Nepal Faces Rising Climate Costs

Abiral Khatri reports that climate-induced disasters currently erase up to 2 percent of Nepal’s GDP annually. A 54-year analysis shows average annual economic losses of $18 million, potentially rising to 10 percent of GDP by 2100 without intervention. The 2021 Melamchi River Valley flood caused roughly $641 million in damages, exacerbated by infrastructure designs that didn’t account for climate change.

Nepal pioneered climate expenditure tagging in 2012, now labeling nearly half its budget as climate-relevant, but actual impactful spending is declining. Despite collecting about $14.3 million in green taxes, these funds aren't directed toward climate projects and lack transparency.

The country also faces complications with its energy transition, as a recent flood impacted hydropower and reduced electric vehicle imports by 14.47 percent. While Nepal’s contribution to global emissions is minimal, integrating climate risk into budgeting remains a challenge. The work to effectively allocate funds and build resilience continues.