KATHMANDU, Oct 24: The decision by the Fund for Responding to Loss and Damage (FRLD) to earmark $20 million for Nepal marks a significant breakthrough in the global struggle for climate justice. For the first time since the FRLD became operational, its board has agreed to set aside money for a country seeking support for climate-related losses and damage. While the decision recognises the urgent needs of vulnerable countries, it also highlights how far the international community remains from providing finance at the scale and speed required.
Nepal’s devastating Bhotekoshi flash flood on August 26 exposed the vulnerability of mountain communities to climate-related disasters. Triggered by a permafrost-related ice and rock avalanche, the disaster left at least 1,455 people dead, nearly 7,000 injured and 5,285 unaccounted for. It swept away settlements, roads, bridges and hydropower infrastructure, leaving families displaced and livelihoods shattered. Nepal’s estimated recovery and reconstruction needs stand at around $4.78 billion.
Against this scale of devastation, the $20 million allocation is modest, covering less than 0.5 percent of the estimated recovery bill. Moreover, the FRLD’s decision to earmark the said amount does not mean Nepal will receive it immediately. The government must submit a proposal for approval, and there is no firm timeline for disbursement.
Yet the decision’s significance extends beyond its monetary value. It demonstrates that a fund established after years of difficult climate negotiations can begin responding to the real-world consequences of climate change. It also offers hope to other vulnerable countries seeking support for losses they cannot prevent through mitigation or adaptation measures alone.
From promises to delivery
The establishment of the FRLD was a hard-won achievement for developing countries at UN climate conferences in 2022 and 2023. Many have contributed relatively little to the greenhouse gas emissions driving global warming but face disproportionate exposure to its consequences. The fund emerged from longstanding demands for climate justice and compensation for irreversible losses suffered by countries least responsible for the crisis.
Nepal's NIMB Bank receives accreditation from Green Climate Fun...
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However, progress has been frustratingly slow. Developed countries have pledged only about $822 million to date, and no money had been disbursed before the board’s decision on Nepal. The gap between the scale of climate-related losses and available resources has raised questions about whether the fund can effectively fulfill its mandate.
Nepal’s request following the Bhotekoshi disaster forced the Fund to confront the need for a timely response. The insistence of developing countries that it act on Nepal’s request challenged an approach that effectively separated loss-and-damage finance from the immediate consequences of climate disasters.
But disagreements over whether Nepal’s case should establish a precedent reveal the challenge ahead. Some developed countries have argued that the decision should be treated as exceptional rather than as a model for future funding. If the fund is to become credible, however, Nepal’s allocation must inform a clear, predictable and accessible system. No vulnerable country should have to rely on exceptional meetings or diplomatic pressure to secure assistance after a major disaster.
Making climate finance meaningful
The FRLD’s credibility will depend mainly on three factors: the amount of money available, the conditions attached to it and the speed at which it reaches affected countries.
First, contributions must rise substantially. Less than $1 billion in pledges cannot meet the needs of countries facing disasters that cause billions of dollars in damage. Wealthier countries must translate their commitments into adequate and sustained contributions rather than treating the fund as a symbolic gesture.
Second, assistance must not deepen the debt burdens of vulnerable countries. If countries already facing fiscal constraints must borrow to recover from climate-related disasters they did little to cause, the promise of climate justice remains unfulfilled. Grants should therefore be central to loss-and-damage financing.
Third, the fund needs a reliable mechanism for rapid disbursement, with clear eligibility criteria, simplified applications and predictable timelines. Recovery requires urgent support for affected communities, infrastructure and livelihoods. Delays only increase the human and economic costs of disasters.
The question of debt is central to this debate. Finance Minister Dr Swarnim Wagle has repeatedly questioned why Nepal should have to borrow to rebuild infrastructure damaged by climate disasters when its contribution to global greenhouse gas emissions is negligible. Prime Minister Balen Shah raised a similar concern at the UN General Assembly, noting that Nepal accounts for less than 0.1 percent of global emissions. Their concerns underscore the need for loss-and-damage financing to provide meaningful support without adding to the debt burden of countries already struggling to recover from climate disasters.
Nepal should use the upcoming 31st Conference of the Parties (COP31) in Turkiye to press for a substantial replenishment of the fund, transparent allocation criteria and a rapid-response mechanism. The international context makes this task more urgent, as the US withdrawal from the Paris Agreement and competing donor priorities threaten to weaken international climate cooperation.
At the same time, Nepal must submit a strong proposal demonstrating the disaster’s losses, affected communities’ needs and the intended use of the assistance. Transparent accounting and clear priorities will be essential to securing funding and ensuring it reaches those who need it most. The country must also strengthen its disaster preparedness and climate-resilient infrastructure, although domestic responsibility cannot substitute for international support.
Ultimately, Nepal’s first allocation is both an achievement and a test. The real measure of success will not be the announcement of $20 million, but whether Nepal receives the money in time to support recovery, whether the fund receives adequate resources and whether other vulnerable countries can access assistance without fighting the same battle. This breakthrough must mark the beginning of dependable climate solidarity, not remain an isolated exception.
