Reaching the unreached: Nepal scales up agricultural insurance in biodiversity hotspots to tackle human-wildlife conflict

Nepal’s success in conservation - marked by forest restoration and the recovery of flagship species such as tigers, rhinoceroses, and herbivores - has come with unintended challenges for local communities. As wildlife populations rebound, so too has the frequency of human-wildlife conflict, especially in and around biodiversity hotspots.

In 2022 alone, Nepal recorded 10,436 incidents of crop and livestock losses linked to wildlife encounters. Experts believe the actual figure may be significantly higher, as many incidents go unreported. Habitat fragmentation and the impacts of climate change have further exacerbated the situation, putting added pressure on people living in proximity to protected areas and biological corridors.

In response, Nepal’s Ministry of Forests and Environment (MoFE), with support from the Biodiversity Finance Initiative (BIOFIN) and UNDP, is advancing a new strategy to scale out agricultural insurance as a tool to promote peaceful human-wildlife coexistence.

Workshop Charts the Path Forward

On 19 April 2025, MoFE convened a high-level workshop in Kathmandu to present the proposed insurance model and develop a shared vision for implementation. The event was chaired by Honourable Forest Minister Ain Bahadur Shahi Thakuri, with Honourable State Minister Rupa B.K. serving as the chief guest. A total of 28 participants attended, including senior officials from MoFE, UNDP, and the BIOFIN Nepal team. The workshop was moderated by MoFE Undersecretary Mr. Rajendra Dhungana.

Addressing a Coverage Gap in Biodiversity Hotspots

Nepal’s existing agricultural insurance programme already covers losses from wildlife-related incidents, with the government providing nearly USD 10 million in annual premium subsidies. However, few households in biodiversity hotspots have accessed these benefits.

A farmer from Bardia National Park shared his experience: "I have reared a goat, hoping to sell it during the festival and buy new clothes for my family. However, a tiger killed a goat. I often visited the park office for relief but could not get it on time. I had to take a loan from my relatives to celebrate the festival. If the insurance had been designed earlier, I should not have taken a loan with such a high interest rate."

A local leader from Jhapa added: "Every time the elephant touches the farmers’ field; we provide compensation of Rs 3,000 to the farmer. The cost is very high. With the insurance, I think now we can address this problem cost-effectively."

These stories reflect a widespread gap in access, trust, and timely compensation—gaps that BIOFIN aims to close.

How the Insurance Scheme Works

Rather than creating a new product, BIOFIN is working to scale up Nepal’s existing agricultural insurance programme within biodiversity hotspots to provide financial protection to farmers for crop and livestock losses caused by wildlife. This is a market-based mechanism, where farmers pay premiums for specific crops or livestock and receive compensation for wildlife-related losses, as per mutually agreed insurance policies.

The insurance policy clearly defines the subscription process, required documentation, claim process, and settlement timeline. However, the uptake in biodiversity hotspots has been limited, leaving many farmers unable to benefit from the government’s existing subsidy scheme.

To bridge this gap, BIOFIN will work with local governments to:

• Identify and engage farmer groups, forest user groups, and buffer zone user groups.
• Raise awareness and improve insurance literacy.
• Support risk prevention planning and prepare groups to meet insurance requirements.
• Facilitate agreements with insurance providers.
• Build multi-stakeholder and grievance-handling mechanisms to promote transparency and collective action.
• Explore innovative premium financing options, including crowdfunding, round-up schemes on agricultural products, and donation-based models.

Broader Strategy and Community Involvement Needed

Participants highlighted that while insurance can play a vital role, it should not be viewed as a standalone solution. Investments are urgently needed in habitat improvement and physical deterrents to prevent wildlife from straying into human settlements. Sustainability was another key concern, with calls to ensure community buy-in from the outset and build the capacity of local governments.

Mr. Dhirendra Pradhan, Joint Secretary of the Biodiversity and Environment Division at MoFE, thanked UNDP for supporting innovative approaches to mitigating human-wildlife conflict. He advocated for greater involvement of local institutions such as forest user groups and buffer zone committees, which are well-positioned to mobilize resources and pay insurance premiums.

UNDP Nepal’s Assistant Resident Representative Mr. Vijaya Singh echoed these sentiments, noting that insurance should be considered the final layer in a broader risk mitigation strategy. Priority must be given to habitat restoration and infrastructure to prevent conflict.

Commitment to Inclusivity and Equity

Honorable State Minister Rupa B.K. emphasized that insurance coverage must extend to all wildlife species—not just select ones. She also called for targeted support for the poor and marginalized, many of whom are unable to shoulder the cost of mitigation without external assistance.

Chairing the event, Minister Ain Bahadur Shahi Thakuri welcomed the initiative and thanked all collaborators, especially BIOFIN, for their technical support. “Conservation should not come at the cost of people’s lives and livelihoods,” he remarked. “Insurance offers a viable, market-based solution that can benefit both people and wildlife.”

Next Steps and Expected Outcomes

MoFE, in collaboration with BIOFIN, plans to officially launch the national programme “Scaling Out Agricultural Insurance in Biodiversity Hotspots” on International Biodiversity Day, 22 May 2025. The initiative will be implemented across four key biodiversity regions: Shivapuri Nagarjun National Park, Bardia National Park, Jhapa Elephant Complex, and Mohana Laljhadi Biological Corridor.

The three-year pilot (2025–2027) aims to:

• Provide financial protection of up to USD 5 million annually, benefiting 5,000 households.
• Ensure 80% of farmers in target sites are aware of and participate in insurance schemes.
• Achieve at least an 80% reduction in retaliatory practices against wildlife by strengthening coexistence mechanisms.

By combining insurance with community engagement, capacity-building, and risk prevention planning, the programme aims to demonstrate how biodiversity finance solutions can protect both people and transform conflict into coexistence.