One World South Asia: The rate of poverty in Nepal fell from 31% in 2003 to 25% in 2010. The reduction would have been greater but for the decision to upgrade the standard basket of food that is valued as the core component of the national poverty line.
The measure of inequality also improved, the Gini coefficient falling from 0.41 to 0.33 over that period. However, there remains a significant poverty gradient between rural Nepal and the relatively affluent urban centres and the Kathmandu Valley.
In the context of the Millennium Development Goals (MDGs), the government in Nepal is confident that the poverty target of 21% by 2015 will be met. Indeed, its current Three-Year Plan for social and economic development brings forward this goal to 2013.
However, continued poverty reduction is subject to many uncertainties. Progress has been underpinned by an exceptional contribution of remittances from overseas, amounting to 20% of GDP in 2010. Preliminary results of the 2011 census in Nepal show that, out of a total population of 26.7 million, almost two million are working abroad, double the figure in 2001.
Meanwhile, prospects for domestic economic activity are at the mercy of the country’s dysfunctional political process. The ending of Nepal’s long civil conflict, followed by integration of the Maoist movement into national politics, had brought hope that the interests of the poor would gain greater recognition.
The 2006 Peace Agreement and subsequent Interim Constitution did pinpoint the inequality arising from caste, ethnic and gender discrimination as a root cause of the conflict. Important social welfare programmes are at various stages of development but their impact has been delayed by the failure to draft a new Constitution by the 2010 deadline.
Central government institutions remain weak and there have been no local elections since 2002, exposing village and district development programmes to a lack of scrutiny. Until the proceedings of the Constituent Assembly can be revived, Nepal’s budget for 2012/13 can do no more than roll over essential government business.
Based on the previous year, over a quarter of government revenues are reliant on foreign aid. This dependency carries risks at a time when rising corruption within all tiers of government in Nepal can play into the hands of international donor fatigue.
Food Security
Progress
Although the contribution of agriculture to Nepal’s economy is falling, it remains as high as 36% and the Nepal Living Standards Survey (NLSS) conducted during 2010/11 reveals that 76% of all households are dependent on farming.
The country recorded a return to food surplus in 2011 for the first time since 2005, with record aggregate cereal production. However, the World Food Programme (WFP) considers that 27 out of Nepal’s 75 Districts are in deficit, creating moderate or severe food insecurity for 3.5 million people.
WFP’s 2012 programmes aim to assist 1.8 million in the worst affected far western hill and mountain regions where over half of the population lives. Although there has been some improvement in rural infrastructure, most roads are impassable in the rainy season.
The proportion of children aged under five years who are underweight fell from 39% to 29% between 2006 and 2011. Although this improvement fulfils one of Nepal’s MDG targets for hunger, the high figure remains a concern.
The causes of food insecurity spring from the poverty of the majority of farming households. Over half cultivate land of less than 0.5 hectares, with primitive tools and low quality inputs. This fragmentation is becoming worse – the proportion of farms of more than 2.0 hectares, described in the NLSS as “large”, fell from 12% to 4% between 1995 and 2010.
This profile is vulnerable to drought in winter and to the vagaries of summer rainfall. Forecasts of 2012 production are already being qualified on account of the late arrival of the monsoon and the failure of the government’s procurement agency to deliver promised supplies of subsidised fertilizer.
In years of national food deficit, there is little option in the landlocked country but to look across the border to India. The critical importance of food sufficiency for Nepal was exposed during the 2008 food crisis when the Indian government banned exports of rice.
The incidence of hunger is very sensitive to the price of rice, the staple which accounts for two thirds of cereal consumption in Nepal. Even the more comfortable urban households spent as much as 46% of their incomes on food in 2010.
Feudal standards of land management reinforce caste and gender discrimination. Over a fifth of the population falls into the low dalit caste, concentrated largely in the Terai region. And 27% of households in Nepal were headed by women in 2010. These groups are restricted by insecure land tenure and suffer unfairness in access to subsidies and benefits.
The Caste-based Discrimination and Untouchability Bill, enacted in 2011, promises to impose punishment for such discriminatory practice. If this initiative could be combined with land reform and adequate safety net provision, the right to food in Nepal will be honoured.
Current spending on agriculture of about 5% of the national budget is relatively modest and may account for the lower farm productivity than is achieved in neighbouring India.
As Nepal is well endowed with freshwater, investment in irrigation is considered to be the optimum policy for raising yields. An MDG Needs Assessment published in 2010 recommended that the road infrastructure should be upgraded at a potential cost of over $3 billion for the five years to 2015.
At community level, efforts will focus on climate risk. Even the smallest farms can contemplate such measures as diversification of crops, more efficient water management, and reinforcement of soil structure on hillside plots.
The government has the opportunity to consider these solutions within a new long term Agriculture Development Strategy, currently under preparation with the support of the Asian Development Bank. The drafting process is due for completion by the end of 2012 with a view to implementation from 2015.
Climate Change
Effects of Climate Change
The volume and consistency of oral testimony on climate change emerging from Nepal is recognised in the country’s National Adaptation Programme of Action (NAPA) published in 2010. Rural communities place on record that the onset of the monsoon is no longer predictable for planting, that the rains are more intense, and that insect habitats are changing.
