Regional : Building Adaptation and Resilience in the Hindu Kush Himalayas-Bhutan and Nepal

Finance / Insurance and contractual savings

Public sector management / Public expenditure and fiscal management

The technical assistance (TA) will strengthen capacity in Bhutan and Nepal (i) to assess multi-hazard risks, including transboundary impacts; (ii) to better manage multi-hazard risk through enhanced risk assessment to support the design of national and project level investments; (iii) to research innovative finance strategies for climate resilient investments; and (iv) to build networks to share approaches, solutions, and related experience. The TA will be implemented in Bhutan and Nepal and will set the stage for knowledge solutions across the Hindu Kush Himalaya (HKH) region on climate resilient investment planning, development, and risk management with the scope for further TA under separate but linked TA projects.

The TA is closely aligned with government priorities in Bhutan and Nepal. It supports the delivery of Asian Development Bank (ADB) operational priorities 3, 6, and 7 under Strategy 2030 and contributes to the objectives of the ongoing country partnership strategies for Nepal, 20202024 and Bhutan, 20192023. The TA is included in ADB's Climate Change Action Plan and it builds on the work of ADB and other partners on climate change and disaster risk management.

The HKH region has the world's largest ice reserves outside of the polar regions. These reserves feed 10 major Asian river systems and support four global biodiversity hotspots, which sustain the livelihoods of 240 million people in the mountains and another 1.65 billion people downstream. The region is warming faster than the global averageeven if the world limits global warming to 1.5

C, the temperature in the HKH region will rise by 1.8

C2.2

C, causing the loss of at least one-third of its glacier volume. More recent reports show that glacier loss in Bhutan and Nepal could reach 75% by 2100 if global temperature rises reach 3

C. This will increase water stress, the frequency of hazards, and biodiversity loss.

From 19852014, economic losses resulting from disasters in the HKH region totaled $45 billion, much higher than those of any other mountain region. Since then, the increasing frequency and intensity of disaster events in the HKH have pushed up economic losses and the number of people killed or displaced by such events. Existing investments that depend on nature, such as hydropowercritically important in Bhutan and Nepalare susceptible to the losses caused by events such as floods, droughts, and glacier melting. These losses can have harmful impacts on services and development outcomes and can result in stranded assets. For example, in 2021, the headworks of the Melamchi Water Supply Project in Nepal were severely impacted by a climate-induced catastrophic debris flood, which damaged access roads, bridges, and public and private properties and disrupted the supply of clean drinking water to Kathmandu Valley. The presence of multiple interacting hazards, together with inadequate risk mitigation, calls for awareness raising, capacity development, and risk management solutions.

There is an urgent need to align financial flows with climate resilient investments to enhance climate and disaster risk management and enable a transition to a climate resilient and low carbon future. This requires high quality and dynamic assessments of climate and disaster risks that should include multiple hazards and consider transboundary impacts. It should integrate climate modeling so that the impact of global warming on multi-hazard risk can be better understood. Significant efforts have already been made to better understand the risks facing the HKH region, including by governments, the International Center for Integrated Mountain Development, and development partners. It is imperative that risk assessment informs policy, strategies, plans, and infrastructure project design.

ADB will help better understand these risks by enhancing the assessment of multi-hazard risk and using these assessments to develop approaches for early warning systems (EWSs) and climate investment services, including disaster risk financing and insurance. ADB will use its pipeline of projects to apply these approaches and use partnerships to spread knowledge solutions beyond ADB's pipeline. Partnerships will be important to develop knowledge solutions to better understand the impacts of climate change in mountainous countries, inform decision making, and save lives. This TA complements other ADB TA, including the Increasing Investments in Early Warning Systems to Strengthen Climate and Disaster Resilience project and the Identifying Climate Adaptation Investment Priorities project, and initiatives in Nepal such as the development of the Nepal Green and Resilience Financing Facility; the Melamchi Water Supply Project; the Green, Resilient, Inclusive Development Program; the Community Resilience Partnership Program Trust Fund; and Strengthening the Enabling Environment for Disaster Risk Financing project. In Bhutan, the TA complements the Enhancing Disaster Risk Understanding and Resilience project and the Fiscal Sustainability and Green Recovery Program.

Climate-resilient transition in ADB DMCs supported (Strategy 2030)

Climate and disaster risk management systems in DMCs enhanced

Climate and disaster risk assessment in DMCs enhanced

Comprehensive and multi-hazard regional early warning approach conducted

Climate risk management and finance services for climate resilient projects developed

Awareness raising and knowledge exchange on climate and disaster risk assessment in DMCs enhanced