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Paper short abstract

Drawing on a qualitative study of two international climate finance projects, this paper critically examines the political economy of and barriers to climate finance localization in the Nepal Himalaya, highlighting structural, institutional, procedural and coordination hindrances at scales.

Paper long abstract

Climate finance (CF) seeks to support mitigation and adaptation actions to address climate change (CC) impacts. Nepal’s CC Policy 2019 recognizes the risk of climate-induced disasters and envisions to achieve socioeconomic prosperity of the nation by building a climate-resilient society through adaptation and mitigation measures. While the country has made noticeable progress in developing policies, Nepal’s aspiration to localize CF is undermined by a confluence of structural, institutional, procedural and coordinational challenges rooted across scales. Such dichotomous and entangled climate financing thus illustrates (1) the governmentality of designing hasty policies to please donors without gauging their material implementation and impacts, and (2) the politics of scale where sub-national and local governments are provided with authorities without resources, reflecting incomplete decentralization. These complexities thus warrant unpacking the political economy of CF in Nepal. Informed by qualitative research conducted in two international CF projects in Nepal and framed through the lenses of governmentality, the paper scrutinizes what factors and actors bar and mar localizing CF in Nepal. Findings highlight that the centralized tendency of the federal government on CF management, both in terms of decision-making and resource allocation, has barred the decentralization mandate enshrined in the national climate policies. Despite the rhetorical policy on 80% benefit sharing with communities, local governments lacked the institutional mechanisms and skills to administer climate adaptation effectively. The barriers to localizing CF therefore are marred by disconnected policy designing, project implementation, and siloed sectoral administration. We therefore recommend restructuring CF governance given the Himalayan exposure to vulnerabilities.