Hydropower Governance in Nepal: A Social-Ecological Systems Assessment

Abstract

Hydropower represents a coupled water-energy system with complex environment-society interactions, where natural river systems and human-constructed infrastructure impact each other through multiple feedback loops. It also represents a development paradox, where, on the one hand, it is presented as a source of cheap, reliable, and clean energy that mitigates climate change impacts, while on the other hand, it has demonstrated adverse impacts on the environment and local communities. These complexities are especially prominent in a developing country like Nepal, which plans to accelerate hydropower development for energy security and equitable economic growth while managing climate change, environmental justice, and international geopolitics. Despite very high potential and ambitious plans for hydropower development, Nepal has not been able to generate adequate and reliable electricity to meet domestic needs. Geographically, it is located in the highly climatically vulnerable and earthquake-prone Himalayan region. Here, Indigenous people’s livelihoods and customary practices exist in intricate balance with the natural environment – often significantly impacted by the development of infrastructure like hydropower and the modification of river flows. The construction of hydropower in mountainous regions impacts cultural diversity, mainly Indigenous people and ecologically sensitive landscapes. With a fledgling democracy, a new constitution in 2015, and an ongoing process of preparing new laws to harmonize with the new federal governance structure, Nepal has an opportunity to define pathways for sustainable hydropower development. However, this requires careful consideration of interactions among water, electricity, communities, and governance, with the need for evidence-based policies for sustainable hydropower development. This dissertation assesses the social-ecological system dynamics of hydropower governance in Nepal. It investigates human-environment relationships at multiple scales that impact hydropower decisions, i.e., i) how to strengthen climate-resilient hydropower governance, ii) how international geopolitics shape hydropower infrastructure decisions in a country like Nepal that is landlocked between two rising economic and political giants, China and India, and iii) how issues of environmental justice in hydropower projects should be addressed in local communities that are predominantly Indigenous. The dissertation is conceptually rooted in and expands the social-ecological system (SES) framework developed by Elinor Ostrom and colleagues to assess the outcomes from interactions between resource systems (water energy systems for hydropower development), resource units (freshwater resources), actors (diverse hydropower-related stakeholders) and governance systems (laws, rules, and organizations that determine hydropower development pathways). This dissertation uses an empirical study of ten hydropower projects, half operational and half under construction, in the Trishuli River basin in central Nepal. These hydropower projects present significant diversity in the hydropower plants' size, ownership, and financing mechanism. In addition, the dissertation applies content analysis of government documents, local newspaper articles, and scientific journals. For the research, 63 semi-structured interviews were carried out with individuals affiliated with government organizations (15), hydropower projects in the Trishuli Basin and other private developers (16), local community members and local government representatives (8), water and energy experts and hydropower consultants (15), international bilateral and multilateral organizations (5), and local banks and lending organizations (4). In addition, five focus group discussions were carried out with 34 individual participants from local communities. Grounded theory assesses SES dynamics and interactions in coupled water-energy infrastructure development and identifies emerging themes based on empirical findings. The findings show that Nepal's hydropower projects are exposed to increasing risks from climate extremes, including glacial lake outburst floods (GLOFs), extreme precipitation, and compounding impacts of geological hazards, such as earthquakes and landslides. These risks are expected to increase under future climate and impact hydropower development, requiring a shift from conventional water and environmental governance to institutionalized adaptive governance, continuous knowledge building, institutional changes for political and legal reform, and aligning incentives to shift from path dependence to adaptive governance. As a landlocked country sandwiched between India and China, with their checkered history and plans for hydropower development in the Himalayas, Nepal is pursuing hydropower development that is also significantly influenced by the geopolitical dynamics of its neighbors. Due to Nepal’s inconsistent foreign policy and frequently changing governments, its relationships with China and India shift depending on the local political parties who favor an alliance with one or the other country. Nepal will have to move beyond the thinking that hydropower projects are only to generate electricity and rethink its strategy to include the geopolitical nature of hydropower governance, including transboundary water and energy as well as bilateral and multilateral finance mechanisms. Despite the new Constitution of 2015 that added an electoral system to ensure proportional representation of all ethnic people, Nepal has failed to ensure the rights of local Indigenous people, who are significantly impacted by hydropower projects, as shown in this dissertation. Besides, Nepal also has international commitments to the United Nations Declaration of Rights of Indigenous People and the ratification of the International Labor Organization's Convention No. 169 (Indigenous and Tribal People's Convention). However, enforcement of free, prior, and informed consent of the Indigenous people by internationally financed projects is a necessary starting point. We envision that conflicts in implementing such mechanisms are likely but have yet to see how these can be managed. This dissertation advances existing knowledge on the linkages between science, policy, and practice for sustainable hydropower governance. Using social-ecological systems framework, it analyzes hydropower through interactions and outcomes from various biophysical variables and social variables. As part of a coupled water-energy system, it draws linkages between utilization water resources for electricity generation with flow of international investments and geopolitical moves, along with questions of environmental justice in locations with indigenous communities. The research findings are valuable to building climate-resilient infrastructure governance, understanding how international geopolitics shape hydropower infrastructure decisions in landlocked Nepal, and advocating for recognition-based justice in hydropower in predominantly Indigenous locations.