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Nepal has become the first country to receive funding from a United Nations-backed climate loss-and-damage fund, with $20 million earmarked to help it recover from devastating floods earlier this year.
The Fund for Responding to Loss and Damage, established in 2023, provides financial assistance to countries facing the impacts of climate change.
On Thursday, the fund approved the allocation of $20 million for Nepal following a devastating disaster on August 26 that killed more than 1,400 people.
The decision marks a significant step towards translating developing countries’ long-standing demand for climate justice into financial support for communities affected by climate-related disasters.
However, under the fund’s guidelines, $20 million is the maximum amount available for a single project. Nepal has estimated its losses to infrastructure and the economy at $2.7 billion, meaning the approved funding covers only a small fraction of the damage.
The United Nations Development Programme (UNDP) described the approval as a “historic milestone for climate justice and solidarity with Nepal”.
It said this was the first time the fund had approved support for a country facing a sudden-onset climate disaster since becoming operational at the UN climate conference COP28.
The funding is expected to support recovery, reconstruction and the development of more resilient livelihoods in affected communities.
The UNDP said the decision also sent a message to vulnerable countries that international cooperation could deliver climate justice when disasters strike.
On August 31, the Nepalese government requested $20 million from the fund to address losses and damage caused by a devastating rock-and-ice avalanche near the border with China’s Tibet region. The disaster swept away houses, roads, schools and power infrastructure in several towns and villages.
Nearly 60,000 people from 15,000 households were directly affected, according to the report. The disaster killed at least 1,500 people, while more than 5,000 remained missing.
In a letter to the fund, Nepal’s Finance Minister Dr Swarnim Wagle said the country contributes negligibly to global greenhouse gas emissions but continues to face disproportionate and growing climate impacts.
He urged the fund to respond swiftly and flexibly to help climate-vulnerable countries cope with losses beyond their capacity to address independently.
However, the allocation has drawn criticism from climate activists.
Rajendra Bagjain, a climate activist and former member of Nepal’s parliament, described the $20 million as a “crumb stuck between the teeth”, arguing that the amount was inadequate to address the suffering of disaster victims.
Developing countries have so far submitted 176 applications to the fund, seeking a total of $2.8 billion to recover from climate-related disasters. Developed countries, meanwhile, have pledged only $800 million to support the fund.