Nepal's Water Resources Strategy

Water Resources Strategy - Nepal
i

i
Water Resources Strategy
Nepal
January 2002
© Water and Energy Commission Secretariat (WECS)
All rights reserved.
Published by:
Water and Energy Commission Secretariat (WECS)
P. O. Box 1340,
Singha Darbar, Kathmandu
Nepal
URL: www.wecs.gov.np
Email: wecs@mos.com.np
Fax: +977-1-227185
Extract of this publication may be reproduced in any form for education or non-profit
purposes without special permission, provided the source is acknowledged. No use of this
publication may be made for resale or other commercial purposes without the prior written
permission of the publisher.
Cover layout and design:
Sharad P. Joshi, WECS, GIS/RS, Unit
Computer layout:
Binod Neupane, WIDP
Photo Credits:
Sharad P. Joshi: front and back cover background,
front cover top left, page 31, 36, 44 and 52
V. J. Galay: front cover center and top right, page 6 and 8.
WECS: front cover bottom left
HMG/N, Department of Water Supply and
Sewerage:front cover bottom right.
Printed in Nepal by……….

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Water Resources Strategy
Nepal
His Majesty's Government of Nepal
Water and Energy Commission Secretariat
Singha Durbar, Kathmandu, Nepal
January 2002

i
Preface
For decades, Nepal’s economic development efforts have focused on its water resources.
Although the country has an abundance of water in terms of annual surface flow and
groundwater reserves, the progress towards utilization of this water for basic uses and
economic growth has been slow. Recently, increasing demands on the water supply, coupled
with factors such as pollution that limit availability of the resource, have led to disputes
among user groups. In the future, the incidence of such conflicts will likely increase,
particularly in instances involving transboundary water resources, whether the parties
involved are neighbouring communities or separate nations. Therefore, instruments for
regulating water use in Nepal cannot remain limited to policies, plans and programs directed
at specific sub-sectors and segregated user groups. The interests of economic development
must be tempered with those of the public and the environment, using mechanisms that
result in broad-based consensus and cooperation.
In recognition of this need, His Majesty’s Government of Nepal supports the development
of a long-term water resources strategy, capable of guiding water sector activities towards
sustainability of the resource, while providing for hazard mitigation, environmental
protection, economic growth and constructive methods of resolving water use conflicts.
His Majesty’s Government of Nepal initiated the process of Water Resources Strategy
Formulation in 1995 with a one-year study to identify issues and problems in the water sector
(Phase I). This was followed by the Water Resources Strategy Formulation Study (Phase II),
which began in January 1999. A team of consultants, the Water Resources Strategy
Formulation Consortium, was engaged on a two-year contract basis. The Consortium’s
findings were utilized by a core team of experts in the Water and Energy Commission
Secretariat (WECS) to further analyze, test and develop strategy statements in a process
involving professional work, expert group meetings and stakeholder consultations. This
document represents the culmination of this work. It describes Nepalese aspirations, viewed
in the context of the difficulties and opportunities that currently confront the country’s water
sector, and provides a strategy that will make water-induced prosperity a reality, rather than
just a mirage.
The contributions of the World Bank, CIDA and HMG/N to this project are gratefully
acknowledged, as are the physical and intellectual efforts of the many Nepali and expatriate
individuals who were involved in the preparation of this document.

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Acknowledgement
“Water Resources Strategy – Nepal” represents the culmination of a process that started in
1996. Condensing the work of Phases 1 and 2 of the Water Resources Strategy Formulation
Project, where the contributions of individual experts, consulting firms, government officials,
peer reviewers and other eminent persons ran into thousands of pages and hundreds of
opinions, was a great challenge. The information base provided in the documents produced
by the Phase I team and the Water Resources Strategy Formulation (WRSF) Consortium
during Phase II was enormous. While this information served as an important building block
for this document, however, the foundation and framework of the ‘Strategy Formulation
Process’ were developed during a number of workshops attended by representatives of the
stakeholders at large – the Nepalese people. These workshops, held at regional and national
levels, provided stakeholders with an opportunity to provide opinions and suggestions
regarding how our water resources could be best utilized for the benefit of fauna, flora, and
the people of Nepal. The information collected during the workshops was synthesized
during a series of smaller workshops involving a broad group of participants. The modality
adopted for presentation of the Water Resources Strategy was Logical Framework Analysis
and Project Cycle Management. The Water Resources Strategy, which is probably the first
document in Nepal to attempt to comprehensively address all issues related to the water
sector, is presented here for public perusal, acceptance and implementation.
As many as two thousand people participated in various stages of the strategy formulation
process. Although each individual has made a valuable contribution and the nature of their
involvement was documented at various project stages and recorded at WECS, it is not
possible to list all of their names in this brief acknowledgement. To ensure that those
responsible for the document are not entirely anonymous, however, the following are
recognized for their significant contributions:
• Dr. Rameshananda Vaidya, Hon. Member, National Planning Commission and
Chairman, Steering Committee, Phase I
• Mr. Bhuvanesh Kumar Pradhan, Team Leader, Phase I
• Dr. Badri Prasad Shrestha, Team Leader, WRSF Consortium, Phase II
• Mr. Shankar Krishna Malla, Deputy Team Leader, WRSF Consortium, Phase II
• Mr. Poorna Bhadra Adiga, Project Coordinator, Phase II
• Mr. Ram Nath Kayastha, Project Manager, Phase II
• Mr. Scott G. Ferguson, Project Director, WIDP
• Mr. Jim Cowley, Water Resource Expert, CIWEC
• Mr. Iswer Raj Onta, Strategy Advisor/Planner, Phase II
• Dr. Poorna Kanta Adhikari, Stakeholder Consultation Facilitator, Phase II
Special thanks are also due to Dr. Ohn Myint and Dr. Shyam Ranjitkar, Dr. Tony Garvey
and Dr. Harsha Bardhan of the World Bank for their help and support, above and beyond
the call of duty. CIWEC advisors including Ms. Margaret Wilson, Dr. Dieudonne
Razanadrakoto, Mr. John Ritchie and Dr. Greg Weary of CIWEC have made invaluable

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contributions and deserve special thanks. Mr. Sanjive Singh, Mr. Gokul P. Sharma,
Ms. Rekha Sakya, Mr. Binod Neupane, Mr. Pratap Lama, Mr. D. Bhattarai and Mr. Rabi
Sharma of WIDP team deserve special mention.
Dr. Guy Le Moigne and Professor Peter Rogers contributed their international expertise and
great wisdom in guiding this document to its present form.
The Canadian government through CIDA support for WIDP and the World Bank through
its NISP Project have been the main external agencies to support the strategy formulation
process, both technically and financially.
Mr. Lok Man Singh Karki, Secretary, Ministry of Water Resources, deserves sincere thanks
for his contribution on the process of the approval of WRSF from WEC and the Council of
Ministers, His Majesty’s Government of Nepal. Dr. K.B. Aryal, Officiating Executive
Secretary, WECS and Mr. Arjun P. Shrestha, Coordinator of WRSF Phase II also deserve
special thanks for their valuable contribution on process of finalization of WRSF.
Special thanks to the members of the Financial Committee of the Council of Ministers and
Members of Water and Energy Commission for the critical review of this document and
valuable suggestions given for the preparation of the forthcoming National Water Plan
(WRSF Phase III).
WECS recognizes valuable and significant contributions from the following in the
preparation of the Water Resources Strategy of Nepal: Dr. D.N. Dhungel, Mr. B.R. Regmi,
Mr. B.N. Sapkota, Mr. K.B. Chand, Mr. S.N. Poudel, Mr. J.C. Gautam, Mr. V.N. Nepal,
Mr. M.N. Aryal, Mr. K.R. Bhurtel, Mr. K.P. Rizal, Mr. J.P. Thanju, Mr. Damodar Bhattarai,
Mr. Rajendra Kshatri, Mr. A.D. Adhikary, Mr. H.P. Ishar, M.D. Pokhrel, Mr. D.L. Shrestha,
Mr. G. Rajkarnikar, Dr. R.C. Arya, Mr. B.R. Adhikari, Dr. Shaligram Pokharel, Mr. V.B.
Amatya, Ms. Bimala Pradhan, Mr. B.B. Bania, Ms. J. Karmacharya, Mr. R. P. Ghimire,
Mr. D. K. Kharal, Mr. Sanju Upadhyay, Mr. M.D. Acharya, Mr. P.K. Srivastav, Mr. Kiran P.
Giri, Mr. Sanjay Dhungel, Mr. A.P. Gautam, Mr. R.P. Bidari, Mr. S.P. Joshi,
Mr. J. L. Maharjan, Mr. R.P. Rupakheti and other WECS support staff.
Last but not least, Nepalese people of all walks of life, especially politicians and opinion
leaders, have contributed through their active participation in the stakeholder consultation
workshops. This document is for the people and by the people.
- Water and Energy Commission Secretariat

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List of Acronyms and Abbreviations
0C Degree Celsius
AD Anno Domini (Gregorian Calendar)
ADB Asian Development Bank
AEPC Alternative Energy Promotion Center
AMIS Agency-Managed Irrigation Systems
APP Agriculture Perspective Plan
BOOT Build-Operate-Own-Transfer
BS Bikram Sambat (Nepali Calendar)
CBOs Community Based Organizations
CIDA Canadian International Development Agency
DDC District Development Committee
DDWUC Dhulikhel Drinking Water Users’ Committee
DHM Department of Hydrology and Meteorology
DNPWC Department of National Park and Wildlife Conservation
DOA Department of Agriculture
DOED Department of Electricity Development
DOI Department of Irrigation
DPR Detailed Project Report
DSCWM Department of Soil Conservation and Watershed Management
DWIDP Department of Water Induced Disaster Prevention
DWRC District Water Resources Committee
DWSS Department of Water Supply and Sewerage
EIA Environment Impact Assessment
EMP Environmental Management Plan
etc. Etcetera
ETFC Electricity Tariff Fixation Committee
FMIS Farmer-Managed Irrigation Systems
FNCCI Federation of Nepalese Chamber of Commerce & Industry
FY Fiscal Year
GDP Gross Domestic Product
GIS Geographic Information System
GLOF Glacial Lake Outburst Flood
GNP Gross National Product
GWh Gigawatt-hour
GWh/y Gigawatt-hour per year
Ha hectare
HMG His Majesty's Government of Nepal
IFI International Financial Institution
IPP Independent Power Producer
ISC Irrigation Service Contribution
IWRM Integrated Water Resources Management
JGF Japan Grant Fund

