Nep Tacr

Technical Assistance Consultants Report
Project Number: 3821501

October 2006
Nepal: Preparation of National Resettlement Policy

Framework
Prepared by Dilli Ram Dahal

Kathmandu, Nepal
For National Planning Commission
This consultants report does not necessarily reflect the views of ADB or the Government concerned, and
ADB and the Government cannot be held liable for its contents. (For project preparatory technical
assistance: All the views expressed herein may not be incorporated into the proposed projects design.
Acknowledgements
We would like to extend our sincere gratitude to many institutions and organizations that
helped us in many ways while preparing the policy paper on Land Acquisition,
Compensation and Resettlement in Development Projects in Nepal. Particularly, the World
Bank, New Era, Melamchi Water Supply Project, Department of Roads and Department of
Urban Development and Building Construction of the Ministry of Physical Planning and
Works (MoPPW), Ministry of Water Resources, Department of Irrigation), Nepal Electricity
Authority, Rural Access Programme, World Conservation Union (IUCN), Department of
International Development (DFID), Winrock International, Nepal Federation of Indigenous
Nationalities, Nepal Forum for Environment Journalists, Water and Energy Users Federation,
Nepal Water Conservation Foundation deserve special thanks as they responded to our
many queries on involuntary resettlement and provided the necessary materials. In addition,
the Working Group members of TA-4422-NEP and participants of the regional workshops in
Biratnagar and Pokhara and national workshop in Kathmandu provided us constant
feedbacks and suggestions while preparing the policy paper. Special thanks and appreciation
go to Mr. Ram Krishna Tiwari, the former Member Secretary of the National Planning
Commission (NPC); Mr. Radhakrishna Pradhan, the Project Manager, TA 4422-NEP of NPC;
Mr. Nogendra Prasad Sapkota, Social and Environment Officer, Asian Development Bank
(ADB); Dr. Jagadish Chandra Pokhrel, Vice Chairman, NPC, Dr. Chaitanya Subba, Member,
NPC, Dr. Posh Raj Pandey, Member, NPC, Mr. Govinda Prasad Pandey, Member Secretary,
NPC and Mr. Shyam Sundar Sharma, Joint Secretary, NPC Secretariat who provided us
extensive inputs while finalizing the policy paper and the final report.
Mr. Bidhan Acharya and Mr Laxmi Subedi deserve many thanks as they played the role of
facilitator in the national and regional workshops. The support of Ms. Rajani Tuladhar of ADB
and Mr. Devi Dotel of TA-4422-NEP is greatly appreciated.
Finally, I would like to extend my deep gratitude and appreciation to my colleagues Mr.
Birendra Bahadur Deoja, Ms. Sabina Panth and Ms. Hilary Bryne who worked very hard in
preparing the policy paper and the final report of TA-4422-NEP.
Dilli Ram Dahal

Team Leader, TA-4422-NEP
III
+TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS III
CURRENCY EQUIVALENTS VIII
ABBREVIATIONS VIII
WEIGHTS AND MEASURES IX
GLOSSARY X
NOTES XII
EXECUTIVE SUMMARY XIII
PART I: INTRODUCTION 1
CHAPTER 1: BACKGROUND 1
1.1 Rationale for Resettlement Policy Framework for Nepal 1
1.2 Objectives of TA-4422-NEP 2
1.3 Study Approach/Methodology 3
1.4 Organization of the Report 4
PART II: REVIEWS 5

5
CHAPTER 2: EXISTING POLICIES, PRACTICES AND LEGAL INSTRUMENTS 5
2.1 Resettlement Policy Status in Nepal 5
2.2 Legal Instruments Relating to Resettlement in Nepal 8
2.3 Gaps in Existing Policies and Laws 9
2.4 Resettlement Policies in Other Countries 11
2.5 Resettlement Policies of the ADB and World Bank 12
CHAPTER 3: CURRENT RESETTLEMENT PRACTICES IN NEPAL 15

3.1 Resettlement Practices in Nepal 15
3.2 Arun III Access Road 15
3.3 Arun III Hydroelectric Project 15
3.4 Kaligandaki Hydroelectric Project 15
3.5 Jumla-Kalikot Road 16
3.6 Road Network Development Project 17
3.7 Rural Access Improvement Project 17
3.8 Sunsari-Morang Irrigation Project Stage III 17
3.9 Environment Impact Assessment Study of Middle Marsyangdi
Hydroelectric Project 18
CHAPTER 4: STATUS OF VULNERABLE GROUPS IN NEPAL 20

4.1 Background 20
4.2 Review of ADB's Resettlement Policy on Vulnerable Groups 20
4.3 Review of World Bank Resettlement Policy on Vulnerable Groups 21
4.4 Status of Adivasi/Janajati in Nepal 21
4.4.1 Socio-economic Situation of Adivasi/Janajati Groups 21
4.5 Status of Dalits in Nepal 22
4.6 Status of Women in Nepal 23
4.7 Impact on Adivasi/Janajati and Dalits 24
4.7.1 Impact on Women and Their Livelihood 25
PART III: POLICY ANALYSES AND RECOMMENDATIONS 27
CHAPTER 5: LAND ACQUISITION, ENTITLEMENT AND COMPENSATION 27

5. 1 Land Acquisition 27
5.1.1 Land Purchased through Direct Negotiation with PAFs and SPAFs 27
5.1.2 Land Acquisition through Voluntary Contribution 27
5.1.3 Land Development Tax 27
5.1.4 Eminent Domain 28
5.2 Issues of landownership 28
5.2.1 Issues Concerning Marginal Landholders 28
5.2.2 Issues Concerning Voluntary Contribution of Land 29
5.3 Entitlements 30
5.3.1 Unit of Entitlement 30
5.3.2 Types of Entitlements 30
5.4 Compensation 31
5.4.1 Normal Compensation 31
5.4.2 Additional Compensation 34
5.5 Mode of Payment of Compensation 37
5.6 Unit of Entitlement and Mode of compensation to Vulnerable Groups 38
5.7 Compensation Measures: 38
5.7.1 Compensation Measures for Vulnerable Groups 39
5.7.2 Beyond Cash Compensation 41
5.7.3 Other Strategies 41
5.7.4 Training 42
5.8 Policy Measures and Regulations to Reduce Adverse Social Impacts
from Land Acquisition and Resettlement 42
CHAPTER 6: CHARACTERISTICS AND ISSUES IN LINEAR AND URBAN

PROJECTS 48
6.1 Linear Projects 48
6.2 Characteristics of Linear Projects 48
6.2.1 Roads 48
6.2.2 Irrigation Canal 49
6.2.3 Water, Sanitation, Gas and Oil Pipelines 49
6.2.4 Transmission Lines 50
6.2.5 Water Supply Lines, Sewer Lines, and Ropeways 50
6.2.6 Railways 51
6.3 Impact upon Economic Activities 51
6.3.1 Informal Traders and Mobile Vendors 52
6.3.2 Squatters and Encroachers 52
6.4 Issue of Corridor Development Levy 52
6.5 Characteristics of Urban Projects 53
6.6. Public Responsiveness 53
6.7 Marginal Impacts in Urban Linear Projects 54
6.8 Replacement Cost for Urban Land 54
6.9 Resolving Locational Issues in Urban Resettlement 54
6.10 Economic Rehabilitation in Urban Projects 54
CHAPTER 7: PREPARATION OF LAND ACQUISITION AND RESETTELMENT PLAN 56

