Ninety percent of Nepal's GDP and employment comes from agriculture, yet soils are very poor. The topography hampers the development of transport, communications, and a monetized economy. Population growth is 2.7 percent a year. Problems such as persistent soil erosion, high rates of sedimentation, increased flooding, and decline in water quality continue to intensify. Pressures of population and livestock on land, migration to fragile areas, and the extent of poverty are all implicated (see box). But so too are development policies and projects.
Six forms of capital participate in the development process-- human, natural, institutional, cultural, physical, and financial. Sustainable development comes from attaining a balance across the various forms of capital over space and time. In Nepal, the accumulation of physical and financial capital has been sought more aggressively than the acquisition of human and institutional capital or the conservation of natural capital. But as natural capital continues to deteriorate, the possibilities for sustainable development diminish.
Studies assessing natural resource degradation in Nepal appeared as early as 1959, but offered few suggestions for managing natural resources better. Bilateral donors were the first to develop programs in soil conservation, land management, afforestation, and livestock rationalization. Most of these programs were quite narrowly conceived and not pursued in the context of an overall understanding of causes and effects or of a broad donor/government development strategy. Nepal's early National Development Plans gave little attention to the environment and natural resources; most public investments were for roads and telecommunications. The Bank began to address environmental problems much later than Nepal's other donors and, even then, without an explicit statement of the problems.
The literature over two decades has severely criticized the way decisions were made and government policies formulated in Nepal, and how little international aid has done to bring about change. Between 1966 and 1989, donors committed more than $4.5 billion (1988 dollars) in grants and loans to Nepal for about 800 projects affecting the use of renewable resources. But much of this aid supported uncoordinated projects that duplicated or cancelled out each other's efforts. Proliferating projects and conflicting advice drained the government's managerial, technical, and financial resources. Donors noted Nepal's limited absorptive capacity but went on providing aid.
Six forms of capital participate in the development process-- human, natural, institutional, cultural, physical, and financial. Sustainable development comes from attaining a balance across the various forms of capital over space and time. In Nepal, the accumulation of physical and financial capital has been sought more aggressively than the acquisition of human and institutional capital or the conservation of natural capital. But as natural capital continues to deteriorate, the possibilities for sustainable development diminish.
Studies assessing natural resource degradation in Nepal appeared as early as 1959, but offered few suggestions for managing natural resources better. Bilateral donors were the first to develop programs in soil conservation, land management, afforestation, and livestock rationalization. Most of these programs were quite narrowly conceived and not pursued in the context of an overall understanding of causes and effects or of a broad donor/government development strategy. Nepal's early National Development Plans gave little attention to the environment and natural resources; most public investments were for roads and telecommunications. The Bank began to address environmental problems much later than Nepal's other donors and, even then, without an explicit statement of the problems.
The literature over two decades has severely criticized the way decisions were made and government policies formulated in Nepal, and how little international aid has done to bring about change. Between 1966 and 1989, donors committed more than $4.5 billion (1988 dollars) in grants and loans to Nepal for about 800 projects affecting the use of renewable resources. But much of this aid supported uncoordinated projects that duplicated or cancelled out each other's efforts. Proliferating projects and conflicting advice drained the government's managerial, technical, and financial resources. Donors noted Nepal's limited absorptive capacity but went on providing aid.
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