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IFC releases study on impacts of hydro development in Nepal’s Trishuli River Basin

IFC, a member of the World Bank Group, has released the recommendations of its Cumulative Impact Assessment (CIA) of the Trishuli River Basin (TRB), which calls for setting up a Trishuli Hydropower Developers’ Forum to minimize the adverse impacts of hydropower development on TRB’s ecosystem and its people.

The year-long study, Cumulative Impact Assessment and Management: Hydropower Development in Trishuli River Basin in Nepal, was supported by the governments of Australia, Norway and Japan. The report recommends a holistic and basin-wide approach to address environmental and social challenges associated with infrastructure development. There are more than 36 hydropower projects in various stages of development or planning in the TRB, which covers an area of 32,000 km2.

The study found the TRB is impacted by hydropower and other development projects, with the effects compounded by other stresses such as climate change, slope instability, sand mining and urbanization. Without action, the river and its fish could be seriously, to critically, affected, with adverse impacts on people’s livelihoods and the future of the already globally endangered Golden Mahseer. It also warns that, if no management measures are implemented, there is likely to be an increase in sand-mining activities while exacerbating the displacement impacts associated with land acquisition. If all the projects currently planned for the TRB materialize, it would require at least 640 hectares of land.

“In the absence of a basin-wide environmental and social approach, individual efforts at the project-level to mitigate impacts will likely fall short and as a result biodiversity, people’s livelihoods and ecosystem services could be significantly impacted,” said Pablo Cardinale, global environmental and social hydropower lead of IFC. “This assessment is part of IFC’s deep commitment to promote a holistic, beyond-individual-projects approach to environmental and social risk management practices in Nepal, with the clear aim to minimize any accumulated harm to the environment and communities through multiple development projects in the same river basin.”

The study recommends the proposed forum include developers, lenders, the Nepal Electricity Authority, environmental and social regulators, and other relevant government agencies. Under the recommended high management scenario, hydropower developers across the basin would sign on to a cumulative impacts management charter that goes beyond the usual compliance requirements of environmental and social management plans of individual hydropower projects.

“The importance of hydropower for Nepal cannot be overstated and the country truly has the potential to be the next regional powerhouse,” said Wendy Werner, IFC’s country manager for Nepal, Bhutan and Bangladesh. “But to exploit the natural endowments without taking a bird’s-eye view of the potential negative consequences throughout the entire river basin could do more harm than good in the long-run. And for that reason, all of us have to work together to understand and mitigate cumulative impacts from multiple projects to ensure a sustainable development pathway for the energy sector in Nepal.”

The study was an integral part of the World Bank Group Board of Directors’ approval of the $650 million 216-MW Upper Trishuli-1 Hydropower Project (UT-1), located in the upstream of the TRB. IFC is leading a consortium of eight international lenders in financing UT-1. High environmental and social standards have been put in place for UT-1 and it is the first project in Nepal to undertake a consent process with affected indigenous communities.

As one of the follow-ups to the CIA recommendations, IFC and partners have developed an assessment tool to monitor biodiversity across the basin and train Nepali researchers in novel field techniques such as environmental DNA (eDNA).

As a part of its advisory services, IFC is working with the Ministry of Forest and Environment to produce a hydropower sector-specific Environment Impact Assessment Manual and is also building capacity at the federal and provincial levels. IFC has also been supporting the hydropower sector through the Independent Power Producers Association of Nepal (IPPAN).

IFC says it is the largest global development institution focused on the private sector in emerging markets. In fiscal year 2019, IFC delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.