6-12 June 2014 #710

A Fossil Economy

We cannot afford a business-as-usual strategy for economic growth because they are economically and politically not sustainable. A fossil economy will doom us

The government is working to present the first full budget in four years to an elected parliament. This is a good sign, and one that could finally spur development spending and ensure accountability. Theoretically.

Finance Minister Ram Sharan Mahat says the budget will reflect the country’s medium-term objective of spurring economic growth and creating jobs. The aim is to put the country on track to graduate from the ranks of Least-Developed Countries to Developing Country category by 2022. The decrease of Nepal’s absolute poverty rate from 45 per cent to 23 per cent in 15 years shows that this may not be as far-fetched as it sounds.

With the appointment of Govinda Raj Pokhrel to head the National Planning Commission, we now have an “energy man” at the top policy-formation body. Pokhrel has experience from his former job in the Alternative Energy Promotion Centre implementing renewable energy projects in rural areas.

Although Nepal’s crippling electricity crisis gets all the headlines, a lot has been achieved behind the scenes in rural energy self-sufficiency. The campaign to make all Nepali homes smoke-free by 2017 through locally-manufactured fuel efficient stoves will not just reduce the pressure on forests, improve the health of women and children, but also reduce black carbon emissions. Since 80 per cent of Nepal’s population is still reliant on biomass for energy, this important goal affects far more people than the price of gasoline in Kathmandu.

The spread in the use of household biogas from farm waste in rural Nepal is another achievement that has gone almost unnoticed. There are now more than 350,000 biogas plants all over the country that run on cowdung and latrine waste – more per capita than India or China. This was possible because of simple, maintenance-free designs appropriate for Nepal. But more importantly, soft micro loans made installation easy and affordable. A similar formula for microhydro and household solar would transform Nepal’s energy landscape within a few years.

Unfortunately, signs are not good that the current budgetary exercise will learn from any of these past achievements. The unseemly greed with which MPs from the ruling coalition have demanded pork barrel funds for their constituencies to be raised from Rs 1 million to Rs 5 million is disheartening. The haste with which ministers (including Mahat) have doled out unspent cash from the last budget to their home districts doesn’t arouse much hope.

To achieve the 2022 GDP per capita target, Nepal’s economic growth needs to average eight per cent over the next eight years. Provided our investment climate improves (very unlikely given the current draft of the new FDI policy and the harassment of existing investors) and political stability is achieved with the writing of the new constitution, it may be possible to double the economic growth rate.

Considering the present governance deficit, rampant corruption and the stranglehold on natural resource exploitation by politically-protected organised crime, eight per cent growth would be a disaster. The devastation of the Chure forests in the past two years because of the proliferation of unregulated, rampant mining carried out by appropriately named “crusher” quarries is just one example.

Even though President Ram Baran Yadav himself has taken this up as a prestige project, the ecologically fragile 1,000 km Chure Arc is being denuded before our eyes.

In this state, what would eight per cent growth mean for air pollution, ground water depletion, the state of the Bagmati and other rivers, the mismanagement of urban garbage, the proliferation of banned pesticides?

Switching to a green economy would help mitigate some of the corrosive side-effects of growth that only looks at GDP per capita or income poverty. Green growth is not just about preserving nature, but an economy that becomes more inclusive and sustainable as it grows. When planning this budget, Minister Mahat must look beyond revenue from petroleum and vehicle sales taxes, for example, and offer incentives and subsidies for renewable energy.

We cannot afford a business-as-usual strategy for economic growth because it is not economically and politically sustainable. A fossil economy will doom us, environmentally and strategically. Alternate energy is no longer just a new age fad, it is mainstream economics.

Read also:

Every breath we take, Arniko Panday

Not business as usual, Nessim J Ahmad and Kaveh Zahedi

Nepal's UN mission has its work cut out, Abha Eli Phoboo

It is Rocket science, Kunda Dixit

Biogas moves up, Foo Chee Chang

No water? No power? No problem

Waste should not be wasted, Bhrikuti Rai

Lethal veggies, Sonia Awale