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KVWA Kathmandu Valley Water Authority
km Kilometer
km2 Square kilometer
kWh Kilowatt hour
m Meter
m3 Cubic meter
m3/y Cubic meter per year
mm Millimeter
MHPP Ministry of Housing and Physical Planning
MOA&C Ministry of Agriculture and Cooperatives
MOCT&CA Ministry of Culture, Tourism and Civil Aviation
MOF&SC Ministry of Forests and Soil Conservation
MOH Ministry of Home
MOLD Ministry of Local Development
MOPE Ministry of Population and Environment
MOPP&W Ministry of Physical Planning and Works
MOS&T Ministry of Science and Technology
MOWR Ministry of Water Resources
MW Megawatt
NEA Nepal Electricity Authority
NEUS Nepal Electricity Utility Statistics
NGO Non-governmental Organization
NISP Nepal Irrigation Sector Project
NPC National Planning Commission
NRs. Nepalese Rupees
NWRDC National Water Resource Development Council
NWSC Nepal Water Supply Corporation
NWSRB National Water Supply Regulatory Board
O&M Operation and Maintenance
RAP Resettlement Action Plan
REDP Rural Energy Development Program
SEA Strategic Environmental Assessment
SHP Small Hydropower Plant
US$ United States Dollar
VDC Village Development Committee
WEC Water and Energy Commission
WECS Water and EnergyCommission Secretariat
WHO World Health Organization
WIDP WECS Institutional Development Project
WMO World Meteorological Organization
WRSF Water Resources Strategy Formulation
WUA Water User Association
WUG Water User Group
WUSC Water Users and Sanitation Committee

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Table of Contents
Preface
Acknowledgement
List of Acronyms and Abbreviations
Executive Summary
1 INTRODUCTION .......................................................................................................1
1.1 RATIONALE FOR WATER RESOURCES STRATEGY ......................................................1
1.2 STRATEGY FORMULATION PROCESS ........................................................................ 3
1.3 FORMAT OF THE REPORT .........................................................................................5
2 OVERVIEW OF NEPAL'S WATER SECTOR.............................................................7
2.1 HYDROLOGY AND CLIMATE .................................................................................... 7
2.2 SOCIO-ECONOMIC SETTING................................................................................... 11
2.3 PRESENT ENVIRONMENTAL CONDITIONS................................................................ 13
2.4 PRESENT STATUS OF WATER SUB-SECTORS AND POTENTIAL FOR DEVELOPMENT ..... 13
2.5 INTERNATIONAL CONTEXT.................................................................................... 18
2.6 INSTITUTIONS INVOLVED IN THE WATER SECTOR ................................................... 21
2.7 CURRENT LEVELS OF INVESTMENT IN THE WATER SECTOR..................................... 23
3 REGIONAL AND NATIONAL WATER RESOURCES NEEDS.............................. 29
3.1 WATER USE IN NEPAL........................................................................................... 29
3.2 WATER NEEDS OF THE TIBETAN REGION OF CHINA ................................................ 35
3.3 WATER NEEDS OF THE DOWNSTREAM RIPARIAN STATES........................................ 35
4 SITUATION ANALYSIS............................................................................................ 37
4.1 INTRODUCTION..................................................................................................... 37
4.2 KEY STUDY FINDINGS........................................................................................... 37
5 POLICY AND LEGAL FRAMEWORK...................................................................... 45
5.1 EXISTING POLICY AND LEGAL FRAMEWORK ........................................................... 45
5.2 POLICY FRAMEWORK ADOPTED FOR THE WATER RESOURCES STRATEGY
FORMULATION..................................................................................................... 47
6 WATER RESOURCES STRATEGY ........................................................................... 53
6.1 SUMMARY OF THE STRATEGY ................................................................................ 53
6.2 WATER-INDUCED DISASTER MANAGEMENT........................................................... 64
6.3 MANAGEMENT OF WATERSHEDS AND AQUATIC ECOSYSTEMS................................. 69
6.4 DOMESTIC WATER SUPPLY AND SANITATION ......................................................... 75
6.5 IRRIGATION FOR AGRICULTURAL DEVELOPMENT ................................................... 85
6.6 HYDROPOWER DEVELOPMENT............................................................................... 98
6.7 OTHER ECONOMIC USES OF WATER......................................................................104
6.8 WATER-RELATED INFORMATION SYSTEMS ...........................................................108
6.9 POLICY AND LEGAL FRAMEWORK .........................................................................111
6.10 REGIONAL/BILATERAL COOPERATION FRAMEWORK..............................................115
6.11 INSTITUTIONAL MECHANISMS FOR WATER SECTOR MANAGEMENT ........................118
7 RESOURCES REQUIRED FOR STRATEGY IMPLEMENTATION .....................127
7.1 HUMAN RESOURCES............................................................................................127
7.2 FINANCIAL RESOURCES........................................................................................134
7.3 FINANCIAL CONTRIBUTIONS REQUIRED FOR COST RECOVERY................................138

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Annexes
A Sub-sector Policies
B Strategy Outputs and Activities in a Log-Frame Format
C Indicators for Strategy Outputs
List of Tables
Table 2.1 Estimated Population of Nepal in Year 1999
Table 2.2 Projected Population of Nepal in Year 2027
Table 2.3 Comparison of Socio-Economic Indicators of South Asia Including China
Table 2.4 Coverage of Drinking Water Service in Nepal
Table 2.5 Irrigation Development Status in Nepal - 1999/2000
Table 2.6 Summary of Economic Hydroelectric Development Opportunities
Table 2.7 Location of Hydropower Resources in Nepal
Table 3.1 Estimated National Water Use - Year 2000 and Year 2027
Table 3.2 Summary of Water Balance Study Conclusions
Table 4.1 Water Sector Issues
Table 6.1 Summary of Strategy Outputs
Table 6.2 Recommended Institutional Changes
Table 7.1 Summary of Capital Investment Requirements
List of Figures
Figure 2.1 Central Organizational Chart of His Majesty's Government of Nepal
Figure 2.2 Coordination / Policy Level Institutions for the Water Sector (Existing
Situation)
Figure 2.3 Organizational Set-up for Water Resources
Figure 2.4 Organizational Set-up for Drinking Water Supply
Figure 2.5 National Capital Expenditures in the Water Sector
Figure 5.1 Relevant Policy, Acts and Regulations for the Water Sector
Figure 6.1 Recommended Reorganization of the Water Sector
Figure 7.1 Nepal’s Water Sector Investment Requirements
Figure 7.2 Water Sector Capital Investments – Comparison of 9th
Plan and Projected
14th
Plan
Maps
Map 1 : Regional Context of Nepal’s Major River Basins
Map 2 : Physiographic Regions of Nepal
Map 3 : Annual Precipitation in Nepal
Map 4 : District-wide Population Benefited from Water Supply in Nepal
Map 5 : Irrigation Coverage in Nepal
Map 6 : Major Power Stations, Transmission Lines and Substations
Map 7 : Important River Basins of Nepal

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List of Supporting Documents
WRSF Consortium Reports - 15 Annexes:
Annex-1 : National Water Resource Policy Framework
Annex-2 : Macro Economic Framework
Annex-3 : River Basin Planning Framework
Annex-4 : Irrigation
Annex-5 : Hydropower
Annex-6 : Water Supply and Sanitation
Annex-7 : Water Transportation
Annex-8 : Water Pricing and Cost Recovery
Annex-9 : Hydrology
Annex-10 : Hydrogeology and Geo-Seismology
Annex-11 : Water Resources Database
Annex-12 : Legal and International Cooperation
Annex-13 : Institutional Framework and Mechanism
Annex-14 : Mainstreaming Environment into Water Resource Strategy
Annex-15 : Social Concerns

1
1 INTRODUCTION
1.1 Rationale for Water Resources Strategy
Water is a precious gift of nature, essential for human survival. Without water, life on earth
cannot be sustained. Water is required for basic human needs such as drinking, cooking and
bathing, for irrigation to grow crops, for hydropower to produce energy, for industry and for
the environment. Water is also an inherent component of the ecological chain on which all
life and life-supporting systems depend. In Nepali and other Himalayan societies, water from
the mountains also has important cultural and spiritual significance.
Water is one of the principal natural resources supporting the economy of Nepal. At present,
approximately 33% of Nepal’s agricultural production is based on irrigation systems.
Intensification of agriculture through expansion of irrigation is considered one of the
principal means of increasing food supplies to satisfy future population growth. Similarly,
84% of Nepal’s electricity is currently produced by hydroelectric generation. The realization
of prospects for very large increases in hydropower generation would allow Nepal to meet its
domestic energy demands and to export this renewable energy to its neighbours.
It must be recognized, that freshwater is a finite and vulnerable resource. Because Nepal’s
population is expected to double in the next 30 years and the demands for water are
continually increasing, a certain level of water crisis is imminent, unless the available water
supply is well managed. Already, signs of crisis and conflicts involving water use have been
reported in some areas. As time passes, the frequency, intensity and seriousness of such
conflicts will increase. One must also recognize the fact that our river basins are shared by
our neighbours -- India, China and Bangladesh (see Map 1). Scientific, sustainable and
consensus-based mechanisms of water resources management should be found to address
the impending water crisis.
The present situation regarding Nepal’s water resources can be summarized as follows:
• 66% of the population has access to safe water;
• 41% of irrigated land has “year-round irrigation”1
;
• Less than 400 megawatts (MW) of installed hydropower capacity is available; and
• Little consideration is being given to environmental requirements.
Every Nepali citizen, now and in the future, should have access to safe water for drinking
and appropriate sanitation, as well as enough water to produce food and energy at reasonable
cost. Achieving these objectives will require an orderly expansion of water uses combined
with radical changes in the manner in which water is perceived and managed today. Nepal
needs to promote ways of managing its water at the river basin level to achieve long-term
sustainability for the benefit of all its people. This will require a holistic, systematic approach
that honours, respects and adheres to the principles of integrated water resources
management. Hence the need for a national strategy for water resources use in Nepal.
1
“Year-round irrigation” denotes the availability of water when and as required (i.e., demanded) for the
optimal use of the land for agricultural production. At present, if the land has over 155 % cropping intensity
on average, it is said to have year-round irrigation.

