Nepal Becomes First Beneficiary of Loss and Damage Fund

On 22 October 2026, the board of the UN’s Fund for Responding to Loss and Damage (FRLD) agreed to set aside 20 million for Nepal’s recovery from floods in August 2026. This is the fund’s first allocation since its establishment, making Nepal its first beneficiary. The approved total for Nepal is 21.6 million, including $1.6 million for oversight fees.

Loss and Damage Fund

The FRLD is a financial instrument mandated under the United Nations Framework Convention on Climate Change (UNFCCC). It was established at the 27th Conference of the Parties (COP27) in 2022 and operationalised at COP28 in 2023. The World Bank hosts the fund. In climate negotiations, loss and damage refers to climate-related impacts that occur despite mitigation and adaptation efforts. The fund is intended to support developing countries facing such impacts. Its board agreed to earmark the Nepal allocation at an extraordinary online meeting.

Flood Impacts in Nepal

The August 2026 floods followed a climate-induced ice and rock avalanche in the Bhotekoshi and Trishuli river basins. The disaster claimed more than 1,500 lives and left over 5,000 people missing. It affected approximately 60,000 people across 15,000 households. Preliminary estimates put economic damage at around 2.7 billion, while projected reconstruction costs are approximately 4.7 billion. Nepal’s Finance Minister, Dr Swarnim Wagle, and Agriculture Minister, Geeta Chaudhary, appealed to the fund’s board on 31 August 2026 to accelerate assistance.

Funding Process and Limits

Nepal’s government has been invited to submit a proposal detailing how it would use the 20 million. The proposal will be considered at a future board meeting, so the agreed allocation is not yet a completed disbursement. Under the current mechanism, a country can request a maximum of 20 million in one application.

Important Facts for Exams

• The FRLD was established at COP27 in 2022 and operationalised at COP28 in 2023.
• The World Bank hosts the Fund for Responding to Loss and Damage.
• The Nepal allocation includes 20 million for assistance and 1.6 million for oversight fees.
• The FRLD board’s 11th meeting is scheduled in Kathmandu from 17 to 19 March 2027.

The $20 million allocation is less than 0.5% of Nepal’s estimated reconstruction costs. Nepal’s proposal will be considered at a future FRLD board meeting.