Nepal is a mountainous region with a number of Himalayan rivers flowing throughout the country, and there is no doubt that harnessing some of these waters will assist in improving the socio-economic well-being of Nepals people (see map). By investing in hydropower projects Nepal will be exploiting a clean, renewable energy source. However, it becomes Nepals task to recognize the trade-offs that exist in implementing different types of dams, to truly ensure that the country is working towards improving the socio-economic well-being of its people.
         There is an ongoing debate over small and large dam projects. In this paper evidence of the merits and drawbacks of each of will be considered and this evidence will lead to a rationale which supports the notion that Nepal is not ready for large scale dam projects. Therefore, Nepal should focus its efforts on creating policies directed to smaller projects. A general overview of both the positive and negative effects of dams is discussed, followed by a more specific look at the benefits and threats to implementing dam projects in Nepal.
        This position will be supported by using the Transition Theory. Investigation of population-environment dynamics is complicated and can involve a number of intricate analyses. Transition theory is an effort to break down this complex dynamic. It views the population-environment relationship as a family of transitions. Drake (1992) has defined transition to describe a specific period of time which spans the shift from slow to rapid change in the sector and then usually a return to relative stability (p. 302). Transitions have similarities and differences and the timing of them is very important because the timing affects societal vulnerability and is frequently influenced by public policy (p.303). It is also important to recognize that various sectors can experience transitions simultaneously and this reference serves to maximize or minimize the effects on the societys ability to cope with the transition. Which stages of transition a country may be in should be examined to determine whether it is in its critical period when society is vulnerable to damage. Also, transition theory explains that the completion of a transition, meaning returning to a steady state, does not necessarily lead to improved conditions, but may be more detrimental to a society. Intervention and action is therefore needed to assure the smooth progression of sectors through their various transitions (Drake, 1992).
        The case of Nepal illustrates that the timing of transition is crucial, and that lack of positive interventions may result in deleterious consequences. An examination of the agriculture, forestry, energy and demographic transitions will be presented in order to understand how these transitions interact and serve to impede or enhance Nepals overall development and growth, with particular attention to the energy sector and its role in Nepals future.

General Dam Information
        Modern dam construction was initiated in the 1920s, advanced after 1950 up until today, and today globally there are more than 38,000 dams (Gardner and Perry, 1995). Although there was a decline in dam construction in the 1980s, both the number of dams being built and the average dam size have been increasing in the 1990s.
        Industrialized nations were the first to construct dams, yet more recently three quarters of dam projects undertaken are in developing countries. It has been recognized that dams have generally been regarded as a symbol of modernity and a source of national prestige, partly because they are seen as a multipurpose tool of development (Gardner and Perry, 1995, p.201). The potential uses and benefits from dams are well known. Dams are a source of electric power, a means of flood control, a source of supply for water irrigation projects and a possible recreation outlet. In 1992 more than 18% of the worlds electricity came from hydroelectric power created by dams. Dams have also provided assurance in areas where drought occurs by holding water in reservoirs that can be used when there is no rainfall. Dams can also control the flow of rivers and thus alleviate flooding problems. More recently the impetus for building dams has come from the apparent need for more sophisticated irrigation projects due to countries growing need for food and water.
        Within a broadly focused dam project there are a number of possible negative side effects. Reservoirs can produce decomposing plant life at the bottom which may release greenhouse gases (CO2 and Methane) into the air, at rates comparable to coal production plants (Gardner and Perry, 1995). In addition, the nutrient rich sediment used for soil may get caught in a dams reservoir and this sediment may shorten the expected life of the reservoir. Finally there is a degree of uncertainty as to the long-term usefulness of a reservoir which is determined by its level of siltation and sedimentation.
        Dams have potential negative effects on the human population as well. Large scale water projects were a major contributor to the 75% global increase in cases of schistosomaisis. In addition, to create reservoirs or even build roads to facilitate the construction of dams, it becomes necessary to displace certain individuals and communities. In the past, most resettlement or relocation of individuals has not been well thought out and has left these people in worse conditions than before. Often these individuals attempt to move back near their original homes and people who live near dams face increased health risks. Another negative effect on people is the loss of arable land. Dams are intended to increase irrigation, and improve the productivity of the land, yet reservoirs eat up the arable land. The larger the project, the bigger the land loss, and consequently the more people ousted from their farm land. Finally, dams in seismic regions can cause severe suffering to a country.
        With dam projects, the positive and negative effects are influenced by and vary greatly depending on the environmental, social and political context within the country or region. A look at Nepals geography, environmental condition, and social and political status illustrates the importance of examining these relevant aspects within the context of the country. Potential dam construction will have a strong impact in many of the sectors in Nepal, most directly affecting the agriculture, forestry and energy sectors.

Nepal: General Review
        Nepal is a small landlocked country about 500 miles long and 100 miles wide. It is located in the Himalaya mountains and bordered by China to the north and India to the south, east and west. It is a mountainous country with approximately 77% of its total area occupied by hills and mountains (Poudel, 1991). It is a country of physical extremes from the arctic high Himalaya in the north to the subtropical hot flatlands in the south. It has a population of approximately 20 million, made up of many different ethnic, cultural and linguistic backgrounds. In Nepal there is a hierarchical society with a strong caste system still dictating ones place in society.
        Nepal is one of the least developed nations in the world, and has one of the lowest per capita incomes. In addition, there continues to be an increase in the population and an increase in misuse of the land. Infant mortality rates are among the highest in the world and life expectancy at birth among the lowest. Half the population lives at or just above the starvation level; this fact has a significant impact on the environmental degradation. The extreme poverty is both a cause and effect of environmental degradation. The impoverished farmers lack access to economic assets and are forced to exploit whatever resources are available, without consideration of the environmental consequences. Dahal and Guru-Gharana (1993) in their paper Environment and Sustainable Development in Nepal assert that:

