Local Governments in Gandaki Province Demand Control Over Natural Resources Amidst Revenue Shortfalls

Pokhara. The Manaslu Conservation Area Project (MCAP), which has extensively promoted and protected Manaslu, is located in Chumanubri Rural Municipality of Gorkha. Due to being within the conservation area, the municipality was unable to generate any income from natural resources. The municipality decided two years ago to collect an entry fee from foreign tourists visiting their municipality. Chumanubri, which used to earn a meager 1.1 million annually, collected 11.7 million in its first year of implementing the tourist fee, in fiscal year 2081/082. This amount increased to 14.9 million in fiscal year 2082/083. "There was strong opposition to the fee, with arguments that tourism would be devastated and tourists would be diverted. Local representatives were also afraid it would affect their political future," said Chief Administrative Officer Manoj Lamichhane. "After explaining and convincing everyone, we started collecting the fee. It is now being collected smoothly." The municipality collects a fee of 1,000 per person from foreign tourists through a decision made in the village assembly. "The collected amount has been used for disaster relief, trail construction, and sanitation. Toilets have been built in various places," said Chief Administrative Officer Lamichhane. "Tourists have not decreased, nor has anyone protested after the municipality imposed the fee." MCAP, which covers this municipality, has earned 41.25 million from tourists. MCAP charges foreign tourists an entry fee of 3,000 per person. According to MCAP data, 16,671 people visited the area in fiscal year 2082/083. Of these, 634 were from SAARC countries and 15,253 from other countries. Project Chief Santosh Sherchan informed that 784 Nepalis also visited MCAP throughout the year. This number is 41 percent higher than the previous year, 2081/082. The government has collected 162,000 rupees in revenue from herbs in MCAP, while the conservation area management committee has earned 303,000. Sherchan stated that these amounts do not come to MCAP. The government has earned more than 210 million from restricted areas within the Annapurna Conservation Area (ACAP). Narpa Bhumi Rural Municipality in Manang, Lo Manthang, Lho-Ghekar-Damodar Kund Rural Municipalities in Mustang, and parts of Baragung Muktichhetra fall within the restricted areas. Tourists have to pay 500 dollars at the immigration office to visit these places. The federal government has now reduced this fee to 50 dollars per day. According to ACAP data, 4,424 people visited the restricted area in Mustang and 1,338 in Manang. In the year 2081/082, Narpa Bhumi in Manang earned only 2.632 million rupees in internal revenue. Lho-Ghekar in Mustang earned 1.373 million, Lo Manthang earned 1.875 million, and Baragung earned 4.368 million. Calculating for all four municipalities, it amounts to 10.2 million. These municipalities, which have resources worth millions, do not have the means to generate income themselves, and the income they do generate is deposited with the federal government, resulting in insufficient budget for annual policies and programs. They have repeatedly demanded the removal of restricted areas, citing that they are unable to conduct economic activities in the name of restricted areas. "Tourists do not come, and the hotels that are open are empty all year round," said Namdu Gurung, a local representative of Upper Mustang and the provincial minister of forests. "This must be removed immediately. If the world takes pride in calling it Lo Manthang, but our citizens get nothing, why do we need it?" In fiscal year 2082/083 alone, 508,000 tourists visited the ACAP area. Among them, the highest number, 384,000, are from SAARC countries, while 124,000 are from other countries. The data shows that only 1.13 percent of the total tourists visited the restricted area. Minister Gurung argues that if the restricted area is removed, all tourists will go to the upper regions, and locals will be able to earn income. "Millions of tourists have reached Muktinath. If there were no restricted area, those tourists would have reached Lo Manthang as well," he said. "I say with regret, only a few thousand cross Chusang in a year." Machhapuchhre Rural Municipality in Kaski also decided to collect fees from tourists trekking on the trails within its territory. Some amount was collected in fiscal year 2081/082. However, it did not continue due to opposition from entrepreneurs and stakeholders. There was opposition from many sides. The truss building set up for fee collection was demolished. Sixteen municipalities in Gandaki fall within conservation areas. Chumanubri Rural Municipality is in MCAP, while the remaining 15 municipalities are within the Annapurna Conservation Area Project (ACAP). They are disgruntled with the conservation area for not