Sushil99’s Blog

Issues and Options



Unemployment among youth is a key factor behind social and political unrest in Nepal. The current peace process still undergoing through a fragile situation mainly due to high expectations of the public after comprehensive peace agreement.SLC drop out youth constitutes the major challenges as majority of them neither can continue their education not find appropriate jobs for themselves. It is imperative for government and civil society groups to ponder on the issues in time so that the problem does not escalate to another unrest or crisis in the country.
Two thirds of the Nepali students who enroll in primary education do not continue into lower secondary and one quarter of those who do enter Grade 6, drop out after Grade 7. There is no yardstick as yet by which the learning gains of early dropouts can be accurately measured. Nepal does not yet have the capacity to run national assessments of educational performance which would enable comparisons of educational achievements to be made at various levels of the school system.
Efficiency in the secondary education system in Nepal is low. A World Bank Study in Nepal reported that the heaviest dropout occurs in grades 7 and 10, at the end of the lower secondary and secondary cycles. Using the reconstructed cohort method to map the flow of students from Grade 6 to Grade 10, it is found that only two-thirds of the students will eventually complete Grade 10. Assuming the appearance rate of regular students at the SLC examination of 80% and the pass rate of 40%, only 26.7% of the cohort passes the SLC for the first time they take it. Similarly, assuming a compartmental and exempted students’ appearance rate at the SLC of 80% and pass rate ‘8 of 47%, an additional 10% of the cohort will eventually pass the SLC exam by re-taking it. In total, only 37% of the student cohort who enter grade 6 passes SLC.

The ongoing education system is blamed to be not efficient to produce good results. The blame is seems to be supported by the ongoing the S.L.C results where the large chunk of the appeared students remains unsuccessful to pass the level . About 4 lakhs students who appeared in the three consecutive year of SLC exam are found to be failed. The figure of dropouts may sore up if additional sent-up dropouts and other level of primary education is considered. Globally, young people are more than three times as likely as adults to be unemployed. Almost half of the unemployed workers in the world are young people although youth make up only 25 per cent of the working-age population. According to preliminary estimates for 2005, young people in the labour force were almost six times (5.6) more likely than adults to be unemployed in South-East Asia. The youth-to adult unemployment ratio for South Asia is also high at 3.8, while for East Asia the unemployment rate for youth is 2.7 times that for adults.

1.1 Why unemployment of school dropout matters?
There are costs incurred when young people are unable to find appropriate jobs. These include economic, social and political factors as well as costs to communities, families and individuals. Moreover, the chance of production of human capital who can lead the future gets faint colour.

1.1.1 Increased poverty:
A study by ILO estimated 700 million people in Asia live on less than US$ 1 per day. In most countries of the region, unemployment and underemployment of youth exacerbate the problem of the working poor. Many youth from poor households drop out of school to enter the labour force at an early age, often ending up in low-paid jobs with little prospect for future improvement. Unfortunately, there is a vicious cycle of chronic poverty with intergenerational links – young people from poor families end up in unproductive jobs. Placing young people in decent jobs is an important way to end the vicious cycle.

1.1.2 Social exclusion:
When young women and young men do not have an opportunity to find a decent job, they are more likely to feel excluded from society and lose their individual sense of self-esteem. Youth who enter the labour market in depressed circumstances are more likely to have difficulties throughout their working life. These factors can lead to crime and unrest.

1.1.3 Foregone output:
Unemployment of young people means wasted potential measured in terms of output that could have been produced and income that could have been earned. While it is difficult to obtain precise estimates of the resulting economic waste, the ILO has produced some figures using data for 2003 to measure additional GDP that would result if the unemployment rate for young people were cut in half. In this context Nepal suffering both at skilled and unskilled labour markets.


Economic condition severely puts constraints on the further study through chances of further attempts and the skill acquisition for gainful employment. As the unwanted leisure time prevails, the youths start to indulge in the social evils and criminal activities which turn a society in a fragile security status.

Interim three year plan of Nepal (2064/65-2066/67) has set up a vision to achieve poverty reduction goal in line with millennium development goals (MDGs) through a supporting wig of employment creation. Technological and cultural lag in absence of human resources familiar to skill, capital, and technology is a cause of widespread unemployment. The plan is expected to explore opportunity of self-employment by creating conducive environment to access skills, capital, and technological innovation and creation of job opportunities. Its strategy explicitly spells over the state attention to put priority to targeted youths in providing skill development and finance the employment related activities through soft loan with subsidies interest rate.
Education system is expected to have positive impacts linking it to life skill, livelihood base, job-oriented, skill enhancement, and productive with collaborative and coordinative approach with non-governmental organization (NGOs) and the private sectors as a key player. It has realized that skills as one of the indicator of quality education. Arrangement of alternative education to the school dropout youth has gained space in its policy. It aspires to provide skills targeted to employment to 42,640 people within its time-frame. Education and skill development of youth is expected to advance simultaneously keeping keen interest on technical, vocational, and market-oriented strategy. It realizes the importance as a policy guideline in its youth section.

Minister of Finance clearly indicated the government priority in education system in the ongoing budget (2065/66). The fiscal plan envisages the arrangement to link the education system with life skill and productivity. The need of quality education with the core emphasis on skill and entrepreneurship attitude generation is put as the checklist. The plan spells loudly the interlink age between illiteracy with underdevelopment and backwardness. Skills development for employment initiatives is going to be implemented in targeted districts with the aim of providing services to 14,200 people. The production of the competitive human resources with compatible skills and quality targeting the local and overseas market has been a target of the government. The minister through the annual plan promises to adopt the rational steps to provide status to employment as of citizen’s fundamental right. Entrepreneurship development is the key to success in the lead to the vision.

Entrepreneurship can be developed through influencing the attitude towards vocational skills. Three ways to enhance such aspiration are:-
• Implantation of entrepreneurship attitude
• Involvement in small enterprise
• Imparting vocational and technical skills
Koirala, B. Alternative Thinking in Education.AFO-Nepal.2064

Goal of this initiative is to help create enabling environment for school dropout youth ( age 15 to 24 years) to motivate and access employable vocational skills and enterprises so that they also can share peace dividend. Some specific questions to be answered for developing an appropriate plan and schemes are as follows:

1. What are the basic needs and major challenges of SLC dropout youth to access employable skills and get chance to be absorbed in the prevailing and prospective job market?

2. To what extent the existing vocational training institutes, courses, and approaches are relevant to address their needs of vocational skills and running a business independently or joining with relevant enterprises to address the felt needs of the section and society?

3. What types of support mechanisms are most useful to help or motivate the dropout youths more specifically those who have prospects to get jobs at local or international labour markets?

4. From demand point of view, what are the most appropriate schemes for short term and long term benefits for the unemployed school dropout youth?

5. What types of roles civil society organizations (for example NGOs), private sector and government agencies can play and how?

Unemployment has been a challenging issue over the national economy and human development. Its tendency to lean towards the worst condition, in fact, is a cumulative effect over the decade’s long failed development initiatives. As its incidence advances so does the severity. Livelihoods are at risk and nation is vulnerable to fragile stage at its worse end. It’s the right time, if not, already late, to provide a suitable exist to the problem where the national aspiration to lead to new equilibrium adjusting dynamics of its governing forces is explicitly awaken.

Initiatives leading to bring changes in the scenario should be able to convert the problem seen and the consequential effects in favor of the job creation. Productive employment is the means to secure the high quality youth capital. Besides, it has a holistic influence towards the overall development of a nation. Productive youth not only secure their future but also ensure strengthening the nation as a whole. Investment on youths is the most in the nation building with a strong foundation of present and future human capital.

Government of Nepal has been putting its effort at its mettle through different ministries in general and CTEVT in particular to disseminate skills through various training measures. It has a great meaning to produce skilled and semi-skilled youth for national and international market demand. Yet, the government efforts felt the need to be supported by the private sector and the civil society organization to drive momentum to change the quantum of muscle power to skilled human capital among the S.L.C. dropout youth. It is the marginalize sector within the youth too and the institutional coverage on the sector is minimum. As the result, the figure spell out the poverty incidence among the people with academic qualification below S.L.C is breathtaking. There is a clear understanding on the need of strategic approach to guide the issue, in accordance with the national policy which certainly provides better results. Thus, Kaushila Foundation fells the need of the following schemes to be made urgently inorder to deal with the issue efficiently. Appropriate selection of type of training and duration for an individual should be based on ones interest, capability, and future perspectives. It would be a great achievement if at least 10% such youth which accounts to 40,000 would be involved in skill development trainings. It is assumed that 50% of them take up short term training, 35% prefer mid-term training and rest 15% involve in long term training.