7.1 Project Cycle 56
7. 2. Social Assessment and Impact 56
7.2.1 Initial Social Assessment 56
7.2 .2 Social Assessment 57
7.2.3 Potential Social Impact Resulting from the Project 57
7.2.4 Project Having Significant Impacts 57
7.2.5 Projects Having Marginal Impacts 57
7.2.6 Projects Having Negligible Impacts 57
7.3 Gender, Adivasi/Janajati and Dalits 58
7.3.1 Special Attention to Vulnerable Population 58
7.4. Resettlement Schemes 58
7.5. Preparation of Resettlement Plan 60
CHAPTER 8: INSTITUTIONAL ARRANGEMENT FOR PLANNING AND
IMPLEMENTATION OF RESETTLEMENT PLAN 62
8.1 Community Participation and Consultation 62
8.1.1 Objectives of Public Information and Consultation 63
8.1.2 Identification of Stakeholders 63
8.1.3. Mechanisms of Participation for Stakeholders 64
8.1.4 Participation of Stakeholders in the Project Cycle 64
8.2. Participation, Consultation and Information Disclosure Mechanism to
Vulnerable Population 64
8.3 Grievance Redress Procedure 65
8.3.1 Grievance Redress for Vulnerable Population 66
8.4 Responsibility for Planning and Implementation of Land Acquisition 66
and Compensation Plan
8.4.1 Planning 66
8.4.2 Approval of Land Acquisition and Compensation Plan 67
8.4.3 Implementation of Land Acquisition and Compensation Plan 67
8.4.4 Implementation of Full Resettlement Plan 67
8.5 Compensation Determination Committee 67
CHAPTER IX MONITORING AND EVALUATION 69

9.1 Project Level Monitoring and Evaluation 69
9.1.1 Monitoring and Evaluation of Vulnerable groups 69
9.2 National Level monitoring and Evaluation 69
BIBLIOGRAPHY 71
LIST OF TABLES
Table 2.1: Chronology of Institutions for Resettlement in Nepal 6
Table 2.2 Resettlement Related Acts and Rules in Nepal 9
Table 3.1: Major Information on Middle Marsyangdi Hydro Electric Project 18
Table 3.2 Number of Displaced Households in Completed Hydropower
Projects in Nepal 18
Table 3.3 Number of Households to be Displaced in some of the Proposed
Hydropower Projects in Nepal 19
Table 4.1 Group Specific Issues at Different Levels 24
Table 5.1 Average Land Holding in Some Districts in Nepal 29
Table 5.2 Entitlement Matrix / Summary of Normal and Additional Compensation 45
Table 7. 1 Project Process and Resettlement Outputs 56
Table 8.1 The Stages in a Project and the Nature of Participation of Stakeholders
in the Process 64
CURRENCY EQUIVALENTS
(As of 21 September 2006)
Currency Unit Nepalese rupees (NRs)

US$1.00 = 74.09NRs
ABBREVIATIONS
ADB Asian Development Bank

ADBD Asian Development Bank Directorate
BOT Build, Own and Transfer
CBO Community Based Organization
CDO Chief District Officer
DDC District Development Committee
DMC Developing Member Country
DoLIDAR Department of Local Infrastructure and Agricultural Roads
DoR Department of Roads
EIA Environmental Impact Assessment
GDP Gross Domestic Product
GNP Gross National Product
GRC Grievance Redress Committee
HDI Human Development Index
HDR Human Development Report
IDA International Development Association
IEE Initial Environmental Examination
INGO International Nongovernmental Organization
KGEMU Kali Gandaki Environment Management Unit
LAA Land Acquisition Act
LACP Land Acquisition and Compensation Plan
MoEST Ministry of Environment, Science and Technology
MoF Ministry of Finance
MoHP Ministry of Health and Population
MOLJPA Ministry of Law, Justice and Parliamentary Affairs
MoLRP Ministry of Land Reform and Management
MoPE Ministry of Population and Environment
MoPPW Ministry of Physical Planning and Works
MoWR Ministry of Water Resources
NEA Nepal Electricity Authority
NGO Nongovernmental Organization
NLSS Nepal Living Standard Survey
NPC National Planning Commission
PAF Project Affected Family
PPP Public Private Partnership
PWD Public Works Directives
RAP Rural Access Program
RMDP Road Maintenance and Development Project
RNDP Road Network development Project
SPAF Seriously Project Affected Family
TA Technical Assistance
VDC Village Development Committee
WECS Water and Energy Commission Secretariat
VIII
WEIGHTS AND MEASURES
Ropani unit of land measurement

1 ropani 5,476 sq.ft
1 hectare 19.657 ropani
1 ana 342.25 sq.ft
Meter (m) unit of length measurement
Kilometer (km) 1,000 m
IX
GLOSSARY
Adivasi/Janajati The National Academy for Upliftment of Adivasi/Janajati Act

2002 defines Advisa/Janjati group as having its own mother
language, traditional customs, distinct cultural identity, distinct
social structure and written or unwritten history.
Affected zone Government declared area under a project, for which land is
being acquired under the Land Acquisition Act (LAA) 1977 or
any other act in force. It could also mean an area that is
submerged resulting from impounding of water in the reservoir
of the project, or an area severely affected as a result of
project activities.
Census Account of the socio-economic data of 100% of project

affected people.
Corridor of development A corridor of up to 250 meter (m) both sides of center line of
an infrastructure, where a development levy in the form of
20% of the total land owned by each land holder within the
corridor is applied. The land within the corridor is surveyed,
replotted, replaced and retitled, so that the entire land within
the right of way is owned by the acquiring body free of cost
provided the majority of stakeholders are convinced of the
benefit sharing schemes of the project.
Cut off date The date of the census prior to which, the occupation or use of
the project area, qualifies residents or users of the project area
as affected persons.
Compensation Payment in cash or kind to cover for lost assets, resources or

income.
Dalit A socially excluded personusually from the occupational

caste group. The Dalit commission 2002 has listed 28 distinct
groups in this category.
Displaced family A family whose property has been acquired for the project and
has been displaced from their land or property.
Entitlement Range of measures such as compensation, income

restoration, transfer assistance, income substitution and
relocation to restore the economic and social base of the
affected.
Head of the household Person that makes the economic decisions in a family.
Involuntary resettlement When individuals and households are required to forfeit

their land and other assets for development projects,
and rebuild their lives, incomes and asset bases.
Land acquisition and Plan for land acquisition, compensation, resettlement and
compensation plan rehabilitation relating to development project.
X
Local advisory committee Committee of local representatives including vulnerable
groups and associated Nongovernmental Organizations
(NGOs) and Community Based Organizations (CBOs).
Local body Village Municipality or District Development Committee (DDC).

Development Committee
(VDC)
Local consultative forum Committee funded by the project and chaired by the project
manager. It includes the VDC chairman or secretary,
representatives of affected persons, social mobilisers and
NGO supervisors.
Marginal land holding A land holding size of 0.10 ha or less per family in the hills
and 0.25 ha or less per family in the Tarai, in the case of land
of best categoryAbbal, as per the classification in Nepal.
The 0.10 ha and 0.25 ha limit on land shall be increased by
50% for each of the remaining three lower categories. In
urban areas, marginal land holding accounts for 4 anas
(1,369) sq. ft. or less per family in the greater metropolitan
areas and 8 Anas or less per family in the metropolitan areas
Notification Acquisition notification published in newspapers for

acquisition of land as per the prevailing law.
Project affected person People residing, occupying or utilizing land in the affected
zone, before the cut off date. In addition, those residing
outside the affected zone that are affected by loss of land,
structures, income or other assets arising from the
development of the project are also categorized under project
affected persons.
Project affected family A family whose land, house and source of income is affected
(PAF) by acquisition of land for the project. In addition, the family
should be residing continuously for a period not less than
three years preceeding the date of declaration of the affected
zone.
Project proponent Ministry, department or DDC responsible for planning and

implementing the project.
Rehabilitation Assistance provided to project affected persons to restore

their livelihood.
Replacement cost Amount needed to replace an affected asset at replacement

value. The following are some examples of how
replacement value is represented:
(i) Agricultural land, forest products and fishponds are

based on productive value.
(ii) Residential land is based on replacement value.
(iii) Houses and other related structures are based on
current replacement prices of building materials,
labor and transaction costs. Replacement prices
XI
should not include depreciation and deductions for
salvaged building materials.
(iv) Crops, trees and other commodities based on
current market value.
Resettlement plan A plan for undertaking resettlement and rehabilitation of

affected persons
Ropani Unit of land measurement where 1 ropani = 5,476 sq.ft =

508.57 sq.m, 1 ha = 19.657 ropani, 1 bigha = 13 ropani or
20 Katha
Resettlement Declared area acquired or proposed to be acquired by the

