The United Nations' loss and damage fund has set aside $20m (£15m) for Nepal – less than one per cent of what the country says it needs to recover after a glacier flood killed about 1,500 people in August.
The fund’s board agreed on Thursday at its first extraordinary meeting to set the money aside. This is the first time the global fund has activated its emergency procedures and responded to a specific climate disaster.
Nepal’s government confirmed late on Thursday that it will receive the money from the Fund for Responding to Loss and Damage (FRLD). Its agriculture, forests and environment ministry said the support was meant to “help address the severe damage caused by climate-related disaster”.
The board has invited Nepal to submit a new funding request under the Barbados Implementation Modalities, the fund's start-up phase, and Nepal must prepare a proposal and go through existing approval processes before it can use the money.
The $20m is the most the fund can currently give for any single disaster, making up only a small fraction of Nepal’s losses. Early official estimates put the cost of reconstruction at more than $4.7bn (£3.5bn). Nepal wrote to the fund in August, less than a week after the flood.
The board set that limit when it chose to start paying out in a test phase, a board member explained to The Independent last month, using the money it has, instead of waiting years to design a full long-term model.
"It's a very small amount compared to what we lost," Maheshwar Dhakal, a senior official in Nepal's climate and environment ministry, told AP. He said the money still sent a message.
"This shows that the global community can take the right decision at the right time to help those who are most vulnerable to climate change," he said. The government had received around $102m (£77m) from domestic and international donors by the end of September, he said, and is working with India, China and multilateral development banks to raise more.
The fund currenly only holds $822m (£616m) in pledges, but only around $350m (£262m) is currently earmarked for disbursement, against 180 applications from developing countries worth a combined $2.8bn (£2.1bn).
The money was issued for the disaster that began on 26 August when part of a mountain collapsed on Nepal's border with China's Tibet region, and more than 5,000 people are still missing. It affected about 60,000 people from 15,000 families and caused losses estimated at $2.7bn (£2bn), including to roads, bridges, schools and 13 hydropower plants, according to official data.
No country had invoked the fund’s emergency procedures before.
The process is meant to move an application to payment in six to eight weeks, compared with six to eight months under the fund’s normal rules. The board was not due to meet until December, but it called its first extraordinary meeting after eight developing country members asked for one.
The board meets again in December to consider more requests pending with it.
Harjeet Singh, global convenor of the Fill the Fund campaign, which pushes governments to pay into the fund, called the decision historic but said it could not be a one-off.
"No country should have to endure a catastrophe and wait seven weeks, through historic letters and relentless pressure, just to unlock the Fund's first-ever emergency meeting," he said.
He said developed countries backed the allocation but "kept insisting it must not set a precedent and must not prejudge the fund's long-term model".
"Nepal needs billions to rebuild, and this fund is responding only in millions," he said.
"Nepal is investing its scarce resources in climate adaptation, mitigation, and resilience, yet climate finance often deepens its debt burden. For every $1 received as a grant, Nepal receives $6 in loans. Countries that contributed least to this crisis should not have to borrow to survive it. These loans divert resources from health, education, and livelihoods, burdening future generations. Meanwhile, the Fund for Responding to Loss and Damage remains terribly underfunded," said Arnab Chaudhary of the Aalawya Foundation in Nepal.
Nepal's prime minister, Balendra Shah, told the UN General Assembly in September: "We did not create this crisis, yet we are paying a colossal price for it."
A World Weather Attribution analysis that month found that warming had thinned the region's glaciers and thawed the frozen ground that holds mountain rock together, weakening the slope that collapsed.
"The headlines have moved on, but thousands are still missing in the Rasuwa and Nuwakot regions," said Dikshya Subedi, founder of the youth group Youth Action For Sustainable and Eco Nepal, whose husband's home was washed away, said.
"Entire villages are still buried under mud, and people lack the support to rebuild their homes."
The decision comes before the next UN climate talks, which begin in Turkey next month, where finance for countries hit by climate disasters is expected to be a key issue.
Aid budgets are shrinking, with official development assistance from major donors falling 23 per cent in 2025, according to the OECD, and the UK among the countries that cut aid.
"Rich nations can't show up at COP31 with empty hands: they need to deliver on climate finance," said Savio Carvalho, head of campaigns and networks at 350.org.
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