Beyond a First Responder: India must Co-Underwrite Himalayan Loss & Damage

For decades, India’s diplomatic relationship with Nepal during natural disasters followed a set protocol: when cloudbursts, landslides, or flash floods devastated the mountain nation, New Delhi deployed National Disaster Response Force teams, airlifted emergency rations, and offered generous reconstruction grants. India was the consummate ‘First Responder’ — immediate, generous, and tactically indispensable. 

Recent catastrophic flash floods across Nepal’s Bhotekoshi and Trishuli river basins have broken this paradigm. Moving away from an era of ad-hoc relief and charity, Nepalese leadership has explicitly pivoted to a framework of climate justice. Kathmandu has appealed to the United Nations-backed Fund for Responding to Loss and Damage (FRLD) — which provides financial assistance to developing nations that are impacted by climate change — while calling directly on major regional emitters, including China and India, to compensate for damages. 

This presents New Delhi with a delicate strategic dilemma. India has long argued at global climate summits that Western historical polluters carry sole responsibility for funding Loss and Damage. Accepting direct legal liability or paying explicit ‘climate damages’ to a neighbor could open a diplomatic Pandora's box, exposing India to similar claims across South Asia, including the Pacific Island States. More importantly, this would weaken its leverage against the Global North, which wants current major polluters like India and China to contribute to global public climate finance. 

Walking on eggshells

For New Delhi, flatly dismissing Kathmandu’s appeals carries severe geopolitical risk. China is expanding its ecological diplomacy across the Tibetan plateau. Sticking to an evasive posture risks alienating the Nepalese public, driving anti-India sentiment, and ceding strategic space to Beijing. 

Furthermore, India’s own interests are tied to Nepal’s ecology. Indian firms have invested billions in projects like the Arun III and Upper Karnali hydropower plants. When GLOFs (Glacial Lake Outburst Floods) destroy these dams and cascade downstream into Bihar and Uttar Pradesh, the loss is mutual. 

So, why is Nepal placing sudden demand on its immediate neighbors? Global climate finance is agonisingly slow. A crucial $49.9 million UN Green Climate Fund project to protect Nepalese communities from GLOFs sat in pipeline limbo for over seven years. 

Meanwhile, Nepal faces up to $5 billion in disaster reconstruction costs—nearly 10% of its GDP. Relying on slow-moving bureaucracies in Geneva or Bonn while mountain settlements wash away is no longer viable. 

Downstream nations are now applying the Common But Differentiated Responsibilities (CBDR) principle locally, pointing out that adjacent economic engines share an immediate physical footprint in their backyard. 

Stepping up

India must transcend the binary choice between accepting legal liability and offering passive aid. As the preeminent regional power, New Delhi can construct institutions that deliver the substance of Loss and Damage funding without getting bogged down in fault-based compensation language: 

• Establish a Regional Himalayan Risk Facility: Working through BIMSTEC or a Third Pole Compact, India should champion a South Asian Resilience and Insurance Facility. Operating as a rapid-payout parametric insurance pool, funds would be released automatically upon satellite detection of threshold climate triggers. This would bypass years of diplomatic wrangling and enable predictable annual budget allocations. This facility would also provide predictability to the Nepalese Finance Minister about the quantum of funds, and to the Indian Finance Minister about the annual allocation to the Facility for disaster relief.

• Re-engineer transboundary infrastructure: Bilateral projects must evolve into resilience-first partnerships. India should route a dedicated percentage of joint infrastructure budgets into an Ecological Adaptation Fund to stabilise upstream slopes, build resilient local infrastructure, and protect mountain livelihoods.

• Institutionalise open data sharing: Leveraging ISRO’s remote sensing capabilities, India can build a real-time early warning system across the Himalayan belt. Co-owning GLOF monitoring data and tracking lake volumes with Nepalese agencies will convert tactical intelligence into a shared regional security asset. 

Also read: The Himalayas needs a cross-border disaster-warning system

The disasters in the Himalayas signal a new era of regional diplomacy. By terming financial assistance as “compensation”, Nepal is not merely asking for relief; it is calling for a structural redesign of how regional climate impacts are financed. 

​In this new phase of climate geopolitics, countries like India and China stand at a pivotal crossroads. Just as they successfully cooperated to reshape global development finance through institutions like the New Development Bank (and the Asian Infrastructure Investment Bank), emerging powers now have the opportunity to innovate on climate cooperation far beyond the rigid, slow-moving models handed down by the West.

By co-underwriting regional resilience, pioneering localised Loss and Damage mechanisms, and investing in transboundary ecological safety, New Delhi can prove that its commitment to the Global South begins right at its own borders. 

 

Dr Ajay Mathur is currently a Professor of Practice at the Indian Institute of Technology, Delhi, and was the former Director General of the International Solar Alliance. Views expressed are personal