Nepal and World Bank sign US$45 million agreement to reduce carbon emissions

By Laxman Datt Pant

Nepal and World Bank sign US$45 million agreement to reduce carbon emissions

Releasing up to US$45 million to support Nepal to reduce carbon emissions from deforestation and forest degradation up to 2025, on February 24 the Government of Nepal (GoN) and the World Bank (WB) signed an agreement under the WB’s Forest Carbon Partnership Facility (FCPF).

By promoting alternative sources of energy and strengthening capacity for protected area management, this agreement also aims to promote sustainable livelihoods and land use in Nepal’s resource-rich lowlands. It also leverages support for sustainable land management and social inclusion and builds on complementary efforts financed by the Climate Investment Funds’ Forest Investment Program and the Dedicated Grant Mechanism for Indigenous Peoples and Local Communities.

This Emission Reductions Payment Agreement (ERPA) signed by Dr. Bishwa Nath Oli, Secretary at the Ministry of Forests and Environment (MoFE) of Nepal, and Faris Hadad-Zervos, WB Country Director for Maldives, Nepal and Sri Lanka, expects to reduce nine million tons of carbon dioxide emissions in the Terai Arc Landscape of Nepal.

Stating that Nepal’s Emission Reductions Program builds on more than three decades of successful community forestry, Faris Hadad-Zervos said, “The emissions reduction purchase is one pillar of a strategic program on forest landscapes and climate action in Nepal.” This innovative financing agreement will address the drivers of deforestation and forest degradation, helping to incentivize further community action across the country, he added.

According to Sishir Kumar Dhungana, Finance Secretary of Nepal, this scale of results-based payments for emission reductions is a first for Nepal. Highlighting that forests in the Terai region of Nepal provide ecosystem services that are critical for climate resilience, Dr. Bishwa Nath Oli, Secretary at the MoFE, anticipates that the program will be helpful to protect the forests that are inextricably linked to the wellbeing of many communities across the country.

  • Nepal’s Emission Reductions Program in the Terai lowlands aims to lower the rates of deforestation and forest degradation across 2.4 million hectares of land rich in natural resources, including 20% of the country’s forest cover
  • The Terai region of Nepal supports some of the most productive forests, richest biodiversity, and significant protected areas
  • Launched in 2008, the FCPF has worked across 47 developing countries, along with 17 donors that have made contributions and commitments valued at US$1.3 billion
  • Nepal is the fifth country in Asia-Pacific and the twelfth globally to reach such a milestone agreement with the FCPF which altogether has unlocked over US$600 million in results-based financing
  • ERPAs are innovative instruments that incentivize sustainable land management at scale and help to connect countries with other sources of climate financing
  • Funding from the FCPF supports new opportunities to conserve and regenerate landscapes and biodiversity which are key for Nepal to build back better and greener

Having the highest population growth, urbanization and economic development in the country and mainly agricultural, the Terai region in Nepal and its natural resources are vulnerable to the substantial threats that the emission reduction program can help to address. This initiative is expected to improve community-based forest management by transferring user rights for national forests to local communities and improving integrated land use planning.