NDF - Financing for climate change and development projects

NCF 6: Reducing vulnerability to climate change in rural Nepal by supporting local business development based on forest-land-management renewable energy initiatives

Photo: DFE
Photo: DFE
Photo: DFE
Photo: WCN
Photo: WCN
Photo: WCN
Photo: DFE
Photo: DFE
Sustainable management of forests and agroforestry systems and the production of NTFPs (non-timber forest products) will lead to 1) improved livelihoods of forest communities of fragile landscapes in rural Nepal and 2) increased climate resilience.

Reducing vulnerability to climate change in rural Nepal by supporting local business development based on forest-land-management-renewable energy initiatives                                                                                                                                                                                                                          
Ref: NDF C83

Nordic Partner: Danish Forestry Extension
Local Partner: Wildlife Conservation Nepal (WCN)
Other Local Partner: Himalayan Bio Trade Pvt. Ltd. (HBTL)
Other Partner: Biosynergy A/S
Other Partner: Skovdyrkerne
Total Project Cost: EUR 468,513
NCF Financing: EUR 354,075
Agreement Signed: 6 February 2017
Project type: Combination
Duration: 30 months

Project objective
Forest based women enterprise developed through sustainable and wise use of forest resources leading to climate resilience and economic development:

  • Consolidate women groups into a women enterprise for scaling up of climate friendly essential oil business, fodder plant production and cash crops.
  • Increase ecosystem resilience through natural forest restoration and agroforestry systems to adapt to climate change and mitigate its effects, including improved livestock management for increased milk production and biogas installation.
  • Develop business acumen of local communities
  • Explore possibility to create a reinvestment fund for women enterprise to promote local green business ideas.


Main results/outputs

  • By the end of the project, economically and institutionally independent women enterprise functioning with members from 10 women groups from 10 community forest user groups of Nawalparasi.
  • NTFP (non-timber forest product) women enterprise business diversified and scaled up, benefitting 150 women and their households directly, and indirectly a total of 5,000 households in the participating CFUGs (Community Forest User Group).
  • Four CFUGs continue management of 1963 ha of restored forest from previous project to ensure growing carbon stock.
  • By end of project period, milk production from livestock enhanced among 5,000 CFUG households in the 10 CFUGs in Nawalparasi 
  • 14 CFUGs, 1 Women Enterprise, and 10 women groups receive training and skill building for behavioural change and entrepreneurial skill developed by end of project. (31 trainings).
  • By the end of the project, 82 biogas plants benefiting 82 HH of 10 different CFUGs in Nawalparsai district have been installed, reducing GHG emissions, contributing to reduced pressure on forests, and eliminating indoor pollution.


The project will work with a women enterprise to consolidate, scale up and diversify their agroforestry systems in the community forests of Nawalparasi. The women enterprise will comprise 25 members from the respective 10 women groups and members of the local CFUG.

In these agroforestry planting systems, diverse NTFPs will be produced such as species for essential oil production, fodder trees, timber and perennial cash crops like bamboo and amriso (broom grass). On the one hand, the cultivation of essential oils will increase the communities’ alternative livelihood opportunities and a strong market link is ensured through a local business partner for the essential oils. The project will strengthen the communities’ natural resource management, business and marketing skills. On the other hand, the agroforestry planting system with fodder trees and cash crops  will not only bring additional  local economic development but also contribute to carbon storage, making the forest and local ecosystem more resilient to climate change. With readily availability of fodder livestock will be kept out of forest increasing milk production even during winter season.

There are two aspects to the livestock: 1) they do not get enough protein-rich fodder, which means that they do not produce milk in the wintertime. The families loose income from not being able to sell any milk and having to buy milk powder for their own consumption. 2) The animals are often allowed to roam freely in the forest which has a negative effect on regeneration and health of the forest. Thus, the agroforestry systems with the fodder trees will allow the families to have enough fodder over the winter so that they can increase their milk production. In addition, by having fodder trees in agroforestry systems, animals will be fed with the fodder and not let to roam in the forest.
In addition, the project has a pilot initiative to work further with the livestock by installing 82 biogas plants. The households that are participating will have to keep their animals in sheds close to living quarters and not let the animals roam freely in the forest, thus also contributing to reducing degradation of forest areas from livestock. The biogas plants will also reduce the pressure on forests since it will reduce the need for fire wood and they will also decrease methane emissions, contributing to climate mitigation and improving indoor air quality of all participating households. The continued increased forest cover will have climate adaptation effects while carbon stock will continue to increase having mitigating effects.

The projects is heavily focused on climate resilience since it works with enhancing the natural systems on which forest communities depend. The idea is to work with agroforestry systems that will make the community forest more resilient to climate change while at the same working with the private sector and linking the rural communities to the national and international market. This project works on pro poor market development through a climate friendly business model.

Relevance for climate change
The project will directly address components of Nepal’s NAPA (National Adaptation Programme of Action) prioritized activities for climate change adaptation under the top priority project profile 5 entitled Forest and Ecosystem Management: Managing trees outside the forests in public and private land (agro – forestry practice); scaling up of biomass energy technologies for less fuel wood consumption; managing community based forest fire in mid hills and Terai and profile 7 titled Ecosystem management for Climate adaptation; promoting improved pasture land management techniques; conserving and promoting medicinal plants and NTFPs (NAPA 2010: 30). Utilization of barren lands with commercial cultivation of essential oil bearing plants and agro-forestry coupled with biogas production initiatives can emerge out as a new economic sector for small farming communities that help them adapt to climate change while they at the same time help mitigate the effects of climate change through carbon storage and reducing GHG emissions.

Innovation aspects
The project uses a demand driven approach to link poor smallholders with modern markets – focusing on smallholders which would otherwise not have market access. The project is innovative because it supports pro-poor market development by making an alliance between civil society Non-Governmental Organizations and businesses. That NGOs link the poor rural communities to the private sector is often lacking in many development projects, however this is essential for sustaining the results of a project intervention and contributing to lasting poverty alleviation and economic sustainability.

The products that are promoted in the project are based on enhancing natural systems, and thus they are environmentally friendly contributing to climate adaptation and mitigation of the rural forest communities. Such results are achieved through innovative designed natural agroforestry systems that improve the degraded forest, creating climate resilience, sequestering carbon and bringing local economic growth. Often agroforestry systems are promoted in the academic literature, however their actual implementation on a larger level is less frequent. Thereby this project represents an interesting case of how to move from theory to action.

More information
Danish Forestry Extension
Wildlife Conservation Nepal (WCN)
Himalayan Bio Trade Pvt. Ltd. (HBTL)
Biosynergy A/S