Poverty, population growth and lack of education and awareness (including personal and environmental hygiene), coupled with institutional problems including inefficiency and poor technology of public utilities are causing this process of environmental degradation (p. 171).
        Additionally, the countrys lack of infrastructure, such as transport and communication, has severely limited its economic opportunities. Such conditions lead to heavy reliance on its natural resources. There is an over exploitation of some its natural resources such as forests, yet there is an under exploitation of other resources such as water (i.e. hydroelectric energy source) (Dahal and Guru-Gharana, 1993). Historically Nepal has relied heavily on foreign aid for development and the majority of the development projects are conceptually born in the aid negotiation arena rather than on the planning desk (Bhadra, 1982, p.6).
        Finally, as Nepal is a landlocked nation with a small domestic market, and limited natural resources, it must rely on its neighbor, India, for any international market opportunities. Since Indo-Nepal relations have been rather tenuous, Nepals manufacturing sector has remained small, representing a mere 1% of the Nepalese workforce.

Hydropower Development in Nepal
Water Resources in Nepal
        Nepal has over 6,000 rivers and streams. Its water resources constitute about 2.27% of the world stock for about .35% of the world population (Dahal and Guru-Gharana, 1993). It is drained by 3 major river systems: the Kosi in the east, the Gandaki in the central region, and the Karnaki in the west. Most major river basins originate in the Himalaya and are snow or ice glacier fed and maintain relatively high flow. Thus with such steep topography and such immense river resources (see Map 1) the potential for hydroelectric power is great. Based on annual run-off of rivers the theoretical potential hydropower of Nepal is estimated to be about 83,000MW. Of that 83,000MW the amount that can be economically exploited ranges from conservative estimates of 30% to just over 50% (UNCED, 1990, Shresta, 1991). Yet the actual installed hydropower capacity by the end of 1990 was only 238MW, about .29% of the theoretical power potential.


Hydro facts
1000 watts = 1 kilowatt (kW) 
1000 kW = 1 megawatt (MW) 
When 1kW of electricity is used for 1 hour, 1 electrical unit is consumed (1kWh) Hydro-electric power plants are generally classified into two types as storage and run of river systems. A storage system involves a dam which holds water back to form a reservoir having sufficient capacity. Run of river plant is built on a river which has a sustained dry season flow that can be diverted for electricity generation (Dixit, 1991). 

Energy and Hydropower
        Figure 1 below reveals that Nepal is not energy independent, rather it relies on energy imports of coal and oil to meet most of its commercial energy needs. Meanwhile, it is evident that the amount of hydropower exploited thus far is too minimal to help the country meet its commercial energy needs.

Figure 1.

Source: World Resources Data Base, 1995.

However, if Nepal were to further exploit its hydro-electric energy source, the country could achieve energy independence, as well as bring in revenue to help economic development. But at what cost to its people and their environment? Is energy independence something Nepal is in a position to be striving for, and more importantly what are the trade-offs of achieving this independence? In order to become an energy independent country Nepal would have to implement large, expensive dam projects. This cannot be done without outside financial assistance and regional cooperation from its neighbor, India. However, smaller dam projects aimed at rural development and rural electrification may prove to be less risky financially, environmentally and socially, and thus more suitable to a country that is already financially strained, environmentally threatened, and politically weak. Table 1 shows the major potential benefits and detriments to both large and small dam projects in Nepal.


Benefits Detriments
  • Export electricity
  • Generate revenue hydro dollars
  • Improve irrigation and agricultural output
  • Improve relations and regional cooperation?
  • Huge financial burden
  • Heavy reliance on foreign aid
  • Seismic hazards - earthquake, landslides
  • Flooding of valuable landfrom reservoir
  • Unknown life of reservoir because high sedimentation
  • No risk of bursting dams
  • Run of river type-no large storage requirements to meet national demands
  • Easier to construct and maintain 
  • Less environmental damage
  • Improve rural development: create small industries, small fertilizer industries, lift irrigation
  • Create ponds for fish farming
  • Conservation of wood fuel 
  • Do not generate enough electricity
  • Lack potential for increasing their capacity
  • Poor load factor

        Nepals energy needs are increasing, as seen in Figure 1, and hydropower development seems beneficial. Nepal can exploit this resource not only as a clean energy source for domestic needs but also as a resource to sell electricity to India to benefit economically. Water resource development can provide great opportunities for regional cooperation. Both India and Bangladesh could benefit if dam construction led to flood reduction and improved irrigation; Nepal could benefit economically from the sale of electricity. Yet there are a number of potential negative side effects that need to be considered carefully before a decision to embark on some sort of sharing a river project.
        Nepal, historically and currently, overuses its forest for energy, resulting in severe deforestation. Dams in Nepal could provide a renewable, clean source of energy to take the pressure off the much overused forestry sector. Dams would also prove highly beneficial in assisting the agriculture sector by improving irrigation with a consequent increase in production. An increase in food production has a direct effect on the quality of life of the people. Finally, large, regional dam projects would allow for electricity sales and hydro-dollars that could contribute significantly to Nepals economic growth.
        The need to exploit water resources seems apparent and appears to be needed to improve the socio-economic well-being of Nepals people. However, careful consideration of the type of dam project most suited for Nepal is also needed to prevent negative consequences which would be harmful to the people. Therefore a closer look at Nepals demographic situation, as well as the environmental conditions in the forestry, agriculture and energy sectors is provided.

