For the first time since it was operationalised at COP 28, the United Nations’ (UN) Loss and Damage Fund has provisionally approved $20 million plus $1.6 million in oversight fees for Nepal on Thursday for the damage caused during August’s Bhote Koshi River floods, which killed at least 1,000 people and left over 5,000 missing.
The Board for the Fund for Responding to Loss and Damage (FRLD) met at an “extraordinary meeting” on Thursday to address a formal climate-emergency funding request from Nepal for $20 million over a four-year period.
This accounts for only around 0.7% of the costs estimated to be incurred by Nepal during the disaster. However, it is the first time money has been allocated to or set aside for a country since the fund's creation and marks a pivotal point in developing countries' efforts to access climate finance for disasters.
The Loss and Damage Fund was set up to provide financial assistance to developing countries that are especially vulnerable to the adverse effects of climate change – helping them cope with unavoidable economic and non-economic losses
Experts said Nepal will still have to formally apply for this funding, and the Board will consider the request at its next meeting in December. This is the maximum amount that can currently be requested for a single project.
The funding is expected to cover about 0.7% of the costs of the August Nepal floods, which preliminary estimates suggest could be around US$2.56 billion. The co-chairs received a communication from the Government of Nepal via its senior signatory national focal point on August 31.
Within the communication, Nepal requested that the Board “take a special decision to respond rapidly, directly and effectively in accordance with its Governing Instrument”.
Applications and contributions
So far, developing countries have submitted 176 applications to the fund, totalling $2.8 billion, a separate analysis by Carbon Brief shows.
As of March 15 this year, the Loss and Damage Fund had received $822.06 million in pledges from 27 countries, with total grant contributions currently standing at $ 629.70 million.
The largest contributors include the UAE ($100 million); Germany ($98.4 million); France ($ 53.07 million); the United Kingdom ($ 52.15 million); Spain ($ 44.01 million); and Australia ($ 34.11 million).
Harjeet Singh, Global Convenor, Fill the Fund campaign and Founding Director, Satat Sampada Climate Foundation, said Thursday marked a historic day in responding to Nepal.
“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. We must set up a permanent rapid-response system that moves support in days, not months,” he said.
Why it is a milestone
For India and other developing countries facing similar climate-induced disasters, this remains an important milestone in accessing disaster finance, experts said. Anjal Prakash, Professor of Public Policy at FLAME University and an IPCC author, said Nepal’s allocation was an important recognition of the need to pay for climate justice.
“However, setting money aside is not the same as delivering it. At just 0.7% of estimated losses, this support exposes the enormous gap between climate impacts and available finance. The priority must now be rapid disbursement, with transparent safeguards that enable rather than delay assistance. We need a permanent emergency window, simpler access procedures and predictable contributions from wealthy countries,” he said, stating recovery support should reach affected families, restore essential services and protect livelihoods without adding to national debt.
“Ahead of COP31, the test is delivery- whether this decision becomes a reliable system that responds to vulnerable communities at the speed and scale their losses demand, rather than another symbolic financial commitment,” he added.