Nepal Walks Back Climate Compensation Demand After Floods

Nepal withdrew its foreign minister's call for compensation from the US, China and India, refocusing on multilateral climate finance after deadly August floods.

Foreign Minister Shisir Khanal said China, the US and India had made "extremely large" contributions to climate change and that Nepal would pursue compensation as "a matter of legal and moral liability," not charity, according to The Daily Star. The statement followed the catastrophic flash flood in the Bhotekoshi River basin on August 26, triggered by a rock-ice avalanche near the Nepal–China border. Three days later, on September 3–4, Khanal reversed course, telling reporters that neither he, the Foreign Ministry, nor the government of Nepal had claimed or asked for compensation from India, China, or the United States, The Hindu and Counterview report.

The scale of the disaster is contested across outlets. The Daily Star reported that more than a thousand people were killed and nearly 4,000 remained missing after symbolic funerals with Kush grass effigies were held at Kathmandu's Pashupatinath Temple. National Herald put the toll higher, saying more than 1,300 were killed and around 4,900 remain missing, while Counterview reported 1,252 dead and over 4,200 missing as of September 3, with nearly 20,000 homes needing rebuilds. Counterview alone placed preliminary economic losses at roughly $2.56 billion, with earlier reconstruction projections of $4–5 billion.

The walkback shifts Nepal from bilateral accusation to a multilateral track. Counterview reports that in talks with China, Khanal clarified Nepal does not seek compensation from any specific country but expects cooperation under the UN Framework Convention on Climate Change and the Paris Agreement. Analysts note that directly implicating India and China — Nepal's immediate neighbors and dominant trade and transit partners — would have strained practical diplomacy, especially after both countries sent rescue teams, helicopters and medicine. The Hindu also notes the Paris Agreement's loss-and-damage provisions explicitly create no basis for liability or compensation, making country-by-country claims legally fragile.

Nepal contributes roughly 0.1% of global greenhouse gas emissions, The Hindu reports, yet sits at ground zero of warming: the Hindu Kush Himalayas, dubbed the "Third Pole," are warming at nearly twice the global average, with glaciers melting at ten times historical norms. The floods devastated Nepal's hydropower-centered economy, crippling about 10% of installed capacity, burying an under-construction project, and forcing an energy exporter to halt exports overnight and import power, according to The Hindu. Khanal separately warned that Himalayan glacier loss could threaten water security for more than two billion South Asians, per The Daily Star.

Nepal has formally asked the board of the Fund for Responding to Loss and Damage for urgent assistance, in a joint letter from Finance Minister Swarnim Wagle and Forests and Agriculture Minister Geeta Chaudhary, The Daily Star reports. The fund, created at COP27 and operationalized at COP28, was not designed as an emergency relief mechanism, and The Hindu notes it holds only a fraction of the money needed for the scale of losses. India, meanwhile, maintains that historical responsibility, per-capita emissions and the CBDR-RC principle should guide climate finance — a stance that shapes how any Nepali claim would be received.

Prime Minister Balendra Shah will address the 81st UN General Assembly general debate on September 24 — his first foreign trip since taking office on March 27, National Herald reports — with climate justice expected at the center of Nepal's message. Kathmandu's Finance and Foreign Ministries are jointly preparing a damage-assessment report to quantify the disaster and back its case internationally. Ahead of November's UN climate summit, Nepal's shift signals a broader strategy: joining Bangladesh, small island states and other vulnerable nations in demanding that the multilateral climate architecture, not any single neighbor, deliver the resources for recovery and adaptation.