Promoting Climate Resilient Agriculture in Nepal: Building Climate Change Resilient Communities through Private Sector Participation

Nepal is one of the world’s most climate vulnerable countries due to its harsh geography, largely poor and resource-dependent population, and weak institutional capacity to manage challenges. Its agriculture sector, which employs over two thirds of the labor force and contributes to roughly one-third of the country’s GDP, is particularly vulnerable, affecting both farmers and agribusinesses. Nepal aims to expand agricultural adaptation measures to manage current climate change and prepare for future impacts, but significant barriers prevent private investment, including a lack of information, knowledge, and inputs (water, seeds, fertilizers, machinery, and finance) and weak commercialization (storage, processing and transportation).

To address this and other climate change vulnerabilities, Nepal developed a Strategic Program for Climate Resilience (SPCR) under the Pilot Program for Climate Resilience (PPCR), a dedicated program of the Climate Investment Funds (CIF). Nepal’s strategic program features four key areas of intervention, including a three pronged program on Building Climate Change Resilient Communities through Private Sector Participation. This case study focuses on one of those three projects: The Promoting Climate Resilient Agriculture Project.

Originally conceived with an advisory and investment component, the project is being implemented by the International Finance Corporation (IFC) from September 2013 to June 2019 on the plains of Terai, a region south of the Himalayan foothills. The project focuses on three crops: sugarcane, maize, and rice.

Delivery challenges and solutions

The project faced several challenges, including expectations set in the SPCR itself, and during project delivery with respect to: i)  Using a standardized approach for diverse commodities, ii)  lack of well defined support, in terms of knowledge and inputs, and iii) non-optimal solutions in some work streams. A study of these challenges and how they were addressed can help improve future project and program design and implementation.

While some of these challenges were addressed in 2015, a more substantive restructuring of the project was carried out from 2016 to 2017. This included i) introducing additional crops to seasonal crop rotation and having a more crop-specific focus, ii) adopting a more comprehensive approach to support provided, iii) finding more suitable solutions in certain work streams.

The restructuring was a complex process that took two years to complete. IFC leadership adopted a flexible and forward-thinking approach to ensure identified delivery challenges were addressed and emerging opportunities were considered, such as channeling investment resources through an equity fund.

The restructuring introduced changes to the project that improved its ability to deliver results. For example, new demonstration plots increased demand for training and adoption of climate-smart farming practices, therefore contributing to the climate resilience of smallholder farmers. In sugarcane, mechanization showed excellent results, and in maize, crop rotation with soybeans allowed for more continuous private firm and farmer engagement and interaction. These changes contributed to strengthening the links between private firms and farmers to improve farming output resilience, as originally sought.

While restructuring afforded more time, financial resources, and flexibility to the project, these were all limited as the project could not deviate from the original approved design and the broader SPCR.

Lessons learned

Several lessons can be drawn from project implementation. A standardized approach for all commodity supply chains was not the most suitable option for the project. Also, the project implementation highlighted the importance of adaptive management, as it faced delivery challenges. Project design should promote more systemic (comprehensive and integrated) approaches, focus on feasible activities, and promote longer time frames to allow for unforeseen events. Phasing would support this. Stakeholder roles, including government involvement, must be clearly defined.