Transitions in Nepal
Demographic Transition
        In the demographic transition it is important to consider the crude birth and death rates and the overall timing of these two rates. Generally in the demographic transition the death rates start to decline earlier than the birth rates. How this process occurs is influenced by a number of factors, some of which can inhibit a country from lowering its population growth rate in order to complete a successful demographic transition.
        Continued high population growth rates is evident in many developing countries. This translates to increased demand for goods and services and puts direct pressure on the environment. Public policy and positive interventions are often implemented to help a country reduce its population growth rate and thus begin to improve its management of impacts caused by severe population pressure. The timing of when a country begins the demographic transition, and of how fast fertility declines once the transition begins are critical factors which have significant impact on many other sectors.
        Figures 2 and 3 illustrate that Nepal is in the beginning stage of its demographic transition. The birth rate has begun to decrease, and the population growth rate has also begun to decline.

Figure 2.

Figure 3.

        However, it is important to remember that while the population growth rate has peaked at 2.8%, it is still quite high and therefore the total population growth will continue to increase at possibly an unmanageable level. Some estimates project that current efforts to slow population growth will not make a significant impact until 2030 (UNCED, 1990). The World Bank reports conclude that Nepals demographic situation is among the worst in the world (Seddon, 1994). Also, one should be aware that different sources indicate rather different projection estimates, and data from many developing countries is at best questionable. Yet for Nepal, all generally conclude that their population will continue to increase and that crude birth rates are still high despite concerted population control efforts.*
        The population distribution in Nepal has also been experiencing changes since the late 1960s. Increased migration to the Terai (flatlands) began when forests were cleared through a malaria eradication project in the 1950s. Environmental stress in the hills caused by deforestation, a shortage of wood fuel and soil erosion, and an increasing population pressure on the land was recognized. Thus with the clearance of the forests in the Terai, more agricultural lands opened up and hill farmers suffering from the poor conditions in the hills began to head south to obtain land or to farm others land (Sill and Kirkby, 1991). In addition to males migrating for agricultural opportunities, females too began to migrate for marriage opportunities. As families recognized the severity of the situation in the hills, and the opportunities in the Terai, they began sending their daughters to the Terai to find husbands who had obtained land and presumably, a better life.
        Table 2 reveals the change in the make up of the hills and Terai from 1970 to 1980. In the 1970s towns in the Terai started to emerge along with industrial and commercial development. This occurrence caused additional increase in the internal migration pattern. If migration to the Terai continues, Nepal will slowly evolve from being a hill and mountain society to a plains and urban country (Sill and Kirkby, 1991).

Table 2 Internal Migration in Nepal

1971 1981
Mountain 9.9% 8.7%
Hill 52.5% 47.7% 
Terai 37.6% 43.6%

Source: Atlas of Nepal in the Modern World, 1991

However, counter-beliefs as well as empirical evidence indicate that this is unlikely. Rural to urban migration does not yet appear to be very significant in absolute numbers.
        Another important factor inhibiting the structural change from the hills to plains society is the impact that tourism is having on the mountain areas. Nepal has become a paradise of sorts to many tourists who visit Nepal for the trekking, mountaineering and sight seeing. Tourism has become a major foreign exchange earner (23% of the total foreign exchange earnings) and plays a role in enhancing the economic development of the country. The number of tourists continues to grow and has increased exponentially since the 1950s when Nepal first opened its doors to foreigners. In 1966 the number of tourists was 12,000 while in 1988 more than 300,000 tourists visited Nepal (Bista, 1991). The impact of mountain tourism on the economy seems to have slowed the trend of migration to the Terai.

Mountain people like the Sherpa have shown great tenacity in holding on to their subsistence lifestyle and the development of mountain tourism has enhanced the resource value of otherwise negative environments (Sill and Kirkby, 1991, p.25)
Mountain tourism can also have profound negative environmental effects and policies should be made to minimize the negative environmental, social and cultural costs associated with tourism, and to maximize the positive effects of providing foreign exchange and becoming a positive means of economic development.
        The demographic factors in Nepal reveal high but decreasing infant mortality and crude birth rates, yet the total fertility rates remain quite high, 5.47 in 1995 (WRD, 1995) and have changed minimally in the past decade. The resulting continued increase in the population has led to population pressure on the land that can not be solved by internal migration. Nepals population dynamic has severe implications for the environment. As environmental conditions worsen it becomes more difficult for other sectors to complete a smooth transition to a steady positive state.

Forestry Transition
        In Nepal the present rate of deforestation exceeds the rate of plantation and natural regeneration (UNCED, 1990). Forest degradation has been recognized in Nepal for a number of years and direct attempts have been made to address this hazardous environmental problem. Nepal is currently in the midst of the forest transition, experiencing rapid deforestation. It is in the critical period when rates of change are high, limited societal adaptive capacity and an imbalance among key variables exists (Drake,1992). Over 75% of energy needs and over 40% of fodder needs are met by forests (Bajracharya, 1993).
        The rate of deforestation is often driven by the general demand for forest products and in Nepal the demand is extremely high. Forests alone are the source of almost 96% of rural household energy needs (Dahal and Guru-Gharana, 1993). Forest use in Nepal is primarily of three kinds: cutting of branches for fuelwood, cutting whole trees for paper, construction and commercial use and the clearing of forest area for agricultural land use.
        Nepals local condition impedes a successful movement through the transition. It is believed that if there is a heavy local demand for fuelwood, steep slopes, infertile soils and limited water availability, the forest transition can take a different form (Drake, 1992, p. 316). Nepal certainly is represented by all of these characteristics since more than two thirds of the countrys land is steep slopes, fuelwood remains the countrys main energy source, population pressure on the land is causing the soil to be overused and become increasingly infertile. Finally, limited ability for sophisticated irrigation schemes on such steep slopes has at times resulted in insufficient water.
        Additionally, Nepals forests are not evenly distributed in relation to the population, thus intensifying the overuse of forests in many densely populated areas. This uneven distribution pattern of forest and population causes problems for people collecting fire wood and fodder. Estimates show in some hill areas the demand supply ratio of forest produce ranges from 2.3:1 to 4.1:1 (UNCED, 1990). Fuelwood is the major source of energy for cooking and heating in the rural areas, and urban consumption of woodfuel is shown to increase with income despite the availability of alternative sources such as kerosene and electricity. (Sill and Kirkby, 1991) This phenomenon is an important indicator of the Nepalese peoples reliance on the more traditional methods to which they are accustomed. It may indicate a lack of intervention in education and/or policy aimed at helping individuals to make necessary changes. While it seems that discoveries of alternate energy sources would help to alleviate this high pressure on the forest, this example illustrates that the discovery of alternatives alone is not enough.
        Deforestation can be directly attributed to human activity. Examples are loss of soil productivity by overuse and increased erosion due to extension of agriculture and roads into the steep fragile slopes throughout the hills. The need for more agricultural land is also drastically affecting the rate of deforestation. It is clear that this continued rate of woodfuel consumption has led to supply problems and environmental damage. Yet if more agricultural land for food is needed, because of an increasing population and thus a higher rate of energy and food consumption, deforestation will undoubtedly continue at high rates.

