The Fund for Responding to Loss and Damage has provisionally set aside $21.6 million for Nepal's August 2026 floods, marking its first response to a specific disaster.
The allocation covers less than 0.5% of Nepal's estimated $4.77 billion recovery needs, highlighting the gap between available funding and the scale of the destruction.
Climate campaigners have welcomed the decision but criticised the time taken to respond, calling for a permanent rapid-response mechanism.
Activists are also demanding greater financial contributions from developed countries and direct access to funding for communities affected by climate disasters.
The Fund for Responding to Loss and Damage (FRLD) has provisionally set aside $21.6 million for Nepal following the devastating August 2026 floods, marking its first response to a specific disaster. But the amount covers less than a per cent of the country's estimated recovery needs.
The FRLD adopted a pilot approach allowing Nepal to submit a funding request under the fund's Barbados Implementation Modalities (BIM), according to a statement issued by the fund. The BIM represents the initial operational phase of the FRLD. Its first call for proposals was announced during the 30th UN Climate Change Conference (COP30) in Belém, Brazil, in November 2025. Nepal submitted its funding proposal on August 31, 2026.
The Bhote Koshi flash floods followed a cascade of events triggered by the collapse of rock and ice from a glacier on Langtang Lirung mountain near the Nepal-China border. The disaster has been attributed to warming temperatures and changes in the mountain’s geology.
The resulting torrents destroyed several hydropower dams in the Trishuli river system and swept away villages, leaving at least 1,451 people dead and 5,745 missing, according to the International Centre for Integrated Mountain Development.
The Nepalese government estimated the total loss and damage from the floods at approximately $2.7 billion. A joint post-disaster needs assessment by the National Disaster Risk Reduction and Management Authority and the National Planning Commission put the cost of recovery at $4.77 billion, according to Nepal News.
The $20 million set aside amounts to less than half a percent of what Nepal needs to rebuild, stated the Fill the Fund campaign.
This is the first time the FRLD has responded to a specific disaster, according to Fill the Fund campaign.
The fund was established at 27th Conference of the Parties (COP 27) to the United Nations Framework Convention on Climate Change in Sharm el-Sheikh, Egypt, in 2022 and operationalised at COP28 in Dubai, United Arab Emirates, in 2023.
"By stepping up to meet this moment, the Board has shown that we can adapt our operations to the pressing needs on the ground," said Ibrahima Cheikh Diong, executive director of the FRLD, in a statement.
"This decision not only paves the way to support Nepal's recovery but also marks a step towards the full implementation of the mandate of the Fund," he added.
Climate activists highlighted the difficulties Nepal faced in securing an emergency response before the FRLD called for an extraordinary meeting. They called for a permanent rapid-response mechanism, direct access to funding for affected communities and the full operationalisation of the fund.
“Today the Loss and Damage Fund took a historic first step by responding to Nepal, but this cannot be a one-off. No country should have to endure a catastrophe and wait seven weeks, through historic letters and relentless pressure, just to unlock the Fund's first-ever emergency meeting,” said Harjeet Singh, global convenor of the Fill the Fund campaign and founding director of the Satat Sampada Climate Foundation.
Singh said developed countries had supported setting aside funding for Nepal but had stressed that the decision should not establish a precedent or determine the fund's longer-term operating model.
“Developed countries bowed to the pressure and backed setting aside $20 million for Nepal. But even as they did, they kept insisting it must not set a precedent and must not prejudge the Fund’s long-term model,” said Singh.
“We must set up a permanent rapid-response system that moves support in days, not months,” he added.
The disaster had highlighted the disproportionate impact of climate-related emergencies on vulnerable communities, including migrant workers, and how they are leading the response and recovery in an effective, context-specific way, said Jocelyn Perry, senior advocate and programme manager of the Climate Displacement Program at Refugees International.
“The Fund must create a simplified direct access window for community organizations, providing a dedicated funding stream with small grants accessible to informal groups, unregistered collectives, and community-based organizations. This can enable the rapid, community-driven responses essential for meeting the moment of this crisis and those we know are coming,” Perry added.
The scale of the needs from the FRLD is huge and many developed countries have to step up and fill up the fund for it to be effective in its mandate.
“The overall scale of the need is immense: research estimates that economic loss and damage in developing countries could reach an average of around $400 billion a year by 2030, and far more in the decades that follow. A fund responding to a single disaster in tens of millions is nowhere near that reality,” Fill the Fund campaign stated.