6.1 Short term training
First hand skills on the job oriented training empower people to acquire the basic skills. The short term training opens up avenues in job market. Vocational training of about 6 month as a full time course can equipped youth in handling the job in areas such as plumbing, electrician, carpenter, mason, tailoring, gardening, blacksmiths, goldsmiths, hair and beauty saloon, computing and hardware maintenance etc. There is the possibility of quick responsive from the side of job market on the demand of such forces at local and national level. The cost estimate of training 20,000 youths accounts to be NRs.264, 000,000 on the basis of per head cost estimated of NRs.13, 200a.

6.2 Mid term training
Full time course of 10 to 12 months can be considering as under this category. Aims of training shall be enabling such youth to understand the nature and equipped skills to handle related task. Technical course on food and beverage, construction, surveying, agricultural, industrial workers, baking and cookery, sanitation and gardening are few to list, can be the potential area of the job training. The estimated amount of training cost accounts to be NRs. 303,660,000 under the estimation of NRs. 21,690a cost per head.

The above mention trainings can enable to bridge shortage of manpower in the job market. The areas have been witnessed attraction of large inflow of migrant worker from the neighboring country.

6.3 Long term training
Training course covering 12 to 16 months can be arranged as a long term training schemes for the youth. An intensive training aims to widen the knowledge as well as skills of youth to handle assigned job independently. Technical competencies thus acquired enable them to create new job platform and be self-employed too. Training related to the public health volunteers, tourist guides, and construction mason for seismic resistant infrastructure, electrical and electronic maintenance, shorting and shooting specialist, development workers (Social mobilization), computing, auto-mechanic, photography and many more. These trainings further opens door for intensive training on the area and related task. These lead to the specialization on the very field. The financial requirement for training 15% such youth under consideration for training requires NRs. 157,800,000 on the basis of per capita training cost of 26,300a.

The culture of ‘Work is worship’ should be implanted among the youths with proper integration of life skills, productive education, and moral strengthening through the process of role modeling. Training centers can be marked according to the geographical proximity, volume of trainer and capacity of the training institution. Financial cost and institutional arrangement shall be based on the principle of sustainability and efficiency.

a. Upadhyay, U. Insurgency Affected People of Nepal: Rehabilitation. IIDS publication. 2006

Provision of interest free or soft loan to the trained youth through certain financing mechanism is essential to create avenues to practice skills gained and to materialize the entrepreneurship. Financial support of NRs. 10,000 to 100,000 could be an incentive to involve in self-employment scheme.
A detail workout on the program will be developed later.

High rate of school dropouts is the consequence of the loophole in the ongoing education system. It has been cause of the mass unemployment and eventually triggers social evils and unrest. Constrains to access the employment opportunity ruins the economic wellbeing of a person and related dependents and degrade the creativity leading to weak human capital. Available data reveals that poverty incidence and poverty severity are significantly higher in the mass of school dropouts. It is the right time if not late, to initiate a concrete strategy and action to address issue of unemployment to secure future of the school dropouts and nation as well.

It is a rare moment in the history. Nepal has been involved in the nation building by providing suitable exist to the transitional situation. Issue of employment has to be felt at its ground reality and suitable action is the must on time to aid peace process too. Volume of people to be address for employment is very high and school dropouts involved in the conflict of 10 years who won[t be assimilated in the national security force are to be to provided with skills for employment. To address the issue, skill development training with strong market linkages for productive employment would be an entry point to address youth employment problem. It provides opportunity and inclusion of those excluded in mainstream development strategy and helps them to create owns avenues of self reliant through decent work.

8.1 Research to find size of such force should be carried in regular basis.
8.2 Market analysis and potential future job market needs to be anticipated through straigic and rational study.
8.3 There is a need to be acquainted critically on field of interest and aspiration of the force.
8.4 Institutional arrangement and the role specification should be taken into consideration to provide training to such youths.
8.5 Human resources and financial sources need to be identified and arrange in sustainable way.
8.6 Short term and long term policy regarding job creation and human capital development pivotal strategy for better outputs.
8.7 Database Inventory on job related information needs to be arranged through ‘Employment Information Centre’.
8.8 Financial arrangements in term of soft loan are necessary to stimulate the entrepreneurships among such youths. Institutional base such as ‘Employment Service Bank’ can be a best option.
8.9 Committee comprising of experts should be developed which analyses possible area of entrepreneurships development and facilitate the interested youths.

 Prepared with vauable suggestions and instructions of Nagmindra Dahal sir.

By: Sushil Kumar Bhandari
Poverty has been a back aching problem of Nepal. Vicious circle of poverty is blamed to have put huge dependence on forest and is a critical area of natural imbalance. It has been area of conference talk about the negative consequences on environment due to higher dependence on nature for subsistence of livelihoods of developing world. But the consumption of resources of forest has been dramatically reduced in the research site. The dependence has been limited to occasional use of timber and partial fulfillment of firewood need the environment services such as hydrological balance has been top the local priority recently. My research on CF based carbon sequestration came up with the interesting figure. It definitely urges the policy makers and the environmentalists to have a critical appraisal over the agenda to lobby in the international forum when Carbon trade gets entry as an agenda of discussion. It has significant upswing positive linkages on tier issue of conservation, livelihoods and rights. The figure of the outcome of the research reads as follows:-
The incidence of the poverty in the site was found to be about 59 percent. It is a based on the income poverty of the villagers which depicts the low level of the income status of the people far below the national average (i.e. 31 percent) and the World Bank demarcation of $1.08 per capita daily income. Carbon trade could add the additional income to the poor society with the significant amount. Carbon trading has the potentiality of generation of additional income of NRs.189487 annually. If the additional revenue earned is disbursed to the individual household, it could enhance the income of household by Rs.1155. This amount is about 7.3 percent annual increments in the household income. As there occurs the spell over effects of the income in the society, the cumulative influence on the poverty reduction progresses in the positive direction. This helps to reduce the poverty by accelerating the poverty reduction process and its rate significantly. The national average of the poverty reduction through the period of 1995/96 and 2003/04 was 3.7 percent and the poverty incidence was declined by 11 point from 42 percent to 31 percent respectively. Taking the national average, although the estimation of the rate to be increasing yet reliable date wasn’t found, the poverty reduction rate could be increased to 12.95 percent annually at the research sight, others things remaining constant( A study carried by the World Bank estimates the progess in the annual poverty reduction rate due to direct and spillover effects of average houseshold income increament(Ravellion, 2001).
Within the 26 years i.e. by the year 2034, the poverty level falls to 1.6 percent from 59 percent, other variables are supposed to be constant but not adverse. On the national scale too, the carbon trade can have a significant importance in bridging the resource deficits for the development finance and poverty reduction. It is estimated that the forest occupies about 4000000 ha of the total land of Nepal. The average carbon
Sequestration capacity of the existing forest is 1.88 tChayr-1 in the mountain and the hilly areas whereas 2 tChayr-1 in the Terai (ICIMOD, 2007 and Aune,et. al.,2005 in ICIMOD,2007). The national average sum up to the value of 1.94 tChayr-1. This could earn the revenue of NRs. 4.5billion, 11billion and 18.4 billion at the rate of $5, $12 and $20 per ton CO2 sequestration respectively even if half of the existing forest area could register for the carbon credits.
A similar glimpse of hope exists in the area of the Leasehold community forestry sector of Nepal. About 40000 ha of degraded land of Nepal can be suitable for the R/A projects recognized by the Kyoto Under its CDM projects. Dhungana (2008) estimates the annual income could be US$ 1.2 million to 2.4 million if the half of the degraded forest land of Nepal in 22 projects district of Leasehold Forestry and Livestock Program (LFLP) is brought under CDM for the carbon trade under the voluntary scheme of the Kyoto protocol. The potentiality to generate additional revenue through the LF could be even higher if a half a million hectare (Singh, 2004) of the degraded land is leased and processed for the Carbon trading. In addition to the above, Nepal can be at a position to reap a huge chunk of the financial flow through the sale of the permitable average which has surplus of 0.07 tCO2 per capita if the mechanism could be established under the emerging issue of the PES and Polluter Pays Principal.

Based on the research carried out by author.

