A climate cure for the COVID crisis
Last year, Nepal faced a complex set of challenges as the pandemic took hold. Hundreds of thousands of migrants walked home from India and quarantine centres were overflowing. At that time, 55 percent of people in Nepal had lost incomes from the lockdown and 28 percent of households were facing food shortages. Economic growth slipped from 7 percent to 1.5 percent and up to 30 percent of the population is still at risk of slipping back into poverty. In stark terms, Nepal’s development has been set back a decade and for those affected by shocks such as the 2015 earthquakes or the 2017 floods, their recovery has once again been halted.
At the height of the pandemic, recovery seemed a long way off with the priority on a direct COVID-19 health response. But with vaccines being rolled out in Nepal from the end of January 2021 we are, at last, at the beginning of the end.
We know that the impacts of the pandemic cannot be magicked away with the wave of a wand, but we must remember how resilient and resourceful Nepalis are. The recent example of the first winter ascent of K2 by Nepali climbers is an inspiration in this respect. A team of highly experienced climbers had lost their normal guiding season to the pandemic and so, used their time instead to plan and then conquer the last, great, unclaimed winter mountain ascent. The team lived up to their slogan of ‘Action is Possible’.
But should COVID-19 recovery be the catalyst for climate action? Reinvigorating remittances, rebuilding the decimated tourism industry, and attracting investment will not be easy. On the other hand, the pandemic has given us time to rethink how to make the most of Nepal’s peoples, mountains, water, nature, and neighbours to make its recovery greener and more sustainable.
What needs to be done
Initial analysis suggests that there is the potential to create over 3 million new jobs in Nepal by focusing on natural resources, infrastructure, urban development, and private sector growth based on innovation and the adoption of new, green technology that is resilient to future shocks. Initial analysis has shown four areas of particular potential.
The first is sustainable, natural resource-based job creation in agriculture, forestry, and eco-tourism. These new jobs can generate immediate employment and raise incomes in rural areas. For example, Nepal has committed to planting 50 million trees and achieving 45 percent forest cover in its Nationally Determined Contribution. These forests can generate over 100,000 jobs in sustainable forestry and forest-based enterprises and reduce erosion and landslide risks whilst absorbing greenhouse gases and protecting ecosystems. Similarly, investing in sustainable, nature-based tourism can create 2 million jobs by 2025 and increase revenues from tourism to over $3.5 billion per year, if managed sustainably in collaboration with Nepal’s conservation agencies and local governments.
Second is more investment in clean power, which can create another 100,000 jobs and meet domestic and regional demands for clean energy. Hydropower alone can generate revenues of up to 1 trillion rupees (US$ 9 billion) per year. This sector can also attract investment from the private sector and lead to equitable, clean power trading in the region. In the short term, public works schemes on slope protection, water resource management and river training can provide over 200,000 immediate jobs for those that have lost theirs due to COVID-19 while also reducing landslide and flood risks.
Third, green and resilient cities will be drivers of Nepal’s growth. Over 70 percent of future carbon emissions in Nepal will be from cities if they follow the high carbon ‘dirty development’ route of the 20th century. But Nepal has the opportunity to drive sustainable and resilient economic growth as it urbanizes at over 3 percent per year. Urban mayors can provide incentives for clean electric vehicles, cooking and heating, as well as generate energy from waste projects that reduce air pollution.
Finally, it is critical to build resilience not just to COVID-19 but any future climate shocks by using new technologies to track new diseases, improve early warning systems, and enable vulnerable people to diversify their incomes away from climate-sensitive agriculture. Research has shown that early warning systems can reduce the impact of future shocks by $4 to $7 for every $1 invested.
New risk financing instruments, such as ‘catastrophe bonds’ can help reduce the burden of future shocks on government budgets and invest in shock-responsive social protection systems to protect up to 10 million people who are vulnerable to slide back into poverty due to COVID-19.
The green recovery package set out above can help Nepal get back on track to Middle Income Status and achieve the Sustainable Development Goals by 2030. The areas identified are firmly based on the Nepal government’s 15th Development Plan, its sector strategies, and climate commitments.
How do we do what needs to be done
Investment, both public and private, is required to support a green and resilient recovery. Nepal’s Nationally Determined Contribution to climate change estimates that the country needs $25 billion dollars to achieve its green growth targets. In the short-term, relief efforts will rely heavily on public funds but in the medium and long term, there are increasing amounts of private green finance available. For example, the global green bond market reached $1 trillion at the end of 2020, despite the pandemic. Nepal needs to attract more of these resources to invest in green industries and public-private partnerships in urban, energy, industry, and transport to ease the burden on government finances.
Well implemented policies also need to complement the investment required to support a green recovery in Nepal. Climate policies in Nepal provide a strong foundation to support green recovery, with ambitious targets related to energy, transport, agriculture, and forestry. Nepal is already seen as leader in the Hindu Kush Himalaya in its efforts to support green and resilient development, so there is much to build on. More can be done to make investment in forestry, solar electric vehicles, and sustainable tourism easier and more secure.
Innovations and new technology are essential to making the shift to green recovery and promote green growth in Nepal. The World Bank estimates that a 10 percent increase in access to broadband can accelerate GDP growth by up to 1.3 percent. So, access to digital technologies that can help Nepal cope with COVID-19 and develop a greener and more resilient economy will be critical. Digital innovations can improve natural resource use efficiency, enable business innovations, and support job creation. Digital innovations can also improve resilience to shocks through access to weather data, satellite landslide risk management, and e-access to relief funds.
In many areas, we must recognise the need to provide skills to enable those affected by COVID-19 to take advantage of Nepal’s green recovery. Climate-smart agriculture, solar parks, low carbon industries, green IT hubs, and sustainable tourism all require different skills. So, the recovery package will need to be tailored to ensure that those affected by COVID-19 have the skills to respond to local needs and the requirements of the private sector.
The opportunities available make a compelling case for Nepal to prioritize a green recovery – but is it the very best option for Nepal? Unsustainable forestry can generate incomes now. Diesel pumps can water fields and new roads can open up tourist destinations quickly. Nepal’s development partners are working together to test this ‘ambitious’ green growth against the business-as-usual of dirty development. These will allow the National Planning Commission, the Ministry of Forests and Environment, and the Ministry of Finance to weigh the costs, benefits, and viability of these scenarios. The work will also inform the development of Nepal’s long-term strategy for climate change.
In parallel, Nepal’s development partners have used the framework above to estimate the current and future investment pipeline to identify resources of up to $7.4 billion for green recovery and in December 2020, agreed to a joint statement with the Government of Nepal to work together on Nepal’s green recovery.
A final thought
Nepal is uniquely placed to leap-frog from the fossil-fueled growth of the past and benefit from new technology and green finance. In doing so, Nepal can demonstrate that not only is a low carbon, climate-resilient, and green recovery possible, but it is affordable, achievable, and advisable. A message that will be increasingly important for the world to listen to in the run-up to COP 26. It will not be easy, but if we accept the challenge, prepare well and work together -- as the Nepali team on K2 proved -- action is possible.
About the author
Simon Lucas is a Team Leader for Resilience and Inclusion Team of the UK Department for International Development (DFID).