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National SDG Report for HLPF 2018 on the implementation of the SDGs in Bhutan

(DRAFT)

Gross National Happiness Commission

December 2017

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CONTENTS

EXECUTIVESUMMARY........................................................................................4

Introduction.......................................................................................................7

MethodologyandProcessforPreparationoftheReport....................................8

PARTI:PolicyandEnablingEnvironment,MeansofImplementation,ThematicIssuesandRecommendations..........................................................................101. PolicyandEnablingEnvironment............................................................10a) CreatingownershipfortheSDGs.............................................................10b) IncorporationoftheSDGsinnationalframework....................................10c) AwarenessonSDGs..................................................................................11d) Integrationofthe3SDGdimension.........................................................12e) InstitutionalMechanisms.........................................................................13

GrossNationalHappiness(GNH)CommissionasHighLevelSDGCommittee.........................................................................................13GNHCSecretariatasLeadCoordinationAgency................................13SDGWorkingCommittee...................................................................13VNRTaskForce..................................................................................13

2. MeansofImplementation......................................................................14a) Financing...................................................................................................14

DomesticResources...........................................................................14OfficialDevelopmentAssistance(ODA).............................................15ForeignDirectInvestment(FDI).........................................................15

b) Statisticalcapacity....................................................................................15c) PartnershipforDevelopment...................................................................16d) Science,TechnologyandInnovation........................................................16e) MonitoringandEvaluation.......................................................................17

3. KeyIssuesandPriorityActionsofthe2030Agenda(PolicyandOperational)..................................................................................................183.1 IssuesandPolicyActions.......................................................................18

EconomicAgenda..............................................................................18PolicyAction:EnhancingProductiveCapacityoftheEconomy.........19SocialAgenda.....................................................................................20PolicyAction:RethinkingHumanCapitalDevelopment....................20Environmentalagenda.......................................................................21PolicyAction:MobilizingResourcesforEnvironmentalVulnerabilities...........................................................................................................21

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3.2 OperationalPriorityActions..................................................................22

PARTII:TRACKINGTHEPROGRESSOFGOALS...................................................23Goal1:Endpovertyinitsallformseverywhere.............................................28Goal2:Endhunger,achievefoodsecurityandimprovednutritionandpromotesustainableagriculture.....................................................................30Goal3:Ensurehealthylivesandpromotewell-beingforallatallages..........33Goal4:Ensureinclusiveandequitablequalityeducationandpromotelifelonglearningtoall...................................................................................................38Goal5:Achievegenderequalityandempowerallwomenandgirls..............42Goal6:Ensureavailabilityandsustainablemanagementofwaterand.........45sanitationforall..............................................................................................45Goal7.Ensureaccesstoaffordable,reliable,sustainableandmodernenergyforall...............................................................................................................49Goal8:PromoteSustained,InclusiveandSustainableEconomicGrowth,FullandProductiveEmploymentandDecentWorkforAll...................................52Goal9:Buildresilientinfrastructure,promoteinclusiveandsustainableindustrializationandfosterinnovation...........................................................55Goal10:Reduceinequalitywithinandamongcountries................................59Goal11:Makecitiesandhumansettlementsinclusive,safe,resilientandsustainable......................................................................................................62Goal12:EnsureSustainableConsumptionandProductionpatterns(SCP)....65Goal13:TakeUrgentActiontoCombatClimateChangeanditsImpacts......69Goal14:Conserveandsustainablyusetheoceans,seasandmarineresourcesforsustainabledevelopment...........................................................................74Goal15:Protect,restoreandpromotesustainableuseofterrestrialecosystems,sustainablymanageforests,combatdesertification,andhaltandreverselanddegradationandhaltbiodiversityloss........................................75Goal16:Promotepeacefulandinclusivesocietiesforsustainabledevelopment,provideaccesstojusticeforallandbuildeffective,accountableandinclusiveinstitutionsatalllevels..............................................................79Goal17:StrengthenthemeansofimplementationandrevitalizetheGlobalPartnershipforSustainableDevelopment......................................................82

PartIII:StatisticalAnnexure

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EXECUTIVE SUMMARY Bhutan has made impressive development progress over the last five and half decades culminating into successful achievement of the MDGs and graduation from LDC status. As a constructive member of the international community and Asia Pacific Group’s representative at the Open Working Group on Sustainable Development Goals, Bhutan contributed to the integration of Istanbul Programme of Action’s (IPOA) priorities into the SDGs and Addis Ababa Action Agenda (AAAA). Bhutan joined the international community and over 150 world leaders during the 70th UN General Assembly (UNGA), held on 25th September 2015, in adopting the 2030 Agenda for Sustainable Development. Additionally, during the 70th UNGA, Bhutan was identified as an early mover country (SDG priority country) in the Asia Pacific region amongst other giants like India, China, Indonesia and the Philippines for the implementation of SDGs. At the national level, there is a very high level of integration between the SDGs and Bhutan’s development philosophy of Gross National Happiness (GNH). The three principles of SDGs closely resonate with GNH, a development paradigm that strives to balance the social, economic, environmental and cultural aspects to growth and in which poverty alleviation, sustainable development and people centric progress forms an integral part. The implementation of SDGs requires cooperation from all sectors and every single person in the society. The Royal Government of Bhutan adopted significant measures to create ownership of the SDGs soon after their adoption in September 2015. Policy formulation process of the Royal Government requires all proposed policies to be screened through a GNH Policy Screening tool. The 22 variable that are used by the screening tool to assess proposed public policies are aligned to the principles and goals of sustainable development. Likewise, out of 143 relevant SDG targets, 134 SDG targets were aligned with the indicators of the 11th FYP, excluding targets related to SDG 14 on Oceans and SDG 17 on Means of Implementation. With "Just, Harmonious and Sustainable Society" as the overarching goal, the 16 NKRAs and KPIs of the 12th FYP are aligned to the 17 SDGs, their targets and indicators. Recognizing the importance of ensuring participation and inclusiveness in aligning the national goals to SDGs, the Royal Government carried out numerous sensitization and awareness programs. Extensive consultations and sensitization were also carried out during formulation of the 12th plan wherein sensitization on the genesis of the SDGs development aspirations with the three normative core principles of (1) universality, (2) indivisibility, and (3) “leaving no one behind” was shared with all stakeholders. In view of the indivisibility between the SDG and GNH, it was felt that there was no need to establish a separate institution to drive the SDGs in Bhutan. The 15 member GNH Commission chaired by the Prime Minister, Finance Minister as the Vice-Chair and Secretaries to the ten ministries, the Cabinet Secretary, the Secretary to the National Environment Commission and the Secretary to the Gross National Happiness Commission Secretariat (GNHCS), assumes the responsibility of overseeing SDG related matters at the highest level. To support the GNHC/High Level SDG Committee, the GNHCS has been entrusted with the responsibility to coordinate, advise, monitor, evaluate and report progress on the implementation

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of the SDGs in Bhutan. GNHCS is the apex agency for central planning and coordination of socio-economic development plans and programs. Within the GNHCS, in order to ensure smooth implementation and seamless coordination, a dedicated SDG Working Committee was established. The committee is led by the Director of GNHCS with the mandate to oversee, facilitate and guide integration, implementation and report progress status. The Royal Government recognizes the significance of the role of partnership with multiple stakeholders including the international community, private sector, civil society and the local governments in achieving the Agenda 2030. This includes promoting the roles of community, civil society, and the private sector in contributing to national sovereignty, prosperity and sustainability through development plans and policies. The guideline for preparation of 12th FYP highlights the importance of “Triple C” – Coordination, Consolidation and Cooperation. Furthermore, with eventual decline in ODA, the role of private sector and CSOs in socio-economic development will inevitably become greater. Bhutan also remains positively positioned in strengthening cooperation in areas of mutually beneficial technical and economic cooperation with other development partners. Of particular significance to the future of our development will be the direction of regional cooperation, particularly in the context of trade, transit, and energy cooperation in South Asia. As Bhutan embarks on the 12th Five Year Plan marking its first step towards the long journey of Agenda 2030, Bhutan has three major challenges to be addressed (Economic; Social and Environment): Economic vulnerability stemming partly from slow progress of change in the production structure and export base of the national economy, is an obstacle to the developmental trajectory. Bhutan faces significant challenges in diversifying its economic base mainly because of the inherent constraints associated with being landlocked and small population. The key economic question facing Bhutan over the medium-term is whether it will be able to move away from export concentration in hydropower towards more diversified exports of value-added goods and service, with increased participation of vibrant small and medium enterprises. Completion of the ongoing infrastructure developments such as four industrial parks, expansion of national highways and construction of dry ports remain urgent in the short-term. Effective implementation of EDP in a structured manner supported by adequate resources will underpin Bhutan’s capability to unlock its economic potentials. Positive picture emerged on social conditions by the end of MDG era, particularly on poverty, health and education indicators. However, deeper issues remain behind statistical averages and aggregations in some social condition. While the progress on poverty reduction has been commendable, Bhutan is confronted with the last-mile challenge of eradicating poverty in all its forms. Additionally, it is of paramount importance for Bhutan to ensure vulnerable section of the population do not fall back into poverty due to disaster or any other external shocks. The rise of non-communicable diseases (NCD), substance abuse and suicide/mental health problem among the youth are some of the increasingly growing concerns. On the other hand, Bhutan faces the challenge of meeting the increasing medical cost and sustainability of free health care. In education, the concerns about the quality of education still persists and differences in male to

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female ratio particularly in vocational and tertiary education remain. Moving forward, important qualitative issues need to be addressed, such as improved learning outcomes and matching the demand and supply of skills, especially for youth, in addition to enhanced working conditions. On the environment front, growing demands for water, energy, and food, in addition to climate change induced disasters which are increasing in frequency and intensity, exacerbate the already vulnerable ecology. The conversion of arable land and forests into other land uses is increasing at an alarming rate. Adverse impact of climate change is aggravating water problem and its quality is deteriorating in and around the urban areas. Air quality is deteriorating, particularly in urban centers, industrial area and along the southern border of the country. Waste management is also becoming a major emerging environmental issue for Bhutan.

In response to this, while Bhutan has already launched important declarations and issued favorable domestic policies, legislations and strategies concerning the promotion of renewables and measures to mitigate and adapt to climate change, significant shift in mobilizing domestic and external resources and attracting international investors is required.

At the operational level, harmonization of policies; improving data and statistics management; improving awareness on SDGs and ownership; developing financing strategies and improving stakeholder coordination are some of the important measures that will play vital role in achieving the SDGs.

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Introduction Bhutan volunteered to undertake a Voluntary National Review (VNR) on Sustainable Development during the 2018 High Level Political Forum (HLPF 2018). This report – ‘National Sustainable Development Goals (SDG) Report of Bhutan 2017’, reviews progress of implementation of the SDGs in Bhutan and forms an integral part of an important process and input to the VNR. Guided by the development philosophy of Gross National Happiness (GNH), Bhutan has made impressive development progress. Having achieved a GNI per capita of US $ 2,478.141 and a Human Asset Index (HAI) score of 67.9 in 2015, Bhutan is poised for graduation from LDC status. As a constructive member of the international community and Asia Pacific Group’s representative at the Open Working Group on Sustainable Development Goals, Bhutan contributed to the integration of Istanbul Programme of Action’s (IPOA) priorities into the SDGs and Addis Ababa Action Agenda (AAAA). Bhutan joined the international community and over 150 world leaders during the 70th UN General Assembly (UNGA), held on 25th September 2015, in adopting the 2030 Agenda for Sustainable Development. Additionally, during the 70th UNGA, Bhutan was identified as an early mover country (SDG priority country) in the Asia Pacific region amongst other giants like India, China, Indonesia and the Philippines for the implementation of SDGs. At the national level, there is a very high level of integration between the SDGs and our development philosophy of GNH. The three principles of SDGs closely resonate with GNH, a development paradigm that strives to balance the social, economic, environmental and cultural aspects to growth and in which poverty alleviation, sustainable development and people centric progress forms an integral part. The current 11th Five Year Plan (2013-2018) assessed 14 out of the 17 SDGs as being aligned and integrated with the achievement of the 16 National Key Result Areas. A rapid integrated assessment conducted by UNDP between 11th Five Year Plan and the 169 targets of the SDGs also reveal a very high level of integration. Of the 169 targets, 143 targets were found to be relevant excluding targets related to Goal 14 on Oceans and Goal 17 on means of implementation. Of the 143 relevant targets, the assessment revealed 134 targets as already being integrated into the National Plan. Therefore, it is not surprising that Bhutan has been identified as one of the early mover countries in Asia and the Pacific for localization of the SDGs. As an early mover country, Bhutan has prioritized three goals in the medium term namely Goal 1: Ending poverty in all its forms everywhere, underscoring the continued importance RGoB places on poverty reduction and the shift beyond income poverty towards addressing issues of social protection and vulnerable groups, Goal 13: Take urgent action to combat climate change and its impacts, upholding Bhutan’s commitment to the global community to remain carbon neutral at all times and Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems,

1NationalAccountsStatistics,2016

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sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. Similarly, Bhutan has embarked on the formulation of the 12th Plan which will be implemented from July 2018-June 2023, and the nation is well positioned to further integrate the SDGs into our National Plan. The report aims to inform the HLPF on Bhutan’s position in harnessing the noble aspirations of SDGs at broad level. Specifically, the report delves into:

a) Sharing experiences on adoption and integration of SDGs in national planning and policy framework;

b) Illustrating the initiatives taken in implementation, monitoring, evaluation, and reporting of the SDGs;

c) Highlighting opportunities as well as challenges that could impede implementation of the SDGs, and

d) Sharing policy strategies and mechanisms to support implementation of the SDGs.

Methodology and Process for Preparation of the Report Bhutan views the VNR as a process to engage and create ownership, rather than a report-making exercise. The report provides an overview of the progress made, policy reforms and initiatives undertaken and challenges faced in achieving some of the 17 SDGs.

This Report has been prepared following the “Guidelines to support country reporting on the SDGs” published by the United Nations Development Group. Latest available data were considered in preparing the report. Three guiding documents, namely the Guidelines for Preparation of 12th FYP, Bhutan Living Standard Survey Report 2017 and the Prime Minister’s State of the Nation Report (2016 & 2017) were extensively referred, in addition to other numerous national and international reports.

In line with the principle of ‘living no one behind’, robust consultative process was followed in engaging with stakeholders of various sections of the society in reviewing the progress of SDGs. They include senior representatives of the government, private sector, CSOs and local governments. Maximum care was taken to ensure the views and comments of all relevant stakeholders were incorporated.

In addition, Gross National Happiness Commission Secretariat (GNHCS) as the coordinating agency for planning, policy formulation and SDGs organized several rounds of meeting of the SDG Review Committee and the Task Force for VNR. The committees were consulted right from the inception of report preparation through the reviewing and endorsement of the draft. The committees comprise of representatives of agencies such as GNHCS, National Statistics Bureau (NSB), Cabinet Secretariat, Ministry of Finance (MoF), Ministry of Foreign Affairs (MFA) and other representatives of relevant government agencies.

Given the multiplicity of nature of SDG indicators and variations between SDG indicators and nationally used indicators across different goals, the status of all SDG indicators and their progress

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are reported according to the following classifications of SDG Indicators and their data availability:

a) Classification of SDG Indicators

Fully Adopted: Indicator used in Bhutan completely matches with the SDG indicator. Partially Adopted: Indicator used in Bhutan addresses the objective of the relevant target or

aggregate indicator exists but not at disaggregated level. Relevant but Not Adopted: SDG indicator is relevant to Bhutan but the indicator is not

adopted/used at all. Not Relevant: SDG indicator is not at all relevant to Bhutan's context.

b) Classification of Data Availability against SDG Indicators

Available: Data is available regularly with clear meta data, collection, analysis and dissemination process with clear assignment of data production responsibilities agencies.

Partially Available: Data is available only as ad-hoc publications but not as systematic regular

publications of agencies with established process of data collection and dissemination frequency.

Not Available: Data is not at all available. In tracking the progress of goals, given the early stage of SDG implementation and complexities associated with multiplicity of indicators under each goal, indicator adoption status and data availability status, it is not possible to assess the progress of each goal objectively through the use of targets and indicators. Nevertheless, progress of goals was tracked using three broad criteria as stated below: ACHIEVED

• All relevant targets are achieved (may not be relevant in the current stage but for future purpose)

ON TRACK • Enabling policy and legal framework is put in place and; • Resources are available and • Implementation of intervention(s) is underway and • Current progress is good and on a positive trajectory.

AT RISK • No enabling policies and legal framework in place • Absence of concrete implementation of intervention(s). • Resources not available. • Limited or no notable progress.

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PART I: Policy and Enabling Environment, Means of Implementation, Thematic Issues and Recommendations

1. Policy and Enabling Environment The development process in Bhutan has been visualized and framed in a broad and utilitarian context that seeks to address a more meaningful purpose for development than just the mere economic growth. Accordingly, Bhutan’s all-encompassing and holistic goal of development is the maximization of Gross National Happiness (GNH). This has served and continues to remain as the principal guiding philosophy for the country’s long term development journey. The SDGs find a natural and spontaneous place within the framework of GNH in that it provides a more focused direction for the country’s socio-economic development with a variety of creative and innovative strategies. a) Creating ownership for the SDGs The implementation of SDGs requires cooperation from all sectors and every single person in the society. They need to feel the sense of ownership. Therefore, Royal Government of Bhutan will continue to invite all sectors at all levels to engage and join hands in designing the path to achieve SDGs. The following are some significant measures that the Royal Government of Bhutan undertook to create ownership of the SDGs soon after their adoption in September 2015. b) Incorporation of the SDGs in national framework An effective mechanism to ensure ownership of the SDGs is to incorporate and mainstream them into relevant national framework, processes and systems. The Royal Government has, among others, two key national frameworks that guide socio economic development- Policy formulation and Five Year Planning.

Policy formulation process of the Royal Government of Bhutan requires all proposed policies to be screened through a GNH Policy Screening tool. The 22 variable that are used by the screening tool to assess proposed public policies are aligned to the principles and goals of sustainable development. As part of the overall policy formulation protocol, all draft policies are subject to the GNH policy screening tool by the proponent sector and the GNH Commission Secretariat has two separate exercises. Policies have to achieve a minimum of 66 points out of 88 in order to pass the screening test, and for those variables with scores of 2 or less , proponent agencies are required to

Illustration: Equity is one of the 22 variables of GNH Policy Screening Tool

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submit mitigation measures. This mechanism effectively ensures formulation of policies that enable achievement of SDGs. The Five Year Plans (FYP) provide the framework to formulate all developmental activities, allocate resources and carry out monitoring and evaluation in the country. Out of 143 relevant SDG targets (excluding targets related to Goals 14 and 17),134 SDG targets were aligned with the indicators of the 11th FYP, excluding targets related to SDG 14 on Oceans and SDG 17 on Means of Implementation. Bhutan is also amongst the first few priority countries that began implementation of the SDGs soon after its adoption in 2015. While all the 17 SDGs are important, Bhutan prioritized three SDGs (Goal 1 – No Poverty; Goal 13- Climate Action; and Goal 15 – Life on Land) for immediate implementation in the 11th FYP. These goals were prioritized on the basis of urgency to address the issue (No Poverty); Bhutan’s commitment to the global community to remain carbon neutral at all times (Climate Action); and be a champion and world leader by show-casing Bhutan’s success in terms of biodiversity (Life on Land).

The 12th plan will be one of the plans that falls within the SDG time period. With "Just, Harmonious and Sustainable Society" as the overarching goal, the 16 NKRAs and KPIs of the 12th FYP are aligned to the 17 SDGs, their targets and indicators. As the 12th FYP programs are currently under formulation at agency and local government levels, there will be further integration of the SDGs into the Agency and Local Government Key Result Areas. Efforts are also underway between GNHC, the apex body for national planning and coordination, and the National Statistics Bureau (NSB) in exploring possibilities to incorporate the relevant SDG indicators into the National Statistical System. Despite the above, there are SDG indicators which are relevant to Bhutan's context but have not been incorporated due to capacity constraints in localization, resources and implementation, while there are also SDG indicators which are not relevant to Bhutan. The Royal Government, in order to provide dedicated executive guidance and administrative support to SDGs, created committees at different levels. The mandates and membership of these are elaborated in the implementation mechanism of Section IV. c) Awareness on SDGs Recognizing the importance of ensuring participation and inclusiveness in aligning the national goals to SDGs, the Royal Government carried out numerous sensitization and awareness programs. Notably, a national Sensitization workshop was carried out on 30th October 2015 soon after the adoption of the SDGs followed by a sensitization to the local governments in 2016. In addition, extensive consultations and sensitization were also carried out during formulation of the 12th plan. Apart from all the government Agencies, the Royal Government consulted Civil Society Organizations, private sector entities, parliamentarians, political parties, local governments and citizens. During these consultations, sensitization on the genesis of the SDGs development aspirations with the three normative core principles of (1) universality, (2) indivisibility, and (3) “leaving no one behind” was shared.

