQL.cfm




2.3 TECHNICAL ASSISTANCE PROJECTS ANDCAPACITY STRENGTHENING

In addition to the above there is a confusingarray of separate technical assistance capacitystrengthening projects funded by different

donors to a number of ministries. These arelargely operated by teams of international andnational consultants in project implementationunits attached to ministries but closely handledby their donors. The main projects are: to MoEfrom ADB, DFID/, DANIDA and UNEP; to the

National Planning Commission (NPC) from ADB and UNDP/UNEP; to the Department of Hydrology and Meteorology (DHM) (which isunder MoE) from ADB, DANIDA and Finland.These are each separate projects with separateMoUs, financing arrangements and modalities.

One of the key components of a programmeof technical assistance from ADB, that has beenongoing since 2008, is a grant entitled

Strengthening Capacity for Managing

Climate Change and the Environment.Central to this is working out the much-needed organisational framework andfunding mechanism for climate changework. The expected outputs are (i) anorganisational framework is drafted andagreed upon by stakeholders; (ii) a fundingmechani sm fo r env i ronmenta lmanagement is agreed upon bystakeholders; and (iii) effective publiceducation, information, and awarenessactivities on environment and climatechange are developed and implemented27.

According to an ADB documentconsultants began work on this inFebruary 2010 with an aim to have �anational Government institutiondedicated to managing climate changeand the environment...fully staffed andfunded by 2015�28. This is vital work. Itis critical that the planning process takesin broad consultations and progresstowards developing the institutionalframework is communicated widely tostakeholders. It is not clear that this has

been happening adequately. In addition thesecond and third component of the expandedNAPA process (which is examined below) shouldlink in directly with this work and not be aduplication of efforts.

26Aide Memoire, Nepal: Pilot Program for Climate Resilience (PPCR) World Bank / ADB / IFC Joint Mission, 15-21 November 201027ADB, Climate Change Roadmap, 31 Jan 1028ADB Technical Assistance Report: �Federal Democratic Republic of Nepal: Strengthening Capacity for Managing Climate Change and the Environment�

going through Ministry of Forests and SoilConservation (MoFSC) and the Ministry of

Agriculture and Cooperatives (MoAC), inparticular. These are mostly vertical fundingagreements with bilateral agencies, thoughthere are some more pooled donor funds

developing. It is extremely hard to establishwhat is new and additional funding or alreadycommitted ODA. It is clear from the data intable 3 below, that some funds previouslycommitted as ODA are now being classified asclimate financing.


BOX 2: FINDINGS FROM NATIONAL ADAPTIVECAPACITY ASSESSMENT CARRIED OUTUNDER PPCR NOVEMBER 201026

The National Adaptive Capacity Assessment carried

out under PPCR identified the following capacity

gaps:

Almost complete absence of climate change risk

management personnel in key organizations and

institutions;

Cl imate change risk management is not

institutionalized in government, academia, civil society

or in vulnerable sectors, municipalities, districts or

communities;

No training, database, information or guidance exists

on planning/constructing cl imate resi l ient

development;

Insufficient financial resources to effectively integrate

climate change risk management into development

planning;

Development planning in key sectors (water,

agriculture, physical planning) does not consider

risks associated with climate change and there are

no modalities to facilitate such transformational

change in development planning.



Given fiduciary risk concerns some majorbilateral agencies say they are not yet able tochannel funds through the Ministry of Environment. Government, and others, arguethat the ministry needs to be given the workin order to prove itself and to be able to

institutionalise the various strands of, oftenunlinked, technical assistance that are currentlybeing provided. Donors need to re-examine thecurrent fragmented approach to capacitybuilding and work jointly on pooling assistance,using the recently approved Climate ChangePolicy as an overarching framework from whichto develop a convergent long term strategy forstrengthening climate change capacity withinthe MoE and other agencies.

2.4 GOVERNMENT POLICY AND COORDINATIONMECHANISMS

There are two chief climate changecoordination and policy forums currentlyoperating under the government. The ClimateChange Council and Multi-Stakeholder ClimateChange Initiatives Coordination Committee(MCCICC). The Climate Change Council,formed in July 2009, is a 25 member high-levelpolicy and coordination body formed under thechairmanship of the Prime Minister, with thesecretary of the Ministry of Environment asthe Member Secretary. Fourteen differentministers and other senior officials are membersof the Council. This council has eight �experts�nominated by government inclusive of NGO,private sector and academia. The main objectiveof this council is to provide national level policyguidance and long term directions on climatechange related policy and strategy.

The MCCICC was formed during thepreparation of NAPA in July 2010, under theMinistry of Environment. MCCICC is chargedwith improving communication andcoordinating climate change initiatives at aprogramme level as well as funding onadaptation actions, including those identifiedunder NAPA. The previous Climate ChangeNetwork (CCN) which had been constituted in2007 seems to have been folded into this. Itincludes members from different line ministries,including local government, donors and civil

society representatives. It was established inJuly 2010.

Two brief overview papers have beendeveloped by MoE on the Council and MCCICC.A comprehensive Terms of Reference, clearly

detailing the purpose and functions of thesebodies, and the roles and responsibilities of serving members would facilitate more efficientfunctioning and better public understanding of these bodies. In addition clarification of howthe Climate Change Council and MCCICCinteract is needed.

The Ministry of Environment (MoE) initiateda process three years ago to formulate a nationalclimate change policy. After several national

and sub-national consultations the process wasput on hold to allow the NAPA plan to beundertaken first. The drafting was resumedand the policy has been recently approved bythe cabinet. Focal areas are adaptation, lowcarbon development paths and natural resourcemanagement. The policy plans for theestablishment of a semi-governmental ClimateChange Centre, within a year. The centre willundertake research and provide technicalsupport to the government.

A Climate Change Coordination Unit withinthe Climate Change Management Division of MoE has been proposed to coordinate all climatechange related projects implemented bygovernment, donors, Multilateral DevelopmentBanks (MDBs) and other agencies. In addition,there is a proposal to establish a projectmanagement unit with support from therespective climate change-related projects.

Although this would be an improvement on thecurrent structure and a positive interim stepa longer-term option for channeling andharmonising funds, must be developed.

2.5 NATIONAL ADAPTATION PROGRAMME OF ACTION(NAPA)

Nepal embarked on its National AdaptationProgramme of Action late, only properly startingin May 2009 and completing it in September2010. Preparation of the NAPA plan wasdelayed for various reasons, including funding





disbursement, coordination issues involvingUNDP and limited operational capacity in MoE.

As funding was delayed for so long and hiringof consultants problematic, DFID was askedby GoN to step in and provide consultants toMoE so they could begin NAPA work.

Since, Nepal was one of the last countriesto prepare their NAPA it strived to capitaliseon learning from other countries, to ensurethere was a strategic approach with better linksto other climate change processes and nationalplanning, and to mainstream adaptation rightdown to the local level. In response Nepalundertook an �expanded NAPA� with threecomponents: (1) preparation and disseminationof a NAPA document; (2) development and

maintenance of a Climate Change KnowledgeManagement and Learning Platform and (3)development of a Multi-stakeholder Frameworkof Action. Significant co-financing was mobilisedfrom DFID, DANIDA and UNDP to supplementfunding from GEF. In addition, to the US$200,000 from GEF (under LDCF), there was afurther US$ 50,000 from UNDP, US$ 875,000from DFID and US$ 200,000 from DANIDA.

The process has been credited with goingfurther than other NAPAs in the level of consultation and engagement, moving beyondonly regional and national consultationmeetings to incorporate inputs from a widerrange of stakeholders and interest groups,including with vulnerable communities. Theplan was developed through six thematic orsectoral areas, under a thematic working groupwere formed, each led by a different lineministry: Agriculture and Food Security; Forestsand Biodiversity; Water Resources and Energy;Climate-induced Disasters; Public Health; andUrban Settlements and Infrastructure. Micro-level impact assessments were conductedthrough transect appraisal exercises withparticipation from a number of government

and non-government agencies. Climate vulnerability assessments and GIS mappingwere also conducted.

The NAPA document states that �NAPA prioritization process serves as a basis for the

development of an adaptation strategy thatwill be able to draw financial resources forimplementation from national as well as variousglobal, multi-lateral and bilateral sources. TheGovernment expects that any and all climatechange adaptation support programmes willcarefully consider the NAPA outcomes as a firststep� in order to ensure a coherentprogrammatic approach and systematicreduction of vulnerability and climate changeimpacts nationwide.�

The thematic working groups identifiedactivities which were then prioritised using acommon set of criteria and qualifiers. Thesewere then clustered into nine combined profiles.The total cost of these nine profiles is budgetedto be US$ 350 million. The document anticipates80% of funds being spent at the village/ municipal level, channelled through adesignated implementing line ministry,according to the project. At the district level,project planning and delivery will be theresponsibility of the District CoordinationCommittee (DCC) under DDC. It is envisagedthat a Secretariat under the DDC will beresponsible for selecting local service deliveryagents. Where there are projects that cut acrosssectors, such as the �Promoting Community-based Adaptation through IntegratedManagement of Agriculture, Water, Forest andBiodiversity Sector�, which require much-neededconvergence, details of implementation are lessclear. The Ministry of Local Developmentand the Local Government CapacityDevelopment Programme should be keyto supporting vertical and horizontalcoordination and delivery.



The planning process incorporated a clearfocus on gender. Gender analyses wereconducted with gender differentiated impactsassessed. The specialist reviewed all ThematicWorking Group reports from a genderperspective, as well as carrying out a literaturereview. The findings were represented within

NAPA teams. It is recognised that integratinggender approaches is key to developing effectiveadaptation actions and actions must be guidedby the findings. The implementation frameworkalso gives consideration to the need for astructure at the development region orwatershed level that would house experts inrelevant fields including gender and socialinclusion. What is harder to see is how theanalytical work has been incorporated in projectprofiles and will move to implementation.

Whilst vulnerability is mentioned, objectives,activities, outputs and long term outcomes giveno mention of gender. It is unfortunate thatneither the Ministry of Women, Children andSocial Welfare nor the Women Commissionwere brought into the NAPA developmentprocess, particularly considering that theengagement of a number of ministries acrossgovernment has been such a positive elementof the Nepal's NAPA. However the ministryhas now been brought into the MCCICC.

