Expert Explains | How floods triggered Nepal’s demand for compensation

Environment & Ecology · 10 September 2026 · Based on Indian Express (original report)

2-minute summary

Following catastrophic flash floods in Nepal that caused over 1,000 deaths and widespread infrastructure destruction, the country's foreign minister announced a shift in diplomatic strategy: demanding 'compensation' rather than traditional 'aid' from the UN's Loss and Damage Fund. Nepal argues that despite its negligible greenhouse gas emissions, it is paying the price for a global crisis driven by major historical and current emitters like the US, Europe, China, and India. The Himalayas, often called the 'Third Pole' due to their massive ice reservoirs, are experiencing rapid glacial melt and severe weather events. While the Loss and Damage Fund was established in 2022 to assist vulnerable nations, it remains severely underfunded, with only $350 million of the pledged $822 million currently allotted for disbursement. The situation is further complicated by geopolitical dynamics, as Nepal balances relations with its neighbors, India and China, while navigating the withdrawal of US funding commitments under changing political administrations.

Why it's in the news

Nepal has formally written to the UN's Loss and Damage Fund seeking compensation for catastrophic flash floods. This marks a significant diplomatic shift from requesting humanitarian aid to demanding legal and moral climate compensation from major global emitters.

Background and context

The Loss and Damage (L&D) Fund was established during the COP27 summit in Sharm El-Sheikh (2022) and operationalized at COP28 in Dubai (2023). It is designed to provide financial assistance to developing nations that are particularly vulnerable to the adverse effects of climate change, focusing on rescue, rehabilitation, and reconstruction. The Hindu Kush-Himalayan region, known as the 'Third Pole', contains the largest volume of ice outside the polar regions and is highly sensitive to global warming. Rapid temperature rise in this region has accelerated glacial retreat, leading to increased frequency of Glacial Lake Outburst Floods (GLOFs) and extreme rainfall events. Historically, vulnerable nations relied on post-disaster humanitarian aid, which is voluntary and unpredictable. Nepal's transition to demanding 'compensation' reflects a growing global push for climate justice, invoking the principle of Common But Differentiated Responsibilities (CBDR) under international environmental law.

Constitutional provisions

  • Article 51 — Directive Principles of State Policy (DPSP) promoting international peace, security, and maintaining just and honorable relations between nations, which guides India's transboundary environmental cooperation.
  • Article 21 — The Right to Life, which the Supreme Court of India has interpreted to include the right to a clean, healthy, and resilient environment, influencing India's domestic and regional climate actions.

Committees and reports

  • IPCC Sixth Assessment Report (AR6) — Highlighted that the Hindu Kush Himalaya region faces severe risks from warming, including glacial mass loss, altered water availability, and increased frequency of extreme landslide and flood events.

Government schemes

  • National Mission for Sustaining the Himalayan Ecosystem (NMSHE) — One of the eight missions under India's National Action Plan on Climate Change (NAPCC), aimed at safeguarding the Himalayan glaciers and mountain ecosystems through scientific monitoring and community-based adaptation.

International organisations

  • United Nations Framework Convention on Climate Change (UNFCCC) — The parent treaty of the 2015 Paris Agreement and the administrative framework under which the Loss and Damage Fund was established and operationalized.
  • International Centre for Integrated Mountain Development (ICIMOD) — An intergovernmental knowledge and development organisation working for the people of the Hindu Kush Himalayas, focusing on transboundary water risk management.

Previous UPSC questions on this theme

  • Mains GS-3 2021 — Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference?

Mains practice: The transition of vulnerable nations from seeking disaster 'aid' to demanding 'climate compensation' marks a paradigm shift in global climate diplomacy. Analyze this statement in the context of the operationalization of the Loss and Damage Fund.

Nepal's recent demand for compensation from the UN's Loss and Damage (L&D) Fund following catastrophic floods signals a major shift from traditional humanitarian aid to rights-based climate justice. This transition is rooted in the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC).