Agricultural Transition
        Agriculture is the defining element in Nepals economy with more than 90% of the population depending on subsistence farming. Agriculture is approximately 57% (data varies depending on the source from 54% - 65%) of the GDP and over 90% of the working population are engaged in agriculture (UNCED, 1990).
        Drakes Transition Theory explains that worldwide agricultural production has been rising in relative harmony with population and this is due primarily to two main factors: the extension of land under cultivation and improvements in land productivity. However, in Nepal evidence reveals that while cultivated land has increased in the past in some areas of Nepal due to population growth, this expansion has been to marginal lands and thus minimized the improvements in land productivity. In other areas, the Eastern Hills for example, the amount of cultivated land has remained constant for the past fifty years (Sill and Kirkby, 1991). This expansion of cultivation to marginal lands leads to negative results including a decrease in average crop yields, an increase in soil erosion, and further loss of forest land, which is already being depleted at a high rate to meet the energy needs of the country. From 1965-1985, the amount of cultivated land in Nepal increased by 30% and the cropping intensity increased by 54% (Khatry, 1992). Yet data in tables 1 and 2 indicate that in the future cultivated land will not increase, yet cropping intensity will.

Table 3.

1985  2005
Intensity %
(mt/ha of cropped area)
Intensity %
(mt/ha of cropped area)
Mountain 135 1.07 140 1.62
Hills 170 1.30 175 2.33
Terai 163 2.00 190 3.02 


Table 4.

1985 2005 
Mountain 0.15 0.25 0.08 0.11
Hills 0.12 0.20 0.06 0.11
Terai 0.17 0.28 0.11 0.22

Source: Khatry, 1992

However, despite such high cropping intensity in the hills, yields are still much lower than in the Terai. This reinforces the observation that much of the land in the hills is not suitable for cultivation, and farmers are forced to continue to farm marginal lands that fail to yield high outputs.
        In order, to increase agricultural land productivity both fertilization and irrigation are needed, both of which are severally limited in the hills. Fertilizers need to be imported and transported to the hills, which is costly and unaffordable for the majority of the subsistence farmers. More sophisticated irrigation schemes are too expensive and beyond the technological capability of Nepal. However improvement and enhancement of irrigation schemes is needed to improve agricultural productivity by allowing for more use of fertilizer and the introduction of new kinds of crops.
        Figure 4 illustrates that while the amount of arable land seems to have peaked, the irrigated land has been generally increasing, indicating improved techniques. There are a variety of techniques used in Nepal, including some small hydroelectric power projects. However, as indicated by data (see tables 3 and 4) revealing the troubles in both the hills and Terai, it seems more effort is needed to improve irrigation schemes to allow for maximum agricultural productivity on limited land availability.

Figure 4.

Major causes for the downward trend in crop yields is the soil erosion, decline in soil fertility, high soil erosion in the Terai (flatlands) and lack of irrigation facilities. The high soil erosion rate leads to other negative consequences such as landslides. Landslides coupled with high sedimentation levels resulting from sediment loads carried by the major rivers in Nepal increase the dangers of flooding. Even though Nepalese farmers are apparently taking measures to prevent such occurrences, it is certainly not within the capability of subsistence level farmers to tackle such overwhelming problems by themselves. The impoverished farmer is forced to exploit natural resources, because he has no other viable option. Such actions inevitably leads to further destruction of the land and eventually an overall decline in agricultural production. There is a clear need for interventions aimed at improving the land quality to benefit the struggling farmers who make up the bulk of the population.
        As is common in other South and Southeast Asian countries, Nepali farmers too, suffer from unequal distribution of land. Two-thirds of all farmers have small plots of land which relegates them to constant poverty. Farms are particularly small in the hills, and the average hill farmer has enough land to feed his family for less than 6 months. Food shortages, loss of land in the hills from landslides and poor soil quality have profound effects on the lives of many hill farmers. This situation has lead to agricultural intensification, the farming of marginal lands and internal migration.
        Nepal is aware of its agricultural problems and limitations and they have been a priority in development projects since the 1970s, yet despite such efforts there continues to be a decline in crop yields. That is not to say that Nepali farmers are ignorant and simply continue to promote land degradation. Nepali farmers, are responding to such degradation, with as much innovation as within their power. Many of Nepals hillsides are comprised of terraced land plots in an effort to maximize utilization of the land while preventing the land erosion caused by both landslides and the monsoon rains.

Energy Transition
        There are two different energy sources in the developing world: (1) traditional biomass fuels usually found in rural areas including wood, crop waste, and animal dung and (2) modern commercial fuels such as coal, petroleum products, natural gas, and electricity.