Although there are concerns about its capacity

it is essential that the national machinery of the advancement of women is engaged in keydialogue and processes related to climate changeadaptation for it to effectively play a role inpromoting gender equality and keeping thishigh on the MCCICC and Climate ChangeCouncil agenda.

Under the second component of the NAPA,the Nepal Climate Change and DevelopmentPortal was also launched29. This portal shouldserve as the main forum for sharing climateinformation and knowledge. The Nepal ClimateChange Knowledge Management Centre(NCCKMC) was inaugurated by the PrimeMinister on 29 November 2010, also underfunding from NAPA. This centre is launchedat the Nepal Academy of Science and

Technology (NAST) in joint collaboration withMoE. The Centre is organising a nationwidemobile library including interactive activities.It seems this centre will focus on knowledgemanagement and public awareness whereasthe semi-governmental Climate Change Centrethat is to be set up within a year will focus oncommissioning new research and advisinggovernment. As stated earlier, it is unclear howthis links in with the third output of the ADBtechnical assistance on effective public

education, information, and awareness

TABLE 1: PRIORITISED PROJECTS UNDER NAPA

Estimated Cost(in million USD)Project Name

50

44

60

Promoting Community-based Adaptation through Integrated Management of Agriculture, Water, Forest and Biodiversity Sector

Building and Enhancing Adaptive Capacity of Vulnerable Communities Through

Improved System and Access to Service Related to Agricultural Development

Community-based Disaster Management for Facilitating Climate Adaptation

GLOF Monitoring and Disaster Risk Reduction

Forest and Ecosystem Management for Supporting Climate Led AdaptationInnovations

Adapting to Climate Challenges in Public Health

Ecosystem Management for Climate Adaptation

Empowering Vulnerable Communities through Sustainable Management of WaterResource and Clean Energy Supply

Promoting Climate Smart Urban Settlement

Total estimated cost

1

2

3

4

5

6

7

8

9

25

15

55

31

40

30

350

29Nepal Climate Change and Development Portal, www.climatenepal.org.np




activities, unless the ADB work is directlysupporting the development of these bodies.Detailed clarification of mandates, coordinationmechanisms and resources will be needed.

In terms of NAPA implementation the

document lays out a framework. MoE isresponsible for overall coordination andreporting and liaising with the Climate ChangeCouncil � the apex body responsible for policycoordination � and the main coordination forumestablished under NAPA, the MCCICC (Multi-Stakeholder Climate Change InitiativesCoordination Committee).

The NAPA document was approved by thecabinet in September 2010. The intention was

that the three components would come togetherand be developed more or less simultaneously.The reality is that the preparation of the NAPA document took longer to get off the ground thananticipated and activities under the other twocomponents are only now being rolled out. Thereare large operational issues to work out aroundan effective delivery mechanism to ensure 80%

of funds actually get down to the local level andpreventing fragmentation across a number of line ministries with a relatively small andnascent ministry charged with coordinationand consolidation. Funding for NAPA projectsis still not entirely clear. NAPA has been

submitted for endorsement and funding underLDCF and it has been indicated that there willbe around $10 � 12m available. It looks likelythat this funding will be split between UNEPand UNDP, with UNEP supporting biodiversityand ecosystem projects (NAPA projects 5 and7) and UNDP supporting community adaptivecapacity initiatives (NAPA projects 2 and 3),although clearly this funding will only go someway to meeting the projected budget for theseprojects under NAPA. Design for this is

currently underway. The decision to splitfunding between two UN agencies will requireextra attention to coordination and ensuringclear strategic direction. Hopefully thecoordination structures that have beenestablished under NAPA will enable this. A number of NAPA initiatives should also bepicked up under PPCR, as is examined below.

FIGURE 1: FRAMEWORK FOR NAPA IMPLEMENTATION30

Planning and coordination at VDC/Municipal level

Local agencies/NGO/CBO

Implementing Line agency (ies)

District Coordination Committee (DCC)

(at District Development Committee to the extent possible)

Regional Technical Support and Coordination Units/s

Programme/Project Coordination Committee (PCC)

Implementing Line Ministry(ies)

Ministry of Environment as Focal Ministry(CC Programme Coordination and Monitoring Unit)

MCCICC

1 0 % o f b u d g e t

C e n t r a l

C o o r d i n a t i o n

P l a n n i n g , m o n i t o r i n g

a n d r e p o r t i n g

Private Sector/s

Programme/project implementation through existing communitylevel organization/s like CFUG, different FGs, Irrigation Groups andother interest groups 8

0 % o f b u d g e t

I m p l e m e n t a t i o n

1 0 % o f b u

d g e t

F u n c t i o n a l

C o o r d i n a t i o n

S e l f

M o n i t o r i n g

a n d

e v a l u a t i o n

S e l f

M o n i t o r i n

g

a n d

e v a l u a t i o n

S e l f

M o n i t o r i n g

a n d

e v a l u a t i o n

Policy and Advisory Bodies (CCC and NPC)

Acronyms: CCC: Climate Change Council, NPC: National Planning Commission, MCCICC: Multi-stakeholder Climate change

Initiatives Coordination Committee, CC: Climate change, CFUG: Community Forestry User Group, FG: Farmers' groups

30Ministry of Environment, National Adaptation Programme of Action, Government of Nepal, September 2010




The Government has recently adopted a new three year

plan 2010 � 2012 (TYP). The key expected outcomes

of the plan are to prepare and implement a national

framework on climate change adaptation and mitigation,

disaster risk reduction, poverty reduction and povertyenvironment initiatives. Several strategies are included

under the TYP to link environmental and climate change

policies to development. Sustainable development,

poverty reduction and responding to climate change

are seen as very much interlinked and interdependent.

To implement the strategies, the TYP has made the

MoE responsible for coordinating all activities related to

conservation and climate change, identifying agencies

and ensuring roles and responsibilities for NAPA

implementation. The TYP also focuses on the need for

developing partnerships amongst donor agencies, NGOs,

local bodies, CBOs and other agencies, and to take aninitiative to establish an international research centre on

climate change.

ADB has been supporting the National Planning

Commission (NPC) with the three year interim

development plan to mainstream climate change into

the plan and make it �climate smart�. This project has

recently come to an end.

BOX 3: NAPA AND NATIONAL PLANNING

2.6 STRATEGIC/PILOT PROGRAMME FOR CLIMATERESILIENCE (SPCR/PPCR)

Nepal is one of the nine PPCR recipientcountries. PPCR is broken into two stages: firstphase is for the analysis, coordination andplanning across ministries to mainstreamadaptation into development plans and thesecond phase for the implementation of theplans and programmes. PPCR is completing

the first stage of planning in Nepal. A projectteam, largely of consultants, currently sitswithin MoE. The draft proposal for a StrategicProgram on Climate Resilience (SPCR) wasreviewed during an ADB/World Bank jointmission in November and has been tentativelyagreed. The next joint mission is planned forearly February 2011. The initial fundingcommitted for PPCR in Nepal was US$ 60million, divided between grant and loan. Thereare ongoing discussions that this will increase

to US$110 million: a 50 million grant and 60million concessional loans.

The loan component of PPCR is highlycontentious with sharply divided opinions bothfor and against. A clear majority of local civilsociety organisations are firmly opposed to loan,which is also evidenced by the recent reports

and articles in the mainstream media31. Thearguments against the loan component in Nepalmirror those arguments that have been madefor a number of years at the international level.

As Muller articulated in a paper in 2008: �Giventhe patterns of differentiated (historic)responsibilities, the costs for developing countryadaptation are seen as debts to be borne by thestill largely responsible industrialised world,and debts cannot be repaid by loans, or even

by �grants� � if that notion is interpreted interms of the provider of the funds doing therecipient a favour. Moreover, given this patternof differentiated responsibilities, there are also

very strongly held views on the importance of an equitable distribution of the burden of suchfunding�32.

PPCR development started as NAPA planning was underway. Expectations werethat PPCR would align under NAPA and could

be used to finance identified NAPA projects. At the same time the Climate Change Policywas being drafted by government and therewas a strong push for improved coordinationbetween donors. There was optimism thatdonors would work jointly with government todevelop a comprehensive and coordinatedstrategy for programming and financing

31Khadka, N.S. �Climate Injustice?� Kathmandu Post Oped, January 27th, http://www.ekantipur.com/the-kathmandu-post/2011/01/27/oped/climate-injustice/217751.html; Khadka, N.S. �Nepal climate loan hit by opposition storm, BBC, February 3 rd 2011, http://www.bbc.co.uk/news/science-environment-12357200;

Bhushal, R.P �Loan to Fight Climate Change� The Himalayan Times, 24 January 2011:http://www.thehimalayantimes.com/fullNews.php?headline=Loan+to+fight+climate+change+&NewsID=27415332Benito Müller, International Adaptation Finance: The Need for an Innovative and Strategic Approach, Oxford Institute for Energy Studies, EV 42, June 2008




adaptation. The two project teams for NAPA and PPCR came together to look at how thiscould work.

The �Prioritization Planning Process Draft�document of PPCR states that it will �build on

the comprehensive, inclusive and country-drivenprocess to develop Nepal�s NAPA�33. Howeverit also emphasises that �NAPAs are intendedto cover urgent and immediate needs foradaptation whereas the PPCR is focused onlong-term goals of achieving development thatis climate resilient.� Although the NAPA document states that prioritised projects includeurgent and long term adaptation strategies34.

Additional activities have been undertaken toaddress what were considered gaps in NAPA

and to ensure compliance with PPCR guidelines.These include: assessment of climate change

risk; adaptive capacity assessment; definitionof priority action needs; resilience assessment;cost/benefit analysis; design of implementationmodalities. The same Thematic WorkingGroups, established under NAPA, have beenused in the development of PPCR.

