Kushal Pokharel

With the country adopting a federal structure, the Government of Nepal is putting constant efforts to restructure its various institutional apparatus. During this process, a pertinent question of natural resource management has emerged. How natural resource governance will be shaped and what will be the revenue model along with sharing of resources among the three-level of governments, i.e. federal, province and local levels remains still unclear although there are some constitutional provisions in this regard. The National Natural Resources and Fiscal Commission (NNRFC) - a constitutional commission entrusted with the task of natural resource management is yet to gain its full shape.
Scenario
In this scenario, sectoral policies and legislative frameworks are being revised amid various contradictions and confusions. Additionally, the issue of demarcation of boundaries for revenue sharing on the basis of population or geographical coverage has attracted the attention of policymakers. It is learnt that NNRFC has expedited consultations with the governments of seven provinces and also reviewed practices of India and South Africa. Currently in the phase of data collection from local to national levels, it is challenging for the commission to find out an acceptable way of settling this issue.
Particularly, the management of forest, water and land resource appears daunting. In the forestry sector, the modality of sharing income and resources between the forest user groups and local governments need to be sorted out. Furthermore, the matter of whether or not the Community Forestry User Groups (CFUGs) should be imposed tax burden has become debatable. While the CFUGs are demanding rights to make decision regarding the utilisation of income generated from forest management, the federal policy aims at collecting tax from them. Further, tussle between local government (rural) municipalities and CFUGs over the stake of the revenue generated by the community will pose a major threat to institutionalising federalism. The matter of performance-based benefit sharing in the era of Reducing Emissions from Deforestation and Forest Degradation (REDD+) and carbon trading is gaining prominence at subnational level. However, the viability of this strategy in the federal Nepal has also become a matter of heated debate.
The second important conflict appears in terms of utilisation, distribution and overall management of water resource. Whether water should be a publicly accessible good or a commercial entity has become much debatable of late against the general principle of water as a common property resource. The use of water for commercial purpose (e.g. hydropower) might ignite conflict between and within provinces. Projects like hydropower have to go through multiple layers of governments often discouraging private investors in water business. The question of whom (which tier of government?) to handover the project and how to distribute revenue appears a tricky proposition in federalism. Nevertheless, the question of licensing authority also looks a complicated matter to settle.
This problem has further aggravated owing to the location of many rural (municipalities) and provincial boundaries on river channels. For instance, in Lamjung, confrontation between hydropower company and local community was observed pertaining to the shifting of funeral place (mashan ghat) in Marshyangdi river. Furthermore, there is a chance of conflict over perceived values and interests of communities and government. A strong emphasis on revenue at the cost of human civilisation will threaten the lives of indigenous communities and their practices based on water like fishing.
The conflict between the upstream and downstream communities over water access is alarming. Mountain, Chure and Bhabar areas, which are important for water recharge, is a major source of underground water in the flat areas of Terai. Interventions in these upstream areas may affect the water flow downstream. There is already a contestation between Terai communities and upstream areas in relation to land use practices. The upstream people may demand some kind of compensation which is likely to escalate tensions in sharing resource and benefit in the federal context.
Land based conflict also looms large. While the geography with low population density has more resources, areas with high population density are struggling with resource crunch. Terai has more human population but less forest resources, whereas hill and mountain regions have low human population but ample resources. This unavoidable geographical reality will have a dire effect in resource distribution including the politics of resource governance while federalizing natural resources.

Management
Management of natural resources and the resulting conflicts require a strong policy response. Historical cultural rights and social practices of local communities pertaining to land, water and other resources, and the relationship between upstream and downstream communities have complicated the federalization of natural resources. Economic interests of local government and politicians in natural resources and policy confusion among private investors call for a scientific revenue collection and resource sharing modalities with adequate stakeholder consultation in federalism.

(Pokharel is a member of the Social Science and Research Faculty at NIMS college)