Incentive for Ecosystem Services: Governance and Policy Coherence in Nepal

3.1. Household Characteristics Out of 203 respondents interviewed, 93 were female respondents. Female respondents in Dasarath Chand municipality are much lower than that of Dhankuta municipality, which may be because of the workload of womenand cultural limitations in Dasarath Chand municipality. The average household size in both municipalities is higher than the national average of 4.37. Average land holding is Dhankuta is 6.16 Ropani, whereas 6.06 Ropani in Dasarath Chand municipality (Table 1). 3.2. Governance Indicators and Community Perception We analysed major policies related to ecosystem management and incentive for ecosystem services based on secondary literature and stakeholder’s perception. Together with the policy review, we analysed stakeholders’ perception of seven governance indicators. Respondents of household surveys and key informant interviews were asked to provide their scoring (1 to 5) for each indicator. Respondents were asked to provide their scoring in the range of 0.5 (10%) against each indicator based on their experiences and understanding of governance indicators. Narratives of each indicator ere provided to the respondent before scoring. The mean scores for the household survey were 2.589 and 2.505 in Dhankuta and Dasarath Chand municipalities, respectively. This means that household respondents from Dhankuta municipality perceived slightly better governance of the ecosystem than that of Dasarath Chand municipality. Perceived scoring on ecosystem governance indicators ranges from 1 (very poor) to 4 (good enough) in Dasarath Chand municipality, whereas 1.5 to 4 in Dhankuta municipality. Summary of the overall governance of the ecosystem perceived by the respondents of the household survey is presented in Table 2. Ecosystem governance is crucial for the sustainable supply of ecosystem services and equitable sharing of benefits for the livelihoods of local communities. In particular, rural communities heavily rely on ecosystem services for diversifying their income options and practicing good governance is a high concern of these rural population. We analysed seven key governance indicators based on households’ respondents and key informants scoring against each indicator. Among seven indicators, tenure security is found most satisfactory in both municipalities, which reflects that Nepal’s policy and legal instruments are clear on tenure rights of ecosystem resources, such as forests water. Household respondents perceived that the government administration and service delivery mechanism was unsatisfactory, as this indicator received scores ranging from 1.5 to 2.5. The mode and frequency of scoring against each indicator are provided in Table 3. We further analyse the weighted score of each indicator using the weightage value of frequency against respondent scoring. The weighted score of each indicator is assessed as: Weighted score = Ʃ (score value × frequency of that particular score/sample size). Based on the weightage value of each indicator, we found that the governance of the ecosystem is perceived slightly better in Dasarath Chand municipality than in Dhankuta municipality which could be because of the performance of municipal government authorities and better leadership. However, this needs further investigation. Figure 2 provides an overview of the perceived weighted score against each municipal governance indicator. 3.3. Interagency Coordination There are several agencies involved in ecosystem management, and therefore, are also relevant for implementing IES schemes, such as municipal government, forest authorities, soil and watershed management offices, district-based water supply and irrigation offices and agriculture development. In order to ensure successful implementation and building ownership of policies and programs, an effective interagency coordination mechanism is crucial [18]. Despite the majority of Nepalese policies discussing the need for interagency coordination, the existing coordination mechanism in both municipalities is found to be very weak and debilitated, resulting in conflict on the use of land and water resources. Suhardiman [19] also suggested similar findings with the lack of vertical and horizontal coordination in Nepal. Forests, agriculture, drinking water supply, municipal government and soil and watershed management authorities are key actors in managing the ecosystem and implementation of IES at the municipal level together with communities and civil society organizations such as community forest user groups (CFUGs). Implementation of the IES mechanism to ensure a sustainable supply of water to downstream communities (both quantity and quality), there is a need for strong coordination among these agencies to support upstream ecosystems such as providing alternatives to chemical fertilizer, soil erosion and landslide control, and plantation of water-friendly tree species. However, these agencies are locked with their sectoral annual program and plans, limiting strong coordination to sustain IES schemes. While our research revealed the need for interagency coordination for the sustainable supply of ecosystem services through incentive mechanisms, existing sectoral planning approaches, overlapping jurisdictions and procedural complexities are key barriers to overcoming the issue of inter-agency coordination, which may need substantial reforms in exiting planning, procedure and policies. 