The Bhutanese Leading the way.
Bhutan hosted a pivotal Investment Dialogue aimed at addressing the impacts of climate change on the country’s water resources on 20th March 2025. The event, which brought together key government officials, international organizations, financial institutions, and civil society representatives, focused on developing and financing the Bhutan Climate Adaptation Investment Plan (CAIP) for the Water Sector.
As Bhutan advances its climate adaptation efforts, water has been identified as a priority sector due to its crucial role in sustaining domestic life, agriculture, and livestock. Over 70% of the nation’s water supply is derived from spring-fed sources, which are becoming increasingly vulnerable to the changing climate. In response, the government is working to secure USD 14 billion in funding to support adaptation projects across various sectors, with a particular emphasis on water, agriculture, and health.
The National Adaptation Plan (NAP 2023) marks a significant step in Bhutan’s commitment to climate resilience. As part of this effort, the government is finalizing the CAIP for the water sector, which lays out a strategic framework to address the country’s water challenges. The aim of the dialogue was to engage stakeholders in refining the draft CAIP and to explore ways to mobilize financial resources to ensure its successful implementation.
The dialogue, co-hosted by the government and the Asian Development Bank (ADB), highlighted the urgent need to tackle water scarcity and the growing pressure on Bhutan’s natural water resources. The CAIP includes 11 proposed adaptation packages, valued at approximately USD 830 million. These packages are designed to address climate risks within the water sector and related areas such as agriculture, human settlements, and infrastructure.
During the event, participants discussed various financing options, including domestic financial models, international cooperation, and innovative mechanisms to support the adaptation initiatives. Key stakeholders emphasized the importance of a holistic, coordinated approach to water management, with a focus on improving infrastructure, protecting spring recharge areas, and promoting sustainable water usage practices.
The dialogue attracted a broad range of stakeholders, including representatives from the United Nations Development Programme (UNDP), World Bank, Japan International Cooperation Agency (JICA), and several Bhutanese financial institutions such as the Royal Monetary Authority (RMA), Bank of Bhutan, and Druk PNB. Environmental and conservation groups like the Bhutan Ecological Society, Bhutan Foundation, and the Royal Society for Protection of Nature also participated, underlining the collective commitment to ensuring sustainable water management in the face of climate change.
Through structured discussions, the dialogue provided an opportunity for participants to offer feedback on the draft CAIP and share insights into potential financing mechanisms for the proposed projects. The event also emphasized the need for strong collaboration between the public and private sectors to align national priorities with global climate financing opportunities.
The government, along with ADB, played a central role in facilitating the dialogue and ensuring that investment opportunities were fully explored. By bringing together diverse stakeholders, the event served as a platform to strengthen partnerships and enhance the strategic approach for water sector adaptation.
The insights and partnerships formed during the dialogue will help shape the final version of Bhutan’s CAIP for the Water Sector, which is expected to be completed by June 2025. The plan aims to secure the necessary investments and resources to protect Bhutan’s water resources in the face of climate change, ensuring that water remains a reliable and sustainable resource for future generations, and is expected to make a significant step in Bhutan’s journey to adapt to climate risks and safeguard its vital water resources, ensuring long-term resilience for its people and economy.
