Climate change may hurt Nepal’s remittance earningsMigrant workers sent home Rs1 trillion in the last fiscal year, making it the primary lifeline of the country’s economy.
Young Nepalis began looking beyond the country's borders after promising sectors like agriculture and tourism faltered. They flew off to labour destinations by the planeload, and toiled away to send money back to their families.
Over the years, remittance inflow turned into a river, becoming a lifeline for Nepal’s ailing economy. In the last fiscal year, Nepali migrant workers sent home more than Rs1 trillion.
The government issued 637,113 labour permits in the last fiscal year ended mid-July, making it the second highest number in history. The rise, according to experts, was due to the repercussions of Covid-19 when tens of thousands of Nepalis lost their jobs and income.
The pandemic may have abated, but now climate change is bringing other worries.
The World Bank Group's Country Climate and Development Reports released on Thursday said the impact of climate change may severely impact Nepal’s remittance earnings in the upcoming future, the primary lifeline of the country’s economy.
Nepal is highly vulnerable to climate change and natural disasters, and faces both extreme and slow-onset climate-related hazards. Nepal’s climate vulnerabilities emerge from a combination of fragile mountainous topography and ecosystems, highly variable monsoon-driven hydrology, unplanned settlements, and a lack of resilient infrastructure.
“These are internal factors induced by climate change. The rising temperature resulting from climate change in many labour-hosting countries is another formidable challenge that Nepal will face sooner or later,” said Madhukar Upadhyay, a climate change expert.
"Temporary labour out-migration from Nepal will continue for generations, but the potential impacts of rising temperatures in the Gulf and the Middle East may pose challenges for Nepalis to work there in the future," said Upadhyay.
“As the temperature goes up, the citizens of the labour-hosting countries may not work; and that means demand for migrant workers will grow manifold. But the question is whether Nepali workers will work in the extreme heat,” he said. “The consequences of heat, obviously, will be big.”
Remittances are, in many ways, the backbone of Nepal’s economy. Since 2005, Nepal has earned significantly more foreign exchange from international migration than from goods and services exports, including tourism, and foreign direct investment combined, according to the World Bank’s report.
The top four destinations for Nepali workers are India (for which migration data are unavailable), Saudi Arabia, Qatar and the United Arab Emirates.
The report says that, by 2039, Qatar is estimated to experience over 45 days of temperatures above 35 degrees Celsius each year. Similar temperature increases are expected in the other Gulf countries that have traditionally been Nepali migrant destinations.
India will also experience higher temperatures, with over 12 days of temperatures above 35 degrees Celsius each year by 2039.
“Nepal should assess the potential impacts of rising temperatures in the Gulf and the rebalancing of energy away from fossil fuels on remittances, as its migrant workforce may shift away from the Gulf countries in response to these global trends,” the report said.
“We have been talking only about the melting glaciers in the Himalaya for decades, while problems in other areas are growing,” said Upadhyay. “Nepal should be prepared on its own because when a problem arises, there will be no one to support you.”
Migrant work and remittance inflows are likely to remain the key driver of growth in the future. The World Bank said that Nepal’s economic growth trajectory was challenging before climate change became a growing limitation.
“The labour sector will definitely suffer if there is no timely intervention,” said Jeevan Baniya, assistant director at the Centre for Study of Labour and Mobility, Social Science Baha, a non-profit involved in research in the social sciences in Nepal.
“The country is now dependent on remittance. The consequences of climate change on the labour market, if not addressed timely with appropriate policies, will be big on the country’s economy.”
Migrants workers are already dying in many countries, including Qatar and Malaysia, as they are working in extreme heat in construction or outdoors, said Baniya.
“Cases may rise manyfold if temperatures rise,” said Baniya. “Nepal needs to press the employer countries for occupational safety and amend the bilateral labour laws in favour of workers' safety.”
Nepal has been hit by frequent shocks. Migration supports household resilience to shocks, including climate shocks, by scaling up remittances. Recent shocks include the 2015 earthquakes and the subsequent fuel crisis, floods in 2017, landslides, and the Covid-19 pandemic in 2020.
Nepal ranks as the 10th most affected country in the world, according to the Climate Risk Index. Approximately 80 percent of its population is at risk from natural and climate-induced hazards, including extreme heat stress, flooding and air pollution.
Vulnerable communities, particularly those living in poverty, in remote areas, and working in subsistence agriculture, are at the highest risk, with exposure being spatially heterogeneous, the report said.
