I

© Sirjana Shrestha February 2015 Email: Shresthasirju25@gamil.com Tribhuvan University Institute of Forestry, Pokhara Campus P.O. Box 43, Pokhara, Nepal Website: www.iof.edu.np Citation: Shrestha S., 2015. Payment for Environmental Services in Begnas Lake: Exploring the potential. A thesis submitted for the partial fulfillment of the requirement for the Degree of Bachelor of Science in Forestry, Tribhuvan University, Institute of Forestry, Pokhara Campus, Pokhara Nepal.

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LETTER OF ACCEPTANCE

III

DEDICATION

This thesis is dedicated to my father, Shiva Prasad Shrestha who brought me up and gave the value of education.

I will always love you and remain grateful to you

IV

DECLARATION

I Sirjana Shrestha, hereby declare that this thesis entitled “Payment for Environmental Services in

Begnas Lake: Exploring the potential” my own original work and all other source of information

used are duly acknowledged. Errors if any are the responsibility of my own. This report and any part

of it have not been submitted to any other academic institutions for any academic awards.

………………………………

Sirjana Shrestha

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ACNOWLEDGEMENTS

I am indebted to my supervisor Bir Bdr Khanal Chhetri, PhD (Campus Chief, Institute of Forestry)

for his regular supervision, encouragement and good advice at every step of my writing. I extend my

sincere regards to my Co-supervisor Dev Raj Gautam (Team Leader, Hariyo Ban Program, CARE

Nepal) for his co-operation, invaluable comments and continuous encouragement throughout the

study.

I am sincerely grateful to Mr. Purna Bd. Kunwar (Field Co-odinator, CHAL, Hariyo Ban Program,

WWF Nepal), Mr. Yajya Pd. Timilsina (Associate Dean, IOF), Mr. Abadhesh Singh (Associate

Professor, IOF) for their regular support, suggestions and guidance. I would specially be thankful to

Mr. Mahesh Kumain (Ranger, Kaski), Mr. Yam Bdr. Rumba (AFO, Kaski) and Mr. Narayan Koirala

(AFO, Kaski) for their valuable inputs in identifying my field site and providing me required

materials. I would like to extend my special thanks to Ms Dhechen Dolma and Ms Smritee Lama for

helping me in data collection and Mr. Gopal Khanal for his support. I would like to thanks to Arun

Regmi, Peema, Deepika, Kanti, Anita for their entire help and constructive suggestion during data

analysis and preparation of this report.

I am especially grateful and thankful to Hariyo Ban Program, WWF Nepal; for providing me a

grant to conduct this research.

I am grateful to the residents of the study sites who gave me their precious time to discuss about

their socio-economic condition, answering the questionnaires and replying many queries. I also can’t

forget my all classmates for their cooperation and support.

Love and affection of my family members always encouraged and inspired me to perform any work

successfully.

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ABSTRACT Payment for Environmental Services (PES) is channel payment for environmental services from

beneficiaries to service providers. PES is the current issue, so many climate change researchers and

experts are giving their attention to it. This research was conducted in Begnas Watershed, Kaski,

Nepal, to increase our understanding of the environmental services provided by Begnas Lake Area

(BLA) and also shed light on the adoption of PES Mechanism in BLA and factors affecting to

willingness to pay for sustainable management of BLA. Data and information were collected

through key informant interviews, focus group discussions, household surveys and direct

observations and various documents. The researcher also reviewed various secondary reports and

documents. Data were analyzed using different tools such as descriptive statistics, multiple

regression and Friedman non parametric tests. This study found that forest and soil conservation

provided by the Begnas Watershed and provisional services (fishing, water for various purposes)

provided by the Begnas Lake are the main environmental services. This study shows that voluntary

PES mechanism can be adopted by establishing upstream and downstream linkage facilitated by

local government. Highly educated people and people living nearer the lake are more willing to pay.

Businessmen are more willing to pay where as farmers less are willing to pay than other

occupations. This study suggests that capacity building, awareness and development of the good

policy and institutions could facilitate for implementing the PES mechanism in the study area.

Key words: Payment for Environmental Services, Begnas Lake Area, willingness to pay.

VII

ACRONYMS

AFO- Assistant Forest Officer

BZ- Buffer Zone

BL-Begnas Lake

BLA-Begnas lake Area

BWS-Begnas Watershed

CFUG-Community Forest User Group

DDC-District Development Committee

DS-Downstream

ES- Environmental Services

FAO-Food and Agriculture Organization

FGD-Focus Group Discussion

HH-House Hold

ICRAF-World Agroforestry Center

IOF- Institute of Forestry

KI-Key Informant

MEA-Millennium Ecosystem Assessments

NWP-National Wetlands Policy

SPSS-Statistical Package for Social Science

US-Upstream

VDC-Village Development Committee

WWF-World Wildlife Fund

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TABLE OF CONTENTS LETTER OF ACCEPTANCE ...................................................................................................................................... II

DEDICATION ................................................................................................................................................... III

DECLARATION ................................................................................................................................................ IV

ACNOWLEDGEMENTS ................................................................................................................................... V

ABSTRACT ....................................................................................................................................................... VI

ACRONYMS .................................................................................................................................................... VII

TABLE OF CONTENTS ................................................................................................................................. VIII

LIST OF FIGURES ............................................................................................................................................. X

LIST OF TABLES .............................................................................................................................................. X

CHAPTER ONE .................................................................................................................................................. 1

INTRODUCTION ................................................................................................................................................... 1

1.1 Background .................................................................................................................................................... 1

1.1.1 Definition of PES ......................................................................................................................................... 2

1.2 Rationale of the Study ................................................................................................................................... 3

1.3 Objective ........................................................................................................................................................ 4

1.3.1 General objective: ...................................................................................................................................... 4

1.3.2 Specific objectives ...................................................................................................................................... 4

1.4 Study limitations ............................................................................................................................................ 5

1.5 Organization of the report ............................................................................................................................. 5

CHAPTER TWO ................................................................................................................................................. 6

LITERATURE REVIEW............................................................................................................................................ 6

