Scale matters: can revenue-sharing improve equity in hydropower development in Nepal?
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Scale matters: can revenue-sharing improve equity in hydropower development in Nepal?

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Soumya Balasubramanya

Soumya Balasubramanya
ASIA 2014
Colombo, March 2014

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    Scale matters: can revenue-sharing improve equity in hydropower development in Nepal? Scale matters: can revenue-sharing improve equity in hydropower development in Nepal? Presentation Transcript

    • www.iwmi.org A water-secure world Scale matters: can revenue-sharing improve equity in hydropower development in Nepal? Soumya Balasubramanya ASIA 2014 Colombo, March 2014
    • www.iwmi.org A water-secure world Why revenue-sharing? • Decisions are centralized; opposition to dam development (Goulet, 2005; WCD, 2000) • Inequitable distribution of: – benefits of dam development (Lin, 2001) – costs of dam development (Wilmsen et al., 2011) • Loss of access (Dore and Lebel 2010) – land – commons • Revenues are a significant source of income; can be re- distributed (Cernea, 2000)
    • www.iwmi.org A water-secure world The Nepal Case • Opposition to dams – mid 1990s – maoist agitation (Dixit and Gyawali) – IUCN coordinates engagement with stakeholders— demand for equity • Introduced revenue sharing in 2001: sharing of hydropower royalties to improve equity in distribution of fruits of development (LSGA, 1999) – 10% of revenues from a project to hosting DDC – 38% of revenues from a project to hosting development region
    • www.iwmi.org A water-secure world Can revenue-sharing improve equity? • Depends on – amount of revenue shared – revenue sharing rule – historical development patterns – revenue spending rules • For a given set of the above; the answer may change with scale – Center vs. periphery – Between districts – Within district
    • www.iwmi.org A water-secure world Methods • Interviews – DoED – WECS, DoSEWM, MoSFC – 4 DDCs (Sindhupalchok, Kaski, Makhwanpur, Mustan g) – Experts (ICIMOD, Winrock International) – IPPAN
    • www.iwmi.org A water-secure world Observations • Rise in revenues collected by central government – Tariff on fixed capacity, esp. for older plans (USD 5 in 1993-94 to USD 14 in 2009-10) – Collection increased 3X (USD 858,000 in 1994-94 to USD 2,454,000 in 2009-10)
    • www.iwmi.org A water-secure world Hydro revenues not significant share of districts’ income Number of Hyd. Rev Number revenue as share of of generating budget districts projects allocation (no.) (no.) (%) Eastern 16 2 0.02 Central 19 13 1.04 Western 16 12 1.08 Midwestern 15 1 0.12 Far Western 9 1 0.53 Source: DoeD, 2012 All prices in 2010 prices, expressed in USD
    • www.iwmi.org A water-secure world Between center and periphery: equity improving Collected Distributed Ratio of Project Non project ('000) ('000) distributed hosting hosting Year (USD) (USD) to collected DDC DDC 1993-94 858 0 0.00 n.a n.a 1994-95 924 0 0.00 n.a n.a 1995-96 1009 0 0.00 n.a n.a 1996-97 1050 0 0.00 n.a n.a 1997-98 1168 0 0.00 n.a n.a 1998-99 1255 0 0.00 n.a n.a 1999-2000 1286 0 0.00 n.a n.a 2000-01 1320 401 0.30 √ Χ 2001-02 1360 424 0.31 √ Χ 2002-03 1438 555 0.39 √ Χ 2003-04 1479 1632 1.1* √ √ 2004-05 1580 3895 2.47* √ √ 2005-06 1699 850 0.50 √ √ 2006-07 1803 901 0.50 √ √ 2007-08 1999 1000 0.50 √ √ 2008-09 2231 1116 0.50 √ √ 2009-10 2454 1227 0.50 √ √ Source: Department of Energy Development, 2012
    • www.iwmi.org A water-secure world Between districts: Reinforcing pre-existing inequities Share in Share in hydrp budget Share Change revenue allocated in Dev Dev in dist. to DDCs pop. index index dev (%) (%) (%) (2001) (2006) Index Eastern Mechi 0.20 5.55 5.4 Kosi 0.25 8.17 8.8 Sagarmatha 0.20 7.47 7.8 0.65 21.19 22 0.493 0.526 0.033 Central Janakpur 16.48 9.25 10.7 Bagmati 22.24 11.38 14.6 Narayani 16.91 7.74 11.4 55.62 28.37 36.7 0.49 0.531 0.041 Western Gandaki 17.48 6.98 5.8 Lumbini 12.92 8.41 10.6 Dhawalagiri 8.84 3.78 2.1 39.25 19.17 18.5 0.491 0.516 0.025 Midwestern Rapti 2.20 5.68 5.4 Bheri 1.13 7.80 6.4 Karnali 1.15 5.73 1.5 4.49 19.21 13.3 0.402 0.452 0.05 Far western region Seti - 7.52 5.9 Mahakali - 4.54 3.6 0.00 12.06 9.5 0.404 0.461 0.057 100.00 100.00 100
    • www.iwmi.org A water-secure world Within districts: depends on revenue spending rules • Districts have flexibility to determine how revenues are spend (and what they’re spent on) – Eg. Mustang DDC: 33% to electrification of Upper Mustang – Eg. Sindhupalchok DDC: prioritizes road construction in remote areas – Makhwanpur DDC: 50% to 12 (rel. developed) villages; 50% for other 33 villages
    • www.iwmi.org A water-secure world Discussion: Hydropower district gets relatively greater share of revenue than non-hydropower district Between center and hydrop-districts Improves equity Between hydro-district and non-hydro Reinforces inequity. Hydropower revenue is concentrated in district areas that have historically been beneficiaries of broader development processes Within hydro district Varies according to district's spending rules. Some districts explicitly earmark revenues for less developed villages; others don't.
    • www.iwmi.org A water-secure world Discussion • Revenue-sharing has likely helped reduce opposition – Recognition that water is a national resource – Conflict over alternative uses is low • Scope for revenue-sharing financing ES programs – Comm. Forestry program is bottom up: improved equity between center and periphery (Agarwal & Ostrom, 2001; Larson, 2002) – Not very successful in improving equity within districts (Thoms, 2008) – May compromise equity considerations • Scale, history of development, pre-existing sociocultural dynamics will determine ability to address equity at different scales.