3.4. Policies, Legal framework and Coherence Different policies interact at the operational level; therefore, policy coherence is crucial as it supports effective service delivery and reduces the chances of duplication [20]. It is important to understand whether different but related sectoral policies share a common goal to interact at the local level and also contradictions that they do have limited effective service delivery [21]. Nepal’s forest Act discussed the provision of incentives for ecosystem services, and Forest Regulation further described the process and procedure to initiate such incentive mechanisms for ecosystem services. Besides the Forest Act, the Local Government Operation Act empowers municipal governments to initiate innovation on local-level resource financing. With the present constitution [22], the forestry sector is under the jurisdiction of the provincial government. There is limited authority to manage forest resources with local governments, which may limit the role of local government in upstream forest management for a sustainable supply of ecosystem services. With three tiers of governments operational within the federal governance system, policy coherence is crucial to avoiding duplication and inter-government conflicts in ecosystem management. Our study revealed that many barriers and constraints exist to overcome the issue of policy coherence, such as constitutional concurrent rights of all three tiers of government, which may need a constitutional amendment. A constitutional amendment may not be an easy path within the hung parliament scenario. 3.5. Multi-Stakeholders’ Participation and Engagement A number of IES-related policies emphasized multi-stakeholders’ engagement in materializing policies in action, such as Forest Sector Strategy 2015, National Land Policy 2019, Water Resources Policy 2020 and Agriculture Development Strategy 2015. Within the forestry sector strategy, a multi-stakeholder institution is envisioned, namely, the district forest sector coordination committee (DFCC), where forestry sector stakeholders are in a better position to take ownership of processes that improve local people’s ability to insert grassroots issues into wider debates and discussions [23]. However, respondents reacted that there is limited opportunity to participate in the policy-making process both at the municipal and provincial levels. Local communities argued that the policy decisions are mostly top-down and local consultations are conducted as formalities where local issues and suggestions are hardly considered in the policy domain. The Local Government Operation Act (LGOA) 2017 empowers local governments to formulate their natural resources management strategies and local-level policies through a consultative process and community participation. However, participants of the focus group discussions argued that the consultative process is not followed at the highest requirement, which may limit the voice of communities in municipal-level policies. Despite these provisions, there may be several limitations of local government, such as the availability of financial resources and required human and technical resources to reach grassroots communities. We also found that the municipal governments are critically lacking skilled and technical human resources, which may be the reason for limited outreach and consultations. 3.6. Tenure Security Tenure rights and security over natural resources are crucial to initiate IES like mechanisms to ensure a sustainable supply of ecosystem services as tenure security provides full access to service providers over identified ecosystem services [10]. There are a number of policies and legal instruments discussed on tenure rights on natural resources, such as Water Resource Act 1992, an umbrella legislation to manage water resources in Nepal, primarily discussing the ownership of water resources to the state. However, the same parliamentary Act discussed community user rights of water resources, prioritizing drinking water. Similarly, the Forest Act discusses forest carbon rights to the state, and a benefit-sharing mechanism is discussed within the Forest regulation to ensure benefits from forest carbon sales reach the communities conserving forests. Despite tenure clarity in water resources and forest resources, there are still conflicts over the use of these resources and a proper institutional arrangement is needed at the municipal level to manage these conflicts to ensure the IES mechanism can work sustainably. Paudel [24] reported the conflict between the communities in Terai region with failure to address the traditional forest use and prioritization of policies that promote forest protection and restoration. In both cases, at users’ level, local rules, arrangements in operational plans, elite mediations and formal legal procedures are used when conflicts arise [25]. 