2.1 Defining ecosystem Services ......................................................................................................................... 6

2.2 PES in Global context ..................................................................................................................................... 7

2.3 PES initiatives in Nepalese context ................................................................................................................ 7

2.4 Major policies and legislative frameworks provisioning for PES in Nepal..................................................... 8

CHAPTER THREE ................................................................................................................................................. 10

METHODOLOGY ................................................................................................................................................. 10

3.1 Study Area ................................................................................................................................................... 10

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3.1.1 Criteria for selection of study area ........................................................................................................... 10

3.1.2 Geographical location ............................................................................................................................... 10

3.1.3 Climate and Soil ........................................................................................................................................ 10

3.1.4 Vegetation ................................................................................................................................................ 10

3.1.5 Aquatic flora and fauna ............................................................................................................................ 11

3.1.5 Location map of study area ...................................................................................................................... 11

3.2 Details of field methods .............................................................................................................................. 12

3.3 Sampling Design .......................................................................................................................................... 12

3.4 Data Analysis ............................................................................................................................................... 12

CHAPTER FOUR ............................................................................................................................................. 14

RESULTS AND DISCUSSION ................................................................................................................................ 14

4.1 Results ......................................................................................................................................................... 14

4.1.1 Characteristics of respondent (n=71) ....................................................................................................... 14

4.1.2 Major Environmental Services in the area ............................................................................................... 16

4.1.3 Understanding about PES ......................................................................................................................... 18

4.1.4 Perception of the people on PES mechanism .......................................................................................... 19

4.1.5 Factors affecting the willingness to pay ................................................................................................... 20

4.1.6 Problems and conservational effort under PES ........................................................................................ 22

4.2 Discussion .................................................................................................................................................... 23

CHAPTER FIVE .................................................................................................................................................... 25

CONCLUSIONS AND RECOMMENDATIONS ....................................................................................................... 25

5.1 Conclusions .................................................................................................................................................. 25

5.2 Recommendations ....................................................................................................................................... 25

REFERENCES .................................................................................................................................................. 26

ANNEXES ........................................................................................................................................................ 29

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LIST OF FIGURES Figure 1: Education of Respondents ................................................................................................... 15

Figure 2: Main source of income of the respondents .......................................................................... 15

Figure 3: Major Environmental Services from Begnas Lake ............................................................. 17

Figure 4: Understanding of the PES ................................................................................................... 18

Figure 5: Willingness to Pay ............................................................................................................... 19

Figure 6: Upstream and downstream people’s perception on PES mechanism.................................. 19

Figure 7: People’s preference on technique of giving and receiving payment ................................... 20

Figure 8 Major programs for implementation to minimize the negative effects ................................ 23

LIST OF TABLES Table 1: Descriptive Statistics of independent variables .................................................................... 14

Table 2: Descriptive Statistics of available ES in BWS by the respondent ........................................ 16

Table 3: Comparison between Upstream and Downstream respondent’s perception on ES .............. 17

Table 4: shows the factors affecting the willingness to pay by the households for environmental

services in the Begnas area by multiple regression analysis. .............................................................. 20

Table 5: Descriptive statistics of peoples’ perception on impact on Begnas Lake ............................. 22

XI

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CHAPTER ONE

INTRODUCTION

1.1 Background

Wetlands ecosystem cover about 6% of the total global land area. They are considered to be one of

the most threatened of all major natural ecosystems and are argued to deserve a high priority for

conservation. Wetlands are crucial for human survival and economic well-being, for ecosystem

functions and for earth’s life support system. Wetlands are sometimes described as “the kidneys of

the landscapes” because of the functions they perform in hydrological and chemical cycles and as

downstream receivers of wastes from both natural and human sources, part from these, now the

wetlands are described as carbon dioxide sink and climate stabilizers.

Nepal has several wetland ecosystems of global significance. These wetlands are important for

Nepal’s sustainable development as they contribute significantly to livelihoods of a large number of

communities. While all communities benefit from wetlands, about 17% of the Nepali populations

representing 21 ethnic communities have traditionally based their livelihoods on wetlands (fishing,

river transport and also tourism in case of Lake, etc.) These communities are some of the most

marginalized and poorest people in Nepal. However, these important resources are undergoing a lot

of threats and challenges in recent years.

Nepal is a signatory of Ramsar Convention, 1987 and has 9 sites designated as Ramsar sites, totaling

area of 34,455 ha. National Wetland Policy, 2003 has been endorsed by the Government of Nepal

(GN/MFSC, 2003) with objective of involving the local people in the management of wetlands and

to conserve wetlands biodiversity with wise use of wetland resources. The wetlands can be used for

various income generating purposes. Eco-tourism is one of the uses of wetlands which can generate

direct and indirect benefits to local people. Similarly, fishing or aquaculture is another potential

income generating activity in the wetlands.

The emergence of Payment for Ecosystem Services (PES) has to be seen as additional sources for

financing conservation, and also as a response to the widespread disappointment with more

conventional approaches for conservation (Zilberman, 2007). The PES concept emerged from

growing concern about the loss of biodiversity and ecosystem services, combined with inspiration

from the early success of the global carbon market and a desire to scale-up experience with PES at

local, regional and national level (UNEP, 2001).

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1.1.1 Definition of PES

“PES is (1) a voluntary transaction; (2) in which a well-defined environmental service or land use

likely to secure that service; (3) is bought by at least one buyer; (4) from at least one provider; (5) if

and only if the service provider secures service provision” (Wunder, 2005).

“PES refers to the variety of the arrangements through which beneficiaries of ES pay back the

providers of those services to ensure their sustainability and timely provision" ( WWF, 2007).

PES is “A transfer of resources between social actors, which aims to create incentives to align

individual and/or collective land use decisions with the social interest in the management of the

natural resources” (Muradian et al., 2010).

“Payments for environmental services (PES) involve schemes where payments or rewards are given

by those who benefit from environmental services like clean and sufficient water, biodiversity, stable

climate, or aesthetic beauty, to those who play a central role in providing or maintaining these

services” (Lee & Mahanty, 2009).

