Budget governance for disaster risk reduction and climate change adaptation under Nepal's new federal system

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Floods affect more people globally than any other type of natural hazard, with over 734 million people affected in the last ten years (IFRC, 2018). With climate change, flood impacts on countries and communities are projected to increase. Nepal is exposed to a multitude of natural and human-induced hazards due to its diverse topography and complex geography. The country ranks fourth in the world to climate vulnerability (Germanwatch, 2018) and 80 percent of the land is vulnerable to multiple natural hazards (GFDRR, 2019). Climate related disasters such as droughts, floods, and landslides undermine agricultural production which employs 70 percent of the population and accounts for 30 percent of GDP. Severe flooding in August 2017 affected 1.7 million people and caused devastation amounting to 585 million USD – three percent of Nepal’s GDP (Government of Nepal, 2017).

Climatic risks and disasters reverse gains in poverty reduction and hinder development. Mercy Corps, as a member of the Zurich Flood Resilience Alliance, is working on a five-year program to improve investment, and support policy and practice for improving Nepal’s flood resilience.
Nepal recently implemented a new federalized governance structure – a significant shift from district level administration to a devolved structure of seven provinces and 753 municipalities covering urban and rural areas. Municipalities now have the authority and responsibility to plan and execute service delivery that was historically done at the district and national levels, including for issues on disaster risk reduction/management and climate change. Although federalism is predicted to improve service delivery in the mid-to-long term, capacity challenges at the provincial and municipal levels must be addressed to prevent under-execution of budgets for effective service delivery (World Bank, 2019).

Local government investment for disaster risk reduction (DRR) and climate change adaptation (CCA) is critical for development. Key stakeholders must understand the current governance structures, processes, and investment outcomes of municipalities for DRR and CCA so newly formulated guidelines, policies, and resources support the needs of local governments. Mercy Corps conducted research in seven municipalities1 of Sudurpashchim province to understand how local governments are investing in DRR and CCA in the new structure. Key informant interviews, focus group discussions, secondary document review, and municipality budget analysis was conducted to understand governance processes and allocations for DRR and CCA with a special focus on flood resilience. This brief provides an overview of findings and recommendations for policy makers to improve investments for DRR and CCA at the local government level so that greater investments can be made to enhance communities’ resilience.