Economics · Chapter 9
Study notes aligned to the official NEB syllabus.
The free gifts of nature, such as land, climate, forest, water and minerals, are known as natural resources. Proper utilization of natural resources makes a country prosperous, and most of the world's developed countries gained their prosperity by using their natural resources well. Nepal is rich in natural resources, and if it can use them properly it could develop within a short period of time.
Natural resources are of two kinds:
Among all the natural resources of Nepal, water resource is regarded as one of the most important. There are more than 6 thousand rivers and rivulets, including major and minor ones, with an average length of 45,000 km. There are hundreds of lakes and many natural springs. The major rivers include Koshi, Narayani, Gandaki, Rapti, Bheri, Karnali and Mahakali, and some major lakes are Rara, Phewa, Begnas and Tilicho. The high Himalayan glaciers and rainfall are the regular sources of water. In terms of water resources, Nepal stands in the second position after Brazil in the world.
Water resource is very important for Nepal and is termed the white gold of the Nepalese economy. Its importance can be analyzed on the following points:
Most rivers in Nepal originate from the mountains and reach the Terai through the hilly region at high speed, so hydroelectricity can be produced easily. The hydroelectricity potential of Nepal is about 83,000 MW, which is 2.27% of the total hydroelectricity potential of the world. However, only a part of that capacity is techno-economically viable. Studies put the viable figure at roughly 42,000 to 44,000 MW, and the round figure most often quoted in textbooks and policy documents is about 42,000 MW.
Table 5.1: Hydro-power Potential in Nepal
| River Basin | Theoretical Potential | Techno-economically viable potential |
|---|---|---|
| Koshi | 22,350 MW | 10,860 MW |
| Gandaki | 20,650 MW | 5,270 MW |
| Karnali and Mahakali | 36,000 MW | 27,360 MW |
| Southern Rivers | 4,000 MW | 880 MW |
| Total | 83,000 MW | 44,370 MW |
Source: Nepal Electricity Authority (NEA), FY 2022/23.
The table shows that the Karnali and Mahakali river basin occupies the first position in hydroelectricity production capacity, followed by Koshi, Gandaki and the Southern rivers. Despite this huge capacity, Nepal has not been able to produce electricity according to its needs due to the lack of resources, technical knowledge and political stability.
Water resources in Nepal are used for generating hydroelectricity, providing irrigation and supplying safe drinking water. Efforts to use them began with the first plan in 1956 AD (2013 BS), and much has been achieved, though much remains to be done.
1. Hydroelectricity: the first hydroelectricity project was the Pharping Hydroelectricity Project, constructed in 1968 BS with an installed capacity of 500 kW. According to the economic survey 2022/23, total electricity production is 2666 MW. Electricity is accessible in 77 districts, and 95% of people have access to electricity in Nepal.
Table 5.2: Major Hydropower Projects
| Project | Production Capacity (MW) |
|---|---|
| Kaligandaki A | 144 |
| Upper Tamakoshi | 456 |
| Sunkoshi | 10.05 |
| Madhya Marsyangdi | 70 |
| Marsyangdi | 69 |
2. Irrigation: irrigation is the lifeblood of agriculture, and without it agricultural and economic development are not possible in Nepal. Out of the country's total 18% arable land, the irrigation command area is only 67%. Out of the total irrigable land, the command area of irrigation facilities reached 86.82 percent by mid-March 2022/23. Irrigation projects under construction include the Sikta Irrigation Project (Banke), the Babai Irrigation Project (Bardiya) and the Rani Jamara Kulariya Irrigation Project (Kailali and Kanchanpur). After these are completed, more land will be irrigated and agricultural production will increase.
3. Drinking water: drinking water is essential for human existence. Despite Nepal's immense water resources, people face an acute shortage of safe drinking water in both urban and rural areas. According to the 15th development plan (2018-2023 AD), the target is for 99% of the population to have access to clean drinking water. According to the economic survey 2022/23, 94.23% of people have access to safe drinking water in Nepal.