PES is an innovative conservation financing mechanism to achieve thedual goal i.e. environmental

conservation and poverty reduction which is widely applied in developing countries (Paudel,

2010).There are four types of PES that currently stand out: (i) carbon sequestration and storage

(electricity companies are paying farmers for planting and maintaining additional trees), (ii)

biodiversity protection (conservation donors are paying local people for setting aside or naturally

restoring areas to create a biological corridor), (iii) watershed protection (downstream water users

are paying upstream farmers for adopting land uses that limit deforestation, erosion, and flooding

risks, and (iv) landscape beauty ( a tourism operator is paying a local community not to hunt in a

forest being used for tourists’ wildlife viewing) (Wunder, 2005).

Payment for ecosystem services (PESs) is one mechanism which is increasingly used to sustain both

the natural environment and local livelihoods (Huberman, 2009).

PES programs can affect the poor by providing an additional income source, maximizing their

potential positive impact on the poor, and minimize potential negative impacts but primary objective

of the PES is not the poverty reduction (Pagiola, 2007).

PES being a new concept and it is a burning issue for Nepal, but many stakeholders, service

providers and beneficiaries are not aware of it. Capacity building of concerned organizations and a

policy maker is inevitable. Moreover, awareness creation among local communities is also

important.

In Nepal, the concept of PES was introduced in 2003 as a pilot project of the World Agro forestry

Centre (ICRAF) to compensate and reward upstream community of the Kulekhani watershed

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(Khatri, 2009). It has been perceived as an additional source of money to implement watershed

management programs in the area, and to foster both environmental conservation and improvement

of livelihoods at the local level (Adhikari, 2009 and Upadhyaya, 2005).

1.2 Rationale of the Study

Wetlands are Nepal’s most threatened habitats supporting a great diversity of floral and faunal

diversity. Conversion, pollution, over-exploitation, invasion of alien species, biodiversity loss and

encroachment are anthropogenic as well as natural threats to wetland of Nepal.

About 60% of the ecosystem services are being degraded or used unsustainably for e.g. fresh water,

capture fisheries, air and water purification, and the regulation of regional and local climate, natural

hazards, and pests (MEA, 2005).

The prevailing Acts and Regulations of Nepal do not have any provisions for community

participation in wetlands conservation and management through wise uses of wetlands, the National

Wetland Policy (NWP), 2003 directs to prepare and implement wetland management plans in order

to involve local people in the management of wetlands and conserve wetlands biodiversity with wise

use of wetlands resources. For supporting NWP, 2003, the concept of PES could play a vital role to

mainstreams the policy in the conservation and wise use of wetlands.

PES creates economic resource that will empower the management activities and can clear out the

misleading idea of common property resources by setting certain cost for the ecosystem service

instead of common property resources by setting certain cost for the ecosystem service instead of

providing it as granted (Niraula, 2007).

Begnas Lake is under the various threats of nutrient enrichment and pollution from people’s

activities in its catchment and surrounding land. Currently the primary drivers of degradation and

loss of this wetland includes infrastructural development, land conversion, water with drawls,

pollution overharvesting and overexploitation, and introduction of invasive alien species. All the

income from fishing and tourism, recreation and other services would subsequently be lost. So to

increase the lifespan of Begnas Lake there should be the mechanism of compensation for local

people to make the contribution for improved management of the resources that supply these

services to them. Thus from this study entitled “Payment for Environmental Services in Begnas

Lake: Exploring the potential” to explore the understanding of local stakeholders on PES concept,

major ecosystem services available in that area and over benefit sharing mechanism among the

potential sellers for the sustainable management of the Begnas Lake Area (BLA).This study will

help to identify of the stakeholders and local people who should actively involved in protection of

BLA and pay them for their incredible contribution in conservation.

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1.3 Objective

1.3.1 General objective:

The general objective of the study is to increase our understanding on the ecosystem services

provided by BLA also shed light on the adoption of PES Mechanism in BLA.

1.3.2 Specific objectives

� To assess the existing and potential environmental services provided by BLA (based on

perception of respondents).

� To explore the potential PES implementing mechanism (e.g., voluntarily, agreement, equal

sharing etc.)

� To analyze the factors affecting the willingness to pay by the households for environmental

services in the BLA.

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1.4 Study limitations

� Since PES is relatively a new concept in the world and in Nepal, there are only limited

references. � This research is for the partial fulfillment of B.Sc degree; hence time and resource are the

main limitations. � Bad management of the past records made difficult to collect the previous information about

the Begnas Lake.

1.5 Organization of the report This report has been divided into seven chapters. With background, definition of PES, rationale of

this study, general and specific objectives, study limitation presented in this first chapter, second

chapter presents about the literature review. Third chapter explains about methodology while fourth

chapter covers information about the result and discussion part. The fifth chapter presents the

conclusion and recommendation while the last chapter presents the annexes.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Defining ecosystem Services

The Convention on Wetlands of International importance especially as Waterfowl Habitat (Ramsar

Iran, 1971) has defined wetlands in a broader sense. “For the purpose of this convention, wetlands

are areas of marsh, fen, pet lands or water, whether natural or artificial, permanent or temporary,

with water that is static or flowing, fresh, or salt, including areas of marine water the depth brackish

which at low tide does not exceed six meters.”

Environmental services defined by Millennium Ecosystem Assessment report (MEA, 2005) includes

(1) Provisioning Service (includes food, fibers and fuel wood)

(i) Regulating services (the benefits obtained from the regulation of ecosystem processes),

(ii) Cultural services (the non-material benefits that people obtain from ecosystems through

spiritual enrichment, cognitive development, reflection, recreation and aesthetic experiences) that

directly affect people, and

(iii) Supporting services needed to maintain other services (soil formation, photosynthesis, primary

production, nutrient recycling and water cycling).

The conservation and protection approach in the past in the most part, not produced the desired

conservation outcomes because they shed negative impacts on the livelihoods of communities in

upstream areas with ignorance to livelihood requirements of communities; while the communities in

the downstream areas, who are users and beneficiaries of the ecosystem services, are enjoying the

benefits but not ready to pay for the service they are getting from the ecosystem (Wunder, 2005).