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d) Integration of the 3 SDG dimension Social welfare, economic growth, and environmental protection, the three dimensions or core tenets of sustainable development were integral elements of Bhutan's development framework well before the inception of SDGs. Bhutan's development philosophy of GNH, which consists of nine domains as described below, in addition to preservation of culture and traditions, adequately represents the three SDG dimensions. Psychological wellbeing: The domain attempts to understand how people experience the quality of their lives. It includes reflective cognitive evaluations such as life satisfaction; affective reactions to life events such as positive and negative emotions and spirituality. Health: The domain comprises of conditions of the human body and mind and thereby attempts to characterize health by including both physical and mental states. Time use: The domain attempts to analyze the nature of time spent on work, non-work and sleep, and highlights the importance of maintaining a harmonious work-life balance. Education: Besides incorporating formal and informal education, the domain also tries to assess different types of knowledge, values and skills, which are mostly acquired informally. Cultural diversity and resilience: The culture domain looks at the diversity and strength of cultural traditions including festivals, norms, and the creative arts. Community vitality: The domain attempts to focus on the strengths and weaknesses of relationships and interaction within communities. The domain gathers information on social cohesion among family members and neighbours, and on practices like volunteering. Good Governance: The domain of good governance evaluates how people perceive various governmental functions in terms of their efficacy, honesty and quality. Indicators help to evaluate the level of participation in government decisions at the local level and the presence of various rights and freedom. Ecological diversity and resilience: The domain encompasses indicators that measure people’s perceptions and evaluations of the environmental conditions of their neighborhood and assess eco-friendly behaviour pattern. It also covers hazards such as forest fires and earthquakes. Living standards: This domain refers to the level of material comfort as measured by income, conditions of financial security, housing and asset ownership. Guided by the GNH framework, the three SDG dimensions are cascaded down into the socio-economic development plans and programs as actionable activities with metrics. Likewise, public policy formulation goes through rigorous assessment of impacts from social, economic, environmental and cultural standpoints to eliminate any adverse effects of proposed policies on sustainable development.

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Furthermore, recognizing the challenges of environmental issues and their effect on the poor and vulnerable, the Royal Government developed a framework called “Framework to Mainstream Environment, Climate Change and Poverty (ECP) concerns and other cross- cutting issues" to address environmental and climate change concerns with the reduction of poverty and enhancement of people’s livelihood.

e) Institutional Mechanisms Gross National Happiness (GNH) Commission as High Level SDG Committee In view of the indivisibility between the SDG and GNH, it was felt that there was no need to establish a separate institution to drive the SDGs in Bhutan. The 15 member GNH Commission chaired by the Prime Minister, Finance Minister as the Vice-Chair and Secretaries to the ten ministries, the Cabinet Secretary, the Secretary to the National Environment Commission and the Secretary to the Gross National Happiness Commission Secretariat (GNHCS), assumes the responsibility of overseeing SDG related matters at the highest level. GNHC Secretariat as Lead Coordination Agency To support the GNHC/High Level SDG Committee, the GNHCS has been entrusted with the responsibility to coordinate, advise, monitor, evaluate and report progress on the implementation of the SDGs in Bhutan. GNHCS is the apex agency for central planning and coordination of socio-economic development plans and programs. The overriding mandate of GNHCS is operationalization of essential principles of GNH into development plans, programs and policies. In doing so, it bases the national planning framework on the nine domains of GNH and evaluates new policies through the lens of GNH indicators using the GNH Policy Screening Tool. In line with the above overarching framework, the GNHCS formulates and evaluates long and medium term national plans, policies and programs; liaises with bilateral and multilateral development partners for external resource mobilization, and allocates resources to priority programs at central and local government levels. It also monitors and troubleshoots implementation issues and advises the government on matters related to public policies and social welfare. The GNHCS Secretary reports to the Prime Minister and the Commission. SDG Working Committee Within the GNHCS, in order to ensure smooth implementation and seamless coordination, a dedicated SDG Working Committee was established. The committee is led by the Director of GNHCS with the mandate to oversee, facilitate and guide integration, implementation and report progress status. The committee meets every quarter and reports to the Secretary of GNHCS and will continue to assume any responsibility that transpires in the future on matters related to SDGs. VNR Task Force Bhutan volunteered to present the Voluntary National Review (VNR) Report during the High Level Political Forum in July, 2018. The VNR will be presented on Goals 6, 7, 11, 12, 15 and 17.

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In order to ensure participatory approach to review of SDG implementation progress, a multi-sectoral task force was formed, comprising of senior government officials from the Cabinet Secretariat, the National Statistics Bureau and from sectors relevant to the SDGs. The task force is primarily mandated to facilitate and coordinate in development of the National SDG Report in preparation for the VNR.

2. Means of Implementation

a) Financing Financing is a critical component in ensuring the success of the agenda 2030. Given that the SDGs are highly intertwined with the GNH and thereby with the socio-economic development pursuit of Bhutan, the resources determined for the respective plans during the SDG period is deemed to form the significant portion for SDG financing.

Domestic Resources Bhutan’s five-year plan financing thus far have been sourced mainly through ODA and domestic resources. With prudent fiscal management, the Royal Government is able to finance up to 64% of its development expenditure through domestic revenue. Domestic resource mobilization is given the highest priority as manifested through the 11th FYP (2013-2018)’s objective of self-reliance. Self reliance is interpreted as ‘the ability to meet all our national development needs as articulated through five year plans by 2020’. Some of the efforts put in place to mobilize resources from domestic sources are broadening the tax base including green tax and sales tax on vehicles and fuels, rationalization of recurrent expenditure, enhancing efficiency of state owned enterprises and fostering public private partnerships. Other financial instruments such as bonds and capital market are also explored to supplement financing of SDGs. Tentative fiscal projection for 12th Plan appear optimistic with a projected fiscal surplus over the plan period although we are going to face some amount of fiscal deficit during the first two years of the plan. Unlike the past plan trends, the allocation has been maintained at almost the same level with the 11th Plan for capital investments. This is a deliberate step for two reasons amongst others; one reflecting existence of a fair level of socio-economic infrastructure and second, to bring in discipline and manage uncontrolled capital investments that would build future current expenditure pressure on the state. However, the timely availability of resources allocated will be of paramount importance for the 12th Plan, and therefore, the support of development partners will be vital.

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Mindful of the rising level of debt, the Royal Government adopted a comprehensive Public Debt Policy in 2016 to proactively guide its investment and ensure that financing decisions are prudent and public debt is maintained at a sustainable level. The need to have a public debt policy is also underscored as the country is graduating from LDC status, with concomitant decline in Official Development Assistance (ODA). Effective debt management is of paramount importance in ensuring that debt financing is sustainable and contributes to the economic growth of Bhutan.

Official Development Assistance (ODA) ODA funds about 34 percent of Bhutan’s development programs. Bhutan is expected to graduate from LDC by 2021. This may impede in achieving some of the SDGs such as combating impacts of climate change as opportunities for official development assistance such as climate financing through LDCF may not be available. Therefore, there is likely to be a big financing gap for meeting some of the SDG targets although the resources needed to achieve the SDGs are yet to be estimated. More importantly, there is need to carry out needs assessment of total resources required to achieve the agenda 2030.

Foreign Direct Investment (FDI) Other than ODAs, the 2030 development agenda also places due emphasis on additional financing scopes from multiple sources such as FDI, remittances and South-South Cooperation. Despite enormous efforts made in attracting FDIs through policy reforms and provision of incentives, Bhutan has not been very successful in attracting global investors. In 2015, the FDI net inflow into Bhutan was reported to be only 0.4% of GDP,

which in South Asia is only higher than Afghanistan

and Nepal. The net FDI inflow per capita in Bhutan is even further behind the average level of South Asian countries, LDCs and Asian LDCs. However, efforts are underway to improve ease of doing business and creating a favorable investment climate by investing heavily on infrastructure, energy, transportation and G2B services.

b) Statistical capacity Access to high quality and reliable data is crucial for measuring, monitoring and reporting development progress on the SDGs. In fact, a significant level of data disaggregation will be required in order to meet the ambitious principle of leaving no one behind. The National Statistics Bureau (NSB) is the main statistical agency and custodian of official statistics. All ministries and Dzongkhags in Bhutan are manned with at least a statistical officer. Different agencies produce different data. For instance, data on employment is produced by Ministry of Labour and Human Resources (MoLHR) and NSB produces national accounts data. NSB also relies heavily on data produced by other agencies to produce aggregate data at national level. An in-depth examination of all the indicators of 17 goals reveals mixed results on data availability. Data are available for most indicators related to health, poverty, education and employment; but for other goal areas such as energy, infrastructure and governance data is scarce. (to be Substantiated with analysis of stats annex). While capacity development efforts in support of the MDGs led to considerable improvements in terms of data quality and availability in Bhutan, challenges remain in terms of coordination. The lack of communication and coordination within national statistical systems is a major source of data problems. The lack of coordination among national data producers can result in reporting

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inconsistent or contradictory information to international statistical agencies. Different sources produce different data because the underlying definitions and operational contexts vary. Using different sources also means that data are updated irregularly, and the reference periods may differ.Therefore, better coordination between line ministries and NSB is a priority. The NSB and UN Country Team have recently carried out Data Ecosystem Mapping in Bhutan to identify gaps in data required for the 12th FYP and for the SDGs and resolve most of data related issues. The mapping exercise concluded that Coordination is one of the key issues that constrains the data ecosystem particularly given the decentralized nature of the national statistical system. The mapping exercise also found the need to upgrade human resource capacity at all levels of government, particularly at local government level and the need for capacity development with more predictable and adequate financial resources.

c) Partnership for Development The Royal Government recognizes the significance of the role of partnership with multiple stakeholders including the international community, private sector, civil society and the local governments in achieving the Agenda 2030. The government has been raising awareness and seeking cooperation from all sectors including the private sector and CSOs to drive SDGs. This includes promoting the roles of community, civil society, and the private sector in contributing to national sovereignty, prosperity and sustainability through development plans and policies. The guideline for preparation of 12th FYP highlights the importance of “Triple C” – Coordination, Consolidation and Cooperation. The Triple C framework is about mobilizing collaborative efforts between public and private sectors, communities, civil society and academia in order to enhance the country’s development in various aspects including the development at community level. Furthermore, with eventual decline in ODA, the role of private sector and CSOs in socio-economic development will inevitably become greater. Hence, strong collaboration with entities outside the government in terms of creating enabling environment for business and support to CSOs is considered central to Bhutan’s development strategy.

Likewise, Bhutan also remains positively positioned in strengthening cooperation in areas of mutually beneficial technical and economic cooperation with other development partners. Of particular significance to the future of our development will be the direction of regional cooperation, particularly in the context of trade, transit, and energy cooperation in South Asia.

d) Science, Technology and Innovation Science, technology and innovation is an important means of implementation of SDGs. The 12th Plan places strong emphasis on enhancing productive capacity of the economy through upgrading technology, advancing research and innovation capacity in key sectors and industries. It also stresses on environment-friendly industrial development practices and creativity and innovation to promote value addition in the manufacturing process. Bhutan is currently working towards establishment of a Research Endowment Fund in the 12th plan.

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e) Monitoring and Evaluation The Royal Government considers monitoring and evaluation as necessary development management measures for effective implementation. Their success and effectiveness are contingent upon having a good plan with measurable indicators and targets underpinned by a sound theory of change. Recognizing this, Bhutan follows a results oriented planning approach based on the principles of theory of change in formulating its five year plans and programs. On an annual basis, the five year plans and programs are translated into annual performance objectives with measureable performance targets at agency level which are further cascaded down to activities for individual civil servants in their work plans. Alignment of aspirations, actions and resources is considered key to ensuring effective delivery of results of plans and programs. Hence, annual budget is allocated as per the annual performance objectives of implementing agencies. Upon approval of the performance objectives and budget, annual performance agreements are signed between the Prime Minister and respective heads of agencies including the local governments. Monitoring and evaluation is based on clearly formulated five year plans and programs and agreed annual performance targets. The monitoring and evaluation of SDGs shall be conducted in a manner that is harmonized with the monitoring and evaluation of the Plan to avoid duplication of efforts. GNHC will be the apex body for monitoring and evaluation of the SDGs. The SDG indicators and targets are integrated into the national, agency and local government key result areas and their KPIs. Since the SDGs will be implemented through the respective five year plans, monitoring and evaluation of NKRA, AKRA and LGKRA KPIs will be carried out following the Royal Government's Monitoring and Evaluation (M & E) system. The national M&E system framework, depicted below, lays out the institutional set up and procedures required for effective monitoring and evaluation of development plans and programs. It also provides an integrated framework within which the management information systems of Planning, Budgeting, Expenditure Management and Performance Management are deployed to function seamlessly as a unified system, automating work flow processes and producing reports for decision making. As per the M&E system, NKRAs are reviewed in the middle of a FYP period and at the end of the FYP, while AKRAs, LGKRAs and program outputs are monitored annually through the Government Performance Management System (GPMS). The Royal Government ensures that the national M&E system meets the monitoring and reporting requirements of the SDGs.

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Results at outcome and impact levels of FYP programs, and national policies are subject to terminal evaluation. Evaluation of programs and policies shall be carried out in line with the evaluation procedure laid out in the national evaluation protocol and guidelines.

3. Key Issues and Priority Actions of the 2030 Agenda (Policy and Operational) 3.1 Issues and Policy Actions

This section examines the immediate, medium, and long-term thematic issues with cross-cutting implications faced by Bhutan. In identifying the national priorities of the 2030 Agenda for Sustainable Development, the report assesses the outlook for sustainable development based on the progress made thus far in terms of the three dimensions of SDG - economic, social and environmental agenda. Economic Agenda Bhutan met the criteria for graduation at the 2015 triennial review, illustrating developmental advancements, resilience and prospects in addressing the post-graduation opportunities. However, while the country has achieved impressive gains in 2 of the parameters for graduation, namely GNI per capita and Human Assets Index (HAI), overcoming economic vulnerability continues to be a major challenge. Hydropower continues to be the main driver of the economy constituting 16% of GDP and 30% of revenue2. On the external front, imbalances in the economy persists with a current account deficit of 31.2% of GDP that continues to be financed primarily by aid flows and hydropower related inflows. While the overall unemployment rate of 2% is relatively low, youth unemployment

2AnnualReport2015-16,RoyalMonetaryAuthority(RMA)

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rate of 11% in 2016 and its increasing trend is a pressing challenge. The Hydropower sector cannot be a sustainable source of job creation to absorb the growing youth workforce. If left unaddressed, economic vulnerability stemming partly from slow progress of change in the production structure and export base of the national economy, will continue to be an obstacle to the developmental trajectory in the post-graduation period. Bhutan faces significant challenges in diversifying its economic base mainly because of the inherent constraints associated with being landlocked and small population. Policy Action: Enhancing Productive Capacity of the Economy Enhancing productive capacity of the economy is perhaps the most crucial SDG enabling factor. The key economic question facing Bhutan over the medium-term is whether it will be able to move away from export concentration in hydropower towards more diversified exports of value-added goods and service, with increased participation of vibrant small and medium enterprises. This is important for SDG implementation because reforms to promote new sources of economic growth assume added urgency for enhanced resilience. Innovation, entrepreneurship development, and job creating industrialization (SDGs 8 and 9) all improve equality, and enhanced equality tends to improve efficiency, leading to and reinforcing sustainable growth. Furthermore, manufacturing through its spillover effects is perhaps the most important dynamic source of technological progress, trading opportunities, and SDG implementation.

To realize the above, numerous hard and soft infrastructure development measures have already been adopted by the RGoB in the ongoing 11th FYP to enhance productive capacity. Completion of the ongoing infrastructure developments such as four industrial parks, expansion of national highways and construction of dry ports remain urgent in the short-term. Moreover, given the potential of universal and affordable access to ICT in not only raising productivity and competitiveness of SMEs, but also in bolstering the achievement of social inclusion as envisaged throughout the SDGs, solving the redundancy issue and connecting the unconnected population could lead to more inclusive and equitable socio-economic development. This is important because notwithstanding the increase in mobile network coverage (97% of households have access to mobile phones in 2017), access to broadband internet remains low (58% of households have Internet connection in 2017).

Revision of Economic Development Policy (EDP) in 2016 was the stand-out policy measure undertaken in this regard. Going forward, effective implementation of EDP in a structured manner supported by adequate resources will underpin Bhutan’s capability to unlock its economic potentials. While the EDP offers broad-based sector approach, it may not automatically result in diversification towards the industries and products that have the potential to succeed. To fill this gap, it is critical to establish a concrete strategy and process to identify and develop industries where policy actions are most likely to make a difference – a process whereby the Royal Government and the private sector jointly develop the required supportive policies, incentive structure and institutional arrangement to divert investments towards high potential areas. This process is expected to enable the government to adopt both macro and micro tools necessary to address the binding constraints faced by diverse industries.

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Social Agenda Positive picture emerged on social conditions by the end of MDG era. However, deeper issues remain behind statistical averages and aggregations in some social condition. Bhutan managed to significantly reduce the number of people living in poverty in the MDG era (2000-2015). The percentage of people living below national poverty rate was reduced from 23.2 per cent3 in 2007 to 8.2% in 2017. While the progress on poverty reduction has been commendable, Bhutan is confronted with the last-mile challenge of eradicating poverty in all its forms. Additionally, it is of paramount importance for Bhutan to ensure vulnerable section of the population do not fall back into poverty due to disaster or any other external shocks. The infant mortality rate reduced from 84 deaths per 1000 live births in 2000 to 37.3 in 20124. The maternal mortality rate also significantly dropped from 255 deaths per 100,000 live births in 2000 to 86 in 2012. Similarly, the proportion of births attended by skilled health person increased more than threefold from 19.8 per cent in 2000 to 73.7 in 2012. However, due to changes in lifestyle and dietary habits, non-communicable diseases (NCD) such as cardiovascular diseases, cancer, respiratory diseases and diabetes has risen considerably causing 53 per cent of all deaths. The recent emergence of cases such as crime, substance abuse and suicide/mental health problem among the youth is also a growing concern. On the other hand, Bhutan faces the challenge of meeting the increasing medical cost and sustainability of free health care. Adjusted Net Primary Enrolment Rate (ANER) is 98.8% in 2017. Similarly, the Gross Enrolment Ratio (GER) for basic (Class PP-X) is 108.8% and GER for secondary (Class VII-XII) is 95.7% for the same year. However, enrolment in vocational and technical education is still dominated by male with only around 35% female in 2017. Similarly, female enrolment at the tertiary level is slightly lower than males, with female making up to 45% of the total enrolment. In addition, the concerns about the quality of education still persists. Policy Action: Rethinking Human Capital Development As discussed under previous section, on social indicators, Bhutan performs quantitatively well on average. However, important qualitative issues need to be addressed, such as improved learning outcomes and matching the demand and supply of skills, especially for youth, in addition to enhanced working conditions. As discussed above, gainful employment is at the heart of poverty reduction and social inclusion, therefore such efforts should be underpinned by strategies which align economic, employment, environmental and social policies. This includes the need to create conditions for supporting job creation capacity, especially among SMEs.

It is also crucial to plan for the long-term challenge of an aging population. As the current population ages, and approaches retirement age, larger cohorts of workers will be retiring while the new labor market entrants will be insufficient to replace them. Recent population projections show that since 2005, the life expectancy would increase for both males and females by ten and thirteen years respectively by 2050. This increase in life expectancy therefore leads to an increase in the number of people living above 65 years by 11.7% which would exert increased pressure on

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health and social security system. Together with investment increases needed in the education and health sectors, a more inclusive society will require new sources of private sector led growth. The experiences, lessons, and best practices emerging from ageing societies such as Japan, Republic of Korea, and China will be useful. At the same time, putting in place plans for productive ageing and population ageing early on will be crucial for the long-term sustainability. Environmental agenda The country today has 70.46% of total land area under forest cover and more than half of the country’s landscape (51.40%) is under protected areas. Nonetheless, the state of Bhutan’s environment has been changing over time due to population growth and economic development. The conversion of arable land and forests into other land uses is increasing at an alarming rate. The pressure is mostly from accelerated construction of farm roads, electricity transmission/distribution lines, industries and urbanization. There are also emerging signs of forest degradations within the 70.46 % forest cover area.