After the first joint PPCR mission of ADBand World Bank, hopes for alignment began todissipate with concerns arising that PPCR wasdeveloping its own process, with littlegovernment ownership. On the other hand, theMDBs expressed their concern that NAPA wasnot developing quickly enough as well asstressing that PPCR had its own set of guidelines. As seen in the paragraph above, itwas felt that PPCR�s focus was on strengtheningnational systems on a long-term basis, whereas

NAPA�s remit was around urgent andimmediate needs. It is noteworthy that theseare seen as mutually exclusive as opposed tostriving to ensure that they are brought togetherfor a comprehensive and strategic approach toclimate change adaptation. It now seems certain

that PPCR will fund some of the activitiesidentified under NAPA. The recent PPCR AideMemoire states that the design of thecomponents is complementary and reinforcingto NAPA 35. Yet distinctions between resilienceand adaptation and short-term and long-termmeasures are still stressed by the MDBs asreasons for distinguishing between PPCR andNAPA. Recently GoN has also been using thesedistinctions in countering arguments againstloans36. However, these distinctions seem

increasingly opaque and unhelpful to otherclimate change actors.

Four inter-related components have beenproposed for the Strategic Program on ClimateResilience: Building Climate Resilience of Watersheds and Water Resources in MountainEco-Regions ($45 million with a combinationof grant and credit, lead: MoFSC); 2. BuildingResilience to Climate-Related Extreme Events(approximately $40 million with a combinationof grant and loan: lead: MoE/DHM and MoAC);3. Mainstreaming Climate Change RiskManagement in Development (US$10 million(anticipated grant financed, lead: MoE); and 4.Building Climate Resilient Communitiesthrough Private Sector Participation(approximately $13 million with a combinationof grant and loan).

33PPCR Prioritization Planning Process Draft � www.ppcrnepal.gov.np34Ministry of Environment, National Adaptation Programme of Action, Government of Nepal, September 2010, p. xiv.35Nepal: Pilot Program for Climate Resilience (PPCR) World Bank / ADB / IFC Joint Mission, 15-21 November 2010

Aide Memoire.

36For example the justification for taking a loan made by MoE recently was that it was not to be used for adaptation projects but instead long-term resilience: �The loan is not at all going for adaptation projects they are actually for climate resilience that include long term projects like, for instance, building bridges, embankments,development of resilient seeds in agriculture...� http://www.bbc.co.uk/news/science-environment-12357200




37Nepal: Pilot Program for Climate Resilience (PPCR) World Bank / ADB / IFC Joint Mission, 15-21 November 2010


BOX 4: PPCR COMPONENT AND CORRESPONDING NAPA ACTIVITIES37

Component 4:Building Climate ResilientCommunities through PrivateSector Participation

Component 1:Building Climate Resilience of Watersheds and Water

Resources in Mountain Eco-Regions

Component 2:Building Resilience to Climate-Related Extreme Events

Component 3:Mainstreaming Climate ChangeRisk Management inDevelopment

Enabling climate vulnerable communities sustain livelihoods by improving access to agriculturalservices

Increasing community climate adaptive capacity through improved production and marketing

systems

Integrated Watershed Management in Churia to ensure ecosystem and community adaptationto climate change

On-farm soil and water conservation initiatives to support hill and mountain communitiesvulnerable to climate change.

Promotion and up-scaling of Multi Use System (MUS) for the benefit of poor and vulnerablecommunities in mid-hills and Churia range of Nepal

Up scaling and implementation of non-conventional irrigation systems in water stressedareas.

Construction of water retaining structures as sustainable adaptation measures to addressthe effect of climate change.

Integrated wetland management

Promotion of rainwater harvesting structures and technologies.

Water supply source conservation (quality as well as quantity) and strengthening programs

of existing projects affected by source reduction

Building capacity to enhance community adaptation to climatic hazards

Flood management to reduce the vulnerability of communities and increase their adaptivecapacity

Community-based disaster risk reduction with climate change dimension

GLOF monitoring and disaster risk reduction

Early warning system development in disaster prone areas

Interlink climate change with DRR and enhancement of institutional capacity at differentlevels

Management of existing hydrological and meteorological network at DHM and up-scaling

the servicesStrengthening forecasting / early warning and surveillance system on climate change & health in Nepal

PPCR Component Corresponding NAPA Activities



Gender has not been significantly addressedin the draft programme document38. Thecomponent on watersheds and water resourcesmakes the most direct reference: �addressingthe availability of water in mountain ecosystemscan help Nepal meet its social inclusion goals.

The burden of carrying water usually falls towomen and children, so addressing their multi-use water availability needs and increasingtheir access to water resources will help inaddressing gender issues�39. It is not clear howaddressing multi-use water availability needsper se will specifically target women or howgender will be explicitly built into the projectdesign and monitoring to tackle some of thestructural issues that result in women havinginequitable access to water resources. The

second component on resilience to climate-related extreme events includes �establishmentof appropriate micro-insurance programs for

vulnerable farming communities, home ownersand women, most probably as a public/privatesector partnership�. Again, differentiatedstrategies and targeting are not addressed.Similarly the proposed institutional structure

and implementation framework make noreference to gender considerations. The Ministryof Women, Children and Social Welfare seemsto have had no involvement.

Control of PPCR decisions seems largely to

be in the hands of the banks� headquarters andon many issues MDB staff in-country seem tohave their hands tied. Other donors andgovernment have found it hard to engage andthe space to influence the process has becomeincreasingly smaller � even though thegovernments of these donor countries are majorfunders of PPCR. Concerns have been increasingthat the aspirations of PPCR�s stated objectivesand the reality are far apart.

During a joint ADB and World Bank mission,donors and civil society raised the possibilityof PPCR funds being channelled through amulti-donor trust fund. It was made clear thatcreating such a fund was not within themandate of PPCR nor was it possible for PPCRfunding to flow through such a fund40. Thisrigidity is unhelpful.

38�Part 1 � Nepal�s Strategic Program for Climate Resilience - Consultative Draft (20/11/10)�39Ibid, Annex 4

40Nepal: Pilot Program for Climate Resilience (PPCR) World Bank / ADB / IFC Joint Mission, 15-21 November 2010 Aide Memoire





TABLE 2: NAPA AND PPCR: OVERVIEW OF KEY FEATURES

· Currently no funding for projects.

· Looks likely that 10 12m. will come from LDCF,split between UNEP and UNDP forimplementation.

· Draft proposal tentatively agreed. Next missiondue for Feb 2011 to finalise and agree funding.

· May 2009 started developing plan.

· US$1.325m: 200,000 (from GEF/LDCF); 50,000

UNDP; 875,000 DFID; 200,000 DANIDA supplemented in country.

· Multi-donor trust fund under UNFCCC�s GlobalEnvironment Facility, LDCF

· Global � under GEF Assembly, Council, Secretariat.Guidance of the Least Developed Countries ExpertGroup

· WB serves as Trustee

· In country, pooled fund under UNDP

· Operated under separate Project ImplementationUnit under MoE with international and nationalconsultants.

· Six thematic or sectoral areas, under a thematicworking group headed by different ministries.

· Involved series of consultations around the country,reviews and appraisals.

· Focus on knowledge management andstakeholder coordination through additional donor

funding in-country.· Plan approved by the Cabinet.

· Identified over 40 projects, prioritised 9, underdifferent themes and sectors

· Anticipates 80% of funds being spent at thevillage/municipal level, channelled through adesignated implementing line ministry MoE isresponsible for overall coordination and reportingand liaising with the Climate Change Council

· MCCICC (Multi-Stakeholder Climate ChangeInitiatives Coordination Committee) established

as main coordination forum.

· Budgeted US$ 350 million for 9 prioritised projects

· March 2010 started developing plan.

· $225,000 for technical assistance (from Strategic

Climate Fund)

· Multi-donor trust fund outside UNFCCC throughClimate Investment Fund

· Global - PPCR Sub-Committee (PPCR-SC)oversees operations and activities of the PilotProgram. Governed by SPCR sub-committeeguidelines

· WB/IBRD serves as Trustee

· In-country managed jointly by World Bank and

ADB.

· Operated under separate Project ImplementationUnit under MoE with international and nationalconsultants.

· Used NAPA thematic groups for consultations.

· Carried out further or new assessments beyondNAPA�s.

· Milestone decisions through WB/ADB missions

· Four inter-related components with some cross-over with NAPA identified priorities.

· Implemented through designated projectmanagement units, with component coordinationcommittees chaired by secretaries of the respectivecomponent lead agencies.

· Climate change program steering committee willmonitor results and provide coordination, chairedby Minister of MoE. MoE secretariat.

· Anticipated budget of $110m: 50m grants & 60mloans.

NAPA SPCR/PPCR

Current statusand Next steps

Timing

Funding to date

Governance andoperationalmechanism

Design process

Content

Budget



2.7 ADAPTATION FUND (AF)

The Adaptation Fund was established bythe Parties to the Kyoto Protocol of the UNFramework Convention on Climate Change(UNFCCC) to finance concrete adaptation

projects and programmes in developingcountries that are Parties to the Kyoto Protocol.The Fund is financed with 2% of the CertifiedEmission Reduction (CERs) issued for projectsof the Clean Development Mechanism (CDM)and other sources of funding.

As Tandon and Vogt state �the fund has anumber of unique features in its ownership,access, funding, revenue generation, governanceand legal structure, and has garnered aheightened sense of awareness and anticipationin the international environmentalcommunity41. �It has created particular interestas it allows �direct access� to funding by Parties,as opposed to through a third partyimplementing agency, usually a multilateral,as is the model with other climate funds. It isseen as an �important development to securegreater national ownership over fundedactivities, whilst maintaining high fiduciarystandards and minimising transaction costs42.The Adaptation Fund Board has recentlyapproved its Operational Policies andGuidelines which allow eligible Parties, seekingfinancial resources from the Adaptation Fund,to submit proposals either directly throughtheir accredited National Implementing Entity(NIE) or using the services of MultilateralImplementing Entities (MIEs). All projectproposals require the endorsement of theauthority which has been designated by therelevant Government to make suchendorsements43.

In order to qualify for funding Nepal hassubmitted its fiduciary risk assessment withMinistry of Environment nominated as the

National Implementing Entity (NIE), and itawaits a decision. The government hopes thatseveral NAPA projects will be funded. WhetherNepal will be able to access direct funding willbe critical. Donors view this as a testing groundfor MoE to prove its capacity.