Government for resettlement and rehabilitation of project
affected persons.
Requiring body Any institution, company, organization, corporation or

Government for whom land is to be acquired by the
Government in the public's interest.
Seriously Project Affected A family affected by a project to the extent that (i) there is a
Family (SPAF) loss of agriculture and residential land such that the remaining
land is less than marginal land holding size, and (ii) there is a
permanent loss of more than 50% of income of the surviving
family. The income measured is considered from sources other
than agricultural production.
Squatters People living on land not owned by themselves and without

any legal title or tenancy agreement. The land may belong
to the Government or to individuals. To qualify for
compensation, the squatters would have to be using the
land for at least three years prior to the cut off date.
Vulnerability Criteria It is based on the severity of loss or damage resulting from

development projects. These groups are defined on the
basis of gender, economic class, social and political
exclusion and lack of access to land and other assets.
Women headed household Households where women make the economic decisions.
These women could also include housewives and
divorcees.
NOTES
In this report, $ refers to US Dollars and NRs refers to Nepalese Rupees.
The Fiscal year (FY) of the Government ends on 15 July. FY of before a calendar year
denotes the year in which the fiscal year ends, EG FY2002 ends on 15 July 2002.
Six Volumes of Annex for this Report will be made available separately, at a later date.
XII
EXECUTIVE SUMMARY
Land acquisition, compensation and resettlement are crucial issues concerning

development projects, which require appropriate resettlement policy and implementation
mechanisms. The major objective behind addressing resettlement issues is recognizing
human beings as primary stakeholders and ultimate beneficiaries of development projects.
In Nepal, although the Land Acquisition Act (LAA) 1977 is the major legal document
for handling acquisition and compensation, it has no provision for granting compensation to
project affected people who do not have ownership of land. Furthermore, LAA 1977 does not
have provisions to (i) address the difficulties caused by delays in compensation to Project
Affected Families (PAF), (ii) ensure that vulnerable groups, ethnic minorities and other
people affected by the project are capable of making proper use of compensation money to
resettle to a living standard not less than that existed prior to the project, and (iii) provide
practical provisions of land for land option despite it being mentioned in the LAA 1977.
Thus, the LAA 1977 is inadequate to effectively deal with the problem of involuntary
resettlement. Besides the LAA 1977, there are other related Acts. However, they do not
address issues of resettlement of people affected by development projects.
In Nepal, most development projects are donor funded. A lack of adequate

resettlement policies and the necessity for a comprehensive national policy for resettlement
has caused donor run projects to formulate and implement their own project specific
resettlement policies. The following are some examples of adoption of donor's resettlement
policies:
(i) The Arun Access Road Guidelines issued in 1989 by the Government of
Nepal provided cash compensation package to PAFs for assets acquired or
damaged and a rehabilitation grant based on family size to cover for suffering
and hardship. The Guideline was developed following World Bank
requirements.
(ii) The Guidelines for Arun III Hydroelectric Project was also based on World
Bank Guidelines and was an improvement to the Arun Access Road
Guideline from 1989. There were provisions for (a) compensation to owners
of affected land even if land is not acquired but the committee feels that it is
affected, and (b) land for land compensationinstead of cash
compensationwherever possible to the Seriously Project Affected Family
(SPAF) in order of priority. This guideline proved valuable for development of
resettlement policy for Melamchi Water Supply Project and for other projects.
(iii) A Resettlement Action Plan based on World Bank guidelines was prepared
for the 36 km section of the Jumla-Surkhet road to ensure that preproject
living standards of affected persons are restored, or even improved as part of
the compensation package.
(iv) In major projects such as Kali Gandaki A Hydroelectricity Project, Melamchi

Water Supply Project and Road Network Development Project, Asian
Development Bank (ADB) Guidelines on Involuntary Resettlement was
followed.
XIII
LAND ACQUISITION, COMPENSATION AND RESETTLEMENT IN DEVELOPMENT PROJECTS IN NEPAL
Discrepancy between developing project specific involuntary resettlement policies for

donor driven projects and Government projects have resulted in inconsistencies in
resettlement standards and delays in project implementation.
Hence, recognizing an urgent necessity to develop a national policy framework, the
Government of Nepal requested ADB for assistance. ADB approved the TA-4422-NEP to
assist the Government in preparing a resettlement policy. Thus, the TA-4422-NEP has been
under the guidance and supervision of the National Planning Commission (NPC) since
November 2005.
The major objective of the TA-4422-NEP is to formulate a national policy on

involuntary resettlement applicable to both internally and externally funded projects.
A. Study Approach/Methodology
The major approaches adopted while developing the draft policy are (i) formation of
an effective working group; (ii) reviewing relevant documents, laws, policies and practices on
involuntary resettlement; (iii) conducting regional and national workshops on land acquisition
and involuntary resettlement, (iv) extensive consultations with major stakeholdersdonors,
Nongovernmental Organizations (NGOs) and various Government agencies related to
resettlement programs, and (v) a brief visit by key members of the Technical Assistance (TA)
working group to Laos. All these activities were significant and helped in preparing the policy
draft document on involuntary resettlement.
B. Outputs of the TA 4422-NEP
The main output of the TA-4422-NEP is the draft National Policy on Land Acquisition
Compensation and Resettlement. The draft has been developed on the basis of the following
principles and guidelines:
(i) Awareness and recognition of ADB and World Bank guidelines and
international trends on social safeguard and involuntary resettlement
policies and practices.
(ii) Based on Nepal's terrain; vulnerable groups, compensation, laws

related to ownership transfer of land, and shortcomings in the existing
laws.
(iii) Relevant policies of other countries.
(iv) Lessons from project based practices in Nepal.
(v) Affordability, sustainability, and growth of infrastructure development in

Nepal.
(vi) Specific provisions for linear infrastructures such as roads, transmission

lines etc.
(vii) Specific needs of projects involving large-scale displacements such as

in hydropower projects.
(viii) Based on extensive and intensive reviews, comments and feedbacks

from stake holders, working committee members, donor agencies,
policy experts and group works from national workshops.
XIV
PART I: INTRODUCTION
I. BACKGROUND
1.1. Rationale for Resettlement Policy Framework for Nepal
1. Development projects constitute several complex stages and financial, social and
environmental assessment of the project's impact on people is just one stage in the project's
life cycle. Besides making a huge difference to the people of the local area by raising their
standard of living and promoting general welfare, development projects constitute the
quintessential aspects of growth and development of the entire country. In that context, the
role of hydropower projects and the electricity generated can never be overstated. Similarly,
the role of transport infrastructure is paramount in the overall development, growth and unity
of the country. Notwithstanding the benefits and importance of such development works,
they can also be the cause of suffering and hardship for people who are adversely affected
by such projects. Thus, people affected by such development projects need to be
compensated so that they can restore their livelihood and income at least to a level that
existed prior to the project. Some development projects may require the involuntary
resettlement of people from areas where they live and work to other locations.
2. It is imperative to guarantee appropriate compensation packages for people who

