scale matters: can revenue-sharing improve equity in hydropower development in nepal?
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Soumya Balasubramanya ASIA 2014 Colombo, March 2014TRANSCRIPT
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A water-secure world
Scale matters: can revenue-sharing improve equity in hydropower
development in Nepal?
Soumya Balasubramanya
ASIA 2014
Colombo, March 2014
www.iwmi.org
A water-secure world
Why revenue-sharing?
• Decisions are centralized; opposition to dam development (Goulet, 2005; WCD, 2000)
• Inequitable distribution of:– benefits of dam development (Lin, 2001)– costs of dam development (Wilmsen et al., 2011)
• Loss of access (Dore and Lebel 2010)– land– commons
• Revenues are a significant source of income; can be re-distributed (Cernea, 2000)
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A water-secure world
The Nepal Case
• Opposition to dams – mid 1990s– maoist agitation (Dixit and Gyawali)– IUCN coordinates engagement with stakeholders—demand
for equity
• Introduced revenue sharing in 2001: sharing of hydropower royalties to improve equity in distribution of fruits of development (LSGA, 1999)– 10% of revenues from a project to hosting DDC– 38% of revenues from a project to hosting development
region
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A water-secure world
Can revenue-sharing improve equity?
• Depends on – amount of revenue shared– revenue sharing rule– historical development patterns– revenue spending rules
• For a given set of the above; the answer may change with scale– Center vs. periphery– Between districts– Within district
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Methods
• Interviews– DoED– WECS, DoSEWM, MoSFC – 4 DDCs (Sindhupalchok, Kaski, Makhwanpur,
Mustang)– Experts (ICIMOD, Winrock International)– IPPAN
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A water-secure world
Observations• Rise in revenues collected by central
government
– Tariff on fixed capacity, esp. for older plans (USD 5 in 1993-94 to USD 14 in 2009-10)
– Collection increased 3X (USD 858,000 in 1994-94 to USD 2,454,000 in 2009-10)
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Hydro revenues not significant share of districts’ income
Number of Hyd. RevNumber revenue as share of
of generating budget districts projects allocation
(no.) (no.) (%)
Eastern 16 2 0.02
Central 19 13 1.04
Western 16 12 1.08
Midwestern 15 1 0.12
Far Western 9 1 0.53Source: DoeD, 2012All prices in 2010 prices, expressed in USD
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Between center and periphery: equity improvingCollected Distributed Ratio of Project Non project
('000) ('000) distributed hosting hosting
Year (USD) (USD) to collected DDC DDC
1993-94 858 0 0.00 n.a n.a
1994-95 924 0 0.00 n.a n.a
1995-96 1009 0 0.00 n.a n.a
1996-97 1050 0 0.00 n.a n.a
1997-98 1168 0 0.00 n.a n.a
1998-99 1255 0 0.00 n.a n.a
1999-2000 1286 0 0.00 n.a n.a
2000-01 1320 401 0.30 √ Χ
2001-02 1360 424 0.31 √ Χ
2002-03 1438 555 0.39 √ Χ
2003-04 1479 1632 1.1* √ √
2004-05 1580 3895 2.47* √ √
2005-06 1699 850 0.50 √ √
2006-07 1803 901 0.50 √ √
2007-08 1999 1000 0.50 √ √
2008-09 2231 1116 0.50 √ √
2009-10 2454 1227 0.50 √ √
Source: Department of Energy Development, 2012
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A water-secure world
Between districts:
Reinforcing pre-existing inequities
Share in Share inhydrp budget Share Change
revenue allocated in Dev Dev in dist. to DDCs pop. index index dev(%) (%) (%) (2001) (2006) Index
Eastern Mechi 0.20 5.55 5.4Kosi 0.25 8.17 8.8
Sagarmatha 0.20 7.47 7.80.65 21.19 22 0.493 0.526 0.033
Central Janakpur 16.48 9.25 10.7Bagmati 22.24 11.38 14.6Narayani 16.91 7.74 11.4
55.62 28.37 36.7 0.49 0.531 0.041Western
Gandaki 17.48 6.98 5.8Lumbini 12.92 8.41 10.6
Dhawalagiri 8.84 3.78 2.139.25 19.17 18.5 0.491 0.516 0.025
MidwesternRapti 2.20 5.68 5.4Bheri 1.13 7.80 6.4
Karnali 1.15 5.73 1.54.49 19.21 13.3 0.402 0.452 0.05
Far western regionSeti - 7.52 5.9
Mahakali - 4.54 3.60.00 12.06 9.5 0.404 0.461 0.057
100.00 100.00 100
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Within districts: depends on revenue spending rules
• Districts have flexibility to determine how revenues are spend (and what they’re spent on)
– Eg. Mustang DDC: 33% to electrification of Upper Mustang
– Eg. Sindhupalchok DDC: prioritizes road construction in remote areas
– Makhwanpur DDC: 50% to 12 (rel. developed) villages; 50% for other 33 villages
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Discussion:
Hydropower district gets relatively greater share of revenuethan non-hydropower district
Between center and hydrop-districts Improves equity
Between hydro-district and non-hydro Reinforces inequity. Hydropower revenue is concentrated in district areas that have historically been beneficiaries of
broader development processes
Within hydro district Varies according to district's spending rules. Some districts explicitly earmark revenues for less developed villages;others don't.
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Discussion• Revenue-sharing has likely helped reduce opposition
– Recognition that water is a national resource– Conflict over alternative uses is low
• Scope for revenue-sharing financing ES programs– Comm. Forestry program is bottom up: improved equity between
center and periphery (Agarwal & Ostrom, 2001; Larson, 2002)– Not very successful in improving equity within districts (Thoms, 2008)– May compromise equity considerations
• Scale, history of development, pre-existing sociocultural dynamics will determine ability to address equity at different scales.