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The role of the Water Resources Strategy is to determine a path involving medium- and long-
term action programs for resolving conflicts and achieving water-related development
objectives.
His Majesty's Government of Nepal (HMG), through its Water and Energy Commission Secretariat
(WECS), has embarked upon the task of preparing the first comprehensive Water Resources
Strategy for Nepal.
1.2 Strategy Formulation Process
Strategic planning aims to improve one’s current situation in order to attain a higher level
goal within a given timeframe. In the water sector, although strategic planning has been
increasingly used at the national and sub-national levels, it has proven to be a complex and
time consuming process. Although considered highly desirable, few countries have been able
to formulate an integrated national water resources strategy.
Despite the lengthy process, national water resources strategy formulation is considered a
necessary and worthwhile participatory process. It provides a systematic framework in which to
develop and manage water that embodies all the varied facets of the resource, and to achieve a
specified set of objectives over the long term. In the absence of such a framework,
development has been ad hoc and sub-sectoral because respective policies are often too general
and slip into sub-sector biases.
Since conditions do change over time, a water resources strategy must remain dynamic, with
updates typically required every five years. Creation of the initial strategy for development
and management of Nepal’s water resources is the challenge of this report.
The decision to formulate a national water resources strategy was taken by HMG/N in 1995.
At that time, the World Bank had prepared a guideline for Water Resources Strategy
Formulation (WRSF) that included three steps:
1) Identification and analysis of issues (Phase I);
2) Formulation of strategy options and a preferred strategy (Phase II); and
3) Preparation of a National Water (Action) Plan to implement the strategy (Phase III).
Nepal embarked on Phase Istrategy formulation in 1995 under the direction of the National
Planning Commission (NPC) and a national steering committee with the technical assistance
of World Bank/JGF. In 1996, the Phase I report was completed and a national workshop
was held to present and discuss its findings. As an outcome of this workshop, a decision was
made to commence Phase II.
Prior to Phase II, the World Bank recommended that HMG establish a National Water
Planning Unit that would be responsible for formulating, managing and updating the national
Water Resources Strategy. The World Bank recommended that the unit be designated prior to
implementation of Phase II to enable it to develop sufficient institutional capacity for strategic
planning. In November 1997, HMG designated WECS as the National Water Planning Unit

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and the Water and Energy Commission (WEC) as the national steering committee. To support
WECS in this role, the World Bank provided funding for local consultants to conduct an
analysis of the water sector and to develop strategy options and action plans. Also, the
Canadian International Development Agency (CIDA) agreed to provide financial support for
Canadian consultants to assist WECS with strategy formulation and capacity building through
its existing WECS Institutional Development Project (WIDP).
World Bank funding forWRSF was part of the Nepal Irrigation Sector Project (NISP) credit,
which became effective in July 1998. Subsequently, request for proposals were issued and a
local consultant – the WRSF Consortium – was contracted for a two-year study commencing
in January 1999. After a further assessment of issues identified in Phase I, a national
workshop was held in September 1999. This resulted in a consensus to proceed with the
formulation of strategy options. By March 2000, a draft report with 12 annexes had been
prepared by the WRSF Consortium for review by WECS, as well as during stakeholder
consultation. A regional workshop was conducted in Chitwan in July 2000.
At this time, the World Bank, CIDA and an independent international panel of experts
comprising Dr. Guy LeMoigne and Dr. Peter Rogers, provided suggestions to WECS
concerning the strategy formulation process. Two concerns regarding the Water Resources
Strategy were paramount:
1) It must be owned by HMG/N; and
2) It should be based on broad stakeholder consultation and consensus.
At this time, responsibility for formulation of the Water Resources Strategy, based on work
undertaken by the WRSF Consortium, shifted to WECS, which decided to embark on a fully
consultative process. Draft strategies were reformulated by the WECS-core group with the
assistance of individual consultants using “project cycle management” techniques (e.g.,
identifying objectives at the purpose and output levels). In Summer 2000, three regional
workshops were held in Pokhara, Nepalgunj and Biratnagar during which consensus was
developed regarding the key issues and strategy options. The Water Resources Strategy was
further refined during internal workshops involving various HMG/N officials. A draft Strategy
Report was prepared and circulated for comments to WEC and more than 400 stakeholders in
February 2001. A national workshop was held in March 2001 at which the draft Strategy was
presented and feedback was provided by stakeholders regarding the Strategy and possible
action plans. A revised draft was produced in July 2001, which incorporated the comments
made by stakeholders and included a synthesized strategy framework that was finalized during
an internal workshop involving experts, including officials from relevant HMG/N agencies.
The draft final Strategy was submitted to WEC for review and approved in October 2001 with
some minor modification. The Strategy was then sent to Cabinet and was approved on January
9, 2002. This document is the final version as approved by Cabinet.
The next step in the process is to develop detailed and comprehensive action plans and
investment plans for the short, medium and long terms, culminating in the National Water
Plan. This plan will also include a companion Environmental Management Plan for the water
sector. The timeframe for Phase III, which will be led by WECS with close collaboration from

5
relevant HMG/N agencies, relevant institution and other key stakeholders, is scheduled from
January 2002 to April 2003. During this phase, WECS will continue to emphasize stakeholder
consultation throughout the process.
In parallel with the preparation of the National Water Plan, HMG/N will formulate a
comprehensive Water Resources Policy and other related legislation. In this respect, the
implementation of the Strategy has already begun.
1.3 Format of the Report
As described above, this report represents the final product of Phase II – formulation of
HMG’s Water Resources Strategy. It provides the framework for the preparation of the
National Water Plan, which will identify specific action plans, timeframes, lead
agencies/entities and investment requirements. The organization of the Water Resources
Strategy Report is as follows:
Chapter 1 –Introduction and overview of the process involved in development of the Water
Resources Strategy.
Chapter 2 –Overview of Nepal’s water sector, including hydrology and climate, socio-
economic setting, present environmental conditions and domestic and
international involvement.
Chapter 3 –Description of the national and regional resource needs of Nepal’s water sector.
Chapter 4 –Summary of the outcome of the situation analysis, including key issues,
problems, constraints and opportunities related to the water sector.
Chapter 5 –Description of the existing policies, principles, and legal framework that are
being used to guide strategy formulation.
Chapter 6 –The approved Water Resources Strategy and detailed description of the major
activities required for its successful implementation.
Chapter 7 –An outline of the human and financial resources required to implement and
manage the Water Resources Strategy. More detail regarding key resource needs
will be included in the forthcoming National Water Plan(Phase III).

6
Canal Intake works showing gates and concrete lined canal at Trishuli River.
Terrace along left bank of river at powerhouse site. Boulder deposits along right bank are
from Waling Khola.

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2 OVERVIEW OF NEPAL'S WATER SECTOR
2.1 Hydrology and Climate
Nepal is a landlocked country in South Asia, located between latitudes 26o
22’N to 30o
27’N and
longitudes 80o
04’E to 88o
12’E, and bordered by China to the north and India to the south, east
and west. With a total land area of 147,181 km2
, the country is characterized by diverse
topography, geology and climate, as well as patterns of land use. Nepal is predominantly
mountainous, with elevations ranging from 64 m above sea level at Kechana in the eastern
Terai District of Jhapa to 8,848 m at the peak of the world’s highest mountain, Sagarmatha,
within a span of 200 km.Map 2 shows the physiographic regions of Nepal.
Approximately 6,000 rivers and rivulets, with a total drainage area of about 194,471 km2
, flow
through Nepal; 76% of this drainage area is contained within Nepal. Drainage areas of 33 of
Nepal’s rivers are greater than 1,000 km2
.
There are three types of rivers in Nepal, classified based on the nature of their source and
discharge. In the first category are perennial rivers that originate in the Himalayas and carry
snow-fed flows with significant discharge, even in the dry season. These include the Kosi,
Gandaki, Karnali and Mahakali river systems. In the second category are the Mechi, Kankai,
Kamala, Bagmati, West Rapti and Babai rivers which originate in the Midlands or Mahabharat
Range of mountains and are fed by precipitation as well as groundwater regeneration, including
springs. Although these rivers are also perennial, they are commonly characterized by a wide
seasonal fluctuation in discharge. The third category of river systems includes a large number
of small rivers in the Terai (southern plains), which originate from the southern Siwalik Range
of hills. These rivers are seasonal with little flow during the dry season, but characterized by
flash floods during the monsoon.
Although Nepal liesnear the northern limit of the tropics, there is a very wide range of climate
from summer tropical heat and humidity of the Terai to the colder dry continental and alpine
winter climate through the middle and northern mountainous regions. The amount of
precipitation and range of temperature varies considerably because of the exceptionally rugged
terrain and large variations in altitude. Summer and late spring maximum temperatures range
from more than 40o
C in the Terai to about 28o
C in the central part of the country, with May
being the warmest month. Winter average maximum and minimum temperatures in the Terai
range from 23o
C to 7o
C, while the central valleys experience a 12o
C maximum and a below
freezing minimum. Much colder temperatures are experienced at higher elevations.
Nepal has two rainy seasons; one during the summer from June to September, when the
southwest monsoon brings about 80% of its total annual rainfall, and the other in winter,
accounting for the rest. In the hydrological cycle, about 64% of all rainfall immediately drain as
surface runoff. Of the remaining 36%, some is retained in the form of snow and ice in the high
Himalayas, some percolates through the ground as groundwater and some is lost due to
evaporation and transpiration. Snow, ice and groundwater acts as a natural reservoir, supplying
the rivers throughout the dry season. Since there are only a few large lakes, natural surface
storage does not play a major role in the hydrological cycle.

8
Mean annual precipitation ranges from more than 6000 mm along the southern slopes of the
Annapurna Himalayan ranges in the central part of the country to less than 250 mm in the
northern central portion near the Tibetan Plateau (see Map 3). Most of the country experiences
annual precipitation in the range of 1500 mm to 2500 mm, with distinct maxima along the
southern slopes of the Mahabharat and the Himalayan ranges in the eastern two-thirds of the
country. Based on available hydrological data, estimated annual runoff from the rivers of Nepal
is 220 billion cubic meters, with an average annual precipitation of 1530 mm.
Devi Ghat Powerhouse, Trishuli
In addition to abundant surface water resources, Nepal is also endowed with extensive
groundwater resources. Groundwater is found in most of the Terai and in some mid-hill
valleys like Kathmandu and the Dang. In the Terai, present annual withdrawal of
groundwater, for various purposes, is estimated at 1.04 billion cubic meters, which is about
20% of the minimum possible annual recharge estimate of 5.80 billion cubic meters. In the
Kathmandu Valley, in contrast, the total annual abstraction is presently estimated at 23.4
million cubic meters, which is much greater than the maximum recharge estimate of 14.6
million cubic meters. The effects of groundwater mining and pollution in the Kathmandu
Valley are alarming and need urgent attention.
The influence of heavy rain during the monsoon causes wide variation in river flow, as well
as land erosion and landslides. Factors such as extreme topographic relief, fragile and
dynamic geological composition contribute to increased soil erosion, which in addition to
snow and glacier melt, results in high sediment inputs to Nepal’s rivers during high summer
flows. The nature of a river’s sediment load is an important factor in determining the extent
of water-related hazards.