have been adversely affected by projects. The idea of development as necessary for
progress will remain incomplete as long as a minority of people lose from such projects.
Therefore, appropriate compensation is necessary to make sure that nobody losses in the
course of these development works.
3. The Constitution of Nepal 1990 guarantees the fundamental rights of a citizen. Article
17(1) establishes the right to property for every citizen of Nepal, whereby every citizen is
entitled to earn, use, sell and exercise their right to property under existing rules and
regulations. Article 17(2) states that except for public purposes, the state will not acquire or
exercise authority over individual property. Article 17(3) states that when the state acquires
or establishes its right over private property, the state will compensate for loss of property
and the basis and procedure for such compensation will be specified under relevant acts.
After the recent political movement of April, 2006 and the likelihood of changes in the
constitution of 1990, it is probable that the above provisions may change.
4. The major legal document for handling compensation and resettlement for an
affected person or family is the Land Acquisition Act (LAA) 1977. However, this act is
insufficient in regards to dealing with problems arising from involuntary resettlement in
Nepal. There are other related acts and legal instruments such as the Land Reform Act
1964, the Land Acquisition Rules 1969, the Town Development Act 1988, the Water
Resources Act 1992, the Electricity Act 1992, the Environment Protection Act 1997, the
Environment Protection Rules 1997 and the Local Governance Act 1998. Nevertheless, they
are also limited in scope to deal with people affected by development projects.
5. Against this backdrop of insufficient and irrelevant resettlement policies, there is an

increasing alternative practice to develop project specific policies for involuntary
resettlement. As a result, Nepal currently has significantly different compensation packages
and policies regarding resettlement between donors financed projects and Government run
projects. Meanwhile, adoption of donors resettlement policies for development projects have
become common practiceespeclially for projects supported by external assistance. Such
approaches have led to inconsistency of resettlement standards, conflicts among the various
interest groups and delays in project implementation.
1 October 2006 TA-4422-NEP

6. In the past, the Government of Nepal made some attempts to develop a national
policy on resettlement. Initially, the Government designated the Water and Energy
Commission Secretariat (WECS) to review existing resettlement policies and practices.
Under Asian Development Bank (ADB) Regional Technical Assistance Programs 5781 and
5935 the New Era submitted two reports to WECS in May 1999 and February 2002. There
were some technical problems within WECS to finalize the document on resettlement and
the Government never adopted these policy measures.
7. So, there is still an urgent need to draft a national level policy paper on involuntary
resettlement compatible to both externally and internally funded projects. The following are
the major reasons for such a need:
(i) Government cannot run packages of involuntary resettlement on a project

specific basis.
(ii) Social impact assessment is an essential stage in the process of developing

an effective resettlement plan.
(iii) A comprehensive policy is necessary to guide the formulation of acts, rules

and guidelines to bridge the gaps in the existing acts and regulations on
involuntary resettlement in development projects.
(iv) Besides protecting the projected affected people, a comprehensive national

policy would also formulate guidelines to protect disadvantaged groups such
as Dalits, Adivasi/Janajati and womenpaying due attention to their needs in
the context of change and development.
(v) A national policy framework would provide the basis to meet the challenges of
sustainable infrastructure development in Nepal along with a people friendly
land acquisition, compensation and resettlement policy and practice.
8. Hence, the Government of Nepal requested ADB for technical assistance (TA) to
prepare a national resettlement policy framework. The TA-4422-NEP was approved by ADB
in 2004. National Planning Commission (NPC) was designated the lead agency for
coordinating the TA's activities including effective representation and mobilization of other
major stakeholdersministries, donors, civil society members and affected persons and
families.
1.2. Objectives of the TA-4422-NEP
9. The major objective of the TA-4422-NEP is the formulation of a national policy on

involuntary resettlement applicable to both internally and externally funded projects. As per
the Terms of Reference (TOR) the specific objectives of the TA-4422-NEP are as follows:
(i) Review existing policy and legal instruments on land acquisition and
resettlement and identify gaps in the documents reviewed.
(ii) Review current resettlement practices and their level of effectiveness in

mitigating impacts on project affected people.
(iii) Identify required policy measures to improve resettlement practices.
TA-4422-NEP BACKGROUND 2
(iv) Develop mechanisms to prepare effective resettlement plans in project

preparation.
(v) Work out appropriate compensation, entitlement and rehabilitation principles.
(vi) Create specific measures for vulnerable groups including Dalits,

Adivasi/Janajati and women.
(vii) Develop systems for effective disclosure of information and consultation with
stakeholders and affected people.
(viii) Build mechanisms of institutional arrangements.
(ix) Create monitoring and evaluation systems.
(x) Develop financial requirements for implementing agencies.
1.3. Study Approach/Methodology
10. The following five major activities or approaches were adopted simultaneously while
preparing this report: (i) formation of an effective working group; (ii) review of relevant
documents, laws, policies and practices on involuntary resettlement; (iii) regional and
national workshops on land acquisition and involuntary resettlement; (iv) extensive
consultations with major stakeholders; and (v) a brief visit by key members of the TA working
group to Laos. All these activities were integrated to prepare a draft policy document on
involuntary resettlement. A brief discussion of these activities is given below.
(i) Formation of an effective working group. A working group was formed

which consisted of senior Government officials from various ministries. The
working group members contributed to two key areas for the successful
drafting of the policy paper on involuntary resettlement: (a) they guided the
overall activities of consultants including effective consultations on
consultative draft documents and participation in regional and national
workshops; and (b) they played an effective role in coordinating various
ministries in terms of sharing ideas on involuntary settlement, including
following through to ensure that the TA outputs were owned or approved by
government.
(ii) Review of relevant documents, laws, policies and practices on

resettlement. The following documents, laws and polices on resettlement
were thoroughly reviewed for assessment of gaps and necessary
amendments in acts and regulations: (a) special reports on resettlement,
including resettlement plans; (b) literature on resettlement policy; and (c)
relevant acts and regulations on land acquisition and environment.
(iii) Regional and national consultative workshops. Two regional consultative

workshops were conducted in Biratnagar and Pokhara in March 2006. The
findings of each regional workshop were put together as one volume. These
workshops focused on the following three areas: (a) issues of land
acquisition, compensation and involuntary resettlement in Nepal; (b)
comparison between donor and Government policy on involuntary
resettlement; and (c) issues concerning women, Adivasi/Janajati and Dalits in
the context of involuntary resettlement. These consultative workshops
gathered the views of various stakeholders and provided a platform to

analyze views of stakeholders on land acquisition, compensation and

involuntary resettlement. In addition, two national workshops took place in
Kathmandu on June 27 and July 17, 2006. The first national workshop
summarized findings from the two regional consultative workshops and
circulated the second draft policy paperthe first draft policy paper was
circulated in advance to experts of various agencies for feedback and
suggestions. It was anticipated that this would help improve the draft policy
paper on involuntary resettlement. The second national workshop included
the third and the fourth draft policy paper on involuntary resettlement, which
was circulated in advance, among participants, for comments and
suggestions.
(iv) Extensive consultations with major stakeholders involved in

