The investment done after the disaster is a late investment. This year's International Day for Disaster Risk Reduction (IDDRR) theme, "Fund Resilience, Not Disasters", is a stark reminder for Nepal to focus on proactive, planned and sustainable investment in disaster and climate resilience rather than being reactive.
The data of Ministry of Home Affairs 2024 shows that Nepal is among the world's most climate-vulnerable countries with over 32,000 disaster events between the year 2018 and 2024. These events resulted in 3,672 deaths and caused a loss of Rs 23.6 billion. The irony here is that despite having the strong national frameworks such as the Disaster Risk Reduction and Management (DRRM) Act (2017), Climate Change Policy (2019), and the National Adaptation Plan (2021-2050), Nepal has failed to translate the commitments into local action and the financing in disaster remains very poor.
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A recent "Budget Tracking and Analysis of Investment" study conducted by Mercy Corps Nepal shows the gap in investment very visible. The study, carried out in Madhesh and Sudurpaschim Provinces across seven municipalities, showed that the allocations for Climate Change Adaptation and DRRM averaged below five per cent of annual budgets, with some local governments spending less than one per cent.
This is contradictory to the national plans target rise in climate related budgets from 6to 20 per cent within five years.
To make this happen, local governments, who are in the front line of resilience, need to be empowered and they need to be fully resourced.
The subnational government faces number of hindrances. The delayed fiscal transfers, lack of technical capacity, fragmented coordination among different sectors, all of these contribute to lack of proper planning and investment in disasters. And this results in many communities relying on reactive response than prevention and preparedness, the consequences of which are costly. Lack of investment in preparedness not only causes the loss in infrastructure, life and livelihoods but also destruction of human development gains.
In places where local investments have been made for risk reduction, for example in Dodhara Chadani in Sudurpaschim, there have been measurable gains in food security and incoming generation minimizing the losses. This is an example that clearly reflects that timely and risk-informed investments can result in long-term resilience building.
Nepal has made remarkable progress in developing policies that promote climate-smart budgeting and planning across all levels of government. However, the study found that the risk data has not been used in the planning and tools like Climate Change Budget Code and Local Disaster and Climate Resilience Plans (LDCRPs) are often not taken into consideration.
Most importantly, the Equalisation Grants, the key fiscal transfer from the federal government, do not consider vulnerability or exposure to hazards. Due to this, the high- risks areas remain underfunded. The gap between the ground realities and national commitments therefore has hindered the long - term resilience building efforts with more focus on short term recovery and relief focused interventions.
It is thus important that Nepal needs to institutionalise risk- informed budgeting , translate policies into action and allocate more funds where risks are maximum.
The emerging potential of private- sector for resilience has been discussed quite often. Now, it is time to encourage private sectors to invest in adaptation. The frameworks like Green Finance Taxonomy (2024) and Corporate Social Responsibility (CSR) mandates, private sector to invest in building resilience and this needs to be materialised. For example, they can invest in parametric insurance in agriculture, digital finance in dairy sector and renewable energy among others.
At present, we can see the private sector investment mobilised mainly in relief and response than on preparedness. But if the government provides incentives for climate resilient projects and encourages private sectors the gap for financing can be fulfilled and we can create a resilient future.
This year's message "Fund Resilience, Not Disasters" is clear: investing in preparedness saves both lives and money. The government needs to make a mandatory policy for at least five per cent allocation of DRRM and 20 per cent for climate relevant spending as mentioned in the National Strategic Plan of Action. This is a dire need not only to minimise the losses but also to increase the human development gain and foster inclusive growth.
As the climate hazards increase each year, from heatwaves in Madhesh to floods in Sudurpaschim, we need to act now. As we know, investing now in early warning, resilient infrastructure costs far less than spending on recovery after every disaster. Studies have shown that $1 spent on disaster risk reduction delivers an average return of $15 in terms of future disaster recovery costs.
This IDDRR, Nepal needs to understand that its time to fund resilience, not disasters and there is no time to wait, it's the time to act, time to act now.