9

10

11
2.2 Socio-Economic Setting
Nepal is one of the least developed countries in the world, with a population of
approximately 23 million and an historical annual growth rate of 2.4%. The majority of the
population is almost equally distributed between the Hills and the Terai, with only 7.5%
living in the Mountains (see Table 2.1).
Table 2.1
Estimated Population of Nepal in Year 1999
Development Region
Category
Total
Estimated
Population
Eastern Central Western
Mid Western Far
Western
Terai
Rural 9,268,500 2,727,100 3,322,700 1,498,800 1,012,500 707,400
Urban 1,564,900 558,700 440,500 198,200 179,000 188,500
Hills
Rural 8,488,300 1,637,900 2,177,000 2,527,600 1,412,600 733,200
Urban 1,681,800 72,200 1,157,500 343,300 52,800 56,000
Mountains
Rural 396,600 539,700 22,500 308,500 393,400 1,660,700
Urban 22,300 22,900 22,500 0 0 45,200
Sub-total:
Rural 19,417,500 4,761,600 6,039,400 4,048,900 2,733,600 2,078,500
Urban 3,291,900 653,200 1,620,900 541,500 2,733,600 1,834,000
Total: 22,709,400 5,414,800 7,660,300 4,590,400 2,965,400 2,078,500
Source: WRSF Consortium Report, Annex 6: Water and Sanitation, December 2000.
Based on current trends, it is projected that important demographic changes will take place in
Nepal by 2027. The population of some districts is increasing at a much more rapid rate than
the national average. In addition, there is a strong increasing trend in the proportion of the
population that is living in urban areas. The projected population of Nepal in Year 2027,
assuming an annual growth rate of 2.1%, is given in Table 2.2.
Although Nepal’s population growth rate has decreased, the country’s population will
increase significantly by the end of the planning period. This increase in population,
combined with internal migration, will present a major challenge to Nepal’s economic
development, a challenge that the water resources sector must strive to meet.
Annual Per Capita Gross National Product (GNP) is only about US $220 (1999) and the
corresponding growth rate in per capita output has remained very low (about 2%) for many
years. The agricultural sector dominates Nepal’s economy, accounting for about 41% of the
Gross Domestic Product (GDP) and employing close to 80% of the working population.
However, the performance of this sector has been less than satisfactory, with productivity
growth barely matching population growth over the years.

12
Table 2.2
Projected Population of Nepal in Year 2027
Development Region
Category
Total
Projected
Population
Mid
Western
Far
Western
Terai
Rural 13,373,000 3,590,000 5,059,000 2,374,000 1,426,000 924,000
Urban 5,535,000 2,055,000 1,422,000 634,000 691,000 734,000
Hills
Rural 10,858,000 2,500,000 1,491,000 3,560,000 2,245,000 1,063,000
Urban 6,265,000 351,000 4,288,000 1,199,000 197,000 230,000
Mountains
Rural 2,614,000 588,000 838,000 36,000 505,000 647,000
Urban 187,000 91,000 96,000 0 0 0,000
Sub-total:
Rural 26,845,000 6,678,000 7,387,000 5,970,000 4,176,000 2,633,000
Urban 11,987,000 2,496,000 5,805,000 1,832,000 889,000 964,000
Total: 38,832,000 9,174,000 13,192,000 7,802,000 5,065,000 3,597,000
Source: WRSF Consortium estimates based on Ministry of Population and Environment projections to 2016 and extrapolation
to 2027. These estimates also presume that 203 municipalities will be classified as urban before 2027.
Table 2.3 compares socio-economic indicators for a number of countries in South Asia,
based on data collected by the World Bank. With 42% of its population living below the
poverty line, poverty is Nepal’s main concern. Life expectancy at birth is 57 years, the lowest
in South Asia (World Bank, 1999); infant mortality per 1000 live births is 83; and illiteracy
among the population above the age of 15 is 62%, the highest in South Asia. Economic
development will be required for Nepal to raise its standard of living and alleviate poverty.
The country’s water resources could play a key role in such development.
Table 2.3
Comparison of Socio-Economic Indicators of South Asia including China
Nepal India
Sri
Lanka Bangladesh Bhutan Maldives Pakistan China
Socio-economic Data
Population (million) 23.4 998.1 18.6 126.9 781.8 277.6 134.8 1,266.8
Average Population
Growth (1992-1998)
2.3% 1.8% 1.1% 1.6% 2.9% 2.5% 2.4% 0.9%
GNP per capita
(Atlas method, US$)
220 450 820 370 510 1,160 470 780
GNP (Atlas method, US$
billion)
5.1 442.2 15.7 47.0 0.4 0.3 64.0 980.2
GDP at market prices
(US$ billion)
4.9 459.8 15.7 45.8 0.4 0.4 59.9 991.2
Life Expectancy at Birth
(years)
57.0 63.1 73.3 58.5 61.1 67.4 62.4 69.9
Infant Mortality
(per 1000 live births)
77.0 70.0 16.4 72.8 60.9 30.6 91.5 31.1
Male Illiteracy (% of
population age 15+)
42% 32% 6% 48% 44% 4% 41% 9%
Female Illiteracy (% of
population age 15+)
77% 56% 11% 71% 72% 4% 70% 24%
Access to Safe Water
(% of population)
81% 88% 83% 97% 62% 100% 88% 75%
Source: World Bank, 1999 (World Development Indicators)
UNICEF, 1999

13
2.3 Present Environmental Conditions
Nepal is blessed with a rich but fragile environment and faces a number of physical and
human challenges. On the physical side, rugged topography, young geology and monsoon
climate, all combine to produce high rates of runoff, erosion and sedimentation. At times,
tremendous natural forces are unleashed as earthquakes, floods and landslides. Human
activities have also resulted in pressure onboth bio and physical resources of the country such
as forests, soils, terrestrial and aquatic species and habitats. Increasing population pressure and
demand for agricultural land have caused particular concerns regarding the protection of the
natural environment. In urban areas, wastewater, solid waste and air pollution have seriously
degraded the living conditions. Poverty and environmental degradation are closely interrelated
in Nepal.
To address problems in certain sensitive areas, HMG/N has established a number of
national parks, wildlife reserves, conservation areas and buffer zones to protect and
rejuvenate the natural ecosystems. In the last decade, HMG has also created the Ministry of
Population and Environment (MOPE) and promulgated environment protection legislation
to improve environmental conditions and protect the environment from future
development. Water resources development must now be carried out in an environmentally
sustainable manner, while water resources management should play a role in enhancing
environmental conditions over the long term.
2.4 Present Status of Water Sub-sectors and Potential for Development
2.4.1 Domestic Water Supply and Sanitation
Despite its huge water resources potential, one third of population does not have access to safe
water. In the past ten years, significant efforts have been made to improve access to water supply
and these efforts need to continue if full coverage is to be achieved. The latest domestic water
supply coverage figures for rural and urban areas (1996/97 and 1998/99 projections) are shown
in Table 2.4.
Table 2.4
Coverage3
of Drinking Water Service in Nepal
Development
Region
Total Benefited Population (‘000)
(1998/99 estimates)
Urban % Rural %
Eastern 376 58 2,586 54
Central 1,191 73 3,834 63
Western 354 65 2,852 70
Mid Western 155 67 2,012 74
Far Western 105 43 1,555 85
Total 2,181 66 12,839 66
Source: WRSF Consortium Estimates based on data provided by Nepal Water
Supply Corporation and Department of Water Supply and Sewerage.
3
A person is deemed to have drinking water coverage if he lives within 50 m in altitude and 250 m in
horizontal distance of a drinking water source.

14
Map 4 shows the levels of coverage for drinking water service by district. Sanitation needs are
more acute, even when only the most basic sanitation facilities (i.e., use of latrines) are
considered. In 2000, sanitation coverage was estimated at 25%4
by the Ministry of Housing and
Physical Planning (MHPP). In addition to the use of latrines, sanitation includes systems of
sewerage, human waste, and solid and liquid waste management. Clearly, a lot needs to be done
in Nepal with regard to sanitation.
2.4.2 Irrigation
Nepal has a cultivated area of 2,642,000 hectares (ha)(18% of its land area), of which two-thirds
is potentially irrigable. At present, 42% of the cultivated area has irrigation of some sort, but only
17% of cultivated area has year-round irrigation (i.e., only 41% of irrigated areas is year-round
irrigation). In terai out of the 889,000 ha of irrigated area, 82% is provided by surface irrigation
and rest 18% is provided by groundwater (tubewells), which contributes in conjunctive
(combined) irrigation also in many cases. Most of the irrigated area (and future potential) is
situated in the Terai, the fertile lowland (see Map 5*). It is estimated that existing irrigation
systems contributes approximately 33% to the country’s current agricultural production. Even if
all irrigable lands were provided with year-round irrigation, total production could increase by
only about 50% (due to water inputs alone).
The Agriculture Perspective Plan (APP), a 20-year framework for agricultural development
prepared by HMG with assistance from International Development Agency, was launched by
HMG in1997. It is expected that, as a result of APP implementation, approximately 612,000 ha
of irrigable land will eventually be converted to year-round irrigation by emphasizing tubewell
irrigation in the Terai. By the end of the APP in 2016/2017, it is expected that irrigation will
command about 1.44 million ha or 55% of the cultivable land in Nepal. Table 2.5 shows the
status of irrigation in Nepal and the potential for future development.
Table 2.5
Irrigation Development Status in Nepal - 1999/2000
Geographic
Region
Overall
Cultivated
Area
‘000 ha
Total
Irrigable
Area
5
*
‘000 ha
Total
Irrigated
Area
‘000 ha
Irrigated as
% of
Cultivated
Year Round
Irrigated
Area
‘000 ha
Year Round
Irrigated as
% of
Irrigated
Year Round
Irrigated as
% of
Cultivated
Terai 1,360 1,338 889 65% 368 41% 27%
Hills 1,054 369 167 16% 66 39% 6%
Mountains 227 60 48 21% 18 38% 8%
Totals 2,642 1,766 1,104 42% 452 41% 17%
Maximum Possible 67% 100% 67%
Source: WRSF Consortium Report, Annex 4: Irrigation, December 2000. Table 4.15 with addition of 47,996.5 hectares
reported progress in Agriculture Perspective Plan to 1999/2000 from Table 4.16.
4
Nepal Status of Sanitation Report, 1999/2000.
5
In addition, some forested land is estimated to be irrigable.
*
The figures mentioned in this map are based on the data available in the WRSF Consortium final report.