2.8 SOURCES OUTSIDE THE UNFCCC THROUGHDONOR FUNDING IN COUNTRY

There are a growing number of scatteredinitiatives classed as climate change activities,being funded by bilateral and multilateraldonors, as highlighted above and detailed intable 3 below. It is hard to obtain a clear pictureof all these initiatives from donors orgovernment partly because there are differingdefinitions between agencies of what constitutesa climate change programme and partly becausethere is a lack of coordination amongst donorsand within government between the variousministries that are implementing climatechange activities. The more significant piecesof funding are all in the form of projects eitherimplemented through Ministry of Environment,Ministry of Forests and Soil Conservation orMinistry of Agriculture through separate MoUsor contracted out to private companies andimplemented by NGOs. There has been anattempt to improve alignment with governmentand information sharing and coordinationbetween donors. MoE brought 14 donorstogether to sign a donor compact in September200944. Though no funding was guaranteedunder this it was seen as an important step inagreeing to harmonise and align actions onclimate change in support to the government.However little over a year on from signing thedonor compact indications are that there isdanger of further fragmentation, withdisagreements over PPCR, at the critical timewhen significant levels of funding for climatechange adaptation might start flowing45.

41In The Hands of Women: Climate Change Finances, Oxfam Internal Background Paper, Nidhi Tandon, Erich Vogt, June 2010)42Climate Finance Policy Brief No.4, Design Challenges for the Green Climate Fund, Bird, Brown and Schalatek, Heinrich Böll Stiftung and ODI, January 201143www.adaptation-fund.org

44Compact on Climate Change in Nepal: An Understanding between the Government of Nepal, Ministry of Environmental and development partners on ways toaddress climate change challenges, September 2009.45See table 3 which represent current funding sources, projects and government implementing agency.




2.8.1 LOCAL ADAPTATION PROGRAMME/PLAN OFACTION (LAPA)

One of the most significant programmes indevelopment for climate adaptation comingthrough bilateral funding in country is the

Local Adaptation Programme of Action/ Reducing the Climatic Vulnerability of the Poor.During NAPA development the idea of Local

Adaptation Plans of Action (LAPA) weresuggested as a way to scale up community-based strategies and integrate top-down andbottom-up approaches to mainstreamadaptation into planning. Given the delaysand time constraints of NAPA it was concludedthat LAPA could not be taken up during NAPA planning. DFID agreed with MoE that it wouldtake on the funding and design, in closealignment with NAPA. The same consultantshave been used for design as were used in theearly stages of NAPA development. DFID�sintention is for LAPA to be its vehicle forfunding NAPA sectoral work at the communitylevel.

The LAPA is a plan prepared at the locallevel by a multi-stakeholder team including

vulnerable communities. It involvesdecentralised and bottom-up planning processesand aims to identify local adaptation needs. Itshould also strengthen institutionalmechanisms for ensuring consolidated andcoordinated adaptation responses. In a recentpaper on LAPA, Regmi and Karki lay out the

vision �to develop a system of adaptationplanning that does three things:

Enables communities to understandchanging and uncertain future climaticcondition and engage effectively in theprocess of developing adaptation priorities;

Implements climate resilient plans that areflexible enough to respond to changingclimatic and vulnerability conditions; and

Informs programmers and catalysesintegrated approaches between sectors46.

DFID has committed funding for four yearsfor the programme it calls �Reducing theClimatic Vulnerability of the Poor�. An initialpilot phase - which is currently underway - andsubsequent implementation, has approximately17.3m (£10,730,000) of DFID funding. The EU

is also likely to join a pooled fund for LAPA implementation. Indications are that the EUwill contribute a further Euro 19.4m(approximately $26.3m). The pilot phase ismanaged by the private consultancy firmHTSPE, and sub-contracted for implementationto seven NGO partners for implementationacross ten districts. Six of these projects followthe six NAPA themes. Although this is not fullyincorporated in NAPA, MoE sits on a SteeringCommittee and considers LAPA as integral to

NAPA. As the NAPA document states �Lessonslearned from LAPA�s implementation [will]contribute greatly to policy refinement andformulation�. Nepal considers need-basedLAPA as one of the practical approaches toanalyze critical and site-specific climate issuesand address them accordingly with peoples'participation�.

The NAPA implementation frameworkrecognises the important role of villagedevelopment committees and municipalities inlocal development planning with plans tosupport them to incorporate adaptationperspectives into their local development plans,aligning fully with the NAPA.

In recent discussions DFID made clear thatLAPA implementation would continue to gothrough a managing agent, given MoE�s capacityconstraints. MoE has stressed that fundingdoes not need to go through MoE but shouldgo through government, channelled to theappropriate line agencies. It is unclear how thiswill be resolved. As funding comes in to supportidenti f ied NAPA projects and ful limplementation of LAPA develops it is essentialthat these initiatives can remain linked andaligned. Ensuring that learning and capacityfor LAPA implementation is systematisedwithin government and shared widely with

46Regmi BR and Karki, G; Local Adaptation Plans in Nepal, Tiempo Climate Newswatch, issue 76, July 2010, pp 21 � 24.




One of the existing models that LAPA

design...will draw on is that of the

Livelihoods and Forestry Programme

(LFP). This has been piloting a LAPA-

type approach to forest management

in over 300 VDCs since 2009. The

community forestry programme...has

helped enhance rural livelihoods -hence providing climate change

adaptation benefits - by conducting

wider l ivel ihoods-based and

community development activities at

the community level. Community

forestry has provided livelihood

opportunities...by using pro-poor

inclusive approaches that target poor

and disadvantaged people using

wealth ranking.

Key to the success of the LFP

programme (is) effective formalized

local inst i tut ions known as

Community Forestry User Groups.

The LFP supports the CommunityForestry User Groups by providing

technical and financial backstopping

to help them understand, plan and

implement forestry and climate

change related activities...The LFP

has recently started developing...

adaptive capacity...by systematically

developing Community Adaptation

Planning through community forestry.

This is done using exist ing

mechanisms such as Community

Forestry User Groups and Public and

Institutional Land Management

groups. The Community Adaptation

Planning programme covers 512

village development committees and2292 community groups (about 50

per cent of the total number of LFP

Community Forestry User Groups)

in 15 districts. Rather than creating

new mechanisms, the LFP has used

existing mechanisms to develop

community adaptation planning in

support of the most vulnerable

BOX 5: CASE STUDY: PILOTING LAPA IN NEPAL FROM REGMI, B AND KARKI, G.47

47Regmi BR and Karki, G; Local Adaptation Plans in Nepal, Tiempo Climate Newswatch, issue 76, July 2010, pp 21 � 24.

networks and active organisations, will be critical. It is too early to be drawing lessons from LAPA but its design and the pool of funding provide enormous potential to support vulnerable communitiesin the scale up of adaptation actions and integration of these into higher level processes. Usedstrategically LAPA and NAPA could mobilise further funding and continue to support acomprehensive and country-owned response to climate change adaptation.

Regmi BR and Karki. G; Local Adaptation Plans in Nepal, Tiempo Climate Newswatch,issue 76, July 2010, pp 21-24.

A FRAMEWORK FOR CLIMATE RESILIENT DEVELOPMENT

F i n a n c i n g

P r i o r i t y - s e t t i n g t r a d

e - o f f s

U r b a n

A g r i c u l t u r e a n d f o o d

s e c u r i t y

H e a l t h a n d s a n i t a t i o n

W a t e r a n d e n e r g y

I n f r a s t r u c

t u r e

T o u r i s m a n d i n d u s t r i e s

F o r e s t a n d b i o d i v e r s i t y

NAPA+ - Central multi-stakeholder coordination;lesson learning; knowledge management;

climate science

LAPAs: Community prioritises trade-offs;implementation tracking future climate; informing

integrated support from sectors.

FIGURE 2: NAPA+ AND LAPA - A FRAMEWORK FOR CLIMATE RESILIENTDEVELOPMENT




2.9 CIVIL SOCIETY PROGRAMMES ANDCOORDINATION

There are a number of civil societyprogramme, research, and networkinginitiatives being undertaken on climate change.

As with current government programming,defining what constitutes a climate adaptation

programme is not entirely clear but initiativesare certainly growing within organisations anddiscourse is becoming more prominent. WWFhas been supporting the development of theClimate Change Policy with government andimplements two adaptation specific projects inLangtang and Indrawati river sub-basin. CARE,Oxfam and Practical Action are also activeinternational NGOs. LiBird is one of the mostprominent national NGOs, with Environmentand Public Health Organization (ENPHO),

Clean Energy Nepal (CEN), and FECOFUN(Federation of Community Forestry UserGroups in Nepal), Nepal Forum of Environmental Journalists (NEFEJ) alsoimportant actors.

With limited funding and a nascentknowledge base many of these organisationsare in the early days of addressing what the

uncertainty of climate impacts means to currentprogramming and are starting to reviewtheir projects to examine how to meaningfullyintegrate climate change adaptation intotheir work48. These experiences are vital toinforming policy and national-levelprogramming.

Several forums on climate change exist inthe country. The Climate Change NetworkNepal (CCNN) is a loose coalition of variousorganisations, including national andinternational NGOs and donors including DFID,JICA and UNDP. The forum was establishedto share information. It meets several times ayear. The NGO Group on Climate Change is aforum of local-level organisations working onthe ground on climate change, set up with astrong community-based focus as an

information-sharing platform. CAN Nepal is aloose alliance of organisations who are membersof Climate Action Network South Asia(CANSA). CANSA is the regional node Climate

Action Network International. The mainobjective of the alliance is to disseminateinformation, discuss and lobby on climatepolicies at a national and international level.It organises various events and workshops to

communities and people. The

process started with sensitization of

local communities on climate change

issues, developing guidelines for field

facilitators/ practitioners, enhancing

the capacity of more than 500 local

facilitators/community practitionerson vulnerability assessment and

adaptation planning, and supporting

the preparation of adaptation

plans...targeting poor and vulnerable

households. The Community Forestry

User Groups and their network

provide very strong sustainable

grassroots-level institutions that can

take the lead on natural resources

conservation and management. The

piloting of local-level adaptation

planning and community-basedadaptation is done by mobilizing

these 300 User Groups and the

Village Development Committee-level

forestry coordination committees.

The programme has also established

grassroots-level community-based

adaptation funding to help innovative

users and vulnerable households

access resources and obtain support

for their adaptation plans. The LFP

initiatives...provide good lessons for

LAPAs. The NAPA will build onlearning from the LFP, particularly

from the pilot projects, on institutional

design, institutional linkages and

natural resource management

interventions.