Water supplies yield significant financial and economic benefits for downstream users, however,

those benefits need to be identified and valued properly to convince the decision makers about the

importance of managing upper catchments as a part of water supply infrastructure. Assessment was

done to value the water in different users (hydropower, irrigated agriculture, urban consumption) and

for different users, enabling the financial and economic impacts of land use change on water service

delivery to be calculated (Karna, 2008).

The forest user groups have been contributing for ecological service to local and global level

without incentive, it is required to recognize the contribution of community and also necessary

to develop mechanism for appropriate incentives for them. There are currently apprehension about

emerging economic instruments, particularly Payment for Ecosystem Services (PES) among various

Stakeholders partly due to limited understanding about their potential for contributing to conservation

and human well being. ( WWF, 2007).

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2.2 PES in Global context

The PES concept was developed during the 1990s.Costa Rica is a world leader in implementing

nation-wide PES program. Other developing countries like Mexico, China, Philippines, Indonesia,

and India are also benefiting from PES programs (Ojha et al., 2009).By beginning in 1997, Costa

Rica developed an elaborated PES program by encoding PES in Forest Law No.7575 which

recognized four environmental services, climate change mitigation, biodiversity conservation,

watershed protection and landscape beauty and provides the regulatory basis to contract landowners

for the services provided by their lands and established the national fund for Forest Financing

(FondoNacional de FinanciamentoForestal, FONAFIFO). The World Bank support the country’s

PES program with a $32.5 million loan and $ 8 million grant from the Global facility (GEF) to assist

in the conservation of biodiversity.

In Colombia, the association of irrigators and government agencies provide payment to the upstream

forest landowner of Cauca River for the improvement of the base flows and reduction of the

sedimentation in irrigation canals in which the association members voluntarily pay a water use fee

of $1.5-2 liter on top of already existing water access fee of $ 0.5/ liter (Forest Treands, Katoomba

Group and UNEP, 2008).

2.3 PES initiatives in Nepalese context

The Kulekhani watershed became a pioneer in adopting the concept where revenue - sharing

mechanism was devised between the Kulekhani hydroelectricity project and the communities

residing in the upstream part of the watershed. The main aim of the scheme was to support the

livelihoods of upstream communities for ensuring forest conservation and reducing sedimentation in

the Kulekhani reservoir (Khatri, 2009). In this scheme 12% of the revenue generated from the

Kulekhani hydropower facility received by the DDC is distributed 50% to the upstream and 50% to

the downstream (Bhatta et al., 2014). Dhulikhel water supply is considered as a model project which

is the only urban water supply managed by the local peoples (Mahato, 2010). There is a agreement

basis of PES mechanism in which the drinking water management committee agrees to pay NRs 1

million (approx. US $ 10,000) per year, scholarship in Kathmandu University for one student and

payment of the salary of a forest watchman to the upstream. In case of the cash payment amount will

be raised by NRS 100,000 every 5 year (Bhatta et al., 2014).

In the Rupa Lake area cooperatives voluntarily pay direct cash to the different users (CFUGs,

schools, communities) mainly for conservation of Rupa Lake and its wetland for increasing fish

production and income generation.(Pradhan et al., 2010).

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Shivapuri National Park is rich in biodiversity which contributes water to over 4,000 ha of

agricultural farms. Water from the Sundarijal sub-catchment is collected into a reservoir and

channeled to a hydropower plant located in Sundarijal that generates about 4,231,000 Kilowatt-hour

of electricity per year. This water is processed and transferred to the city for distribution to domestic

consumers who use about 33.3 million cubic meters of water per year from this source. Each of this

water uses generating huge financial revenues and economic benefits. Currently, the net financial

value-added across different water uses totals NPR 306 million or some US$ 7.65 million a year

(Karna, 2008). Hence these realize the feasibility of PES in the Shivapuri because the local residents

are beyond the benefit.

2.4 Major policies and legislative frameworks provisioning for PES in Nepal.

Year Policy/Strategy Related provisions PES case 1973 National Parks and Wildlife

Conservation Act, 2029

It provides power to declare buffer zones (BZ)

around the national parks and wildlife reserves

The Act allows funneling back 30–50% of park

and reserve revenue for the community

development activities in the BZ .

Case # 3:Incentivizing BZ

communities (government –

communities PES-type

mechanism.

1996 Buffer zone Management

Regulation,2052

It is facilitates public participation in the

conservation design and management of buffer

zones and provides guidelines to manage 30-

50% of park generated revenue with the

communities in the buffer zone.

Case # 8: Shivapuri Nagarjun

National Park, Kathmandu.

1993 Electricity Act 2049 It has stated that during the construction and

operation of hydropower station, environment

and watershed areas should be protected. This

Act provisions that 10% of the total revenue

generated by hydropower needs to be ploughed

back to the concerned district developments.

Case # 1: Kulekhani

hydropower, Makwanpur,

District.

1993 Forest Act, 2049 The Forest Act, 1993, accounts for all forest

values, including environmental services and

biodiversity, as well as production of timber

and other products The Act empowers local

people for their participation in decision-

making and sharing of benefits in terms of

forest resources.

Case # 4: Haldekhal irrigation

Kanchanpur, District.

1999 Local Self Governance Act, 2055

It provides immense autonomy to the District Development Committees (DDCs), municipalities and Village. Development Committees (VDCs). Section 55 empowers VDC to levy taxes on utilization of natural resources. Similarly, Section 189 sanctions the DDC for formulation of and implementation of plans for conservation and utilization of forest, vegetation, biological diversity and soil

Case # 1: Kulekhani, hydropower, Makwanpur District. Case # 10: Shardu Khola watershed management. Case # 7: Conserving Rupa, Lake, Kaski, District.

