Bhutan is the first pilot country for UNCDF under the global programme (2011-2014). The UNCDF signed a MOU with the Royal Government of Bhutan to support the UN Capital Development Fund global LoCAL programme in Bhutan.

The LoCAL pilot in Bhutan is implemented as the ‘Performance Based Climate Change Adaptation Grants’ under the ongoing Joint Support Programme coordinated by the Gross National Happiness Commissionand. It is implemented by the Department of Local Governance, Ministry of Home and Cultural Affairs in the pilot districts of Zhemgang and Wangduephodrang.

Under this agreement, UNCDF provides direct grants to the Royal Government for local climate resilience and adaptation, and technical support to seek further adaptation resources.

The Royal Government building, Thimpu - Bhutan.

The objective of the support strategy is to build on the understanding that effective climate adaptation and resilience can be achieved by enabling local governments to use their mandate to plan, finance, procure and manage infrastructure and programmes to provide holistic and integrated responses to the challenge of climate change. However, while local governments have a mandate to respond, there is a funding gap that limits their ability to do so. Therefore, the principle aim of the facility is to demonstrate that contributing to filling this gap by channelling additional financing to local governments through a performance based grant system is an efficient and effective way to finance increased climate resilience. The LoCAL facility helps transfer capital funds to climate change adapatation to the local government levels under a specially adopted performance based grant system.

History of Decentralisation in Bhutan

Bhutan is a country of over 700000 people in the heart of the Himalayas. The Kingdom was created in 1907. Five Kings have governed the country since it was created. The third King initiated five year development plans in the late 60’s. The 4th King enunciated the development philosophy of Gross National Happiness and pushed for decentralization. By Royal Decree in 1981, he put in place the Dzongkhak Development Committees – there are 20 Dzonghaks or Districts in Bhutan. Ten years later, in 1991, also by Royal Decree, he installed the Gewok Development Committees. There are in total 205 Gewoks or Blocks in Bhutan. This set the framework for a decentralised administration system and today Bhutan starts to fully reap the benefits of a decentralised structure.

Since 1979, UNCDF has been a long-term development partner to the Royal Government. UNCDF assistance started with primary focus on infrastructure and the agriculture sector. From 1996, UNCDF interventions increasingly focused in the field of decentralization and local governance and microfinance within the 8th Five-Year Plan (FYP). UNCDF has also supported the decentralisation process through the pilot block grants to 10 gewogs under the gewog development fund activity (GDFA), and subsequently to 32 gewogs under the decentralisation support programme (DSP, 2005-2008) covering the districts of Gasa, Pemagatshel, Lhuentshe, Trongsa and Zhemgang. This has provided a foundation for the ongoing joint local governance support programme (LGSP, 2008-13). The LoCAL programme is integrated in the 11th development plan: the Gross Happiness Development Plan.

Climate Change Status
(Excerpts from the NATIONAL REPORT FOR THE UNITED NATIONS CONFERENCE ON SUSTAINABLE DEVELOPMENT 2012)

The country is endowed with outstanding natural environment. It is dubbed as the "crown jewel‟ of the Eastern Himalayas, a region recognized as a global biodiversity hotspot. Broadly speaking, the natural habitats range from the subtropical broadleaf forests and grasslands through temperate mountain forests to alpine meadows and scree interspersed with marshlands and various water bodies. The Constitution of the Kingdom mandates a forest cover of at least 60% of the land at all times. Currently, the country benefits from a forest cover of over 70% - one of the highest in the world. As a result of vast forest cover and limited number of polluting industries, Bhutan is among the few countries in the world with net greenhouse gas (GHG) emission in negative.

The Royal Government of Bhutan has committed to remain carbon neutral keeping in line with the country's policies and to serve as an example in combating climate change. This has been declared through the “Declaration of the Kingdom of Bhutan- The Land of Gross National Happiness to Save our Planet” made at the UNFCCC 15th Session of Conference of Parties (COP15) in Copenhagen in December 2009, wherein the government committed to maintain Bhutan‟s status as a net sink for Green House Gasses by ensuring that greenhouse gas emission levels do not exceed the sequestration capacity of its forests.

Unfortunately the country is also at grave risk of natural disasters to changing patterns in the environment. For example, more intense rains, reduced soil moisture in high altitude, flash floods and landslides put at risk decades of development efforts. It is in this context that the LoCAL programme attempts to mainstream climate change adaptation mechanisms at local government levels.