Govt frets as donors divert funds to climate change


KATHMANDU, Nov 5: The increasing trend of the use of Official Development Assistance (ODA) by donor agencies for climate change activities has worried the government.

According to the report ´ The Future of Climate Finance in Nepal´, published by the Overseas Development Institute in the UK, about $650 million in international public grant finance has been made available for the country by donor agencies in last one decade and all of the funds are under ODA.

ODA money provided by developed countries to support poor countries is basically used on developmental work, including essential services such as health and education. But in the past few years, donor agencies have been slowly shifting the ODA money to climate change activities, and the government fears that it would face a funding crunch in the development sector if the trend continues.

“In the past, climate change was not in the bilateral programmes of donor agencies, but in recent agreements under ODA, this is one of the major programmes proposed by donors,” said Under Secretary at the Ministry of Finance, Hari Prasad Pandey.

He added that if the trend continues, developmental work would suffer due to lack of funds as more money gets shifted to climate change activities.
“We face unlimited demand by people in development sector and ODA is one of the major fundings to meet that demand. If the funding is shifted to climate activities, there could be a problem in future,” Pandey added.

As per the commitment made by developed countries during international negotiations on climate change, they should provide additional funds (not from ODA) to countries like Nepal to fight climate change. But that´s not happening.

“Climate change funding has to be additional to ODA, not part of the funds that developed countries were providing to poor countries for decades as ODA,” said Dr Dinesh Chandra Devkota, fomer vice-chairman of the National Planning Commission. “Things will be in a mess if this continues,” he added.

At international climate change negotiations, developed countries had committed themselves to providing $30 billion by 2012 to poor countries to fight climate change, and this was named ´Fast Start Finance´. But this basket fund established under the UN Convention on Climate Change is almost empty as those countries have not put the pledged money in it.

“The problem with climate finance is that developed countries pledge funding but don´t put it in the basket as they pledged; so it has become like a business on credit for poor countries like Nepal that are highly vulnerable to climate change,” said Raju Pandit Chhetri, an expert on climate finance.

On one hand, the country hasn´t received the money pledged at international climate negotiations and on the other, money that used to be spent on developmental work has become reduced after donor interest shifted to climate change activities. Not only that, another issue that worries experts is that in many cases developed countries have been reporting ODA money used on developmental work as money for the climate change fund.

Experts on climate change say it would be highly unfair to put ODA money into climate-related activities and term this as support provided under the climate change fund.

“Donors may use the money for climate-related activities but the problem is that many times, the ODA money used for climate activities has been reported as Fast Track Finance money,” said Manjeet Dhakal, another expert on climate change, who has been following international climate negotiations for years.

The experts say that the way developed countries have been using ODA for climate change work would have a huge impact on other sectors in the country. So the developed countries should put additional money into climate change activities under the UN Climate Change Convention.

“There is huge dependency on ODA for many sectors in the country; so developed countries should provide additional funds to fight climate change rather than using the funding provided for developmental work,” said Prof. Madan Koirala at the Central Department of Environmental Science at Tribhuvan University.

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