Kathmandu – The World Bank Group’s Country Climate and Development Report for Nepal underscores the urgency of building resilience to climate change and recommends policies and investments for integrated climate and development solutions for green, resilient, and inclusive development.
Nepal’s
supply chains, farmers, and urban dwellers are already facing devastating climate
impacts such as landslides, droughts, and flooding. Without concerted steps to shore
up resilience, future climate hazards will threaten the country’s long-term
development. Climate variability is already a major driver of food
insecurity and poverty in Nepal, with increased flooding and heat stress seen in
the southern regions, while the north experiences increased landslides, water
stress, and glacial lake overflow. The
report states that Nepal’s GDP could be at least 7 percent smaller by 2050 due
to unchecked climate impacts.
As
Nepal’s economy grows, it also needs to address its greenhouse gas and air
pollution emissions. While the country is a negligible contributor to climate change
– producing 0.1 percent of total global greenhouse gas emissions – the
country’s emission rate is growing rapidly. Nepal also has one of the highest
levels of air pollution in the world, with emissions from transport, biomass burning,
and industrial activities significantly impacting health and productivity.
“With increased evidence of more severe climate
change impacts, Nepal stands at a critical juncture to embark on a path for recovery
and growth that is more sustainable, more inclusive, and more resilient to
future shocks,” said World
Bank Vice President for South Asia Martin Raiser. “The good news is that the country’s notable
successes in community forestry and hydropower investments are a strong
foundation for future climate-smart growth.”
Nepal
has pledged to achieve net zero emissions by 2045 and to significantly scale up
hydropower investment in the coming decade.
In 2021, Nepal adopted the Green, Resilient and Inclusive Development (GRID)
approach as a national vision
to guide long-term green growth and build resilience to climate and other
shocks that are barriers to Nepal’s development ambitions. Under Nepal’s
federal structure, the local governments are placed at the center of climate
resilience and development efforts with extensive implementation
responsibilities and play a crucial role in translating the GRID strategy into
action.
To
help Nepal achieve its development goals while implementing its climate
commitments, the report proposes actions on two fronts: building resilience to
climate impacts and pursuing public and private investments in low-carbon
solutions, notably hydropower and its export. The report also highlights that
women, indigenous people, and other marginalized groups are often excluded from
mainstream development and suffer from cumulative and cascading impacts of
climate change and disasters.
Based
on the report’s modeling and analytical work, the World Bank Group recommends four
priority transitions.
· Taking an integrated approach to
water, agriculture, and forests. Nepal’s agriculture and forestry sectors together
comprise 24 percent of GDP and provide
the main source of livelihoods for the poor. Agriculture will be hard hit by
climate variability which strains forests, soil, water, and other natural
assets in the rural landscape. To shore up resilience, the report recommends
enhancing water resource management, including water storage investments;
embracing climate-smart agriculture; and transitioning to sustainable forest
management.
·
Harnessing
the hydropower opportunity. Nepal
has among the world’s largest hydropower potential, which can enable the
decarbonization of the country and its higher-emitting neighbors. The report finds that an annual average of
US$200 million of additional export revenues could be generated from 2022 to 2025.
Hydropower development also offers the potential to grow climate-smart
solutions such as electric mobility and green hydrogen. To prepare for this
opportunity, more work is needed to assess climate impacts on future river flow,
invest in supporting infrastructure to firm up exports, engage the private
sector more systematically, and continue to work with regional partners.
·
Managing
sustainable urbanization. Nepal is the fastest-urbanizing
country in South Asia, and cities can benefit from the climate transition catalyzing
new jobs, innovation, and improved service delivery to residents. To tap into
these opportunities, the report recommends strategic urban planning to invest
in municipal solid waste and water treatment infrastructure, green, resilient
buildings, and low-carbon transport options such as e-mobility and mass transit.
·
Strengthening
low-carbon resilient connectivity. Road
transport is critical to Nepal’s economic development; disaster-related
closures and damage lead to reduced access to jobs, healthcare, and education,
and lower profitability for businesses. The report estimates that the costs of
climate damages to the transport sector could be as much as US$250 million
annually. To increase resilient connectivity, Nepal can shore up the most
critical transport corridors and develop a climate-smart maintenance plan.
To support these transitions, Nepal needs to
prioritize three key enablers: scale-up all types of finance for resilience and
low-carbon development; strengthen household and community resilience through
social protection and well-managed built and natural capital; and strengthen
governance for climate change and disaster risk management through deeper federalization
of responsibilities.
"Nepal's transition to a prosperous low-carbon
economy that is resilient to climate adversity will also require significant
mobilization of private expertise and capital," said Ruth Horowitz, IFC's Regional Vice
President for Asia and the Pacific. "The
private sector already plays a crucial role in harnessing clean energy—and with
targeted reforms, more private finance, including foreign direct investments,
can be crowded in to sustainably green the entire economy while reducing fiscal
pressure on public finance."
World
Bank Group Country Climate and Development Reports
The World Bank Group’s Country Climate and
Development Reports (CCDRs) are new core diagnostic reports that integrate
climate change and development considerations. They will help countries
prioritize the most impactful actions that can reduce greenhouse gas (GHG)
emissions and boost adaptation, while delivering on broader development goals.
CCDRs build on data and rigorous research and identify main pathways to reduce
GHG emissions and climate vulnerabilities, including the costs and challenges
as well as benefits and opportunities from doing so. The reports suggest
concrete, priority actions to support the low-carbon, resilient transition. As
public documents, CCDRs aim to inform governments, citizens, the private sector
and development partners and enable engagements with the development and
climate agenda. CCDRs will feed into other core Bank Group diagnostics, country
engagements and operations, and help attract funding and direct financing for
high-impact climate action.
