In order to advance sustainable forest management and to boost green recovery, on March 19 the Government of Nepal (GoN) and the World Bank signed loan and grant agreements valued at US$24 million. Signed under the Forests for Prosperity Project (FPP), these agreements comprise US$6.1 million in the form of a grant and US$17.9 million as a concessional loan and are expected to help Nepal to advance sustainable forest management.
The FPP aims to contribute to transforming Nepal’s forest sector through the improvement of sustainable forest management and the development of a strong forest-based private sector. The project’s activities are expected to result in multiple gains such as inclusive economic benefits, ecosystem services, and greater climate resilience for forest-dependent people in selected municipalities of Province Number 2 and Lumbini Province of Nepal. It is also expected to strengthen ongoing community-based conservation efforts while promoting inclusive sustainable use.
These agreements were signed by Sishir Kumar Dhungana, Finance Secretary of the GoN, and Faris Hadad-Zervos, the World Bank Country Director for Maldives, Nepal, and Sri Lanka. A project agreement to establish and strengthen forest-based small and medium enterprises was also signed by Anil Kumar Upadhyaya, Chief Executive Officer of the Agriculture Development Bank of Nepal, and the World Bank Country Director.
Highlighting that the project will support 50 municipalities as a starting point for inclusive climate action and inclusive green economic growth based on Nepal’s comparative advantage, Faris Hadad-Zervos said, “We are confident that if the project yields the expected outcomes, there will be opportunities to scale up the project and allow more people to benefit.” FPP demonstrates that the World Bank is proud to be a trusted partner of Nepal as it faces three challenges at the same time – COVID, climate, and community opportunities, he added.
Underscoring that forests are a traditional safety net for local communities during the crisis and are particularly essential in the COVID-19 context, Finance Secretary Dhungana said, “The project will facilitate Nepal’s forest-based private sector to invest in jobs and reduce dependence on timber imports.” The project will also provide timely support to institutions at the provincial and local level to strengthen natural resource governance, he added.
- FPP is the first World Bank-supported forest sector investment project in Nepal in over 15 years and the third part of a joint programmatic engagement on forest landscapes by the World Bank and GoN
- The project is a key part of Nepal’s Relief, Recovery, and Resilience (3R) plan and the country’s commitment to mitigate and adapt to climate change
- Aligned with the 3R plan, development partners led by the World Bank and the UK’s Foreign, Commonwealth, and Development Office have come together around a Green, Resilient, and Inclusive Development framework to mobilize investments over the next three years
- The project aims to secure jobs and livelihoods, to build resilience, to strengthen social inclusion, to enhance sustainability, and to promote efficiency
“FPP complements the ongoing technical assistance for reduced emissions from deforestation and forest degradation, as well as the recent signing of the Emissions Reduction Program for the Terai Arc Landscape, the first performance-based program addressing drivers of deforestation and forest degradation in the Terai Arc Landscape, unlocking up to US$45 million through 2025 for verified emission reductions,” reads the World Bank press statement.
Financing for the FPP comes from the Forest Investment Program within the Climate Investment Funds (CIF). The CIF is hosted by the World Bank and financed by a number of development partners such as Norway, Spain, Sweden, Australia, Denmark, Japan, the United Kingdom, and the United States.