2000 Revised Forestry Sector Policy It introduced a new concept in managing the

forests of the Terai, Churia and inner Terai

named collaborative forest management

(CFM). Fifty percent of the income from CFM

will be provided to local communities and local

Case # 5: Mohana Kailali corridor

9

governments

2007 National Water Plan (2007–2027)

This support Churia conservation program for ecological services down to Terai irrigation

Case # 9: Central Terai PES

2009 Tourism Policy It states that certain proportion of income from village tourism will be utilized in tourism infrastructure development and environmental conservation

Case # 3: Incentivizing buffer zone communities Case # 8: Shivapuri Nagarjun National Park, Kathmandu District.

2009 Working Policy on Construction and Operation of Development Projects in Protected Areas

It highlights that 10% of the government royalty earned from electricity generated thereof shall be deposited by the hydropower owner to the concerned protected area for environmental conservation and community development.

Case # 3: Incentivizing buffer zone communities. Case # 8: Shivapuri Nagarjun National Park, District.

2010 Three Years Interim Plan’s Approach Paper (2010–2012)

It provisions that 35% of the income of community based resource management models will be returned back to local communities for their livelihood. It states that a trust fund will be created from private contribution to be used for the development of forest-based enterprises.

Overall development policy

Note: Nepal follows the BikramSambat (BS) era as its official calendar, which is 57 years ahead of

the Common Era (AD).

Adopted from Bhatta et al., 2014

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CHAPTER THREE

METHODOLOGY

3.1 Study Area

3.1.1 Criteria for selection of study area

The Begnas Lake of the Kaski district was selected for the study because it was one of the important

places in the mid hill wet land which was developed for the tourism. It supports the livelihood of the

people. The area is also important from the point of fishery as well as for bird watching too. This place

is also proposed to enlist as Ramsar site.

3.1.2 Geographical location

Begnas Lake, the second largest lake of Pokhara valley lies in mid hills at an altitude of 650 m. It

extends between 280 7’ N to 280 12’ N latitude and 8405’E to 84010’ E longitude. The lake is situated at

Sisuwa village about 13 km east of Pokhara. It has a watershed area of 225 ha, maximum depth of 13.84

m and an average depth of 9.37 m. The lake has instable temperature stratification. At surface the water

temperature varies from 15.1 to 30.3°C over the year. Anoxia occurs below 3.2 m depth at times. At 6 m

depth dissolved oxygen is very low (less than 1 mg liter) from March to October. The surface water is

mostly somewhat oversaturated with dissolved oxygen (FAO, 2010)

3.1.3 Climate and Soil

The climate is sub- tropical and humid, and is marked by monsoon rainfall. The pre-monsoon period

is generally hot and dry, and sometimes there are hailstorms. The average annual rainfall is about 3,

580 mm and it occurs mainly from May to September. The peak Temperature in July and August is

35.5°C but falls to just 13.2°C in January. Geologically the area is composed of slate and phyllite

zone with beds of calcareous conglomerate and gravel deposits.

3.1.4 Vegetation

Vegetation here is quite different than other parts of Pokhara. Shorea robusta is the major species on

the southern aspect of the hills on the northern part of the lake whereas the major species of the

forest on the northern aspect of the hill lying on the southern part of the lake is Schima-Castenopsis.

The predominant species of the area are Castenopsis indica and Schima wallichii, and other species

include Engel hardtiaspicata Syzygium cumini, Myrica esculenta and Rhus javanica. The farming

cultivation is on the both eastern and western part whereas fishery project on the western part. The

forest surrounding the lake is the habitat of more than 150 species of other birds. The northern part

11

of the lake is best site for observing the waterfowls. The forest is also rich in mammals where

abundant leopards roam majestically. The pride of the forest is that it is the home of some

endangered flora and fauna.

3.1.5 Aquatic flora and fauna

The lake is rich in aquatic flora and fauna, different type of the lotus like white, blue, and red as well

as water hyacinth, different types of hydrilla are found in the bank of the lake. Red lotus is now

becoming endangered. The aquatic fauna consists of fishes, frogs, snakes, crabs etc. This lake

consists of different types of local fish e.g Kande, Bam, Jhinge, Katle etc. The exotic species like

Sahar, Bighead, Grass Crap, Silver Carp are found in the lake. Different types of water bird like,

Jogi ducks, Phalacrocorax carbo, Grus antigone, Tadorna ferruginea are other fauna found in the

lake.

3.1.5 Location map of study area

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3.2 Details of field methods

Only the forest and water ecosystem will be selected for the study purposes.

i. To assess the existing and potential environmental services provided by BLA (based on

perception of respondents).

The data were obtained from the field observation and household Survey (questionnaire on annex) as

well as from the secondary sources and direct field observation.

ii.To explore the potential PES implementing mechanism (e.g., voluntarily, agreement, equal

sharing etc.)

Data were obtained through the household survey, focus group discussion and as well as key informant

interview.

iii. To analyze the factors affecting the willingness to pay by the households for environmental

services in the BLA.

Contingent valuation method was used. In this method suppliers, “willingness to pay” for the

services provided by the ecosystem providers were identified. The subject matter was explained

before asking the WTP questions. The respondent were also briefed about role and importance of

watershed area on water supply and use of hypothetical market value before them being asked

whether they were willing to pay for the service in question. This objective was fulfilled by

household survey (annex) and focus group discussion. The stakeholders like forest product users,

fisherman, dwellers around the basin, farmers using water for irrigation, tourism industries and

boaters, drinking water suppliers, etc. were the respondent of the study.

Data were obtained by the house hold survey (annex) variables were sex, age, household size,

household income source, education and distance from the lake.

3.3 Sampling Design

Systematic sampling was applied to carry out the research. First I selected the name of the

respondent randomly and then other name was chosen after specific interval (5 or 10) from the name

list provided by the source mainly in three villages of the watershed. Sampling framework and

intensity were decided in consultation with advisor, however, at least 2 -5 % of the total direct

beneficiary households were selected for sampling.