48SAGUN and Libird, Climate Change Impacts on Livelihoods of Poor and Vulnerable Communities and Biodiversity Conservation: A Case Studyin Banke, Bardia, Dhading and Rasuwa Districts of Nepal, CARE Nepal, 2009




inform climate negotiations at the internationallevel. Only NGOs and INGOs can be membersof the alliance. Representatives of NGOs arealso on the MCCICC and the Climate ChangeCouncil though the lack of formal and detailedterms of reference for both these bodies and

any contractual arrangements for memberslimits their effectiveness and the degree towhich they can serve as accountablerepresentatives.

As these are loose and informal alliances,representing a large and diverse number of organisations coordination and effectiveinformation flow is a challenge. Activity hastended to be centred in Kathmandu anddominated by the larger international and

national NGOs. However some deliberate crossover in membership between the networks,attempts to make better linkages and increasingattention to organisation and information flowis beginning to address these weaknesses. Lackof legal status can also a barrier to progressingwork and dialogue with policy makers. Thereis some resistance to spending time and energyon formalising these platforms amongstmembers, who have little spare time andresources and believe their work is inimplementation at the community level. Thedifficulty comes in presenting a coherent andinformed voice to policy makers and ensuringthat the evidence from programming and localknowledge feeds into decision making. Clearlythese NGOs are not the sole purveyors. Howeverthey are often at the forefront of working withcommunities and community organisations;innovating, piloting initiatives and seeing theresults of policy implementation. As a collectivethey have strength in this experience and theirbreadth and diversity. Finding ways to poolthis knowledge and effectively communicate todecision makers is critical to informing strongdebate and influencing successful policymaking.

These networks have not yet played asignificant role in gathering information andadvocating around financing and governanceat the national level, although recently therehas been a fairly strong collective voiceadvocating against the PPCR loan. This is in

part because discussions tend to be held behindclosed doors and the issues are opaque. Howeverthese alliances can be maximised by membersexamining the impact, or lack, of currentfinancing and governance models on climateprogrammes in the communities where theywork and use platforms strategically to agreecommon key policy objectives and actions. Toachieve this entails a level of structure andformalisation as well as the need for dedicatedresources.

As climate adaptation initiatives are growingand organisations struggle to understand whatthis means to their programming, there is anincreasing need to prioritise good knowledgemanagement practices. It is critical thatresources and capacity are put into buildingknowledge and gathering evidence todemonstrate what is working and what is notworking. Only once this is happeningsystematically, can successful actions be scaledup, learning more widely shared and effectivepolicy and advocacy platforms built. The mediahas a growing voice and private sector,parliamentarians and government institutionsat the local level are also critical players.Climate networks need to reach out toeducational institutions and the scientificcommunity as well as build stronger linkagesto the media and parliamentarians. Thesealliances need to continue to explore effectiveways to reach out, represent their membersand be strategic in their actions. A futureclimate model must incorporate sufficientresources, separate to project implementation,for civil society to play the information,coordination and watchdog role that isdesperately needed.






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o n g o i n g o r n o t .

S u p p o r t t o g o v e r n m e n t i n t h e f o r m o f T A t o

s t r e n g t h e n c a p a c i t y t o m

a n a g e c l i m a t e c h a n g e

a n d t h e e n v i r o n m e n t t h r o

u g h l o n g - t e r m v i s i o n

a n d p l a n n i n g .

I n t e g r a t i o n o f c l i m a t e r i s k

a n d r e s i l i e n c e i n t o

d e v e l o p m e n t p o l i c i e s a n d

p l a n n i n g : 2 0 1 1 � 2 0 1 3

N a t i o n a l D e v e l o p m e n t P l a n

D i g i t i z a t i o n a n d q u a l i t y c o

n t r o l f o r m e t e o r o l o g i c a l

d a t a a n d d e v e l o p m e n t o f s t a t i s t i c a l c l i m a t e

d o w n s c a l i n g

E m p h a s i s o n p r e p a r i n g N

e p a l f o r g l o b a l

n e g o t i a t i o n s

E m p h a s i s o n p r e p a r i n g N

e p a l f o r g l o b a l

n e g o t i a t i o n s

P i l o t p r o j e c t i m p l e m e n t e d

b y M i n i s t r y o f A g r i c u l t u r e

t o a d d r e s s a g r i c u l t u r a l v u l n e r a b i l i t y t o c l i m a t e

c h a n g e i m p a c t s o f f a r m e

r s

2 0 0 8 - 2 0 1 0

a n d

2 0 0 9 - 2 0 1 1

M i n i s t r y o f

A g r i c u l t u r e

a n d

C o o p e r a t i v e

s





M I T I G A T I O N A N D C A R B O N M A R K E T S

N e p a l S w i s s C o m m u n i t y

F o r e s t r y P r o j e c t

S w i s s D e v .

C o o p e r a t i o n

( S D C )

L i n k i n g c o m m u n i t y f o r e s t u s e r g r o u p s t o c a r b o n

m a r k e t s a n d s t r a t e g y d e v e l o p m e n t a n d

p r e p a r a t i o n f o r R E D D

R e d u c i n g E m i s s i o n s f r o m

D e f o r e s t a t i o n i n D e v e l o p i n g

C o u n t r i e s ( R E D D )

K a t h m a n d u S u s t a i n a b l e

U r b a n T r a n s p o r t ( S U T )

P r o j e c t

A l t e r n a t i v e E n e r g y

P r o m o t i o n C e n t r e

( A E P C ) / E n e r g y S e c t o r

A s s i s t a n c e P r o g r a m m e

( E S A P )

R e n e w a b l e E n e r g y P r o j e c t

B i o g a s P r o j e c t

B i o g a s P l a n t s

V a r i o u s - m u l t i -


D A N I D A

N o r w e g i a n

E m b a s s y

E U

W o r l d B a n k

G e r m a n y

3 . 2 m

2 . 8 m

3 0 m 2 2 m

2 1 m

7 m

3 1 m

4 4 . 5 m

( C H F 4 . 2 m )

W o r l d B a n k

A D B

K F W

M o F S C

M P P W

A E P C

M o F S C

2 0 1 0 - 2 0 1 4

2 0 0 7 - 2 0 1 2

2 0 0 4 - 2 0 1 2

2 0 0 6 - 2 0 1 5

1 9 9 7 - 2 0 1 1

2 0 0 8 - 2 0 1 1

R E D D c e l l e s t a b l i s h e d a n d N e p a l i s w o r k i n g

t o w a r d s t h e p r e p a r a t i o n

o f t h e r e a d i n e s s p l a n .

E n e r g y S e c t o r A s s i s t a n c e P r o g r a m m e � b u i l d i n g

c a p a c i t y f o r A E P C t o f u n c

t i o n a s n a t i o n a l r e s o u r c e

c e n t r e s f o r a l t e r n a t i v e e n

e r g y p r o m o t i o n

C r e a t i n g r e n e w a b l e e n e r g y i n f r a s t r u c t u r e i n 2 1

d i s t r i c t s

T o r e d u c e g l o b a l e m i s s i o

n s o f c a r b o n d i o x i d e ,

t w o b i o g a s o p e r a t i o n s a r e b e i n g s u p p o r t e d .

T h i s

p r o j e c t a i m s t o i n c r e a s e a c c e s s t o m o d e r n e n e r g y

s o u r c e s i n t h e r u r a l a n d p e r i - u r b a n a r e a s o f N e p a l

U s e o f u n d e r g r o u n d ' d i g e s

t e r s ' t h a t u t i l i z e b a c t e r i a

t o g e n e r a t e m e t h a n e g a s f r o m c a t t l e d u n g .

F o r e s

t r y C a r b o n

P a r t n

e r s h i p F a c i l i t y


4 0 m

S c a l i n g U p R e n e w a b l e

E n e r g y P r o g r a m m e

( S R E P )

T h e p r o j e c t p r o p o s a l a p p

r o v e d b y t h e S R E P

E x p e r t g r o u o p a n d d e c i d

e d t o f i n a n c e .

C l i m a

t e I n v e s t m e n t

F u n d s

V a r i o u s - m u l t i -


A D B

M o E



CLIMATE FINANCE MARKED BY FRAGMENTATIONAND UNPREDICTABILITY:

Similar to the financing of development inNepal, the financing for climate changeadaptation has been fragmented anddisconnected. Funding has been unpredictable

and piecemeal, impacting on the possibility of long-term national planning and commitmentand delivery of resources and support to

vulnerable communities. Given the conflict andpolitical uncertainty that has followed, the aideffectiveness agenda has struggled to makemuch progress. Although a donor compactachieved some success in improving donorcoordination it commits but does not bind donorsto a set of principles and does not indicatefinancial commitments or modalities. Attention

is being paid to developing a national financingmodel and governance framework but progressis slow and getting traction is challenging whilstgaps in expectation between government anddonors remain extremely wide.

STRUCTURES ARE BEING PUT IN PLACE AND POLICYAND PLANNING PROGRESS MADE:

The Ministry of Environment has been madethe focal point for climate change efforts. A

specific Climate Change Management Divisionis being established. A high-level policy and

coordination body has been established underthe leadership of the Prime Minister and amulti-stakeholder committee to coordinateinitiatives at the programme level is alsofunctioning. These are significantachievements. Much expectation was placedon NAPA to galvanize efforts and build a

strategic and harmonised platform for actionand finance. The momentum built in the earlydays of NAPA managed to progress efforts toimprove donor coordination with achievementssuch as the signing of the donor compactbetween Ministry of Environment and a numberof donors; and alignment behind NAPA andthe Ministry of Environment with additionalpooled funding from donors in-country. NAPA has been credited by many with being aconsultative and inclusive process that has

gone a long way to narrow the gap in currentknowledge and identified needs.

...BUT RESOURCES AND CAPACITY ARE LACKING:

MoE is severely constrained by a lack of human resources and has been largelydependent on technical assistance inputs fundedby donors, in the form of consultants. TheMinistry questions to what degree this hasactually built capacity and institutionalised

learning but whilst the systems and technicalcapacity are not sufficiently present within the

3CONCLUSIONS




civil service currently institutionalising thiscapacity will remain a challenge. The newlyformed climate division does not yet have theresources, capacity or authority it needs. Thereare a number of ongoing pieces of separatecapacity building initiatives funded by donors.