resettlement. Extensive consultations were carried out with experts from
relevant institutions in Kathmandu and Lalitpur districts and during the
regional and national workshops on issues relating to development projects
and resettlement. Such interactions among various groups of stakeholders
led to a better understanding in preparing a policy and program on involuntary
resettlement.
(v) Brief visit by key members of the TA working group to Laos. A seven day
visit of the TA working group to Laos took place from June 411, 2006. It was
an opportunity for the working group members to review a real case of
developing a resettlement policy framework and share relevant knowledge
and lessons from it. This visit enhanced the knowledge and confidence of the
members on the subject.
11. Finally, this report will serve as a manual for developing detailed guidelines for
project owners and private and public sector participants. It will also help address social
issues in development projects, specifically in planning and implementing resettlement
plans. In addition, this report also explains in detail the processes and procedures necessary
for data collection, including surveys for involuntary resettlement in Nepal.
1.4. Organization of the Report
12. This report is aimed at a concise documentation of the activities of the TA-4422-NEP
and is divided into nine chapters. Chapter I analyzes the major concerns regarding
involuntary resettlement policy framework in Nepal, its objectives and the methodology of
study. Chapter II reviews existing policies, legal instruments and their gaps with regards to
land acquisition and resettlement in Nepal. This chapter also compares national and
international policies and guidelines on involuntary resettlement. Chapter III details current
resettlement practices and their level of effectiveness in mitigating impacts on project
affected persons and family. It also suggests policy measures to improve resettlement
practices. Chapter IV describes the status of vulnerable groups in Nepal in the context of
resettlement. Chapter V deals with the resettlement activities relating to land acquisition,
entitlements and compensation. Chapter VI describes the characteristics and issues of
linear and urban projects in the context of involuntary resettlement. Chapter VII deals with
social assessments in the stages before construction and discusses major issues in
resettlement planning with institutional arrangements. Chapters VIII describes the process
of public information, participation and grievance redress mechanism, and chapter IX
provides guidelines on monitoring and evaluation with an emphasis on national level
monitoring and evaluation of land acquisition and compensation plan.
TA-4422-NEP BACKGROUND 4
PART II: REVIEWS
II. EXISTING POLICIES, PRACTICES AND LEGAL INSTRUMENTS
2.1. Resettlement Policy Status in Nepal
13. Nepal's history of resettlement policy started with the establishment of Rapti
Development Board in 1956. Supported by US assistance, it was meant to resettle flood
victims of 1955 in Chitwan Valley by bringing forest land under cultivation. In 1963, Nepal
Resettlement Company was established under the Ministry of Food and Agriculture. The
company executed resettlement programs in the Tarai districts of Banke, Nawal Parasi and
Jhapa. After five years of establishing Nepal Resettlement Company, a Resettlement
Department was established within the same Ministry. The department mainly executed
resettlement of displaced people on forest land designated for clearance with ten regional
offices. For some time, both these agencies existed simultaneously and performed
overlapping functions at times.
14. Table 2.1 lists the chronology of institutions since 1956, for resettlement in Nepal.
Most of the institutions listed in this table were not dealing with project induced involuntary
resettlement, rather they were dealing with other forms of resettlement. During the process
of acquiring land and resettling the landless, conflict between the Ministry of Food and
Agriculture and the Ministry of Forest became apparent. The Ministry of Forest was reluctant
to offer forest land as requested by the Ministry of Food and Agriculture. As a result, the
Government in 1977 decided to transfer Nepal Resettlement Company and Resettlement
Department to the Ministry of Forest.
15. The Resettlement Company and Resettlement Department became almost

nonfunctional. They were then transferred to the Ministry of Housing and Physical Planning
(MoHPP). In 1988, the Resettlement Department was dissolved. Instead, 13 commissions
for the landless people were created. Politically appointed parliamentarians, who were
mainly responsible for resettlement of landless people and squatters, headed these
commissions.
16. In 1991, a central coordination committee for solving the problem of squatters was
formed under the chairmanship of Minister of Housing and Physical Planning. It continued its
work in 72 districts with district committees headed by political appointees. However, due to
general election in May 1999, the commission was dissolved in February 1999.
17. The problem of involuntary resettlement caused by project activities has remained
entirely neglected both at the policy level as well as in the regulatory domain. Thus, there is
no central mechanism to oversee and deal with this emerging problem.
18. In brief, Nepal does not have a comprehensive and inclusive national policy
specific to resettlement issues in development projects. On the other hand, resettlement
has been addressed on a project specific basis as per the guidelines of World Bank since
late 1980s and ADB since the beginning of 1995.

Table 2.1: Chronology of Institutions for Resettlement in Nepal

Year Event Type of resettlement Remarks
1956 Establishment of Rapti Disaster relief First modern resettlement program with
Development Board US assistance to resettle flood victims
1963 Establishment of Development In Tarai districts of Banke, Nawal-
Resettlement Company scheme, internal Parasi and Jhapa. Based on Israeli
under Food and Agriculture migration regulation kibbutz model
Ministry
1968 Establishment of Project induced Resettlement on designated forest land
Resettlement Department internal migration with ten regional offices in the Tarai
under Food and Agriculture regulation
Ministry
1977 Transfer of Resettlement Project induced There was conflict between Food and
Company and Resettlement internal migration Agriculture Ministry for land and
Department to Ministry of regulation families to be settled, and Forest
Forest Ministry's reluctance to divest
forestland. With the transfer of
resettlement function, Forest Ministry
drastically reduced the target for
resettlement. The result was
emergence of forest encroachment on
a large scale
1986 Creation of 13 commissions Social program The commissions were headed by
for the landless politically appointed parliamentarians
1988 Transfer of Resettlement Project induced Dissolution of Resettlement
Company and Resettlement housing project Department.
Department to Ministry of
Housing & Physical Planning
1991 Formation of Forest To deal with impacts It had representation of seven
Protection Task Force and of social program ministries and ten political appointees
subsequent creation of
Central Coordination
Committee for the landless
1992 Formation of Landless To deal with impacts The commission has 72 committees for
Problem Resolution of social program landless in districts headed by political
Commission in place of appointees
Coordination Committee
1999 Dissolution of the Not applicable Commission was dissolved due to the
commission general election of May 1999
Source: New Era, 2002
19. Following are the project specific policies and guidelines applied in Nepal:
(i) Arun III Access Road, Land Acquisition Guidelines 1989. For this project,
guidelines were issued by the Government pursuant to section 16 and 27 of
LAA1977 and are meant for Arun III Access Road Project activities only.
(ii) Arun III Hydroelectric Project, Land Acquisition Guidelines 1993.
(iii) Melamchi Water Supply Project Resettlement Policy 2001.
20. The Arun III Access Road Guidelines provided compensation package for Project
Affected Families (PAF) including cash for assets acquired or damaged from the project and
a rehabilitation grant to cover for suffering and hardship. Rehabilitation grant was to be
based on family size and other criteria determined by the acquisition and rehabilitation
committee. A 30-day notice for affected families to file complaints was made mandatory. For
Seriously Project Affected Families (SPAFs), compensation was to include employment and
training for at least one member, in addition to the allowances specified for PAF. The
guidelines also directed the projects to assist the purchase of substitute assets for PAF and
SPAFs.
TA-4422-NEP EXISTING POLICIES, PRACTICES AND LEGAL INSTRUMENTS 6

21. In the case of Arun III Hydroelectric Project, Land Acquisition Guidelines 1993 had
provisions for rehabilitation and other matters were to be derived from a Land Acquisition,
Compensation and Rehabilitation Plan prepared for the project. For SPAFs compensation
could be given to the owner of the affected land even if the land is not acquired, but if the
land has been affected by the project. In the context of compensation options, the guideline
specifies that if the possibility of land for land compensation exists, the compensation
determination committeeinstead of cash compensationshall make land available to
SPAFs in order of priority.
22. The Government of Nepal approved the resettlement policy for the Melamchi Water
Supply Project in 2002. The policy includes the following provisions:
(i) Compensation at market value without depreciation.
(ii) Inclusion of affected families in the Compensation Determination Committee.
(iii) Minimizing time between notice of acquisition and compensation award.
(iv) The date of the census survey as cut off date or nontitle holders could qualify
for compensation if they had been living in the area for three years.
(v) Priority to indigenous people, ethnic minorities, women-headed families,

extremely poor, and socially and economically deprived.
(vi) Land for land compensation should be the preferred option and appropriation
of land only after full compensation and resettlement.
(vii) Active involvement of seriously affected families in the resettlement process.
(viii) Displacement allowances as per entitlement matrix.
(ix) Supplementary activities such as health, education, rural electrification and

income generating activities.
(x) Resettlement should be community oriented including shifting of socio-cultural

institutions for large scale displacement.
(xi) Priority for providing basic services in the resettlement site. Also, the policy
includes provision for public land for nonregistered tenants and landless
squatters living in the site for the last three years.
(xii) Training and employment of at least one member of SPAFs including

necessary provisions in the construction contract.
(xiii) Permitting PAFs to use their property until full compensation is paid.
(xiv) Advance compensation payment and displacement allowances for SPAFs.
(xv) Resettlement Plan to include detailed activities, estimates, and compensation

amounts and responsibilities of agencies related to the project.
(xvi) Project to pay registration fees and other Government fees for the purchase
of land, out of the compensation amount, anywhere in the country within one
year.