Energy Consumption in Nepal
        Nepal presently still relies very heavily on traditional biomass fuels for energy consumption. These traditional fuels, especially wood, account for more than 90% of its energy consumption. Such high rates of traditional biomass consumption are evident in both the forestry and agricultural sectors which suffer supply problems and environmental damage. Furthermore, Nepal has the lowest commercial energy consumption per capita of any developing country (World Bank, 1989). There are many possible explanations for this given the present economic and social conditions in Nepal:
* It is still far cheaper for Nepalese to continue to use traditional fuels by stripping the forests
* Since most of the population lives in poverty, they have low purchasing power to buy more modern forms of fuels.
* Traditional attitudes prevail due to a lack of education and policy implementation aimed at change in energy use. (World Bank, 1989))
Finally, their commercial energy consumption levels are far lower than other developing countries because of their slow urbanization and industrialization rates. As a country shifts from an agrarian to an industrial economy, there is a natural increase in commercial energy consumption. However Nepal is still an agricultural society. Map 1 and table 3 reveal Nepals strong reliance on traditional fuels, dependence on agriculture, and very low urbanization rates as compared to other South Asian developing countries.

Table 5.

Agriculture Labor Force 
(percentage of total labor force)
Traditional Energy Consumption 
(percentage of total energy consumption)
1970 1990 1971 1991
Nepal  94%  92%  97% 93%
Pakistan 59% 50%  --- 22%
India 72%   66% 31% 26% 

Energy consumption can be a major contributor to environmental degradation. Even though Nepal is still primarily an agricultural society and industrial growth is presently slow, Nepal needs to make a shift in its energy consumption patterns and move toward more commercial energy practices. If this needed shift is made in a timely and careful manner, a positive change in the energy sector can benefit Nepal by lessening the environmental degradation and improving agricultural capacity.

Figure 5.

        Since Nepal is still experiencing relatively little urban and industrial growth, they have the opportunity to explore resource exploitation options and can make the needed shift at a reasonable pace. There is not such a dire need to focus on increasing the energy supply as fast as possible, which is the general paradigm for energy planning adopted by most developing countries (WRD Resource Book, 1995). Unfortunately, when countries push for such quick increase in supplies to meet their rapidly changing energy needs, they are often not effective in managing supplies to maximize the services. Thus, increased energy supply is often not very efficient.
        Nepal cannot continue to rely on its biomass fuels because not only will conventional means not be able to meet Nepals growing commercial energy needs, but it is detrimental to the population-environment dynamic in Nepal. The challenge for Nepal to make the shift to commercial energy sources is probably one of the most complex and expensive aspects of the countrys development. The consequences are dramatic to just about all sectors in Nepal.

Energy Production in Nepal
        Nepals energy demand is expected to grow at least 8% per year as electricity service is extended. Commercial energy consumption in Nepal includes coal, petroleum, and hydropower. Since Nepal is not rich in coal or oil it seeks to utilize the one abundant renewable source of energy - hydropower. It makes sense that Nepal would want to exploit this abundant renewable resource since importing coal and oil is expensive, limited and not very environmentally sound. However the big question, and one which will have a severe impact on Nepals economic, social and political future is what is the best way to exploit this energy source? This has been an ongoing debate in Nepal.
        Globally, there has been recognition that large dam projects are environmentally and socially damaging, however the trends show that average dam sizes are increasing and currently large scale dam projects in countries such as Brazil, Turkey and Japan are being built (Gardner and Perry, 1995). Nepal too, is considering such projects, even though the risks are extremely high.
        There are benefits and problems to implementing any dam project, however, the amount of consumption and degree of degradation are factors that must be weighed in comparing overall effects of different technologies and cultural perceptions of resources may alter with time (Biomedical Environmental Assessment Group, 1974). While uncertainty is an inherent part of any environmental problem, decision makers need to be better informed about the environmental processes and social preferences. In weighing the benefits and detriments of the dam possibilities in Nepal, there is a need to consider and understand the countrys environmental, economic, and political status. Given its relative poor environmental and economic state, as well as the political instability due to a relatively new and struggling democracy, it seems that large dam projects in Nepal are a very high risk.