Climate change refers to any significant change in measures of climate (such as temperature, precipitation, or wind) lasting for an extended period i.e. decades or longer ( It is widely found to denote the extreme climate variability of events and state of climatic condition. Global climate change indicates a change in either the mean state of the climate or in its variability, persisting for several decades or longer.
Climate change may result from:
• natural factors, such as changes in the sun’s intensity or slow changes in the Earth’s orbit around the sun;
• natural processes within the climate system (e.g. changes in ocean circulation);
• human activities that change the atmosphere’s composition (e.g. through burning fossil fuels) and the land surface (e.g. deforestation, reforestation, urbanization, desertification, etc.)

Present Trend
Overall, the last 100 years (1906–2005), global temperature has increased by 0.74°C.It is predicted that the rise of temperature in the Indian continent in the end of 21st century will sore up to 3.5 to 5.5o C (IPCC 2001).11 of the last 12 years (1995-2006) rank among the 12 warmest years since then (Kettunen et al., 2007). Analysis of existing temperature records already shows an increasing trend of 0.0597 ºC/yr in Nepal. The projected changes above the baseline in such models show average increases of 1.2ºC for 2030, 1.7ºC for 2050 and 3.0ºC for 2100(OECD,2003). The climate variability record of Katmandu valley shows significant changes over recent five year span. The maximum temperature during January of 2004 was recorded 18.30 but it has rise to 24 in this year. The cold days were marked to have temperature of -10 C in 2004 but the coldness did not shrink below 1.20 C ( Kantipur, Jan 22,2008).

Evidence and Indicators
Climate change is evident more significantly in the recent decade. Both physical and biological events and processes point towards the change. Global warming, glaciations, and ocean variability indicate such process of unifocal changes. Biological components such as pheology, “Black beaching’, and tree-line shift (Xu Jianchu et. al., 2007) are the most sensitive indicators to respond towards the changing climate. Most of the evidence is indirect—climatic changes are inferred from changes in indicators that reflect climate, such as vegetation, dendrochronology, ice cores, sea level change, and glacial retreat.There are many observations of increasing air and ocean temperatures, widespread melting of snow and ice, and rising sea levels.
Industrialization is a boon of development to certain context. Yet, the human incapability to predict its future consequences of mismanagement of byproducts such as gaseous exhausts is infact, leading towards destruction of the only ‘living planet’. Green house gases (GHGs) are scientifically proved as the most critical players in global warming. This is mainly due to human activities, such as the burning of fossil fuels, land use change, and agriculture. For instance, global greenhouse gas emissions have grown markedly since pre-industrial times, with a 70% increase from 1970 to 2004 alone. The figure leads to significant high and rose up to 370ppm of CO2 from 270 in the onset of the revolution.Without the greenhouse effect, Earth’s average temperature would be -0.4°F (-18°C), rather than the present 59°F (15°C).
Population growth rate is in line with the trend of sky rocketing. Commercialization and consumerization of human society is blamed to influence the exploitation of the natural resources and alter the natural process of regeneration and balance. In addition, mass destruction of forest in the recent decade has fuel up the emission trend. The natural sink of carbon has turned to the source of CO2, which is acknowledged recently as one of the leading cause of global warming. It accounts of 18-25 percent of overall anthropogenic emission of the gas.

Climate change will affect all natural and man-made systems to some extent. For instance, it is an observed phenomenon that the rise in temperature has increased melting of snow and glaciers retreat, hydrological and biological systems are changing. Migrations are starting earlier, and species geographic ranges are shifting towards the poles. However, the impacts on individual sectors or regions will vary depending on the sensitivity of the system and its adaptive capacity. Experts of climate change indicate the following sectors most likely to bear direct and cumulative effects as consequences (Australian Greenhouse Office in 2005):-
• Agriculture – includes cropping and livestock sectors. A study carried by UNDP reports that agro products will decrease by 30% by mid of this century.
• Biodiversity – includes national reserves, species diversity, ecosystems. It is predicted that 2.4% of biodiversity of Nepal may be lost with climate change (MoPE, 2004).
• Coasts – includes fisheries, marine life (Great Barrier Reef), coastal infrastructure,
• Forests -includes natural and plantation forests
• Settlements – includes infrastructure, local government, planning, human health, transport, energy, emergency services
• Water – includes drought, water quality, water supplies, and variability of river runoff. GLOFs may be a critical consequence of climate change. 15 GLOFs outburst cases has been reported in Nepal (Samjwal, 2007).

National Policy on climate change
At the national level, Nepal has no specific policy documents dealing with climate change. Nepal’s National Communication to the UN Convention on Biodiversity (UNCBD), to the UN Convention on Combating Desertification as well as its report to the World Summit on Sustainable Development (WSSD) make only marginal references to climate change. Nepal is a signatory party of United Nations Framework Convention on Climate Change (UNFCC) but the strategic deal with the climate change is yet realized in legislation. Sustainable Development Agenda (SDAN) acknowledges the vulnerability situation of Nepal to climate change, natural disasters, and environmental degradation but concrete action plan to mitigate the climate change and its consequences are far from the priority.

Way Forward
It is a high time to develop a subjective and quantified ranking of the probable sector of climate change based on impact certainty, urgency, and severity. Government can apply a wider variety of policy tools to create incentives for mitigation action. It can range from regulation, taxation, tradable permit schemes, subsidies, and to voluntary agreements. It is important to consider the environmental impacts of policies and instruments, effectiveness, and institutional feasibility.
National policy should be able to lay the foundation for future mitigation efforts. Adaptation strategy is linked to the immediate short-term action oriented steps to reduce the severity of shocks. Mitigation strategy should be envisaged and formulated in such a way so that it reduces the impacts and build resilience capacity. Natural barriers to such change should remain the focal agenda in strategic vision. Development policies need to contribute to both climate change mitigation and sustainable development through remarkable drive to energy efficiency, renewable energies, and conservation of natural habitats is essential. In general, sustainable development can increase the capacity for adaptation and mitigation, and reduce vulnerability to the impacts of climate change.
Adaptation Adjustments in ecological, social, and economic systems in response to the effects of changes in climate are the most for reducing frequency and severity of impacts. As far as vulnerable ecosystems are concerned, adaptation requires flexible management practices to enhance the inherent adaptability of species and habitats. It is expected to reduce trends in human-induced pressures and reduce significantly vulnerability to climate variability and change.
a) Formulation of National Adaptation Plan of Action with due care of vulnerable sectors
and prioritize areas of initiatives and action
b) Supporting community led adaptation methods and practices
c) Integrated approach of water resource management
d) Human ecosystem approach to development

However, as the temperature increases, adaptation alone is not expected to be able to cope will all projected effects. Mitigation measures help to avoid, reduce or delay impacts, and should be implemented in order to ensure that adaptation capacity is not exceeded.

a) Reduce emission through fixation of emission ceiling target applicable to industries and help achieve
the goal through innovation of eco-friendly technology
b) Formulation and implementation of legislation and necessary legal instruments based
on strategy such as Payments for Environment Service and Polluter Pay Principle
c) Development of alternative technologies in the energy sectors
d) Increase carbon sequestration, conservation and substitution through modification of
land use
d) Compatible national policy development with Kyoto Protocol (KP) and beyond for
emission reduction

Scientific support
a) Development of regional climatic variation model and establishment of scientific
research centers
b) Strategy formulation on disaster risk mitigation and reduction strategy with focus on climate change.

By: Sushil Kumar Bhandari
It is obvious that the one who toils should reap the benefits of the effort. Too often, the issue on claims over benefit gets limbo without a reason, totally due to lack of proper mechanism on resource decentralization. Carbon sequestration points towards same classic trend as it move towards Carbon trade. Carbon offsets by the Community Forestry (CF) in Nepal has been envisaged as a high potential enough to attract a huge chunk of pie. This definitely raises the issue of benefit-sharing between the forest user groups (FUGs) and the government. Policy on the degree of ownership over the local resources is still controversy and this ambiguity fuel up debates and may emerge out to conflict. Researches on carbon sequestration capacity of community forest in Nepal indicate towards high capacity. The figure is as high as 3.1tC/ha/yr in Nepal and its variability depends upon the vegetation and crown density of the forest through different ecological region. The data reveals the sequestration as 1.13 tC/ha/yr at Manang, 1.41 tC/ha/yr at Lamatar, 3.1 tC/ha/yr at Illam and 2.25 tC/ha/yr at Terai (Mean).