The most significant of these is a technicalassistance project from ADB that should resultin the institutional and financial frameworkfor climate change and developing professionalskills. It is hard to see how these various pieceslink up and become part of an overall strategy.Unless its staff and technical capacity areaugmented soon the MoE will struggle tomanage the growing climate change projectportfolio. Since the NAPA document wasfinalised, action has been taken on several

areas of coordination and knowledgemanagement. However securing significantlevels of funding for projects remains unclear.What looks likely is funding for NAPA projectswill come from various different mechanisms,divided between different donor implementingagencies.

NAPA RECOGNISES THE NEED TO DELIVERRESOURCES TO THE LOCAL LEVEL AND LAPA

PRESENTS A POSSIBLE MODEL BUT THERE AREBOTTLENECKS TO OVERCOME:

NAPA also leaves many of the more detailedquestions of adaptation implementationunanswered. There are concerns about theamount of time it will take to significantlyoperationalise NAPA. Under the coordinationof a relatively small and nascent ministry itwill be critical to figure out how to remainstrategic and effectively channel funds, through

a number of larger implementing line ministriesto the district level and down. MoE needspolitical backing and authority acrossgovernment. Although there have beenimprovements in financial management withchannels of funding to the local level more openthan before, there are still many bottlenecks,particularly at the district level. Linkages withthe Ministry of Local Development and the

Local Government Capacity DevelopmentProgramme are critical. Lessons from LAPA piloting are not yet clear, but if the pilotsdemonstrate success there will be much to learnabout successful community adaptation actionsand integrated development planning. With

funds from DFID and EU for a large programmelined up tensions on the funding modality forLAPA need to be overcome to ensure that MoEremains meaningfully engaged and LAPA continues to be aligned to NAPA. If presentconditions mean DFID and EU will channelfunding for LAPA outside government thisneeds to be put within a larger discussion aboutcommitments towards the long-term financingframework. In the meantime other institutionalmechanisms could be put in place to ensure

MoE and the government remain centrallyengaged and do not feel alienated.

GLOBAL CONTROVERSY OVER PPCR GOVERNANCEAND FINANCE PLAYS OUT AT THE NATIONAL LEVELBUT THERE HAVE BEEN SOME ACHIEVEMENTS INALIGNMENT:

There is palpable disappointment amongststakeholders in how PPCR has been developed

and concern that the programme will beimplemented with limited national ownership.However, there have been some successes inaligning the PPCR with Nepal's NAPA. Theproposed grant component is likely to be thefirst piece of significant funding explicitly forclimate change adaptation and national systemstrengthening. Stakeholders should continueto use existing forums and networks to engagewith PPCR and push to influence itsimplementation in alignment with NAPA.

In addition, the loan element is becomingincreasingly contentious amongst domesticconstituencies. Considerable additional analysisand discussion is required to clarify the issueand decide on the best course of action in thespirit of the Nepal Government�s recently issuedclimate change policy and Nepal�s position asa leading LDC affected by climate change.




PROMOTING SOCIAL EQUALITY IN CLIMATEADAPTATION NEEDS TO EXPLICITLY ADDRESSRESOURCE DISTRIBUTION AND INSTITUTIONALSTRUCTURES, MOVING FROM ANALYSIS TOIMPLEMENTATION:

Whilst the differentiated impacts of climatechange on social groups and between men andwomen have been relatively well examined andunderstood, moving from this to developingeffective strategies within programmes presentsa greater challenge. There is much heateddebate at the international level on �distributive

justice� (deciding equitable use of resourcesbetween countries) and �thematic balance�(between mitigation, adaptation, technology

transfer and capacity building)53

. Theseconsiderations also need to filter down to thenational level to consider appropriatemechanisms for fair resource distributionbetween and within communities. Existingfunding mechanisms are not designed to deliverresources that prioritise the most vulnerable.NAPA planning incorporated a significantexamination of gender and vulnerabilitydimensions and has paid attention to this inthe implementation framework to some extent

by incorporating the need for gender and socialinclusion analysis at the local level but it ishard to see how this translates into currentproject profiles and corresponding activitieswhen it is absent in objectives, outputs andoutcomes. Gender also seems to be largelymissing in PPCR design. It is too early in Nepalto assess the extent to which gender and socialequity ambitions on paper translate into actionbut unless policies and programmes are moreexplicit about how activities address the

different needs of poor men and women thereis a danger it will not happen in practice.

CIVIL SOCIETY FORUMS ARE ACTIVE AND

CONSULTATIVE SPACES INCREASING BUT

IMPROVING INFORMATION FLOW AND INFLUENCING

POLICY NEEDS STRATEGY AND DEDICATED

RESOURCES:

Civil society forums on climate change are

progressively more active and vocal. They arebeing invited into planning and consultationspaces and their voices increasingly heard.There are positions for civil societyrepresentation on the MCCICC and �nominatedexperts� on the climate change council are from

NGOs. More formal, detailed terms of referenceand contractual relationships for members of these bodies would add greater legitimacy andweight to their presence. The main civil societycoordination bodies are disconnected, not bestserving effective dialogue, policy influence andinformation flow. Lack of legal status for thekey civil society networks and dedicatedresources for coordination and informationsharing limit their potential. As programmingdevelops and opportunities for funding open

up, coordination and convergence betweenorganisations will be important to ensure fundsflow effectively down to the local level targetingthe most appropriate projects and people.

BUILDING AN EVIDENCE BASE FOR SUCCESSFULADAPTATION:

There a number of civil society organisationssupporting community adaptation through a

variety of projects. Knowledge management

needs to be more centrally prioritised in orderto build a sound evidence base for scaling upcurrent efforts and sharing learning widely.NAPA has begun to do this through theestablishment of the MCCICC and the ClimateChange Knowledge Management Centre but itis early days and there are many civil societyorganisations beyond the scope of current NAPA initiatives, working directly or indirectly onclimate adaptation actions with vulnerablecommunities. In particular evidence of effectivegender transformative activities and challengesare needed.

INCREASED FUNDING WITHOUT BETTERHARMONISATION AND ALIGNMENT INCREASES THEBURDEN ON ALREADY WEAK INSTITUTIONS:

In the absence of a coordinated mechanismto capture climate change adaptation fundingthere is a real fear that funds will increase and

53Müller, B. �The Time is Right! Devolution of funding decisions to designated national/regional climate change funding entities�, November2009, Oxford Institute for Energy Studies, p. 1




the number of different modalities and agenciesinvolved will continue to proliferate andfragment. Whilst government juggles thedifferent modalities, with more fundingexpected, MoE will struggle to strategicallymanage the different strands without better

harmonisation and a clear commitment fromdonors of how they will pool resources andinitiatives in support of development of nationalsystems. This could depend to a large degreeon the government�s leadership in identifyingresources and clear plans for the ClimateChange Management Division as well as abeing able to produce a sound proposal for anational funding entity. It could also dependon the degree to which donors are forthcomingin agreeing to a joint position on their minimum

criteria for channelling funding, and workingwith government on a roadmap to get there.Domestic stakeholders must not be left out of these discussions. Wide consultation andparticipation in design will help to promoteownership and engagement, which will be vitalfor any transformative action on climate changeadaptation. If MoE is accredited by the

Adaptation Fund and manages to obtainfunding it may help to further propel theseefforts but this is currently unknown. Interimoptions must be considered, whilst MoE�scapacity is strengthened. Channelling fundingthrough another entity following a model suchas the Alternative Energy Promotion Centre

(AEPC), with MoE providing oversight andcoordination, are two such options.

The challenge to respond effectively to therealities of climate change is clearly formidable.

Action at the national level is undoubtedly only

part of a much greater, more complicatedpicture. Decisions at the international levelwill have enormous bearing on the progressthat Nepal is able to make. However asufficiently resourced, sustained and nationallyowned programme of action is needed. A programme that can deliver resources and toolsto enable poor and marginalised communitiesto adapt, that places women at the forefront of this change and prevents any further slowingin the gains that have been made in

development. There are concrete steps thathave been made, but progress is fragile. Withthe almost simultaneous emergence of NAPA,PPCR and LAPA coming together with a climatechange policy and proposals for establishmentof a climate fund, it is essential to pull unlinkedinitiatives together. Donors must coalesce andstrive to find a common, robust and accountablemechanism that can channel funds to supportnational systems and effective climate changeadaptation to the most vulnerable. If thebarriers can be overcome there is an opportunityfor these actions to chart a new path forsustainable development in Nepal.




4RECOMMENDATIONS

GOVERNMENT OF NEPAL

Immediate areas to address regarding the

organisational structure of Ministry of

Environment and climate change activities

Decide exact mandate of MoE, its role andfunctions and how it will interlink with otherministries, agencies and departments onclimate change. Communicate this withingovernment.

Map existing resources with current andproject programmes to clearly assess thecapacity gap in terms of financial and humanresources and what would be need to fillthis.

Fill current vacant positions within MoE.

Furthering Climate Planning and Policy

Develop a long term climate change strategic

plan to underpin the climate change policy.

Review current relevant legislation andconsider where this can be strengthened.Consider drafting of new legislation to betterenforce areas of the climate change policy.

Development of an institutional structure

and national funding entity

Take greater leadership in developing andagreeing a detailed roadmap with milestones

for expediting the establishment of a nationalclimate finance entity that garners sufficient

trust, is transparent and robust and alignedclosely with national systems. Look to betteraid effectiveness models where these do existand draw lessons for climate funding.

Put forward immediate interim options forchannelling funding through another entityoutside of government that MoE can have arole in terms of administration and oversight.

In the establishment of an institutionalframework develop clear principles andstrategies around promotion of gender andsocial equity, considering how theseprinciples can be reflected within thegovernance structure as well as distributionof resources, thematic areas andprogramming. Build these into anymonitoring and evaluation framework.

Build in windows for on-budget (for public

sector projects) and off-budget (for civilsociety projects).

Ensure these processes incorporate broadconsultation and progress towards developingthe institutional framework is communicatedwidely to stakeholders.

Develop detailed terms of reference and cleararrangements for decision making bodiesand coordination fora under government.

Clarify how the MCCICC, Climate ChangeCouncil, Climate Change Knowledge




Management Centre and planned ClimateChange Centre will interact and coordinate.

Oversight and Accountability

Revive the Natural Resources andEnvironment Committee with dedicated

resources, ensuring cross party expertise.