Large Dams = High Risk
Environmental Conditions
        In Nepal the existing environmental status described in the forestry, agriculture and energy transitions, makes large dam projects problematic. The forestry and agriculture have a symbiotic relationship, as is evident by the interdependence of the two sectors. First, the deforested mountainside erodes the topsoil which negatively effects the agricultural productivity of the soil. Also, rain on a deforested mountainside cause this topsoil to be flushed down the hillside and it ends up in the rivers, lakes and hydroelectric reservoirs. This in turn causes the reservoir to fill with sedimentation and hence shortens its life span. Second, such large projects would inundate valuable limited agricultural land. With an increasing population, the cultivated land has already peaked and there are food shortages in the hills. Creating large reservoirs in the hills, where the land is already limited, would certainly impact many farmers lives.
        Another option that Nepal has considered is avoiding storage type dams and building run-of -river dams which do not require a reservoir and therefore do not flood as much valuable land. However, these dams need to be built fairly high in the mountains and therefore need road access (anywhere in Nepal), would require building roads or tunnels through the mountainside in order to access the river to construct the dam. In both cases, building roads and tunnels or creating reservoirs will cause many people to be displaced. Nepal does not have large urban centers to absorb these people or a large industrial and/or manufacturing sector for these people to become trained. Moreover, relocating these individuals to the Terai is not a preferred option. There was heavy internal migration to the Terai in the 1960s and 70s, and it is now densely populated and therefore no extra farm land is available.
        Large scale projects are designed primarily to sell electricity and to initiate large scheme irrigation projects in the Terai; neither of which are intended to benefit the hill farmer. Given the inequality of the land ownership, whereby the vast majority of farmers are subsistence level farmers, it seems likely that such large irrigation projects would not prove beneficial or even needed by the majority of hill farmers. In the hills the farmers do not have enough land to produce a market surplus, so large irrigation projects would assist a few large landowners who already possess better quality land, yet not realistically addresss the needs of the majority of the farmers. Large dam projects do not make it easier for the hill farmers to improve their land productivity because they do not focus on providing the kinds of irrigation the majority of the farmers need, nor do they put them in a better position to enhance their fertilizer use.
        The energy transition is also severely impacted by large dam projects. These large dams are designed to generate energy for export. The high voltage needed to convert this type of energy to be used for domestic energy at the local level is costly, technologically difficult, and therefore unlikely to be figured into the overall budget of this type of project. Moreover, these projects are so costly and have such long gestation periods that they do not provide any means for slowing the heavy reliance on traditional fuels - the forests. There is an immediate need to alleviate forest pressure by generating energy for cooking and heating in the villages but these projects are not designed with this intention in mind. The large-scale projects look at the macro-level impact, yet ignore the village level, where the main forest degradation occurs.
        In addition, the larger the project the greater the potential hazards. The Himalaya are considered to be a relatively young mountain range and because of this they are still being actively uplifted and continue to rise each year about 1cm (Shrestha, 1991). This tectonic activity makes Nepal highly susceptible to earthquakes. Given the terrain of Nepal, mostly steep slopes, even minor tremors result in landslides which potentially block rivers to form lakes. Furthermore, given these conditions it is possible for the effects of an earthquake to extend east to west and pose great threat to any large structure; like a large dam ready to burst and wipe out a significant portion of the country.
        The powerful run-off from the Himalayan rivers also carry some of the heaviest sediment loads in the world (Terrell, 1991). These sediment loads get deposited in reservoirs and have significant impact on shortening the life of the reservoir. Heavy rainfalls, during the monsoons on deforested land also contributes to landslides and heavy sedimentation. If the reservoirs are taking away precious agricultural lands, then a trade off of receiving increased land productivity is expected, however the people directly effected by the reservoirs do not see these results.

Foreign Aid Dependent
        In addition to the environmental risks, Nepal is at high risk socio-economically when considering the implementation of large dam projects. They need to depend heavily on foreign aid development to construct such projects which far exceed their national economy. Nepal already is highly dependent on foreign aid.
        During the Rana period before 1950, Nepal was not interested in foreign aid, as it was viewed as an intrusion. However, since the 1950s Nepal has opened up to foreigners and recognized the possible benefits of modern technology. They began to accept foreign aid, and since then they have continued to become increasingly more and more dependent on it. Foreign aid inflow into the country has steadily increased and aid in the form of loans is much larger than grants. In 1988, 69.40% of the total aid was in the form of loans. (NFFAS, 1992). Foreign debt is rapidly accumulating and in 1990-1 Nepals outstanding external debt reached 46% of the estimated GDP (Seddon, 1994). It has been argued by many that while Nepal has been receiving foreign aid for more than 40 years, they have not succeeded in alleviating poverty as is indicated by their economic indicators. If aid is supposed to help a country to overcome the development bottlenecks so that the country can move rapidly from an initial heavy dependence on foreign aid toward self-reliance then Nepal has thus far failed (NFFAS, 1992).
        In the past two decades large amounts of money has been invested in the agriculture and energy sectors. Aid aimed at serving large irrigation and hydroelectric projects accounts for a great deal of the aid money in these two sectors. It was estimated in 1987 that a hydroelectric project, Arun III was to receive more than $600 million (World Bank, 1989). Such incredible amounts of money being loaned for these risky projects only enhances Nepals dependence on foreign donors.
        Unfortunately, this foreign aid does not appear to be enhancing Nepali productivity. It has certainly been speculated that when projects are planned by experts outside of Nepal, with minimal Nepali institutional support there is widespread economic abuse and corruption (Bista, 1991). Hence, not only is Nepal heavily dependent on foreign aid but it has also become passive in the planning of these foreign initiated donor projects. A large dam project is a perfect example where mega-donors do the macro-planning. It seems logical then, that the Nepali government cannot refuse this kind of project that brings large amounts of money to the country and possibly to their own pockets.

