Turning Nepal’s forests into fortune

In the late 1970s, the World Bank made a grim prediction that the forests in Nepal’s hilly regions would disappear by the 1990s. Fortunately, that did not happen as the government made necessary course corrections by launching community forestry programmes. Since then, the forest cover has nearly doubled, with forests now accounting for almost 45 percent of the country’s total land area.

In the early decades, the community forestry (CF) programme achieved multiple objectives simultaneously. Initially, CF aimed to meet the basic needs of communities by actively participating in forest management. CF then evolved to support the livelihoods of community members by allowing them to produce non-timber forest products (NTFPs) for additional income. Furthermore, CF evolved to establish strong local institutions by forming community forest user groups (CFUGs), promoting good governance and addressing power, gender and governance issues at the local level. Evidence shows that CF supports women’s empowerment and lays the groundwork for integrating gender-inclusive strategies and policies.

While CFs successfully achieved their early objectives, they failed to evolve to meet the present socio-economic needs of the country. However, I feel that the entire forestry sector in Nepal is running on the legacy of the “success story” of community forestry in the 1990s and early 2000s.

Community forestry in Nepal

Today, community forestry in Nepal has received international praise for doubling forest coverage from 26 percent in 1992 to 45 percent in 2016. They cover one-third of the country’s total forest area and are managed by 22,000 community forest user groups, comprising 3 million out of 56 million households in Nepal. However, this increasing forest coverage comes with forgone opportunity costs as Nepal imports wood and furniture worth around $129 million annually.

After achieving the goal of protection-oriented community forestry for increasing forest cover, the focus should now switch to prioritising harvesting and regeneration to increase the economic well-being of people. The underutilisation of forest resources is prevalent in Nepal, and the failure to establish community forestry enterprises has proven costly for the country’s local communities and the national economy. Although successful regarding carbon storage and climate mitigation, the policy resulted in unintended consequences for rural development, such as the exodus of youth from rural areas to cities or foreign countries for employment opportunities.

REDD+ initiative in Nepal

When a country fails to harvest its tangible forest products sustainably, it should focus on reaping the economic benefits of forest conservation. One such benefit comes from reducing emissions from deforestation and forest degradation (REDD+). REDD+ is a result-based payment mechanism where a country gets paid for its verifiable emission reduction, usually represented as a unit of carbon credit (one credit equals one ton of carbon dioxide equivalent).

REDD+ implementation could provide much-needed climate finance for forest countries like Nepal. Moreover, it could be an essential source of income for indigenous and local communities to develop alternative climate-resilient livelihoods. Nepal started its REDD+ journey in 2011 by implementing pilot projects in three districts covering 10,266 Ha and 104 CFUGs. Since then, the country has completed multiple preparatory works to enable participation in the international voluntary carbon market, including developing a National REDD+ Strategy, a Benefit Sharing Plan and establishing the REDD Implementation Center (REDD IC) under the Ministry of Forest and Environment.

Currently, Nepal has signed the Emission Reduction Purchase Agreement (ERPA) with the Forest Carbon Partnership Facility of the World Bank and is in the process of signing the agreement with the Lowering Emissions by Accelerating Forest Finance (LEAF) coalition coordinated by Emergent. For the World Bank, Nepal aims to sell 9 million credits from the Terai Arc Landscape, allowing it to earn as much as $45 million ($5/credit) within 2018-24. According to a document submitted by Nepal to the LEAF coalition, Nepal aims to deliver 30 million credits in the 2022-26 period and could earn as much as $300 million ($10/credit). It will only receive that money once it delivers these credits, which will be verified and issued using rigorous standards.

To benefit from the rapidly evolving voluntary carbon market, implementing entities like the REDD IC must demonstrate high adaptability and adjustability to changing circumstances. The absence of adaptive governance explains why Nepal has not received payment from the World Bank despite signing the ERPA almost three years ago. However, Costa Rica and Ghana, which started their REDD+ journey simultaneously, have already received payment from the World Bank. Nepal can learn valuable lessons from these countries. The longer the delay for making necessary progress, the greater the erosion of trust with carbon credit purchasers. This could have significant costs for Nepal, potentially affecting the future price it will receive for its carbon credits. Therefore, Nepal should consider implementing multiple strategies to accelerate its progress and achieve its REDD+ objectives.

Lessons for Nepal

While Nepal’s commitment to increasing and preserving forest coverage is clear, the focus must shift from policy creation to effective implementation. This shift is crucial for producing tangible benefits for the communities safeguarding these forests. For effective implementation of policies, it is imperative to ensure the retention of strong institutional memory that facilitates actions. The person leading the REDD IC should serve longer tenures, ideally five years, to oversee an entire cycle of REDD+ projects, aligning with the crediting cycle. Additionally, if leadership roles lack tenure assurance, individuals may hesitate to take decisive actions.

Second, strong coordination and collaboration with relevant departments must be ensured. In particular, REDD IC should closely engage with the Forest Research and Training Center(FRTC) under the MoFE. The synchronisation of activities these departments undertake annually can benefit the engagement. For instance, FRTC can schedule its once-in-10-years Forest Resource Assessment to overlap with the REDD+ cycle and consider changing its frequency from once in 10 to five years. Furthermore, the FRTC should establish a dedicated sub-team to provide technical support to the REDD IC in meeting the standards set by organisations like ART TREES, which issue carbon credits.

Lastly, the REDD IC should create an online platform to transparently track Nepal’s projected emissions reduction goals, total carbon credits issued, the companies to which carbon credits are sold, total finance received and the utilisation of funds. This platform should use user-friendly data visualisation techniques to improve accessibility and information dissemination. This would address the lack of informative content about REDD+ on the REDD IC’s website.

Nepal, renowned for its effective community forestry program globally, should promptly implement strategies to support the communities engaged in conserving biodiversity and addressing climate change worldwide. These communities deserve recognition and fair rewards for their crucial role in safeguarding Nepal’s ecosystems and contributing to global environmental efforts.

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