Although Bhutan has one of the highest per capita water resource availability in the world with 94,500 m3/capita/annum, geographical imbalance and temporal distributions is leading to experience of shortages in local areas. Adverse impact of climate change is further aggravating water problem for agriculture. Water quality is deteriorating in and around the urban areas.

Air pollution is becoming one of the emerging issues that has serious risk to human and environment health. Air quality is deteriorating, particularly in urban centers, industrial area and along the southern border of the country. Emission of greenhouse gases, which contributes to global climate change, is also on the rise.

Waste management is a major emerging environmental issue for Bhutan. Poor waste management practices threaten public health and natural environment.

Policy Action: Mobilizing Resources for Environmental Vulnerabilities Growing demands for water, energy, and food, in addition to climate change induced disasters which are increasing in frequency and intensity, exacerbate the already vulnerable ecology. Land suffers from high degree of degradation, and with increasing temperatures and advancing desertification, crop yields may decelerate. This will affect food production in Bhutan. At the same time, climate change will threaten water, a resource fundamental for agriculture and hydropower. Considering this situation and the risks represented by climate change, countries are expected to participate in the reduction of global GHG emissions as a means of favorable policy: enhancing energy efficiency, reducing air pollution, and improving quality of life for all. While Bhutan has already launched important declarations and issued domestic policies, legislations and strategies concerning the promotion of renewables and measures to mitigate and adapt to climate change, significant shift in mobilizing domestic and external resources and attracting international investors is required. For instance, despite huge area of Bhutan’s land under degradation (0.54% of total area), financial support to agriculture, particularly to land management has been limited. The total budget allocated to the RNR sector varied between 9-14% of the

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country’s total budget from 2008-2014. In the 11th FYP, the budget allocated for Sustainable Land Management (SLM) activities is only 1% of the budget of the RNR sector. Without consistent financial resources in place it will be very difficult to achieve at least four of the targets under SDG 15 (Land), namely targets 15.2, 15.3, 15.4 and 15.5. Because of the centrality of land to other dimensions of development, Bhutan’s challenge in achieving SDG 15 will also significantly impede, the achievement of other SDGs – mainly SDG 6, SDG 8, SDG 9 and SDG 11.

Competing priorities for the government such as education, healthcare, poverty, road, hydropower and tourism among others makes it increasingly difficult to meet the resource requirements. Therefore, exploring innovative means of financing and mobilizing international support measures are critical to manage challenges posed by environmental vulnerabilities.

3.2 Operational Priority Actions Harmonization of Policies: With the formulation of a number of public policies to address various needs and problems, inadvertent conflict among the policies have also cropped up. Such incoherence and conflict among policies hinder actual implementation on the ground. It is recommended that a thorough harmonization of policies that have relevance to SDG implementation be carried out. Improving Data and Statistics Management: Availability of accurate data in a timely manner is critical to effective planning, monitoring and evaluation of SDGs. Assessment of SDG indicators and targets reveals data gaps in terms of adequacy, timeliness and quality. In order to improve data generation, collection, analysis and dissemination, strengthening of relevant policies and legislations, improving coordination and strengthening human resource competencies need to be considered. Improving Awareness on SDGs and Ownership: While there is strong integration of SDGs in the national plans and policy frameworks, inadequate level of awareness and capacity constraints to align sector and agency plans and programs to SDG targets and indicators have been highlighted. More awareness and sensitization on alignment of plans and programs to SDGs and localization of SDGs to sector, agency and local government needs need to be conducted. Developing Financing Strategies: In order to ensure successful implementation of SDGs, a financing needs assessment that establishes estimated cost of SDG implementation needs to be carried out. Based on the needs assessment, a strategic framework for resource mobilization that identifies potential financing sources including domestic, ODA and other means of financing may be developed. Improving Stakeholders Coordination: A critical factor that determines efficiency and effectiveness of SDG implementation is a strong coordination among all the stakeholders -Government, Private Sector, Non Governmental Organizations, Academia and Citizens. While the 12th plan is anchored on the principle of Coordination, Cooperation and Consolidation (CCC), the principle must be translated to practical processes to help strengthen partnership and coordination among all stakeholders.

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PART II: TRACKING THE PROGRESS OF GOALS Given the early stage of SDG implementation and complexities associated with indicator adoption and data availability, it is not possible to assess the progress of each goal objectively through the use of targets and indicators. However, based on the set of broad criteria to gauge the progress as discussed in the methodology section, 8 goals are found On Track and 9 goals At Risk. A snapshot of the current status of goal attainment by Bhutan is illustrated in the figure below:

Goal1Goal2

Goal3

Goal4

Goal6

Goal7Goal8Goal9

Goal10

Goal11

Goal12

Goal13

Goal15

Goal16Goal17

ProgressSDGs

Goal5

Goal14

Goal13

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This table provides the progress status of the SDGs and brief highlights of some of the positive attributes in terms of interventions and concerns related to each goal. Supporting details of each goal are elaborated in the narrative section and statistical annexure.

Goals Progress Status Rationale 1. No Poverty

On Track

Effective targeted interventions by Government and CSOs (REAP, THPP, NRP) in addition to regular development programs National Income Poverty Rate reduced to 8.2% High coverage of free basic health and education services High coverage of communication services

2. Zero Hunger On Track Food Security & Nutrition Policy adopted and under implementation. High level of food sufficiency (more than 97%) Variety of interventions initiated to improve. nutrition (SAP, 3 Eggs a Week program, etc. ) High prevalence of malnutrition. Low agriculture productivity. Climate change concerns.

3. Good Health and Wellbeing

On Track Constitutional mandates access to free basic health care services. National Health Policy 2012 adopted and under implementation. Achieved MDG targets. Increasing NCDs and HIV Increasing incidences of suicide, substance abuse and other mental health issues. Rising cost of healthcare

4. Quality Education

At Risk

Constitutional mandates access to free basic education. Education Blueprint 2014-24 & Tertiary Education Policy 2010 adopted and implementation underway. Achieved MDG targets on quantitative indicators. Quality of Education including vocational education is a concern. Gender parity at the tertiary not achieved. Low levels of ICT literacy.

5. Gender Equality At Risk National Commission for Women & Children established. Variety of interventions underway by Government and CSOs (RENEW, BAOWE, BNEW). Gender equality policy being formulated. Maternity leave extended to 6 months in the government agencies.

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Legislation awards equal property rights to females.

Female unemployment rate is higher Labor force participation is lower for female Low female representation in elected offices, executive positions in the civil service, corporate and private sector. Gender gap remains in tertiary and vocational education

6. Clean Water and Sanitation

At Risk Water Act 2008 enacted and implementation underway. IWRM Plan initiated. Very good access to improved water sources (99.5%) and improved sanitation facilities (92%) Drying sources (urban drinking water and rural irrigation) is a concern Inadequate sanitation infrastructure and services Increasing pressure due to Climate change and increasing population.

7. Affordable and Clean Energy

On Track Bhutan Sustainable Hydropower Development Policy 2008 and Alternative Renewable Energy Policy 2013 adopted and implementation underway. Energy Efficiency & Conservation Policy and Domestic Feed-in Tariff under formulation. High coverage of electricity (99%). Higher proportion of renewable energy in total energy use mix. Provision of 100 units of electricity per month free to rural households. Initiatives to improve energy efficiency underway. Lack of public-private partnerships in renewable energy (solar and wind) financing. Limited institutional capacity to implement other forms of renewable energy besides hydropower.

8. Decent Work and Economic Growth

At Risk Economic Development 2016 adopted and implementation underway. Priority Sector Lending Rules adopted and implementation underway. Labor & Employment Act 2007 adopted and implementation underway. High economic growth High growth (due to hydropower) not translating to sufficient jobs. Limited diversification, technological innovation and entrepreneurship. Growing youth unemployment.

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9. Industry, Innovation and Infrastructure

At Risk Economic Development Policy 2016 adopted and implementation underway. Fair level of infrastructure coverage. Efforts to improve access to finance underway. Priority sector lending rules adopted. Research Endowment Fund creation underway. Low share of manufacturing value added. Concerns on Quality of infrastructure, lack of scientific research, technology and innovation.

10. Reduced Inequalities

AT Risk Equity and redistributive principles embedded in legislations and policy. Social Protection Policy under formulation. REMIT Bhutan Measures underway to narrow gap between rich and poor. Increasing Gini Coefficient Top 20% consumes 6.7 times more than bottom 20%

11. Sustainable Cities and Communities

AT Risk Constitutional mandates preservation of culture. Disaster Management Strategic Policy Framework 2015-25 adopted and implementation underway. Efforts are underway to improve human settlement planning, housing, waste management. Affordable housing particularly in urban areas and District Headquarters is a concern. Limited public transport facilities. Water scarcity, waste management and increasing vehicular congestion are concerns. Inadequate disabled friendly infrastructure and public spaces.

12. Responsible Consumption and Production

AT Risk Sustainable Consumption & Production Action Plan under implementation. Waste Prevention & Management Regulation 2012 in effect. Green Public Procurement Project under implementation. Sustainable tourism pursued. Increasing waste generation No policies or plans on SCP in place

13. Climate Action On Track Enabling policies and strategies in place Effective awareness and education on climate change Variety of disaster management initiatives underway

14. Life Below Water

On Track Policies and legislation for water management in place Studies on aquatic life underway

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Increasing pollution is a concern 15. Life on Land On Track Commendable progress of biodiversity conservation

including resource mobilization Strong legislations and policies Effective implementation of initiatives Resource constraint for land management is a concern

16. Peace Justice and Strong Institutions

On Track Strong Justice Sector and Low corruption Variety of efforts underway to improve public service delivery Conflicting laws and policies and inadequate institutional capacity

17. Partnerships for the Goals

AT Risk Most indicators under the Goal are not in favor

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Goal 1: End poverty in its all forms everywhere

‘End poverty in its all forms everywhere’ aims to eradicate extreme poverty defined as people living below $1.25 a day. Guided by the philosophy of GNH, the Royal Government has always been mindful of ensuring sustainable and inclusive development, and mainstreamed poverty and related programs into the development process implemented through the five-year plans. The Royal Government began to place added emphasis on poverty reduction by formulating Poverty Reduction Strategy Paper in 2004. The strategy focused on profiling of the poor and causes of poverty, enumerating poverty reduction challenges and strategies, and developing a poverty monitoring and assessment system. In addition, ‘Poverty Reduction’ was the overarching objective of the 10th FYP (2008-2013) and REAP, a targeted poverty reduction program, was initiated. The percentage of people living below national poverty rate was reduced from 23.2 per cent5 in 2007 to 8.2 percent in 2017. In 2012, as per international poverty line of US$ 1.25 per day, Bhutan had only two percent of population under poverty, and the proportion of population living below the MPI was 12.7 per cent. THPP, a more poverty targeted program with interventions aimed at enhancing livelihood at household level in the form launched in the 11th.Further, poverty reduction has been identified as one of the 16 National Key Result Areas in the 12th FYP6. To gather data on poverty incidence, detailed mapping of disaggregated poverty levels at Gewog level was conducted in 20107. The mapping has enabled the government to locate poverty incidence by area and households and serves as one of the key references for undertaking targeted poverty reduction interventions in the country. On the resource allocation front, poverty incidence is allocated with weight of 45 percent in the resource allocation formula (RAF) for local governments. This ensures that the Dzongkhags with higher incidence of poverty receive higher share of resources. Furthermore, relatively higher investment in sectors such as agriculture, health and education has resulted in remarkable improvementin the lives of the people including life expectancy, mortality rates, and literacy rate and food security. In the 11th FYP, about 26 percent of the total resources were channeled towards these sectors8.

5BhutanPovertyAnalysis,NationalStatisticsBureau,20126GuidelinesforPreparationof12thFYP,GNHC7SmallAreaEstimationofPovertyinRuralBhutan,NationalStatisticsBureau,20108ComputedusingAnnualFinancialStatement(2013/14-17/18)

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Innovative financing in the form of concessional credit are provided for development of rural enterprises through establishment of Bhutan Development Bank Ltd. and Rural Economic Development Corporation Ltd to boost agriculture productivity. Bhutan has been ensuring its citizens with equal access and right over land and land based resources. The Land Act of Kingdom of Bhutan 2007exclusively provides rights over land and land based resources to every citizen. There is high proportion of adults with freehold land tenure rights with negligible gender differences. The proportion of total adult population with secure tenure rights to land stands at 77 per cent in 2016, with 86 per cent for male and 69 percent for female. Provision of basic services to rural areas has been a priority. Basic services such as electrification has extensively improved rural livelihood with its coverage reaching about 95 per cent of the rural households. Close to 97 percent of the population have access to clean drinking water and about 66.3percent have improved sanitation facilities. While the progress on poverty reduction has been commendable, Bhutan is confronted with the last-mile challenge of eradicating poverty in all its forms. Additionally, it is of paramount importance for Bhutan to ensure vulnerable section of the population doesnot fall back into poverty. Targeted poverty reduction program - The Rural Economy Advancement Program (REAP) Rural Economy Advancement Program (REAP), a targeted poverty alleviation program, was initiated in the 10th FYP in 14 poorest villages covering 10 Dzongkhags. The core objectives of the program are: To reduce extreme poverty by targeting the poorest communities & enhancing productive capacities to secure sustainable livelihoods To provide sustainable livelihood to the extreme poor, especially in the areas of standard of living, health, education, community vitality, financial and food security; To promote community participation, especially the poor, in planning and implementation of their own development plans. Broad activities under the program include income generating activities, improvement of housing, health and sanitation, skills development, human-wild life conflict management, land management and supply of farm machineries. With the completion of REAP-I in 2012, a terminal evaluation carried out in 2013 showed that the program was effective and efficient in reducing extreme poverty in the targeted households and villages. One of the remarkable outcome was increase in the average monthly savings to Nu. 1300, which is above that of the national extreme poverty level (Nu.1155, PAR 2012). The program was efficiently executed achieving all targets spending 89.3 per cent of the allocated resource. Based on the success of REAP-I, the program was extended with REAP II in the 11th FYP that covered 75 villages in 18 Dzongkhags with an increased resource outlay of Nu.150 Million. The REAP II program benefits about 1500 households and 8500 populations. The program was implemented by Gross National Happiness Commission in partnership with Tarayana Foundation, a CSO.

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Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture. The goal aims to ensure food security for all with satisfactory level of nutrition. It will also ensure promotion of sustainable food production systems and resilient agriculture practices, especially for the small farmers with enhanced investment in the sector. Agriculture is the major source of employment for Bhutanese with 56.6 percent of the population employed by the sector. Food sufficiency has been a priority of all the development plans and Bhutan is modestly food secure based on the sufficiency parameters of food availability, access and nutrition. Around 95 per cent of the households in Bhutan are reported to be food sufficient9, with urban residents enjoying higher sufficiency than their rural counterparts. The above outcomes are the results of consistent investment in RNR sector over the years. Throughout all the five year plans, investments have been made in agriculture research and technology, skills development, input supply, land management, rural accessibility, marketing, and human wildlife conflict management. Food security was one of the NKRAs of the 11th FYP under the first pillar of GNH - Sustainable and Equitable Socio-Economic Development. Numerous programs were initiated to achieve the objectives of enhancing food and nutrition security, improving rural livelihood, accelerating and sustaining RNR sector growth, and promoting sustainable management and utilization of natural resources. Some of the specific programs to promote and sustain food production were:

1) One Chiwog one power tiller: to minimize the drudgery in farming and to make farming more attractive and tolerable, the government has provided a power tiller each toevery chiwog. As of June 2017, 783 chiwogs (75 per cent)10 of 1044 Chiwogshave received one power tiller each.. This initiative has significantly reduced hours of labour in tilling land for agriculture production.

2) Electric Fencing: Human wildlife conflict is one the main issues constraining sustainable agriculture practice and production. Electric fencing is one the most effective solutions to mitigate and curb the impact of human wildlife conflict. About 2000 kilometers of electric fencing has been built benefiting close to 11,000 rural households10.

To adapt to climate change, National Irrigation Master Plan with a 15-year action plan and road map was developed in 2016. The master plan is to develop climate adaptive irrigation system to

9BLSS201210TheStateoftheNationReport,June2017.

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help attain food and nutrition security and enhance rural incomes. In the 11th FYP alone, about 680 kilometers of irrigation channels were constructed or renovated. ‘Many of our people continue to depend directly on land for their livelihood. In addition, land is traditionally considered a precious inheritance to be bestowed to our children. The objective of the Land Kidu is to place the much-treasured land upon the hands of our people, and enable them to use it to better their lives and secure the future of their children’. His Majesty the King Jigme Khesar Namgyel Wangchuck, 17th December 2016, 109th National Day, Trongsa. Availability of sufficient arable land is critical for sustainable agriculture production. His Majesty stated that ‘The important feeling of attachment and belief in the future of the country, will only come about if the people have effective and secure ownership to land’. Landless households and individuals continue to receive land from His Majesty The King as a part of the Royal Kidu (Welfare) Program initiative. About 77 percent of total adult population has secure tenure rights to land in 2016. In addition, the National Rehabilitation Program (NRP) has enhanced sustainable agriculture practice with the vulnerable landless populace allotted with feasible and economically viable farming land on freehold. Under the program, more than 6,536 landless households were allotted with 23,800.87 acres (3.6% of total arable land) of farming land with inclusive resettlement package. The Use Right System (URS) is an innovative landholding system introduced recently to enhance livelihood opportunities. The URS allows beneficiaries to use state land as long as the land is being used productively for the purpose for which the land is allotted through payment of taxes at par with existing land tax. The Royal Government has placed importance to improving food nutrition in the recent years. Various programs and activities have been initiated to improve the nutritional status, particularly of women and children. Stunting in children under five years declined from 34.8 per cent in 2010 to 21.2 per cent in 2015. Similarly, wasting for children under five years decreased to 4 per cent in 2015 from 5 per cent in 2010 and underweight to 9 per cent in 2015 from 13 percent in 2010. These outcomes indicate a moderate public health problem in nutrition as per the WHO classification cut-off for a moderate public health problem11. One of the most important policy instruments put in place to improve food nutrition is the Food and Nutrition Security Policy of Bhutan, 2014. The policy aims to create a healthy and active population through better access to safe and adequate nutritious food. In addition, the FDI Policy also promotes private sector participation in the RNR sector to enhance investment, production, value addition and marketing of agriculture produce. The draft agriculture subsidy policy will help alleviate poverty, generate income, and ensure environment sustainability.

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The Food Based Dietary Guideline2010 and the Bhutan Dietary Guideline for School Children 2015 were adopted to improve nutritional status of adult population and school children through initiatives such as ‘fortification of rice’ and ‘three-eggs-per-child-per-week’ in schools. Going forward, improving nutrition security will continue to be vital part of health and agriculture plans and policies as the 12th FYP has identified ‘water, food and nutrition security ensured’ as one of the NKRAs. Furthermore, Bhutan adopted the RNR Research Policy2012 mainly to enhance food and nutrition security through promotion of sustainable agriculture practice. Bhutan has recently been promoting mitigation and adaptation measures for crop and livestock production through the national strategy on climate adaptation of the Sectoral Adaptation Plan of Action (SAPA). While agriculture is the main source of livelihood and employment for more than 50 per cent of the population, the sector has been plagued by challenges. Some of the challenges faced by the RNR sector are loss of agricultural land to other development works, lack of infrastructure such as irrigation and post-harvest storage, farm labour shortage, human-wildlife conflict and lack of access to credit. Further, as Bhutan is located in the eastern Himalayan region the impacts of climate change are often severe with frequent incidences of erratic monsoons, flash floods, GLOF and landslides. The RNR sector comprising of agriculture, livestock and forestry is one of the most vulnerable sectors to climate change and climate induced disasters.

