Ecosystem services in hydropower development policy and practice in Nepal

Ecosystem services (ES) represent the tangible and intangible benefits that humans derive from nature. These are typically categorised in terms of provisioning services (such as food and water), regulating/supporting services (such as flood control and nutrient cycling) and cultural services (such as spiritual benefits), the diversity of which reflects the dependence that humans have on the environment. The significance of the ES concept is that it can enable recognition of the multiple values that different stakeholders' have toward the environment and, as such, facilitates ecological functioning to be meaningfully drawn into economic decision-making. This allows for the economic evaluation of costs and benefits under different management options and can lead to more sustainable decisions. Hydropower is only one of the many ES that rivers provide; therefore hydropower development planning and decision-making should be informed by a comprehensive evaluation of options.

The Millennium Ecosystem Assessment (2005) highlighted the extent of human dependence on ecosystem services, which stimulated a considerable body of academic research on the topic. While knowledge about the ES concept is still evolving, efforts are being made to apply the concept in practice. However, relatively little is known about the impacts of its application at both national and local scales or whether it is relevant for the developing or Least Developed Countries (LDCs), such as Nepal. In Nepal, most research into ES has focused on mapping and assessing the impacts on these services that result from the use of land, watershed/river basin, wetland, and forestry uses. However, few studies have focused on water resources or considered about the adoption of ES in water resources policies and its implementation in decision-making processes.

For Nepal there is an urgency to develop economically to fulfil its aspiration to graduate to a middle income country by 2030. However, the prevailing energy crisis poses a substantial challenge to achieving economic development and poverty alleviation. As a result, the Government of Nepal has positioned hydropower expansion at the heart of its national economic development policy and has set an ambitious target of generating ten thousand-megawatts of electricity by 2030 in its national Sustainable Development Goals. But meeting this target is likely to incur a significant cost to the rivers that will be diverted and dammed. In Nepal, rivers carry immense cultural significance and the livelihood and well-being of millions of people are dependent on the many ES they provide.  This thesis investigates how the numerous ES provided at multiple scales to different stakeholders by rivers are considered in hydropower development policies and when making decisions about hydropower development in Nepal and considers the implications of these at national and local levels.

To achieve the research aim, a qualitative inquiry with case study design that engages with multiple sources of data is employed. Thus, the research questions are investigated through document analyses of 20 hydropower development policies, 38 key informant interviews undertaken with policy-makers, practitioners, and local community members and one local focus group discussion. The analytical framework developed for the policy coherence analysis is an important contribution of this thesis and can be applied at different scales and for analysing coherence with other concepts.

The policy analyses and key informant interviews indicate that the ES concept is not internalised in legislation in Nepal, particularly legislation that is directly related to hydropower development. As such, the process of hydropower planning and decision- making lacks adequate consideration of ES. The environmental impact assessment (EIA) tool, which is the main mechanism for considering the environment in development decision-making, fails to identify the impacts of hydropower development on ES. This hinders integration of indirect and intangible ES values in economic cost-benefit analyses, which provides an incomplete picture of the actual costs and benefits of proposed hydropower systems.

The local case study in this research reveals that people feel inadequate consideration for their needs in hydropower planning and decision-making and, as a consequence, the integrity of local ecosystems and the livelihoods of local communities are compromised. The mandated public consultation process that is designed to identify and verify local impacts is perceived as tokenistic and fails to adequately capture local needs and impacts. Based on these findings, the conclusion is that key legislation that governs hydropower decision-making in Nepal needs updating and revising. The recommendation is for new water resource management legislation that is highly coherent with the ES concept and that aligns with the National Water Plan (2005). Such an overarching policy will enable implementation of a basin scale integrated water resources management (IWRM) agenda with a potential to better incorporate ES into hydropower planning and decision making and to safeguard ecological integrity and social well-being. Considering the concerns of the local community about environmental integrity and the sustained flow of ecosystem services, this study argues for the meaningful participation of stakeholders in the hydropower planning and decision-making process. It also recommends the need for a deliberative reconciliation of national development priorities with local development needs. Overall, this research identifies opportunities for enhanced implementation of the ES concept by revising policy and reforming institutions, improving implementation mechanisms, encouraging community stewardship and generating knowledge and sharing evidence on the local ecosystems and ecosystem services.

This research contributes to a larger body of work on the topic of the ES concept but is particularly important for drawing on the experiences of a LDC. It provides insights into the challenges that LDCs may confront in seeking to incorporate ES into their policy, planning and decision-making processes. In particular, it identifies discrepancies in water resource development policies relating to hydropower in Nepal that limit the effective integration of the ES concept into planning and decision making.