As the World Bank's Global Economic Prospects report (June 2024) reveals a projected global growth of only 2.6% in 2024, the sobering reality for vulnerable countries like Nepal becomes stark. With nearly 60% of economies projected to underperform their 2010s averages, Nepal faces a multifaceted crisis at the intersection of economic stagnation and climate vulnerability. Its dependence on agriculture, remittances and tourism, particularly rural and Himalayan tourism, makes it highly vulnerable to global economic fluctuations and the devastating effects of climate change.
The fragile economic landscape: Public investment is critical to catalysing private investment and raising productivity across sectors. According to the World Bank, a mere 1% increase in public investment can boost output by 1.6%. Yet Nepal's recovery from COVID-19 remains sluggish, weighed down by an over-reliance on remittances and a struggling agricultural sector.The agricultural landscape paints a grim picture. The CBS/Agricultural Census 2078 (2021) shows that 55% of Nepali farmers face food insecurity throughout the year. This isn't just a statistic - it's a harsh reality for millions of farmers and families. Many farmers are turning to alternative sources of income, often migrating to cities, while rural tourism - vital to local economies - is struggling under the weight of climate-related disasters. Natural disasters disrupt trekking seasons and access to our World Heritage sites, threatening the livelihoods of communities that depend on these resources. Climate talks: Nepal's path to survival and resilience
As the World Bank's Global Economic Prospects report (June 2024) reveals a projected global growth of only 2.6% in 2024, the sobering reality for vulnerable countries like Nepal becomes stark. With nearly 60% of economies projected to underperform their 2010s averages, Nepal faces a multifaceted crisis at the intersection of economic stagnation and climate vulnerability. Its dependence on agriculture, remittances and tourism, particularly rural and Himalayan tourism, makes it highly vulnerable to global economic fluctuations and the devastating effects of climate change.
The fragile economic landscape: Public investment is critical to catalysing private investment and raising productivity across sectors. According to the World Bank, a mere 1% increase in public investment can boost output by 1.6%. Yet Nepal's recovery from COVID-19 remains sluggish, weighed down by an over-reliance on remittances and a struggling agricultural sector.The agricultural landscape paints a grim picture. The CBS/Agricultural Census 2078 (2021) shows that 55% of Nepali farmers face food insecurity throughout the year. This isn't just a statistic - it's a harsh reality for millions of farmers and families. Many farmers are turning to alternative sources of income, often migrating to cities, while rural tourism - vital to local economies - is struggling under the weight of climate-related disasters. Natural disasters disrupt trekking seasons and access to our World Heritage sites, threatening the livelihoods of communities that depend on these resources.
Agriculture plays a central role in the lives of some 3.999 million farming families, many of whom struggle to secure enough food for several months each year. This food insecurity disproportionately affects women and children, deepening existing inequalities and perpetuating cycles of poverty. As climate change leads to unpredictable weather patterns and reduced agricultural yields, the vulnerability of these communities increases, making it harder for them to achieve food security and economic stability.Tourism is another vital sector that will be significantly affected by climate change. The lure of Nepal's stunning rural and Himalayan landscapes attracts tourists from around the world, generating vital revenue for the local economy. However, erratic weather patterns such as unseasonal rainfall and rising temperatures, coupled with environmental degradation, pose a serious threat to this industry. These changes not only undermine the economic benefits of tourism, but also threaten the cultural heritage that defines many rural communities, diminishing the unique experiences that attract visitors.World Heritage Sites, including Sagarmatha National Park and Chitwan National Park, face existential threats from climate change.
These treasured sites are not only vital for biodiversity conservation, but also serve as important tourist attractions. Climate change-related challenges such as biodiversity loss, increased flooding and landslides threaten conservation efforts and erode the natural beauty that attracts visitors. The degradation of these sites threatens the livelihoods of local communities that depend on tourism and conservation activities, further increasing their vulnerability. The private and service sectors, which cover a wide range of industries from hospitality to retail, are heavily dependent on the stability of agriculture and tourism. Disruptions in these fundamental sectors can lead to job losses and stunted economic growth, with ripple effects throughout the economy. As agricultural productivity declines and tourism falters, the service sector faces increasing challenges, threatening the livelihoods of countless individuals and families. The interconnectedness of these sectors highlights the urgent need for a comprehensive approach to addressing the impacts of climate change, ensuring that all facets of Nepal's economy can thrive in a more resilient and sustainable future.
The urgent call for climate compensation: Following the conclusion of the UN General Assembly (UNGA) and the Future Summit at the end of September 2024, climate activists in Kathmandu have stepped up calls for $500 billion in climate compensation for the world's poorest nations. This call is not just about justice, but about survival, as countries like Nepal that are disproportionately affected by climate change demand accountability from the wealthy nations that are the biggest contributors to global emissions.
In his address to the UN General Assembly on 26 September, Prime Minister KP Sharma Oli emphasised the urgent need for climate justice and tangible action by the global community. His participation at the Future Summit marked a critical moment for Nepal's call for international solidarity. In a separate meeting with UN Secretary-General António Guterres, Oli discussed the pressing issue of climate change impacts, including glacial melt, and Guterres pledged to work to increase climate finance for vulnerable countries like Nepal.
A critical lens on Nepal's path to a just and sustainable future: To address the twin threats of economic stagnation and climate vulnerability, Nepal urgently needs to strengthen its climate finance governance, which is currently marred by corruption and inefficiency. While scaling up public investments in agriculture, food security, health, education, renewable energy and sustainable tourism is essential, there is a risk that these funds will not effectively reach marginalised communities.The development of climate-resilient infrastructure is crucial, but without an honest commitment to reform the existing governance system, these investments may fall prey to political manipulation. It is imperative not only to improve transparency and accountability in climate finance, but also to address the deeply entrenched corruption that undermines effective governance, particularly in Nepal and globally.Mobilising global support for adequate climate finance and debt relief is vital, but the critical question remains: Can Nepal ensure that these resources are distributed equitably and efficiently? Strengthening governance structures and committing to real reforms will be essential to turn climate finance into a tool for meaningful change that ultimately benefits the most vulnerable communities in Nepal.
A Shared Global Responsibility:
Nepal's future depends on global economic conditions and our ability to adapt to climate change. While the challenges are significant, strategic public investments and bold policy reforms can turn them into opportunities for resilience and growth.
In his recent address at the Summit of the Future during the 79th United Nations General Assembly, Prime Minister KP Sharma Oli underlined the urgent need for industrialisation and climate finance to reduce poverty in the least developed countries (LDCs). He highlighted the negative impacts of greenhouse gas emissions from developed countries and called for increased support to uplift vulnerable communities. Tragically, as he delivered this message, Nepal faced a devastating disaster that claimed hundreds of lives, flooded the capital and destroyed thousands of homes.
As we face these urgent challenges, the international community must act responsibly and ensure that those most affected are not left behind. There is a moral imperative to work together for a sustainable future. The question remains: "The challenge is clear, are we ready to act now?"
{Parajuli, a human rights defender, development activist and practitioner working with RRN}