The National Rehabilitation Programat Khenadang: This pro-poor resettlement program was initiated under the auspices of His Majesty the Fifth King. The Rehabilitation Program was in initiated in 2009 by the Office of the Gyalpoi Zimpon (Royal Chamberlain). The program is in continuation to The Resettlement Program initiated in 1997 by His Majesty the Fourth Druk Gyalpo, under which land ‘Kidu’ was granted to the landless, near landless and households’ dependent on shifting cultivation (Tseri/Pangzhing). Recognizing the linkages between land and poverty, main objective of the program is to reduce poverty through enhancement of sustainable rural livelihoods of the landless and socioeconomically disadvantaged/marginalized communities. The implementation of the program is being spearheaded and coordinated by the National Land Commission guided by the Rehabilitation Strategy Document formulated by NLCS. It outlines the overall framework, approach and procedures to effectively and efficiently implement the program in an equitable and transparent manner.

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More than 6,536 landless households who are socio-economically disadvantaged have been benefited from the secured tenure rights with the allotment of 23,800 acres (3.6% of total arable land) of farming land, mostly aided with inclusive resettlement package. Khenadang in Pemagatshel District was the first village to transform under the program in 2013. The village has about 47 households with population of 311. Their lives transformed with registered ownership of 124 acres of agriculture land and free materials and grant of Nu. 50,000 (US$ 1000) for each household to construct their houses. Life became much easier with access to electricity, water and mobile network. Their transition to the new village was smooth with free basic food items for first six months. As a part of the program, a separate kitchen and a toilet were mandatory to maintain health and hygiene. Livelihood improved with backyard farming including vegetable garden, poultry and raising cattle as main sources of income. A vegetable group was formed to improve vegetable production primarily to enhance nutrition intake. The annual mean household income has increased four-fold from Nu. 9,424 in the previous village to Nu.36,954 in the current village. Similarly, annual median income has increased significantly from Nu.3,500 in the previous village to Nu.33,800 in the current village. Access to micro-credit is provided from the Bhutan Development Bank Ltd. There is a high level of social support from neighbours in times of need such as disaster, constructions, funerals and annual rituals. While children goes to the newly constructed school around the corner of the village, medical needs are administered through a monthly visit of the Health Assistant from Yelchen Basic Health Unit. With a new community temple at the top, Khenadang has denatured into a beautiful, sustainable, happy, and a model village in one of the district with high incidence of poverty.

Goal 3: Ensure healthy lives and promote well-being for all at all ages. This goal is about minimizing the impact of preventable diseases, untreated drug and alcohol abuse, preventable birth defects, and avoidable traffic and industrial accidents. It is also to ensure that every person, child or adult, gets the resources they need to live a long and healthy life. Bhutan made significant investment to develop its health system from a low base and achieved remarkable progress in key health outcomes over the past several decades. Average health indicators vastly improved from among the poorest in the world to mostly achieving the Millennium Development Goals. Bhutan’s total health expenditure is at 3.8% of GDP, which is predominantly government financed (approximately 75.0%). Household out-of-pocket expenditure is relatively low (estimated 25% of the total health expenditure), implying fair level

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of equity and financial protection. Coverage of health facilities is also extensive with 96% of the population living within 3 hours walk from a nearest health facility, which is a laudable feat in physical access for a country challenged with difficult terrain and scattered remote populations. Mandated by the Constitution (Article 9, Section 21), the State has ‘to provide free basic public health services in both traditional and modern medicines’. Consistent efforts and investment in healthcare have resulted in the increased life expectancy from 32.4 years in 1960 to 69.5 years in 201212. The population living within three hours from a nearest health facility was 94.8 per cent in 2012. The last case of polio was seen in 1986 and Bhutan was declared polio free by 201413. Other milestones were the elimination of iodine deficiency in 2003 and measles elimination status achieved in 2017. The infant mortality rate decreased from 60.5deaths per 1000 live births in 2000 to 30.0 in 201214. The maternal mortality rate also significantly dropped from 255 deaths per 100,000 live births in 2000 to 86 in 2012. In order to improve the nutrition and care for newborns, the three-month maternity leave has been extended to six months. Prevalence of HIV in Bhutan was estimated at 0.2 per cent among adult aged 15-45 years in 2012. However, in order to prevent and reduce the incidence of HIV, various methods have been adopted such as development of HIV treatment guideline in 2016; hepatitis surveillance in 2017; provision of fixed-dose combination therapy; targeting zero mother-to-child transmission by introducing voluntary counselling and testing for HIV/hepatitis B/syphilis to all ANC attendees, and monitoring of CD4 count and viral load. Also, extensive awareness and advocacy campaigns on the use of contraceptives have resulted in increase of contraceptive prevalence rate from 30.7 per cent in 2000 to 65.6 per cent in 2012. Bhutan has remarkably reduced the cases of malaria from 39,852 in 1994 to 34 in 2015 and the goal is to eliminate the indigenous case by 2018. Similarly, morbidity cases of Hepatitis B was 162 per 100,000 population in 201615. The Bhutan One Health Strategic Plan 2017-21 and the WASH program are key priority programs for prevention and minimize/control of zoonotic and infectious diseases that are being implemented. Although incidence of alcohol related death had been low, it is the top most killer in recent years. The National Policy and Strategic Framework to Reduce Harmful Use of Alcohol (2015-2020) was adopted in 2015 to reduce harms related to alcohol. One of the most critical causes of concern in Bhutan’s heath sector is the recent emergence of non-communicable diseases (NCD). Incidence of cardiovascular diseases, cancer, respiratory diseases and diabetes has risen considerably causing 53 per cent of deaths in 2016. The Royal Government adopted a five-year multi-sector national action plan for prevention and control of NCDs in 2015. Likewise, trend in mental health problem and suicide cases are on the rise. In 2014 alone, the Suicide Survey reported that about 300 people aged 15-65 year committed suicide. In order to

12AnnualHealthBulletin,MinistryofHealth,201713TheKingdomofBhutanHealthSystemReview,WHO,2017142012NationalHealthSurvey,MinistryofHealth,201415112017AnnualHealthBulletin,MinistryofHealth.

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address the rising trend of suicide cases, a National Suicide Prevention Action Plan is being implemented. Furthermore, Bhutan Mental Health Strategy and Action Plan (2015-2023) was also developed in 2015 with the aim to improve mental health and reduce suicides. To improve health and promote active and healthy lifestyles, outdoor gym equipment have been installed in urban areas across the country. Recognizing the harmful effects of tobacco consumption, Bhutan enacted Tobacco Control Act in 2010, and took a giant step in banning sale of tobacco products and consumption in public places. Such a policy intensely shares the concerns of physical health and wellbeing which is a critical element of the development philosophy of GNH. As per the 2012 National Health Survey, the percentage of population aged 15-75 who smoked tobacco was 4.0 % The road traffic death was about 15 per 100,000 population in 2010 and which is below the regional average of 18.5. There has been steady decline in the actual numbers of road traffic accidents over the years (1094 in 2013, 791 in 2014 and 715 in 2015). Such progress is a result of strict enforcement of road safety regulations, awareness and other measures including introduction of zero tolerance day, maintaining speed limits up to 30 km/hr in towns and 50 km/hr on highways. Bhutan’s health care service to its citizens extends beyond the modern healthcare system. Traditional medicine system has been long practiced and continues to be an alternative source of healing for the Bhutanese. The Royal Government accords importance and continues to strengthen traditional medicine services in the country. Also, access to traditional health facilities and services has been made available in all the 20 districts of the country. In 2015, the Royal Government launched helicopter services to enable search and rescue, medical and casualty evacuation during times of health emergencies. Furthermore, to improve diagnostic and critical health services in remote areas and in health facilities with shortage of medical doctors, rural telemedicine was introduced in 2000. Health infrastructure and workforce are crucial to the improvement of overall health system. Currently there are about 5028 health care providers including 299 doctors in 31 hospitals (including one traditional hospital), 237 BHUs (including sub-posts), 562 Outreach clinics and 54 indigenous units in the country. According to the Annual Health Bulletin, the doctors’ density per 10,000 population is 3.9 and nurses’ density per 10,000 population is 15.4 in 2016. The ratio of beds per nurse is 1.1 in 2016. In order to consolidate and harmonize health infrastructure and services the national health policy was adopted in 2011. The 12th FYP also considers improving healthcare as one of the national key result areas.

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To ensure sustainability of the primary healthcare in Bhutan, the Bhutan Health Trust Fund (BHTF) was established in 1998. BHTF is an endowment fund created through a Royal Charter. Overall, the BHTF is intended to generate sufficient return on investments to cover all annual expenditures on vaccines and essential medicines. The BHTF capitalizes funds from contributions from RGoB (the main contributor) and development partners. The Fund started to disburse money in 2003. Despite these impressive gains in key health outcomes, and a high government priority given to health, challenges remain in Bhutan’s health sector performance, including regional disparities in health status and wide district-level variations in health outcomes and service coverage. The sector also needs to evolve to effectively deal with growing health security threats and epidemiological and demographic transitions, including increasing burden of non-communicable diseases and rapid urbanization with increasing rural urban migration. Funding for health is declining not least due to the withdrawal of a number of external donors, as Bhutan’s per capita income is rising and the country graduates from LDC status. In fact, external financing of health has dropped from around 28% in 1996 to about 12% in 2012.This has put considerable strain on the health system finding it difficult to meet the expectations of the people and to provide the services that it would need to offer. Long-term sustainability of health care financing is being reviewed given rising population expectations and introduction of new technologies and services. The need for solutions to address the critical shortage of human resources is a further challenge for sustainably improving healthcare quality and access.

Bhutan Health Trust Fund: An innovative sustainable healthcare financing Bhutan has been prioritizing health consistently through all the five year plans and have significantly achieved most of it is outcome. The constitution mandates the State ‘to provide free basic public health services in both traditional and modern medicines’ and self-sustaining financing of free healthcare is a critical component of the endeavor. Therefore, taking into account the well-being of the people in general and women and children in particular and above all, the sustainability of Primary Health Care led to the initiation of the Bhutan Health Trust Fund (BHTF) sometime during 1997 and formally launched on 12 May 1998 at the WHO Headquarters in Geneva. The vision of the fund is ‘to attain sustainability in the primary health care delivery system’ and the mission is ‘to help provide basic health care services to the people’. The key objective of the fund are:

1. To help sustain primary health care through continued and uninterrupted supply of essential drugs and vaccines, needles, syringes, cold chain equipment and other related drugs/equipment,

2. To help eliminate financing uncertainties for priority core components of the primary health care services out of the income generated from the investment of the fund,

3. To help achieve self-reliance in the primary health care sector.

With the initial target of the fund is to mobilize US$ 24.00 million, huge achievements has been made in mobilizing the resources and the fund stands at approximately USD 19.8 million in 2017, realizing about 82.5 per cent. Capitalization of the Fund is done through contributions from donor countries, organizations of private and public status, financial institutions and individuals. Based on the principle of one-to-one partnership, any donor contribution to the fund is matched by the Royal Government on a one-to-one basis. This principle amply

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demonstrates the firm commitment of the Royal Government for the development and success of the Fund to sustain Primary Health Care. ‘Move for Health’ is an engaging program initiated by the government for advocacy and raising fund from the general public. Accordingly, the program in 2002, 2013 and 2014 conducted across the country has mobilize about US$ 2 million. The fund envisages various investments and portfolios to generate sufficient returns to meet all annual expenditure on essential drugs and vaccines and help eliminate financing uncertainties for purchase of these crucial components and other related drugs/equipment.

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Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning to all Education plays a crucial role in accelerating economic growth through creating a productive national workforce and in advancing socio-economic development. The Royal Government accords high priority to education and has allocated no less than 10 percent total budget in all the FYPs. Bhutan has made great strides in improving access to education and is close to achieving the goal of Universal Primary Education. As of 2017, the Adjusted Net Primary Enrolment Rate (ANER) is 98.8% constituting 98.7 % boys and 98.9 % girls. Similarly, the Gross Enrolment Ratio (GER) for basic (Class PP-X) is 108.8% and GER for secondary (Class VII-XII) is 95.7% for the same year. These successes have been made possible through consistent investment in the education sector over the years since the advent of modern education in 1960s. While outcomes on access to education at all levels have seen remarkable progress, quality of education in tandem with development of labor market dynamics has come under scrutiny in recent times. Recently, in view of improving quality of education and rationalizing increasing costs, the Royal Government has carried out innovative interventions such as establishment of Central Schools, Extended Classrooms and expansion of primary and secondary schools. To improve learning outcome, the government decided to take part in the Program for International Student Assessment for Development (PISA-D). Such participation will help benchmark the country’s education quality against international standards and build effective policies. Recognizing early childhood care and development (ECCD) as the foundation for children’s long term development, wellbeing and health, the Royal Government of Bhutan prioritizes providing quality child care and early learning opportunities for children as part of the broader education continuum. Although the concept of ECCD is relatively new to Bhutan, progress has been commendable. Currently, there are 7250 children enrolled in 307 ECCD centers compared to 3835 enrolled in 165 centers in 2013. The gross enrolment rate in ECCD as of 2017 was 21.8% against 7 % in 2013. Going forward, ECCD program will be a priority. The 12th FYP aims to enroll at least 50% of children aged 3 to 5 years in ECCD Centres through establishment of one ECCD Centre for every Chiwog16. Ensuring continuity and access to affordable and quality technical, vocational and tertiary education is an important element of the overall education system framework in Bhutan. Currently, there are six TTIs, one institute for Tourism and Hospitality and 2 IZCs in the country with a total of 1536 trainees and 163 instructors.

16Agroupofvillages.

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While efforts have been made to enhance access to and quality of TVET education, it remains an unpopular option for many students due to the low status and poor working conditions associated with blue-collar jobs. Nevertheless, the Bhutan Education Blueprint(2014-2024) aims to enroll at least 20% of the students at higher secondary level in technical and vocational education courses by 2024. Furthermore, in order to provide a long term strategic vision over the next 10 years (2016 to 2026), a Technical and Vocational Education and Training (TVET) Blueprint that outlines policy reforms and development planning in skills development to meet existing and future labour market demands has been developed. The Gross Enrolment Ratio (GER) Tertiary within Bhutan for age 19-21 years as of 2017 stands at 27.5%. As of 2017, there are 21 Tertiary Education Institutes (TEIs) offering undergraduate and postgraduate courses in healthcare, medical, law, language, management, natural resource, education, and technology in the country. In 2014, the Royal Government instituted Students Loan Scheme for Tertiary Education to provide opportunities for students from economically disadvantaged families to continue tertiary education. Efforts are underway to review school curriculum to make it more relevant to the present reality. In addition, to enhance technical and vocational education, the government attaches huge importance to enhance computer literacy and IT skills among students. Such efforts are expected to increase employability of students upon graduation. In the 10th FYP, the Chipen Rigphel project established computer laboratories in secondary schools and trained teachers and students in IT skills. building on the efforts, during the 11th FYP, government developed Education ICT Master Plan (iSherig) 2014-2018 to establish computer laboratories and supply computers to schools with internet connectivity. In terms of gender equality in education, impressive achievements have been made with Adjusted Net Primary Enrolment Rate of 98.9% for girls compared to 98.7% for boys. In 2017, girls make up 50.5% of the total school enrolment in school education system (Class PP-XII). The gender parity index at primary, basic and higher secondary levels, stand at 1.02, 1.07,1.03respectively, while at tertiary education level, gender parity index is only 0.82. Enrolment in vocational and technical education is also dominated by male with female enrolment at 35%. With the establishment of first school for visually impaired in 1973, Bhutan has made modest success in terms of access to education for children with disabilities. To extend educational services to children with disabilities, two special schools catering to hearing and visual impairment have been established. In 2002, a Special Educational Needs Programme (SEN) was started in Changangkha Middle Secondary School to integrate children with disabilities into the mainstream school system. . The long-term objective of the Programme is to provide access to general education in regular schools for all children with different forms of disabilities. As of 2017, 647 students with various forms of disabilities were enrolled in 12 schools. .

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Non-Formal Education (NFE) programme continues to be an effective program in providing basic literacy and functional skills to adult population who have missed the opportunity to pursue schooling. In 2017, there were 6668 NFE learners attending basic literacy and post literacy course in 668 NFE centres. The participation of female has always been much higher than male in NFE programme. The Royal Government continues to expand NFE programme to achieve 70% adult literacy rate by 2017 from 55% in 2012.

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Central Schools - Centers of Excellence for Quality Education The present school system of providing education through a thinly spread network of 600 schools across the country is no more sustainable and conducive to providing quality education. An increasingly emerging trend is the dwindling number of student enrolment due to low birth rate and rural urban migration leaving many schools without the critical mass of student number to afford a robust social community to call it a school. Many schools have less than 100 students. maintaining school infrastructures, services and facilities including teachers that is reflective of a level of quality that inspires and enable quality learning is a becomes difficult.

In addition, students, most of whom are from rural communities walk for hours to schools. At home students do not receive the much needed pastoral care at home, and nutrition is a challenge in many a homes, especially in rural areas.

In order to address these challenges, the Royal Government initiated the Central School program with the objectives to:

● Optimize utilization of available physical facilities by operating a central school in a location that can serve a large population catchment to improve efficiency of resources use both physical and teaching learning.

● A Central School has the following attributes:

§ Safe and child-friendly ambience with strong emphasis on students’ wellbeing and development; § Three meals a day for boarding students and mid day meal for day scholars; § Different campuses for primary and secondary levels wherever feasible; § Classes range from PP-X/XII with minimum enrolment of 800 students; § Structured learning schedule of morning, evening and night study § Provide residential facility to 80 percent of students and day-meal today-scholars as well; § Provide free amenities such as stationery, school uniform, school shoes, socks and sports gears. Boarding

students are also provided with mattress, blanket, bed sheet, bed cover, pillow, pillow case and towel and services;

§ Proactive engagement of parents; § Vibrant Alumni Association; § Operate as autonomous school; § Enhance pastoral care; § Curb frequent students transfers and create strong sense of belongingness and identity.

The Royal Government piloted 24 Central Schools in 2015. Based on the success of the pilot, 27 more were established in 2016 and yet another 9 in 2017 totaling to 60 Central School across the country. Today, about 45000 students are study in the Central Schools. The Royal Government has allocated close to Nu. 5000 million for the program.

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Goal 5: Achieve gender equality and empower all women and girls Gender equality and empowerment of women and girls have been recognized as an important cross cutting theme of socio-economic development in Bhutan. Gross National Happiness (GNH), Bhutan's development philosophy, which guides Bhutan’s socio economic journey aims to promote a conducive and inclusive environment within which every man, woman and child can pursue happiness and well being. The Five Year Plan’s (FYP), which provides the framework to formulate and implement all developmental activities in the country, have, since the early eighties, articulated the importance of women in development, and the 10th FYP (2008-2013) gave major focus on mainstreaming gender in the plans. Subsequently, the 11th Five Year Plan (FYP), 2013-2018, has ‘Gender Friendly Environment for Women’s Participation’ as a National Key Result Area out of its 16 National Key Result Areas. The Constitution of the Kingdom of Bhutan 2008 is steeped in values that promote gender equality and women and girl empowerment, demonstrating unequivocally the intent of non tolerance of the state on gender discrimination. Article 7 bestows equal Fundamental Rights, specifically guaranteeing equal protection before the law, for both women and men as a Bhutanese Citizen while Article 8 mandates every Bhutanese, as Fundamental Duties, to prevent and not tolerate amongst others, abuse of women and children. Article 9 provides protection to women and children from all forms of discrimination and exploitation against women and girl child and, Article 10 of the Constitution recognizes CEDAW and other relevant conventions that Bhutan is a party to as deemed by the law of the Kingdom. There has been strong political will in establishing an enabling environment for advancing the cause of women. The Child Care and Protection Act 2011 (CCPA), the Penal Code (Amendment) Act of Bhutan 2011 (PCB) and The Domestic Violence Prevention Act 2013 (DVPA) are critical legislations that protect the rights of women and girls. Equal treatment and inclusion of rights of women and men in other laws is also ensured to the extent possible. In order to provide strategic guidance in the planning, implementation and accountability of gender equality and women empowerment initiatives and programs in the country, gender equality policy is being drafted Further gender responsive budgeting has also been initiated by the Royal Government. Policy formulation process of the Royal Government of Bhutan requires all proposed policies to be screened through a GNH Policy Screening tool which, among others, assesses potential impact of proposed policies on Gender Equality and Women Empowerment and eliminate any negative impacts. As such, the overall policy formulation process ensures every policy to be gender neutral at the minimum. Bhutan also considers, where possible, generating gender disaggregated data in the 12th FYP, and towards this effort, a dedicated project for mapping the overall data ecosystem in the country is underway to assess data needs, gaps, processes including gender disaggregated data generation, analysis and dissemination for decision making.

