The World Bank Group in Nepal, 2014-23
Chapter 5 | Resilience to Natural Disasters
Highlights
The World Bank’s support for disaster response and resilience building has been highly relevant to Nepal’s recent disasters and severe climate exposure. In the first half of the evaluation period, the government and the World Bank focused on earthquake response. The World Bank’s convening of stakeholders and large, sustained financing enabled the government to move toward improved risk reduction in the second half of the evaluation period.
The World Bank’s Earthquake Housing Reconstruction Project successfully built resilient homes for affected populations but did not pay adequate attention to the needs of the poorest beneficiaries. The project’s success is attributed to an owner-driven construction approach, output-based disbursement, effective donor coordination, strong political buy-in, and the World Bank’s flexibility to respond to changing circumstances.
The World Bank integrated disaster resilience into the design of its sector projects but was unable to fully integrate it into government policies and programs.
The 2023 earthquake exposed additional gaps in Nepal’s disaster preparedness, including inadequate funding, a delayed postdisaster needs assessment, limited disaster management capabilities at the local level, and nonimplementation of building codes at subnational levels.
This chapter reviews the World Bank’s support for strengthening resilience to disasters caused by natural hazards, such as earthquakes, floods, hurricanes, tornadoes, landslides, and droughts. It also covers support for adaptive social protection. The chapter finds that the World Bank was far more effective in earthquake response and in supporting policy and institutional reforms than in building resilience and ensuring reform implementation. The chapter begins with a section on the country’s context and the evolution of the World Bank program during the evaluation period. It then structures the discussion around the World Bank’s disaster resilience results chain (figure 5.1). This segment assesses the World Bank’s three main areas of support: (i) disaster response and recovery, aimed at providing immediate relief and quickly restoring affected communities after a disaster has occurred; (ii) disaster risk mitigation, aimed at reducing the loss of human life and property by reducing disaster impacts; and (iii) disaster preparedness, aimed at developing strategies and systems to effectively manage potential disasters, including social protection measures.
Figure 5.1. Results Chain for World Bank Support to Strengthening Resilience to Natural Disasters

Source: Independent Evaluation Group.
Note: EWS = early-warning system.
Country Context and Evolution of the World Bank Program
Nepal is highly vulnerable to natural disasters and climate risks. The most exposed people to these risks are poorer households and communities in remote, mountainous areas. Rising temperatures, melting glaciers, and more intense rainfall will likely increase climate-related hazards (World Bank Group 2022). Over the past decade, Nepal faced a series of shocks—from the major earthquake in 2015, the floods in 2017, and the most recent Jajarkot earthquake in 2023. These events led the government to focus on strengthening resilience to natural disasters and adapting social protection systems to be more responsive to shocks.
In April 2015, Nepal was hit by two major earthquakes, which resulted in more than 8,700 deaths and 25,000 injuries. The first earthquake had a 7.8 magnitude, and the aftershock had a 7.3 magnitude. The postdisaster needs assessment, supported by the World Bank and other development partners, estimated the earthquakes’ physical damage at about $7 billion—approximately one-third of Nepal’s GDP in FY13–14 (National Planning Commission 2015). The postdisaster needs assessment identified housing as the most pressing issue for the individuals affected by the earthquake, with damage to homes totaling $3.27 billion, nearly half of all reconstruction costs. The earthquakes destroyed about 490,000 houses and partially damaged another 265,000. In addition, government buildings, heritage sites, schools and health facilities, rural roads, water supply systems, and agricultural land also suffered significant damage. The government estimated it would need $1.2 billion for housing reconstruction, which could be financed through a combination of government resources, loans, and grants from development partners.
After the 2015 earthquakes, the government of Nepal, with World Bank support, prioritized disaster relief and reconstruction of critical infrastructure over initiatives aimed at reducing future risks. This focus was driven by the need to respond quickly and visibly to the 2015 earthquake. The government of Nepal’s establishment of the National Reconstruction Authority, with a five-year life span, helped coordinate and manage the government’s reconstruction efforts across various sectors.
