With the launch of the National Adaptation Plan (NAP 2023), Bhutan needs to mobilise resources and financing of USD 14.000 billion to implement the seven key adaptation priority sectors: water, agriculture and livestock, forests and biodiversity, human settlement and climate-smart cities, health, energy, climate service and disaster risk reduction. Given that water is cross-sectoral and multifaceted, the Royal Government of Bhutan has prioritised the Water Sector.
In collaboration with relevant agencies, the Department of Water, under the Ministry of Energy and Natural Resources, with support from the Asian Development Bank, is currently developing Bhutan’s Climate Adaptation Investment Plan (CAIP) for the Water Sector under ADB TA-6933. Eleven adaptation packages worth USD 830 million were tentatively identified, of which eight packages have explicit adaptation objectives, while three packages are critical for the Water Sector and have important adaptation co-benefits or linkages. The CAIP introduces a strategic and programmatic investment rather than focusing on individual projects through a five-step approach. These include (1) analysis of the country context, including relevant planning and financing frameworks, (2) climate risk assessments to develop a strategic climate diagnostic, (3) develop the adaptation priorities into packages, based on urgency and sequencing, (4) assess potential economic and financial viability of packages, and (5) assess the financing opportunities for each package, considering multiple sources and appropriate financial instruments. Moreover, Water Sector CAIP also identify enabling factors to help deliver adaptation.
For the implementation of Bhutan’s CAIP, the engagement of multiple sectors is imperative to explore and create avenues for investment opportunities through various financing options and models, both at domestic and international levels. The Royal Government of Bhutan and the Asian Development Bank co-hosted an Investment Dialogue on the draft Bhutan Climate Adaptation Investment Plan for the Water Sector on March 20, 2025, at Thimphu. The discussion brings together relevant governmental agencies, international organizations, private sectors, financial institutions and non-governmental organizations/civil service organizations to explore investment opportunities in the bankable adaptation programmes and foster collaborations and partnerships. The Investment Dialogue was attended by officials from the Office of Cabinet Affairs and Strategic Coordination, Asian Development Bank, World Bank, United Nations Development Program, Food and Agriculture Organization, Japan International Cooperation Agency, Royal Monetary Authority of Bhutan, Financial Institution Association of Bhutan, Bank of Bhutan, Druk PNB, Bhutan Chamber of Commerce and Industries, Association of Bhutanese Tour Operators, World Wildlife Fund, Bhutan Ecological Society, Royal Society for Protection of Nature, Bhutan Foundation, Bhutan Trust Fund for Environmental Conservation, Bhutan Water Partnership and the CAIP Inter Agency Working Group Members. The outcome of the Investment Dialogue includes:
• Recognition of coordinated efforts and holistic approach to achieve climate change adaptation goals in the Water Sector.
• Feedback from the relevant partners and organizations to enhance the draft CAIP document.
• Enhanced understanding of current engagements and commitments towards future collaboration opportunities in the investment and implementation.
The investment dialogue was led by the Department of Water, alongside the Department of Macro-Fiscal and Development Finance of the Ministry of Finance, and the Asian Development Bank. The Water Sector Bhutan CAIP is tentatively scheduled for completion by June 2025.