Community forestry in Nepal was initiated through handover of degraded forest area. So, there was a little need for a generous discussion about the right of communities to benefit commercially at the stage. The extension of CF in Terai i.e. high value, taxes on surplus timber sold. This implies the government policy to provide the right of community for non-commercial use but restricts the commercial gain of their endeavors. The compensation for the carbon sequestration from the forest indicates the possibility towards the huge revenue generation. A research carried out in Lamatar area of Lalitpur district has come up with interesting figure. The study indicates towards the raise over five folds of revenue in comparison to the existing income of the forest. The study depicts the comparative financial study; NRs. 193494 against the income of NRs. 37868 of 2005/06 and 220388 against NRs. 39690 in 2006/07. This is enough to provide the commercial scale benefits to the local people. This probable revenue of significant amount is still undermined in CF policy of Nepal. Resource deficit has been forwarded as a constraint in smooth sailing of development works in Nepal. The source clearifies the promising sum in development finance and financial tool to achieve overriding national objective of poverty reduction.
It is worth enough to raise the issue of the probable conflicts in the near future in the resource sharing and the revenue claim. It is the right time to formulate and develop the rational policy governing the issue of the ownership of the carbon sequestration and the mechanism to institutionalize the process of revenue sharing and the risk pooling.

By: Sushil Kumar Bhandari

Energy is the backbone of an economy. Its availability and consumption reflects the level of development of a nation. The catalytic role it plays in advancing traditional economy towards modernization has escalated its demand. It is a vital input in the process of socio-economic prospects of a nation–the higher the availability of energy, higher is the level of development and vice versa. It is obvious to think of electricity in Nepal when we talk of energy due to its dominance. Renewable and environment-friendly nature makes it the most preferred energy source at the consumer ends. It is a basic input in production process in agricultural, commercial and industrial sectors. Therefore, it demands wide attention on part of all sections of society for uninterrupted service delivery at affordable prices. Recognizing its importance, various international agencies such as United Nations Development Programmed (UNDP) has given due weight to per capita electricity consumption in concluding Human Development Report (HDR).

Energy consumption by source in Nepal can be divided into three categories: traditional, commercial and renewable. The traditional source meets the bulk of total energy consumption with an 85.5 per cent share, followed by commercial and renewable energy sources at 13.54 per cent and 0.61 per cent, respectively. Fuel wood, agriculture residue and animal residue provide 88.68 per cent, 4.85 per cent and 6.47 per cent of the total traditional energy consumption, respectively.
Figure 1 Comparative status of per capita electricity consumption (KWh) among some SAARC countries
The hydropower generation potential of Nepal is estimated at 83,000 Mega Watts (MW) among which 42,000 MW is a commercially viable capacity. At present mere 0.75 per cent (i.e., 619 MW) of its total generation capacity is exploited. All 75 districts have access to electricity facility (MoF, 2007). The Nepal Electricity Authority (NEA), the state-owned utility has coverage of 41.5 per cent of the total 48.5 per cent people access to electricity. Nepal is at lowest in the list of ascending hierarchy in per capita electrical energy consumption among the other SAARC countries which accounts just 68 KWh in 2003, a slightly inclined from 35 in 1990 status.


National energy demand of Nepal is 11.6 million units. The energy system manages to support demand of 6.2 million units of energy which account to be 55 per cent of the demand. The total installed capacity of hydro plants is 619.38 MW and runs with production capacity of 276MW at present. The annual demand of electricity has been steadily inclined by 9.3 per cent which indicates the new plant of size 60-80 MW addition to meet the growing need of domestic market. It has been a tough time to NEA to manage even 326 MW power at its mettle. The shortage of 534 MW power over the demand has pushed to darkest years in the history of electricity development and crippling hours of lead shedding has slowly turned to be way of life among people. Thus, Government of Nepal has declared ‘National Electricity Crisis’ in Nepal. The future projected demand points towards sharper inclination with no significant projects to deal with in the pipeline.

Figure 2 Supply, demand trend and installed capacity status of electricity in Nepal
When we look on the source of present electricity supply, fig.2 depicts that mere 326 MW power is available being run-off-river type plants the greatest contributor accounting 70.5 per cent on its share. NEA has observed a good number of consumers within time span of fiscal year 2062/63-2065/66 accounting 1.6 million which is increment of 25 per cent. The production side remained at shadow and just 1.3 per cent (7.85MW) power addition was installed during the same period which has asserted a huge pressure in smooth supply of power. Government has managed to contribute about 400 MW, 50 MW by national private sector and rest by international investors.



3.1 Supply lag over demand
Supply shortfall over the demand of consumer is the immediate cause of present load shedding. Demand is inclined steeply specially in the few past years where urbanization is rapid. Annual energy demand has crossed an average of 9.3% growth. Present demand exceeds over 808 MW where NEA toils to manage 326 at its best. The shortage of 482 MW pulled country to severe energy crisis and power cuts is being tending to way of life among Nepalese territory. The future need is marked on time yet the prospective plants to support the escalating demand failed to develop. The cumulated shortage remained far back and larger plants option remained only one to support the present trend.

3.2 Monopoly of NEA
The singly entity dealing with the power sector in all its three forms of development tag Nepal Electricity Authority (NEA) with the monopoly power to exercise in the energy market. Production, transmission and even distribution through national grid are the solo responsibility of NEA. Butwal Power Company (BPC) is a private enterprise which is involved in the distribution confirms within few districts with small section of coverage. The responsibility of NEA is observed to be beyond its capacity as opined by many stakeholders whose claims is supported by its inefficiency to grow as expected. The higher technical and non-technical losses of power generated and the weakening financial status threats even its future existence. Nayapatrika stated quoting Mr. Ratna Sagar Shrestha that at the efficiency of NEA to invest on 70 MW from its revenue private sector could able to generate 240 MW. Within the 24 years of its establishment (2042 B.S) about 270 MW capacity plants for electricity has been installed.

3.3 Resource deficit
Power production is heavily constrained by the availability of financial and human resource. A huge investment is deserved to carry out a project. Financial resource is set forth as the leading constraints in the power production given the high per capita energy production but the degree depends on the scale of production. The sector is envisaged as a lucrative area by private sector and even the interest of private sector to carry large projects such as Upper Tamakoshi is the recent event which is enough to answer rightly to skeptics over internal resource management. Resource analysts opine that financial resource is a manageable constrains to tackle but visionary leadership and guts to get the right thing done is much to do on it. The average cost of per KW hydro-electricity production is US $ 2481 which itself is higher figure in power production.

3.4 Inadequate private investment
Partnership with the private sector is the best possible way to fill-out the resource constraint in the liberalized economy. Resource in the private sector needs to channelize in the productive sector of national interest. Although private sector accepts power production is a lucrative sector to invest yet only about 24% of the total installed capacity is carried by national and international private sector. There is a huge trend of holding license of river intended to carry out projects after the Electricity Act, 2049 B.S but a very few gets the work done. Within the last three years, NEA manages to do Power Purchase Agreement (PPA) with just 12 MW capacity projects. Till now, there has been 46 number of PPA contract yet 18 has completed their project with 158MW out of targeted production of 266MW. It is a matter of enthusiasm to have 64 purposes for PPA at NEA desk with the accumulated target power production of 1015 MW which definitely sign towards the future power supply if materialized .10th national development plan period ended up with installation of just 39.5 (19.5+20) MW electricity out of targeted 214 MW from private investment marks towards inadequate investment from the major player of the sector.

3.5 Failure to meet development target
Policy versus implementation debate is not a new discourse in development debate while reviewing any shortcoming. Same fate evoke out even in the power development sector in Nepal. Vision to develop set target of power production in different plan period has syndrome of far away from achievement in return. 10th development had aspired to gear up the sector and push up installed capacity of 315 MW but about 40MW rest in hand as achievement with zero addition from government sector. The ninth plan resulted out with better figure of 216 out of set target of 268 MW. The figure 4 shows the failure of 10th plan in energy sector and accounts lag of 375 MW which is a blunder inefficiency triggering the darkening days left to behind to come.

3.6 Seasonal variation supply
All except one power plant are run-off-river water feeding nature. The acclaimed capacity is of 619 MW at present is just installed maximum strength. The plants are heavily depended on the nature and its production is directly proportional to precipitation level. During the winter where volume of river water declines drastically, so does the generation of power. The run-off-river type just supports 230MW whereas the reservoir type Kulekhani manages output of 46 MW. This reduction of power generation in dry season puts heavy pressure to manage demand where power demanded is at its apex.

