1. Click to edit Master title style
Ministry of Federal Affairs and Local
Development
Nepal
Changing Performance Incentives
for
Local Government
Chakra Pani Sharma
Under Secretary/Environment Management Section Chief
Ministry of Federal Affairs and Local Development

2. Performance Incentives for Local Government : the
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Ministry of Federal Affairs and Local
Development
Case of Nepal in areas of Environment
• Government of Nepal introduced the system of allocating minimum and additional
grants to Local Bodies (LBs) to carry out assigned duties as per the Local Self
Governance Act (LSGA), 1999.
• Government through Local Governance and Community Development Programme
(LGCDP) implemented performance based grant system to provide additional grant
to LBs since 2008
• The performance based grant allocation system was introduced to improve LBs
performance and meet the compliance with rules/regulations, to improve service
delivery and to improve accountability, transparency, good governance, etc.
• The performances of LBs are assessed annually on the basis of indicators of
Minimum Conditions (MCs) and Performance Measures (PMs).
• Environmental consideration introduced in Performance Measures in 2011 (latest
version MCPM)

3. Incentive Based Management at Local Level
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Ministry of Federal Affairs and Local
Development
Enabling Environment
• Local Self Governance Act authorize local bodies for managing natural
resources
• Minimum Condition and Performance Measures Manual (MCPM) of local
bodies includes pro-poor, climate and environmental sensitive indicators
as a performance measure and condition for accessing future grants
• MCPM Focuses on Enhancing Planning and Programme Management
capacity of local bodies in:
– Fund Management
– Resource Mobilization
– Investing for safeguarding sources of revenue generation and
environment services
– Allocating budgets to ensure sustainability of infrastructure

4. Environmental Consideration in MCPM-Manual
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Ministry of Federal Affairs and Local
Development
MCPM tries to integrate social inclusion, gender equality, children,
poverty, environment conservation and climate change into development
planning.
•Two main criteria and performance indicators in the MCPM include:
1. Energy and environment management condition
• Prepare environment managements plans for infrastructure
projects
• Develop and implement projects for enhancing access to
renewable energy services
• Plan and implement local adaptation programme to minimize
climate change impact
• Develop and implement a policy for use of heavy equipment in
road construction

5. Environmental Consideration in MCPM continue…..
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Ministry of Federal Affairs and Local
Development
2. Cross sectoral subjects like climate change, environment protection,
disaster management, child friendly governance, open defecation free
area are to be addressed from planning to approval process by District
Development Council
• District Development Committees mandated for approving
projects of cross sectoral nature ( climate change, environment
protection, disaster management, child friendly governance, open
defecation free area)
• DDC includes activities in line with the aforementioned policies
• DDC allocates budget to implement activities from the DDC fund.

6. Future Course of Action/Way Forward
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Ministry of Federal Affairs and Local
Development
Incentivize climate change adaptation and environment work
•Local Bodies adopt incentive measures for climate change adaptation work
•Institutionalize performance based incentive mechanism in management of natural
resources by the community groups
•Provision of incentives for environment friendly climate proof infrastructure
development
Ensure efficient and effective management of climate funds at local level
•Capacity of local bodies enhanced to:
– Expand the mandates and strengthen capacity of District Energy and Environment
Units to work on climate change adaptation
– Ensure planning and budgeting process is responsive to climate, environment and
poverty issues reflected in annual plans
– Improve reporting, monitoring and evaluation