15

16

17
2.4.3 Hydroelectric Power
Nepal possesses energy sources in the form of hydropower and forestry (fuelwood); no other
fossil fuel energy resources have been discovered in significant quantities (e.g., coal, oil, gas)
yet. Renewable energy resources including solar and wind power are being developed on a
very small scale for isolated hill villages and bio-gas is utilized in an increasing number of
villages throughout the country.
Nepal has 83,000 MW of hydropower potential, of which about 43,000 MW is currently
considered economically viable. Table 2.6 describes Nepal’s economic hydropower potential
relative to development size.
Table 2.6
Summary of Economic Hydroelectric Development Opportunities
Category
Number of Projects
Identified
Total Capacity
MW
Total Generation
Potential
GWh/y
10 – 100 MW (medium) 157 6,200 38,000
100 – 300 MW (medium) 47 7,815 42,056
300 – 1,000 MW (large) 20 9,437 45,723
> 1,000 MW (large) 5 19,463 50,985
Totals 229 42,915 176,764
Source: WECS estimate, 2000 (excludes micro, mini and small hydropower).
Table 2.7 indicates the regional locations of hydropower potential. Although Nepal possesses
huge hydroelectricity potential, only 1% has been developed to date.
Table 2.7
Location of Hydropower Resources in Nepal
Numbers of Identified Projects - Development Region
Category
Mid
Western
Far
Western
Total
10 – 100 MW 48 40 28 30 11 157
100 – 300 MW 6 14 12 13 2 47
300 – 1,000 MW 6 2 6 3 3 20
> 1,000 MW 2 0 0 1 2 5
Totals 62 56 46 47 18 229
Source: WECS estimate, 2000 (excludes micro, mini and small hydropower).
Nepal’s present installed hydropower capacity is less than 400 MW (see Map 6). An
additional four hydropower projects are under construction, which will add another 239 MW
of capacity by 2002. These plants will keep pace with electricity demands until 2005.
Thereafter, additional hydropower capacity will be needed.

18
2.4.4 Other Economic Uses of Water
Nepal’s water sector generally focuses on only three sub-sectors – water supply, irrigation
and hydropower – that comprise the majority of uses and investments. However, there are
other significant uses of water that must be considered during water sector planning, as these
may compete or conflict with other uses. Such uses include:
• Large-scale industrial uses - for cooling or process water.
• Recreation and tourism – rafting, pleasure boating, bathing, aesthetic values of rivers,
lakes and glaciers (e.g., for trekking, mountain climbing, sightseeing);
• Traditional and commercial fishing – catch and cage fisheries;
• Navigation of rivers - mainly crossings but some rivers could be made navigable in
future;
• Natural aquatic habitat and wetlands – often associated with parks and wildlife
reserves;
• Cultural and religious – temples, ghats, sacred waters;
• Sand and gravel extraction from river beds; and
• Unique water sources or bottling of spring water.
Although these uses have not been well documented or quantified, they are important and
their contribution to the economy is clear and needs to be better appreciated. Further, since
the importance of these types of water use will likely to increase in the future, they should be
included in the current water resources planning framework.
2.5 International Context
Nepal is blessed with abundant water resources potential that can provide solutions to its
long-term food and energy demands as well as other needs. Development of Nepal’s water
resources could also provide significant benefits to its neighbours in terms of water supply,
hydropower and flood reduction. Surface runoff from Nepal comprises 45% of the average
annual flow of the Ganges and over 70% of the Ganges' dry season flow. Nepal does not
currently possess enough financial resources to develop large-scale water resources projects.
Therefore, Nepal’s future for large-scale water resources development will require
international cooperation.
Past experience regarding international cooperation in the development of water resources
has been mixed. A positive sign of cooperation is that Nepal and India have signed three
river basin treaties during the past 50 years. However, the implementation of works under
these treaties has not met the expectations of both parties.
Nepal’s water resources potential has been tapped to a relatively minor extent. The greatest
economic benefits will only occur from the storage of water, allowing its release to be timed
to coincide with periods of greatest demand. The storage of significant amounts of water
would require large dams that are expensive to build and would cause social and
environmental impacts. Based on lessons learned from international water law, Nepal has
adopted the principles of (i) equitable sharing of water and (ii) downstream benefits whereby

19
the lower riparian users should bear costs proportional to the long-term benefits of storage
projects. Although no large projects have been mutually implemented to date, the proposed
Pancheshwar Project located on a boundary river, has progressed to the detailed planning
level. This development is covered under the Mahakali Treaty that provides the basis for
equal sharing of costs and benefits.
Being a landlocked country, Nepal has been pursuing for the possibility of constructing a
navigable channel between Nepal and the Indian inland waterways that will ultimately lead to
an access to the sea. Such a project would require cooperation between India and Nepal.
Nepal must have the cooperation with India, as well as China and Bangladesh, in order to
realize the full potential of its water resources. Therefore, Nepal's National Water Plan would
define a framework of international cooperation.
2.6 Institutions Involved in the Water Sector
Figure 2.1 shows the central organizational set-up of HMG. A number of councils,
commissions and line ministries are involved at the policy, planning and political decision-
making levels in the water sector. Figure 2.2 shows the organizational set-up of the policy
level institutions. The NPC is responsible for the national planning and coordination of all
sectors. For the water sector, the WEC and its Secretariat were established as a coordination
and advisory body. Its ability to coordinate the numerous agencies involved in the water
sector has not been effective because it does not have explicit authority. The highest
authority for decision-making on water-related issues is the National Water Resources
Development Council (NWRDC), which has wide representation from political parties,
senior government officers and non-government spokespersons. WECS also serves as the
secretariat of the NWRDC.
At the water resources administration and management level, institutions have been
organized into two sectoral line ministries. The Ministry of Water Resources (MOWR) is
responsible for hydropower, irrigation and disaster prevention and the Ministry of Physical
Planning and Works (MOPP&W) is responsible for drinking water supply, as well as urban
infrastructure, housing and roads. Sub-sectoral implementation departments, including the
Department of Irrigation (DOI), Department of Water Supply and Sewerage (DWSS),
Department of Electricity Development (DOED), Department of Water Induced Disaster
Prevention (DWIDP) and two public corporations, the Nepal Water Supply Corporation
(NWSC) and the Nepal Electricity Authority (NEA), are placed under these two ministries.
There are also some related departments that are under other line ministries:
• The Department of Hydrology and Meteorology (DHM) has been placed under the
Ministry of Science and Technology (MOS&T); and
• The Department of Soil Conservation and Watershed Management (DSCWM) has
been placed under the Ministry of Forests and Soil Conservation (MOF&SC).
Figure 2.3 shows the institutional set-up for water resources and Figure 2.4 shows the
institutional set-up for drinking water supply.

20

21
INSERT FIGURE 2.1 – Central Org. Chart …

22
INSERT FIGURE 2.2 – Coordination/Policy level Institutions …

23
At the local level, there are a number of administrative institutions that have authority for
planning and implementation of projects within each district. The District Development
Committee (DDC) is the key institution in each district. It coordinates development activities
with line ministry offices that are located at regional and district levels, including irrigation,
water supply, soil conservation, and hydrology and meteorology. The DDC is also
responsible for the coordination of planning and implementation in the Village Development
Committees (VDCs). In turn, DDCs and VDCs administer and interact with Water Users'
Associations (WUAs), Water Users' and Sanitation Committees (WUSCs) and/or Water
Users' Groups (WUGs). The District Water Resources Committee (DWRC) is responsible
for water licensing and dispute resolution, although these functions have rarely been carried
out. In the larger towns and cities, municipal governments have the mandate to administer
urban services; however, only a few municipalities presently manage their own water supply.
2.7 Current Levels of Investment in the Water Sector
2.7.1 Public Sector Development Expenditures
Investments in the water sector can be divided into the following categories:
• Drinking water supply;
• Sewerage and sanitation;
• Irrigation;
• Electricity (hydropower generation, transmission and rural electrification);
• Water-induced disaster prevention;
• Environmental protection and enhancement;
• Water resources data collection and monitoring; and
• Institutional support.
In the last two decades, the majority of investment has been allocated for irrigation,
electricity and drinking water, with the amount of investment in the other sub-sectors being
relatively small. Figure 2.5 shows the trend of Nepal’s annual development expenditures in
the three major sub-sectors. In the 1998/99 fiscal year (FY), the total development
expenditure was Rs. 9.62 billion (US$ 135 million), which represents 34% of Nepal’s
development expenditure in all sectors. In the past decade, the largest sha re of water sector
expenditures has been for the electricity sub-sector, ranging from 40% to 60% of the total;
annual expenditures have fluctuated due to the timing of large projects. The irrigation sub-
sector used to comprise 40% to 45% of water sector expenditures, but in the last five years
irrigation expenditures have declined in constant value terms and its relative share has fallen
to 30%. Although the drinking water sub-sector grew from only 7.5% in the FY 1979/80 to
30.0% in the FY 1992/93, the annual expenditures have been lower in constant value terms
and the relative share of expenditures dropped to about 20.0% in the last six years.
These development expenditures have resulted in the increasing levels of coverage and
service quality reported in Section 2.4. It is recognized that increasing levels of capital
investment will be needed in the water sector to provide service to all people, to improve
quality of service and to meet other requirements including sewerage and sanitation, water-
induced disaster prevention, environmental protection and enhancement, data collection and
monitoring, and institutional support.