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The Economic Development Policy (EDP) of Bhutan 2016, National Human Resource Development Policy 2010 (NHRD), CSMI Policy 2012, National Employment Policy (NEP) 2012, Food and Nutrition Security Policy of the Kingdom of Bhutan 2014, Financial Inclusion Policy and National Health Policy of the Kingdom of Bhutan have all mainstreamed gender equality, women's participation and empowerment aspects. Recognizing the importance of having effective institutional mechanisms to enforce the enabling legislations and implement policies and programs, the Royal Government of Bhutan has established key institutions and, has, over the years, strengthened the institutions with allocation of funds, adequate and competent human resources, and robust systems. The National Commission for Women and Children(NCWC), after its initial establishment as an agency under the Ministry of Health in 2004, has been upgraded and strengthened to a fully autonomous agency under the Royal Government with a vision to help develop Bhutan to be a "a happy nation where children, women & men live in harmony with equality and respect in all spheres of life". The members of the commission comprise of Government Secretaries, the Judiciary, Local Government, Royal Bhutan Police, Parliament, Civil Society Organizations and the Private Sector with the first female Minister of Bhutan, Lyonpo Dorji Choden, Minister for Works and Human Settlement as the Chairperson. The commission is supported by a full time secretariat staffed with civil servants headed by a Director. . In addition, the NCWC has a network of trained Gender Focal Persons(GFP) in all the Government Agencies. Civil Society Organizations (CSOs) play an important role in Bhutan in all spheres of socio- economic development through constructive partnership with the Government, and most CSOs in Bhutan help the vulnerable groups including women and children. The Civil Society Organizations Act of 2007, implemented by the Civil Society Organizations Authority, provides the framework for registration, functioning, funding and monitoring of CSOs. TARAYANA, Bhutan Association of Women Entrepreneurs (BAOWE), SAARC Business Association of Home Based Workers (SABAH) Bhutan and the Bhutan Network for Empowerment of Women (BNEW)the Youth Development Fund (YDF), Respect, Educate Nurture Educate Women (RENEW) work on issues related to livelihood programs for the vulnerable, violence against women and women empowerment. Additionally, there are also non-governmental organization like the Bhutan Nuns Foundations (BNF) and other community based informal and voluntary groups which work for women and girls empowerment. Additionally, there are also community based organizations which are informal and voluntary which also work in the interest of the vulnerable groups. The Royal Government in partnership with its national and international partners have undertaken numerous initiatives to promote gender equality and empower women and girls. A Mainstreaming Reference Group (MRG) has been constituted through an executive order of the Prime Minister, which will ensure that all cross cutting issues, including gender shall be mainstreamed and, a gender mainstreaming guideline has been developed. A Gender Equality Diagnostic study of selected sectors has been carried out to provide updated baseline information on the situation of women and men, as well as the gender analyses of selected sectors to facilitate gender mainstreaming. Awareness and sensitization programs were also organized at all levels to create awareness and in garnering support from the highest levels of the legislative, executive and the judiciary. Such

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programs were also conducted for the private sectors, NGOs and the government officials at the implementation levels. Despite the efforts put in, gender stereotype and prejudiced based beliefs and practices disallow complete understanding and internalization of the issue. Therefore, incomplete understanding of the issue continues to pose subtle yet strong challenges particularly at the implementation stages. At implementation level, agencies responsible for gender equality and women empowerment face the difficulty of translating the enabling legal, policy and political environment into actions owing to limited capacities.

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Goal 6: Ensure availability and sustainable management of water and sanitation for all This goal is to ensure that by 2030 every individual and household worldwide have access to clean water in their homes and adequate sanitation (safe toilet facilities). It is to ensure improving water quality through environmental protection measures and sustainable waste management. Bhutan’s water resources are mainly in the form of rivers and the major rivers of the country flow north to south. Apart from the major north-south flowing rivers, there are dense network of small – mainly rain-fed - tributaries that flow down the steep slopes and side valleys to join the major rivers. The Water Resources Management Plan (WRMP) 2003 reported that Bhutan has abundant water resources at the national level with 109,000 m3/capita/ year of water. Bhutan has achieved tremendous results in water and sanitation. Driven by the significance of water, water security has been prioritized as one of the national key result areas in the 11th FYP and 12th FYP. Integrated water security will also receive further attention in the 12th FYP as it is identified as one of the flagship programs.17 As per the 2017 Annual Health Bulletin (AHB), proportion of population using improved drinking water sources has increased from 96.1 per cent in 2010 to 97.7 per cent in 2016 with slightly higher access for urban population with 99.5 per cent and 97.2 per cent for rural population. Water resource management strategies has been continuously enhanced over the years. The Water Policy, 2006 provides guiding principles on environmental conservation, integrated water resource management, sustainable utilization, economic efficiency, equity and good governance. It envisions water as the most important natural, economic and life sustaining resource, assuring access to adequate, safe and affordable water to maintain and enhance the quality of lives and the integrity of natural ecosystems for present and future generations. It also sets priority for allocation of water use in the event of water scarcity. Bhutan adopted Water Act in 2011 particularly bearing in mind that every Bhutanese have assured access to adequate, safe and affordable water. It is also ‘to ensure that the water resources are protected, conserved and/or managed in an economically efficient, socially equitable and environmentally sustainable manner’ (Water Act of Bhutan, 2011). In 2014, the Bhutan Water Regulation has been approved to support enforcement of the Act and to clarify the roles and responsibilities of the water related stakeholders. As required by the Water Regulations 2014, Water Safety Plan has been developed and implemented for the urban supply systems in 22 municipalities. Furthermore, to ensure sustainability of the water safety plans, the ministry is continuously monitoring and evaluating the plans. Till date monitoring and evaluation has been carried out for 10 municipalities. This

17Guidelinesforthepreparationofthe12thFYP,2018-2023

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water safety plan has not only made significant changes in the management of the systems and the quality of water supplied but has also been useful to the municipalities in prioritizing system needs. With the rapid socio-economic development, the quality of raw water sources in Bhutan may be deteriorating. The water used for drinking must be regularly monitored and treated in order to protect the health of the consumers. Therefore, Bhutan also developed Drinking Water Quality Standard in 2016, in line with WHO standards, to ensure safe drinking water. Such standards protect public health by limiting the levels of contaminants in the drinking water. Several interventions along with the policies have been initiated to improve access and quality of drinking water both for rural and urban populace. The Royal Centre for Disease Control has established rural drinking water quality surveillance in line with the Water Policy. To contribute towards greater quality, quantity and sustainability of water, an integrated information system on water and sanitation has been developed as part of baseline study on WASH and initiated a pilot program to restore WASH systems at community level. As part of the program, the Community Health Pilot Project is being piloted at Trashi Yangtse and Wangdue Phodrang districts, and is expected to benefit a total of 10,707 households. The focus of the project also includes building a sustainable health system to deal with maternal and child health and health system capacity to deal with emergencies. In addition, development of the Water and Wastewater Master Plan is a consistent, proactive step taken to ensure proper planning of infrastructure that will encourage growth and a continued high level of services to the Municipal residents. The government has developed Water and Wastewater Master Plan for Paro, Bumthang, Tsirang, Phuentsholing Thromde and Denchi town at Pemagatshel as part of its strategy for short and long term planning to ensure sustainability of urban water cycle. Governed by the Water Act, the National Integrated Water Resource Management Plan (NIWRMP) has been prepared for the purpose of coordinated development, management, conservation and efficient use of water resources in the country. River basin management plans, water risk scenario and opportunities for resilient development, and community based water resource inventory forms integral part of integrated approach to water resources. A framework for ambient water quality monitoring has also been established in 2010. In order to improve data on water to ensure accessibility and sustainability, the government has developed an Integrated Information System on Water and Sanitation ‘WASIS’ that is accessible to the Local Governments as well as the central agencies. This system is expected to provide real time data, improve communication and reduce risk of error contributing towards greater productivity. Although Bhutan is endowed with abundant water resources, accessibility remains a major challenge with communities facing seasonal and local scarcity of water due to rugged topography and associated climatic variations for drinking, industrial and agriculture purposes.

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Sustainability and reliability of urban water supply systems also remain one of the main challenges. Amongst the 22 urban centers, 17 class B Thromdes depend entirely on surface sources while 4 class A Thromdes (Thimphu, Phuntsholing, Samdrupjongkhar and Gelephu) and one class B Thromde (Paro) depend on surface water sources as well as ground water. However, less than 10% of population in Thimphu and 50% of population in Gelephu, Phuntsholing, Samdrupjongkhar and Paro depend on ground water. In addition, issue of water quality due to contaminations remains to be solved. Most of the urban centers also have access to only intermittent water supply.

Lack of coordination among water related agencies have been a major challenge with each agency pursuing their own priorities for use and management of water. Efforts have been made by the government to foster coordination through establishment of a Water Board comprising of director-level officials from various agencies. In terms of sanitation, proportion of population using improved sanitation facilities increased to 71 per cent (87 per cent urban and 61 percent rural), in 2015 compared to 66.3 per cent (92.6 per cent urban and 57.9 per cent rural) in 201218. The government developed Rural Sanitation and Hygiene Strategy in 2015 and various programs were implemented across Dzongkhags with severe sanitation issues such as Mongar, Samdrup Jongkhar, Samtse, Wangdue, Trashigang, Trashiyangtse, Trongsa and Tsirang. Draft National Sanitation and Hygiene Policy explicitly addresses the significant opportunities to professionalize sanitation and hygiene service delivery and reach universal coverage. With close alignment with national, regional (South Asian Conference on Sanitation-SACOSAN), international commitments (Right to Sanitation and Hygiene and SDGs), the policy considers the institutional roles and responsibilities for sanitation and hygiene encompassing all components with respect to technology, infrastructure, environment, health and economic development. Some of the challenges faced in improving sanitation include: Mud rammed, wooden, traditional houses in Bhutan cannot accommodate modern pour flush toilets and people end up building poor quality toilets at a distance from the home;

a. Providing sanitation facilities to the urban poor in informal settlements although the current scale may be small;

b. Providing sanitation facilities to nomadic populations; c. Collection and analysis of disaggregated data on age, sex, disability and poverty so as

to be able to plan for equitable access to WASH by all.

The Role of Water Safety Plans: A success story for Bajo Water Supply System Wangduephodrang dzongkhag is one of the largest districts in the western central part of Bhutan. Bajo was selected as the model town for implementing Water Safety Plan (WSP) in Bhutan for urban water supply. The water supply system for Bajo caters to about 6000 water users through 330 metered pipe connections.

182012NationalHealthSurveyReport,2014

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Ex-Ante: The quality of drinking water supply before the implementation of WSP was very poor with significant number of water related illnesses being reported every year. The treatment plant was not well maintained due to lack of trained operators, lack of capacity and equipment for operational monitoring of the water supply system. As a result, the treatment plant was bypassed most of the time and raw water was supplied to the consumers. Quality of water supply was not considered as a priority but rather quantity of water was focused by the municipality. Water testing was not carried out before by the municipality. Although test for microbial content was carried out by the Hospital, the test results were not shared with the municipality. The water supplier was not able to keep records of the expenditures incurred for providing infrastructures in place. The identification of hazards which contribute to poor quality of water at various points was neglected. The unaccounted flow of water was more than 40% resulting in the shortage of water at the consumer. Although, complaint log book was in place, there were no proper records on the nature of complaints and actions taken. Ex-Post:In less than two years after implementation, the WSP for Bajo water supply system has contributed to significant improvement in the water infrastructure as well as strengthening of system operations and management. Many improved infrastructures were put in place to minimize the risk of contamination of water supply. A review of available microbial water quality data from 2012 till date indicates significant improvements in water quality since the installation of pressure filters and backwash pumps, the improvement of the chlorination system and the provision of water quality testing equipment and trainings, all of which were identified from the water safety plan. Various SoPs were developed and made available to the operators working at the field on O&M of water supply system. Customer care services were improved. A new record book was maintained after WSP and detailed records of complaint and action taken were recorded. Various sensitization programs were conducted by the municipality on water quality to the consumers. Expenditures related to water supply is tracked and recorded. This has helped in determining the operational cost for water supply. The operational monitoring plan (water quality testing and visual inspection) is clear and comprehensive and is being implemented by the highly competent operators. Microbiological testing of water quality is done by the hospital every month and the results are shared to the municipality for correction where required, in the system.

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Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all Bhutan is endowed with significant natural energy resources, including hydropower, solar, wind, and mineral resources. Bhutan meets its energy needs primarily from fuel wood and electricity from hydropower accounting for the largest share of energy use in the economy. As per Bhutan Energy Data Directory 2015, the country’s energy supply mix shows that there is still a large dependence on thermal energy (72%) out of which petroleum products contribute about 21%, followed by industrial consumption of coal and its derivatives which forms 15% and biomass 36%. The remaining source of energy is from electricity contributing 28% of the aggregate fuel mix. In terms of Total Oil Equivalent (TOE), Bhutan consumed 650,220 TOE of energy. The highest energy consumption is observed in the building sector (270,356TOE) which comprises of 41.58% of the total energy consumed in the country while the energy consumption in the industry sector was 37.22% of the total consumption (241,992 TOE). The transport sector follows after the industry sector with 18.64% share in the energy consumption (121,218 TOE) with the remaining 2.56% being consumed in agriculture and other auxiliary sectors.

In terms of access to electricity, 100% of the rural households have access to electricity (about 97% through on-grid electrification and about 3% through off-grid basically through solar photovoltaic systems).

Hydro-power energy production is Bhutan’s outstanding comparative advantage and its sustainable exploitation has had an immeasurable impact in boosting the country’s economic situation. Hydropower constitutes 16% of GDP and 30% of revenue. Resources from hydropower exports have enabled the country to develop greater economic self-reliance and ability to meet increasingly larger shares of the country’s development expenditures. The potential for hydropower in Bhutan is estimated to be around 30,000 MW of which around 23,760 MW is estimated to be techno-economically feasible for development. As of 2017, the installed generation capacity is about 1,614 MW and three mega projects that would contribute an additional of 2,940 MW capacity are under advanced stage of construction. Bhutan’s hydropower plants are mainly run-of-the river schemes that has minimal impact on the environment.

In recognition of Bhutan’s comparative advantage in hydropower development given the huge market in the region and to foster socio-economic development, the Government embarked on an accelerated hydropower development program. In order to facilitate this accelerated hydropower development and strengthen institutional capacity, Bhutan Sustainable Hydropower Development Policy 2008 was adopted. The Policy provided the framework and guidelines for accelerated hydropower development. The Royal Government has set a target of 10,000 MW to be developed by 2020.

In order to provide legal framework for restructuring the power supply industry and mechanisms for licensing and regulating the operations of power companies and possible participation of the private sector, the Electricity Act 2001 was enacted. One of the key underlying objectives of the Act was to promote a safe, reliable, secure and affordable supply

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of electricity throughout the country. At present, the Act is being amended to reflect new development in the electricity sector and also to harmonize its provision in consonance with other policies and Acts.

While hydropower development is seen as the key to economic growth, its continued generation could be impaired due to adverse impacts of climate change. Development of other resources, particularly to meet primary energy requirement are required to be pursued to address energy security concerns. Bhutan has good potential for other renewable energy sources, primarily solar and wind energy, and is exploring to diversify the energy supply mix to ensure energy security in the long run. Therefore, in order to provide necessary direction for the promotion and development of renewable energy, the Alternative Renewable Energy (ARE) Policy 2013 was adopted. The ARE Policy has a target of 20 MW to be developed from various technologies by 2025.

As part of the implementation process of the ARE Policy 2013, the renewable energy resource assessment has been carried out and Renewable Energy Master Plan has been formulated with identification of potential project sites. The implementation rules & regulation and guidelines as per the provision of the AREP 2013 are also being formulated. Further, feed-in-tariff policy is also being formulated to provide favorable incentives for the promotion of renewable energy technologies in the country.

Bhutan has significant potential to develop wind power system in the country. To kick-start the technology, a 600 kW wind power plant was successfully commissioned in 2015 under the support from the Asian Development Bank.

In order to help the country meet its objectives of being a net carbon sink, reduce dependence on imported fossil fuels, reduce dependence on fuel wood and improve energy security through diversification of energy supply, about 14,179 improves and energy efficient stoves and about 3,738 biogas plants at the household level have been promoted across the country.

To promote energy efficiency through the use of Light Emitting Diode (LED) bulbs, a total of 24,500 LED bulbs have been distributed nationwide at subsidized rate. The LED program is being initiated by the Government in an attempt to phase out incandescent lamps, which are inefficient and prevalent across the nation.

As part of the implementation process of the Alternative Renewable Energy Policy(AREP) 2013, the renewable energy resource assessment has been carried out and Renewable Energy Master Plan has been formulated with identification of potential project sites. The implementation rules & regulation and guidelines as per the provision of the AREP 2013 are also being formulated. Further, feed-in-tariff policy is also being formulated to provide favorable incentives for the promotion of renewable energy technologies in the country. In order to provide necessary direction for a streamlined and systematic approach for implementation of Energy Efficiency and Conservation (EE&C) efforts, the National Energy Efficiency Policy 2017 is being formulated.

Demand side management of energy and improvements in the energy performance standards are also carried out for four major sectors of Industry, Transport, Buildings and Appliances through adoption of energy efficiency and conservation standards. This will make our industries and service sectors energy efficient and clean, thereby increasing its competitiveness in the market.

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At the regional level, recognizing the desirable benefits of optimal sharing of the limited energy resources in the region, especially in the field of renewable hydropower energy that will further contribute towards combating global warming and climate change, a trilateral cooperation among Bhutan, Bangladesh and India for investment in hydropower project is being initiated.

At the international level, Bhutan is a member to the International Renewable Energy Agency (IRENA), wherein the country could avail the benefits of the Agency such as relevant policy advice, improvement of important knowledge & technology transfer, capacity building and advice on financing for renewable energy. Bhutan participates at the Assembly and Council’s meeting for fostering partnership and also for attracting investment.

Despite huge progress made in producing renewable energy and enormous potential, Bhutan is still confronted with challenges that need to be addressed. In order to successfully carry out the above programs to realize the SDG 7, Bhutan would require huge financing. The Royal Government will continue its efforts to further improve the investment climate and adjust policy and regulatory framework to attract more financing in the form of domestic and foreign investments. Lack of skilled manpower and transfer of technology in the energy sector is another challenge. Investments in these areas are also the priority of the Government to reap the benefits of the renewable energy resources and human potential in time.

Furthermore, it is increasingly becoming compelling for the Royal Government to provide reliable, efficient and adequate supplies to the domestic market at affordable and competitive rates to improve and enhance quality of lives of Bhutanese people and to enhance and sustain the economic growth.

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Goal 8: Promote Sustained, Inclusive and Sustainable Economic Growth, Full and Productive Employment and Decent Work for All Guided by the development philosophy of Gross National Happiness (GNH), Bhutan has made impressive development progress. Having achieved a GNI per capita of US $ 2,478.1419 and a HAI score of 67.9 in 2015, Bhutan is poised for graduation from LDC status. The average economic growth rate in the last five years (2012-2016) was 5.5 percent, which stands below the SDG target of 7 percent. The Bhutanese economy is mainly driven by hydropower. Bhutan has an estimated hydropower potential of 30,000 MW of which 23,760 MW is techno-economically feasible. Bhutan continues to evolve into a modern economy with the industry and services sectors growing more rapidly than the agriculture sector. In terms of sector composition, agriculture dominated Bhutan's output up until 1990s. The development of hydro resources enabled industry to overtake agriculture in the economy’s output. Similarly, the development of infrastructure, particularly in the 1990s, and the surge in tourism activities in the 2000s propelled the growth of service sector. From 2001/2002 to 2014/2015, the GDP share of service sector increased from 34.5% to 38.8% and industry sector’s share increased from 37.8% to 43.6%. In contrast, agriculture’s share declined steadily from 25.1% to 12.7%, in the same period20 (See Figure 1). The Royal Government of Bhutan has thus far been the driving force behind its socio-economic progress. With “Self-reliance and Inclusive Green Socio-economic Development” as the overarching objective, the Royal Government set LDC graduation by 2021 as an explicit milestone and a top priority of Bhutan’s 11th FYP (2013-2018). In view of aligning policies with the changing economic context, the country’s Economic Development Policy (EDP) adopted in 2010 was revised in 2016. EDP is the overriding policy document that sets the agenda for economic development of the country. It has identified priority sectors in the form of “Five Jewels” that have the potential for export, revenue generation and employment creation. The Five Jewels consists of hydropower, agriculture, cottage and small industries, tourism, and mining.