Nepal-Indo Relations
        Nepal also needs to consider its relations with India since any large dam project would require Indias cooperation. Currently and historically relations with India have not been great and there still exists a deep rooted lack of trust between the two countries. A most recent example of the general difficulties experienced by the neighboring countries is the trade embargo which India imposed on Nepal in 1989. The trade and transit treaty between the two countries expired and major differences between the two government prevented the signing of a new one and Nepal was deprived of some 80% of goods normally imported from India (Seddon, 1994). This caused economic hardship in Nepal as prices rose and tension mounted. Such conditions provided impetus for the revolution in Nepal in 1990.
        Another example specifically related to dams, further illustrates the tenuous relations between Nepal and India. The one completed joint dam project was initiated by India in 1954. The Kosi Barrage, located in Nepal on the southern border, was developed because of a flood in Northern India in 1954. This project has been viewed as disastrous by both Nepal and India. The government of Nepal feels they allowed the dam to be built and only suffered environmentally with losses of arable land, while India benefited from flood and irrigation control. The Nepalese also believe that India has done nothing to repay Nepal for its efforts. Yet the Indian government feels that the prosperity they were to gain has been nonexistent, as the barrage failed to produce the estimated irrigation potential and a Kosi river flood in 1991 reconfirmed Indias suspicion that the barrage in its present state is not an effective means of flood control.
        Nepal and India continue to disagree on issues regarding this project, each blaming the other for problems and hazards. Even the new government in Nepal today has not forgotten this project that they felt cheated and included in the new Constitution of 1990 is a statement that treaties dealing with water sharing have to be ratified by a two-thirds majority in the parliament if they are of a comprehensive, serious, long term nature (Aryal, 1995). This deep rooted lack of trust seems to be even more influential in preventing large dam construction than anti-dam activists complaining about the environmental degradation incurred by dams.
        Despite such problems, Nepal continues to explore large dam options and since 1987 has been preoccupied with developing a large project in Eastern Nepal, known as the Arun III project. This large scale project, to be funded by the World Bank, was designed to generate revenue by not only for providing electricity to meet the national demand, but also by selling electricity to India. Even with recent changes in the government the project was supported as unrealistic visions of hydro-dollars still permeated the government. The elected Prime Minister in 1990, stated that the problems of trade deficit with India will be overcome with Arun III hydroelectric project (Gyawali, 1991 p. 6).
        While the newly developed constitution in 1990 gave people the right to development, it also gave them the right to information (Aryal, 1995). The Arun project became the first controversy about a major development project in Nepal. Also, World Bank, receiving pressure from various projects, established a commission in 1994 to hear complaints from parties affected by proposed dam projects. Arun III opponents in Nepal were the first to address this commission with their concerns (Gardner and Perry, 1995). The project has been opposed for years by many private environmental groups who felt that such a large World Bank project could have more harmful than beneficial effects. After years of debate the project was finally rejected in August of this year. It was decided by the new World Bank president to cancel the project because Nepal was too poor for the project to succeed (New York Times, August 1995).

Political Instability
        In addition to Nepals poor environmental and economic conditions, it also lacks the institutional and infrastructure support to successfully complete such projects. This is mainly due to the political instability found in Nepal. Political stability is an underlying assumption in the transition theory, for without positive government intervention, it is difficult to make it through a transition to a steady state.
        Prior to 1990 Nepal had an absolute monarchy. It was a partyless Panchayat (village council) system in which power was exercised from the palace. In 1990 there was a democracy movement, which was not directed at the king, but against the Panchayat system which institutionalized the kings power. The aim was to lift the constitutional ban on political parties. The struggle was painful for Nepal as demonstrations and violence caused casualties, but it was minimal compared to other countries experiencing democratic revolutions. Within less than three months the king dissolved the Panchayat system and a new interim government was formed under a new multiparty parliamentary democracy system.
        However, any country struggling to adhere to a new democratic system of government is bound to suffer difficulties and go through a period of instability and thus have difficulty managing its resources. In 1990 the new government inherited a country characterized by extreme poverty, high population growth, and an aid-dependent economy. These conditions are not easy to change in a short period of time.
        Moreover, as in any state recently freed from autocratic rule, the society is in a state of confusion as modernity approaches. This is especially true in Nepal because since 1990 the government has changed hands over four times. There continues to be mistrust among people and dissatisfaction with government decisions and the two main parties, the Congress and Communist, continue to fight to control and set the general course for the government. These government decisions effect development activities. Development activities need to be more political, but they need a stronger more stable political framework to rely on for support. In addition, a stable government is needed to ensure that a more broadly defined strategy for the countrys development is achieved.

Small Dams = Low Risk?
        Small dam projects are aimed more specifically at assisting the rural farmers and since 94% of the people live in over 30,000 villages and over 90% are farmers, a development project seems meaningless unless it improves their lives. In addition a World Development Report published by World Bank in 1990 stated that several factors were impeding development. Among these was an inadequate participation: inadequate attention was given to sociocultural and political factors in the design and implementation of projects resulting in ineffective projects and a greater reliance in foreign aid. However, it is ironic that World Bank made this statement since it is the main organization that Nepal has become so heavily dependent on for loans in large dam projects which ignore any local participation. Similarly, in 1992 World Bank report recognized that many of the water projects built in developing countries over the past 25 years have been failures, lack of technical expertise and inability to operate and maintain water systems once they were in place(Brookshire and Whittington, 1993). It was suggested that lack of community participation or local involvement in design and management is a major cause of project failure; a typical example is large dam projects being imposed on the local people who have no decision making power and often only suffer the negative consequences.
        Large dam projects ignore rural farmers, while small dam projects specifically aim to improve rural development. The socio-economic benefits are extensive. First, small hydropower plants can be run of river types which means no reservoir or storage space is needed. This important aspect certainly minimizes the potential environmental degradation and loss of arable land by not flooding the lands to create a reservoir. Secondly, small dams are designed to provide the villages with electrical energy. And with this electrical energy comes numerous opportunities for rural development. There is the possibility for local farmers to begin to participate in income generating activities such as small cottage industries. Electricity will also help to improve education standards by making it easier to study and also making radio (and eventually television) available to people who have been fairly isolated and distant from country and world information. Also, electricity available in villages where health clinic exist will enhance the capability of the clinics by allowing for the use of modern facilities such as X-ray equipment and small operating rooms, and refrigeration for storage of medicine.
        Electricity in rural areas, provided by hydropower, will definitely help to increase the earning potential of the population and possibly slow migration to the Terai, urban areas, and out migration (primarily to India). Small dam projects are also sufficient to provide irrigation opportunities. Electrical energy can pump the water for lift irrigation. Since the majority of farmers own minimal land, such irrigation schemes would be beneficial to them.
        Finally, small dams will definitely have a direct and immediate impact on saving the countrys forest resources. Small dams designed to generate electricity to provide for cooking purposes, will drastically cut back the amount of fuel wood used by rural people. However, simply providing the electricity is not enough to cause farmers to change their behavior and immediately adopt a system of utilizing electrical equipment. Education is needed to instruct farmers of the importance and benefits of changing from their traditional system of exploiting the forest resources. An integrated system of providing education and employment opportunities is essential to make rural electrification beneficial in enhancing the development of the country.