During the latter half of the evaluation period, the World Bank supported the government’s shift toward proactive DRM. The support included generating analytic insights for risk-informed decision-making and strengthening systems and institutional capacity for DRM at the subnational level. This shift from reacting to disasters after they occur to strengthening preparedness reflected the government of Nepal’s growing recognition of the need to build resilience to increasing climate and disaster risks. The World Bank supported the enactment of the Disaster Risk Reduction and Management Act of 2017, which contributed to a proactive DRM approach and establishing the National Disaster Risk Reduction and Management Authority in 2019 (figure 5.2). The World Bank elevated Green, Resilient, and Inclusive Development (GRID) as a framework for shaping Nepal’s sustainable development agenda.
Figure 5.2. Disaster Resilience: Evolution of Nepal’s Policy and Institutional Framework

Source: Independent Evaluation Group.
Note: DRM = disaster risk management; DRR = disaster risk reduction; GRID = Green, Resilient, and Inclusive Development.
The World Bank’s diagnostics and CPFs consistently highlighted the need to enhance Nepal’s resilience to natural disasters. The FY14–18 CPS highlighted Nepal’s vulnerability to climate change and natural disasters, proposing a collaborative approach with development partners to address these risks. The 2018 SCD and the FY19–24 CPF reinforced the importance of enhancing Nepal’s resilience to natural disasters and climate change. The FY22 Performance and Learning Review prioritized GRID as a key framework for aligning donors and the government toward a multisector agenda.
The World Bank adapted its support in response to the changing priorities of DRM. Over the past decade, the World Bank has contributed to Nepal’s DRM efforts through a variety of mechanisms, including investment lending, trust funds, analytic work, technical assistance, and development policy financing. The World Bank’s initial efforts concentrated on immediate disaster relief and the construction of resilient infrastructure. More recently, World Bank projects have placed a greater emphasis on preparing for and mitigating the impact of disasters. This approach aligns with the World Bank’s commitment to the principles of the Sendai Framework for Disaster Risk Reduction for global disaster risk reduction and adherence to IDA’s climate change priorities and the Paris Agreement on climate change.1 In discussions with IEG, the World Bank’s clients and development partners acknowledged the World Bank’s role as a trusted partner in Nepal’s progress toward a more disaster-resilient future.
Disaster Response and Recovery
The World Bank provided effective disaster response. Its flagship project—the EHRP (2015–24)—provided an effective disaster response by reconstructing more than 320,000 disaster-resilient homes in all 32 affected districts. Since its approval in 2015, this project has been the World Bank’s largest disaster-related investment lending operation in Nepal. The project, funded by a $200 million credit from IDA, aimed to restore multihazard-resistant housing and strengthen disaster resilience. IDA later provided the project with an additional $500 million in funding. In parallel, the World Bank established the Nepal Earthquake Reconstruction Multi-Donor Trust Fund to channel development assistance from other development partners toward the World Bank’s housing reconstruction program. The EHRP has provided housing grants for the reconstruction of multihazard-resilient housing units across the 32 affected districts. The project benefited 1.3 million people in all 32 affected districts by reconstructing 320,000 disaster-resilient homes, of which 20 percent were women-headed households.
The EHRP has become a model for postdisaster reconstruction in the region, drawing on lessons from similar World Bank efforts. The EHRP’s design incorporated lessons from the World Bank’s past operations in Pakistan and Gujarat. These lessons emphasized the importance of an owner-driven construction approach, which adopts the principle of the “right of choice” for beneficiaries, allowing them the flexibility to determine the typology and size of houses according to their needs. The World Bank led the coordination efforts to ensure the uniform adoption of the owner-driven construction approach across all development partners in the earthquake-affected area. A donor official emphasized that the World Bank’s “convening of donors around the common owner-driven approach marked a paradigm shift with the focus shifting from building houses for people to enabling people to rebuild safer houses themselves.”
The EHRP design linked financial incentives to specific construction milestones, facilitating quick disbursement of funds. The project released funds in multiple tranches, subject to satisfactory inspection and verification of construction compliance with resilient building standards. The project deposited housing grants directly into beneficiaries’ bank accounts, promoting accountability and transparency. Furthermore, the government established the National Reconstruction Authority as the dedicated implementing agency for the project, which facilitated efficient decision-making. About 8 percent of the beneficiaries reconstructed their houses in less than one year, 17 percent in less than two years, and 67 percent between three and four years (World Bank 2024b). This pace is on par with or better than past reconstruction efforts in Indonesia, Japan, and Sri Lanka, which typically took four to seven years (National Reconstruction Authority 2021b).