19NationalAccountsStatistics,201620Agriculturesectordataconstitutesproperagriculture,livestockandforestry.

“Why am I always putting so much emphasis on the economy? The answer is simple. I am a realist, and there is no doubt in my mind that in this day and age, a nation’s success is determined by the strength and competitiveness of her economy. This may change in the future, but today, if we are to succeed in this globalized world, we need a strong economy”.His Majesty the King 2007

“Why am I always putting so much emphasis on the economy? The answer is simple. I am a realist, and there is no doubt in my mind that in this day and age, a nation’s success is determined by the strength and competitiveness of her economy. This may change in the future, but today, if we are to succeed in this globalized world, we need a strong economy”. His Majesty the King 2007

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By creating enabling environment for business through policy and regulatory reforms, the EDP aspires to achieve minimum average economic growth rate of 10% which is expected to propel Bhutan to the status of a middle income country by 2020. A set of broad strategies including diversification of exports and economic base, development of ‘Brand Bhutan’ and industrial cluster approach is set to aid the development of priority sectors. With “Just, Harmonious and Sustainable Society through enhanced Decentralization” as the main objective, the Guideline for Preparation of 12th FYP (2018-2023) also recognizes the importance of improving productive capacity of the economy and prioritizes economic diversification as one of the National Key Result Areas.

Next to hydropower is a thriving tourism sector that has had significant contribution to Bhutan’s economy. Bhutan is regarded as one of the most exclusive travel destinations in the world. Bhutan is reputed for authenticity, a well-protected cultural heritage and natural environment that make it an exotic destination. In 2016, 25,517 people were employed directly (as operators, guides, hotels and drivers) in the tourism sector and contributed Nu. 4.7 billion to the economy in 2016.

The Royal Government of Bhutan adheres strongly to a policy of 'High Value, Low Impact' tourism which serves the purpose of creating an image of exclusivity and high-yield for Bhutan. The tourism industry in Bhutan is founded on the principle of sustainability, meaning that tourism must be environmentally and ecologically friendly, socially and culturally responsible and economically viable. The Royal Government has adopted a very cautious approach to growth and development of the tourism industry to promote Bhutan as a high-end tourist destination in a manner which accords with the tenets of Gross National Happiness. The overall unemployment was 2.0% in 2017. However, rising youth unemployment remains a cause of concern for Bhutan with youth unemployment rate of 11%21 in 2017. The Royal Government continues to place high emphasis on youth employment. In 2015-2016, 1,296 job seekers were covered by the Guaranteed Employment Scheme (GES). The GES provides an opportunity to support youth in transition to work, promote dignity of labor and provide skills training in critical sector that are in high demand for a maximum of two years. In the same year, in view of limited employment opportunities in the country, 1439 job seekers were employed overseas countries such as Qatar, UAE, Kuwait, Japan, Israel, Malaysia and Thailand. In the pursuit of promoting entrepreneurship and generating self-employment, the Royal Government provided entrepreneurship training to 354 youths in 2015-201622.

In addition, a National Workforce Plan has been developed to bridge the gap between supply and demand of workers in tourism, construction and production sectors. A Technical and Vocational Education and Training Blueprint (2016-2026) has also been developed to provide strategic approach for policy reform and development planning in skills development with an objective to address the inherent sector challenges and meet existing and future labor market demands in the country. Recognizing the benefits of vocational education and training for gainful and productive employment, 1477 youth (958 males and 519 females) were enrolled in six Technical Training Institutes (TTIs) and two institutes of Zorig Chusum during the 2015

21AnnualReport2015-16,MoLHR22PrimeMinister’sStateoftheNationReport,July2016.

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academic year23.

The National Employment Policy (NEP) adopted in 2013 outlines strategies that will accelerate employment growth, improve the quality of working conditions and provide equal employment opportunities. The National Youth Policy 2011 identifies ‘Employment & Training’ as a key focus area and highlights that a well engaged and productive young workforce is key to a happy and prosperous society. Under this policy, the Government identifies unemployment as a key concern facing the youth of Bhutan and establishes its intent to tackle the issue proactively.

However, while the country has achieved impressive gains in two of the parameters for graduation, namely GNI per capita and Human Assets Index (HAI), overcoming economic vulnerability continues to be a major challenge. Bhutan’s economic growth is hugely influenced by investment in hydropower with growth rates spiking whenever hydropower projects are commissioned. As such, the hydropower sector does not create adequate jobs to absorb the growing youth workforce. Bhutan also faces persistent current account deficit due to rising imports including for hydropower construction vis-à-vis sluggish growth in exports. Bhutan faces significant challenges in diversifying its economy in part because of the inherent constraints associated with being landlocked and small population. Besides, institutional setbacks such as lack of policy coherence, coordination and slow implementation progress in major programs continue to deter the growth of private investment. Lack of adequate infrastructure, energy, land, access to finance and issues associated with labor market are prominent binding constraints faced by the private sector.

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Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. Planned development has brought about significant structural changes in the economy moving away from the primary sector towards secondary and tertiary sectors. The rapid growth and consequent structural changes have been driven by the public investment in hydropower projects and other critical infrastructures. The occupational structure of the economy has, however, not, shifted in a manner consistent with the changes in the sectoral composition of GDP. Around 60% of the population are still engaged in agriculture sector.

Expansion and modernization of transport, energy and communication infrastructure network is an essential component of growth strategy. Promoting synergy and integration across these infrastructures can bring about enormous economic gains through enhanced efficiency and cost effectiveness.

Energy Infrastructure: Affordable, reliable and renewable energy is key to sustainable development and the transition to modern society. Bhutan has an estimated hydropower potential of 30000 MW of which 23760 MW is techno-economically feasible. As of today, Bhutan has an installed capacity of 1,606 MW of electricity most of which is exported to India. The initial plan of increasing the total installed capacity to 10,000 MW by 2020 is delayed due to geological challenges that have resulted in exorbitant cost escalations. It is now expected that only around 3,658 MW of hydropower capacity can be added to the existing capacity, increasing the total hydropower capacity to around 5000 MW by 2020.

Transport Infrastructure: It is key for driving economic and social development and an important mechanism for raising a country’s competitiveness and achieving inclusive and sustainable development.

However, transportation is a major obstacle within and beyond Bhutan’s border, given that the country is landlocked, and situated in geologically different terrain, raising the cost of construction and as well as the cost of production. Bhutan therefore suffers from limited regional and international connectivity in terms of greater market integration.

India is by far the largest trade partner accounting for more than 80% of the trade value. With the exception of small volumes of air freight, all trade is conducted by road to, or through, India. The Asian Highway AH 48 connects Thimphu to India (West Bengal) through Phuentsholing.

To address the issue of connectivity, the government has built around 6,000km of roads in Bhutan24. The road network comprises a single East-West Highway through the centre of the country, linking Thimphu with the Central and Eastern Districts, plus a series of north-south 24TransportVision2040.

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connections to the Indian Border, including the main access between Thimphu and the border at Phuentsholing. All the Dzongkhag Centres are connected by blacktopped motorable roads forming part of the National Highway Network. Additionally, the government is upgrading to double lane the Northern East-West Highway (NEWH) from Semtokha to Trashigang. To make the road access resilient to climate change impact, as of 2016, 17 Gewog Centres (GCs) were connected with black-topped roads. 87 GCs are located along the highways. The government has built 1,540 KM of farm roads in the last three years of the 11th Five Year Plan25, and in the 12th FYP, effort will be to consolidate these critical infrastructures to make it more climate resilient. With the completion of all these projects, Bhutan is expected to be equipped with basic road connectivity. Upgrading of the two domestic air ports in the East and South is also seen to facilitate integration of regional trade and business for larger economic gains.

In addition, the Royal Government of Bhutan has participated in several joint projects with neighboring countries and international development agencies. The Bangladesh-Bhutan- India-Nepal (BBIN) Motor Vehicles Agreement for the Regulation of Passenger, Personal and Cargo Vehicular Traffic, signed in 2015, is expected to facilitate easy movement of people and goods across borders to reduce trade transaction costs.

Bhutan’s sustainable transport development follows the “Bhutan Transport 2040: Integrated Strategic Vision”. The long term strategic transport envisions “to provide the entire population with a safe, reliable, affordable, convenient, cost- effective and environmentally friendly transport system in support of strategies for socio- economic development”. To match strategic vision of Bhutan Trashport 2040, the Government also updated its National Transport Policy 2017 which provides an eco-system ecosystem to promote sustainable and inclusive transportation which is safe, reliable, accessible and affordable, encompassing land, air, and water transport, which is also in with SDG 9.

To accelerate the implementation of this strategic vision, Bhutan will be implementing low emission transport system in the 12th FYP.

ICT Infrastructure: Seamless information exchanges that are affordable and available all the time to all is the basis for an efficient and interconnected business environment, people-to-people connectivity, more efficient resource-use as well as transparent governance. Bhutan’s focus in recent years has been on strengthening ICT infrastructure such as fiber optic connectivity, government intranet system and national data center. Critical infrastructure such as optical ground wire (OPGW) national backbone, fiber optics and internet connectivity are already laid out in all the 20 districts. Bhutan also has extensive mobile connectivity with all the 20 Dzongkhags (Districts) and 205 Gewogs (blocks) connected through the two telecommunication companies – ‘B-mobile’ and ‘T-cell’. According BLSS Report 2017, 58% of households in the country have Internet connection. Of those, 99% have mobile Internet irrespective of areas (urban and rural), while less than 3% have other connections such as broadband, leased line, dial-up, and data card.

In addition, inter-government interoperability framework and enterprise architecture to enable efficient sharing of information has been developed. Bhutan has developed its first IT Park with support from multilateral donors and FDI with the objective of employment generation and promoting knowledge based society. In addition to these services, the park also serves as innovation hub for startup business. To foster innovation and ICT enabled growth, the country 25StateoftheNationReport,2016.

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has started innovation camp through Start-ups and has committed to create start-up space in the capital city.

The EDP of Bhutan places strong emphasis on the promotion of a rational and scientific temperament, dignity of labor, spirit of adventure, entrepreneurship, creativity and innovation with ethics and hard work. The following strategies of EDP closely aligns with the essence of SDG 9:

i. Diversify the economic base with minimal ecological footprint. ii. Harness and add value to natural resources in a sustainable manner.

iii. Increase and diversify exports. iv. Promote Bhutan as an organic brand. v. Promote industries that build the Brand Bhutan image.

vi. Reduce dependency on fossil fuel.

An action plan has been recently developed to implement the EDP.

The Constitution of the Kingdom of Bhutan requires protection and preservation of our pristine environment, and mandates a minimum of 60% of Bhutan’s total area be kept under forest cover for all time. In 2009, in the 15th Conference of Parties (CoP) to the United Nations Framework on Climate Change, Bhutan committed to remaining carbon neutral at all times.

Furthermore, the Royal Government recognizes that challenges of environmental issues, concerns with expansion of developmental activities related to urbanization, and climate change due to global warming are on an increasing trend which will affect, first and foremost, the poor and vulnerable. Thus, it is imperative that environmental and climate change concerns be addressed systematically with the reduction of poverty and enhancement of people’s livelihoods. These concerns are implemented through a framework called “Framework to Mainstream Environment, Climate Change and Poverty (ECP) concerns and other cross- cutting issues into the 11 FYP’. The framework contains six steps of mainstreaming, and forms an integral part of the FYP guidelines for central agencies and local governments.

Given the significance of SMEs, particularly its potential to create employment, the Royal Government considers SMEs as one of the Five Jewels of the economy. However, access to finance is one of the biggest challenges faced by small enterprises in Bhutan. Challenges in both supply-side as well as demand-side constrain small enterprises from accessing finance required for the growth of business.

In the absence of any MFIs dedicated to provide microfinance, Bhutan Development Bank Limited (BDBL), a state-owned bank provides credit to small and medium-scale industrial and agricultural activities. BDBL has set up 29 branches in all 20 Dzongkhags and in some of the Gewogs. It is the only bank that has a noteworthy microloan portfolio with close to 3,000 customers in their Group Guarantee Lending Scheme (GGLS). It has also launched savings products for the youth and elderly and has more than 40,000 accounts. These measures have brought about wider participation of the rural population, especially women. The interest rate on GGLS loans is set at 10%, which is relatively lower than the prevailing market rate. Recently, the government also began to track proportion of population with savings account as part of local governments’ annual performance. To address the issues related access to finance and to promote rural enterprise, the Royal

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Government also introduced Revolving Fund as part of the Economic Stimulus Plan in 2014. The fund provides credit to small businesses and non-formal rural commercial activities at highly concessional interest rate of 4%.

At the policy level, the Royal Government has drafted the Financial Inclusion Policy (FIP) with support of the World Bank. Regulations on Microfinance Institutions (MFIs), Branchless Banking and agent regulations are also in place. However, like any other landlocked country, Bhutan faces challenging circumstances. Bhutan’s access to neighboring countries and, indeed, the rest of the world is limited as Bhutan shares borders with the PRC and India only. Expansion of trade relationships beyond its current dominant trade partner, India, faces the hurdle of limited air and border connectivity, as well as access to shipping ports.

Secondly, with a population of only 768,577, the small size of domestic market offers limited opportunities to harness economies of scale for production. Besides, capacity constraints and negligible investment in the area of science, technology and innovation are a major constraint facing the Bhutanese economy.

As Bhutan’s industrial sector has been largely driven by hydropower and construction sectors, the manufacturing subsector remains relatively small, accounting for only about one-fifth of the industrial sector. The narrowly based Bhutan’s manufacturing sector is also dominated by a small number of major operators and a larger number of small manufacturing plants concentrated in the food processing activities and cottage industries. In general, the manufacturing sector in Bhutan is locked into relatively low value-added products.

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Goal 10: Reduce inequality within and among countries Equality is at the core of all sustainable development goals. It is to empower and promote social, economic and political inclusion irrespective of specific characteristics such as age, sex, disability, religion, economic or other status. ‘It is a concern that in a rapidly growing economy, inequality may bring great divides in our society between the rich and the poor. Another objective of the Land Kidu has been to empower and uplift people, and allow them to prosper’. His Majesty the King Jigme KhesarNamgyelWangchuck, 17th December 2016, 109th National Day, Trongsa. Bhutan is determined to address growing concerns of different forms of inequalities across all sections of society through various policies and legal frameworks. Reduction of poverty and inequality has consistently featured as a priority in the 11th FYP as well in the 12th FYP. The 12th FYP is also focused on creating a ‘Just and harmonious Society’ through reduction in poverty, creating gainful employment, providing quality health and education services, promoting democracy and decentralization, reducing corruption, improving justice system and promoting gender equality. The mean per capita expenditure of households in the fifth (richest) per capita consumption quintile (Nu. 10,765) is more than seven times that of households in the poorest per capita consumption quintile (Nu. 1, 471) and the income gap is wider between the rural and urban population. The average annual household income was Nu. 164,829 for the entire country. However, the average annual household income for urban population was 172 % more than that of rural counterparts. The average annual household income for rural population was Nu. 104,091 whereas it was Nu. 282,671 for urban population in 2012. Similar results have been echoed by the 2015 GNH Survey that reported only 59 per cent of the population enjoyed sufficiency level of household per capita income. The Gini coefficient is 0.38 in 2017 compared to 0.36 is 2012. Key programs such as the targeted poverty reduction, the National Rehabilitation Program for landless and destitute people, national resettlement programs are altogether geared towards uplifting the livelihood of marginalized section of the society. Given the importance of socio-economic development realities in rural areas, the resource allocation system adopted by the government is inclusive. Resource share of local government has also been steadily increasing in tandem with improvement in local governments’ capacity. The practice of the RAF for local government will further ensure the resources reach the needy ones. The RAF is based on four criteria including MPI, rural population, geographical area and transportation cost index with maximum weightage of 45 % for MPI. Life and house insurance are mandatory in Bhutan. The Government facilitates provision of life insurance and insurance for rural houses for the population. Under the life scheme, the

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annual premium contribution per person is Nu 195 with a subsidy of Nu. 108 by the government. Upon the insurer's death, the family receives a compensation of Nu 30,000 from the Government. For the rural house insurance, both the permanent and semi-permanent, the premiums are collected by local village leaders and deposited with the RICB. Between 2009 and 2010, six earthquakes of varied magnitude hit Bhutan affecting more than 7,000 rural houses and compensation amounting to Nu. 130 million were paid to the affected households. In absence of any MFIs dedicated to provide microfinance, Bhutan Development Bank Limited (BDBL), a state-owned bank provides credit to small and medium-scale industrial and agricultural activities. BDBL has set up 29 branches in all 20 Dzongkhags and in some of the Gewogs. It is the only bank that has a noteworthy microloan portfolio with close to 3,000 customers in their Group Guarantee Lending Scheme (GGLS). It has also launched savings products for the youth and elderly and has more than 40,000 accounts. These measures have brought about wider participation of the rural population, especially women. The interest rate on GGLS loans is set at 10%, which is relatively lower than the prevailing market rate. Recently, the government has also begun to track proportion of population with savings account as part of local governments’ annual performance. To address issues related access to finance and promote rural enterprise, the Royal Government also introduced Revolving Fund as part of the Economic Stimulus Plan in 2014. The fund provides credit to small businesses and non-formal rural commercial activities at highly concessional interest rate of 4%. In addition, the Royal Government has drafted the Financial Inclusion Policy (FIP). . Regulations on Microfinance Institutions (MFIs), Branchless Banking and agent regulations have also been put in place. Considering the changes in economic and social structure, the minimum level of National Workforce Wages has been revised from the range of Nu. 165-240 to Nu.215-324. Above all, impact on inequality is considered right through the development stage of any policy or project in the country through the GNH Screening Tool. GNH Screening Tool is a system that ensures all development policies and projects of Bhutan are reviewed under the lens of GNH. The tool evaluates, monitors, sets goals and raises national consciousness about the conditions that are conducive to happiness and wellbeing of people, and the country as a whole. With Bhutan fully onboard in international conventions and initiatives on people with disabilities, the Royal government has been giving priority to mainstream their concerns into all development spheres. The idea of inclusiveness is being promoted and the recent effort is to mainstream people with disability in the upcoming parliamentary elections to be held in 2018.

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One Gewog One Product Program

One Gewog One Product (OGOP) is a noble initiative initiated by Her Majesty the GyeltsuenJetsun Pema Wangchuck to pursue vigorously to achieve the objectives to promote production of authentic Bhutanese produce for both domestic and international market, contribute to poverty alleviation, improve rural livelihood and also promote entrepreneurship among the Bhutanese people. While the main beneficiaries are the rural farmers, it is multi-dimensional and multi-sectoral in nature comprising of production, value addition, standardization and marketing with many stakeholders along the whole value chain. The overriding objective is to ‘produce at least one authentic Bhutanese product from each gewog to increase and supplement rural cash income’. Through the OGOP approach, each gewog plan and produce at least one product that defines the gewog or is unique to that particular gewog. The product should also have potential to enhance production and marketability with some processing and value addition. The activities undertaken under the aegis of this plan must have a visible positive impact on respective gewogs. OGOP is a community led process, and community has the authority to decide on which product to include as OGOP product based on the comparative advantages and production capacity. The government will help and facilitate the farmers through education, training, technical backstopping and provision of technology. Currently there are more than 80 Gewogs supplying close to 106 products to the OGOP processing unit benefitting about 59 individuals. The products are sold through the main outlet in Thimphu and at Paro International airport. The assorted gift packages from OGOP are gaining popularity and used by the Royals and the government especially for country’s high-level regional and international guests. The program is regularly monitored and reviewed to identify best practices and challenges. In the 12th FYP, as one of the flagship program, it is expected to substantially increase production, diversify products, and thereby increasing the engagement of rural households and individuals.

