EconomicsNEB 2074 (old course)

Write short answer of all questions. [5×2=10] i) What are the main four causes of deforestation in Nepal? ii) Write down the main four importance of tourism industry in Nepal. iii) What is meant by…

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Write short answer of all questions. [5×2=10] i) What are the main four causes of deforestation in Nepal? ii) Write down the main four importance of tourism industry in Nepal. iii) What is meant by natural resource management? iv) What is meant by public enterprises? v) Define Absolute Poverty.

Answer

i) Main Four Causes of Deforestation in Nepal

Deforestation in Nepal is driven by multiple factors, primarily economic, social, and environmental. The four main causes are:

  1. Agricultural Expansion

    • Shifting Cultivation (Jhum Farming): Traditional slash-and-burn farming, especially in the Terai and mid-hills, leads to large-scale forest clearing for temporary cultivation.
    • Commercial Farming: Expansion of cash crops (e.g., maize, wheat, cardamom) and large-scale agricultural projects (e.g., rice terraces) requires deforestation for land.
    • Population Pressure: Increasing population leads to encroachment on forest lands for subsistence farming.
  2. Fuelwood Collection

    • Household Demand: Over 80% of Nepal’s rural households rely on firewood for cooking and heating, leading to unsustainable extraction.
    • Lack of Alternatives: Limited access to electricity or LPG in remote areas forces people to depend on wood.
    • Poor Forest Management: Unregulated cutting and illegal logging exacerbate the problem.
  3. Urbanization and Infrastructure Development

    • Road Construction: Expansion of roads (e.g., East-West Highway, Prithvi Highway) into forested areas fragments habitats and enables illegal logging.
    • Hydropower Projects: Dams and reservoirs (e.g., West Seti, Budhi Gandaki) submerge forests and disrupt ecosystems.
    • Urban Sprawl: Encroachment of forests for housing, industries, and commercial centers (e.g., Chitwan, Pokhara).
  4. Illegal Logging and Smuggling

    • Demand for Timber: High demand in India and China for Nepalese timber (e.g., sal, chirpine) fuels illegal logging.
    • Weak Law Enforcement: Corruption and lack of monitoring in forest departments enable illegal extraction.
    • Smuggling Networks: Timber is smuggled across borders via poorly guarded checkpoints, especially in the Terai.

ii) Main Four Importances of the Tourism Industry in Nepal

Tourism is a growing sector in Nepal, contributing to economic growth, employment, and cultural exchange. Its four key importances are:

  1. Economic Growth and Foreign Exchange Earnings

    • Revenue Generation: Tourism contributes ~7-8% of Nepal’s GDP and earns foreign exchange (e.g., USD 1.2 billion in 2019 before COVID-19).
    • Job Creation: Provides direct employment to ~1.2 million people (guides, porters, hotel staff, artisans) and indirect jobs in related sectors.
    • Infrastructure Development: Funds road, airport, and hospitality infrastructure (e.g., Tribhuvan International Airport expansion, Kathmandu-Pokhara highway).
  2. Cultural Preservation and Heritage Promotion

    • UNESCO Sites: Nepal’s 11 UNESCO World Heritage Sites (e.g., Kathmandu Valley, Lumbini, Sagarmatha) attract cultural tourists.
    • Traditional Crafts: Supports Newari, Thangka, and carpet weaving industries by promoting local art and heritage.
    • Festivals: Events like Dashain, Tihar, and Buddha Jayanti draw religious tourists, preserving cultural traditions.
  3. Environmental Conservation and Ecotourism

    • Protected Areas: Tourism funds national parks and reserves (e.g., Chitwan, Annapurna, Sagarmatha), supporting wildlife conservation.
    • Ecotourism Initiatives: Promotes sustainable practices (e.g., homestays in Mustang, trekking permits in Annapurna) that reduce environmental damage.
    • Awareness Programs: Educates tourists and locals on biodiversity, climate change, and sustainable travel.
  4. Social Development and Community Empowerment

    • Rural Livelihoods: Benefits marginalized communities (e.g., Sherpas in Everest region, Tharu in Chitwan) through homestays, trekking, and cultural performances.
    • Women Empowerment: Provides income opportunities for women in handicrafts, hospitality, and guiding (e.g., female trekking guides in Annapurna).
    • Peace and Stability: Post-conflict, tourism has helped reintegrate former combatants into society (e.g., ex-Maoist guides in Langtang).

iii) Meaning of Natural Resource Management

Natural resource management (NRM) refers to the planned, sustainable, and equitable use of natural resources (land, water, forests, minerals, biodiversity) to meet human needs while ensuring long-term ecological balance and economic stability.

Key Aspects of NRM in Nepal:

  1. Sustainable Utilization

    • Ensures resources are not depleted faster than they regenerate (e.g., community forestry in Nepal, where locals manage forests sustainably).
    • Example: Chitwan National Park manages wildlife and forests to prevent over-exploitation.
  2. Equitable Access and Distribution

    • Balances government, private, and community rights (e.g., Forest Act 1993 allows community forest user groups to manage 40% of Nepal’s forests).
    • Prevents exploitation by elites while ensuring poor communities benefit (e.g., micro-hydro projects in rural areas).
  3. Integration of Economic, Social, and Environmental Goals

    • Economic: Generates income (e.g., hydropower from melting glaciers, timber from managed forests).
    • Social: Improves livelihoods (e.g., agroforestry in mid-hills).
    • Environmental: Protects ecosystems (e.g., wetland conservation in Koshi Tappu).
  4. Policy and Institutional Frameworks

    • Legal Instruments: Nepal’s Environment Protection Act (1993), Water Resources Act (1992), and Forest Act (1993) regulate resource use.
    • Participatory Management: Involves local communities, NGOs, and government in decision-making (e.g., People’s Forest concept).
  5. Disaster Risk Reduction

    • Manages resources to mitigate climate change impacts (e.g., afforestation to prevent landslides, water harvesting in drought-prone areas).

iv) Meaning of Public Enterprises

Public enterprises are business organizations owned, controlled, and operated by the government to serve public interests rather than profit maximization. They play a crucial role in economic development, social welfare, and strategic sectors where private investment may be inadequate.