being able to utilize resources. Diva Kumari Tilija Pun, Vice-Chairperson of Annapurna Rural Municipality, Myagdi, complains about not being able to use resources due to ACAP. "ACAP falls in three wards of our municipality. Their rules and regulations are followed more than the government's," she said. "We had called for bids after conducting EIA for riverbed material excavation. ACAP has stopped it. Local levels have not received the right to collect and distribute it." Not only are they unable to earn income, but local representatives are also concerned about obstacles in the work of settlement protection. Mohan Singh Lalchan, Chairman of Mustang's Gharpaajhong Rural Municipality, is tired of talking about the erosion of the Kali Gandaki River. He expresses concern in every forum about the rising water level of the Kali Gandaki River entering the settlements. "Stones, gravel, and sand accumulate in the river every year. The river is changing its course. Now the river is about to flow through the settlement," he said. "Those stones, gravel, and sand will eventually flow down. Let's sell them, use them as mines. The money is flowing away." Local levels, as they are pleading with the province, have also been demanding the transfer of conservation areas to lower levels in every meeting of national development problem-solving committees and coordination councils. Chief Minister Surendra Raj Pandey said, "There is no meeting where the issues of ACAP and MCAP are not raised. We are tired of saying it, but the federal government is not paying attention." He emphasized that the province and local levels should also receive a share of the income from both conservation areas. He also demanded facilitation in development construction work within the conservation areas. "Even when building a road, we have to ask ACAP. Even when providing water to the public, we cannot work without asking ACAP, which is wrong," said Chief Minister Pandey. "We are the government ourselves. Another government is not needed here. It can be transferred to the province." He argued that the revenue collected by ACAP and MCAP going directly to the federal government is against fiscal federalism. Currently, the Gandaki government earns only about 3 billion in internal revenue. Chief Minister Pandey stated that they are continuously working to bring ACAP and MCAP under the province. ACAP Director Dr. Rabin Kadaria also admits that the distribution of resources is justified. "Since the local levels themselves have very low direct revenue collection, it is natural for them to seek a share in tourist fees," he said. "However, while demanding, it is not wise to dismantle the currently established successful conservation model." He suggested that the benefit-sharing should be clarified in the revised regulations of the conservation area. "According to the revised regulations, if ACAP receives 50 percent and the province and local levels receive 25 percent dividend each, it will address the resource needs of the local levels and maintain everyone's ownership in conservation," said Kadaria. *How much is earned annually from the ACAP area?* In the last fiscal year, approximately 674.7 million rupees were collected from tourist entry fees. ACAP paid about 85.5 million rupees annually in value-added tax to the Nepal government from entry fees alone. The annual permit fees of about 210 million rupees collected from special tourist areas like Upper Mustang, Nar, and Phu within the Annapurna region go directly to the federal government's revenue account through the Department of Immigration. The Department of Tourism collects about 35 million rupees annually from mountaineering permits for peaks like Annapurna I, IV, Lamjung, and Himlung. There are currently 23 hydropower projects operating within the ACAP area, and 19 are under construction. The royalties from these projects, with a total capacity of 3031 megawatts, are distributed among the federal, provincial, and local levels according to the established rules of the Nepal government through the Ministry of Energy. There are 57 conservation area management committees under ACAP. These committees collect about 38.6 million rupees annually from the local use of timber, firewood, stones, and gravel within their areas. This amount is decided by the local committees themselves and spent on local welfare and conservation, which is audited by ACAP. Local communities earn about 200 million rupees annually from the collection of herbs in this area. Similarly, farmers earn 25 million rupees annually by selling timber from their private land, from which 11.7 million rupees in VAT is paid to the government. The 15 local levels within this area have been able to collect only 19.4 million rupees annually from natural resources. On average, ACAP has been earning over 1.1 billion annually. Local representatives, stating that municipalities cannot earn income due to