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Indicator B5.1

B5.1 Policies, laws and regulations on benefit sharing are in place

Evidence Supporting This Indicator

  • The Constitution of Nepal establishes the foundation for equitable benefit sharing. Article 51(g)(1) and requires the State to prioritise and ensure preferential rights of local communities in the equitable distribution of benefits generated from natural resources. Article 59(4) mandates that a share of benefits from the utilisation or development of natural resources must be provided to affected areas and communities through royalties, services, or goods.
  • Nepal 2019s National Forest Policy (2019) and National Climate Change Policy (2019) reinforce the principle of equitable benefit sharing, requiring that climate finance and forest -based revenues (including those from carbon) be channelled principally to local communities and right -holders.
  • The Forest Act (2019) defines forest ecosystem services (including carbon) and provides the legal basis for developing benefit -sharing mechanisms. Section 202f44 authorises the Government of Nepal to establish arrangements for managing, using and distributing benefits arising from forest ecosystem services, including from carbon stocks and emission reductions.
  • The Forest Regulation (2022), Rule 115, sets out the statutory division of carbon-related benefits among beneficiaries:
    • - 10% to the Forest Development Fund (FDF)
    • - 80% to forest management authorities or user groups (e.g., Community Forest User Groups, Collaborative Forest Management Groups)
    • - 5% to private forest owners
    • - 5% to forest-dependent households not affiliated with user groups
    Rules 107(7-8) describe the procedures for preparing and approving benefit-sharing arrangements, including:
    • - Mandatory consultations
    • - Compliance with forest tenure and Free, Prior and Informed Consent (FPIC) rules
    • - Submission of benefit-sharing plans for approval
  • The above benefit -sharing provisions form the basis for REDD+ benefit-sharing mechanisms for all Emission Reduction (ER) programs, which must comply with the Forest Act, Forest Regulation and national community rights frameworks.

  • The Forest Development Fund (FDF) serves as the national institutional mechanism for managing and disbursing revenues generated from forest ecosystem services, including REDD+ and other carbon -related payments. The FDF operates under a defined governance structure, with allocation decisions overseen by the FDF Programme Selection and Implementation Committee, chaired by the Secretary of the Ministry of Forests and Environment. The Fund is intended to ensure transparent management, equitable allocation and oversight of forest -based revenues.
  • The National REDD+ Strategy (NRS) embeds benefit sharing as a core principle and objective of REDD+ implementation. Both the NRS (2018-2022) and the updated NRS (2025-2034) commit to fair and equitable sharing of carbon and non carbon benefits, prioritising rights-holders, including Community -Based Forest Management (CBFM) groups, Indigenous Peoples, women, marginalised communities and forest -dependent households. The updated NRS further emphasises strengthening institutional arrangements and transparency for managing and distributing REDD+ benefits.
  • For the Forest Carbon Partnership Facility (FCPF) Emission Reduction (ER) Program, a Benefit -Sharing Plan (BSP) was finalised and approved in 2018, prior to the signing of the Emission Reduction Payment Agreement, and has since been revised to support implementation. The FCPF BSP operationalises Nepal 2019s national benefit -sharing framework by defining eligible beneficiary categories, performance -based allocation criteria, fund -flow arrangements and governance mechanisms. It incorporates specific measures to promote equity, gender inclusion, transparency and safeguards against elite capture during benefit distribution.
  • The LEAF ER Program BSP was drafted and consulted on during (2023-2025) in accordance with Nepal 2019s national benefit -sharing framework and statutory allocation rules. The proposed LEAF BSP sets out the identification of beneficiaries, allocation principles, institutional roles, fund-flow mechanisms and oversight arrangements to ensure equitable and transparent distribution of REDD+ benefits to CBFM groups, Indigenous Peoples, forest -dependent households and other eligible actors. The BSP is being finalised as of 2026.
Abbreviations
NRS National REDD+ Strategy
ERP Emission Reductions Program
ERPD Emission Reductions Program Document
SFM Sustainable Forest Management
FCPF Forest Carbon Partnership Facility
NBSAP National Biodiversity Strategy and Action Plan
FDF Forest Development Fund
REDD Reducing Emissions from Deforestation and Forest Degradation
FPIC Free, Prior and Informed Consent