Nepal pilots a new diagnostic for climate budgeting

Sep 15, 2016

Increased flooding linked to glacial melting in the Himalayas threatens water supply to billions of vulnerable people – and their crops and livestock – which are vital to rural livelihoods. Photo: UNDP Nepal

Despite making a negligible contribution to global warming, Nepal is one of the most vulnerable countries in the world to climate change. Climate change threatens to save almost 10 per cent off projected annual gross domestic product (GDP) by 2100, according to the ADB. Prudent public spending and fiscal management is critical to avert this gloomy scenario.

Nepal’s pioneering efforts to tackle climate change through the budget and enhanced public financial management (PFM) has moved a notch ahead thanks to new initiatives taken by government – both at central and at local levels. A new index created by UNDP in 2015 – the Climate Change Budget Integration Index (CCBII)– clearly reveals this progress. The CCBII helps countries measure the extent to which and how well they are integrating climate change in their PFM systems. Being one of the first few countries to use the diagnostic places Nepal in a good position to move towards even greater progress in the future.  

Nepal has for some time been a first mover in this area. It was one of the first countries to undertake a Climate Public Expenditure and Institutional Review (CPEIR) and to implement a dedicated budget code to monitor and report on national spending on climate change. The latter is a first step towards ensuring that policies and government programmes are backed up with resources to address the concerns of the poor and vulnerable.

Nepal results

The UNDP-CCBII index is an easy-to-use tool and whose results are particularly useful for identifying strengths and weaknesses and designing responses to address gaps. Multiple components are assessed along different dimensions: policies, systems, accountability, and development partner adoption. Each of these is further split into sub-categories for grading, which have been standardized to allow for both annual and cross-country comparisons.

Nepal finding

Nepal scored 45 out of a possible 100 points. It fared stronger in the policy and systems dimensions compared to others. This is due to having a strong foundation by virtue of climate policies and having a budget code to build upon for improving reporting and expanding programmes spending monitoring at sub-national level. With UNDP support, Nepal is undertaking efforts that could improve its score by integrating climate change into the Mid Term Expenditure Frame, capturing projects funded by development partners in the PFM system and enhancing the oversight role of Parliament and CSOs.

For more information:

Presentation on CCBII and Nepal's results

Kathmandu regional exchange on climate budget oversight