3.4 Data Analysis

Data analysis comprised both qualitative and quantitative techniques scientifically recognized and

internationally used were applied. Processing and analysis of quantitative data were based on statistical

13

analysis (use of MS EXCEL, SPSS for social data analysis), Freidman test was done to find difference

in perception of the people in ranking the ES and impacts on BL and multiple regression was done to

find out the effect of variables on WTP. Qualitative analysis of data collected from FGDs, KIs, and

directly observed too. Descriptive analysis of different cases of environmental services particularly those

services that cannot be quantified such as biodiversity conservation and soil and watershed management

practices were carried out for better understanding of the problems, and their remedies. Simple statistical

tools like average mean, bar diagram, pie chart, SPSS, etc. was used to analyze the data.

14

CHAPTER FOUR

RESULTS AND DISCUSSION

4.1 Results

4.1.1 Characteristics of respondent (n=71)

Table 1: Descriptive Statistics of independent variables

Variables Numbers

Sex US DS

Male 24 15

Female 12 20

Ethnicity

Bramin 23 19

Chhetri 6 5

Janajati 4 0

Dalit 3 11

Variables Mean Standard Deviation

R Age 46.48 14.083

Household Size 6 2.762

R Education 6.18 5.322

Land Holding

Khet 4.23 4.489

Bari 3.65 4.763

Kharbari 0.49 1.835

15

Comparing the education and income source of household between upstream and downstream

Figure 1: Education of Respondents

Above figure shows that most (38%) of the downstream respondents have above secondary

education followed by secondary education with 26%. But only 7% of the downstream respondents

have above secondary education and 40% have secondary education. 12% of upstream respondents

are illiterate where as only 6% of the downstream respondents are illiterate.

Figure 2: Main source of income of the respondents

7

40

12

29

12

38

26

6

23

7

0

5

10

15

20

25

30

35

40

45

Above secondary Secondary Primary Below primary Illiterate

No

. o

f R

esp

on

den

t (%

)

Education

Upstream Downstream

61

1114

8 6

0

23

17

2

29

0

29

0

10

20

30

40

50

60

70

Agriculture Government

Services

Daily Wage Business Remitance Boating and

Fishing

No

. o

f R

esp

on

den

t (%

)

Occupation

Upstream Downstream

16

Above figure illustrates that 61% of the upstream respondents have agriculture as major income

source and 29% of the downstream respondents have business and boating and fishing as a main

income source.

4.1.2 Major Environmental Services in the area

Major Environmental Services in the BWS

BWA provides diverse of environmental opportunities and services that has benefited large group of

people residing around the area. However different environmental services can be prioritized based

upon the perception of the local people. The following table: 1 shows the priority of the available ES

in the area and their prioritization by numbering from 1 to 6 indicating as highest to lowest.

Table 2: Descriptive Statistics of available ES in BWS by the respondent

Statement of ranking of

environmental services Minimum Maximum Mean Std. Deviation

Freidman test

Natural purification of water 1 6 2.72 1.929

Forest and soil conservation 1 6 2.59 1.316 Chi-Square=

Erosion control 1 6 3.27 1.404 91.768

Habitat for fish and wildlife 2 6 3.62 1.005 d.f=5

Recreation and ecotourism 1 6 3.83 1.454 P=0.000

Beautiful landscape 1 6 5.17 1.512

Ranking indicates that most of the respondents agree that forest and soil conservation is the main

important ES they get from the BWS followed by and natural water purification with mean rank of

2.59 and 2.72 respectively. Respondents gave the erosion control and habitat for fish and wildlife as

3rd and 4th priority with the mean rank of 3.27 and 3.62 respectively. Landscape beauty is the last

priority of the respondent among the environmental services. It also shows that there is significant

difference in perception of people in ranking among the above six environmental services.

17

Table 3: Comparison between Upstream and Downstream respondent’s perception on ES

Environmental services Upstream mean Downstream mean

Natural purification of water 2.17 3.29

Forest and soil conservation 2.61 2.57

Erosion control 3.11 3.43

Habitat for fish and wildlife 3.56 3.69

Recreation and ecotourism 4.00 3.66

Beautiful landscape 5.61 4.71

Above table shows that natural purification of water is the main ES for the upstream people it may

be because upstream respondents use the water source that the watershed helps to purify. Whereas

downstream respondents ranked forest and soil conservation as most important ES, which may be

because downstream respondents perceive high threat of landslide if upstream forest and soil cover

are not conserve. Downstream respondents use municipal water facility that may be the reason why

they not valued natural purification of water as an important environmental service.

This result shows that upstream and downstream respondents perceive and value environmental

services differently.

Major Environmental Services from the Begnas Lake

Figure 3: Major Environmental Services from Begnas Lake

55

32

13

0

10

20

30

40

50

60

provisioning Tourism Aesthetic

No

. o

f R

esp

on

den

t (%

)

Environmetal Services

18

Above figure represents that most of the respondents said that provisioning services (water for

various purpose and fishing) are the main environmental services from the Begnas Lake followed by

Tourism service and Aesthetic service.

4.1.3 Understanding about PES

The environmental services obtained from the lake have to be institutionalized for which, the

knowledge and perception of the actors play a vital role to adopt and enhance the PES mechanism.

Following figure 5, illustrate the acquaintance of the respondents regarding the word “PES”.

63.4%

36.6%

Yes

No

40.0%

60.0%

Female

Male

53.3%

46.7%

downstream

upstream

33.3%

2.2%

6.7%

57.8%

Janajati

Dalit

Chhetri

Bramin

Figure 4: Understanding of the PES

Above figures show that 63.4% of the respondent are familiar with the word PES. Among them 60%

are male and 40% are female. On the basis of the ethnicity of the respondents who understand about

19

PES are Bramin (57.8%) followed by Janajati (33.3%) and Chhetri (6.7%) and only 2.2% are Dalit.

It also shows that among known respondents about PES 53.3% are from downstream and only

46.7% are from upstream.

WTP by Downstream Beneficiaries

Figure 5: Willingness to Pay

Above figure illustrates that 77% of the downstream respondents are willing to pay the

compensation to the upstream people for the environmental services where as 23% of the

downstream respondents are not ready to pay the compensation for environmental services.

