Conservation Through Financial Institutions

The International Finance Corporation (IFC), the World Bank Group, has released a report on 'Cumulative Impact Assessment and Management: Hydropower Development in the Trishuli River Basin (TRB), Nepal' in July 2020. It may be the first CIA study report in Nepal.

Aug. 21, 2020, 11:30 a.m. Published in Magazine Issue: VOL. 14 No. 03, August 21, 2020 ( Bhadra 05, 2077) Publisher: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

Few countries have used Cumulative Impact Assessment (CIA) tool to understand the combined effects and impacts of past, present and planned future projects on the environment in a geographical and temporal contexts. If series of same type of projects or causing similar impacts are under implementation, construction or being planned, CIA helps to evaluate significance of potential cumulative impacts on one or more valued environmental components (VECs) and minimise adverse impacts to an acceptable level. The CIA is normally carried out by a competent institution that has access to data, information and sites of all projects which are under implementation, construction and being planned.

Many countries have internalised project level assessments [Initial Environmental Examination (IEE) or Environmental Impact Assessment (EIA)] to identify, predict and evaluate the impacts of a project on the environment with focus on its physical, chemical, biological, social, economic and cultural domains. The domains greatly depend upon the nature and location of the project. Strategic Environmental Assessment (SEA) is globally carried out to evaluate the impacts of a policy or plan or programme on the environment. Nepal has experience in carrying out project and strategic levels of assessments. It has no experience in CIA studies and implementation.

Nepal's Environment Protection Act (2019) has called for an environmental study, IEE or EIA of prescribed projects, including supplementary EIA as deemed necessary. The Act opens avenues for carrying out Strategic Environmental Analysis (SEAn) for a policy, programme or project. The legislation calls for carrying out project level assessments or SEAn of a project, which is normally unnatural. In addition, Nepal's legal regime on the environment does not recognise the CIA study. There are additional legally unrecognised tools such as social impact assessment, biodiversity impact assessment, health EIA or regional environmental assessment and so on.

The International Finance Corporation (IFC), the World Bank Group, has released a report on 'Cumulative Impact Assessment and Management: Hydropower Development in the Trishuli River Basin (TRB), Nepal' in July 2020. It may be the first CIA study report in Nepal. The IFC called for safeguarding the environment and people's livelihood and setting-up of a Trishuli Hydropower Developers’ Forum to minimize the adverse impacts of hydropower projects in ecosystems and its people in TRB (https://www As per the news, the CIA study was a part of the World Bank supported 216 MW Upper Trishuli-1 (UT-1) Hydropower Project, located at upstream of the Basin. The IFC intends to put high environmental and social standards for UT-1. This study might have been carried out to meet IFC's requirements.

The CIA study report includes impacts and mitigation measures in five VECs namely Langtang National Park (LNP), aquatic habitat, cultural and religious sites, livelihoods, and water resources. It predicts potential cumulative impacts from 36 hydropower projects with the total capacity of generating 1530 MW. At present, six projects (81 MW) are under operation, seven are under construction stage (286 MW) and 23 hydropower projects (1163.6 MW) are being planned. The study has considered climate change and extreme events, slope stability, sand and sediment mining and rapid urbanisation as the key 'stressors' and identified possible complete loss of natural habitat and biota with irreversible changes in basic ecosystem functions in worst cases.

The CIA study has proposed broad-based mitigation measures such as, inter alia, awareness raising of contractors for terrestrial biodiversity conservation in LNP, release of adequate environmental flows for aquatic biodiversity, provision of fish passes, assessment of the actual water requirements in dewater reaches for normal rituals in cultural and religious sites (Uttargaya and Devighat), granting of reservoir area fishing rights to improve livelihoods, and implementation of Environment Management Plan (EMP) on muck disposal to maintain surface water quality. Based on national experiences, measures related to aquatic ecosystems may not 'work'.

The report has coined 'high-management action (HMA)' in themes such as on developer's charter on sustainable hydropower in TRB, community-based river guards, sustainable fishing plans, indigenous hatcheries for fish stocking, farming of commercially valuable fish species, sustainable sediment mining plans, watershed management, delineating no-go areas for hydropower development, and mahseer and snow trout sanctuary. The CIA study report claims these HMAs as sustainable development pathway to maintain or enhance current levels of ecosystem integrity and VEC conditions. It would have been realistic to consider experiences of the proposed measures in fishery and ecosystem conservation.

The study has proposed Trishuli Hydropower Development Forum (to be represented by hydropower developers, lenders, Nepal Electricity Authority, and relevant government institutions), and Technical Resources Group (from government ministries, conservation groups, research agencies and multilateral development banks/donor agency experts) for advise, and implementation from Local Management Committees.

Effective implementation of the realistic EMP by each project, followed by stringent compliance and impact monitoring would be the pre-requisite to safeguarding environmental resources and people's livelihood in the TRB. If mitigation measures are implemented and project-induced impacts reduced, one can 'trust' on the effective role of financing institutions in conserving the environment.

As mandated environmental institutions are 'grossly ineffective' in avoiding or minimising project-accelerated adverse environmental impacts, it is natural to expect natural resource conservation from national, regional and international financial institutions as well. Besides, requirements of the regional and international funding institutions, the Nepal Rastra Bank (NRB) has issued a Guideline on Environmental and Social Risk Management (ESRM) for Banks and Financial Institutions (B/FIs) in May 2018. This Guideline provides a solid basis to integrate environmental and social risks management aspects into credit risk management process and minimise environmental damage, manage watersheds, and restore the vitality of the terrestrial and aquatic ecosystems.

Nepal's experiences on non-implementation of mitigation measures and monitoring requirements as contained in the legally approved IEE or EIA reports and gross-negligence in mitigating adverse impacts, including maintenance of aquatic and terrestrial ecosystems dictate to consider TRB a development zone rather than a 'hub of sustainable hydropower development and management of water resources'.

In view of the mitigation measures and implementation modality of the CIA study report, national experiences, and urgency of conserving the TRB, B/FIs are encouraged to build and/or strengthen the capacity of the Loan/Credit Officers on environmental safeguards measures/options and strictly follow the ESRM Guideline, in particular monitoring and performance reporting procedures and quality check. Effective implementation of the Guidelines provides a logical basis to make the development sustainable and environment-friendly. However, this Guideline needs updating based on Environment Protect Act, 2019 and its Rules, 2020 and utilising experience of nearly two years of Guidelines implementation in order to make it country-specific, development and user-friendly.

Effective implementation of the ESRM Guideline will hopefully bolster the mandated environmental institutions to benefit from environmental monitoring and performance reporting outcomes and make project-level assessment reports more technical, practical and implementable, by avoiding or minimising the existing 'cut and paste' syndrome. The B/FIs may be instrumental in safeguarding and enhancing environmental resources, and make development project environmentally sustainable as envisaged in the CIA report of the TRB.

Uprety is a former Joint-Secretary (Tech) and involved in institutionalizing Environment Assessment system in Nepal, then Ministry of Environment. E-mail:

batu uprety111.jpg

Batu Uprety

Former Joint-Secretary and Chief of Climate Change Management Division, Ministry of Environment (then), and former Team Leader, National Adaptation Plan (NAP) formulation process. E-mail:

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