24
Insert – Figure 2.3: Organizational Set-up for Water Resources

25
Insert Figure 2.4: Organizational Set-up for Water Supply

26
INSERT FIGURE 2.5: National Capital Expenditures in the Water Sector

27
2.7.2 Public Sector Regular Expenditures (Recurring Costs)
HMG has an annual budget for regular expenditures that is in the range of Rs. 30 to 35
billion. Of this amount, Rs. 10 billion (30% to 33%) is spent in the economic and social
sectors. For the water sector, the annual regular expenditures only amount to Rs. 130 million
(1.3% of the economic and social sectors) and most of this is for irrigation (Rs. 110 million).
The water sector public agencies/corporations are expected to collect revenue to cover their
own recurring costs and to some extent they already do so. The cost of institutional support
is not a heavy burden, but many institutions could be run more efficiently.
2.7.3 Contributions to Capital Expenditures from the Private Sector and
Communities
Although statistics are not well documented regarding private sector and community contributions
to capital investment and operating costs, there is clearly an increasing shift away from reliance on
the publicsector. In the electricity sub-sector, the private sector has made capital investments
equivalent to Rs. 20 billion over the past five years in hydropower projects like Khimti,
Bhote Kosi, Chilime and Indrawati. This is equivalent to 55% of the capital investment from
the public sector during the same period, most of which has come in the form of foreign
equity and loan.
In the irrigation sub-sector during the past five years, capital investments in tubewells under
various programs amounted to Rs. 407 million, of which at least half has come from the
private sector/communities. These investments, however, still represent only 14% of the
public sector development expenditures on irrigation.
Overall in the water sector, capital investments from the private sector and communities
have reportedly been low. However, industries, hotels and foreign missions have been
operating private tubewells for many years. With the shortage of water in Kathmandu, some
households have installed shallow tubewells to augment the supply of piped water. Although
people in the rural areas have invested in household wells and tubewells, the major
investment in water supply and sanitation has continued to come from the public sector.
2.7.4 Water Pricing and Cost Recovery
In the electricity sub-sector, tariffs are set to recover all operating costs and repayment of
debt, as well as to finance future investments. In 2000, the average tariffs in Nepal were Rs.
6.5 per kWh (US$ 8.8 cents per kWh), which are very high for developing co untries in Asia.
The marginal rate for domestic energy consumption above 250 kWh/month is Rs. 9.25 per
kWh (US$12.5 cents per kWh), which is equivalent to or higher than the tariff in many
developed countries. For Nepal, these tariffs are a heavy burden for the majority of the
population as well as industrial and commercial businesses. The reasons for these high tariffs
include:
• A small power system serving a relatively large area;
• Large investments required for expansion of existing facilities; and
• High percentage of non-technical losses and high accountsreceivable.

28
In fact, the Asian Development Bank (ADB) has requested that HMG raise tariffs to a level
that would allow the NEA to meet its commercial targets (23% self-financing ratio and 6%
return on re-valued net fixed assets). In addition, NEA has been purchasing power from
some independent power producers (IPPs) at rates higher than its current average cost.
Attempts to further increase tariffs may encourage greater non-technical losses and may
reduce load growth. The requirement to increase rural coverage will also adversely affect
NEA’s cost recovery because these customers will be in lower tariff structures that are below
the cost of supplying power. Consequently, the long-term outlook for full (commercial) cost
recovery does not look favourable unless NEA can reduce non-technical losses and eliminate
high accounts receivables.
In the irrigation sub-sector, cost recovery has been a problem for many years, particularly
with government-operated surface water schemes. Unlike the electricity sub-sector, the
irrigation sub-sector simply attempts to recover the operation and maintenance (O&M)
costs. In most cases, cost recovery does not cover even O&M costs. The practice of
providing free or low cost water has led the APP to conclude that the better solution is to
promote shallow tubewell development whereby O&M costs are borne completely by the
farmers. Also, many government schemes have been transferred to community management
in the last decade and this will continue. In this way, Nepal should see an improvement in
cost recovery over the years.
In the water supply sub -sector, cost recovery has also been a serious problem which has led
to the deterioration of service quality. The situation has improved in rural areas where small
appropriate technology has been provided virtually free of cost (i.e., communities contribute
labour which usually accounts for 10%-20% of the investment). These schemes are then
owned and managed by the communities, implying full cost recovery for O&M, excluding
major repairs. In urban areas, tariffs should be set to recover all the operating costs and
repayment of debt and to finance future investments. However, due to poor levels of service
and lack of political support, tariffs in many urban centres have not been raised to meet these
criteria. There are high levels of technical and non-technical losses, as well as high accounts
receivables. In addition, charges levied for sewerage have often been inconsistent with the
service provided. Future investment needs for sewerage will be very large in urban centres
and this will require significantly higher tariffs. Consequently, the outlook for full cost
recovery in urban areas is not favourable. HMG has decided to contract service delivery and
tariff collection to the private sector to improve cost recovery and efficient management.
This may not be possible unless there is a concurrent improvement in the quality of service.
Kathmandu will become the key testing ground as the Melamchi Water Supply Project is
implemented.

29
3 REGIONAL AND NATIONAL WATER RESOURCES
NEEDS
3.1 Water Use in Nepal
3.1.1 Present and Future Water Use in Nepal
Estimates of Nepal’s current water use and potential use in 2027 are shown in Table 3.1.
Table 3.1
Estimated National Water Use in Nepal - Year 2000 and Year 2027
Year 2000 Year 2027
Water Demands/Uses
Water Volume
Million m3 /yr
Water Volume
Million m3 /yr
Domestic Water Use Population
22.9 million
800 Population
38.8 million
1,800
Irrigation Area
1,104,000 ha
13,000 Area
1,766,000 ha
37,000
Consumptive
Industrial Water Use 80 180
Non-
Consumptive
Hydroelectric Power Capacity
342 MW 1,000
Capacity
22,000 MW 60,000
Total Demand/Use 14,880 98,980
Water Supply (Surface-
and Groundwater)
230,000 230,000
Source: WECS Estimates, 2000.
As shown in Table 3.1, the total volume of Nepal’s water supply is very great compared with
the scale of expected water uses, establishing the fact that Nepal is generously endowed with
freshwater. A number of factors, however, limit the spatial and temporal availability of water
in Nepal and exemplify the challenges Nepal has to face in harnessing its water resources for
optimal use and maximum benefits. The factors include:
• The volume of runoff into the country’s streams and rivers varies greatly from place
to place due to large variations in climate and topography.
• The seasonal variation is very great. In an average year, 82% of the annual river flow
occurs in the June to November period. Even in large rivers, the dry season flow in
an average year is only 12.5% of the annual flow.
• There are tremendous flow variations from dry years to wet years.
• The locations where water can be usefully employed do not always coincide with the
locations where water is easily available.

30
• The patterns of desired water use in terms of times of the day and seasons of the year
may or may not be compatible with the natural patterns of supply.
• The natural condition of most Nepali rivers with all their variation in water levels,
river discharge and sediment load is a kind of dynamic equilibrium.
• Water-induced disasters are a feature of the natural flow regime. For this reason,
some significant water resources investments may have to focus on reducing the risk
of disasters rather than improving the supply of water.
Other factors that are relevant to the major uses of water are as follows:
• Water use for domestic water supply is not fully consumed. Most of the water
withdrawn from the source eventually returns to the river system.
• Water used for irrigation is likewise not fully consumed. Of the water withdrawn for
irrigation, 20% to 30% in the Terai and 50% to 60% in the hills and mountains
returns to the river systems and can support irrigation or other activities downstream.
• Water used to generate hydro power is not consumed at all. Power production may
benefit or interfere with downstream uses, depending on when the water is released
and power is generated. In a run-of-river project where there is no storage, there are
few impacts on other water users in the river system. However, some projects reduce
river flows for several kilometers between the diversion dam and the powerhouse.
Future water needs in Nepal include an obligation to coordinate and manage water use for
various purposes, including establishing adequate provisions for in-stream flows to protect
the downstream ecology, human needs and aquatic habitats.
Large storage reservoirs, which would be features of some of the proposed hydroelectric
power or multipurpose projects, would increase the amount of water available downstream
in the dry season to support activities that are of a higher value due to the scarcity of water in
that season. These projects may also have some capability to reduce flood risks by
impounding and delaying the passage of floodwater. Such benefits, including increasing the
amount of the lean season flows, may have a great value a considerable distance downstream
from the storage reservoir. The main concerns are the inundation of valleys, displacement of
people, and loss/damage to terrestrial and aquatic habitats.
Where it is available, use of water from groundwater aquifers most often will be the least costly
and most sustainable means of augmenting water supplies for consumption in the season of
low river flows.

31
Singha Darbar Main Building front view
Ministry of Water Resources Building, Singha Darbar

32
3.1.2 Basin Wide Accounting of Water Uses
A water balance study was carried out to examine the amounts of surface water available in
each of the major river basins in Nepal, on a monthly basis for a full range of high, normal
and low flow years8
. All identified water uses were accounted for considering present and
future water needs. The study also accounted for the interaction among water uses and the
re-use of return flows for downstream purposes. Until recently, irrigation, the largest
consumptive use of water, was assumed to be primarily reliant on large surface irrigation
projects, as indicated by a number of studies that had been conducted.
The study showed that, taking all aspects of location and time of water supply and water
demand into account, most of the anticipated water needs over the next 25 years will be met.
This study made provision for (i.e., assumed) nominal minimum river flows for ecological
preservation and downstream entitlements. Table 3.2 summarizes the study’s conclusions by
river basin.
Map 7 shows the important river basins and rivers of Nepal.
8
WRSF Consortium Report, Annex 3: River Basin Planning Framework, December 2000.

33

34
Table 3.2
Summary of Water Balance Study Conclusions
River Basin Study Conclusions
Mahakali Present and future water needs can be comfortably met.
Karnali Water surpluses offer opportunities for large multipurpose benefits.
Babai Water shortage exist in Babai. If diversion from Karnali Basin (Bheri) is
undertaken, a large water surplus is available.
West Rapti Water supply will be adequate to support some surface irrigation.
Gandaki This is a water surplus basin with potential to irrigate the adjacent Terai
area.
Bagmati Water shortages exist now and quality problems are evident.
Kamala Available flow can be balanced with newly developed irrigation areas.
Koshi
Water surpluses are forecast if operation policies for power, irrigation and
flood control are prioritized.
Kankai Water shortages will occur in March, April and May if full irrigable area is
developed using surface water.
3.1.3 Special Situations
3.1.3.1 Urban Areas
Rapid population growth in the Kathmandu Valley has created water demands
exceeding the available supply of surface and groundwater. Demands are being met
at a low standard of service only by progressively depleting stored groundwater. The
urgent situation is receiving attention, the planned remedy being transfer of a flow
of approximately 170 million litres per day from the adjacent river basin of the
Melamchi Khola (River).
Other rapidly growing urban areas may face comparable challenges requiring a
regional approach to surface and groundwater use, perhaps supplemented by
rainwater harvesting and demand management.
3.1.3.2 Irrigation Supported by Groundwater
The river basin water balance study contemplated a greater extent of surface water
irrigation than is currently intended under the APP. The APP has proposed
increased reliance on groundwater for year-round irrigation. Groundwater use
would help to satisfy water demands in dry season that cannot currently be met by
surface water schemes. Also, there would be greater in-stream flows for command

