Friday, 7 October, 2022

Green Economy In Nepal’s Perspective: Path Ahead


Ujjwal Upadhyay  / Arpan Gelal

Amid structural, economic and social transition, Nepal holds comparative advantage to orient its economy to a greener path. Nepal remains alarmingly vulnerable to climate change with limited coping capacity against climate induced hazards. With the rapid increase in urbanization, industrial spur and broadening production and consumption base, the shift to greener economy is not only an inevitable alternative for sustainable use of natural resources and consummation patterns, but also achieve the twin goal of economic growth along with environment friendly development practices. Though the agenda of green economy is in forefront in discussion and debates in the form of dialogues and seminars, no significant intervention has been in place to green the economic structure.

Nepal targets to graduate to middle income country (MIC) by 2030 from the present status of lower income country (LDC). To fulfill this objective of gaining the status of MIC by 2030, institutions of the government of Nepal have been focusing on improving human development, reducing poverty, enhancing accessibility to livelihood opportunities along with tackling the vulnerability towards exogenous factors such as impacts of climate change and thereby induced disasters.

Macro Economic Reforms
There is a challenge to combat the impact of the exogenous factor i.e., climate change. The country despite having minimal emission of carbon at global level, is one of the worst victims of the alteration brought by the climate change. To cope with the changing climate and various of its possible consequences, the government has formulated and approved a Climate Change Policy in 2011 and developed a national framework on Local Adaptation Plans of Action (LAPA) and National Adaptation Plan of Action (NAPA). As means of preventive interventions, Low Carbon Development Strategy is under development.

Green economy as a broad macroeconomic reform agenda may induce various trade off in diverse economic parameters. It is often argued that in the verse of greening the economic activities, open unemployment problem may escalate as employment growth falls short of labor force growth. This remains a threat when more than 450,000 semiskilled labor force enters job market every year along with poverty rate standing at 25.16% and worsening inequality with Gini coefficient of 0.49. There is a deemed need of quantitative macro policy analysis on impact of green interventions on employment in diverse sectors of economy. Also, quantitative analysis and estimation of size of green economy and jobs is mandatory for further green reform planning.

The nature of Nepalese economy with predominance of agriculture and more than half share of service sector may not allow the replication of greening efforts of other manufacturing-based economies. With the nurturing manufacturing sector, green development strategy may pose a tradeoff between employment generation and increasing productivity.
This would be more pronounced during gradual shift of workforce from agricultural to industrial sector. This should be carefully analyzed, and the tradeoff could be minimized through the choice of sectors in the economy that are employment intensive and may absorb the mentioned threat. Nevertheless, the choice of patterns and tools of green interventions based on the ground realities of various sectors could direct the green growth.

Climate Responsive Budgeting
Climate responsive budgeting practice has been proved to be an effective tool to promote green practice in various countries. Theoretically Nepal has pursued this strategy. However, with new decentralized governance system in place along with three tiers of government, an integrated guideline for drafting climate responsive budget could be an effective institutional move to green government expenditures at grassroots. On one hand, this could decentralize the greening effort and on the other hand, may lead the incorporation of local indigenous nature friendly knowledge and practices into action.

With the booming entrepreneurship across the country, these local government agencies may play a significant role in promoting green entrepreneurship through related skill development, grants, and subsidies. The issues of transparency and accountability of government officials remain significant role in this grassroot initiative.
The popularity and success of circular economy in various countries including China, Germany and UK among others is another alternative pathway to green industrial practice. The shift from linear approach of ‘production-use-disposal’ to more sustainable production process and management of residuals and unutilized items in the end of production process, not only minimizes the use of non-renewable resources but also significantly reduce the industrial emissions.

This concept is in initial stage in Nepal, sometimes pronounced in the field of solid waste management. However, with effective planning and intervention, this option holds immense opportunity to integrate the various industrial production processes and achieve twin benefit of resource use efficiency and reduced production cost.
However, there remains the issue of practicality in implementation of this model in Nepal. The starting point for this approach could be piloting integrated manufacturing practice in selected industrial areas and if successful and with the lessons learned, upscaling it to new model of industrial areas based on circular model.

Potential Sectors For Initial
Nepal is predominantly an agricultural country, agriculture sector contributing to a third of national GDP and almost two third of employment. This could be the prime sector of green intervention in a sense it remains the potential sector of growth, commercialization, trade opportunity and prerequisite sector for industrial growth. This sector is already green as traditional agricultural practices are less chemical and equipment intensive.
However, the major challenge is greening the agricultural practices to enhance productivity to meet the needs of growing population. The increasing use of chemical fertilizers, genetically modified seeds and fossil fuel based agricultural equipment pose the treat to green practice. The identification and use of indigenous knowledge and practices, climate resilient crop varieties and carbon smart agricultural practices are way forward to green agricultural practices in Nepal.

Although Nepal is rich in water resource with immense potential in hydroelectricity sector, Nepal’s energy need is mostly fulfilled through imported fossil fuels. The phased wise hydroelectricity power plants development remains a prime need towards greening the energy consumption pattern in Nepal.
Moreover, Nepal has potential on other sources of renewable energy mainly, solar and wind energy. It is yet to conduct detailed research on prospect of wind energy across the country and meet at least the local energy needs.
As Nepal is prioritizing infrastructure development for quite some time and as an area of significant government spending, this sector is very much strategic for green economy reform. Infrastructure is also linked with other sectors of the economy.

It is recommended that labor-based option is infrastructure is greener as well as less costly than equipment-based alternative. The use of traditional and conventional labor-based approach in irrigation, soil and water management, erosion control, sewage system could be more effective to reduce the environmental externalities during infrastructure development.
Nepal has comparative advantages on green tourism with natural landscapes and biodiversity as major attractions. Nepal’s tourism sector is already green in many senses. Tourism as a significant employment generating sector and with sizable contribution to GDP, promoting tourism and expanding the tourist destination is vital to create green jobs.

Nepal is popular for ‘eco-tourism’ with integrated conservation initiatives thereby acting as a major source of foreign currency earnings which is greener than foreign earnings from other sectors of economy.
However, haphazard infrastructure development along the tourist trails and introduction of motor vehicles in trekking trails may do more harm than good. Strict provisions for environmental management, ranging from banning the plastics and environment regulatory fee could promote the environmental obligation part of tourism industry. Further, linking tourism with other associated sectors of the economy (for instances- agriculture, beverage, hotel, or garments) may enhance the gains from tourism as well as foster green practice across these sectors.

Transition To Greener Technology
Environment friendly technological landscape is vital to promote green growth. Improvement in technological landscape can direct paradigm shift towards green jobs, green products, and minimization of environmental problems like pollution and greenhouse gas emissions. However, the prime issue for developing countries like Nepal in their journey towards green technology remains the availability of sufficient finance. Meanwhile this technological shift should also entail the goals of poverty and hunger reduction, food security, capacity building and livelihood support systems.

Nepal entails a better prospect and comparative advantage in its transition towards green economy to lead the green growth that is sustainable for generations. The sectoral targeted intervention resulting in greening their products and services is vital to green the production and consumption practices across the economy. The prime concern is selection of sectors of the economy for intervention that is in line with employment creation and that creates broader impact to achieve the twin growth of economic growth and environmental conservation as well as efficient use of resources. The use of green technology and technology transfer across various sectors of economy could jump start the green economic reform.

(Upadhyay is an active environmentalist and meteorologist and has been working as a development researcher and Gelal is a
development researcher)