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 primarily driven by the following four key factors:

  1. Population Pressure and Agricultural Expansion

    • Rapid population growth has led to increased demand for land for cultivation, especially for subsistence farming.
    • Shifting cultivation (jhum or daha) in hilly and mountainous regions destroys forests to create temporary farmlands.
    • Commercial farming (e.g., maize, cardamom, and tea) also contributes to deforestation for land clearance.
  2. Industrialization and Urbanization

    • Expansion of industries (e.g., paper mills, brick kilns, and hydropower projects) requires large amounts of wood as raw material or fuel.
    • Urbanization leads to increased demand for construction materials (timber, charcoal) and infrastructure development, often at the cost of forests.
  3. Lack of Awareness and Weak Enforcement of Laws

    • Many communities, especially in rural areas, lack awareness about the long-term consequences of deforestation.
    • Weak implementation of forest conservation laws (e.g., Forest Act, 1993) and corruption in forest management allow illegal logging and encroachment.
  4. Fuelwood Collection and Charcoal Production

    • Over 80% of Nepal’s rural population relies on firewood and charcoal for cooking and heating.
    • Unsustainable harvesting of firewood from forests leads to degradation and loss of tree cover.
    • Charcoal production (often illegal) further accelerates deforestation due to high demand in urban areas and export markets.

ii) Main Four Importances of the Tourism Industry in Nepal

Tourism plays a crucial role in Nepal’s economy and development. Its key importance includes:

  1. Foreign Exchange Earnings

    • Tourism brings in foreign currency through tourist arrivals, which helps improve Nepal’s balance of payments.
    • In 2074 BS, tourism contributed ~$300 million in foreign exchange earnings (though fluctuating due to political instability and natural disasters).
  2. Employment Generation

    • Provides direct jobs in hotels, restaurants, trekking agencies, and transport services.
    • Indirect employment opportunities in handicrafts, agriculture (supplying local produce), and guiding services.
    • Especially benefits rural and mountainous regions where alternative livelihoods are scarce.
  3. Cultural Exchange and Preservation

    • Promotes cultural heritage (e.g., UNESCO-listed sites like Kathmandu Valley, Lumbini, and Chitwan National Park).
    • Encourages preservation of traditional arts, festivals, and languages through interaction with tourists.
    • Helps in reviving dying traditions (e.g., Newari culture, Tharu dances).
  4. Infrastructure Development

    • Boosts construction of roads, airports, and hotels, improving connectivity in remote areas.
    • Encourages development of tourist-friendly facilities (e.g., trekking trails, lodges, and waste management systems).
    • Acts as a catalyst for private sector investment in hospitality and adventure tourism.

iii) Meaning of Natural Resource Management

Natural resource management refers to the planned, sustainable, and efficient use of natural resources (such as land, water, forests, minerals, and biodiversity) to meet present needs without compromising future generations’ ability to meet their own needs.

Time (Years)Resource Availability (%)OSustainable UseExploitation
Balancing extraction vs. conservation in natural resource management

Key Aspects:

  • Sustainability: Ensuring resources are used in a way that maintains their availability for future use (e.g., reforestation, water conservation).
  • Conservation: Protecting resources from depletion or degradation (e.g., wildlife sanctuaries, soil erosion control).
  • Allocation: Fair and equitable distribution of resources among different users (e.g., water sharing between agriculture and households).
  • Policy and Regulation: Implementation of laws and regulations (e.g., Forest Act, Water Resources Act) to govern extraction and usage.
  • Community Participation: Involving local communities in decision-making to ensure long-term compliance (e.g., community forestry programs in Nepal).

Example in Nepal:

  • Community Forestry Program (CFP): Over 1.8 million hectares of forests are managed by local user groups, reducing deforestation and improving livelihoods.
  • Water Resource Management: Projects like the Melamchi Drinking Water Project aim to balance urban demand with ecological sustainability.

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, especially in sectors where private investment is inadequate or risky.

Key Features:

  1. Government Ownership

    • Capital is provided by the government (e.g., Nepal Electricity Authority (NEA), Nepal Airlines).
    • Profits (if any) are reinvested in public welfare or used for national development.
  2. Service-Oriented Motive

    • Operate to provide essential services (e.g., electricity, transportation, telecommunication) at affordable rates.
    • Example: NEA supplies electricity even to remote areas where private companies may not operate profitably.
  3. Social Welfare Focus

    • Aim to reduce economic inequalities by providing jobs and services to marginalized groups.
    • Example: Agricultural Development Banks (ADBs) offer loans to small farmers.
  4. Economic Stability

    • Help stabilize the economy by controlling key sectors (e.g., Nepal Oil Corporation (NOC) regulates fuel prices).
    • Can act as a buffer during economic crises (e.g., providing subsidized goods during shortages).

Types of Public Enterprises in Nepal:

Type Example Role
Departmental Enterprise Nepal Electricity Authority (NEA) Directly controlled by a government ministry; no separate legal status.
Statutory Corporation Nepal Airlines Corporation (NAC) Operates under a specific law (e.g., Nepal Airlines Act).
Government Company Nepal Bank Limited Registered under the Companies Act but fully government-owned.

v) Definition of Absolute Poverty

Absolute poverty refers to a condition where individuals or households lack the basic necessities required for survival, such as adequate food, clean water, shelter, clothing, healthcare, and education. It is measured against a global or national poverty line, which represents the minimum income or consumption level needed to meet basic needs.

Key Characteristics:

  1. Survival Threshold

    • People in absolute poverty struggle to meet daily caloric intake (typically <1,800 kcal/day in developing countries).
    • Example: In Nepal, the absolute poverty line (as per the World Bank) is set at $1.90 per day (2011 PPP).
  2. Global Standard

    • Defined by international organizations like the World Bank or UNDP based on Purchasing Power Parity (PPP).
    • Ensures comparability across countries with different price levels.
  3. Lack of Basic Services

    • Malnutrition: High rates of stunting and underweight children.
    • Poor Housing: Lack of safe drinking water, sanitation, and durable housing.
    • Limited Access to Healthcare: High infant mortality and low life expectancy.
  4. Measurement in Nepal

    • The National Living Standards Survey (NLSS) conducted by the Central Bureau of Statistics (CBS) estimates absolute poverty.
    • In 2074 BS, about 25.2% of the population lived below the absolute poverty line (down from 42% in 2068 BS due to economic growth and social programs).

Difference Between Absolute and Relative Poverty

Aspect Absolute Poverty Relative Poverty
Definition Lack of basic needs for survival. Income below a certain percentage of median income in a society.
Standard Global/national poverty line (e.g., $1.90/day). Relative to societal wealth (e.g., <50% of median income).
Focus Survival (food, shelter, healthcare). Standard of living (education, leisure, dignity).
Example in Nepal A family earning <$1.90/day in rural Terai. A family earning less than half of Kathmandu’s average income.
Solution Approach Food aid, microfinance, infrastructure. Social welfare programs, progressive taxation.

010.721.432.142.82068 BS42.82071 BS28.72074 BS25.2Percentage of Population Below Absolute Poverty Line (%)
Trend of Absolute Poverty in Nepal (Source: CBS, NLSS)

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