(xvii) Avoid damage to standing crop, pay full compensation in the case where it is
unavoidable.
(xviii) Local consultative groups to be formed to advice on investment of

compensation amount in the productive sector.
(xix) To integrate displaced families with host families, resettlement provision

includes basic facilities for the host families as well.
(xx) Acquire remaining land if it is less than 2.5 anas in Kathmandu valley and 8
anas in Melamchi Valley and provide replacement for land acquired, or pay
cash to equivalent land including replacement facilities and compensation as
per the entitlement matrix for SPAF.1
(xxi) Resettlement plan should include complaint hearing provision for matters
other than specified in the existing laws.
23. Separate policies have not been framed for other projects but resettlement plans
have been prepared based on ADB, World Bank and donor agency guidelines. ADB policies
on involuntary resettlement have been followed in Kaligandaki Hydropower Project, Road
Network Development Project and are to be implemented on the Decentralized Rural
Infrastructure and Livelihood Project. World Bank resettlement operational policies have
been applied in Arun Access Road Project, Jumla-Kalikot Road Project, Rural Access
Improvement Project and Sunsari Morang Irrigation Project Stage III.
24. The project specific policies for involuntary resettlement have resulted in disparities
between Government funded projects and donor-financed projects. These discrepancies
have given rise to clear discrimination in the provision of compensation packages and
resettlement schemes among people affected by these projects.
25. Recently, the National Policy Relating to the Internally Displaced 2006 was
formulated by the Government of Nepal and was brought into effect in March 2006.
However, this policy is also inadequate as it does not have specific provisions relating to
compensation, relocation and rehabilitation of project affected people. Nevertheless, it
has recognized the need to safeguard the rights of displaced people by paying proper
compensation, resettling them through proper planning, and preparing specially targeted
programs for women, senior citizens, children, orphans and disabled persons.
2.2. Legal Instruments Relating to Resettlement in Nepal
26. There are many acts and rules related to land acquisition and compensation in
Nepal. Table 2.2 provides a brief summary of these acts and rules, endorsed in Nepal, over
a period of time.

Table 2.2: Resettlement Related Acts and Rules in Nepal

S. No. Document Year (AD)
1. Constitution of the Kingdom of Nepal 2047 1990
2. Immovable Property Acquisition Act 2013 1956
3. Land Reform Act 2021 1964
4. Land Acquisition Rules 2026 1969
5. Land Acquisition Act 2034 1977
6 Land Revenue Act 2034 1977
7. Town Development Act 2045 1988
8. Water Resources Act 2049 1992
9. Electricity Act 2049 1992
10. Civil Aviation Authority Act 2053 1997
11. Environment Protection Act 2053 1997
12. Environment Protection Rules 2054 1997
13. Local Governance Act 2055 1998
AD = after date, S.No = serial number
Note: LAA 1977 also states that if compensation has to be paid for Guthi landwhich is basically trust owned
landthe amount of compensation to be received by the tenant will be as per the Guthi Sansthan Act 1976.
The year after the related acts and rules are given in the Bikram Sambat (B.S)
calendar year. For example, 2047 is B.S 2047.
Source: New Era, 2002
27. Although many acts relating to resettlement exists in Nepal, the LAA 1977 is the only
legal document dealing with land acquisition and compensation. Yet, it does not address
many relevant and apparent issues, which have adverse socio-economic impacts on families
affected by development projects. The LAA 1977 is anachronous and this would probably
explain its above mentioned ineffectiveness since it was promulgated quite a few decades
ago in 1977. Likewise, the following are some of the areas and issues that the LAA 1977
overlooks: (i) it has no provisions for granting compensation to project affected people
lacking ownership of land; (ii) it does not address hardship caused from delays in payment of
compensation for several years after the completion of the project; (iii) the LAA1977 lacks in
mechanisms to ensure ethnic minorities and vulnerable groupsAdivasis/Janjati, Dalits and
womenuse compensation money in a manner that would enable them to restore their
living standards at least to levels prior to the project; and (iv) it does not analyze the
limitation of land for land compensation.
28. The legality of resettlement plans in donor-assisted projects is based on the approval
of guidelines for the Arun III project. These guidelines have been acknowledged by the
Government under Article 16(ka) of the LAA 1977, which provides for Government directives
as one of the basis for fixing compensation. Another legal basis for adoption of donor
guidelines is the provision of the Financial Administration Rules of the Government of Nepal,
which has provisions to allow any agreement between the Government and donor agencies
to prevail.
2.3. Gaps in Existing Policies and Laws
29. Delays in land acquisition, completion of land transfer and compensation process
adversely affect the quality of life of PAFs and create an outstanding liability to compensate
at the present value. There are instances, especially in cases related to road projects where
the land within the right of way is still registered in the name of the project affected persons
who have been paying land revenue for several years, even after the land has been
appropriated and the project is completed. The management of roads has been extremely
complicated by unresolved acquisitions and title transfer of land in the right of way.
1
16 Anas = 1 ropani = 5,476 sq ft.

30. The Town Development Committee under the Ministry of Physical Planning and
Works (MoPPW) has been carrying out the Guided Land Development program for several
years, but the problem of resettling squatters is not addressed by either the LAA 1977 or the
Town Development Act 1988.
31. Similarly, there are still hundreds of displaced families affected by the Kosi Barrage
Project more than four decades ago that have not been compensated. Cash compensation
in many projects such as Kulekhani has worsened the lives of many families because of their
inability to manage cash and procure replacement land. On the other hand, linear projects
such as roads have witnessed three types of compensation schemes at one locality. The
Surkhet-Jumla highway is one such example which had (i) a 100% Government funded
section where the compensation was cash for land, structures and buildings only; (ii) another
section was financed by World Bank loan, which provided liberal compensation for land,
buildings, vegetation and other assets lost by PAFs due to the project; and (iii) a district road
connecting to the highway entailing voluntary contribution of land.
32 Compensation amounts, resettlement and rehabilitation assistance granted in various

projects have widely differed in fixing compensation rates, and in entitlements agreed by
various compensation determination committees headed by the chief district officer. Such
inconsistencies in compensation schemes in the same locality can give rise to
disappointment and disputes among the project-affected people. Therefore, it is important to
harmonize compensation schemes in a given area.
33. Further discrepancies are recognized while determining the status of a SPAF. While
some projects determine SPAF status on the basis of loss of 25% or more land, others
define it on the basis of loss of 50% or more land and in some cases families left with less
than 11 ropanis of land are also declared SPAF (see footnote 1).
34. Other inconsistencies related to resettlement plans are in regards to valuation of

land:(i) in some cases, valuation of land is liberal, whereas in other cases it is conservative;
(ii) there is a lack of clarity about the cut off date which could lead to fraudulent claims; and
(iii) mismatch in surveyed and actual land title cause delays in acquisition of land and also in
project implementation.
35. Another problem related to policy and implementation arises because resettlement
as such is a broad issue and thus it is difficult to place it under any one specific ministry.
Thus, issues concerning resettlement such as infrastructure development, land registration,
environment and social issues all fall under different ministries making it difficult to
coordinate resettlement activities as a single program. Institutionally, resettlement falls
under the Ministry of Home Affairs. Infrastructure development policies or the preparation of
pubic works directives falls under the responsibility of MoPPW, cadastral survey of land and
replotting and ownership certification falls under the responsibility of the Ministry of Land
Reforms and Management, and environmental issues are covered by the Ministry of
Environment, Science and Technology. Social issues though lightly mentioned in the
Environmental Protection Act do not have a definite ownership. The respective line ministry
owning the project implements the resettlement plans.
36. There is confusion between policy and law in Nepal. National five-year plans
enunciate policies and the line ministries also prepare national policies, which may have
much longer time horizons. In the absence of a legal instrument, many policies have become
redundant because there is no compulsion or penalty involved in connection with
implementation of these policies. In most countries, policy is mentioned in relevant laws and
thus easily associated with rule of law.