35
areas that do not have groundwater potential and must continue to rely on surface
irrigation. There will be water sharing issues with respect to use of groundwater but,
because it is expected that groundwater irrigation will be carried out on a sustainable
basis with adequate annual recharge of the aquifers, the withdrawal impacts of
groundwater for irrigation will be localized.
3.2 Water Needs of the Tibetan Region of China
3.2.1 Present and Future Water Use in Tibet
About 40,000 sq. km. of the Karnali, Gandaki and Koshi river basins lie in Autonomous
region of Tibet in China. Although these are areas of low runoff intensity in the rain shadow
of the Himalayan Mountains, due to their size they contribute substantially to the flow of the
rivers in Nepal and India.
At present, no significant amount of land is currently irrigated in Tibet, upstream of the
Nepal border. Although there are scopes for irrigation and other water uses, the increase in
consumptive use in the near future will not likely to be appreciable. If dams are constructed
for hydroelectric power production in Tibet, their effect will be to regulate the flow of the
rivers to some extent, which could enhance low season flows in Nepal, provided they do not
divert water flow to another drainage basin. In the long-term, concerns could arise regarding
water quality if sources of contamination are located near the rivers in Tibet. On balance,
however, it is not anticipated that there will be any serious conflicts with Tibet over river
flows in the foreseeable future.
3.3 Water Needs of the Downstream Riparian States
3.3.1 Geography of the Ganges Basin
All rivers flowing south from Nepal form part of the headwaters of the Ganges River Basin.
The Ganges is one of the 20 largest rivers in the world. This river basin, now home to nearly
500 million people, has been described as the cradle of cities. Its catchment area is 1,076,000
sq. km and its mean annual flow volume is approximately 400,000 million cubic meters per year.
The Ganges and the Padma channel of the Brahmaputra rivers are connected and therefore the
flow of the Ganges influences conditions in the distributaries of the delta in both India and
Bangladesh.
Eight major tributaries of the Ganges add their flows to the river volume upstream from
Patna with a total catchment area of approximately 800,000 sq. km. The catchment area of
rivers sources in Nepal add about 200,000 sq. km. between Patna and Sahebganj in Bihar.
Thus the Nepali rivers joining the Ganges in the reaches downstream from Patna contribute
about 25% of the catchment area at that point. The rivers flowing from Nepal comprise 40%
of the mean annual flow and 70% of the dry season flow of the Ganges.

36
3.3.2 Present and Future Water Use
In the densely populated Ganges Basin, the great river has enormous economic and cultural
importance. It is navigable as far as Agra, nearly 1200 km from the seaport of Haldia near
Kolkata. The catchment of the Ganges has a cultivated area of some 65 million ha in
India, most of which is under irrigation. The application of the water to the land is
controlled by thousands of kilometres of canals and dikes and many hundreds of dams,
weirs, barrages and other structures. Many cities and hundreds of industries draw their water
from the river.
Population growth in the Ganges Basin will create increasing demands of every kind of useson
the river in the coming years. India has Nepal as its upper riparian neighbour and Bangladesh
as its lower riparian neighbour in the Ganges Basin. Transboundary problems of pollution,
water sharing, flooding and river channel changes afflict all three countries. In this context,
regional cooperation for solving outstanding problems and harnessing the water resources for
economic growth would benefit a vast population.
Upstream pounded view of Dudh Koshi River at Confluence of Inkhu Khola; after1998 GLOF

37
4 SITUATION ANALYSIS
4.1 Introduction
Strategy formulation begins with a situation analysis. This process was conducted in the
WRSF Phase I study, whereby issues were identified and the key problems, constraints and
opportunities were presented in a 14-volume report in 1997. When Phase II began in 1999,
WECS and its consultant the WRSF Consortium reassess the problems and issues – some
had already changed, others were not strategic issues and new issues had arisen even in a
matter of two years. Another set of key problems were identified by stakeholders during
regional stakeholder consultation workshops held in Chitwan, Pokhara and Nepalgunj. These
problems were also cross-checked at the Biratnagar regional consultation workshop. The
consensus-based issues agreed upon in the course of the Phase II study are listed in Table 4.1.
The WRSF Consortium took the situation analysis further by analyzing the genesis or root
cause of each issue. These results are presented in the WRSF Consortiums reports (refer to
List of supporting documents).
The issues relate to the range of problems and constraints to the development of water
resources. These issues are specific to policies, financial and human resources, institutions
and actions needed for the sustainable development and management of the water resources
sector. The objective of the WRSF Phase II study was is to identify a range of strategies
leading to implementation of action-oriented initiatives and programs designed to address
the issues.
4.2 Key Study Findings
Based on the analyses conducted during the Phase I and Phase II studies, a number of key
findings were developed which became an important basis for strategy formulation.
1) General Findings
1.1 Water represents one of the main resource opportunities for Nepal’s future
economic development.
1.2 Previous investments in the water sector have not provided the expected
contribution to economic growth and/or poverty alleviation.
1.3 Ultimately, people will pay for water services, either directly or indirectly.
2) Domestic Water Supply and Sanitation
2.1 Coverage for rural water supply has increased steadily because investment requirements
are low; however, imperfect sustainability of schemes may erode some of the gains. If
sustainability is maintained, full coverage for rural water supply is feasible in the next 10
to 15 years.

38
2.2 Coverage for rural sanitation is extremely low. Although basic sanitation
infrastructure is not costly, there needs to be a vast improvement in the
understanding and practice of good hygiene.
Table 4.1
Water Sector Issues
GENERAL ISSUES
• Need for comprehensive water
resources policy
• Lack of integrated river basin planning
and management
• Water pricing and cost recovery
• Potential of water transportation –
navigation
• Macro-economic implications
SOCIAL ISSUES
• Poverty and malnutrition
• Balanced gender participation
• Appropriate technology for
primary target (social) groups
• Hill to Terai and rural to urban
migration
• Project impact and resettlement
WATER SUPPLY & SANITATION
ISSUES
• Lack of adequate planning, design and
construction of water supply and
sanitation projects
• Lack of appropriate approach towards
rural water supply system
• Improper management of water supply
systems of Kathmandu Valley and
other urban centers
• Lack of water quality standards for
drinking water
IRRIGATION ISSUES
• Reorientation of supply-driven
approach
• Poor performance of irrigation
systems
• Lack of effective implementation
of APP
• Farmers' dependency syndromes
and sustainability
• Problems of river management
• Weak institutional capability
• Symbiotic relationship between
agriculture and irrigation (weak
linkages)
• Strengthening of WUAs
HYDROPOWER ISSUES
• Improve power system planning
• Increase access to electrification in
rural areas
• Encourage private investment in
hydropower
• Reduce cost of development
LEGAL ISSUES
• Non-specificity of water rights and
ownership
• Lack of sub-ordinate enabling
legislation
• Lack of harmony among related
legislation
• Lack of adequate legal provisions
to encourage private sector
participation in multipurpose
projects

39
DATABASE ISSUES
• Inadequate hydro-meteorological
network
• Inadequate funding and management
of existing network
• Inadequate flood forecasting and
warning systems
• Lack of regulatory mechanism in
hydrogeology and geo-seismology
sector
• Inadequate seismic survey data related
to geophysical parameters and
information
INTERNATIONAL ISSUES
• Compliance with the provisions
stipulated in Kosi and Gandak
agreements
• Implementation of the provisions
of the Mahakali Treaty
• Formulation of general legal
framework for development of
trans-boundary rivers
• Absence of mechanism for
institutionalized cooperation
between riparian countries
ENVIRONMENTAL ISSUES
• Environmental database and mapping
• Integration of environmental
considerations into planning of water
resources developments
• Effective implementation and
enforcement of Environmental Impact
Assessment (EIA) and Strategic
Environmental Assessment (SEA)
norms and recommendations
• Bio-diversity conservation
• Surface- and groundwater pollution
• Lowering of groundwater tables
• Lack of environmental awareness
• Landslides, erosion, sedimentation,
Glacial Lake Outburst Flood (GLOF),
flooding
• Watershed conservation
INSTITUTIONAL ISSUES
• Absence of an effective central
planning organization
• Blurred responsibilities between
policy, implementation,
operational and regulatory
institutions
• Absence of an institutional
framework for coordinated and
integrated development
• Jurisdictional overlaps and the
challenge of maintaining
coordinationbetween public and
local bodies
2.3 Coverage for urban water supply has been declining as cities grow and the
investment in relatively costly infrastructure lags behind. Declining service levels
make customers less willing to pay at a time when tariff increases are needed to
finance new infrastructure. The resulting dilemma has created a huge investment
requirement that may not be financially sustainable.
2.4 Coverage for urban sewerage/sanitation is very low and is a major contributor to
deteriorating health conditions and pollution of nearby water bodies. Investment
requirements for sewers and primary wastewater treatment plants are even greater
than the investment for water supply. Since the cost of sewerage/sanitation is added
to the water tariff, full cost recovery becomes a heavy burden on the people.

40
2.5 The water quality of most drinking water schemes is not acceptable even by
proposed national standards that would not fully reflect the rigor of World Health
Organization (WHO) recommendations; poor water quality causes health problems
and places a burden on customers to purify the water.
3) Irrigation
3.1 The fundamental basis of the APP and its strategy for irrigation (i.e., emphasis on
groundwater) was reconfirmed but some of the implementation actions may need to
be revised (i.e., subsidy for tubewells). Although intensification of crop production
using water from tubewells appears to be financially viable, there needs to be greater
commercialization of the Nepali agricultural sector before farmers will invest heavily
in tubewells. This requires an integrated approach to agriculture (as per APP). The
present extreme decline in world grain prices is not expected to continue in the long
term due to increasing populations and other factors in the cyclic determination of
commodity prices.
3.2 Surface irrigation schemes are capital intensive and require regular maintenance to
maintain their design capabilities. Hence, they place heavy demands on foreign
investment (i.e., donors) and require ongoing subsidies. Nonetheless, these are
viewed by many stakeholders (e.g., farmers, politicians, engineers) as the main
solution for long-term year-round irrigation of the Terai and thus food security. This
contradiction and lack of fundamental acceptance of the principles of the APP is
reflected in the current institutional capacity of the country.
3.3 It is widely accepted that Farmer-Managed Irrigation Systems (FMIS) have operated
better than Agency-Managed Irrigation Systems (AMIS). Efforts are being made to
transfer AMIS to FMIS, but there is concern regarding the management transfer of
large schemes.
3.4 Nepal has not been able to build any storage projects for irrigation because they are
not economically viable. However, storage projects may be built for hydropower or
flood control; in such cases, the opportunity to expand the water supply available for
surface irrigation may be quite large. Thus, although some multipurpose storage
projects are economically viable, they require a lead proponent other than irrigation
to secure the required investment. The most likely lead sector for funding such
projects is hydropower.
4) Hydropower
4.1 Hydropower development offers Nepal potential for economic growth by providing
energy to domestic industry and to India for export earnings.
4.2 Hydropower development is capital intensive and at present more costly than
thermal power. Relatively small projects operating as run-of-river generate power that