Earthquakes and flood risk are the most dangerous natural hazards to date, while floods and landslides were the most frequent hazards over the past 40 years. The number of flood events has doubled in recent years; storms, erosion, and landslides are also on the rise, resulting in loss of life and livelihoods.
Incidences of dry spells, droughts, forest fires, heat waves, flash floods and disease outbreaks are increasing along with slow-onset risk. Climate and disaster risks are expected to further increase, affecting people and the environment, and putting development gains at risk.
“Last year, Sindhuli, Gorkha, Dhading and many mid-hill districts suffered pest infections on a massive scale in citrus fruits. No one bothered to study why it happened,” said Upadhyay. “Disease outbreaks are increasing everywhere. We are at risk of becoming a food insecure country sooner or later due to climate change.”
According to the World Bank, Nepal’s temperature is projected to increase by 0.92-1.07 degrees Celsius in the medium term (2016-45) and 1.3-1.8 degrees Celsius in the long term (2036-65) from the reference period of 1981-2010.
Likewise, annual precipitation is expected to increase in both the medium and long term by 2-6 percent to 8-12 percent with more precipitation expected in the higher regions.
Winters are projected to be drier and monsoon summers wetter, with up to a threefold increase in rainfall.
The report said that the number of people in Nepal annually affected by river flooding caused by climate change could more than double to around 350,000 in 2030 (from 157,000 in 2010).
“The economic impact of this flooding could triple,” the report said. This will contribute to further increasing Nepal’s relative exposure to climate-related hazards.
Climate variability is already a major driver of poverty, food insecurity and energy insecurity in Nepal.
The costs of climate variability to the Nepali economy are incurred through lower agricultural output, high energy imports, and high health and coping costs due to prolonged water and electricity shortages. The lack of reliable water and electricity is a major constraint to development.
Rapidly urbanising areas and rural agriculture communities are experiencing increased climate change risks. Overall, the built-up area accounts for less than 1 percent of total land cover; more than 25 percent of municipalities have negligible built-up areas.
However, Kathmandu and Pokhara valleys and southern municipalities in the Tarai have seen 62 percent growth relative to 2000. These changes lead to growing hazard exposure and vulnerability.
Agricultural land is at risk of severe drought, which is associated with reduced crop harvests, increasing food costs, and negative impacts on the livelihoods of primarily rural communities.
Heat stress affects large swathes of the country, with over 4 million Nepalis facing the health impacts of extreme heat. Warming threatens the future of Nepal’s high mountain glaciers, which are a critical supply of freshwater to the region.
In Kathmandu, water stress is so severe that piped supply is reported to meet less than 32 percent of household demand in the monsoon and 19 percent in the dry season, the report said.
Water availability also affects small-scale hydropower and agriculture, which remains a vital part of the livelihoods of 64 percent of the population.
In the energy sector, hydropower makes up 90 percent of Nepal’s domestic electricity generation. Currently, all but one hydroelectric plant is run-of-river; its productivity is impacted by river runoff volume and sedimentation caused by poor land and forest management as well as extreme weather events.
Nepal’s infrastructure is vulnerable to heavy rainfall, flooding and landslides, the frequencies and intensities of which are increasing. About 90 percent of Nepal’s movement of passengers and goods takes place on road transport networks.
In 2019-20, road infrastructure incurred damage worth over $16.4 million, the report said.
Recent major disasters include the glacial lake outburst floods in the Bhote Koshi in 2016 and Barun Khola in 2017 as well as the June 2021 Melamchi flood and landslide which severely damaged the water supply to Kathmandu. These events are expected to increase in frequency and severity due to climate change.
Nepal is a negligible contributor to global greenhouse gas (GHG) emissions. With 48 million tonnes of carbon dioxide equivalent in 2019, Nepal contributes around 0.1 percent of total global GHG emissions. These come primarily from agriculture (54 percent) and energy (28 percent).
Biofuels and waste (including fuel wood, dung, biogas and agricultural waste) provide 72 percent of the energy supply, followed by oil, coal and hydropower.
However, the country’s GHG emissions are rising. Emissions increased by 26.86 percent between 2012 and 2019. This is linked to rising energy consumption, which doubled in the residential sector between 1990 and 2018 and, from a smaller base, increased almost tenfold in the transport and industry sectors over this period.
The carbon intensity of Nepal’s energy supply has also risen steadily since 1990; the largest driver of emission growth was the transport sector, the report said.