3.7 Lack of timely maintenance
Most of installed plants run far below their installed potential. Frequent breakdown of sub-systems, low generation due to inefficient appliances and alternatively use of generators due to long maintenance duration are single or collective cause of the state. There is a tendency to point towards inadequate rainfall being the cause of load shedding. But most of the plants have never attempted to generate power at its claimed installed capacity. The national capacity of installed power is 619 MW but there is no evidence of production above 530 MW even in the flooding season. Thermal plant of 56 MW capacity ran maximum output of 19 MW, Trishuli of 24 ends with record output of 18, BhoteKoshi struggle at 14 out of 36 are few on the list. This inefficiency rests on negligence over timely maintenance of turbine and generators.

3.8 Lack of Chain-development initiative
As the demand of power has been soared up, development of plants in a chain order –one after the other within the construction phase of previous is obvious alternative to manage demand and avoid power cuts. Higher capacity plant needs a longer time, the annual demand of 70-80MW can be met only through chain development of projects set in pipeline to install. As the return start to achieve from a project, it deserves the capacity to develop another. The chain effects on strengthening capacity can be achieved if new project is formulated by the end of ongoing project completion without wait of 3-4 years period of project preparation.


4.1 Withering linkages
Energy is an important input in production process in an economy power shortage has bound industries to cut down production heavily if not shut sown factories both service and goods reduction industries of small to larger scale have been struggling to exist. There has been threat of shrinking job opportunities and even job cuts. The backward linkages established as direct or spillover effects of power plants in the form of job opportunity and raising income is at threat as the plants are running down the expected capacity. The industries which rely on such power are unable to meet their optimum production and are severely subjected to condition of energy supply trend. Government has hardly manage to provide relief to industries within the industrial corridors to some extend but situation of larger number of factory lies outside remained as a victim of sever shock.

4.2 Reduces national revenue and income
The power cuts has drastically declined the production the revenue of government collected informs of taxes and fees /prices is being low. As there is direct as well as spell over effects of hydro projects in GDP and per capita income, the development in the sector helps to ease the livelihoods of people and increase the income. Economic loss of about 32 billion is stipulated in the last fiscal year where load shedding of 430 million units was observed as press statement of Ministry of water Resources stated in Poush 10, 2065. Alarming figure of economic loss is pointed towards further increased to 45 billion in this year if the power cuts reached to 600 million units at the cumulative loss rate of Rs. 74 per unit power cuts. If the trend couldn’t be reversed, the shortage of electricity drags national economy severely toward downswing stage.

4.3 Cut-down of jobs
There is no authentic report on the job cuts due to lack of research on impacts of acute power-cut shedding yet it an observed suffocation in retaining employed manpower within. Due to weakening financial strength many workers have already been laid off and is seems to continue unless regular power resumes.

4.4 Increment of social crimes
There has been frequent report of increased social crimes such as incidence of theft rubbery at the time of load shedding. This has put more pressure to maintain law and order in society.

4.5 Reduction in investment
Power is a pre-condition for investment. Server handicap in power supply bound any investor to think several times about their investment security before commencing any projects. Nobody takes risk in form of killer assumption and bold enough of launch new investment in such circumstances. This has significant role as a push factor for capital flight.


5.1 Institutional development

Effectiveness of single existed institution with empowered monopoly power definitely faces questions on its functions. NEA as the single authority in production, transmission and distribution of energy criticized for being unable to conduct its function with satisfaction as expected. Definite specialized institution with dependent but segregated authority and responsibility is continuously demanded in order to rejuvenate the sector. The ongoing problem definitely doesn’t deny the fact of failure and supports the voice to arrangement of independent entity in-charge of energy development. The lack of institution particularly dedicated to power sector under the ministry of water resources is infact, undermines the sector.

5.2 Alternative sources
Energy in Nepal has been envisaged as hydropower due to its potentiality and coverage. Till date, alternative sources of energy are taken as for rural setting where national grid takes years to connect. Harvest of solar power help even the urban dwellers to meet their household demand.

5.3 Public-private partnership
It is the only way to generate resources to fill the resource gap prevailed in development sector in Nepal. It curtails aid syndrome and sever conditionality intermingle with it. Power sector has not aloof from the scene if not worst suffered. The yearly loss to NEA eventually Nepal of 1.75 billion from Khimti is a tough blow on financial status, is one among others, to hike tariff rate of US $ 8.96 cent being seven folds as compared to Bhutan, double of Bangladesh, 73 per cent greater as that of Pakistan. It strengthens the need of internal resources arrangement to carry out project as much as possible. Chilime is an example project developed through internal finance and human asset which create enthusiasm and confidence on Nepali nationals over the capacity to produce electricity. Upper Tamakoshi has been pulled in debate although the financial arrangement was claimed to have already managed through internal finance. Some points towards suspicion that the sudden inclined budget estimation curve is in fact tool to bypass the internal resources and deviate away the national spirit of confidence and attraction on power development build after the success of Chilime. It lay out question that is it not a rational to encourage internal resources rather than outsiders in such lucrative and sensitive area of development. Private investment of 500-600million can easily be attracted in the power sector. The national banks and financial institutions claim the annual capacity of 15 billion and eventually contribute generation of 150 MW as excerpt by Monoj Goyal, the CEO of Clean Energy Development Bank. He further adds that even they can ensure financial instruments needed to carry out single project of 50 MW within the periphery of internal resource mobilization under the conducive environment prevailing.

5.4 Political commitment
Political commitment is the must for sustainable energy development consensus based policy on energy sector is needed among the brands to capitalize national potential. As political instability and interference on energy project continue, there is no way out to end power cut in near future. Selection of wrong project with the vested political interest leaves country with high cost to pay.

5.5 Micro-macro project debate
The scope of power plants is matter of national debate even among the policy makers. They clearly saw in two contrasting opinions. Some advocate on small hydro-plants for rural electrification and claims to be realistic, given the present resources constraints and feasibility. The need of larger project is the only options as other urges. It is rational in the present scenario of ever increasing load shedding. The annual average increment in demand of power is not supported by small projects if not developed in chain trend. The so called ‘hydro dollar’ can be harnessed through large capacity project as achieved by Bhutan. Yet, source of finance and associated resources is difficult of manage for such huge capital intensive projects.

5.6 Integrated energy development
By term energy, it is understood hydropower in Nepal. It has dominance coverage in urban household and industrial utility and even the most versatile and eco-friendly nature is the backing factors. The potential alternative sources are not developed at satisfactory level yet manage their existence at rural settings. Integrated energy policy (IEP) is an issue in the situation such as envisaged in power sector now-a-days. The simultaneous development of all possible alternative sources of energy is required to meet the present demand and estimated development of the sources needs to be clearly marked beforehand to guide power development in Nepal.

5.7 Infrastructure development
Access road and transmission line to connect national grid are essential pre-condition for any projects. It is blame that PPA of many projects is subjected to the availability of such infrastructures. License holders and private entrepreneurs are not in position to start their proposed projects due to lack of such infrastructure.

5.8 National electricity Crisis Resolution Work plan, 2065
Nepal Government has realized the intensity of the power cut problem and its effects. It has acknowledged the fact of failure of electricity system to carter its utility to household consumers and the industrial use. At the scenario, the government has forwarded 35 points relief pact on 24th December, 2008. The forwarded plan incorporates 25 points deal with the immediate, 3 with mid-term and 7 with long –term work plan. It is a welcome step, yet is highly criticized in the expert discussion arena and has gained status of hot topics of debate divided in favour and against the issue. Analysts clearly blame the plan failed to realize the need of time demarcation and project identification to manage the problem and develop power plants. Transmission line and plant accessories maintenance, alternative source establishment, import from India, efficient CFL use, reduction in leakage are main issue forwarded by the plan.

5.9 10,000 MW in 10 years- Fact or Fantasy?
It is a welcome policy of government to escalate power development in Nepal. Vast array of its potentiality of the natural resource is rightly judged. Following the previous trend, government has implanted vision of harvesting ‘hydro dollar’ to swing up the national income. ‘Bhutan-type’ strategy on hydro development certainly not only ends the fate of country to go through years of crippling hours of load shedding but also push up per capita income of Nepalese people to respectable livelihood status. If the dream comes true, its spill over effects vitalizes and political slogan of economic revolution can be geared up. There are a good number of hydro experts who are skeptic on the vision to achieve. Nepal, being one of the few Asian countries to start hydro plant a century ago, yet a mere 5MW per year is so far achieved. Even 10th development plan period ended up with just 39.5 MW out of set target of 315 with zero contribution of government directly. It is rational to such suspect, at least given the ongoing trend of power development. It failed to alienate itself from sever criticism as it is understood as a just another whim of political dream to sell in the present scenario where reality clearly depicts the darkest years in the history with 16 hours of power cuts a day.