4.1.4 Perception of the people on PES mechanism

Figure 6: Upstream and downstream people’s perception on PES mechanism

77

23

0

10

20

30

40

50

60

70

80

90

Yes No

No

. o

f R

esp

on

den

t

(%)

Do you want to provide the compensation

11

3

69

1714

3

66

17

0

10

20

30

40

50

60

70

80

Percentage Agreement Voluntary Equal SharingNo

. o

f R

esp

on

den

ts(%

)

Mechanism of PES

20

Above figure 7 depicts that downstream respondents are willing to pay voluntarily for the

environmental service in the same manner upstream respondents are also expect voluntary payment

from the downstream people.

Preference of the people for technique of giving and receiving payment

Figure 7: People’s preference on technique of giving and receiving payment

This figure indicates that most of the upstream respondent agrees to receive the payment for capacity

building and on same way most of downstream respondent also agrees to provide the payment for

capacity building. Similarly second option is Begnas Lake Conservation that both upstream and

downstream respondents are agreed to receive and provide payment.

4.1.5 Factors affecting the willingness to pay

Table 4: shows the factors affecting the willingness to pay by the households for environmental

services in the Begnas area by multiple regression analysis.

(N=35)

Variables Coefficient P-value

Dummy variables

Constant 0.905 0.000

0

11

19

42

28

36

17

43

31

0

10

20

30

40

50

Not answered Bank deposit Direct payment Capacity building Begnas Lake

conservation

No

. o

f R

esp

on

den

ts (

%)

Types of compensation do you want to provide or gain

upstream downstream

21

R Sex (Dummy, Female-1) 0.190 0.198

R Main Source of income

Agriculture* -0.400 0.038

Business * 0.320 0.043

Daily Wedge -0.500 0.127

Government Service -0.257 0.272

Others -0.257 0.173

Explanatory Variables

Constant 0.725 0.021

R Education (year)* 0.049 0.000

R Age (year) 0.001 0.896

Distance from Lake (minutes)* -0.018 0.047

Family member (number) -0.014 0.570

Land holding -0.021 0.152

*means significant at 5% level

Above table gives the result of a multiple regression tested to find out the effect of the above given

variables on WTP for the sustainable management, restoration and conservation of lake. It depicts

that among the dummy variables, agriculture as a main source of income the respondents is

significant with the negative regression coefficient and similarly business as a main source of

income of the respondents are significant with the positive regression coefficient. It illustrates that

farmer are less WTP whereas business holders are more WTP as compare to other occupation.

It shows that out of all above assessed explanatory variables, educations of the respondent and

distance from the lake in minutes are significant with positive and negative regression coefficient

respectively. It means that higher education of the respondent increases the WTP for the

environmental services. But increasing distance from the lake decrease the WTP for the

environmental services.

22

4.1.6 Problems and conservational effort under PES

The PES mechanism has two objectives, one is to address the local people livelihood and other is to

conserve and manage the environment. But the main objective of the PES mechanism is to conserve

and manage the environment. Based on the perception of the respondent impacts on the Begnas Lake

due to human activities are as tabulated.

Table 5: Descriptive statistics of peoples’ perception on impact on Begnas Lake

Results from table 3 describe that natural disaster considered as major impact followed by

unavailability of water for irrigation, water consumption, boating, fisheries with mean rank 1.69 and

2.18 respectively. Similarly impact on tourism was perceived as a least impact with the mean rank

3.35. To overcome from these impacts on the various programs should be conducted. It also

illustrates that there is significance difference in ranking of five main impacts on BL by the

respondents.

Ranking of impact on Begnas Minimum Maximum Mean

Std.

Deviation

Freidman test

Natural disaster(Risk of flood, landslide

and soil erosion) 1 3 1.69 .767

Disappearance of Begnas by

sedimentation 1 5 2.83 1.069

Chi Square=

66.431

Unavailable of water for irrigation, water

consumption, boating, fisheries 1 4 2.18 .899 d.f =3

P=0.000

Obstacles in tourism industry and loss of

employment 1 5 3.35 1.057

23

Following figure shows that the responses on major type of the programs required for the

conservation and maintenance of health of the lake.

Figure 8 Major programs for implementation to minimize the negative effects

The figure 4 describes about the major programs for implantation that are felt by the respondents to

minimize the negative effects on Begnas . It is clearly show that most of the respondents about 60%

feel that creating awareness to the people is the main task for the sustainable management and

conservation of the Begnas Lake. Similarly adoption of soil conservation measures is the other

alternatives to minimize the negative impact on lake.

4.2 Discussion

By the discussion with the focus group and key informants of the study area it was found that there

are several PES like mechanism such as downstream people helps to conserve the upstream forest by

directly involving to look after the forest by the rotation, create the awareness program not to

deforest the forest and not to kill the wild animals etc. It was also found that at past CARE Nepal

helped the upstream people for afforestation of their barren land and as well as reforestation of their

degraded forest. All these are PES like mechanism, so according to the view of the stakeholders, key

informants and responses of the respondent there should be the institutionalization of the PES

mechanism for the sustainable management of the Begnas Lake.

This study shows that “Forest and Soil conservation” as high ranked environmental services which is

similar to (Adhikari, 2014) and (Pal, 2012).

From the analysis of the respondent’s perception voluntary payment mechanism can be adopted

which is coherent with the case of Rupa Lake as per findings of (Pradhan et al., 2010) but differ with

the case of Kulekhani because it has agreement basis as per finding of (Bhatta et al., 2014).

31

59

4 6

0

10

20

30

40

50

60

70

Adopt soil

conservation

measures

Conduct awareness

programme

Pay the cash to others Others

No

. o

f R

esp

on

den

t (%

)

Programmes to minimize above effect

24

They are also agree that government should play the role of mediator or subsidiary organization with

the good policy which is coherent with the Dhulikhel drinking water supply as per findings of

(Bhatta et al., 2014).

This study also shows that the WLP increases with the high education and decreases when the

distance from the lake increases which is in accordance with the results of (Adhikari, 2014)

25

CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

� Forest and Soil conservation provided by the Begnas Watershed and provisional services

(fishing, water for various purposes) provided by the Begnas Lake are the main

environmental services.

