Sustainable Management of Sand, Gravel and Stone in Nepal A. Background In pursuant of addressing emerging issues in Sand, Gravel and Stone (SG&S) sub-sector and recommending policies to address the challenges and making more efficient, effective and sustainable management system, the Ministry of Local Development has administered questionnaire survey in 75 districts in October 2011. In total, 26 districts responded questionnaire until December 2011. In addition, the Ministry through Poverty and Environment Initiative (PEI) Program under Local Governance and Community Development Program (LGCDP) commissioned a study on Current Practices of Revenue Generations from Natural Resources for the Local Bodies of Nepal in five districts of Nepal – Kailali, Rupandehi, Makawanpur, Dhadiing and Saptari in 2011. Likewise, to promote third party monitoring system, the Ministry entrusted Central Department of Environment Science to carry out study on effectiveness of implementation of Initial Environment Examination (IEE) reports in Dhading and Kabhre Districts in Nepal in 2011. Based on analysis of the questionnaire survey and aforementioned two studies, various issues in sustainable extraction of SG&S were identified and policy recommendations have been made accordingly. B. Issues and challenges 1. Resource ownership There is overlap, ambiguity and conflict about who owns the resource and is entitled to collect, extract or award contracts by levying charges. Local Self Governance Act (LSGA 1999) confers exclusive ownership of district based resources including SG&S to the District Development Committees (DDCs). Forest Act 1993 provides the same authority to the Ministry of Forests and Soil Conservation for the same resource lying within forest areas. According to the Forest Act, forest products are defined as “boulders, soil, stones, pebbles, sand” among others. Likewise, Security Forces, Wildlife Reserve, Custom Office and Buffer Zones are also collecting revenues from SG&Ss. In summary, because of having different windows for collecting revenues, conflicts amongst stakeholders have been on raise in this sub sector. While analyzing the questionnaire survey data, it was revealed that 28% DDC are realizing resource use conflicts with District Forest Offices. Even, community forests are charging tax for SG&S. Also, in the absence of clear administrative demarcation between forests and other lands, inter districts revenue collection conflicts have been reported in the boarder of Kapilbastu and Arghakhachi districts. 2. Effectiveness of IEE As per the Environment Protection Regulations (EPR 1997), extraction of SG&S up to 300 m3 per day requires IEE study. Out of the total 21 SG&S revenue generating survey districts, around 38% have carried out IEE thus far. It was revealed that some districts have undergone contractual agreement even without undertaking IEE/EIA study. Other districts are realizing problems with measurement of SG&S and raising questions on the cost effectiveness of the IEE study as such. As per the mandate of the IEE report, the excavation/collection of SG&S from different river systems has affected the entire watershed in Dhading and the cumulative effects have been observed in Trishuli River and Prithvi Highway. Sediment load is increased in the Trishuli River and the highway has been badly damaged, purportedly due to the movement of large trucks carrying SG&S. Given the complexity and integrated land use system, extracting SG&S from different river system only based on IEE study is in question. 3. Revenue sharing Some Terai districts are generating revenue through export tax on SG&S. Even, some of the districts are enjoying benefit of export tax that come out from other districts. For instance, Kailali DDC administers export tax for SG&S that originates from Knachanpur District. Kanchanpur District was of the view that they also should be entitled to receive part of the export tax. According to LSGA, between 35 and 50 percent of DDC revenues derived from SG&S taxes are expected to be shared with “concerned” Village Development Committees (VDCs), Municipalities, DFOs, and where applicable, Buffer Zone Committees. Almost two third of the entire survey districts are sharing revenues ranging from 18% in Pyuthan to 90% in Udayapur District with an average of 42% with local bodies including Municipalities and VDCs. 4. Income and expenditure The local bodies have been able to raise significant tax and other revenues from the SG&S subsector. However, these revenues have not been sufficiently ploughed back into the protection of the revenue sources – the rivers. In total, 48% of the total SG&S collecting survey districts are investing part of their income ranging from 4% in Nuwakot to 81% in Chitwan to environment protection. Though, the proportion figure is small, investment trend on environment protection has been on raise. For instance, 11% of the total income of 22 districts (Rs. 15, 44, 64,073) from this sub-sector in the country was invested in environment protection activities in 2009 while the proportion of income and investment in environment protection increased by 1% and 2% respectively in 2011. Chitwan district has invested mainly to undertake IEE study. Similarly, other districts have invested primarily in stream bank protection, plantation, awareness raising, disaster reduction and climate change. As per the given authority, different organizations have different tax rate for SG&S. For instance, following the LSGA, some districts are collecting upto 50% revenue while as per the Mining Act others are collecting only 10% revenues from SG&S sub-sector. 5. Monitoring and coordination Due to ineffective monitoring, coordination and law enforcement mechanism, state of impunity has been occurred in managing SG&S in some districts. In some study districts, “mafia” operations have controlled illegal exports of SG&S products, capturing contracts, carteling in contracts, not paying DDC tax as per contract (in Kailali), collecting ransom donations from the industries, transporting products without paying taxes, etc. If such a state of impunity continues unabated, it will spread to other districts. Sometimes SG&S are being collected from Churia Foot Hills, one of the youngest and fragile ecosystems in Nepal. Having effective coordination amongst stakeholders, regular monitoring and effective law enforcement in place would help enhancing effective management of SG&S. 6. Priority to local use Resource use priority should be given to local communities. For instances the drifted wood and other SG&S products of Parsa Wildlife Reserve has not been given priority to local development, instead they are supplying the resources to crusher industries. C. Policy recommendations • Prevailing policy conflicts over ownership of the SG&S sub sector should be resolved as soon as possible through adopting one door policy. It is recommended to give whole sole management authority of the SG&S sub-sector to DDC. The upcoming revised LSGA may need to address the issue tactfully. • Need to avail simple, cost effective and user friendly IEE/EIA study guidelines and formats to local bodies including DDC and Municipalities. The revised guidelines and formats need to include simple technology to measure SG&S. Devolution of ToR approval responsibilities to DDC with a provision of constituting a technical review team comprising of Local Development Officer, District Technical Officer, District Forest Officer, District Soil Conservation Officer and District Environment Focal Person would help improve the quality of IEE reports. • In line with the existing Regulations, DDCs should be reminded that the collection and extraction of SG&S resources within their jurisdictions is subject to IEE / EIAs study being conducted. • Considering the cumulative and integrated effects of interconnected river system, it is desirable to prefer EIA to IEE. • DDCs should be encouraged to plough back at least 20 percent of their SG&S revenue earnings from each river where extraction takes place, for river protection works such as embankments, putting concrete slabs to demarcate depths up to where the extraction can take place. • A mechanism should be envisioned for sharing part of export tax with the resource generating districts. • A more stringent Act should be formulated, promulgated and effectively enforced for punishing and sanctioning illegal extraction to end the current state of impunity. The revenue management, including taxation and revenue sharing system needs be made more transparent so that it helps minimizing state of impunity. • Identify environment sensitive areas and prohibit collecting SG&S from such sites and adopt site specific policies, especially resource extraction from foot hills of Chure should be strictly controlled. • Effective monitoring and feedback mechanism should be established and strengthened from central to district level. D. References • A Review of Current Practices of Revenue Generation from Natural Resources for the Local Bodies of Nepal, a report prepared by MLD in 2011 • Central level Environmental Monitoring of Sustainable Collection/extraction of Sand, Gravel and Boulders from rivers of Dhading and Kavre district, Nepal. A Study carried out by Central Department of Environmental Science, TU in 2011