Conduct information sessions in parliamenton key climate change issues, programmesand policy.

DONORS

Capacity Building Initiatives

Jointly commission an external independentreview of current capacity building initiativesto assess areas of progress and weaknessand make recommendations going forward.

Re-examine the current fragmentedapproach to capacity building and work

jointly on pooling assistance, using therecently approved Climate Change Policy asan overarching framework from which todevelop a convergent long term strategy forstrengthening climate change capacity withinthe MoE and other agencies.

Support further strengthening of thegovernment�s financial and procurementmechanisms with suitable monitoring totrack improvements.

Finance and Coordination

Develop one pooled multi-donor trust fundas an interim mechanism that can begin tofoster alignment and harmonisation. As an

interim measure agree options with GoN forchannelling this through an entity outsideof government.

Clearly communicate minimum conditionsfor channeling current funding through anational level climate fund.

Ensure experiences and constraints of institutional practices as they play out at anational level are fed back to headquarters.

Donors should ensure that climate change

financing is in addition to and does notdisplace any existing ODA commitments.

CIVIL SOCIETY

Formalise and improve coordination,

broaden coalitions and build evidence

Prioritise joint working to improve knowledgemanagement and evidence building onadaptation efforts.

Agree common policy objectives and prioritise joint actions across networks and advocateon these with policy makers.

Consider organising a regular forum to bringnetworks together.

Consider legalising networks and puttingdedicated resources behind a nationalsecretariat. Seek funding and support outsideof Nepal.

Reach out to make linkages withparliamentarians, educational and researchinstitutions and media organisations.

Ensure country experiences on finance,governance, policy and programming isfeeding into and informing internationalforums.

Finance Model and Governance

Push for consultation and participation indecision making with government and donorson a national funding entity and governancestructure. Ensure positions are clear andinformed and have buy-in of members.

Advocate for dedicated resources in climateadaptation projects for gathering evidenceand sharing information.

Advocate for need for sufficient oversightand accountability mechanisms to be builtinto the institutional structure and a clearrole and legitimacy for civil society.

Advocate for civil society resource envelop

and clear decision making structure onresource allocations.




A d a p t a t i o n

F u n d B o a r d

M o s t l y A n n e x I / I I

P a r t i e s p l u s s o m e

o t h e r c o u n t r i e s

F u n d i n g a n d i m p l e m e n t a t i o n a t N e p a l l e v e l

F u n d i n g a n d g o v e r n a n c e a t g l o b a l l e v e l

K y o t o P r o t o c o l

S p e c i a l C l i m a t e

C h a n g e F u n d

A d a p

t a t i o n F u n d

$

C l e a n D

e v e l o p m e n t

M e c h a n i s m

& o t h e r s o u r c e s

$

' D i r e c t a c c e

s s ' N o f u n d i n g

c u r r e n t l y b u t

M o E n o m i n a t e d

a s N a t i o n a l I m p l e m e n t i n g

A g e n c y . A w

a i t i n g d e c i s i o n

1 0 p o s s i b l e G E F i m p l e m e n

t i n g a g e n c i e s , r e s p o n s i b l e f o r c r e a

t i n g p r o j e c t

p r o p o s a l s a n d f o

r m a n a g i n g G E F p r o j e c t s i n c o u n t r y .

C l e a n

T e c h n o l o g y

F u n d

C I F s W

B T r u s t e e

1 3 c o u n t r i e s

$

S t r a t e g i c

C l i m a t e

F u n d

F I P

S R E P

P P C R

$ 2 2 5 , 0 0 0

$ 4 1 0 , 0 0 0

W o r l d B a n k

A D B

U N E P

D F I D

D a n i d

a

$ 2 0 0 , 0 0

0

$ 8 7 5 , 0 0

0

G o v e r n m

e n t o f N e p a l

M o E

P P C R I m p l e m e n t a t i o n

t e n t a t i v e b u d g e t 1 1 0 m

l o a n

a n d g r a n t

N A P A

i m p l e m e n t a t i o n

b u d g e t 3 5 0 m . N o

F u n d i n g y e t

N A P A +

d e v e l o p m e n t

' E n a b l i n g

a c t i v i t i e s '

g r a n t s

P P C R

d e v e l o p m e n t

P P C R P I U

N A P A P I U


U N D P

$ 5 0 , 0 0 0 =

1 . 3 2 5 m .

$ 2 0 0 , 0 0 0

L e a s t D e v e l o p e d

C o u n t r i e s F u n d

G l o b a l E n v i r o n m e n t F a c i l i t y ( G E F )

W B T r u s t e e

U N F C C C / C l i m a t e C h a n g e S e c r e t a r i a t

C o n f e r e n c e o f t h e P a r t i e s

F I G U R

E 3 : I N T E R N A T I O N A L C L I M A T E F U N

D I N G A R C H I T E C T U R E A N D L I N K S T

O M A I N C L I M A T E A D A P T A T I O N P R O

G R A M M E S I N N E P A L




Conference of the Parties (COP)

The supreme body of the United National

Framework Convention on Climate Change(UNFCCC) Convention. It currently meets oncea year to review the Convention's progress. Theword "conference" is not used here in the senseof "meeting" but rather of "association," whichexplains the seemingly redundant expression"fourth session of the Conference of the Parties."

Global Environment Facility (GEF)

The Parties to the Convention assignedoperation of the financial mechanism to the

Global Environment Facility (GEF) on an on-going basis, subject to review every four years.The financial mechanism is accountable to theCOP, which decides on its climate changepolicies, programme priorities and eligibilitycriteria for funding,

Global Environment Facility Trust Fund

The common funding resource of the GlobalEnvironment Facility (GEF). Climate Changeis one of the six focal areas supported. The

objective of this part of the fund is to helpdeveloping countries and economies intransition to contribute to the overall objectiveof the UNFCCC. The projects support measuresthat minimize climate change damage byreducing the risk, or the adverse effects, of climate change. The GEF Trust fund hasreceived a total of $10.885 billion during fourreplenishments. There are 39 donors that havecommitted funds: Argentina, Australia, Austria,Bangladesh, Belgium, Brazil, Canada, China,

Côte d�Ivoire, Czech Republic, Denmark, Egypt,Finland, France, Germany, Greece,

India, Indonesia, Ireland, Italy, Japan, Republicof Korea, Luxembourg, Mexico, Netherlands,

New Zealand, Nigeria, Norway, Pakistan,Portugal, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey,United Kingdom, and the United States.

Least Developed Countries Fund (LDCF)

Set up to address the needs of the 48 LeastDeveloped Countries (LDCs) that are especially

vulnerable to the adverse impacts of climatechange. Supports a work programme to assistLeast Developed Country Parties (LDCs) carry

out, inter alia, the preparation andimplementation of NAPAs To date, the fundhas 19 donors: Australia, Austria, Canada,Denmark, Finland, France, Germany, Ireland,Italy, Japan, Luxembourg, Netherlands, NewZealand, Norway, Portugal, Spain, Sweden,Switzerland, and United Kingdom.Contributions of about $180 million have beenreceived for the LDCF; the target in the nextfour years is to reach $500 million, which isthe amount estimated by the UNFCCC needed

to finance NAPA implementation as well as tomove toward a four-year replenishment process.

Special Climate Change Fund (SCCF)

To implement long-term adaptationmeasures that increase the resilience of nationaldevelopment sectors to the impacts of climatechange. The SCCF should serve as a catalystto leverage additional resources from bilateraland other multilateral sources. The Parties tothe Climate Convention identified adaptation

to climate change as the top priority of theSCCF, and that technology transfer and its

EXPLANATORY NOTES (FIGURE 3)

Sources: unfccc.in, gef.org, gefonline.org;climateinvestmentfunds.org, adpatationfund.org andclimatefundsupdate.org




associated capacity building activities asanother essential area for funding. 14 funders:Canada, Denmark, Finland, Germany, Ireland,Italy, Netherlands, Norway, Portugal, Spain,Sweden, Switzerland, United Kingdom andUnited States. As of May 31, 2010, the total

amount deposited is USD eq. 110.48 million,97m disbursed.

Adaptation Fund (AF) and Adaptation

Fund Board (AFB)

The Adaptation Fund is supervised andmanaged by the Adaptation Fund Board (AFB).Upon invitation, the GEF provides secretariatservices to the AFB and the World Bank servesas trustee of the Adaptation Fund on an interimbasis. The Adaptation Fund finances concrete

adaptation projects and programmes indeveloping countries that are Parties to theKyoto Protocol. It is financed with a share of proceeds from the Clean DevelopmentMechanism (CDM) project activities and fundsfrom other sources. The share of proceedsamounts to 2% of certified emission reductions(CERs) issued for a CDM project activity. Asof November 2010, the total amount pledgedto the Adaptation Fund, including CERs, isUSD 216.15 million and the total amountdeposited, including CERs, is USD 202.11million. The Adaptation Fund received 10funding proposals up to September 2010, witha total requested funding amount of USD 60.9million. The Adaptation Fund allows directaccess to the fund by parties, as opposed tothrough a multilateral institution, as is themodel of other funds. It has accredited three

National Implementing Agencies: the Centrede Suivi Ecologique from Senegal, the PlanningInstitute of Jamaica and the Agencia Nacionalde Investigacion e Innovacion of Uruguay. Thefollowing multilaterals are also accredited asimplementing agencies: UNDP, the World Bank,

ADB, the International Fund for AgriculturalDevelopment (IFAD), UNEP and the WorldFood Programme (WFP). It has so far approvedtwo projects in Senegal and Honduras,amounting to approximately $14.3m andendorsed six more.

Climate Investment Funds (CIFs)

Two funds to help developing countries pilotlow-emissions and cl imate-resi l ientdevelopment. 45 developing countries are

piloting projects. The CIFs are channeledthrough the African Development Bank, AsianDevelopment Bank, European Bank forReconstruction and Development, Inter-

American Development Bank, and World BankGroup. The funds are disbursed as grants,highly concessional loans, and/or risk mitigationinstruments. There are 13 countries providingfunding: Australia, Canada, Denmark, France,Germany, Japan, Netherlands, Norway, Spain,Sweden, Switzerland, UK, US. $6.1b pledged.The CIFS are divided into two funds: the CleanTechnology Fund ($4.5b) and the StrategicClimate Fund ($1.9b). The Strategic ClimateFund supports three programmes, one of whichis the Pilot Programme on Climate Resilience(PPCR), currently under development inNepal.




