UN climate damages fund earmarks $20 million to Nepal for August disaster

The United Nations climate convention’s Loss and Damage Fund has set aside $21.6 million for Nepal towards addressing the damage from the Bhotekoshi floods that ravaged the country in August.

The decision, taken at an extraordinary meeting by the Fund’s Board on Thursday (October 22, 2026), is the first time that the Fund has earmarked money for a specific country to remedy damage from climate change. However, the funds still constitute a tiny fraction of the $5 billion in economic losses the country has self assessed.

It comes weeks before the 31st UN climate conference, COP31, opens in Turkey next month.

‘Escalating climate impacts’

On August 26, a climate-induced ice-and-rock avalanche in Nepal set off a debris flow and flooding along the Bhotekoshi-Trishuli-Narayani river system. The Nepal government puts initial recovery and reconstruction needs at a minimum of $4.71 billion.

On August 31, Nepal’s Finance Minister Swarnim Wagle, and Agriculture, Forests and Environment Minister Gita Chaudhary wrote to the Board’s co-chairs. They asked it to “take a special decision to respond rapidly, directly and effectively.” The letter said that Nepal, a least developed country, contributes negligibly to global emissions yet bears escalating climate impacts, and that the full extent of losses was still to be determined.

Board members from Africa, Asia-Pacific and least developed countries then sought an extraordinary meeting. Members from Latin America, small island states, Eastern Europe and developed countries sent letters of support.

Pleas for money outpace pledges

The Fund for responding to Loss and Damage, was established at COP27 in 2022, with its operational mechanism agreed at COP28 the following year. It is meant to help vulnerable developing countries respond to economic and non-economic losses from climate change.

The Fund has pledges by countries (mostly developed) of more than $820 million, of which $342 million has been promised for its start-up phase. On the other hand, it has 176 requests from 119 countries, worth about $2.8 billion. There was no official figure immediately available on how much money the Fund had on hand, and the disbursement, even in the Nepal case, will rest on donors making good on their pledges in time.

The allocation, as of Thursday, is provisional and includes $1.6 million in “oversight fees,” which are a charge the Fund pays to the organisations that implement its projects, to cover the cost of overseeing how the money is used. These can include multilateral banks, national institutions, and UN agencies.

“The Fund for Responding to Loss and Damage (FRLD) has taken a landmark operational step by allocating $20 million for the reconstruction in Nepal following the [glacial lake outburst flood] GLOF event. But the funding is less than 0.5% of Nepal’s estimated $5 billion reconstruction costs, and the cash would be released only after Nepal clears further bureaucratic project proposals, risking a delay to vital relief amid an ongoing structural crisis. I would suggest that the FLRD releases support immediately if the bulk of funding is coming from other sources,” Ajay Mathur, former Director General, International Solar Alliance, said in a statement.