UN Climate Fund Earmarks First $20 Million in Aid for Flood-Hit Nepal

The United Nations’ climate loss and damage fund agreed on Thursday to set aside $20 million in aid for flood-stricken Nepal, marking the first time it has allocated funding to a country in a key test of its credibility.

At an extraordinary meeting, the fund’s board approved the earmarking of the modest sum for the Himalayan nation, which was devastated in August by tsunami-like floods triggered by a climate-related avalanche of ice and rock. The disaster killed more than 1,400 people and left over 5,000 missing.

Camila Minerva Rodriguez Tavarez, the Dominican Republic’s co-chair of the board, described the decision as “truly historic” and thanked members for enabling the fund to respond promptly to Nepal’s request.

Nepal’s Finance Minister Swarnim Wagle welcomed the decision, telling AFP: “The fact that they could convene this emergency meeting in response to our letter and commit $20 million of grant money is very welcome.”

However, the decision does not mean Nepal will receive the money immediately. The proposed grant represents less than 0.5% of the government’s estimated $4.78 billion reconstruction bill.

Countries can request a maximum of $20 million in a single application. Nepal must now submit a detailed proposal for the board’s approval, and no firm timeline has been established for the process.

The Fund for Responding to Loss and Damage was established through hard-fought negotiations at UN climate conferences in 2022 and 2023, following demands from developing countries that have contributed relatively little to global emissions but face disproportionate risks from climate change.

The fund emerged from calls for climate reparations from historically major greenhouse gas emitters, although such compensation has not materialised.

Since becoming operational, the fund has faced criticism over limited financial commitments from wealthy nations, which have pledged $822 million to date, and the fact that no funding had previously been disbursed.

Wagle described Nepal as a test of “how serious the world is in helping developing and fragile countries to respond to the loss and damage associated with climate change.”

Dispute Over Precedent

During Thursday’s meeting, some developed countries emphasised that the decision to support Nepal should be treated as an exceptional case rather than a model for the fund’s long-term operations.

“This is not a precedent on one hand, but on the other it provides a learning for the development of the long-term model of the fund,” said Jan Dusik of the European Union.

Developing countries pushed back against that position.

“I heard Jan saying that we are open for learning, but not in setting precedent. Please do not define the boundaries for learning,” said Pakistan’s Ali Tauqeer Sheikh, whose remarks received support from other participants.

The debate reflects growing pressure on the fund to move beyond its original cautious approach and respond more directly to climate-related disasters.

Last year, after a devastating hurricane destroyed parts of Jamaica, the fund’s French co-chair at the time told AFP that the body was not intended to “provide a humanitarian response” but was designed to support “the next stage.”

However, the scale of Nepal’s disaster prompted developing countries, which hold a majority of the fund’s board seats, to demand a response to the country’s appeal.

Questions Over Climate Finance Obligations

Harjeet Singh, founding director of the Satat Sampada Climate Foundation and global convenor of the Fill the Fund campaign, welcomed the decision while warning that substantial challenges remain.

“It’s a landmark first step. At the same time, it’s also a proof of how far the fund still has to go,” he said.

The United Nations and its humanitarian partners launched a $49.6 million emergency appeal following the Nepal disaster. The United States also announced $31 million in additional flood recovery assistance in September.

However, as courts increasingly examine countries’ legal responsibilities for climate change, developing nations and legal experts argue that support for vulnerable countries should be an obligation of wealthy nations rather than a voluntary contribution.

Nikki Reisch, director of the Climate and Energy Program at the Center for International Environmental Law, said she hoped the decision on Nepal would “really be a springboard” for efforts to ensure that the fund and responses to escalating climate impacts are “grounded in legal obligations.”