Nepal is in the midst of a new dam-building period. After decades of uncertainty and civil conflict, the government is pressing ahead with projects that ramp up energy production. The 900-megawatt Upper Karnali Hydropower Project, the country’s largest at present, was at the time of its inception projected to increase power generation dramatically in the country, with 88% destined for export to India and Bangladesh. This was anticipated to be a key source of national revenue.

Currently, however, the mega-project is mired in controversy. The developers have yet to secure a market for hydropower exports, leading to financial difficulties and construction delays. The project has faced protests and resistance from environmental non-governmental organizations and communities living along the Karnali River. Communities fear damage to natural environments and society, particularly where rivers and related ecosystems are disrupted, and large-scale resettlement of people is planned to make way for construction.

Balancing social-justice issues with national energy-production priorities is a global challenge. Nepal’s current situation exemplifies obstacles faced all over the world. How do you ensure that a hydropower project distributes benefits equitably and protects the rights of those most directly affected by construction?

Losing local voices

In the current climate, the needs and demands of local people are being overshadowed by a rising demand for actions that can mitigate climate change and generate clean energy. Countries are actively looking for new opportunities to meet carbon-emissions targets, and consider hydropower an attractive option. This has had the effect of “crowding out” local development voices and, to an extent, access to rights for those most affected, and most vulnerable.

Like other developing countries, Nepal has embraced hydropower as a “clean” energy source and has mainstreamed it within national development goals. Local NGOs and anti-dam activists have argued that this approach to development is not going far enough to involve local communities in the process, as they have only been consulted by the government and construction companies at the end of the process, long after the contract has been agreed and work is under way.

Recent research from the International Water Management Institute, funded by the US Agency for International Development (USAID, helps to unpack the complexities of what is now a highly polarized debate around the merits and drawbacks of hydropower in Nepal. We at IWMI believe it is possible to link national development with broader achievement of social justice as the push for hydropower continues.

Redistributing of bargaining power

Those for and against hydropower describe local communities in starkly contrasting terms. While the former view them as beneficiaries of rural development, the latter cast them as victims of adverse impacts. Both views may be valid. The key issue is how bargaining power is distributed between different groups and how consultation processes are set up. To achieve social justice, the views of all affected communities must be considered equally in the decision process, and a strong process for documenting their inclusion from design through to development must be put in place.

Uniting diverse community views

Communities often express different, or even conflicting, views about a hydropower project. Villagers who manage to negotiate with developers successfully, leading to good land compensation, welcome hydropower development as an opportunity to improve their livelihoods. Meanwhile, other villagers who lack bargaining power and negotiation skills expect only negative impacts, with no benefits.

This can depend on their location. For the Upper Karnali case in particular, upstream villagers want land compensation payments, while downstream villagers are concerned about how the hydropower project would negatively impact their agricultural and fisheries resources. For a socially just outcome, local communities should work together to reconcile their differences and build alliances in order to negotiate with a unified voice that can effectively communicate their diverse needs.

Local governments must play key role

As Nepal is moving to a decentralized government, local governments can play a critical role in shaping the country’s development – its hydropower development in particular. Local government can act as an important advocator for local communities, ensuring their negotiations with hydropower companies are driven by the need to distribute benefits and impacts of hydropower development equitably. The challenge is to ensure that development plans and activities reflect the needs and concerns of society’s poorest and most marginalized groups.

Nepal isn’t alone in navigating these complexities, but it stands at an important crossroads. This is now a test of how federal, state and local interests can be best managed and combined to bring real social development. A focus on getting the process right could help Nepal become a beacon for progressive hydropower development, rather than falling into many of the already well-trodden traps suffered by other countries in South and Southeast Asia.

(This article is made possible by the support of the American people through USAID. The contents are the responsibility of IWMI and do not necessarily reflect the views of USAID or the US government.)