During the ongoing 37th Saarc Ministerial Meeting underway in Pokhara, some 200 km west of Kathmandu, the two countries have laid their respective claims to host the headquarters of the proposed body.
Sources said the matter figured during a brief meeting between External Affairs Minister Sushma Swaraj and Sartaj Aziz, foreign relations adviser to the Pakistani prime minister, on Thursday morning during a breakfast meeting hosted by Nepal Foreign Minister Kamal Thapa.
Climate change, degradation of environment and recurring natural disasters have taken a toll in the region and the South Asian Association for Regional Cooperation (Saarc) member-states are less prepared to combat these menaces.
With this realisation, the member-states have agreed to set up the centre to meet the environmental challenges in a professional way.
Other interested member-states have dropped their claims to host the regional body, said two diplomats familiar with the development.
The member-states had agreed to merge the Saarc Disaster Management Centre, Saarc Forest Management Centre, Coastal Area Management Centre and Environment Centre into the proposed body.
As the issue could not make a headway at different levels, it has finally landed at the ministerial-level meeting.
India, Pakistan, Bhutan and Bangladesh have expressed the desire to host the headquarters of the proposed body but during several rounds of negotiations, Bhutan and Bangladesh opted out of the race, leaving India and Pakistan in the field.