Nepal reached a significant milestone in advancing the implementation of its Emission Reductions (ER) program when it was declared “effective” on June 24^th. Meeting the conditions of effectiveness means that the country (or program entity) has fulfilled the obligations outlined in the Emission Reductions Payment Agreement (ERPA) and can now begin to sell, transfer, and receive payment for emission reductions.

To become effective, Nepal’s program had to satisfy five main conditions: approving the ERPA by the Government of Nepal, producing a Benefits Sharing Plan for the ER program, demonstrating that ERP implementation was consistent with established environmental and social safeguards, and creating an agreement between the country’s Ministry of Finance and Forest Development Fund (FDF).

The Forest Development Fund was established as a long-term funding structure for Nepal’s forestry sector. The Fund will administer up to US$45 million set out in the ERPA for the management and maintenance of forest cover, and other Sustainable Forest Management (SFM) initiatives in Nepal. The Fund can receive and manage funding from other sources as well.

With the declared effectiveness, the ERPA team is now focusing on the ER Monitoring Report. This monitoring process and the report will provide evidence that verifiable emission reductions were achieved in a way that satisfies the high standards for social and environmental responsibility set out in the ERPA. Provided the report is confirmed, the first payment is expected to be issued in mid-2023.

Nepal is the 8^th country to meet its conditions of effectiveness in FY22 (after Fiji, Indonesia, Lao PDR, Cote d'Ivoire, Costa Rica, Madagascar, and the Dominican Republic), bringing the total number of “effective” ER program countries to 11 by the end of June 2022.