2.4. Resettlement Policies in Other Countries
37. Several least developed and developing countries have promulgated laws related to
resettlement. This section will review resettlement policies of some of these countries.
38. In Bangladesh, the National Policy on Involuntary Settlement in line with ADB
guidelines is being prepared under the technical assistance of ADB. In 2003, China drafted
an Involuntary Resettlement Law. Similarly, India brought into effect a National Policy on
Resettlement and Rehabilitation for PAFs in 2003. In 2002, Pakistan drafted a National
Involuntary Policy and Project Implementation and Resettlement of Affected Persons
Ordinance 2001.
39. In June 2003, Sri Lanka prepared recommendations for amendments to the Land
Acquisition Act and a Draft Resettlement Act. Sri Lanka also prepared guidelines for
participatory resettlement, process manual for implementation of national involuntary
settlement policy and general guidelines for planning and implementation of involuntary
resettlement and guidelines for resettlement plan.
40. In 2003, the Socialist Republic of Vietnam issued a Government decree on

Compensation, Assistance and Resettlement when the state recovers land, pursuant to the
Government Organizational Law dated 25 December 2001 and the Land Law dated 26
November 2003.
41. The following are some of the provisions on compensation, assistance and
resettlement extracted from the decree and the subsequent circular of December 2004 of
Ministry of Finance of the Socialist Republic of Vietnam: (i) assistance for stabilization of life,
(ii) provision of employment training, (iii) other forms of assistance for persons subject to
land recovery, and (iv) mechanisms for stabilization of production and life at resettlement
areas.
42. Furthermore, Vietnamese people displaced from their original place of residence will
have to be compensated in one of the following ways: by providing houses, land or money to
manage a new home by themselves.
43. Lao Peoples Democratic Republic has issued Regulations on Compensation and
Resettlement of People Affected by Development Projects pursuant to the Decree on
Compensation and Resettlement of People Affected issued on 7 July 2005 and the Decree
on the Establishment and Functioning of the Science Technology and Environment Agency
dated 21 May 1999. Technical Guidelines on Compensation and Resettlement in
Development Projects was issued in November 2005.
44. In the Lao Decree, projects have been placed into three categories based on the
number of people severely affected and the degree of vulnerability of people residing in
project areas. Thus, projects are categorized in terms of their magnitude of impact on people
namely significant impact, marginal or insignificant impact and no impact. The extent and
depth of resettlement studies, planning and implementation required for each category has
been spelled out. Projects categorized as significant impact will require a full resettlement
plan or a standalone ethnic minority development plan. Projects categorized as marginal
impact or insignificant impact will require a simple resettlement plan or a land acquisition and
compensation report and projects of no impact category will not require further studies and
resettlement planning. Only those actually affected following the final design of the project
would be eligible for resettlement assistance. Conditions for accepting voluntary
contributions have also been stated so that forced voluntary contributions do not have to be

undertaken. Particular attention has been paid in laying down requirements concerning
issues related to gender and ethnic minorities.
45. The Lao Decree requires project owners to ensure that all resettlement planning and
implementation costs are determined during the feasibility stage of project preparation.
These costs are included as an integrated part of the project for purposes of cost-benefit
analyses and for getting approval from the Government. Project owners are fully responsible
for timely provision of funds to meet all costs of planning and implementation of resettlement
and compensation. To facilitate availability of funds, project proponents will make advance
provisions for yearly budget requirements in accordance with the implementation schedule.
In addition, the need to involve local people and local officials in the consultation process
and document their views into project designs has also been stated in the Decree.
46. As mentioned earlier, the Lao Decree pays special attention to issues concerning
ethnic minorities. This is evident in the stand alone Ethnic Minority Development Plan. Thus,
the Decree requires participation of ethnic minorities in decision making throughout the
project cycle. Therefore the following measures are considered necessary: (i) information
dissemination in local languages; (ii) tribal representation by a tribal leader, relevant agency or
a social scientist knowledgeable in the ethnic minority groups history and tradition; and (iii) all
meetings to be properly documented and shared with the concerned ethnic minority groups.
47. In China, the resettlement plan is framed keeping in mind the number of jobs and
other income sources that must be created to ensure employment of all displaced workers.
In addition, resettlement program must provide for continued income to displaced workers
such that overall quality of life for relocated families is improved. Although all expropriated
physical assets are compensated directly, a major component of the planning process is
commitment to replace jobs. Such a commitment often results in additional compensation
directed to affected communities, which increases the chances of achieving resettlement
success.
48. Indias policy on involuntary resettlement applies to projects displacing 500 families
or more in plain areas and 250 families or more in hilly areas. The policy has several
provisions on resettlement and rehabilitation benefits for PAFs. Thus, the policy includes
allotment of land, financial assistance packages, employment, training and preferences to
scheduled tribes.
49. The objectives of the draft National Resettlement Policy of Pakistan prepared in 2002
were to (i) avoid or minimize adverse social impacts, (ii) execute mitigation measures and
resettlement activities, (iii) grant opportunities for affected persons to share project benefits,
(iv) offer sufficient assistance and compensation for lost assets to improve or at least restore
their living standards, (v) make available means to earn income or production capacity to
preproject standards, (vi) provide development opportunity to all vulnerable groups, and (vii)
ensure that all those adversely affected by the project should be eligible to share social and
economic benefits, envisaged after completion of the project. The draft policy states that no
civil works will commence in project areas unless affected persons have received full
compensation in accordance with the National Resettlement Policy.
2.5. Resettlement Policies of ADB and World Bank
50. The following documents apply to involuntary resettlement for projects under ADB
funding:
(i) Policy on Involuntary Resettlement 1995.

(ii) Handbook on Involuntary Resettlement 1998.

(iii) Policy on Indigenous Peoples Operational Procedures1998 (OM Section F3).
(iv) Bank Policies and Operational Procedures on Involuntary Resettlement,

Operation Manual Section F2/BP, 29 Oct 2003.
51. The guiding principles of ADBs Policy on Involuntary Resettlement 1995 are to
ensure that (i) affected people are at least as well off as they were without the project; (ii)
absence of legal title to land should not be a bar to compensation; and (iii) people below the
poverty line, female-headed households, other vulnerable groups such as indigenous
people, the elderly and the disabled should receive special attention.
52. The following are ADBs main policy guidelines:
(i) Involuntary resettlement should be avoided or reduced as much as possible

by reviewing alternatives.
(ii) Where involuntary resettlement is unavoidable, affected persons should be

assisted to reestablish themselves and improve their quality of life.
(iii) Gender equality and equity should be ensured and adhered to throughout the
policy and vulnerable groups should be identified and given appropriate
assistance to substantially improve their living standard.
(iv) Resettlement should be planned as a development activity for affected people

and resettlement plans should be prepared in full consultation with affected
people.
(v) All compensation payments and related activities should be completed prior
to commencement of civil works.
(vi) Affected persons missing documented title to land should receive fair and just
treatment.
(vii) The borrower prepares a full resettlement plan if more than 200 people are
affected and a short resettlement plan is required if less than 200 people are
affected
53. The following documents apply to involuntary resettlement for projects under World
Bank funding:
(i) Operational Policies OP 4.12 and Bank Procedure BP 4.12 on Involuntary

resettlement 2001.
(ii) Operational Directives on Indigenous People OD 4.20 1991.
(iii) Operational Policies OP 4.10 and Bank Procedure BP 4.10 on Indigenous

People July 2005.
54. The guiding principles of World Bank's policy on involuntary resettlement are the
following:
(i) Involuntary resettlement should be avoided where feasible, or minimized,

exploring all viable alternative project designs.

