The site:
Kulekhani watershed of Makwanpur is located 50 km south-west of Kathmandu and is the source of water for the Indra Sarobar lake (now Kulekhani reservoir) that supplies water to hydropower plants downstream. The 92 MW Kulekhani hydropower plant is the only storage-based plant in the country; it provides about 17% of the total hydroelectricity generated in the country. There are about 600 households with over 45,000 residents in eight villages in the catchment area. Most households depend on agriculture and livestock. Intensive agriculture for commercial vegetable production and paddy rice is increasing. Community forests in the watershed are well protected and the forest cover has increased over the last two decades.
The issue:
The reservoir depends on the water from the watershed of 12,500 ha. The four months of monsoon accounts for around 80% of the annual precipitation. Within this watershed, there are settlements and mosaic of different land uses. The land use pattern in the upstream area directly affects the water storage capacity of the reservoir. Sedimentation, caused by intensive agriculture and land disturbance, is the main problem for hydro power plants in Nepal. Kulekhani Hydropower Plant (KHP) also faces the problems of high sedimentation in the rivers and low dry season flow. Economic losses associated with siltation in the reservoir are very high. While many check-dams were built along the rivers to reduce siltation in the reservoir, there had been no program to encourage the upland communities to practice more conservation orientation farming and there were no incentives provided by the hydropower plant to the community forest users for improving the forests.
The legislation in the country mandates all hydropower plants to pay royalty to the central government, and the 12% of this royalty is channeled back to the district that houses the power plant. The District Development Committee (DDC) then allocates this budget, as regular budget, to the Village Development Committees (VDCs) for development projects. There was no acknowledgement of the role of upland communities and forests in providing hydrological services in the use of this royalty received by the government.
PES mechanism:
In 2003 the RUPES program started to work with upland communities in Kulekhani and the KHP to foster a win-win situation based on PES mechanism. Programs (watershed conservation included community forestry, conservation education, terrace improvement and fruit plantations) were implemented to enhance the awareness about environmental services among the local communities and other stakeholders and to promote conservation farming in the uplands. A local Kulekhani Watershed Conservation and Development Forum (KuWaCoDeF) was established to facilitate communication between different stakeholders and to promote conservation. The forum actively pursued and succeeded in developing a PES mechanism based on the 1999 Local Self-Governance Act and the 1992 Decentralization Act. At district level, for the first time in Nepal, Hydropower Royalty Distribution and Use Directive (2062) was issued by Makwanpur DDC to allocate 50% of royalty it receives from the central government to the 12 KHP-affected villages (8 in the upland, 2 in the surrounding and 2 in the downstream areas). This directive also enabled a larger part of the district share of the royalty from hydropower plant to be allocated to upland VDCs (20% compared to 15% allocated to villages in the vicinity of the hydropower plant and 15% to downstream villages as compensation; the remaining 50% of the district budget from royalty is shared with all villages in the district).
The Reward
An Environmental Management Special Fund (EMSF) was established under the Makwanpur DDC that oversees the distribution and allocation of the royalty budget for the KHP-affected villages. This mechanism has functioned for three years although much of the budget from the royalty was used for building roads and electrification in the villages. The budget received in the fiscal years 2006/7, 2007/8 and 2008/9 were about US$ 4300, US$ 56000 and US$ 71,000 respectively. The conflict between political parties at local level is seen as the major reason for the current stalemate in the selection and funding of projects.
On-going Work and Future Plan
A study on local stakeholders’ perspectives and feedback on the progress and outcome of RUPES activities in Kulekhani watershed was completed. On-going work includes review of national policy on royalty from hydropower plants, review of the role, responsibility and involvement of major stakeholders (sellers and buyers of environmental services). A national policy workshop is being planned.
Contact:
Dr. Laxman Joshi
PES Specialist
Email: ljoshi@icimod.org