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Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable As a developing nation, Bhutan continues to undergo fast socio-economic change and progress with rapid urbanization. Population and Housing Census of Bhutan (PHCB) 2005 found increasing trend in the population living in urban areas with 15% in 1995 to 20% in 2000 and 31% in 2005. The latest data on urban population will be available after the PHCB 2017 results is published. Traditionally, settlement system consisted of villages and settlements around administrative centers and monastery complexes. Patterns and forms of settlements were mostly shaped by the availability and topography of the land, availability of water, and safety and security. However, with the start of modern development, new forms of settlements based on trade and commerce developed. Some of the historical factors have become less relevant because of access to new markets and improved infrastructure services. The Royal Government considers human settlement as living spaces and as essential elements of the cultural landscape that need to be developed as parts of an integrated system. Studying the existing scenarios and emerging trends, the government identifies potential urban growth centers and prepares human settlement plans and strategies for specific urban centers following integrated planning approach for holistic perspective taking into consideration environmental sustainability, disaster risk reduction and climate change adaptations. The 11th FYP implemented human settlement development programs and projects to enhance provision of basic services both in urban and rural areas, enhancing livability of the four major Thromdes 26and mainstreaming disaster management into human settlement plans. Similarly, the 12th FYP has prioritized " Livability, Safety and Sustainability of Human Settlements Improved" as one of its NKRAs. Housing is an integral component of human settlement. Traditionally, housing shortage was not a critical issue. This could be attributed to the safety net provided by the community and the use of local work force and building materials. However, with the changing structure of the economy and growth and movement of population, providing adequate affordable housing has become a serious issue, especially in urban centers. BLSS 2017 reported that 63.3% of the Bhutanese live in houses, 87% of the households in the rural areas lived in houses whereas over three-fourth of urban households (77%) lived either in part of a house or in an apartment. It also indicates that about 60 percent of the household owned their own dwellings, out of which 83 percent households were in rural areas and 17 percent in urban areas. 62 percent of households in urban areas rented their dwellings. Also, Bhutanese spend 19% of their monthly income on house rent as per the same report.

26Cities

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Existing legislation and policies recognize the primacy of housing provision. A national housing policy was adopted in 2002, which encompassed: (i) providing safe and affordable housing; (ii) promoting home-ownership; and (iii) creating a transparent and well-functioning housing market. In line with the policy, the National Housing Development Corporation Limited (NHDCL) was established in 2009 with the mission to provide safe and affordable homes to Bhutanese. The Royal Government developed 1134 housing units between 2000 and 2017. The surge in private investment in housing sector in the recent years has helped narrow the gap between supply and demand for housing especially in urban areas like Thimphu and Phuntsholing. However, with limited research and development and innovation in the construction sector, the housing, like any other sector, continues to be driven by high import of materials and machineries.

The benefits of integrated rural and urban settlements are well appreciated by the Royal Government. To provide access to safe, affordable, accessible and sustainable transport for all, the Royal Government continues to invest in improving transport infrastructure such as road network and airports as well as services. Bhutan has over 12,000km of internal road network. The road network comprises a single East-West Highway through the center of the country, linking Thimphu with the Central and Eastern Districts, plus a series of north-south connections to the Indian Border, including the main access between Thimphu and the border at Phuentsholing.

The country is divided into 20 Dzongkhags (Districts) each with an administrative centre. All the Dzongkhag Centres are connected by motorable roads forming part of the National Highway Network. Additionally, the government is upgrading to double lane the Northern East-West Highway (NEWH) from Semtokha to Trashigang. As of 2016, 79 GewogCentres (GCs) were connected with black-topped roads. 20 GCs are located along the highways. The government has built 1,540 KM of farm roads in the last three years of the 11thFive Year Plan27.With the completion of all these projects, Bhutan is expected to be equipped with basic road connectivity. Upgrading of the two domestic air ports in the East and South is also seen to facilitate inter-regional transport and tourist movements within Bhutan.

Bhutan’s sustainable transport development follows the “Bhutan Transport 2040: Integrated Strategic Vision”. The long term strategic transport envisions “to provide the entire population with a safe, reliable, affordable, convenient, cost- effective and environmentally friendly transport system in support of strategies for socio- economic development”. The government has set out a total of nine transport strategies, namely, road network, civil aviation, inter-city passenger transport, freight transport, regional connectivity, urban transport, road safety, road transport regulation and transport sector management.

There are public transport services in all the 20 districts, and in 2016 about 1.07 million

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passengers used public transport services. In urban areas like Thimphu and Phuntsholing, public transport services have been introduced with designated seat, and wheel chair ramps for elderly citizens, pregnant mothers and people with disabilities.

Bhutan’s tangible culture such as the Dzongs, lhakhangs, chortens, farm-houses and the settlement patterns display the physical forms, while the festivals, rituals, songs, dances, folklores, etc comprise the traditional customs which are more intangible. However, modernization and urbanization pose risk of adverse impacts to the sustainability of these invaluable and unique cultural heritage.

Recognizing this, the Human Settlement Strategy 2017 identifies lack of awareness on the importance of culture and heritage, the need to protect them, absence of zoning guidelines to preserve heritage building and sites, inability to see economic opportunities of traditional villages as issues that need to be addressed. The National Human Settlement Policy currently being developed aims to promote a comprehensive and an integrated approach to settlements planning and development while ensuring preservation of environment and conservation of the ecology; preservation of tradition, culture, historic structures and sacred sites; human settlements are safe and resilient to disasters and promote equitable access and rational use of resources. The Royal Government has consistently placed importance to sustainability on such tangible heritage and invests huge amount of public resources in maintaining the age old heritage structures. For example, the Wangdue Phodrang Dzong 28 built in 1638 that was completely burnt down in 2012 is being rebuilt at an approximate cost of Nu 1000 million.

In order to ensure sustainable human settlement and harmonious co-existence with nature, Bhutan has always championed environment protection and has accordingly identified "remaining carbon neutral" in its development pursuit. Strong policies and legal framework to this effect have been formulated and are being implemented as enunciated under SDG 13. The Royal Government also continues efforts of greening urban areas with conversion of state registered land into recreational parks for children and adults, and especially, the 12th FYP (2018-2023) aims to increase the average share of the built-up area of Thromdes/Municipality that is open space for public use. Although efforts towards developing sustainable human settlement are being pursued, Bhutan faces increasing challenges in balancing economic development and conserving its valuable cultural heritage and environmental assets. Drying up of water sources and increasing waste generation in urban areas are emerging issues that threaten the sustainability of human settlement. Likewise increasing vehicular traffic congestion against limited road infrastructure have begun to invite attention of the Bhutanese residing in urban areas. Inability to contain these trends may result in human settlements that are not as accommodating and livable.

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Goal 12: Ensure Sustainable Consumption and Production patterns (SCP) Recognizing the importance of Sustainable Consumption and Production (SCP), Bhutan initiated implementation of SCP in 2015.

Bhutan does not have specific laws and policies on SCP, but there are many laws and policies concerning the environment and climate change that have high relevance to SCP requirements.

The Royal Government with the support of SWITCH-Asia Regional Policy Support Component, started the implementation of Sustainable Consumption and Production patterns in the following five areas: Mainstreaming SCP into Policies, Plans and Programme Under this component, SCP has been mainstreamed into policy protocol under crosscutting theme, whereby all the government agencies are required to mainstream SCP into policies and plans. Given that the indicators of SCP are already covered under climate change and environmental sectors of the national plan, the indicators used in the plan are deemed to address the concerns of SCP. While the benefits and opportunities of mainstreaming SCP into plans and policies are well recognized, technical challenges relating to application of tools and methodologies have been consistently felt by relevant sectors. This would require further support of capacity development in tools and methodologies specific to SCP applications.

Sustainable Tourism Sustainable Tourism Development is one of the key programs of Tourism sector in the 11th Five Year Plan. As part of sustainable tourism development through its policy of “High value, Low Impact”, Bhutan developed Green Hotel Guideline and launched on the World Environment Day on 5th June 2017.

Hotels and restaurants play a major role in tourism sector and the guideline aims to enable hotels to promote ‘green’ in management and operations by creating awareness on green component, resources and energy efficiency, etc. The guideline was developed by a task force comprising of members mainly from the National Environment Commission, Tourism Council of Bhutan, Hotel and Restaurant Association of Bhutan, Association of Bhutanese Tour Operators and Guide Association of Bhutan. With the guideline in place, Tourism Council of Bhutan in collaboration with the National Environment Commission will also award ‘green leaf’ with incentives to encourage hotels and restaurants to go green.

“The problems facing the world today – they challenge all of us equally. And the solutions to these challenges must come

from a real sense of concern and care for others, for all sentient beings and, for

future generations. We must care about what happens to this”.

His Majesty the King of Bhutan

“The problems facing the world today – they challenge all of us equally. And the solutions to these challenges must come

from a real sense of concern and care for others, for all sentient beings and, for

future generations. We must care about what happens to this”.

His Majesty the King of Bhutan

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Green Public Procurement. Sustainable Public Procurement has become a priority for many governments in Asia as well as globally, partly due to the opportunities of Sustainable Public Procurement (SPP) that were recognized under the 10 Year Framework of Programmes on SCP. Given that the government is a major player in market, particularly in procurement, incorporation of ‘green’ in public procurement is seen as an important opportunity. The Royal Government has recognized SPP as a priority for supporting green development in the 11th Five Year Plan. Against this backdrop, a task force was established that reviewed the Public Procurement Rules and Regulation of 2009 to infuse green elements. However, lack of laboratory testing facilities and standards remain to be addressed in undertaking GPP. SCP Curriculum in Vocational Training Institutes, Non-Formal Education and Education Institutes The Royal Government incorporated SCP learning and training in various levels of education: At the Tertiary education level, SCP content are incorporated under environment course in classes XI and XII, while at the Vocational education level, besides conducting trainings, handbook for teachers and course materials on SCP have been developed. In the Non-formal education (or continuing education), SCP was incorporated into the curriculum, and awareness and training on SCP were conducted for all instructors of non-formal Education in all the twenty districts. Guideline on Paperless Initiative In 2013, the Office of Prime Minister of Bhutan announced its interest in significantly reducing paper use in government, or even moving towards paperless operations. Given the environmental benefits of paperless initiative, a Life Cycle Assessment (LCA) was carried out in 3 divisions of the office of PM and Cabinet, Department of Information and Technology, MoIC and National Environment Commission Secretariat.

Based on the LCA study, a guideline was developed for implementing paperless initiatives across all the offices of the Royal Government of Bhutan. Upon endorsement of the Guideline by the National Environment Commission (NEC), series of sensitization workshops and trainings were carried out in all the government agencies. In order to assess the impact of the paperless initiative, the Royal Government has begun tracking per capita expenditure on stationaries of government agencies as part of their annual performance targets. Waste management is a major emerging environmental issue for Bhutan. It is reported that municipal per capita waste generation was 0.53 kg/day in 200829. In terms of e-waste; most modern electronic equipment such as television and computers became popular only recently in Bhutan and are expected to be used to its full life.

In response to this, Bhutan enacted Waste Prevention and Management Act in 2009. The Act extends to all forms of waste whether solid, liquid, or gaseous, hazardous or non-hazardous, 29StateofEnvironmentReport2016.

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organic or inorganic, from residential, agricultural, commercial, medical or industrial sources, produced by any person, including materials being stored for recycling or in the process of recycling, including the transportation of waste in any form, and import and export of waste in Bhutan.

The Waste Prevention and Management Regulations 2012 identifies roles and areas of implementation of the implementing agencies for the purpose of establishing a sound waste management system including monitoring procedures at every organization level, through efficient collection, segregation, treatment, storage, transportation, reduction, reuse, recycling and safe disposal of solid, liquid and gaseous wastes.

In keeping with the requirements of the legislation and regulation of waste management, an Integrated Solid Waste Management Strategy was developed in 2014 to operationalize and institutionalize a comprehensive set of planning approach and practices for integrated solid waste management.

In addition, the NECS in collaboration with schools under Thimphu Thromde (Municipality of Capital City) launched a program on Youth Action for 4Rs. The program aims to build a lasting and sustainable partnership in waste management with the schools; establish a conducive environment for fostering environmentally friendly thinking in our youth; and instill civic responsibility and good ethics in waste management in families and society by making our youth goodwill ambassadors in waste management. The Youth Action for 4Rs program has 10 schools from Thimphu Thromde, one monastic school from Thimphu, six schools from outside Thimphu and Bhutan Archery Federation as partners.

Solid waste management is also included as mandatory indicator of all the local governments in the 11th FYP. Local governments’ initiative to organize mass cleaning campaigns in the municipalities has now become a common trend in Bhutan. The Royal Government also declared 9th December to be observed as the “clean campaign day” every year in Bhutan.

NGOs also play a vital role in supplementing the efforts of the government in waste management. Clean Bhutan is a relatively new civil society organization that has been working to advocate and sensitize the citizens about behavior and habits to manage waste and to help reduce waste generation. Clean Bhutan works on mobilizing volunteers and focuses on clean rivers and tributaries, clean trekking routes and highways, and zero waste communities, villages and towns.

Similarly, Greener Way, another NGO has recently taken up the initiative of better waste management in the capital city of Thimphu. It engages in collection and processing of waste generated in the city. The project is implemented in partnership with Thimphu Thromde and is on track to making significant contribution to the society.

The Samdrup Jongkhar Initiative (SJI) under the Lhomon Society is working to develop a potential model to promote sustainable livelihood in Samdrup Jongkhar dzongkhag. As part of its key focus areas, SJI is actively promoting zero waste strategies that are helpful in reducing waste, creating awareness and empowering communities on managing waste.

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Despite the efforts to rein in consumption on to the path of sustainability, growing population and consumption patterns fueled by enhanced trade and marketing measures are posing increasing concerns. Lack of awareness and knowledge on sustainable consumption, weak enforcement of policies and laws coupled with limited technical and technological capacity are some of the challenges that may impede Bhutan towards smooth and successful achievement of SCP goals.

Sustainable Tourism Development in Bhutan – Historical Overview

In 1974, coinciding with the coronation of His Majesty the Fourth King Jigme Singye Wangchuck, many dignitaries from several countries were invited for the occasion making them the first batch of tourist to visit Bhutan. As a result of political stability, good governance and the country’s pristine environment and cultural heritage, the number of tourist arrivals has been increasing over the years. The Government has pledged to achieve 200,000 tourists by the end of 11th five-year plan.

The tourism sector in Bhutan is considered to have great potential for generating employment opportunities for the private sector with the important benefits of its spill-over impact on domestic hotels, airline, shops, consulting agencies and car hiring agencies. Increase in the tourist arrivals are mainly as a result of diversifying tourism from cultural and nature-based products into bird watching, flora and fauna, trekking, spirituality and wellness as well as opening up the previously protected areas for the visitors. In order to ensure minimal impact on Bhutan’s socio-cultural and natural environment, Bhutan’s tourism policy has been based on the theme “high value, low impact”.

According to the TCB’s Bhutan Tourism Monitor 2015, both international and regional tourist were keen to visit Bhutan for its pristine natural environment, Buddhism, unique traditions and culture, peace, Gross National Happiness and friendly people. International visitors were also attracted by variety of festivals, while regional visitors were drawn towards the favorable weather and climate.

The daily tariffs of USD 250 during the peak season (March, April, May, September, October and November) and USD 200 during lean season (January, February, June, July, August and December) was revised in 1989 since the daily tariffs were first set up in 1974. The minimum daily package covers a minimum of 3-star accommodation, all meals, a licensed Bhutanese tour guide, all internal transport, camping equipment and it also include all internal taxes and charges while USD 65 is payable as royalty for Royal Government of Bhutan.

Total visitor arrivals increased to 155,121 in 2015 from 133,480 in 2014 indicating a growth of 16.21 percent over 2014. Of the total visitors 57, 537 were international visitors and 97,584 were arrivals from the regional markets (India, Bangladesh and Maldives). International tourist earnings for 2015 is reported as USD 71.04 million.

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Goal 13: Take Urgent Action to Combat Climate Change and its Impacts Climate change and its impact on various sectors such as agriculture, water, infrastructure and hydropower have increased pressure on implementing climate resilient activities in Bhutan. Bhutan is part of the Eastern Himalayan region - an area where the impacts of climate change are often more severe than anywhere else in the world. The region’s glaciers have been melting at alarming rates, and it is suffering increasingly intense rainstorms that activate damaging floods and landslides. Air temperatures are rising steadily and this warming has seen Bhutan experiencing more warm weather and extreme events such as Glacier retreat posing GLOF threats, reduction in availability of water for agriculture, loss of habitat and increased incidences of pest and diseases over the recent years.

Bhutan is highly vulnerable to the effects of climate change due to its geographical features. The risk is further pronounced as close to 60% of its population depends on agriculture for livelihood. Hydropower and tourism are the other two important drivers of the Bhutanese economy and these sectors also face enormous risks due to climate change. However, The RNR sector comprising of agriculture, livestock and forestry is perceived to be one of the most vulnerable sectors to climate change and climate induced disasters. Bhutan has established conducive policy support and guidance to promote environmental conservation and pursue climate change adaptation and mitigation programs and projects in line with SDG 13. Bhutan 2020 outlines the country’s development goals, objectives and targets with a twenty-year perspective to maximize Gross National Happiness (GNH). Even before the inception of SDGs, Vision 2020 enunciated Bhutan’s development pursuits to be carried out within the limits of environmental sustainability and without impairing the ecological productivity and natural diversity, providing the policy context for sustainable development - implicitly encompassing a path that is resilient to and mitigates climate change.

Guideline for Preparation of 12th Five Year Plan, 2016: Firmly anchored on the values of Gross National Happiness and drawing on the principles of Result Based Management, the Guideline identifies two National Key Result Areas – NKRA(5) and NKRA(6). NKRA(5) is about continuing to conserve Bhutan’s natural environment that provides many essential ecosystem services such as clean air & water, and natural resources required for development. NKRA(6) is about ensuring a carbon neutral development path and building capacity to respond, mitigate and adapt to climate change. It is also about building Bhutan’s resilience to disaster impacts. NKRAs are highest priority outcomes identified by the government to be achieved by the end of the five-year plan.

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Eleventh Five-Year Plan (2013-2018): The overall goal of 11th FYP is to achieve “self- reliance and inclusive green socio-economic development.” The term “green” in the development goal is explained to mean – carbon neutral development. The plan seeks to promote carbon-neutral and environmentally sustainable development, and engenders mainstreaming of environment, climate change and disaster risk reduction as crosscutting issues along with gender and poverty reduction.

National Adaptation Program of Action (NAPA) was produced in 2006 and regarded Glacier Lake Outburst Floods as the highest priority climate induced hazard. The NAPA was reviewed and updated in 2012 to incorporate new climatic hazards such as windstorms, fire and cyclones and also to take stock of the implementation status of the priority projects.

RNR Sector Adaptation Plan of Action (SAPA, 2016): The RNR-SAPA 2016 consolidates, integrates and updates the climate change adaptation related programs, themes and actions of the RNR sector as proposed in the 11th FYP with the core objective of mainstreaming climate change adaptation into the 12th FYP. The adaptation plans of action are grouped into three core themes of Agriculture and Food Security, Water Resources and, Forest and Biodiversity. National Action Program to combat Land Degradation, 2014 was developed in recognition of the urgency of land degradation issues and in order to streamline the planning and implementation of various land management activities of different sectors in Bhutan. It replaces the erstwhile NAP 2010 and aligns with the UNCCD’s 10-year strategic plan (2008-2018).

National Environment Strategy (NES), 1998 identifies and describes the main avenues and approaches for sustainable development. The strategy is currently under review and in the absence of a separate climate change policy, the revised NES will among other things focus on low-carbon and climate resilient development, addressing both climate change mitigation and adaptation aspects.

National Forest Policy, 2012 serves as the guiding policy framework for forest management and nature conservation. It recognizes the important role of sustainable forest management in climate change mitigation and adaptation. The policy adopts an integrated landscape-level approach to sustainable forest management.

Bhutan Water Policy, 2003 describes the approach and context of water resources management from a multi-sectorial perspective. The policy advocates integrated water resources management to address existing and emerging water issues including those arising from climate change. It identifies priorities of allocating water for drinking and sanitation, for food production for hydropower development and for industrial purposes.

The Water Act of Bhutan, 2011 assigns the NEC to prepare and continuously update the National Integrated Water Resources Management Plan (NIWRMP) for conservation, development and management of water resources. The plan shall be mainstreamed into National Policies, Plans and Programs. It also requires establishment of River Basin Committees (RBC) within a basin for the purpose of proper management of water resources and to prepare River Basin Management Plans (RBMP). The act accords water use priorities such as – 1) water for drinking and sanitation; 2) water for agriculture; 3) water for energy; 4) water for industry; 5) water for tourism and recreation; and 6) water for other uses.

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was produced in 2000 and the Second National Communication in 2011. These National Communications provide inventories of GHG emission and sequestration, describes climate change vulnerabilities, and outline a wide range of adaptation and mitigation options across various climate-sensitive development sectors.

In its Intended Nationally Determined Contributions (INDC) Bhutan has reconfirmed its target to remain carbon neutral at the COP 21 in Paris. Bhutan also committed itself to maintain a minimum of 60% of land area under forest cover.

