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Nepal

Impact of Climate Change Finance in Agriculture on the Poor

Attachments

Executive Summary

Agriculture being one of the most vulnerable economic sectors to the impacts of climate change, the Ministry of Agriculture Development (MoAD) has been allocating substantial amount of its annual budget to implement programmes that help reduce farmers’ vulnerability. Therefore, the share of climate-related budget of MoAD was about 20.8% of the total national climate related budget in 2013/14, when tracking of the climate-related budget began in the country. The high amount of climate-relevant budget is not a guarantee that it has reached the intended farmers and has helped them reduce their vulnerability. Therefore, this study, conducted by MoAD in collaboration with a civil society organization, focused on independent evaluation of the impacts of climate investments in agriculture with particular focus on poverty and gender.

Study objectives

The objective of the study was to provide the MoAD with a snapshot of the impacts of climate investments on the poor and vulnerable as well as of the current gaps in its delivery of climate investment both at the national and sub-national levels.

Methodology

This study reviewed agricultural programmes coded as climate-relevant in the national plan. The socioeconomic benefits of the climate-relevant programmes in the districts of Bardiya and Myagdi were assessed, particularly with respect to their benefits in terms of gender equality and poverty reduction. Programmes that the districts considered to be climate-relevant but which were not coded as climate-relevant in the national plan were identified in consultation with officials in the districts for assessment. The study team also reviewed the National Climate Change Impact Survey (NCCIS) to identify socioeconomic factors that contribute to climate change adaptation practices (CBS, 2016). Secondary information was collected through a review of the Nepal Living Standard Survey (NLSS), the NCCIS, the Red Book, national and district crop production data, climate-coded programme documents, and relevant technical and policy documents. Primary information was collected through consultations at the MoAD, Ministry of Finance, District Agriculture Development Offices, and group discussions and personal interviews with farmers’ groups, cooperatives and individual farmers in the districts.

Findings and Recommendations

  1. Public Finance Management

Expenditure as a percentage of the allocated budget declined on average from 97 percent to 87 percent between FY 2012/13 and FY 2015/16. This decline varied across activities. Expenditure increased for Agricultural Research and Development, Food Crisis Response, and Home Garden programmes but it did not for others. The general delay in the release of the budget as well as increased out-migration were reason for under-performance. As such programme and project-level expenditures as a proportion of the total have slightly declined over the last two fiscal years.

Recommendation:

• There should be a public expenditure tracking system at the sub-national level to enhance the efficiency in the flow of climate finances.

  1. Socioeconomic impacts on the Poor and Vulnerable

The socioeconomic impacts of climate-related investment in agriculture are clearly visible. The productivity of cereal crops has increased in programme areas compared to that in the district as a whole. The resilience of farmers has also increased, as they have begun multiple cropping, have greater access to improved irrigation facilities, plant droughtand flood-resilient varieties, manage local water more effectively, use organic fertiliser, and practice tunnel farming.

Feminisation of agriculture was observed in the study area as men had migrated in search of employment opportunities, with women left behind with increased workloads. Improving irrigation facilities helped women farmers to save time, earn more, and the resulting economic empowerment had increased their engagement in community organisations.Such positive impacts, however, are mostly coincidental; they are not outcomes of planning, programming and budgeting designed to reduce gender-specific climate change vulnerabilities. Climate investments have not been effective in introducing gender-friendly technologies that could reduce the agricultural workload of women.

Current climate-related programmes have failed to target the ultra-poor, the landless and the poor with very little land (the nearly landless), who live far away from service institutions.

Recommendations

• A mechanism must be in place to use the available vulnerability tools and assessments during planning and budgeting to increase the resilience of vulnerable populations for ensuring greater socioeconomic impact of the investments.

• The capacity of gender focal points should be enhanced to ensure that they propose gender-sensitive climate budgeting that could contribute towards addressing this shortcoming,

• These institutions at the local level should explicitly target the ultra-poor and ensure that they receive support to ensuring resilience to climate-induced disasters.

  1. Factors Determining Resource Allocation and Institutional Mechanisms

The currently practiced farmers’ group approach does not include the landless and nearly landless poor and other marginalised groups. Also the existing agriculture extension service does not communicate climate-related information to farmers, nor does it inform them of local research findings. There is very little vertical communication among agricultural institutions on climate-related issues, and this means that programmes need to focus on pro-poor and gender concerns at the implementation level. Further, the government’s recommendations for crop varieties do not always match the particular geo-climatic conditions of the areas they are recommended for.

Recommendations:

• Build capacity of government officials at both the ministry and district levels to communicate climate concerns.

• Make clear provisions to ensure coordination between the gender and climate change focal points at the MoAD to consult on planning, programming and budgeting of climate actions.

• There is a need to improve existing institutional mechanisms to ensure sharing of knowledge among federal, state, and local governments, while also improving the communication system.

  1. Systematizing Vulnerability Assessments to Improve Budget Proposals

Agriculture plans are formulated without vulnerability assessments because the locally available information on vulnerability is scattered and seldom used for project identification, planning or implementation. There is a need for a data management system with variables like demographic information and shifts caused by climate change, an updated list of crop varieties, soil profiles, and how they have changed due to climate-related hazards like disease, flooding, drought, and storms.

Recommendation:

• Technical staff and officials at the sub-national level should be oriented on using vulnerability assessment tools and identify those who are unable to organise in groups and include them in participatory vulnerability assessments for improving budget proposals. They must ensure that the landless poor receive benefits from climate-related programmes.