– ASMITA RAWAT
Overview
Climate finance, a beacon of hope in the face of climate change-driven challenges, is a pressing issue for Nepal. The country’s struggle to access climate finance remains a significant hurdle. To bolster its position in the climate finance arena, Nepal must embrace innovation. Traditional climate finance management strategies, plagued by transparency issues, inefficiency, and limited accessibility, undermine their effectiveness. However, by strategically leveraging technology, Nepal can revolutionize its climate finance system, achieving greater transparency, efficiency, and accessibility.
Nepal’s Pertinent Climate Finance Issues
Nepal faces significant challenges in mobilizing and managing the USD 46 billion required to meet its climate adaptation and mitigation targets. The absence of comprehensive data hinders progress, including a shortfall of a database for non-traditional funding sources and a centralized registry of donors. This makes tracking contributions toward national and international climate commitments, such as Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs), even more difficult.
Despite claiming a climate budget increase, the government’s opaque reporting leaves domestic contributions unclear. For instance, in 2017-18, a USD 2.3 billion transfer from the federal government to local governments was classified as climate-relevant financing without a clear understanding of its specific utilization. However, Nepal has taken positive steps. Nepal’s Climate Change Finance Framework (CCFF) mandates reporting of departmental climate expenditures and results to the National Planning Commission (NPC) and the Ministry of Finance (MOF). The Medium-Term Expenditure Framework (MTEF) links climate finance to policy targets, and the Climate Change Budget Code categorizes expenditures. Further improvements lie in understanding the micro-fiscal impact of climate change and establishing a blockchain system to ensure transparent and secure financial transactions, ultimately building trust with donors and attracting essential resources.
Lessons for Nepal
Monetizing the impacts of climate change, especially loss and damage from extraordinary or slow-onset events, is challenging. Many climate change impacts are not easily predictable or measurable. Singapore, the second-largest data center market in the Asia-Pacific region, has harnessed advanced technologies to enhance climate finance accessibility and management. Its 81 data centers are critical hubs for aggregating, storing, and disseminating Environmental, Social, and Governance data. For Nepal. an integrated data system would be crucial in coordinated efforts to facilitate better tracking of resources and enable the collection and analysis of vital data. This data would be crucial for measuring and valuing the impacts of climate change, ultimately informing more effective allocation of climate finance.
Way Forward
Nepal’s climate finance system requires a complete overhaul, driven by innovative technologies, to respond more impactfully to climate change. Creating comprehensive databases, centralized registries, and the incorporation of blockchain will not only enhance transparency, efficiency, and trust but also pave the way for a more sustainable and resilient future for Nepal.
About the Contributor
Asmita is the Early Career Policy Research Fellow (ECPRF) at NIPoRe.