Key Features of Public Enterprises in Nepal:

  1. Ownership by Government

    • Funded and controlled by the state (e.g., Nepal Electricity Authority (NEA), Civil Aviation Authority of Nepal (CAAN)).
    • Capital comes from tax revenues, loans, or public funds.
  2. Social and Economic Objectives

    • Economic Development: Provides essential services (e.g., electricity, telecom, transport) that private sectors may ignore.
      • Example: NEA supplies electricity to remote areas at subsidized rates.
    • Employment Generation: Creates jobs in public-sector units (PSUs) (e.g., Nepal Railway).
    • Redistribution of Wealth: Operates in loss-making but socially important sectors (e.g., public buses in Kathmandu).
  3. Regulation and Control

    • Government Policies: Operates under laws and regulations (e.g., Public Enterprise Act 2018).
    • Accountability: Must submit annual reports to Parliament and follow audit procedures.
  4. Types of Public Enterprises in Nepal

    Type Examples Role
    Departmental Undertakings Nepal Police, Nepal Army, NEA Fully integrated with government; no separate legal status.
    Statutory Corporations Nepal Rastra Bank (NRB), CAAN Created by an Act of Parliament; semi-autonomous.
    Government Companies Nepal Airlines, Nepal Oil Corporation Registered under Company Act; more flexible than statutory bodies.
  5. Challenges of Public Enterprises in Nepal

    • Political Interference: Appointments based on political patronage rather than merit.
    • Inefficiency: Bureaucracy and red tape lead to slow decision-making (e.g., Nepal Airlines’ financial losses).
    • Corruption: Misuse of funds and nepotism in hiring.
    • Lack of Autonomy: Over-regulation by government reduces operational flexibility.

v) Definition of Absolute Poverty

Absolute poverty refers to a condition where individuals or households lack the basic necessities of life (food, shelter, clothing, clean water, healthcare, and education) to maintain a minimum standard of physical well-being and survival. It is measured by fixed, objective indicators (e.g., income below a poverty line) and is considered a global phenomenon affecting developing countries severely.

Key Characteristics of Absolute Poverty:

  1. Fixed Poverty Line

    • Defined by minimum caloric intake (e.g., 1,800 kcal/day in Nepal) or minimum income (e.g., USD 1.90/day by World Bank).
    • In Nepal, the absolute poverty line is set at NPR 2,100 per month (2022) for rural areas and NPR 2,700 for urban areas.
  2. Lack of Basic Needs

    • Food Insecurity: Chronic hunger and malnutrition (e.g., 30% of Nepali children under 5 are stunted).
    • Inadequate Shelter: Living in slums, makeshift houses, or without proper sanitation.
    • No Access to Healthcare: High infant mortality (28 deaths per 1,000 live births) and low life expectancy (70 years).
    • Illiteracy: Low school enrollment in poor households (e.g., only 50% of girls in Terai complete primary school).
  3. Geographical and Demographic Concentration

    • Rural vs. Urban: More prevalent in rural areas (23.6% in 2022) than urban (10.2%).
    • Regional Disparities: Far-Western and Mid-Western regions have higher poverty rates due to limited infrastructure and agriculture-based economies.
    • Caste and Gender: Dalits, Janajatis, and women are disproportionately affected.
  4. Causes of Absolute Poverty in Nepal

    • Low Agricultural Productivity: Subsistence farming with poor technology and climate shocks (e.g., droughts, floods).
    • Limited Employment Opportunities: High unemployment (4.1% in 2022) and informal sector dominance (80% of workforce).
    • Weak Social Protection: Lack of pensions, unemployment benefits, or healthcare subsidies.
    • Conflict and Displacement: Decades of civil war (1996-2006) displaced millions, destroying livelihoods.
    • Climate Change: Glacial retreat, landslides, and erratic rainfall threaten agriculture and infrastructure.
  5. Measurement of Absolute Poverty in Nepal

    • National Statistics Office (NSO) Surveys: Conducts Nepal Living Standards Survey (NLSS) every 5 years.
    • Multidimensional Poverty Index (MPI): Measures deprivation in health, education, and living standards (e.g., 23.6% of Nepalis were multidimensionally poor in 2022).
    • World Bank Indicators: Uses international poverty lines (e.g., USD 1.90/day, USD 3.20/day).

Absolute Poverty vs. Relative Poverty

Aspect Absolute Poverty Relative Poverty
Definition Lack of basic needs for survival. Income below a certain % of national median.
Measurement Fixed poverty line (e.g., USD 1.90/day). Dynamic (e.g., 50% of median income).
Focus Global comparison (e.g., Sub-Saharan Africa). Within-country inequality.
Example in Nepal A family earning NPR 1,500/month in rural area. A family earning NPR 30,000/month but below Kathmandu’s median.
Solution Approach Food aid, microfinance, infrastructure. Progressive taxation, social welfare programs.

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