The World Bank effectively coordinated and convened development partners around a common approach and joint financing for postearthquake housing reconstruction. In interviews, development partners and government officials appreciated the World Bank’s leadership role in housing reconstruction. The World Bank facilitated the government’s postdisaster needs assessment, with support from the Global Facility for Disaster Reduction and Recovery and other donors,2 ensuring that development partner interventions complemented each other. The World Bank–led housing reconstruction multidonor trust fund reduced transaction costs by pooling resources for housing reconstruction. The World Bank ensured that all development partner efforts in housing reconstruction were aligned and coherent through regular donor meetings. The strong political support from the government was critical to the success of the reconstruction efforts. The formation of an apex advisory council led by the prime minister, including members from the opposition party, helped the government oversee the country’s housing reconstruction efforts. This ensured political support for implementing decisions and maintaining momentum.
The World Bank ably adapted its program to the country’s needs. The World Bank used its “streamlined procedures in situations of urgent need” to prepare the EHRP and mobilized resources from the IDA Crisis Response Window to meet the country’s immediate housing reconstruction needs. It further restructured 12 IDA-financed sectoral operations to support recovery efforts by reallocation of resources toward disaster recovery efforts. The World Bank’s support to the government for an immediate and thorough assessment of the earthquake’s impact helped the World Bank quickly mobilize resources for housing reconstruction from the development partners. The World Bank restructured the EHRP six times to bridge funding shortfalls, support Nepal’s transition to federalism, include the National Disaster Risk Reduction and Management Authority as an implementing agency after the closure of the National Reconstruction Authority, and add resilience-building activities.
The EHRP was inclusive, supporting vulnerable people and women. The EHRP included targeted support for vulnerable groups through skills training, efforts to enhance women’s participation in jobs, and socioeconomic surveys to identify vulnerable beneficiaries. It also promoted joint house ownership and women’s representation in elected positions. People who met the government’s vulnerability criteria received additional grants from the project. Women constituted 20 percent of the 755 masons and 8 percent of more than 3,000 engineers nationwide eligible for housing reconstruction.
The World Bank focused insufficiently on equity, which contributed to several assisted households being saddled with debt. The project was only able to identify the vulnerable population late in the reconstruction phase because of a lack of existing data, slowing down assistance and reconstruction progress. Vulnerable households struggled with debt despite project assistance because the cost of housing reconstruction was, on average, three times higher than the project grant of NPR 300,000. This was also driven by increased costs due to scarcity of reconstruction materials and inflation, as well as homeowners’ choices to build multiunit houses under the owner-driven approach. The grant was not differentiated by income level. As such, the additional NPR 50,000 that many households received was still not enough. Discussions with residents in Kakre revealed that many struggle with reconstruction-related debts, with interest rates soaring from 7 to 20 percent. Households’ limited access to subsidized loans led many of them to borrow at high interest rates from local lenders and microfinance institutions (National Reconstruction Authority 2021a). Furthermore, the earthquake affected the livelihoods of 2.29 million households and 5.6 million workers, resulting in a loss of about 94 million working days (World Bank 2015).
The livelihood dimension did not receive the necessary attention from the government or the World Bank. Instead, the government and the World Bank concentrated their efforts on training beneficiaries in housing reconstruction skills, leading to employment challenges in the postreconstruction phase because individuals trained in these skills had limited opportunities to use them. Senior government officials acknowledged that the predominant focus on housing overshadowed broader community needs—for example, livelihoods and employment regeneration, especially for disadvantaged people. Livelihood support was mostly left to nongovernmental organizations and other development partners.
Disaster Risk Mitigation
The World Bank guided Nepal’s building back better from the earthquake by building resilient houses and protecting communities against future shocks. The EHRP helped rebuild houses affected by the earthquake to multihazard resilience standards. However, the design lacked targeted activities for fostering long-term resilience despite the project’s explicit development objective to strengthen disaster resilience. It was only in December 2018, during implementation, that the project launched specific measures to strengthen the government of Nepal’s capacity for disaster resilience, via training in resilient construction practices, screening of municipal facilities’ vulnerabilities, and installation of municipal search and rescue equipment.