conservation areas, have also gathered and demanded the transfer of municipalities. A meeting of the chairpersons, vice-chairpersons, and chief administrative officers of all 16 municipalities was held in Machhapuchhre Rural Municipality, Kaski, demanding the immediate transfer of conservation areas to local levels. A few months after their meeting, the government handed over the responsibility to the National Trust for Nature Conservation for an additional 5 years. This has further angered the local levels. The term for ACAP and MCAP is now until the end of Asar 2085. Most municipalities without conservation areas have increased their income by selling stones, gravel, and sand. They have also utilized other natural resources for income. However, local levels have not made efforts to stand on their own feet. They are in the same situation regarding the scope of resources as they were at the time of their establishment. Most municipalities in Gandaki are still dependent on grants from the federal and provincial governments. Although the budget size of local levels has been increasing year by year, internal revenue has always been limited to the same figures. Analyzing the budgets of all 85 municipalities, the proportion of internal revenue of local levels compared to the total budget is around 5 to 10 percent. According to the Auditor General's report, in fiscal year 2081/081, municipalities in Gandaki earned only 3.52 billion rupees in internal revenue. In the same year, municipalities had prepared a budget of 63.76 billion. In fiscal year 2080/081, internal revenue was seen to be 3.61 billion. The income earned by Pokhara Metropolitan City and the internal income of the remaining 84 municipalities appear to be similar. While Pokhara Metropolitan City alone earned 1.14 billion, the total income of other municipalities is also similar. Among the municipalities with high internal income, Vyas Municipality in Tanahu comes after Pokhara Metropolitan City. Vyas earned 214.6 million in internal revenue. Nine municipalities in Gandaki, excluding Pokhara, earn more than 50 million in internal revenue. Binayi Tribeni Rural Municipality in Nawalpur earned 144.7 million, while Gaindakot Municipality earned 127.6 million, Madhyabindu earned 124.6 million, Kawasoti earned 96.2 million, and Devchuli earned 61.1 million rupees. Shuklagandaki in Tanahu earned 129.4 million and Aabukhairani earned 57.8 million, while Putalibazar in Syangja earned 57.5 million rupees. Ironically, the municipalities in the areas from which the federal government earns the most have the lowest earnings. Lho-Ghekar Damodar Kund in Gandaki has the lowest earnings of only 13.73 million. Lo Manthang earned 18.75 million and Narpa Bhumi earned 26.32 million throughout the year. There are many municipalities with earnings less than 10 million. The main source of income for municipalities with high internal revenue is stones, gravel, and sand. Similar to conservation area projects in the upper regions, there is obstruction from national parks in the lower regions, and the Dhorpatan Hunting Reserve also falls in this province. Laxmi Devi Pandey, Chairperson of the National Federation of Rural Municipalities and Chairperson of Hupsekot Rural Municipality, comments that many municipalities have not been able to increase their income due to the lack of full implementation of the Local Government Operation Act. "The Local Government Operation Act gives local levels the authority to manage riverbed materials, but the provisions of the Forest Act and Environmental Protection Act are hindering it," she said. "When we try to work, various legal obstacles arise. The Forest Act, in some cases, seems to disregard the existence of local government." She argues that local governments are victims of policy problems in development construction. She stated that local governments have been given only the keys to vehicles without technical training. "It's not enough to just give us the keys to the vehicles; we also need training on how to drive and the correct map," said Chairperson Pandey. "Currently, the federal and provincial governments, which are supposed to be in a guardian role, are behaving more like controllers than facilitators." Meanwhile, federalism expert Girdhari Subedi argues that municipalities have not yet recognized their capacity. "Operating regular markets in their areas is the most effective means for municipalities to increase internal revenue. This breaks the monopoly of mafias in agricultural produce. Farmers get fair prices for their produce, and the local economy becomes dynamic," he said. He stated that every municipality should identify its comparative advantage areas. "Municipalities should facilitate the branding of production with local identity and bring it to the market," he said. Experts are unanimous that local governments should be given autonomy in identifying and utilizing resources.