By Hemant Ojha| 31 December 2025
Introduction
In December 2025, I joined a diverse group of researchers, local leaders, community members, and policymakers in Nepal’s Melamchi Valley —a place still bearing the scars of the devastating 2021 flood. Where fertile fields once stretched, we now finds homes half-buried in silt and the quiet determination of people rebuilding their lives.
This gathering was the result of years of groundwork by local partners, culminating in a three-day event designed not as a typical field visit, but as an immersive co-learning event. We didn’t just study or observe; we engaged in a two-way dialogue to spark new thinking about how Nepal—and the world—can respond to the realities of loss and damage and bridge the gap between global policy discourse and local realities. Together, we walked the riverbanks, heard stories of loss and resilience, and debated what true recovery and restoration should look like. Our aim was simple but ambitious: to co-learn and ignite local action on the global agenda of Loss and Damage, using Melamchi’s experience as both a case of warning and a source of hope.
The Astonishing Scale
The devastation left by the Melamchi flood is beyond imagination. Before our co-learning event, our partners at Prakriti Resource Centre and Practical Action Nepal meticulously gathered evidence from the ground. Their research captured not only the economic losses but also the non-economic losses such as cultural and psychosocial impacts that continue to haunt the valley’s residents.
The numbers are staggering. Early estimates put the damage to private homes and local infrastructure in Melamchi and in Helambu at nearly $500 million (PRC, 2023)—a sum that dwarfs the combined annual budgets of both local governments. And this figure only scratches the surface of the L&D, leaving out countless public assets and the actual cost borne by the community.
Faced with such overwhelming loss, the question of how to finance recovery becomes urgent—not just for Melamchi, but for climate-vulnerable regions across the globe. Our national research team found that, so far, less than 1–2% of these losses and damages in Melamchi have been covered by existing recovery funds. The gap is immense, and the resources available are a mere drop in a vast, turbulent ocean.
While the world celebrates the launch of the new United Nations Fund for Responding to Loss and Damage (FRLD), its initial $250 million allocation for all developing countries seems woefully inadequate. If a single valley in Nepal needs almost $500 million just to begin to recover, how can this Fund possibly deliver the climate justice so urgently needed in so many vulnerable places?
Is the Flood Attributable to Climate Change?
Was the Melamchi flood a direct result of climate change, or simply a natural disaster—an unfortunate roll of the dice? The answer, as with so many climate-related events, is not black-and-white.
Our ongoing research suggests a strong link between climate change and the 2021 flood, though efforts to achieve absolute certainty remain elusive. The evidence gathered by our Nepal partners points to a dramatic shift in Himalayan weather patterns: in 2021, rising temperatures brought heavy rainfall to the upper reaches of the Melamchi watershed, replacing the usual seasonal snowfall. This ‘unnatural’ rain became the spark—a plausible trigger for the disaster. But the consequences didn’t stop at flooding. The deluge set off a chain reaction, moving ice masses, mobilising infrastructure debris (mainly from the Melamchi Water Supply Project supplying water to Kathmandu), and ultimately devastating settlements and agricultural fields.
However, climate alone does not tell the whole story. Human actions—roads built without proper planning, houses constructed on vulnerable valley floors, and a lack of risk-informed development—amplified the flood impact. The valley floor, rich in history and identity, became a place of risk as memories of past floods faded and people settled closer to the river.
In the end, the evidence points to a disaster fueled by both human-induced climate change and local development choices. Melamchi stands as a textbook case for why Loss and Damage finance is essential—beyond traditional disaster relief, and how climate and non-climatic factors contribute to the disaster of an unimaginable scale. It is a stark reminder of what happens when local institutions reach the limits of adaptation, and when the financial needs of recovery far exceed government capacity.
Beyond Local Capacity to Adapt
The scale of the Melamchi River flood extends far beyond what local institutions can handle. Even at the national level, Nepal’s capacity to respond is limited amid unprecedented political turbulence (the September 2025 violent uprising) and a continuing federal governance transition over the past decade. Amid this uncertainty, however, local government stands out as a rare beacon of hope, a point even national government officials acknowledge. Nepal’s constitutionally empowered local governments have the authority to enact laws on environmental management, climate resilience, and local development—powers that, in theory, could transform the country’s response to climate risk.
