Reforms 2.0: Implementing Sustainable Natural Resource Use in Nepal

Introduction

Nepal’s High-Level Reforms Committee has proposed recommendations aimed at enhancing sustainable economic growth through effective management of natural resources. This initiative aligns with Part 4 of the 2015 Constitution, which emphasizes the protection, promotion, and sustainable use of water, forest, land, and minerals. This article outlines strategies to implement these recommendations, focusing on leveraging incentives, evidence-informed policymaking, inter-ministerial coordination, and transforming challenges into opportunities.

Shifting from Conservation to Sustainable Use

Nepal’s approach to natural resource management has been heavily influenced by a conservative mindset that emerged after the 1990s, largely as a response to deforestation. This perspective often links forest usage with poor governance, which hinders a country’s economic growth. To align with the objective set forth by the High-Level Reforms Committee, Nepal must transition towards sustainable use of natural resources, especially by implementing Scientific Forest Management (SFM) over 1.18 million hectares. This strategy employs targeted silviculture techniques to strike a balance among economic, social, and environmental goals. Embracing this shift could foster economic development while addressing pressing environmental challenges.

Implementation Strategies

1. Leveraging Economic Incentives

Economic theory highlights that individuals respond positively to incentives. Therefore, it is crucial for policies to incentivize sustainable practices, especially within the private sector. A notable example is the Bhimsen Thapa Rural Municipality in Gorkha, which encourages locals to collect leaf litter by offering them NPR 2 per kg. This initiative not only helps prevent forest fires, but also reduces greenhouse gas emissions while creating economic opportunities for the community.

Additionally, the Ministry of Forests and Environment (MoFE) has an opportunity to increase its contribution to the national economy as agriculture, forestry and fishing account for 24.09% of GDP in FY 2023/24 AD (2079/80 BS) and the contribution of forests only is small. By implementing the System of Environmental-Economic Accounting (SEEA), MoFE can quantify and communicate the economic value of sustainable practices. Moreover, providing incentives to MoFE and its personnel could significantly amplify the economic impact of the forestry sector.

2. Evidence-Informed Policymaking

Evidence-based policymaking is critical for effective project implementation. Documenting lessons learned, successes, and challenges from various initiatives can lead to valuable knowledge generation. In Nepal, the Government of Nepal’s committee for reform utilizes contextual evidence to design complementary policies across different sectors. Strengthening knowledge management within MoFE and other ministries enables insights from initiatives, such as SFM and fire prevention programs, to inform future policies, enhancing both efficiency and impact.

3. Aligning Policies, Budgets, and Ministries

To implement policies effectively, it is important to align them with budgets and roles of various ministries. For instance, agroforestry coordinates the efforts of the Ministry of Agriculture and Livestock Development (MoALD) for agricultural inputs, MoFE for forest management, and the Ministry of Industry, Commerce, and Supplies (MoICS) for market value chains. The Ministry of Finance (MOF) aligns the budgets, while the Ministry of Women, Children, and Senior Citizens (MoWCSC) addresses the needs of marginalized groups. This coordinated approach generates a multiplier effect, enhancing outcomes such as the 5.7% GDP contribution from livestock in FY 2023/24 AD (2079/80 BS).

4. Transforming Challenges into Opportunities

Converting obstacles into resources is key. For example, forest fires, which often occur in March, can significantly contribute to pollution, as seen in the high emissions in the Kathmandu Valley. However, we can repurpose leaf litter for composting and decaying trees for paper production, thus creating economic value. Local governments can encourage composting initiatives that provide fodder and fertilizers, supporting livestock. Furthermore, Nepal’s abundant water resources provide a comparative advantage in hydroelectricity, which can reduce reliance on imported petroleum, which is a major driver for trade deficit, thereby facilitating carbon trading.

5. Capitalizing on Comparative Advantages

Nepal’s unique geography and biodiversity present opportunities for non-timber forest products (NTFPs). Processing, packaging, and certifying NTFPs, while utilizing cooperatives to manage market linkages allows farmers to focus on production. This aligns with Adam Smith’s theory of specialization to enhance efficiency. Nepal’s self-sufficiency in milk and poultry can be tapped into as an economic opportunity, shifting additional focus on the production of exportable goods, such as cheese, through investments in infrastructure and certification. Moreover, increasing hydroelectricity production can further reduce trade deficits associated with petroleum imports, while maximizing economic and environmental benefits.

Policy Context and Challenges

Part 4 of Nepal’s Constitution emphasizes the importance of sustainable resource use. However, it does not define what natural resources encompass. Generally, natural resources include elements like water, forests, land, and minerals. Current challenges include low economic contributions from sectors like mining, contributing merely 0.47% of GDP in FY 2023/24 AD (2079/80 BS) and a conservative mindset limiting use of forest resources. Overcoming these challenges will require collaborative efforts among households, firms, government, and development actors to maximize resource potential.

Opportunities for Economic Growth

Nepal’s forest products can significantly enhance agricultural outcomes and support livestock and composting initiatives. Cultivating trees on private land, as suggested by Finnish counterparts highlighting Nepal’s faster tree growth, can leverage these comparative advantages. Developing green enterprises through collaborations between the public and private sectors can enhance economic contributions from NTFPs and clean energy, aligning with global sustainability goals.

Recommendations

1. Promote Incentives: Expand initiatives like Bhimsen Thapa municipality’s leaf litter project and implement Scientific Forest Management to balance economic and environmental goals.
2. Strengthen Evidence Systems: Improve knowledge documentation within MoFE to guide policy development.
3. Enhance Coordination: Align the efforts of MOALD, MoFE, MOICS, MOF, and MoWCSC for programs like agroforestry.
4. Convert Waste to Resources: Repurpose forest waste for paper or compost and utilize water resources for hydroelectric power.
5. Support Green Enterprises: Facilitate certification of NTFP and market linkages to promote specialization while reducing trade deficits.

Conclusion

Successfully implementing Reforms 2.0 requires leveraging incentives, evidence-based, inter-ministerial coordination, and resource transformation. By harnessing Nepal’s comparative advantages, these strategies can unlock the economic potential of the natural resources, contributing to sustainable development and fulfilling global commitments. Collaborative efforts across sectors will ensure effective implementation, driving economic growth and environmental sustainability.