The World Bank used DPCs to support policy reforms that strengthen resilience, but outcomes fell short. The DPCs supported Nepal in developing a comprehensive policy and institutional framework aimed at enhancing disaster resilience, based on analytic work. For example, the programmatic fiscal and public financial management DPCs, informed by the World Bank’s DRM analytic work after the 2015 earthquake in Nepal, contributed to the federal enactment of the Disaster Risk Reduction and Management Act in 2017 and the introduction of DRM guidelines at the local level in 2019 (World Bank 2021a). The DPC policy actions have helped the government make progress toward establishing a legislative and regulatory framework for DRM, including disaster strategies and plans and coordinating mechanisms. IEG Implementation Completion and Results Report Reviews of two closed operations deemed the DRM-related prior actions to be of substantial relevance. However, less than one-third of DRM-related indicators demonstrate downstream effectiveness. Most DPCs lack evidence of the outcomes of DRM-related policy changes, primarily focusing on upstream measures, such as the issuance of regulations or approval of frameworks, with fewer indicators for actual policy implementation; the operationalization of new institutions; strengthened coordination; and devolution of powers at the local level. DPCs with DRM policy actions have met their targets, and there have been no policy reversals during government administration changes, but the actual impact of these policies largely depends on their effective implementation. Complementing development policy financing with technical assistance would help in ensuring active engagement by line ministries and overcoming capacity constraints.
Limited provincial and local implementation has hindered DPCs from achieving their defined disaster risk reduction outcomes. The 2017 Disaster Risk Reduction and Management Act provided a comprehensive institutional framework for disaster risk reduction across all government levels. However, overlap among district and provincial roles and responsibilities leads to challenges in coordination and efficiency during implementation. For example, the Nepal catastrophe deferred drawdown option supported an update of the National Building Code to enhance earthquake resilience, but nongovernment building compliance remains limited (Ahmed et al. 2019) because of the prevalence of informal construction practices. Government officials indicated that many municipalities have yet to adopt these codes in their local regulations. The Implementation Completion and Results Report Review for the Nepal Fiscal Reforms DPC (which closed in 2019) reported that about 400 municipalities adopted local frameworks for DRM (World Bank 2023d). However, IEG visits revealed that municipalities lacked technical expertise and had financial constraints and coordination issues. To date, the World Bank has not been significantly engaged in addressing these local-level challenges.
The World Bank integrated resilience measures into its projects. IEG estimates that one-third of the 65 investment lending projects during the evaluation period incorporated resilience aspects. This uptake was relatively even across sectors and included (i) enhancing water security and climate-resilient water supply and sanitation services, (ii) using climate-resilient designs in road networks, (iii) promoting climate-smart agriculture, (iv) integrating disaster risk analysis in hydropower projects, and (v) adopting nature-based solutions. The World Bank’s creation of the DRM and Climate Change unit in South Asia and the integration of DRM and climate change specialists into sector dialogue helped mainstream disaster resilience into sector operations.
The World Bank’s support to incorporate resilience aspects at all levels of government faced challenges. An example of this is the Narayanghat–Mugling road upgrade, which included slope and river protection measures as part of the World Bank project. However, postproject activities by the Department of Roads, such as excavation on previously stabilized hill slopes for building a bridge, led to road closures. This highlights the critical need for integrating climate resilience measures more comprehensively across government programs to ensure that donor efforts are not undermined by future development activities. Government regulations for planning, design, and construction of resilient roads have been developed and endorsed. However, there is no evidence of the government incorporating climate and DRM considerations into service delivery agencies’ operational plans, such as those of the NEA or the Nepal Water Supply Corporation (World Bank Group 2022).
