ADB_book_18 April.qxp - Himalayan Document Centre - icimod

Chapter 10Environmental FinancingIntroductionEnvironmental financing is a new area ofconcern in Nepal. Once the benefits ofconserving the environment are understood,budgetary allocations for national and localenvironmental programs will increase. At presentenvironmental financing takes place in national andlocal budget allocations. Nepal has realized theimportance of conserving environmental and naturalresources through policies, legal measures, andinstitutional development. Institutions such as theMinistry of Environment, Science, and Technology(MOEST); and the ministries of Forests and SoilConservation, Water Resources, Agriculture andCooperatives, and Industry play major roles inenvironmental programs and therefore inenvironmental financing.Based on the State of the Environment report(UNEP 2001), Nepal has identified 17 environmentalissues of national significance, classified as mosturgent, moderately urgent, and less urgent butsignificant. The most urgent environmental issuesare: land degradation, forest depletion, solid waste,water pollution, and air pollution. The first two issuespertain to rural areas, where over 80% of thepopulation lives; the latter three are outcomes ofhaphazard urban development and inadequateconsideration of environmental aspects duringurbanization and industrialization.Moderately urgent environmental issuesidentified include: dwindling biodiversity, desertification,noise pollution, forest fires, groundwaterpollution, glacial lake outburst flood events, foodsecurity, and alternative energy. Of these, biodiversityand desertification also have long-term implicationsfor food security. Groundwater depletion, particularlyin Kathmandu Valley, has been a major concern.Other environmental problems that are less urgent interms of the need for implementation but stillsignificant include loss of aquatic fish, haphazardurbanization, depletion of biomass energy, andtransboundary movement of wastes.Environmental financing is required inmanaging forests and land resources, and inminimizing water and air pollution. In rural areas,most of the funds are required for the conservation,management, and sustainable use of the naturalresource base, particularly forest, soil, and waterconservation, water harvesting, and mineralresources. As most of the people depend uponagriculture, financing is necessary for promotion andexpansion of sustainable agricultural systems toreduce poverty and to ensure food security.Ultimately, this will reduce loss of fertile topsoil andpromote water retention. In urban areas,environmental financing is urgently required for theimprovement of water and air quality, solid wastemanagement, and reducing noise levels.Domestic SourcesA number of domestic sources could generate theneeded funds. Some of the potential areas are thesustainable use of water resources, and mining ofprecious metals, forests, and wildlife. There are vastpotentials for hydroelectricity generation,development of irrigation schemes, and promotionof navigation and recreational sports. Deposits ofprecious metals can be explored and utilized in anenvironmentally friendly way. In the forestry sector,there is a vast potential for sustainable utilization ofnon-timber forest products (NTFPs) such as leaf,bark, fruits, and roots. Commercially valued plantspecies could also be planted and harvested onbarren or public or private land as income generationactivities. Some of the nurseries developed forpromotion of NTFPs have shown potential fordevelopment and promotion. The public and privatesector have been developing such nurseries indifferent parts of the country. A nursery developedand maintained by the Rural Development ServiceCenter in Doti district can be taken as an example.Protected areas are an emerging sector where ecotourismcould be promoted. Some of the commonwild animals could also be utilized and/ordomesticated and marketed. These funds could berecycled for environmental and natural resourceconservation. The above activities are envisaged tobe undertaken by public-private participation withsupport from donors as needed.Chapter 10: Environmental Financing143