The government is giving Rs. 30,000 ($300) per month to 500 artists, many of whom have suffered at the hands of militants.
Tourists from across the country and outside visit the alpine lake during the summer months.
Numbering only 4,100, the Kalash people inhabit a scenic valley surrounded by the Hindu Kush.
The centuries-old water mill method of grinding grain into flour remains popular, despite the advent of modern flour mills.
The three-day event showcased the work of local artists and featured traditional music and foods.
Authorities have planned three months of activities meant to underscore the defeat of militancy.
Residents are demonstrating their resilience after years of terrorism and fear by organising cultural, music and fashion events.
Militant groups and the criminally inclined are duping citizens into donating to fraudulent charities.
The Centre for Research and Security Studies has launched the Pakistan Centre of Excellence (PACE) programme.
Reminding youth about the peaceful history of the region will promote tolerance and curb extremism, experts say.