� Voluntary PES mechanism can be adopted by establishing upstream and downstream linkage

facilitated by local government.

� Downstream people are willing to pay upstream people for the ES to reduce the pressure on

the forest by building the capacity of the upstream people.

� Highly educated peoples and peoples living nearer to the lake are more willing to pay.

� Businessmen are more willingness to pay whereas farmers are less willingness to pay than

other occupations.

� Local people are ready to fully facilitate for initiating a local PES scheme and implementing

this mechanism.

� High level committee of related stakeholders is needed to initiate for the coordination and

taking forward these issues.

5.2 Recommendations

The following recommendations have been made based on the study:

� Because this search shows upstream respondents perceive environmental services differently

than downstream respondents, I suggest launching awareness program so that they can value

the environmental services in same manner.

� Based on the results of second objective, I would recommend implementing “Voluntary PES

Mechanism”.

� Since my results show that education and distance from lake area as two most important

factors/variables affecting the WTP by downstream respondents, I recommend to consider

these variables while implementing PES mechanism and sensitize less education and distance

users about the importance of environmental services so that they will be more willing to pay.

26

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Bhatta, L., Helmuth van Oort, B., Rucevska, L., & Baral, H. (2014). Payment for ecosystem

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Chhetri, B. (2005). Community Forestry Program in the Hills of Nepal: Determinants of User

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GN/MFSC. (2003). National Wetland Policy. Kathmandu: Governement of Nepal.

GN/MFSC. (2002). Nepal Biodiversity Strategy. Kathmandu: Government of Nepal.

Hubermann, D. (2009). A gateway to PES: using payments for ecosystem services for livelihoods

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Karna, K.P. (2008). Making Payment for Environmental Services (PES) Work: A case study

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185 .

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watershed, Nepal, A master thesis. The Hague, The Natherlands.

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Kousy, C., Jack, B., & Sims, K. (2008). Designing payments for ecosystem services: lessons from

the previous experience with the incentive-based mechanisms. Proceeding Natural Academic

Science , 105, 9465-947.

Lee, E., & Mahanty, S. (2009). Payments for Environmental Services and Poverty Reduction:Risks

and Opportunities. The center for people and forest.

Mahato, R. (2010). Model Dhulikhel. The Nepali Times [Internet].Kathmandu; [cited 2015 Jan, 9].

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Ojha, H., Kotru, R., Khanal, D., Bhatta, L., & Paudyal, G. (2009). Payment for Environmental

Services (PES) in Nepal: Global Lessons. Local Reflections Discussion Note . Kathmandu,

Nepal.

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Ravnborg, H., Damsgaard, M., & Raben, K. (2007). Payments for Ecosystem Services: Issues and

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29

ANNEXES Annex-1

Date…………..

Demographic:

1) Name of Enumerator: ………………………………………………..

2) Name of the respondent: …………………………… 3) Respondent sex……

4) Age………………….. 5) Ethnicity…..

6) Education……………………

7) No.of the family member:……………………

9) What is the main source of your family?

a) Agriculture b) Government service c) Daily wage d) Business e) Others

10) How much land do you have in ropani?

a) Khet…………… b) Bari………….. d) Kharbari…………….

11) How many minutedoes it takes to reach the lake? (For downstream only)

a) 5 b) 10 c) 20 d) 30

PES Related Question:

1) Do you know about Environmental services?

a) Yes b)No

2) If yes what are the environmental services are you getting from Begnaslake?

…………………………………………………………………………………

…......................................................................................................................

3) If, upstream dwellers do not manage the natural resources, does it impact on Begnas

lake/downstream dwellers?

a) Yes b)No c)Don’t know

30

4) If yes what type of impact may happen? Please rank.

5) What type of program should implement to minimize the above effect?

a) Adopt the soil conservation measures b) Conduct the awareness program

c) Pay the cash or other reward to people for conservation

d) Voluntary conservation expecting its own duty

e) Others……………… (Specify)

6) Do you know about PES?

a) Yes b) No

7) If yes then do you know about the payment given by downstream people to the upstream?

a) Yes b) no c) don’t know

If yes since when you are giving/ receiving payment (year)? ..........

8) If no do you want to provide the compensation for using services?

a) Yes b) No

9) What type of the compensation do you want to provide/ gain?

a) Bank deposit b) indirect payment(eg. Schools, community development, etc.)

c) Capacity building for institutional management d)Begnas lake conservation and

management

10) Is there any existing rules and regulation for mechanism of payment?

a) Yes b) no c)don’t know

Issues Rank

a)Natural disaster(Risk of flood, landslide and soil erosion

b)Disappearance of Begnas lake in future caused by sedimentation

c)Unavailable of water for irrigation, water consumption, boating,

fisheries

d)Obstacles in tourism industry and loss of employment

e)Others

31

11) If yes what are the existing criteria or rules for giving?

a) Percentage b) agreement basis c) voluntarily d) equal sharing

12) Are you satisfied with existing payment mechanism?

a) Not at all satisfied b) slightly satisfied c) moderately satisfied d) very satisfied

e)extremely satisfied

13) If not satisfied what may be the mechanism of payment or what can be the better than existing?

a) Percentage of benefit b) agreement basis c) voluntary d) equal sharing

14)Is this mechanism helps to up lift the people’s livelihood?

a)Yes b) no

15) If yes how does it help?

…………………………………………………………………………………

…………………………………………………………………………………..

17) Please prioritize these environmental services provided byBegnas Lake?

14) Do you have any more to say about above topic/discussion?

………………………………………………………………………..

………………………………………………………………………………

Environmental Services Rank

1. Natural purification of water

2 .Forest and soil conservation

3. Erosion control

4. Habitat for fish and wildlife

5. Recreation and ecotourism

6. Beautiful landscape

32

Annex-2

Photo plates

Conducting Household Survey

Conducting focus group discussion and key informant survey

33

Environmental Services provided by the Begnas Lake