ICIMOD Contributes to Institutionalizing PES Schemes in Nepal

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Hon’ble Minister Shankar Bhandari speaking during the event, explaining that Government of Nepal is highly committed towards institutionalizing PES mechanism
Photo: Naresh Newar

The Government of Nepal is taking steps towards making Payment for Ecosystem Services (PES) a reality. In 2017, the country will discuss PES while working on its 14th National Development Plan.

“I assure you that our government is highly committed to prioritizing PES and institutionalizing mechanisms to implement it effectively,” said minister for forest and soil conservation, Shanker Bhandari at a one-day stakeholder consultative workshop held in Kathmandu on 10 November. 

The workshop, Research-Policy Interface: Incentivizing Communities for Ecosystem Services in Nepal, was organized by the Ministry of Forests and Soil Conservation (MoFSC) with support from ICIMOD’s Koshi Basin Programme (KBP), and the Himalayan Climate Change Adaptation Programme (HICAP), in partnership with Green Governance of Nepal (GGN), and South Asia Network for Development and Environmental Economics (SANDEE). 

Participants included high-ranking government officials, development practitioners, and journalists who discussed how the research-policy interface might be supported to help make informed decisions at the policy level. The focus was on PES, and on how it should be effectively institutionalized at both the policy and ground levels. 

PES is an instrument for sustainably financing ecosystem management to ensure a continuous supply of ecosystem services, where beneficiaries pay producers for the ecosystem services provided. PES has been gaining momentum over the years, and is a priority area for ICIMOD, where the focus is on incentive-based mechanisms for ecosystem services. For the past three years, ICIMOD, with its partners, has been conducting action research in the Koshi basin in relation to valuating ecosystem services, linking upstream and downstream watershed areas, understanding water demand and supply scenarios, and negotiating payment mechanisms. 

The knowledge generated informs the policy making process. The Government of Nepal has already drafted a PES policy where these research findings have proved helpful. The Forest Act 1993 has been amended, and the provision of ecosystem services, and possible payment mechanisms have been discussed. In line with the amended Forest Act, the MoFSC is in the process of revisiting forest regulation. Knowledge generated from action research may be helpful in detailing these provisions.

Although Nepal does not produce significant amounts of greenhouse gases, the Himalayan nation’s ecosystem is under threat. “The most vulnerable groups are those that are directly dependent on land, water, and forests. Policies should be made to benefit these vulnerable groups,” said member of parliament, Rajaram Syangten.

It was in the contexts of knowledge sharing and policy reforms that senior officials highlighted the role of knowledge institutions like ICIMOD and its partners for the Government of Nepal. “We have to go one step forward and discuss how to integrate and internalize PES into our planning process. ICIMOD can make an effort to not only share knowledge but also influence and encourage the government to internalize this process for real impact in terms of the science-policy interface,” said Prabhu Budhathoki, a member of Nepal’s National Planning Commission.

ICIMOD’s research impact on PES services

The Himalayan nation’s ecosystem is under threat and most vulnerable groups are those who depend on the ecosystem services for livelihoods
Photo: Alex Treadway

In 2015, ICIMOD, through the Koshi Basin Programme (KBP) in partnership with Green Governance of Nepal (GGN), initiated action research to identify the role of upstream watershed areas in Dhankuta district, east Nepal, in maintaining the quality and quantity of water flow downstream. The initiative is supported by the Australian Government’s Department of Foreign Affairs (DFAT) through the Sustainable Development Investment Portfolio (SDIP), South Asia.

A ‘Letter of Intent’ was signed by the Dhankuta Municipality in June 2016 as a result of this research. The letter was an official endorsement to help the implementation of the PES mechanism that would strengthen the upstream-downstream linkage between Nibuwa and Tankhuwa villages, and Dhankuta town residents. Dhankuta’s implementation of PES at the local level could be a source of knowledge and learning for a national level implementation of PES, combined with other similar work being done in different parts of Nepal.

While PES has been widely discussed, this is the time for institutionalizing it within the development planning process. 

“Policy makers should be informed by action research with clear guidelines on developing relevant policies, laws and mechanisms. Let’s hope that the forum will be able to produce knowledge that policy makers can translate into policy action which will help implement PES at the local level,” said MoFSC Secretary Krishna Chandra Poudel.

ICIMOD Director General David Molden said that the forum was an opportunity to enter into discussions with policy makers. He added that ICIMOD is ready to support the Government of Nepal to institutionalize PES.