By: Sushil Kumar Bhandari
Carbon trade, a matter of hot cake in the recent discourse aimed to strengthen triangular relationship – economy, equity and ecology, has clicked in the issue on climate change too. The nature conservationists i.e. the people of third world, making livelihoods with symbiotic relation with nature, has started to raise their voice to get compensation for what they deserve for their role in keeping natural balance. It is high time to recognize the effort if further deterioration of the living planet is to be reversed. If climate change trend is to be controlled, the enthusiasm of the people has to be fuel up through channeling the economic benefits achieved so far at the cost of the commons. Agrarian economy and nature resource based livelihoods of the poor plays a decisive role in combating adverse climate change which deserve due credit without further delay.
Agrarian economy harvest additional benefits from avoided deforestation (AD). Biodiversity protection, preventing soil erosion, and protecting the livelihoods of forest dependent populations are the incremental benefits of carbon trade under AD compensation scheme besides the financial flow and the overriding concern of mitigating climate change.
20.25 percent emission share of globe has been contributed by deforestation. Each year, more than 13 million hectares of forest is cleared (FAO, 2006). The trend is found increasing in the developing world. The ‘conference of the parties’ (COP 11), held in Montreal in 2005 has raised the issue of inclusion of AD under the Kyoto and UNFCCC for credits. The follow up has been done but yet, far away to have come out with concrete positive development on the issue.
The supporting tropical developing countries urged to pay for the AD considering the historical trend of emission from deforestation. The AD positive above the national baseline needs to be credited by the developed countries for the global emission reduction and control globally rise in temperature and thus, climate change. Silva- Chavez (2005) found that the AD has more financial value than soybean production in Bolivia.
Efforts are being made to estimate the ecological and environmental value of the services in order to build mechanism for payment for environment services (PES). It could be a rewarding strategy which could directly contribute in the production of such services. REDD is still in the phase of feasibility analysis (Hall, 2008) which failed to include the ‘avoided deforestation’ within the first commitment period lasting 2012.
It is a newly emerged and advocated issue of global debate in resource conservation and carbon trade. It implies the conservation of forest biomass unless other otherwise degraded under considering the trend of deforestation it is yet not incorporated by CDM or the voluntary scheme. It is wider in scale i.e. national or sub-nationally envisaged to operate unlike the project based intervention of CDM and voluntary scheme is a purely market based instruments where addition of a ‘social responsibility’ represents an unwelcomed elements of constraints. It is still unclear, yet , REDD encompasses some degree of poverty component. It needs a special institutional coordination which ensures better redistribution of benefits to local entity. Whilst the REDD aspires to secure the offsets forest –dependent poor as well. But it is seen to be a good and effective way of preserving the rights to compensation of the globally influencing exemplary activities. It is a glimpse of hope after proposal of Nepal to recognize forest within her territory and include in the Carbon trade under the REDD is accepted along with the some other countries by the World Bank. It is welcome step though being late and continuity of such tools further strengthen the nature-livelihood ties in win-win situation.



Anthropocentric conservation approach is taken as the end spirit of the community- forest program of Nepal. It is expected to be a cornerstone of subsistence in the ruralhouseholds of Nepal. Ecological services and livelihoods support are the twin objectives of thforestry program. This study examines the possibilities of further enhancement of the local livelihood by possible extension of its scope of revenue. Carbon trade aspires to deal with possible emission reduction and compensate the efforts to aid in global fight against poverty. The quantitative and qualitative analyses adopted for the study are based on the primary and secondary sources of information. Total respondent of 26 households out of 63 were chosen to incorporate 50 percent of each existing three socially stratified groups i.e. caste among the CF members. Understanding gist of carbon trade, analysis of existing legal and non-binding rules and policies, poverty scenario of the research site and the potentiality of the Kafley community forestry to generate additional revenue that could be used to break the vicious circle of poverty if their efforts of conservation is compensated, were the objectives of this research work.

This study shows the high potentiality of the forest to generate revenue from carbon trades in Nepal. The income of the forest could be increased to more than five folds of the ongoing trend of revenue generation of the CF if it is recognized under the framework of mechanism such as Kyoto protocol. Kyoto has recognized the leasehold forestry under A/R through CDM but yet the poor people are far away to reap the benefit. Proper institutions and their functioning towards the area could lead towards the benefits. At national level too, carbon trade could have a share of large chunk in development budget. Provisions such as A/R and AD, if Nepal could lobby and utilize, could attract a significant financial inflow. PES and ‘Polluters Pay Principle’ could be further institutionalized to achieve sustainable development, poverty reduction and mitigation of environment consequences. The further inability of emissions regulation mechanism such as Kyoto to incorporate the development for conservation efforts to turn as conservation for development in the livelihoods of poor may cost a high in the next day. This study concludes that community forestry has potential to generate huge revenue to act as a source to fill the resource gap in the development finance of rural Nepal. It is sure to acts as a positive catalyst to increase the rate of poverty reduction to achieve the overriding national aspiration of poverty reduction. Further lobby can shape new anthropocentric framework after Kyoto too, integrating environment, economy and equity. Thus, the suitable mechanism establishment, national efforts and suitable policy responses helps to reduce transaction costs and turns a good share of pie as compensation for the conservation efforts.

In the process of economic shift to openness especially after the downfall of Soviet Union, it is the conditional obligation too, to Nepal to adopt free trade in order to integrate its economy with the global framework. Nepal had to lose much more if it was a closed economy. Economic interdependence aided by the new perspective of development as the right of people to have access and to choose among the broader options to fulfill wants trigger the need and necessity of Nepal to catch up the train of global wave. So, it is rational to field the best policy options favorable within the framework rather than analyzing the decision itself.

During the 1980s, a new economic order based on the free trade market ideology was promoted. The intension was to create small government through deregulation, privatization and liberation. This neo-liberalization advocated to address slow growth, poverty, unemployment and economic instability being faced by the then world economy.
Nepal has been experiencing some positive changes after its liberalization and free trade in 1980s through Structural Adjustment Programs (SAP). The trade to GDP has increased from 30.4% in 1982 to 47% in 2002. It has been much supported by import than export. This shows larger volume of trade transactions. Remittance is the national economic backbone which sustained our economy even in the very critical socio-political crisis. The trade openness on service provided employment to the larger section of Nepalese youths. 12% share to GDP was contributed the remittance in 2003/04. It is estimated that about one to two hundred thousands of new entrants in the job market every year has been absorbed by overseas employment which accounts to be 50% annually. There would be a drastic turmoil in the Nepalese economy if there arises any disturbances in the area. Nepalese trade structure has experienced a much more shift from its primary to manufactured goods. Share of primary goods reduced from 56.2% in 1985 to 12.9% in 1995 and 9.7% in 2006/07. This shows the modernization trend in the Nepalese Industry and trade although the huge share of the outcome is from manufactured goods such as ready-made garments and carpets.

Nepal is at vulnerable position while dealing with process of economic integration at international trade level. Small economy, difficult topography, and far from the international markets are the general economic related trade characteristics which strike it as a minor and weak player in the international trade. Nepal is in weaker position and weighted lightly in international market although its comparative advantages exist to benefit from trade integration and free trade. The comparative advantages need to be harness as competitive advantage to boost up the economy. Low levels of skill and technology leading of low productivity , poor infrastructure, few linkages between productive sectors and lack of adequate financial sectors to provide necessary capital at reasonable interest rate are seems constraints in holding back its economic development.
Nepal is a minor player in the international trade. It is vulnerable due to its limited export items. So, it has been a ‘price taker’. For instance, Nepal had been making a huge foreign currency earning from garments and carpets until 2004 under the provision of Multifibre Agreements (MFA). As the quotas lifted off, the export declined sharply by 18% in value and 29% in volume in the very next year, from 40% share of Nepalese export in 2003.
Trade integration has also limited impacts on Nepalese economy. The ‘enclave –type’ growth pattern on certain sectors such as vegetable ghee, copper, pulses don’t have sound spillover effects on broader economic arena. Nepal aims at reducing poverty through agricultural development which is not only the important economic sector of the nation but also a majority of peoples’ livelihood. Due to accession to liberal economic and adoption of the free economic strategy, withdrawal of state subsides; tariff reduction was expected to have positive effects on agriculture sector. But, it shows the negative impacts and the competitiveness ruined due to higher production costs dashing the small farmers to more vulnerable context. The country is gradually turned to food deficit (-187749 m. tons) from the status of food sufficiency, in 2006/07. Similarly, the Gini Coefficient for income inequality shows the sharp inclination accounting to about double from 0.26 in 1985 to 0.47 in 2003 in the urban area.