41
is relatively expensive for Nepal (NRs. 5 per kWh), so there is no short-term solution
to reduce electricity tariffs. Over the longer term, through development of larger,
more economic projects and through realization of the relatively inflation-free cost of
hydroelectric production, hydropower is expected to provide very competitively
priced electricity, which will open up potential for energy intensive industries and
exports to India.
4.3 Private sector investment in Nepal has been promoted and given favourable
conditions. Some private sector projects have already started generating power and
some private investors have indicated an interest in building new plants, both for
domestic power consumption and for export.
4.4 Although there is agreement that NEA should be operated more efficiently, there is
no agreement on how to strengthen, restructure or privatize parts of NEA.
4.5 Micro hydro and small hydropower can provide viable alternatives for electricity
supply in some isolated communities.
4.6 Large hydropower projects with storage reservoirs are economically viable but
require huge capital investments that are not available domestically, or from donors.
The scale of production from such projects can only be absorbed by large-scale
export of electricity. These projects may also cause significant impacts on the natural
and social environment, which would need to be mitigated.
5) Role of Institutions
5.1 A central water-planning agency in Nepal is needed to assure the integration and
efficiency of water resources development and management.
5.2 The existing emphasis on large centralized line agencies to construct and manage
projects in the water sector is no longer appropriate for sustainable water resource
infrastructure. Ultimately, management should be vested in the users, but this cannot
happen immediately. Thus, it is evident that the transition from centralized to
decentralized authorities (and ultimately users) must be the focus of efforts and
should proceed in an orderly manner and within a realistic timeframe.
5.3 Planning, development and management should consider the dynamics of river
basins.
5.4 The institutional framework and capacity for monitoring and regulating water
resources is either absent or very weak (e.g., water effluent, groundwater extraction,
water allocation, private infrastructure development, tariff setting).

42
6) Information/Database Systems
6.1 The studies revealed that the quality of information on water resources, water usage
and future water demands was limited and constrained the ability to plan and manage
water resources.
6.2 Available data clearly indicate that parts of Nepal face water stress or conflicting
demands at certain times of the year, a situation that will worsen over time.
6.3 Lack of good hydrological information systems can result in economic losses due to
incorrect decisions on infrastructure investments and a lack of preparedness for
water- induced disasters.
7) Environmental Issues
7.1 Water pollution is a serious problem near urban areas. The problem is expected to
increase due to the rapid pace of urban growth, unless measures are taken to control
and treat effluents.
7.2 Groundwater depletion in certain valleys (e.g., Kathmandu Valley) is a concern but is
not well understood due to lack of data and systematic monitoring.
7.3 Environmental assessment legislation and procedures have made good advances in
Nepal, but the proposed mitigation is not always implemented due to lack of capacity
and/or regulatory monitoring and follow-up.
7.4 Aquatic habitat has been adversely affected by some water resource development
Projects. It may deteriorate further unless water resources are developed in an
environmentally sustainable (or beneficial) manner.
7.5 Natural environmental processes cause a significant amount of damage due to the
sensitive geological conditions of Nepal (e.g., soil erosion, landslides, sediment
transport and deposition, floods) and these processes need to be fully understood.
Water resources development and management decisions need to reflect this
understanding so as to avoid adverse impacts, improve conditions and/or reduce the
negative elements, where feasible.
7.6 There is a close relationship between watershed conditions and sedimentation in
rivers, which can affect aquatic habitat, riverside communities and infrastructure built
in, alongside or over the rivers.
8) Social Issues
8.1 Nepalis living conditions are closely tied to water. Since most people depend upon
farming, the need for water to provide food security is paramount.
8.2 The inability to fully develop water resources in a sustainable manner has accentuated
poverty conditions. The inability of farmers to control the amount of water they
receive, when they need it, has been one factor that has prevented them from
advancing beyond a subsistence economy.

43
8.3 Some communities have been able to work collectively to harness and manage their
water resources. Traditional mechanisms for water allocation have been used to
resolve conflicts, but these mechanisms are coming under threat from new
development pressures.
8.4 Water problems create serious social concerns that must be resolved either locally or
with political intervention. Examples include flooding, lack of drinking water,
inundation of border areas, lack of water in irrigation canals, etc.
9) Legal Issues
9.1 The lack of a comprehensive water policy has led to some conflicting legislation and
regulations in the water sector.
9.2 Water rights have not been implemented according to the Water Resources Act
(1992). Traditional rights are still applied in most areas. There is no capacity or
political commitment to implement the legislation. This could lead to serious
problems as water demands and conflicts increase.
9.3 After promulgation of the prevailing water sector legislation and practical experience
gained the time has come for revisions and additions to improve the legislation.
10) International Issues
10.1 Water-related treaties have been signed with India but have never been fully executed
to their original intent. Expectations were raised but never fulfilled; hence, neither
India nor Nepal has been satisfied.
10.2 There is uncertainty whether to proceed with additional river basin treaties, how to
handle rivers that originate from the Siwalik (Churia) Hills, or whether to formulate a
joint (or regional) umbrella treaty covering all transboundary rivers.
10.3 Dialogue between India and Nepal concerning water development and management
has been slow at best. Recent progress has been made both at the government
technocrat level and at the non-government level. Nonetheless, there is a need to
strengthen mechanisms for joint collaboration in order to achieve real progress.
10.4 Nepal’s dialogue with other nations (i.e., China and Bangladesh) on water sharing has
been limited.
10.5 The potential for navigation is tied to the development of large storage projects,
which would require joint collaboration with India. Consequently, more study is
required before the potential role of river navigation in Nepal can be determined.

44
Traditional stone tap outside the Bagalamukhi
Temple, Patan
Balkhu Khola is the main water source for local people; a view from near the Kalanki Road,
Kathmandu
Bagmati Water Treatment Plant at Pashupati, Kathmandu

45
5 POLICY AND LEGAL FRAMEWORK
5.1 Existing Policy and Legal Framework
5.1.1 Background
Water law in Nepal consists of customary rights and statutory laws. The National Code of
1910 BS (1853 AD) was the first comprehensive statutory law in Nepal. It established the
rights of people on the usage of water as incident to ownership of land abutting the stream
or river. Some specific provisions were given for the utilization of water for irrigation. The
first attempt to make a specific law for the water sector was the Irrigation Act of 2018 BS
(1961 AD). This was replaced by the comprehensive Canal, Electricity and Related Water
Resources Act of 2024 BS (1967 AD), which introduced the concept of water tax and
licensing for water use, although licensing was only implemented for the use of water in
hydropower generation. For the drinking water sector, the issue of water charges was spelled
out in the Water Tax Act of 2023 BS (1966 AD).
5.1.2 Current Legislation
After the restoration of democracy in 1990, HMG began the task of revising a number of
Acts and producing new Regulations under the present constitution. The most important
change was the drafting of a new Water Resources Act and Regulation 2049 BS (1992 AD),
the umbrella legislation for hydropower, irrigation, drinking water and other water use. In
addition, a separate Electricity Act and Regulation 2049 BS (1992 AD) was promulgated to
specify legislation for the power sector. However, the main thrust for the power sector is on
hydropower development. The utilization of water for hydropower is still governed by the
Water Resources Act (2049 B.S.). Since then, other Regulations have been drafted under the
Water Resources Act, including the Drinking Water Supply Regulation, Irrigation Regulation
and Groundwater Regulation (see Figure 5.1).
There are also some Acts and Regulations that, while not for the water sector per se, do have
a very direct impact on resources development and management. These include the
Environment Protection Act, the Local Self-Governance Act and the NEA Act (see also
Figure 5.1).
5.1.3 Current Policies
When drafting legal instruments, it is now common practice in Nepal to draft a policy that
can be reviewed by stakeholders for the purpose of building consensus. Once consensus has
been sought, the policies are submitted to Cabinet for approval, and then the Acts and
Regulations are drafted using the approved policy as the guiding principle. As shown in
Figure 5.1, there are currently three sets of sub-sector policies within the water sector
(hydropower, irrigation and drinking water supply); however, Nepal has not yet formulated a
comprehensive policy for the water sector. With respect to the irrigation policy, the higher-
level policy that drives the need for irrigation is the agricultural policy that is laid down in the
APP document of 1997. In 2001, a Drinking Water Supply and Sanitation Strategy (policy)
was approved for the Kathmandu Valley. Since all of these policies have been drafted or
amended quite recently, they reflect the real status of the sub-sectors. Excerpts of these
policies are presented in Annex A.

46
Insert Figure 5.1: Relevant Policy, Acts and Regulations for the Water Sector

47
5.1.4 Implications for Strategy Formulation
As described above, Nepal has given significant consideration to the legal and regulatory
mechanisms involved in the development and management of its water resources. However,
some of the current legislation is conflicting and needs to be harmonized. Also, although the
Water Resources Act (2049 B.S.) was intended to be the umbrella act for the water sector,
subsequent sub-sectoral regulations have often gone beyond the scope of the original
governing Act. Thus a comprehensive Water Resources Policy is called for which would
provide a clear guideline for revisions to the Water Resources Act.
5.2 Policy Framework Adopted for the Water Resources Strategy
Formulation
The Water Resources Strategy Formulation Process originates from a clear and
comprehensive policy framework. With key stakeholder input, WECS has developed and
adopted a set of objectives and policy principles that provide the framework for strategy
formulation. The proposed policy framework, which has been endorsed by HMG as an
integral part of the Strategy, consists of a set of water sector objectives, core policy principles
and other development objectives.
5.2.1 Water Sector Objectives
Water resource development, like any other national development, should aim to contribute
to improving the quality of life. Specific objectives adopted for the formulation of the Water
Resources Strategy include:
• To help reduce incidence of poverty, unemployment and under employment;
• To provide people access to safe and adequate drinking water and sanitation for
ensuring health security;
• To increase agricultural production and productivity, ensuring food security of the
nation;
• To generate hydropower to satisfy national energy requirements and to allow for
export of surplus energy;
• To supply the needs of the industrial sector and other sectors of the economy;
• To facilitate water transport, particularly connection to a sea port;
• To protect the environment and conserve the biodiversity of natural habitat; and
• To prevent and mitigate water-induced disasters.

Nepal's Water Resources Strategy

Nepal's Water Resources Strategy

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