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

LoCAL is the UN Capital Development Fund’s facility for investment in local level climate resilience. The facility channels local adaptation finance to local governments - who are at the frontline of dealing with the effects of climate change - and enables them to invest in building local resilience.  

The LoCAL pilot in Bhutan will be implemented through ‘Performance Based Resilience Grants’, under the ongoing Joint Support Programme coordinated by the Gross National Happiness Commission (GNHC). Under the four-year MOU, UNCDF has committed a total of about 27 million ngultrums (US$600,000) for the first year of implementation (2011-2012). It will be implemented by the Department of Local Governance, Ministry of Home and Cultural Affairs (MOHCA) in the pilot districts of Zhemgang and Wangduephodrang.  

This MOU outlines the first of several country pilots under the global LoCAL programme described in the UNCDF LoCAL global facility Project Document. UNCDF will, under the agreement, provide direct grants to the Royal Government for local climate resilience and adaptation, seek further adaptation resources, and provide technical assistance. 

The programme aims to consolidate 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 challenges posed by climate change. However, while local governments have the mandate to respond, they face a funding gap that limits their ability to do so.  

The LoCAL facility seeks, therefore, to demonstrate that filling this gap through additional performance based financing to local governments is an efficient and effective way to finance local climate resilience and therefore attract funding from global climate funds directly to the local level. 

Since 1979, UNCDF has been a long-term development partner of the Royal Government of Bhutan. UNCDF assistance started initially with a focus on infrastructure and the agriculture sector. From 1996, UNCDF interventions increasingly focused in the field of decentralization, local governance and microfinance within the 8^th Five-Year Plan (FYP). Today with the signing of this MOU, UNCDF broadens its partnership with the Royal Government of Bhutan and increases its support to local Bhutanese governments in responding to the growing challenges of climate change.   

Ms. Chencho G. Dorjee, UNCDF Programme Analyst, UN House, Thimphu Email chencho.dorjee@uncdf.org; telephone +2-322424 ext. 240