Nepal has to act as an active state and play a precautionary role in the sensitive way. It should act as a monitor and regulator of market failure and take responsible steps to narrow down the gap of inequity created due to market liberalization and free trade.
Boosting international trade through free trade strategy demands not only capital and technology, but also a capable labor force. It should ensure basic capabilities on its subjects to gear the competitiveness of private sector to take full advantage of liberalization.
Nepal should join the common interest group of countries and demand more flexible options and alter the unfavorable clauses existed with the trading regime. It needs to advocate for a fresh look at the liberalization dimensions extending preferential market access such as EU’s ‘everything but arms’ (EBA) initiatives to foster the benefits. The ‘Aid for Trade’ initiatives and access to meaningful assistance without any strings attached within can help uplift the clumsy momentum of its economy and its development.

Nepal should able to harness its own reform initiatives aided by the World Bank’s initiatives popularly known as ‘putting the country in the driver’s seat’. The collaborative stand is required for changing the hegemonic attitudes and bulling behaviors of the international financial institutions backing up neo-liberalization, which tries adopting ‘one-size-fits-all’ policy approach. A keen eye to international competitiveness needs to be supported by investments for the competitiveness. Social safety nets such as unemployment allowances and government support to search jobs for underemployed and the people loosing the jobs due to closure of incompetent business houses are need of the day to create distributive social justice. Nepal have to identify the ‘niche products’ realizing the comparative advantages to safeguard its economy. It needs to diversify the economic horizon as possible through the diversification of products and markets. Subsidies to farmers but not in the form of reducing the factor cost of production and rural investments can enhance one capability. Nepal has comparative advantages on wage labor and tourism. The selling services across boarder can help to become not only the probable workshop but back office status from the MNCs.
The present global economic synthesis is titled towards pro- liberalization for the development of a dynamic global integration. Therefore, no country aspires to flourish and prospers without accepting the global norms of politico-economic freedom in a non-controlled regime. It is the bitter truth and a fact that Nepalese economy is sustaining at large by the donors assistance. This sympathetic motivational cooperation is not sustaining itself. But, Nepal has no way to escape and run back the track of global integration of its economy. Becoming the member of WTO, through the free trade strategy adoption, it has committed further to liberalized and open up its economic boarder siding its political boarder. It has to stimulate its economic development efforts with self- initiation and move to gear its effort in creating a sound and dynamic backup of domestic environment conducive for capitalizing comparative and competitive advantage. And all we need is Aid for Trade.

‘By means of water, we give life to every thing’ is indeed able to reflect the wisdom in its implication as Koran says. Water has been of no less important throughout the human civilization. Access to water has leap ahead from just a need but as a fundamental right in the present development paradigm. As the discussion and debate goes on, the water scarcity continues to claims lives on other side.

It’s a fortune to have a green revolution to reduce the shock of geometrically erupting population through arithmetically increased production. But the carrying capacity of earth doesn’t show such system, but its reaction in destructive face has started to visualize. Thousands of lives are deprived of clean drinking water and sanitation. This evoked up the water borne diseases as one of the top in intensity for annual lives claim.

Above two thirds of the earth surface is covered by water. It has been a means to satisfy the day to day needs. Livelihoods linkage of water in support of area such as agriculture and fishery, travel and tourism and niche climate stabilization or less fluctuation through maintenance of hydrological cycle proves its significance in the human livelihoods. In addition to direct benefits, the recreational, cultural and spiritual or religious value plays an important role. For instance, in the life of Hindus, water has high significance right from born to the death. Different festivals and Malas are organized at the periphery of river basin and its sources. Fertile floodplains of river banks and source of irrigation are the most valuable economic gain from the water.

Conservation of biodiversity has been an important area of where the value of water is judged. It supports many endemic and globally threatened flora and fauna. It has been serving as a habitat and source of food for the existing living beings. However, human needs to widen the available choices variables and reduce the constraints to access them in the way to do progress in human wellbeing term. The human capability to access water is an important component where other many inherited issue are interlinked. But, when it is an issue of water, it is a far away to talk about the right intermingled to human being at least at the present context of global cry for water. The per capita available water has been sharply declining. One is due to population pressure and other being the weakness in proper management of the resources.

As the resources become scarce the competitions toughen. Survival of fittest (Darwinian principle) leaves the widening gap of the resources consumption. The unjust distribution leads further exacerbate the crisis. Although prevalence of the differences in propensity to consume is common, yet, it has less meaning while unequal power relation persists and the process of increasing gap of haves and haves not continue.

The social ties and harmony gets a new dimension when the antagonism shows its seed. The latent form of dissatisfactions gains its momentum and erupts out as a social conflict. The experiences from history shows that conflicts may not always lead out to functional output, the society faces a problem of mal-adjustment. The situation gets worse when its gets the political color. And sometimes leads to violent conflict.
However, there are some ways a head to have a safe settlement of disputes or provides a safe pass to functional change. As the conflict on water have no strong clues related to Malthusian assumption, but rest heavily on to poverty, inequality, management and power tussle over the resource ownership. Gandhi has rightly marked the resources on earth is enough for everyone needs but not for their greed. Our earth has not run short of water resources to feed its populace. Yet, in our increasingly prosperous world, water has been an issue of conflict and a scarce resource. A proper strategic management of these resources is sure to be assets for achieving success in securing social security of water. An appropriate policy of water supply management such as privatization or public corporate overhead with proper assurance of safety-nets can lead out our society from the vicious circle of water scarcity.

Social security has been weakened due to water insecurity on its citizen. Every person need to be secure in terms of reliable source of clean water enough for the need at an affordable cost inputs. This input may be bear jointly by the states and the consumer, but the affordability of population is a vital component of during the decision related to cost sharing, on the people side.

This social security on water has cumulative effects on other dimensions of human wellbeing. A healthy and productive life of a citizen is an asset of a country which is far more productive than physical and armaments reliability. So investment on the citizen i.e. people through assured means of livelihoods and needs of citizen is a strong foundation of a country’s present and further. The opportunity cost inherited in short fall in social security to achieve healthy and productive human capital is of much higher than the exogenous unfavorable situation on national status.

Water has been viewed as a cross-cutting issue at different roots in social settings. Disease burden and prevalence rate is high among the poor and poor physical settings. The lack of access to clean water at sufficient volume has been a great problem in lives of poor. Ill health associated with the problem of water has reinforces the low productivity of human resources. This furthers the deepening inequality and slow economic growth. As result the ends of extremities becomes a silent killer of the poor lives.

Mainstreaming of water issue to gender has again posses the characteristics tend to drive gender inequity. Fetching and harvesting water for household chores is a female-assigned role in the patriarchal social structure. When the resources get decline, the opportunity cost of fetching water inclines up. This hinders the availability of time of female for productive economic work and education and result reinforces continuation of the sub-ordinate status of women over her counterpart.

Different sets of challenges have been emerged in relation to water scarcity. Millions of people are at vulnerable situation at the context of mounting water stress. It has been suspect to be a life threatening crisis and ruins livelihoods at devastating scale in the days to come if the trends continue. This trend sighs towards the days that are not so far where the politics of water leads to wars.

Works has been facing the problem in general and the poor third world in particular. It is a bitter truth that international political development and development trends has put much less emphasis on water. Putting it straightly, the issue of much concerned of the poor has been at the lower end of list of world priority at international development agenda. It may not be a totally unfair statement to if we say that the issue of water and sanitation has less to do with lives of prosperous rich as compared to the issue at lives and deaths of the poor which result out in the difference of priority. Deprivation of water is a silent crisis of the poor living in the marginalized group in the developing countries, which generally have a small voice at international platforms. For instance, the resource allocation at international arena clearly depicts the deviation of large chunk to that issue such as arms and armaments which claims lives much less than the issue of the basic minimum needs of life such as water and sanitation.

Politics of water has created an artificial shortage of water. For instance, Nepal is taken as one of the World’s richest in water sources. The ever- white snow caps mountain ranges has been feeding the perennial rivers on their lap. The potentiality of the river has been undermined at national economy and on spell-over effects on the poor livelihoods. The anthropocentric development initiatives needs to be redesign to have the least minimum environmental effects, if not total eradicate but the whole projects cancellation and again bringing forth after ellipse of some time has not more than postponement of the fruits of development. In the name of any issue it has observed and analyze as an evidence of politicizing the water and its management. Water has been recognized as basic public goods which need to be assured for consumption purpose of households needs by the state. The time and again raising the non-productive issue of public or private ownership has a great implication on the lives of people and the poor particularly.