National Strategy and Action Plan for Low Carbon Development, 2012 was primarily prepared in support of Bhutan’s commitment to remain carbon neutral development at the 15th Conference of Parties of the UNFCCC in Copenhagen in December 2009. It presents a long-term national strategy comprising of various scenarios analyzing development paths from 2005 until 2040. Concomitant to these scenarios, the action plan articulates a number of short and medium- term interventions under various development sectors to achieve sustainable economic growth through green and low-carbon growth.

Bhutan experienced many natural disasters in the recent years.

One of the most awakening disasters was the 2009 earthquake followed by the 2011 Earthquake. The 2011 earthquake resulted in loss of one life due to landslides and 14 injuries. 6,977 rural homes were damaged, 36 schools, 22 hospitals, 286 heritage sites, monasteries, 27 RNR centers were badly affected. Windstorms have become more frequent and widespread disasters in recent years in Bhutan. The 2011, 2013, and 2014 windstorms have affected majority of the districts in Bhutan. The recent windstorm disaster in May 2014 affected 106 homes (mostly rural homes) and 20 government structures. The most recent GLOF disaster event is 1994 GLOF, triggered by the outburst of Luggye Tsho in Lunana caused massive damages downstream in the Punakha-Wangdue valleys and claimed 21 lives. One of the most recent climate change effect disaster is 2009 Cyclone Aila precipitated floods, which affected the whole of Bhutan taking 12 lives and causing losses of more than Nu. 700 million. Besides, other disasters such as landslides, forest fires, drought, etc. occur in Bhutan either due to climate change reasons or man-made causes.

Even though, Bhutan has experienced few major natural disasters in the past as per the record, the first framework of National Disaster Risk Management Framework (NDRMF) was drafted and adopted in 2006.

The 2009 Earthquake in the Eastern part of Bhutan led to framing of laws for disaster management and the process of drafting the Disaster Management Act started. The Sikkim Earthquake of 2011 became the second epoch leading to approval of the Disaster Management Act. Therefore, on 27th February, 2013, during its 10th session of Parliament, the first

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Disaster Management Act of Bhutan was enacted. The Act establishes the National Disaster Management Authority at the central level chaired by the Prime Minister; formalizes the establishment of Dzongkhags Disaster Management Committee in all Dzongkhags and sub-committees at Dungkhag and Gewog levels.

The Department of Disaster Management (DDM) under the Ministry of Home and Cultural Affairs serve as the Secretariat and executive arm of the NDMA as per clause 59 of the DM Act 2013. The DDM is nodal National Coordinating Agency for disaster management in the country and the DDM is responsible for laying down strategies, policies for disaster management; ensuring that agencies mainstream disaster risk reduction measures; preparing the National Plan in coordination with relevant Agencies; formulating standards, guidelines and procedures for disaster management; developing and implementing public education, awareness and capacity building program; developing standard training module and curriculum on disaster management; developing and maintaining Disaster Management Information System; and ensuring implementation of Disaster Management and Contingency Plans.

At the local level, as per the Disaster Management Act 2013, all the Dzongkhag Administrations constituted Dzongkhag Disaster Management Committee (DDMC) under the Chairmanship of the Dzongdag. The lowest level of the disaster risk reduction institutions are the sub-committees: Thromde sub-committee, Dungkhag sub-committee and Gewog sub-committee.

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Constitution of the Kingdom of Bhutan

Article 5

Every Bhutanese is a trustee of the Kingdom’s natural resources and environment for the benefit of the present and future generations and it is the fundamental duty of every citizen to contribute to the protection of the natural environment, conservation of the rich biodiversity of Bhutan and prevention of all forms of ecological degradation including noise, visual and physical pollution through the adoption and support of environment friendly practices and policies.

2. The Royal Government shall:

(a) Protect, conserve and improve the pristine environment and safeguard the biodiversity of the country;

(b) Prevent pollution and ecological degradation;(c) Secure ecologically balanced sustainable development while promoting justifiable economic and

social development; and(d) Ensure a safe and healthy environment.

3. The Government shall ensure that, in order to conserve the country’s natural resources and to prevent degradation of the ecosystem, a minimum of sixty percent of Bhutan’s total land shall be maintained under forest cover for all time.

4. Parliament may enact environmental legislation to ensure sustainable use of natural resources and maintain intergenerational equity and reaffirm the sovereign rights of the State over its own biological resources.

5. Parliament may, by law, declare any part of the country to be a National Park, Wildlife Reserve, Nature Reserve, Protected Forest, Biosphere Reserve, Critical Watershed and such other categories meriting protection.

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Goal 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development (not immediately relevant to Bhutan)

Bhutan is endowed with abundant fresh water resources. Water bodies and wetlands, glaciers, supra-snow lakes, supra-glacial lakes, glacial lakes, lakes, rivers, streams, springs, peat lands, marshes, peat-bogs, fens and other forms of wetlands are important fresh water sources in Bhutan.

It is reported that there are 110 supra-snow lake, 495 supra-glacial lakes and 637 glacial lakes with a total area of 5183.78 Ha30.

Increased waste, particularly untreated wastewater generation, pollute pristine water bodies. Water bodies in urban centers, such as Thimphu and Phuentshoing, are subjected to additional pressure from automobile workshops, which generate waste oil and other effluents.

Based on remote sensing analysis, 25 of the 2,674 glacial lakes in Bhutan are identified as potentially dangerous glacial lakes. Additional studies are ongoing to ground truth and validate the number of dangerous glacial lakes.

The National Integrated Water Resource Management Plan, 2016, was prepared to ensure that the water resources are protected, conserved and managed in an economically efficient, socially equitable and environmentally sustainable manner.

The Bhutan Water Security Index (BWSI) was developed in 2015. The index has five key dimensions, each with set of indicators. The five key dimensions are 1) Rural drinking water supply, sanitation and hygiene, 2) Economic water supply for agriculture, industries and hydropower, 3) Urban water supply, sanitation and drainage, 4) Environmental water security, and 5) Disaster and climate change resilience. Efforts are being made to integrate BWSI into the national key result areas in the national plans and programs.

Bhutan has limited records of described freshwater biodiversity and the macroinvertebrates studies in Bhutan has just picked up quite recently. A preliminary nationwide survey stated that there are records of 109 fish species. Studies on Baseline information on aquatic species are being initiated for main river system in the country with particular focus on the rivers that have planned for hydropower plants.

30AquaticBiodiversityAssessment2010.Ugyen Wangchuck Institute for Conservation and Environment (UWICE).

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Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. Bhutan’s environment, ecological and biodiversity landscape is largely intact and is endowed with rich diversity. Although its total land area is only 38,394 km2, the total national forest cover is 70.46%. The total land area under Protected Areas is 16,396.4 km2, accounting to 51.40% of the country. Total of 10,231 Ha land area are under high altitude wetland/marshes31. Degraded land as a proportion of total land area is reported to be 0.54%.

However, concerns on land degradation and threat to its biodiversity are increasing. While the degradation of soil, water, vegetation and other land resources is less pronounced than in nearby countries, the pressure is increasing because of general socio-economic development, expanding infrastructure, improving access to modern production inputs, changing land use and management practices, and other factors. The conversion of arable land and forests into other land uses are increasing. The pressure is mostly from accelerated construction of farm roads, electricity transmission/distribution lines, industries and urbanization. There are also emerging signs of forest degradations within the forest cover area.

A number of legislation and policies have been put in place for the sustainable management of land and its resources. The Constitution of the Kingdom of Bhutan mandates environmentally sustainable with a mandate to ensure 60% forest cover for all time and also identifies the roles and responsibilities of both citizens and government in this regard. Several legislations such as the National Environment Protection Act 2007; Land Act 2007; Environment Assessment Act 2000; Forest and Nature Conservation Act 1995; Mines and Minerals Act 1995; and Waste Management and Prevention Act 2009 contain mandates for sustainable management of land.

Some of the relevant processes arising from the above legislation include safeguard measures such as Environmental Assessment including EIA for major development activities.

Sustainable Land Management is now mainstreamed and implemented as a regular program to combat land degradation as per the obligations as a member country to United Nations Convention to Combat Desertification (UNCCD) following the principle of Land Development Neutrality. In addition to RGoB budget, additional funding supports are aligned with projects

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accessed through climate financing such as GEF and GCF.

Bhutan also has a wide range of ecological zones ranging from sub-tropical forests to alpine meadows and permanent snow and ice and has one of the highest species density (richness per km2) in the world. There are 24 threatened mammal species of which one is critically endangered, 11 endangered, 12 vulnerable. In terms of avifauna, 18 threatened species are found of which are critically endangered and 14 vulnerable. There are 182 species of butterflies categorized as rare and threatened species. Increasing trend in the illegal logging and poaching of wild life activities is also a cause of concern to Bhutan.

Following are some of the Policies and Acts supporting biodiversity conservation and use:

The Constitution of the Kingdom of Bhutan 2008 decrees that the country maintain a minimum of 60 percent of the total land under forest cover for all times to come. The government is tasked to conserve and improve the environment and safeguard the country’s biodiversity.

The Forest Act of 1969 was the first legislation related to the conservation of biodiversity. Later, the National Forest Policy was formulated in 1974 which highlighted biodiversity conservation in Bhutan. Subsequently, the Plant Quarantine Act 1993 was enacted to prevent the introduction of pests not already present or widespread in the country.

The Forest and Nature Conservation Act of Bhutan, 1995 lists a total of 30 species of wild animals and plants in Schedule I as totally protected species. These include 17 species of mammals, 1 species of fish, 5 species of birds and 7 species of trees. The list was further revised and approved by the Cabinet in February 2012 whereby 6 species of birds were included under Schedule I as totally protected. The Plant Quarantine Act 1993 and Seed Act of Bhutan 2000 were enacted to regulate import and export of plants and seeds and to prevent invasive species.

The Environmental Assessment Act 2000 directs the government to ensure that environmental concerns are taken into account when formulating, renewing, modifying and implementing any policy, plan or program. It requires the issuance of environmental clearance as a prerequisite to the approval of any development activity.

The Seed Act of Bhutan 2000 regulates the import and export of agricultural seeds and prevents introduction of unwanted plants and diseases. It also promotes the seed industry with the aim to enhance rural income and livelihood.

The Pesticide Act of Bhutan 2000 encourages the practice of organic agriculture and integrated pest management with centralized system that controls and limits the import, sale and use of pesticides.

The Biodiversity Act of Bhutan 2003 ensures regulating access to genetic resources in the

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country and promoting sustainable and use of biodiversity resources through benefit sharing and protecting local knowledge and interests related to biodiversity.

The National Environment Protection Act 2007 calls for conservation of natural resources to be based on a participatory approach aimed at achieving an equitable sharing of the costs and benefits of conservation among resources users.

In addition to the Department of Forest and Park Services, there are also number of institutions and funds established to promote conservation in the country.

The BTFEC was established in 1992 with a Royal Charter with an objective to secure a mechanism for sustainable financing to preserve the country’s rich biological diversity as part of the overarching goals of its visionary Gross National Happiness (GNH) policy. The trust fund started with an initial capital of US$ 20 M of which US$ 10 M was contributed by GEF/UNDP through grant and the rest were raised through contributions from WWF-US and bilateral donors. BTFEC has achieved significant success over the past twenty years by increasing its initial endowment of $21.3 million to its current capital base of $53.5 million as of July 2015. Interest generated by the prudent investment of its endowment has provided BTFEC with more than $17.5 million in grant funding for the projects it supports.

In 1987, the Royal Society for Protection of Nature (RSPN) was established as a citizen-based NGO devoted to the conservation of Bhutan’s unique environment. RSPN has evolved as complementary partner to the Royal Government in environmental education, conservation of endangered species, ecosystem conservation and promotion of conservation and sustainable livelihood. The Royal Government recently established Bhutan for Life (BFL) in collaboration with WWF and raised USD 45 million for the maintenance of the protected areas, funded through GCF, UNDP – GEF, and private sectors. The BFL is a funding mechanism that assures project financing for permanence, that will invest on institutional strengthening including smart patrolling, operationalizing the biological corridor, implement safe system for human wildlife conflict management, payment of environmental services among others.

Nevertheless, challenges abound in pursuing economic development and continuing the same level of conservation of environment in Bhutan. Human-wildlife conflict is on the rise and currently Bhutan faces several challenges to have adequate interventions to help rural residents mitigate it in a responsible and conservation friendly way. Bhutan is also experiencing increased poaching and the country’s current enforcement capacity is unable to effectively tackle it. Because of Bhutan’s geographical location, illegal wildlife trade will become a serious concern for wildlife conservation in the coming years. Last, but not the least, just as Bhutan needs critical funding to address all of these emerging threats, overseas development assistance is declining as Bhutan will soon be graduating from the status of LDC.

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Sustainable Land Management Project (SLMP)

Besides many projects implemented in other parts of the country, the National Soil Service Center (NSSC) implemented two projects titled “Up- Scaling Sustainable Land Management to Combat Land Degradation & Climate Change Mitigation” at Jarey and Thangrong Gewogs in Lhuntshe Dzongkhag (Eastern Bhutan). The projects were initiated in 2015 and financed by Bhutan Trust Fund for Environmental Conservation (BTFEC). With resource outlay of Nu. 11.96 million, the project aims to promote and implement sustainable land management (SLM) practices and agro forestry principles to enhance rural livelihoods in the two Gewogs.

As of July 2017, 337 households are reported to have benefitted from SLMP interventions that include development of SLM plan, training of farmers and supply of farm tools. SLM pans were developed for 10 Chiwogs for three years. Hands on training on Napier hedgerow establishment and stone contour bund construction in dry land were conducted and 12 acres of landslide sites have been stabilized. The farmers have begun to generate income from sale of Napier slips and fodder availability have been enhanced for farmers besides additional benefits such as ease of working and more productive use of time.

The above case study indicates that SLMP interventions are proving to be beneficial in terms of combating land degradation and enhancing the livelihood of rural population. If access to increased resources are made available, combined efforts of BTFEC and NSSC have the potential to make significant differences in dealing with land degradation and enhancing food security in the country.

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Goal16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. The world is increasingly experiencing conflicts fueled by variety of factors that threaten to shake stability, peace and harmony of the societies. Such conflicts not only impact human lives but take a grave toll on environmental health, waste valuable resources, weaken governance systems, and deter people from accessing services such as health, education, justice and other basic rights of livelihood. Likewise, corruption and distortion of rule of law also pose major hindrance to socio-economic progress. Bhutan enjoys harmonious and peaceful society free of conflicts and social unrest. Although there were 16 cases of homicide in 2016, there are no recorded case of death related to conflict in recent years. Foremost to ensuring peace and harmony is the institution of justice. Bhutan has always maintained an independent judiciary that provides all Bhutanese unimpeded access to law and legal process. The judicial authority of Bhutan is vested in the Royal Courts of Justice comprising the Supreme Court, the High Court, the Dzongkhag32 Court and the Dungkhag33 Court. Cases are adjudicated expeditiously, fairly and inexpensively through established judicial processes. Furthermore, to ensure equitable access to justice, an indigent accused is guaranteed with legal aid from the State. To resolve disputes amicably, harmoniously and expeditiously, Bhutan has also established alternative dispute resolution. It minimizes winner and loser concept and thereby contributes to societal harmony. In order to professionalize legal counsel services in the country, a Bar Council has been recently established. In addition, recognizing the importance of empowering citizens with legal knowledge, the judiciary carried out legal empowerment through a nationwide series of awareness workshops on the Civil and Criminal Procedure Code for community leaders and dissemination of legal knowledge to the students under “Know the law - to protect your rights series” and establishing law clubs in schools. In addition to a strong and independent Judiciary, justice sector has been strengthened with the establishment of two important institutions that promote rule of law. The Jigme Singye Wangchuck School of Law, Bhutan's first law college, was established in 2015. Likewise, the Bhutan National Legal Institute has also been established to ensure high quality of continuing legal education aimed at effective discharge of judicial functions.

32District33SubDistrict

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The 12th Plan prioritizes enhancing justice services and strengthening justice sector institutions as one of the NKRAs with the specific objectives to harmonize conflicting laws, enhance the efficiency and quality of judicial services, and ensure procedural justices and enhancing citizens’ awareness of laws and procedures. Reducing crimes of all sorts has been a priority of the Royal Government. In addition to the legislation such as the Child Care and Protection Act (CCPA), Domestic Violence Prevention Act 2013 (DVPA) and the Penal Code Act of Bhutan 2011, the Royal Government continues to strengthen agencies such as the Royal Bhutan Police, Office of the Attorney General, NCWC, BNCA which all play important roles in crime prevention. To counter money laundering and financing of terrorism, recently Government adopted “Anti- Money Laundering and Countering Financing of Terrorism Act 2017”. The Royal Government places high importance on the need to ensure efficiency and effectiveness of public service delivery at all times. To this effect, G2C Project, a special purpose vehicle, was set up under the direct supervision of the Prime Minister with the objective to reduce turnaround time for public services through streamlining and simplification of public services, automation of service delivery by developing mobile apps and online systems, enhancing access to services by establishing community centers in rural areas and delegating service delivery responsibilities to the local governments. The project has developed 155 government-to-citizen and government-to-business services as online systems and 19 services as mobile applications. According to the Transparency International Corruption Perception Index (TI-CPI) 2016, Bhutan is the 27th cleanest country of the 176 countries with a score of 65. Bhutan’s position and score has remained the same despite increase in the number of countries/territories participating in CPI 2016 as compared to CPI 2015. Bhutan has featured in the TI-CPI for eleven successive years since 2006. Over the years, Bhutan has made remarkable improvement in the rank and score. The Anti-Corruption Commission is an independent constitutional body created through an Act of the Parliament mandated to eliminate corruption and contribute to building a happy, harmonious society. Reducing corruption is an NKRA in the 11th FYP, and the Commission in collaboration with the Royal Government, launched the National Integrity and Anti-Corruption Strategy to promote ethical leadership and integrity; inculcate ethical behavior through education and awareness programs; promote cooperation and partnership for a collective alliance against corruption; and strengthen systems to prevent and combat corruption. The activities of the strategy are being implemented as mandatory annual performance objectives by all the Government Agencies. Inspired by the conviction that meaningful engagement of communities in decision-making and development process is critical to strengthen good governance, the Royal Government has pursued a proactive policy to devolve institutional powers since the 1980s. Moreover, decentralization has been recognized as a deeply integral part of the democratization process. Amongst others, the Local Government Act 2007 translates the important constitutional principle of decentralized governance into law and mandates, the formation of local governments for the development, management and administration of areas under their

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jurisdiction. The Royal Government plans to formulate a decentralization policy to provide clarity in implementing the principles of decentralization, in addition to the division of responsibility framework which provides a clear delineation of roles and responsibilities between the center and local governments. Going forward, decentralization has been identified as an overarching strategy under the limits of which many of the 12th FYP programs shall be implemented. The 12th FYP accordingly allocates close to 50% of the total capital resources to the local governments, an increase of more than 25% of the resource share between central and local governments compared to the previous plans. In order to strengthen accountability and transparency of institutions, the Royal Government continues to support independent watchdog institutions like the Royal Audit Authority and the media through provision of financial and capacity development support. Within the executive confines, the Royal Government established a Government Performance Management System that tries to ensure effective and efficient delivery of development results and public services through fixation of accountability on government institutions and the civil servants. Despite the above, the Royal Government faces challenges such as inconsistent and conflicting laws and policies, lack of institutional capacities, poor inter-agency coordination, inadequate research and innovation, limited use of technology in governance, and inadequate professional and leadership skills and competencies.

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Goal 17: Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development. SDG 17 is about fostering various implementation mechanisms that are essential for achieving 2030 Agenda for Sustainable Development. Multilateral agreements and regulatory frameworks, international conferences and cross-border economic initiatives which forge partnerships in terms of strategy, trade, policy coherence and commitment, as well as technical expertise and capacity building are critical for the meaningful progress of 2030 Agenda.

Bhutan is well positioned to be an important contributor to the “global partnership” called for by Goal 17, and places strong emphasis on multilateral cooperation. In brief, through the United Nations Development Assistance Framework (UNDAF), the Royal Government of Bhutan and the United Nations Country Team in Bhutan are working toward fostering “Just, Harmonious and Sustainable Society through enhanced Decentralization” in the 12th FYP of Bhutan. Details of Bhutan’s position and policies are provided under Section IV – Means of Implementation.