Yet, during our intensive two-day engagement, it became clear that while local governments are the strongest pillar of Nepal’s federal system, their resources and institutional capacity lag far behind their ambitions and mandated roles. Building true climate resilience and managing disasters require not only authority but also significant financing, anticipatory planning, and technical expertise—capabilities that remain limited at the local level.
This gap is especially critical for localizing the emerging Loss and Damage agenda. Local governments are being asked to navigate a complex web of policy and finance, often without the specialized skills needed to assess economic and non-economic losses and damages from climate change (particularly the non-economic impacts such as the loss of culture, the trauma of displacement, and the permanent severing of ancestral ties to land). Without an operational understanding and the capacity to assess, the ability to argue for L&D financing remains weak.
Financing to Address the Residual Risk (Losses and Damages)
Leaving the Melamchi Valley, I felt the weight of what experts call “residual climate risk”—the impacts that linger even after every effort to adapt has been made. Disaster relief support here is just a fraction of what’s needed to restore livelihoods and rebuild homes. People for suffering losses from the act of others who contributed to climate change. The people of Melamchi did not cause the melting glaciers or the shifting monsoon, yet they bear the full cost of these changes.
The voices from the frontline are clear and urgent. First, there is a pressing need to channel funds directly to local governments and then to communities. Mechanisms must be created to bypass national bureaucracy and deliver resources straight to the municipalities that are managing the disaster on the ground.
Second, it’s time to recognise and finance non-economic losses—the heritage lost, the trauma endured, and the broken psychosocial well-being of mountain communities. Measuring impact only by destroyed bridges or buildings misses the deeper wounds left behind.
Third, in regions where data is scarce, investing in the co-production of knowledge is critical. This means not just understanding what caused the disaster, but also developing specific, locally informed solutions for recovery and restoration.
Finally, we must not wait for perfect scientific certainty or for external experts to define every action. True resilience will come from blending local wisdom with scientific insight—a fusion that our initiative aimed to foster.
As I left Melamchi, the sense of climate injustice was palpable. The question is no longer whether loss and damage is happening, but how we will pay the debt owed to those living beyond the threshold of adaptation—those who suffer the consequences of risks created elsewhere.
Conclusion
The story of Melamchi Valley is not just a warning for the future—it is a call to action that is already overdue. As the world grapples with the realities of climate-induced losses and damages, it is clear that incremental fixes and piecemeal relief are no longer sufficient. True climate justice demands a transformation in how we approach finance: moving beyond compensation and recovery toward building resilient communities by removing conditions of vulnerability and risk exposure.
The Loss and Damage finance must be part of the transformation agenda — empowering local governments, recognising non-economic losses, and fostering innovation through the co-production of knowledge and co-design and delivery of contextually relevant solutions. By blending local wisdom with global support, we can shift from risk management mindset to shaping a future in which vulnerable communities are not only surviving but leading the way in climate resilience.
Amid suffering, losses, and damages, Melamchi’s experience inspires a new era of climate finance—one that is bold, inclusive, and truly restorative.
Disclaimer: The views and opinions expressed in this blog are solely those of the author and do not reflect the positions or views of the organisation with which the author is affiliated or those of the publishers. This blog is intended for general educational purposes only. The author and publishers do not assume, and hereby disclaim, any liability to any party for any loss, damage, or disruption caused by any errors, omissions, or any other cause associated with this blog.
Reference:
Parajuli, B. P., Baskota, P., Singh, P. M., Sharma, P., Shrestha, Y., & Chettri, R. P. (2023). Locally-led Assessment of Loss and Damage Finance in Nepal: A Case of Melamchi Flood 2021. Kathmandu: Prakriti Resources Centre.
Gautam et al. (2025). Adaptation Limits Demand L&D Finance: Lessons from Nepal’s Melamchi River Basin; [Manuscript in preparation]. STRENGTH project research paper, Dhaka/Sydney/ Ottawa
Maharjan et al. (2025), Climate Change Attribution in Data-Poor Regions: Advancing an integrated storyline approach through the Case of the 2021 Helambu-Melamchi Flood in Nepal.[Manuscript in preparation]. STRENGTH project research paper, Dhaka/Sydney/ Ottawa