Policy Recommendations
        Nepals apparent environmental, economic, and political conditions prevent it from implementing such large scale dam projects, yet it is apparent that something must be done to meet the increasing energy demands of the country. If policies were implemented to restrict immediate focus on small (projects not requiring international cooperation, and not financially exceeding the national economy) Nepal would benefit by improving its economic and environmental conditions. Such focus would give Nepal time for its newly democratic government to stabilize, to work on improving relations with India, and to begin to rely less on foreign aid.
        The Nepali government should not focus on becoming an energy independent country, rather it needs to focus on feeding its people, educating its people, slowing the population growth, and protecting its resources. The following are policies for consideration based on evidence presented in this paper:

Population Policy
        Nepals population has increased at about 2.1% annually over the last decade (Gurugharana, 1993). In a country with a very limited resource base, this kind of population pressure has severe consequences. It has resulted in increased poverty and environmental degradation, and therefore, curbing the population is necessary to begin to alleviate poverty and improve environmental conditions. The Government has established targets in its population policy which include reducing the total fertility, infant mortality, child mortality and maternal mortality rates but what interventions and specific policies will enable this to become a reality need to be further explored and articulated.
        Nepals continued high fertility rates are indicative of the need to incorporate not only a more extensive family planning program, but to improve education and employment opportunities for people, especially for women who remain at the bottom of the economic and social scale. Nepals government is aware of its rising population and recognizes that a fair amount of the poverty found in the country can be attributed to this fact. However, they have not yet been able to devise an extensive program that addresses all the factors involved in controlling population growth. Efforts are being made to improve the education status of women and a number of non governmental organizations have provided financial support as well as training and materials for literacy classes and income generating schemes for rural and urban women. These actions need to be continued, but more importantly they need to be better monitored by the Nepali government in order to maximize the productivity of these programs.

Agriculture policy
        Nepals need for a more effective agricultural policy is also apparent by the worsening conditions in the agriculture sector. Nepali government and people, like many countries in the world, maintain a more is better mentality. They believe the answer to improving their lives or developing their country is done by producing bigger and better things. However, it would be more practical and beneficial to focus on better management instead of more facilities. This would include initiating policies aimed at educating farmers, as well as providing assistance such as seedlings and fertilizers, in ways to allow them to maximize their agricultural production.
        In addition, often smaller more manageable products are overlooked as viable options. An example of wanting to improve things on a larger scale than necessary can be seen in the irrigation schemes targeted. The majority of farmers own very small plots of land and therefore do not need large costly irrigation schemes. They continue to devise their own small irrigation systems, however these generally are not long lasting. The projects are labor intensive because they are temporary and need to be remade each year. However, if a policy was made to assist farmers in improving their indigenous irrigation schemes, it would prove beneficial to all. As noted by Gurugharana (1993) in his paper Poverty Alleviation and Human Development: The Nepalese Case, The country has water resources for substantial improvement in irrigation which should, however, be of reasonable size under farmers management (p. 96). He emphasizes the need for technologies to be suitable to local conditions and small-scale production. The Government needs to further research and investigate the feasibility of providing assistance with these types of projects, rather than waiting for a more sophisticated system which may not appeal to the local farmer, and not be affordable or easy to maintain.

Water Resource Policy
        Nepal is in desperate need of a national water policy that will allow the government and people to decide for themselves how to best utilize their water resources. Currently, Nepal relies heavily on outsiders to come in and decide how to exploit its water resources. A national water policy would cause those in authority to investigate for themselves what exactly needs to be done to meet the national energy requirements, what is economically feasible, and what options are the least environmentally damaging. Again, like the agricultural policy, there is a need to focus on better management instead of more facilities. Nepal needs to thoroughly investigate its existing water projects, including dams already constructed. Such research and action can be used to improve the technology that is available at reasonable costs. It will also serve to avoid local difficulties and excessive costs that have resulted in the past due to lack of investigations done by Nepalese. Furthermore, policies could be designed to provide incentives for better management and better performance.
        Finally, if a policy to implement small dam projects, designed to provide rural electrification, was implemented, it would be important to focus on training and working directly with rural farmers to maximize the potential benefits from locally implemented projects that could develop if villages are supplied with electricity. It is not enough to simply provide electricity to the villages. There needs to be direct efforts to bring skilled people to villages to assist in the development of locally designed projects. Proper monitoring and continuous feedback would be essential to avoid replication of mistakes, waste of important resources, and to ensure further progress and development.

        All projects seem to be problem-ridden but it appears to be between those that are more or less successful in overcoming their troubles and those that are not (Hirschman, 1991, p.3). This assertion holds true in Nepal. The future direction of the exploitation of its water resources needs to be decided in order to improve the lives of all Nepalese. Nepalese are faced with a situation in which they need to understand the trade-offs involved in potential projects, and then make a well informed decision to implement policies designed to help them achieve a solution that is suitable to their country.
        On a micro level small dams seem very beneficial, however, it is uncertain if such projects will allow Nepal to become an energy independent country. The trade-off, however, is to implement large dams that pose such a high risk for the county. Large dams cause arable land reduction when there are already food shortages. They are also much more expensive and would put the country, already more foreign aid dependent than any other developing country, into further debt. These facts coupled with the environmental and social risks posed by such projects indicate that large dams are not the answer for Nepal. Given all the conditions, Nepal may never be ready for large dam projects, but it is clear that the current conditions should direct Nepal away from considering such projects. There are certainly trade offs for both, but given the evidence it seems evident that Nepal needs to exploit its water resource in a manageable way aimed at developing the country at a pace from which they can benefit, and this is not capable by initiating large dam projects.


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