The World Bank helped establish a multisectoral GRID partnership platform, but challenges remain in translating this into a shared vision and action. The platform effectively coordinates and aligns donor actions to support sectoral transitions toward greener, more resilient, and inclusive development. The government of Nepal has prepared a GRID Strategic Action Plan 2024–34 supported by 16 development partners. This plan includes a $10 billion program of ongoing and pipeline investments over the next 10 years for 10 priority transitions. The World Bank’s GRID DPC series, complemented with programmatic advisory services, supports policy reforms led by Nepal’s Ministry of Finance. However, the DPC series’ effectiveness remains to be seen. At present, the GRID agenda is largely donor driven and will need additional government efforts to generate acceptance across all sector ministries. Discussions with government officials also highlight that they do not prioritize borrowing for climate and disaster resilience because the impacts from these measures are less immediate and their benefits are less visible compared with other projects. This is also influenced by the political landscape surrounding climate justice.
Disaster Preparedness
The World Bank developed early-warning systems, but the efforts have faced several challenges because of inadequate capacity for operations and maintenance. The Building Resilience to Climate-Related Hazards Project advanced weather and flood forecasting by installing 88 meteorological and 70 hydrological stations. However, the project closed before the capacity-building activities were fully implemented because of procurement and implementation delays. The EHRP has also installed 34 multihazard early-warning systems across 13 municipalities. Evaluative documents and IEG’s discussions with municipal and provincial officials reveal significant ongoing challenges in delivering early-warning system services. These challenges include inadequate capacity for operations and maintenance of the equipment and insufficient public awareness and response capabilities. For example, during the postmonsoon rainfall in October 2021, a three-day weather forecast issued by the Department of Hydrology and Meteorology was not taken seriously by either local government agencies or the public, resulting in agricultural losses. The limited response to weather alerts can be attributed to the absence of location-specific impact-based rainfall forecasts, inadequate coordination among sectoral agencies for taking appropriate actions, and challenges in effectively communicating risks (Bhandari and Dixit 2022). The Melamchi flooding in June 2021 exposed the need to expand hydrometeorological observation networks in higher Himalayan elevations. The lack of tailored hydrometeorological services for sectors such as transport, tourism, and hydropower limits the full use and effectiveness of early-warning system investments.
Many gaps remain in Nepal’s disaster preparedness, which the World Bank makes continued efforts to address. There have been instances of enhanced readiness. For example, the catastrophe deferred drawdown option provided $24.5 million to the government of Nepal for immediate relief work after flooding in the Sindhupalchowk and Baglung districts in September 2020. However, persistent gaps in preparedness remain. Following the EHRP’s closing in June 2023, the National Disaster Risk Reduction and Management Authority saw a decrease in human and financial resources because contracts ended for technical consultants. IEG’s visits showed insufficient government capabilities to operate the systems developed by the project. The aftermath of the Jajarkot earthquake in November 2023 exposed many shortcomings in preparedness, including a delayed postdisaster needs assessment, inadequate funding, and limited local-level disaster management capabilities. The lack of consensus inside the government on the emergency response trigger to request funding through the ongoing catastrophe deferred drawdown option after the earthquake highlights the need for strengthened policy dialogue and coordination in disaster response efforts. The World Bank is continuing its support to respond to these gaps in disaster preparedness.
The World Bank has engaged with different levels of government to strengthen social protection for disaster response, but the landscape is foundational and fragmented. Having multiple programs under different ministries—Nepal has more than 80 programs housed in more than 10 different ministries—coupled with high turnover of government staff, has led to lack of accountability and limited use of social protection systems for shock response. Although the World Bank has supported the digitization of data systems and payments for stronger social protection delivery, these have not been leveraged at scale. The World Bank successfully helped the government digitize civil registries and beneficiary databases for the Social Security Allowance, but the integrated social registry framework has met with resistance from the Ministry of Home Affairs because of (i) an incomplete national identity card system—3 million identity cards issued versus biometric data collected for more than 14 million of Nepal’s 30 million citizens (Digital Watch 2024); (ii) constrained government capacity to operate a sophisticated integrated framework; (iii) political economy, including competition among ministries for autonomy over their programs; and (iv) continuous turnover of government staff.
- The Sendai Framework for Disaster Risk Reduction (2015–30) calls for enhancing disaster preparedness for effective response and to “build back better” in recovery, rehabilitation, and reconstruction.
- The postdisaster needs assessment was also supported by the Asian Development Bank, the Japan International Cooperation Agency, the United Nations, and the European Union.