UN Capital Development Fund to support the global pilot for Local Climate Change Adaptive Living (LoCAL) grants for local governments in Bhutan

MoU signing netween GNHC and UNCDF

The UNCDF signed a MOU with the Royal Government of Bhutan to support the UN Capital Development Fund global LoCAL programme in Bhutan. Bhutan is the first pilot country for UNCDF under the global programme (2011-2014).

LoCAL is the UN Capital Development Fund’s facility for investment in local level climate resilience. The facility channels local adaptation finance to local governments who are at the frontline of dealing with the effects of climate change and enables them to invest it in building local resilience.

The LoCAL pilot in Bhutan will be implemented as the ‘Performance Based Climate Change Adaptation Grants’ under the ongoing Joint Support Programme coordinated by the GNHC. Under the four-year MOU UNCDF has committed a total of about 27 million ngultrums for the first year of implementation (2011-2012). It will be implemented by the Department of Local Governance, MOHCA in the pilot districts of Zhemgang and Wangduephodrang.

The MOU represents one of several country pilots under the global LoCAL programme described in the global UNCDF LoCAL facility Project Document. UNCDF will under the agreement provide direct grants to the Royal Government for local climate resilience and adaptation, support to seek further adaptation resources, and to provide technical assistance.

The objective of the support strategy is to build on the understanding that effective climate adaptation and resilience can be achieved by enabling local governments to use their mandate to plan, finance, procure and manage infrastructure and programmes to provide holistic and integrated responses to the challenge of climate change. However, while local governments have a mandate to respond, there is a funding gap that limits their ability to do so.

Therefore, the principle aim of the facility is to demonstrate that contributing to filling this gap by channelling additional financing to local governments through a performance based grant system is an efficient and effective way to finance increased climate resilience. Thus, the LoCAL facility will transfer capital funds to climate change adapatation to the local government levels under a specially adopted performance based grant system.

Since 1979, UNCDF has been a long-term development partner to the Royal Government. UNCDF assistance started with primary focus on infrastructure and the agriculture sector. From 1996, UNCDF interventions increasingly focused in the field of decentralization and local governance and microfinance within the 8th Five-Year Plan (FYP).

Currently, UNCDF supports the ongoing joint Local Governance Support Programme (LGSP, 2008-2013) in Bhutan. The LGSP is a national programme implemented in 20 districts and 205 gewogs. It is a joint programme with other development partners who have agreed to coordinate and harmonise support in the field of decentralisation and local governance to support the 10th FYP target of poverty reduction to 15 % by 2013.

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