3.7. Landscape Focus and Planning Incentive for ecosystem services mechanism needs a multi-sectoral approach to ensure upstream-downstream linkages and interconnection between service providers and consumers. Therefore, a landscape approach could be beneficial to implement IES schemes in the municipal area. The ongoing 15th development plan (2020–2024) aims to ensure intersectoral planning with landscape-level focus towards achieving targeted results [26]. However, sectoral development planning, such as agriculture, water resources and forests, follows the sectoral or silo approach failing to adopt landscape-level relationships and interdependence among these sectors [27]. In addition, there are several policy inconsistencies and overlapping provisions among the sectors limiting cross-sectoral focus [5,10,11] where some policies are causing ownership and accountability problems in implementation due to overlapping and conflicting provisions (Table 4). In Dasarath Chand municipality, water is being supplied from the Gwallek area to the city center, where Department of Roads recently constructed the road with limited consideration for the protection of water springs as a reason, local communities claimed that water springs are under threats with road construction without ensuring environmental safeguards. This will, in the long term, reduce the availability of water downstream and also to the district city center. A similar case is also observed upstream of Dhankuta, which increases the chances of landslides and soil erosion, ultimately contaminating water downstream of Dhankuta city. 3.8. Government Administration and Delivery Nepal’s policies and related legislative instruments, such as the Forest Act, provided financial resources through local-level financing mechanisms such as through REDD+, PES and revenue generated from the hydropower sector [28]. Despite the policy provisions, significant institutional capacity gaps, especially at the provincial and local levels, carry out the functions entrusted to them [29]. One of the major assignments that the present legislative instrument assigns to local governments is to develop and implement a land use plan essential for ecosystem management and, thus, also for local-level financing mechanisms such as incentives for ecosystem services (IES). Capacity of Local government to develop land use plans and their implementation is very limited [30,31] and also the fact that adequate attention is not given to developing their capacity [32], as a reason the government delivery mechanism is not found effective at the municipal level to take initiation on IES mechanism to generate local finances for sustainable supply for ecosystem services. Stakeholders mostly argued aboutthe slow delivery of government services and not coordinated efforts to ensure a sustainable supply of ecosystem services in both municipalities. One key issue that largely impactsservice delivery is that there are many unclear or overlapping jurisdictions. For example, forests are under the jurisdiction of the provincial government and any activities within the forest area need approval or consent from the forest department of the provincial government. In contrast, municipal governments are assigned to watershed management [5]. These contradictory jurisdictions assuming the watershed without forests make further complications in the implementation of IES-like mechanisms at the municipal level. 3.9. Sustainable Production and Resilience There are a number of policy and legislative instruments prioritizing sustainable production and resilience of both communities and ecosystems. For example, the Forest sector strategy supported by the Forest Act and Regulation highlights the need for sustainable production of ecosystem services while ensuring ecosystem resilience. Similarly, Nepal’s national adaptation plan (NAP) identified eight key areas, including forests and biodiversity, agriculture, and water resources, where innovations are suggested to reduce vulnerability while increasing the adaptive capacity of communities and ecosystems [33]. Agriculture perspective plan also discussed sustainable production while ensuring resilience through Integrated Pest Management (IPM), integrated soil fertility management, organic farming, and renewable energies. In recent years, water has been central to discussions and strategies to ensure multiple water use. The study primarily focused on water as an ecosystem service in both municipalities. Most respondents argued that water availability has reduced in recent years and, the quality of water is more contaminated than in earlier days. Similarly, household respondents perceived negative changes in forest cover. The perceived change in water availability and forest cover is presented in Table 5. While communities argued that the amount of water has decreased, there is a need for proper management in upstream and water source areas through innovative solutions such as water source protection, plantation of water-friendly vegetation species and controlling soil erosion as well as landslides. In order to provide innovative solutions to ensure water supply, there is a need for strong inter-agency coordination and collective sectoral planning as envisioned in many policy documents, including the National Adaptation Plan.