Cross-border tensions in water related issue has been observed as an emerging issue of conflicts. It has not only remained as the concerned of the water-stress places but also in every corner of the world. International development aid and support has been blamed to subject to the water management and sharing. Rivers are facing the issue of debate as bilateral or international rivers and policy of sharing has been of dispute. Hydrological inter-dependence and sharing benefits at just and rational basis should bridge the gap of reality of the issue related to water.

Management of water has been an issue of great concerned to avoid the probable conflict. The watersheds have been put under the risk. This in turn pushes people and ecosystem to venerable situation of extinction through probable dry up of the sources. For instance, Phewa lake of Pokhara has been acting as a focal attraction of tourists. The local economy and the national GDP of Nepal have been supported by such wetlands at significant figure. Yet, the deteriorating and depleting situation is taken as a great concerned by the local blaming the weakness of the related stakeholders. The overlapping jurisdiction over the water sources has result out to be in care of none. This may give outlet to probable eruption of conflicts from its latent form. Timely settlements of the conflicts with output as a win-win situation through appropriate conservation can give life to the sources of water and is the most urgent need for the sustainable ecological and economic situation. Nothing remains at the end except the time to regret if the issue is not conceived at priority without further delay.

The condition of the minimum responses elicits the further deepening of the crisis. It is the human rights of the poor which is widely abuse through violation with impunity over right to water. The poor section of populaces is systematically marginalized to vulnerability through deprivation.

The power generation through water acts as an economic growth and catalyst in development. It is also entitled to make additional benefits under the framework such as clean development mechanism (CDM). It can act as an incentive to and avoid the polluting energy resources and mitigating global climate change.

In the course of competition on exploitation of resources, such resources tend to be scarce day by day. This increases the value of the resources and thus, paying for environment services (PES) has been observed a rational approach of resource conservation as incentives to the conservation effort. In the above case of implementation, the policy absence on the ownership right between the state and the local people over the water resources increases the tussle leading to conflict. In the present context of national policy heading towards federalism, the conflicts among the state as a resources owner and the consumer is expected to uplift. The right of people over the basic needs may be constraint by the bargain of compensation as seen in some of the states of India. Zero sum game at the context is not expected to have by any stakeholders who don’t want political liquidity and turmoil. Proper management of the resources on time is the only way out to avoid the circumstances.

Just availability of resources cannot capitalize the development aspiration. It needs to be managed in proper way to harvest maximum out of it for development. Timely response to the latent conflict can lead towards just and equitable distribution of water resources. The multiples uses of resources with due care of conserving capacity of nature can fulfill the sustainable demand of resource management. Suitable manpower with essential national policy development of water resources can ensure the continuous supply of the resource reducing poverty, inequality and resource depletion.

So, the research focus on the area of sustainable resource development and socially equitable distribution of the resource can mitigate the probable issue of water related conflicts in the days to come. Resources development through integrated water resource management leads to reduction of probable resource deficit and scarcity and ensure the basic rights of human to water.

Climate change has been an issue of global concern particularly to the poor and developing world. As its consequences gets downhill and worsen the natural resources based livelihoods are threatened significantly and pushed to vulnerable situation. Major new investments are needed to support the environment program to achieve the MDGS. Poverty –environment partnership network has estimated that $60-$90 billion per year is required to address the global environment issuer which is linked heavily on poverty reduction support projects but $3-$5 billion fund is circulated annually in the sector (MDG carbon facility). This brings out the larger gap existed in the finance of the sectors.
MDG is a framework for achieving human development and broadening its benefits. It is numerically set targets under eight goals with time specific nature. Particularly, it relates the aspiration of goal 1, 7 and 8. Target 9 urges for the time to reverse the process of loss of environmental resources by formulating and integration the principles of sustainable development. CF program of Nepal is an exemplary effort towards the conservation and sustainable livelihood strategy. The efforts of the local enthusiasm for local and global services deserve the credit and compensation for the endeavor. It is one of the best areas of intervention to have a symbiotic relationship between the conservation, poverty reduction, and sustainability of the efforts.

The foremost goal of poverty reduction aspires to reduce poverty incidence by half by the year 2015. The annual rate of poverty reduction was 2.15 percent between 1990 to 2004 which is smaller than actual smooth reduction rate of 3.47 percent annually to achieve the target of 21 percent by the year 2015 from 38 in 2000 (GCAP, 2004). A research study carried by the writer of this article claims to escalate the rate of poverty reduction by three-to fourth fold at the research site level and account to about 9 to 12 percent annual against the average of 3.7 percent over the year of 1995/96 to 2003/04.The national promise of reduction of poverty level by half by the year 2015 under MDGs is envisaged to realized with the resource inputs in development sector.

Goal 7 of MDG has emphasized in the sustainable development. Environmental sustainability is a crucial aspect of global wellbeing. Carbon trade can influence the local to involve actively in the conservation of the local forest so that the annual rate of 1.79 percent (ADB) decline in forest areas in between 1990-2000 can be halted. The development of international mechanism of carbon trade puts a milestone in achievements towards target 9 by integrating of sustainable development into policies and programs. The reverse process of the loss of environment resources can be achieved. Biodiversity conservation leads towards the hydrological balance whereby the secure and continuous supply of drinking water is possible. Target 9 urges for the time to reverse the process of loss of environmental resources by formulating and integration the principles of sustainable development. CF program of Nepal is an exemplary effort towards the conservation and sustainable livelihood strategy since its inception phase. The result achieved so far is enthusiastic and sigh towards continuity in same direction. The efforts of the local enthusiasm for local and global services deserve the credit and compensation for the endeavor. It is one of the best areas of intervention to have a symbiotic relationship between the conservation, poverty reduction, and sustainability of the efforts. Target 10 of MDGs focuses on the sustainable provision of drinking water. Forest area conservation leads to proper management of watershed areas conserving the sources of water. The probable water induced conflicts can be managed in its latent stage if resource development and its conservation gain same pace of its momentum.

Goal 8 of the MDGs clearly spells out the responsibility of the developed world to lead the development of underdeveloped area. It calls for the global partnership to tackle the probable consequences of global issues of concern. Goal 8 is taken as the crucial in development. Poverty anywhere is a threat to prosperity every where. It awakens the developed world to lead the global partnership for development through non- discriminatory trading regime (target 12). It visualizes the need of sustainable development finance at international level so that development of underdevelopment and core-periphery relationship as urged by Neo-Marxist doesn’t prevail at international ties. Carbon trade is the trading regime with jurisdiction at local as well as international area. It forwarded the right of the locals to get compensation for their services. So far development strategy has been blamed as a tool of natural exploitation. It lays a cornerstone to change the stigma and development as a human right and right to development can be pursue. Carbon trade can be a working tool towards the vision of sustainable source of development finance.
The environment consequences are non- alienable and impacts equally and the poor particularly. It doesn’t only lay the foundation for ‘polluters pay principle and paying for environmental services (PES) but also bridge the gap of resource deficit society for its development finance. This is a golden chance to break the vicious circle of dependency and aid syndrome. Carbon trade if realized at CF of Nepal, the annual revenue of the CF could increase by 5 times at the rate of $5/tCO2/yr. It could have acted as a catalyst in the way to poverty alleviation. Carbon trade if materialized at CF level can reduce the seasonality of resource availability and vulnerability to livelihoods of the poor. It aids in the lead to make poverty and hunger, a history.
The provision demands for a clear policy and justifiable mechanisms for the carbon trade. The trade in human term, not a sympathetic support to the poor but the rights of them for the compensation for their conservation efforts to tackle the global environment hazards and their management are the rising rational voice of the poor. Paying for environment services and polluters pay principle inherited in carbon trade for emission effects and mitigation through community forest are the concerned discourse and are the only ways for just treatment for environment and it’s conserving agents. The existing sluggish development in carbon finance not only ruins the depleting and deteriorating environment but also acts as a disincentives leading towards emergence of environmental conflicts.

Yet, the days ahead are not as simple as we expect. There is the need of the proper mechanism development at national level. The technical competencies, the institutional base, and the inter-sector coordination are vital in the determination of the range and volume of the financial compensation. The policy problem of recognizing the ownership in between the government and local to sets a framework of sharing of benefits is viewed as a strategic tactic to alleviate the probable conflicts. The degree and volume of commercial use of forest products such as compensation claim has a great implication on the poverty reduction, livelihoods security, and environment ties. A lion’s share of pie is at our doorway and is sure to have a great meaning in national development finance to aid MDGs if initiated without further delay.