Mekong Forum on Water, Food and Energy. 2012. Presentation from Session 5: Sharing for Energy, Water and Food

1. Economic incentives in
hydropower watersheds in
Nepal
Soumya Balasubramanya
The Mekong Forum on water, Food and Energy
Nov 13, 2012
Hanoi, Vietnam
Water for a food-secure world
www.iwmi.org

2. Revenue Sharing
• Royalties levied on installed capacity and generation
– 50% from every project to central govt.
– 38% from every project to development region
• divided between DDCs according population, state
of development etc.
• Decided by the central government
– 12% from every project to hosting DDC
• DDCs can receive royalties from more than one HPP.
• Don’t have to host a project to receive royalties.
Water for a food-secure world
www.iwmi.org

3. ―Payments for Ecosystem
Services‖
• No national policy—a number of pilot and
feasibility studies conducted.
• One example in Kulekhani Project hosted by
Makhwanpur DDC
– Of the 12% of royalties: 20% earmarked for VDCs
upstream of dams
– Used for forest conservation and other
development activities
– No additionality
Water for a food-secure world
www.iwmi.org

4. Discussion
• Purpose of program
• Transaction costs
• Transparency vs. fungibility
• Equity vs. efficiency
Water for a food-secure world
www.iwmi.org