K E

Y I S S U E S

R e l a t i o n s h i p b e t w e e n B o a r d a n d

C O

P ; b o a r d i s a c c o u n t a b l e t o ,

u n d e r t h e g u i d a n c e o f , a n d u n d e r

t h e

a u t h o r i t y o f t h e C O P ?

W B

a s t r u s t e e f o r h o w l o n g ?

F u n d m o b i l i s a t i o n t o g e t t o

$ 1 0 0 b n .

A f u n d o f f u n d s o r c o - e x i s t i n g

f u n

d ? A n d w i l l W B i n v o k e t h e

S u n s e t c l a u s e o n t h e C I F s ?

D i s

b u r s e m e n t � d i r e c t a c c e s s ?

L o a n s , g r a n t s , g u a r a n t e e s e t c ?

G r e e n C l i m a t e F u n d B o a r d :

2 4 m e m b e r s ,

e q u a l n o d e v e l o p e d a n d

d e v e l o p i n g , r e g i o n a l g r o u p i n g s ,

S I D s a n d L D C s

S e c r e t a r i a t

U

N F C C C C O P

G r e e n C l i m a t e F u n d :

3 0 b n 2 0 1 0 - 2 0

1 2 , 1 0 0 b n / y r . b y 2 0 2 0

T r u s t e e ( W B

i n t e r i m )

O t h e r e x i s t

i n g f u n d s

u n d e r U

N F C C

a n d o u

t s i d e

P R O P O S

E D

I N T E R N A

T I O N A L

A R C H I T E

C T U R E

O U T L I N E N A T I O N A L

A R C H I T E C T U R E

$

D o n o r p o o l e d f u n d

N a t i o n a l - l e v e l p l a n n i n g , s y s t e m

s t r e n g t h e n i n g a n d i m p l e m e n t a t i o n

D i s t r i c t a n d c o m m u n i t y - l e v e l a d a p t a t i o n

p r o g r a m m e s

C i v i l s o c i e t y

f o r u m s a n d

n e t w o r k s

C l i m a t e C h a n g e C e n t r e

C l i m a t e F u n d

B o a r d

N a t i o n a l I m p l e m e n t i n g

E n t i t y ( M o E o r o t h e r )

C r o s s c u t t i n g p r i n c i p l e s a n d g o a l s m o n i t o r e d a t e a c h l e v e l o n g e n d e r , a n d s o c i a l e q u i t y

C l i m a t e T r u s t F u n d ( N

e p a l )

W i n d o w s f o r C S , p u b l i c s e c t o r a n d

t h e m a t i c a r e a s

G o N

$

$

N a t u r a l R e s o u r c e s a n d E n v i r o n m e n t

P a r l i a m e n t a r y C o m m i t t e e

$ $

$

C o m

m i t t e e

C o m m i t t e e

C o m m i t t e e

R e g i o n a l a n d d i s t r i c t u n i t s

( g o v e r n m e n t a n d o t h e r )

R e g i o n a l a n d d i s t r i c t u

n i t s


R e g i o n a l a n d d i s t r i c t u n i t s


F I G U R

E 4 : P R O P O S E D C O U N T R Y L E V E L O U T L I N E F O R N A T I O N A L I N S T I T U T I O N A L S T R U C T U R E




Climate Trust Fund

Options to establish a new semi-autonomousbody, a body directly under GoN/MoE or opena window under existing Fund, such as theEnvironment Protection Fund.

Separate windows for CS, public sector and

thematic areas. Clearly earmarked funds andcriteria for decisions over allocation of resources.

Climate Fund Board

New provisions and fiduciary standardsformulated to govern it.

Climate Change policy as guidance.

Members of government, private sector, cross-parliament, civil society and technical experts.Gender balance on the board. Regionalrepresentation.

Donors observer status.

Responsible for drawing up criteria andguidance to select national implementing entityand sub-national entity(ies)

Responsible for high-level finance, policy andstrategic guidance

Establish separate committees on finance,programmes, as appropriate. MCCICC foldedinto a committee or continues to operate as is.

Climate Change Council folded into the Boardbut appointments reconsidered according toclear criteria and guidelines

National Implementing Entity

Under authority of Fund Board

Possibly MoE with sufficient human resourcesand legitimacy, a new body or other existinginstitution

Acts as focal point and main coordination body.

Implementation of national Climate Change

Policy and Strategy

Oversees implementation of climateprogrammes

Monitoring, reporting

Climate Change CentreResearch and technical guidance.

Responsible for regularly publishing anddisseminating information about fundedprogrammes and climate research.

Donor pooled fund

Short-term minimum requirement for donorsto set up a donor trust fund to pool funding.MDBs continue to channel money through

government for Climate Fund.Interim as projects phase out and to capturesmall levels of in-county funding, possible TA etc.

Donors nominate lead donor to channel fund �such as under Nordic Plus Agreement.

Watchdog Body/Parliamentary Committee

Separate funding stream for funding watchdogbody. Existing parliamentary committee to be

reviewed and properly resources. Examinepossibility of funding separate watchdog bodyto provide independent scrutiny in coordinationwith parliamentary committee. Committee of civil society, academia and parliament members.

Adaptation programmes - other

government agencies, civil society, private

sector

Funding to government agencies. Specificwindow or % for civil society and public privatepartnership initiatives.

EXPLANATORY NOTES (FIGURE 4)




ADB Technical Assistance Report, �Federal Democratic Republic of Nepal: Strengthening Capacity

for Managing Climate Change and the Environment�, Nov 2008

World Bank/ ADB/ IFC , � Aide Memoire, Nepal: Pilot Program for Climate Resilience (PPCR) World

Bank/ ADB/ IFC Joint Mission, 15-21 November 2010�, 23 Novmeber 2010

Bird, Brown and Schalatek;, �Design Challenges for the Green Climate Fund�, Climate Finance

Policy Brief No.4, Heinrich Böll Stiftung and ODI, January 2011

Central Bureau of Statistics, National Planning Commission, �National Population and Housing

Census�, Nepal, 2001

Central Bureau of Statistics, National Planning Commission , � Statistical Yearbook of Nepal�,

Government of Nepal, 2009

DFID, �Country Business Plan in Nepal, 2009 � 2012�, DFID Nepal

Dixit, A, �Scoping Assessment on Climate Change Knowledge Platform in Nepal�, ISET-Nepal,

2010

FAO , � Global Forest Resources Assessment 2010�, Forestry Department, FAO

Immerzeel W W, Van Beek L P h and Bierkens M F P (2010) �Science 328�: 1382-1385

Maplecroft, �Climate Change Vulnerability Index�,

Ministry of Environment, �Compact on Climate Change in Nepal: An Understanding between the

Government of Nepal, Ministry of Environmental and development partners on ways to address

climate change challenges�, September 2009.

Ministry of Environment, �National Adaptation Programme of Action�, Government of Nepal,

September 2010

Ministry of Health and Population, �The Sector-Wide Approach in the Health Sector; Achievementsand Lessons Learned�, Government of Nepal, May 2010

Ministry of Finance, �Joint Evaluation of the Implementation of the Paris Declaration, Phase II

Nepal Country Evaluation�, Government of Nepal, 2010

Ministry of Forests and Soil Conservation, �The Future of Nepal's Forests, Outlook for 2020�,

Government of Nepal

Müller, B. � International Adaptation Finance: The Need for an Innovative and Strategic Approach� ,

Oxford Institute for Energy Studies, EV 42, June 2008

Müller, B. �The Time is Right! Devolution of funding decisions to designated national/regional

climate change funding entities�, November 2009, Oxford Institute for Energy Studies

REFERENCES




Nelson, G; Rosegrant MW.; Koo, J; Robertson, R; Sulser, T.; Zhu, T.; Ringler C.; Msangi S.; Palazzo,

A.; Batka, M.;, Magalhaes, M.; Valmonte-Santos, R.; Ewing, M.; and Lee, D.; �Climate Change,

Impact on Agriculture and Costs of Adaptation� , Food Policy Report, IFPRI, October 2009

OECD-DAC, �Paris Declaration 2008 Monitoring Survey for Nepal�

Oxfam International, �Even the Himalayas have Stopped Smiling: Climate Change, Poverty and

Adaptation in Nepal�, August 2009

Oxford Poverty and Human Development Initiative, �Multidimensional Poverty Index�, University

of Oxford

PPCR, �Prioritization Planning Process Draft�, available at www.ppcrnepal.gov.np

Regmi BR and Karki, G; �Local Adaptation Plans in Nepal�, Tiempo Climate Newswatch, issue 76,

July 2010, pp 21 � 24.

South Asia Sustainable Development Department, World Bank, �Shared Views on Climate Change�,

2009

UNDP, �Nepal Human Development Report 2009; State Transformation and Human Development�,2009

UNDP, �Human Development Report: Asian countries lead development progress over 40 years�,

2010

United Nations Environment Programme, Global Environment Facility, �Climate Change Expedited

Financing, (Interim), Measures for Capacity Building in Priority Areas (Part II), Nepal Project

Document�, Date?

Tandon, N. and Vogt, E.; �In the Hands of Women: Climate Change Finances, Oxfam Internal

Background Paper� , June 2010

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This research is linked to an Oxfam global policy brief and series of countryresearches on the governances of climate change funding in developing countries.The research is designed to inform Oxfam's advocacy on how climate changeadaptation funding should be managed in developing countries so that it fulfillsthe goals and needs of the marginalized and most vulnerable communities, witha particular focus for smallholder women farmers. Country researches have alsobeen conducted in Bangladesh, the Philippines, Cambodia, Vietnam and Ethiopia.Country briefs are also intended to feed into policy dialogue and advocacy at thenational and regional level.

GOVERNANCE OF CLIMATE CHANGE ADAPTATION FINANCE

IN NEPAL

MINDING THE MONEY

Country Programme Office, Nepal

Jawalakhel-20, LalitpurGPO Box 2500, Kathmandu

Tel: +977-1-5530574/ 5542881

Fax: +977-1-5523197

E-mail: [email protected]

Documents

Minding the Money: Governance of climate change adaptation finance in Nepal