• **Shift from Charity to Liability**: Traditional aid is voluntary, discretionary, and often subject to geopolitical alignments. In contrast, 'compensation' frames climate impacts as a legal and moral liability of historical polluters (such as the US and EU) and major current emitters (such as China and India).

• **The Vulnerability of the 'Third Pole'**: The Hindu Kush Himalayas suffer disproportionately from rapid warming and glacial melt despite negligible local emissions. Nepal's near-zero carbon footprint contrasted with its severe vulnerability highlights the ethical imbalance of climate change impacts.

• **Operational Challenges of the L&D Fund**: Although established at COP27 and operationalized at COP28, the fund remains severely underfunded. Out of approximately $822 million pledged, only $350 million is currently allotted for disbursement. Furthermore, the voluntary nature of contributions and political shifts (such as the US pulling out of funding commitments) undermine its reliability.

• **Geopolitical Implications for India**: As a major current emitter (though low per-capita), India faces diplomatic pressure from neighbors like Nepal, necessitating a delicate balance between its domestic development needs and regional leadership in climate adaptation.

For the L&D Fund to be effective, global climate governance must transition from voluntary pledges to legally binding, predictable financial mechanisms, ensuring that vulnerable mountain ecosystems and downstream populations are adequately protected.

Prelims practice questions

Q1. Regarding the 'Loss and Damage Fund' established under the UNFCCC, consider the following statements: 1. It was formally established at COP27 in Sharm El-Sheikh and operationalized at COP28 in Dubai. 2. Contributions to the fund are mandatory for all Annex-I (developed) countries. 3. The World Bank was selected as the interim host of the fund. Which of the statements given above are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer: C. Statement 1 is correct; the fund was established at COP27 and operationalized at COP28. Statement 2 is incorrect; contributions to the Loss and Damage Fund are voluntary, not mandatory. Statement 3 is correct; the World Bank was agreed upon as the interim host of the fund for a period of four years.

Q2. The term 'Third Pole' is frequently used in environmental discussions to refer to which of the following regions?

  1. The Antarctic dry valleys
  2. The Greenland Ice Sheet
  3. The Hindu Kush-Himalayan region and the Tibetan Plateau
  4. The deep-sea hydrothermal vents in the Pacific Ocean

Answer: C. The Hindu Kush-Himalayan region and the Tibetan Plateau are widely referred to as the 'Third Pole' because they contain the largest reserve of fresh water and ice outside the geographic polar regions.

Q3. With reference to the 'National Mission for Sustaining the Himalayan Ecosystem (NMSHE)', which of the following statements is/are correct? 1. It is one of the eight missions under India's National Action Plan on Climate Change (NAPCC). 2. It is implemented by the Ministry of Environment, Forest and Climate Change. Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer: A. Statement 1 is correct; NMSHE is indeed one of the eight missions under the NAPCC. Statement 2 is incorrect; NMSHE is implemented by the Ministry of Science and Technology, not the Ministry of Environment, Forest and Climate Change.

Revision flashcards

  • What is the 'Third Pole' and why is it ecologically significant? The Hindu Kush-Himalayas and Tibetan Plateau region, containing the largest reserve of fresh water and ice outside the polar regions, feeding major Asian rivers.
  • When and where was the Loss and Damage (L&D) Fund established and operationalized? Established at COP27 (Sharm El-Sheikh, 2022) and operationalized at COP28 (Dubai, 2023) under the UNFCCC.
  • What is the core difference between 'Climate Aid' and 'Climate Compensation'? Aid is voluntary humanitarian assistance, whereas compensation implies legal/moral liability of historical emitters for damages caused by climate change.
  • Which Indian ministry implements the National Mission for Sustaining the Himalayan Ecosystem (NMSHE)? The Ministry of Science and Technology.
  • What is the principle of 'CBDR-RC' in international climate negotiations? Common But Differentiated Responsibilities and Respective Capabilities, acknowledging that all states have shared obligations to address climate change but differing historical responsibilities and financial capacities.

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