The argument that climate change is particularly evident in Nepal is founded on the observation that temperatures in the Himalayan region are rising considerably faster than the global average, in line with scientific predictions. The 2011 Maplecroft analysis of climate risk ranks Nepal as the world’s fourth most vulnerable country.
Based on results from the latest regional circulation model technology, the NAPA predicts an average temperature increase of 1.4° between 2000 and 2030, with the mountainous western region likely to be the worst affected.
Rising temperatures inevitably focus attention on the fate of Nepal’s 3,000 glaciers, the overwhelming majority of which are already unequivocally in retreat. Closely related is the spectre of glacial lakes filling with melt-water at unnatural rates to the point of catastrophic flooding through the mountain valleys. The NAPA warns that 20 glacial lakes are at risk of bursting of which 6 should be classed as “critical”.
Water is the therefore the dominant feature of climate risk; beyond the glaciers lie 6,000 rivers, many of which sustain countries far beyond Nepal. The sensitivity of the regional hydrological cycle explains why the country features so prominently in global warming assessments.
Rapid warming also threatens the dry land of the southern Terai plains of Nepal where crops will be exposed to greater frequency of hot days and nights. Maize yields are believed to be especially vulnerable.
Adaptation
Nepal’s NAPA report reflects the most recent thinking about climate adaptation, having been published many years behind almost all the other participating Least Developed Countries.
In particular, it proposes the idea of Local Adaptation Plans of Actions (LAPAs) at District level. This recognises that it is poor rural households which are least able to cope with the effects of climate change. Community-based programmes are more likely to build on the common ground of adaptation and poverty reduction.
In support of this approach, the NAPA recommends that “(project) operating costs will be kept to a minimum such that at least 80% of the available financial resources reach the local level.”
In parallel with preparation of the NAPA, the Ministry of Environment established a range of new administrative bodies to inject awareness of climate change throughout government departments. These are led by the Climate Change Council, a coordinating committee chaired by the prime minister.
The government approved a climate change policy in early 2011 but supporting legislation, finance, institution-building and overall donor coordination have stalled within the constitutional limbo. A similar fate has been experienced by the National Strategy for Disaster Risk Management that was approved in 2009.
Adaptation to the threat of glacial lake outburst floods is primarily concerned with constant monitoring supported by early warning systems. Engineering solutions to reduce the volume of water through outlet channels have had some success but are risky and difficult.
Nepal has enjoyed some success in attracting adaptation funding, although not entirely with the support of civil society. The Climate Public Expenditure and Institutional Review, a major study published by the government at the end of 2011, estimates that international donors have contributed around $650 million to climate programmes in Nepal over the last decade. Government spending on climate mitigation and adaptation has been running at about 1.8% of the national budget, of which about half has been funded by donors.
Deforestation
Nepal is a world leader in decentralised forest management which aims to provide livelihoods for the poor without degrading the natural resource. Established for over three decades and substantiated in law by the Forest Act 1993, Community Forest User Groups now engage 1.6 million households in management of about a quarter of Nepal’s forest cover.
This experience should give the country a head start in bidding for global funds for “reducing emissions from deforestation and forest degradation” (REDD). Nepal’s 2010-2012 preparation period, supported by the World Bank’s Forest Carbon Partnership Facility, is near completion. An innovative trust fund is under consideration for distributing REDD revenues directly to local forest stakeholders.
The community model has proved less effective in areas such as the Terai forest where the quality of hardwood offers high rewards to logging interests. This region is prone to lawlessness and offers market outlets across the nearby Indian border.
In the absence of significant government spending on the forest sector, other drivers of deforestation retain their force. As well as clearance for agriculture, firewood is used for cooking and other purposes by 84% of the population, according to the 2010 NLSS.
The overall rate of deforestation in Nepal may therefore be as high as 2% per annum. Questions are bound to be asked about the provision of REDD finance for well-managed forest areas if other parts of the country cannot be brought under control.
Energy For All
Nepal faces two broad challenges in providing energy access for all. The first is to provide a credible service to those connected to the national grid (96% in urban areas and 63% in rural in 2010). And the second is to create electricity capacity in those rural areas where the potential for grid expansion is limited by the hostile terrain.
Despite potential hydropower comparable with any country in the world, Nepal exploits only 1.5% of that potential. Even this modest capacity is prone to mechanical failure and vulnerable to falling water levels in winter drought. Users have been warned of the possibility of 20-hour daily outages for the 2012/13 winter.
Energy shortage represents a massive impediment to social and economic development. The failure is attributable to inefficiency and corruption within the Nepal Electricity Authority combined with longstanding inability of the national political process to implement policies.
There is much more forward momentum in building energy capacity in rural Nepal. The Alternative Energy Promotion Center (AEPC), the government agency responsible for coordinating rural energy programmes, has established viable models for a range of micro-energy solutions.
There is emphasis on engaging local communities in the programmes – for example through creation of a local industry in manufacturing improved cookstoves. AEPC estimates that almost 10% of Nepal’s population benefits from a small-scale renewable technology such as micro-hydro, wind, household solar and biogas.
The challenge is to scale up these models to deliver universal access to clean energy, including the poorest families who struggle to afford even subsidised installations. Over half of the population were using a traditional mud stove for cooking in 2010 and a further 22% cook over an open fireplace.
