Country Profile: 

Population (thousand): 28,513.70
Multidimensional Poverty Index Value : 0.13
Inequality-adjusted Human Development Index, Country Rank : 145
Gross Domestic Product per capita, at Purchasing Price Parity (US$): 2,458.1 


The PEI programme in Nepal was initiated in 2010. Land, forests, minerals and water remain the key natural resources in Nepal for human survival, livelihoods and climate change adaptation, with natural resources being the livelihood base of almost 90% of the population and representing almost 40% of GDP. Rural populations, especially the poor, landless, indigenous people and women rely heavily on forests and land resources for their livelihoods. More than 80% of people derive their livelihoods from forests. Around 86% of total energy for cooking and 40% of fodder comes from forests. 66% of the total gainfully employed population is engaged in the primary sector including agriculture, forestry, and fishery . The share of the primary sector in the Mountain region is 81%, compared with 68% and 60% in the Hill and Terai regions, respectively. While Nepal is endowed with social, agriculture and biological diversity, it experiences chronic poverty which is more severe in rural areas than urban areas.  Considerable progress has been made in poverty reduction, however unsustainable use of these natural resources has resulted in widespread environmental degradation now threatening especially poor people’s livelihood and health.  

To contribute to addressing these issues and promoting sustainable development, the PEI Nepal programme supports central and local governments to integrate environmental, poverty and climate challenges in planning and budgeting processes to achieve a greener, more inclusive and more sustainable development path. Thereby the country programme is contributing to the achievement of national development goals and the overall PEI Programme outputs. PEI Nepal is led by the Ministry of Federal Affairs and Local Development (MoFALD), embedded in the larger, multi-donor Local Government and Community Development Programme- Phase II. 



Strengthen integrated planning, budgeting, monitoring and evaluation and coordination amongst local governance actors

  • Local governments in Nepal are taking the lead towards a more sustainable development path and PEC concerns are integrated into local planning and budgeting processes. The improved capacity of local authorities enables them to respond to poor and marginalized communities’ requests by allocating public resources to PEC issues. For example, the “Planning and Decision-Making Guidelines” of local bodies were revised and approved to incorporate PEC perspectives. The Ministry of Federal Affairs and Local Development’s fourteen point directives encourages mainstreaming of environmental concerns into planning and infrastructure development guided by two key PEI economic valuation studies. 
  • Monitoring of Initial Environmental Examination (IEE) reports of sand gravel and stones and rural roads were completed in 10 districts. The MoFALD received over 50 IEE reports of sand, gravel and stones and Rural Roads from various DDCs for approval. After rigorous review, all the IEE reports were endorsed by the MoFALD. A database of endorsed IEEs has been maintained in the Ministry which has become a basis for making decisions towards improving the quality of reports. In addition, PEI extended technical backstopping services in institutionalizing third party monitoring of IEE reports. To this end, Tribhuvan University and Kathmandu University, through their respective environment departments, have been extending support for monitoring IEE reports.
  • PEI-supported Rupandehi District Development Council has passed two policies related to environment friendly infrastructure development activities. First, the District Development Committee (DDC) shall consider environment while implementing even small infrastructure development activities. Environment costs will be embedded within the overall development projects. The cost will be accounted for while designing, implementing and monitoring the infrastructure development activities and infrastructure development activities will be guided by the provision of Environment Protection Act and Regulation.
  • The Annual District Development Plan of Dhading (another PEI supported district) includes three important policy and programs regarding to environmental conservation. First, prefeasibility, Initial Environment Examination (IEE) and survey design shall be carried out while implementing infrastructure projects. Infrastructure projects shall be guided by Environment Protection Act and Regulation and DDC Block Grant Mobilization Guidelines. Second, at least 10% budget of every road project shall be set aside for maintenance fund for the road. Third, budget for environment conservation and climate change and adaptation (IEE, Local adaptation and improved cooking stoves) though small – Rs. 43, 25,000 (4%) has been included in the plan.
  • As part of its effort to realign its work to support the post-earthquake recovery in Nepal, PEI supported MoFALD to prepare pro-poor environmentally sustainable green recovery and rehabilitation plans in Myagdi and Kavrepalanchowk districts . In the process of preparing the plan, drivers of landslides and water scarcity were examined and recommendations on viable projects to tackle the challenges guided by green development approaches were proposed. The plan got official endorsement for implementation.
  • The South-South Cooperation Team and the Ministry of Finance of Indonesia hosted an exchange meeting in Jakarta , bringing together delegations from Bhutan, Cambodia, Nepal and Indonesia to learn from each other’s experiences in strengthening fiscal systems and using innovative tools to track rising expenditures due to climate change. The highlight of the discussion was the usefulness of the Climate Public Expenditure and Institutional Review (CPEIR) as a key tool to integrate climate change concerns into the budget allocation and expenditure processes. Delegations also discussed challenges and innovations in defining public expenditure related to climate change; assessing the effectiveness and impacts of climate related expenditure on actual climate and development outcomes; linking climate planning to budgeting and expenditure; ensuring coherence between national, sectoral and local level systems and coordinating across different sectors.
  • The NPC updated its monitoring indicators to incorporate poverty-environment components and reviewed its project prioritization criteria to integrate PEC needs.
  • PEI commissioned a study on drought impact on displacement and migration has led the Government to allocate 250 million rupees to drinking water programmes in the drought affected districts.

Strengthen Institutional and Human resource capacities of LBs and central level agencies involved in local governance

  • Dhading and Rupandehi Districts have integrated climate change, environment and disaster risk management issues into their respective district periodical plans. The periodical plans are medium term plans that guide the formulation of annual planning process, since periodic plans are PEC aware, the annual plans will also mainstream PEC nexus.

Empower Citizens and community organizations to actively participate and assert their rights in local governance

  • PEI project has strengthened the capacity of local government actors in mainstreaming poverty, environment and climate change adaptation nexus. The Government has developed and institutionalized the “Environmentally Friendly Local Governance” framework that will be benefit poor people particularly women and marginalized groups. A communication strategy to change behavior on environmental management has been developed targeted at all levels of stakeholders, from central government to households. MoFALD facilitated Environmentally Friendly Local Governance (EFLG) training with PEI support. As a result of the training, participants implementing EFLG were asked to prepare a Project Funding Matrix that received implementation support of US$4.71m from MoFALD under the Local Governance and Community Development Programme (LGCDP) Phase II, a national programme largely funded by DfID which PEI is aligned to. The activities identified are environmentally friendly activities. Some examples of the activities proposed include biogas installation, solar home development, and tourism management. One identified pond conservation as a key activity, with a view to benefitting the poor by providing resources for fishing.


Mainstreaming Resources: 
Nepal Climate Change Knowledge Management Centre
Rural Roads Forum, Nepal