(ii) When resettlement is unavoidable, resettlement activities should be

conceived and executed as sustainable development programs, providing
sufficient investment resources to enable persons displaced by project to
share in project benefits.
(iii) Displaced persons should be meaningfully consulted and should be given

opportunities to participate in planning and implementing resettlement
programs.
(iv) Displaced persons should be assisted in their efforts to improve their

livelihoods and standards of living. In the absence of possibilities to improve
their standards of living, it should in the least be restored to levels that existed
prior to the project.
(v) The borrower prepares a resettlement plan if more than 200 families are
affected and an abbreviated resettlement plan is required if less than 200
families are affected.

III. CURRENT RESETTLEMENT PRACTICES IN NEPAL
3.1. Resettlement Practices in Nepal
55. The resettlement and rehabilitation of project affected people are not envisaged in
the LAA 1977. On the other hand, donor guidelineson a project specific basishave been
adopted to address social safeguard measures as per their involuntary resettlement policies.
Donor policies based resettlement practices applied in some projects in Nepal are briefly
described below. While the projects listed below are not exhaustive and focuses primarily on
the donor-driven projects, they do help to provide a general picture of resettlement practices
in Nepal over the last 15 years or so.
3.2. Arun III Access Road
56. International Development Association agreed funding for Arun III Access Road
Project and the agreement was signed in 1989. The Arun III Access Road guidelines issued
in 1989 by the Government of Nepal provided compensation package to PAFs. The package
included cash for assets acquired or damaged due to the project and a rehabilitation grant
based on family size to cover for suffering and hardship. There were additional provisions
such as training and employment for at least one member of SPAFs and assistance for
purchase of substitute asset. Even though land acquisition and payment of normal
compensation for most of the 200 km access road was completed during 198991 under the
Acquisition, Compensation and Rehabilitation Plan, civil works never started and PAFs were
left to use their land as usual. This situation has changed under the Road Network
Development Project. Payment of compensation has been substantially completed and the
project is scheduled to commence in 2006.
3.3. Arun III Hydroelectric Project
57. The guidelines for Arun III Hydroelectric Project based on World Bank guidelines
were an improvement to the Access Road Guidelines of 1989. There were provisions for (i)
compensation to owner of affected land even if land is not acquired but the committee feels
that land is affected; and (ii) land for land compensationinstead of cash compensation
wherever possible to SPAFs,in order of priority. Notwithstanding the improvement in the
above guidelines, they could not serve the project since it was dropped. On the other hand,
the guidelines proved valuable for development of resettlement policy for the Melamchi
Water Supply Project and resettlement plans for other projects in Nepal.
3.4. Kaligandaki Hydroelectric Project
58. ADB guidelines on involuntary resettlement were followed in this project. Kali
Gandaki A Hydroelectricity Project is a run off the river type project with its installed
capacity of 144 MW and generates 842 GWh of renewable energy annually. A case study
carried out in 2001 on involuntary resettlement for this project revealed the following:
(i) The project involved about 94 ha of land acquisition. 123 SPAFs and 494
PAFs were also involved.
(ii) Assistance equivalent to lost land was provided to nontitleholdersfishermen

known as Bote. They were living in the banks of the river and areas occupied
by their temporary huts were to be acquired for various project facilities.

(iii) The tenants of Guthi land were entitled to 33% compensation according to
Guthi Act 1976, but the project management made a special consideration of
this case and provided assistance equivalent to 75% of total compensation.
(iv) In the process of fixing compensation and other rehabilitation measures, an
innovative approach called Community Consensus Valuation was followed,
which involved representatives of PAFs, local Village Development
Committees (VDCs), political parties, Nongovernmental Organizations
(NGOs) and other local people.
(v) Payment of compensation was made on site rather than at district

headquarters where district level agencies are located. Payment was given to
titleholders only upon submission of necessary documents including signature
of three witnesses.
(vi) Categorization of families losing 50% or more of their total land as SPAF was
not fair to many PAFs losing up to 49%of their land.
(vii) Paying cash only and providing employment on an hourly basis for one
member of household whose family comprised of ten or more people was
insufficient compensation.
(viii) Continuous monitoring of activities, compliance of contractual agreements

and maintenance of environmental and social norms are the key to success
of the project and rehabilitation program.
(ix) 20 out of 25 of PAFs surveyed responded that the project had positive
impacts, only 5 out of 25 acknowledged negative impacts from the project.
3.5. Jumla-Kalikot Road
59. A resettlement plan based on World Bank guidelines was prepared for the 36 km
section of the road during the project preparation in June 1999 to ensure that the preproject
living standard of affected persons are restored, or preferably improved, at no cost to those
affected. The resettlement plan entailed the following activities: (i) preparing a list of project
affected people and families before starting the project; (ii) conducting a detailed verification
of assets lying within the corridor of impact before start of construction, (iii) carrying out land
valuation and entitlement framework as per the rules of the Government, (iv) feed back and
recommendations from local consultative forums and NGOs, (v) involvement of local people
at VDC level to support conflict resolution, (vi) prioritizing member of PAFs and SPAFs for
employment in the project, and (vii) providing information and assistance to PAFs to access
other line agency services and poverty alleviation programs.
60. Thus, as per the resettlement plan, compensation was paid for land, trees, crops,
and houses based on basic rates quoted by the District Land Revenue Office, the District
Urban Development and Housing Office, and the District Agriculture Office. Consequently,
displacement allowances were paid to SPAFs at the rate of NRs7, 300 per house when the
houses were dismantled. In other cases, such as public schools, replacement land was
provided. Finally, the project did not have to adopt the optional provision as per the
entitlement framework for resettlement and rehabilitation of SPAFs when clusters of SPAFs
are to be evacuated.
61. Compensation payment during the construction of this road amounted to

NRs91,403,341NRs32.5 million for land, NRs57.0 million for buildings, NRs1.196 million
for trees and NRs0.657 million for crops. As of today, 85% of compensation distribution has
TA-4422-NEP CURRENT RESETTLEMENT PRACTICES IN NEPAL 16

been accomplished and PAFs and SPAFs are satisfied with the road construction
procedures. The compensation payment process has encountered minimal problems owing
to absentee PAFs and volatile security situations. The project has recommended
implementing income generating and skill development programs and providing marketing
facilities by linking with Community Based Organizations (CBOs) and empowering NGOs.
3.6. Road Network Development Project
62. The road projects funded by ADB under Road Network Development Project involves
improvement and maintenance of existing roads. Thus, these projects do not involve serious
problems concerning land acquisition and involuntary resettlement. Nevertheless,
resettlement plans have been prepared in accordance to ADB guidelines.
The following is an evaluation of the implementation of land acquisition and resettlement
under the Road Network Development Project:
(i) The cost of land acquisition, resettlement and rehabilitation in the

resettlement plan prepared at the time of project preparation was based on
market rate but actual compensation during implementation was based on the
rate fixed by the Compensation Determination Committee.
(ii) Land acquisition has been completed and ownership has been transferred in
the name of the project, but the acquisition is limited to carriageway/formation
width only and not to right of way. This could create a big problem in future for
off road maintenance and road improvement due to ribbon development
along the road.
(iii) There are some problems concerning inaccurate land survey resulting in
variation in location as per field and as per the survey maps.
(iv) Compensation assessment becomes very cumbersome where the road
crosses community forests. Existing rule requires 25 trees to be planted to
replace one fallen tree. Permission to cut trees has to be granted by the
Central Office of the Forest Department.
3.7. Rural Access Improvement Project
63. The Rural Access Improvement Project is a World Bank funded project aimed at
improving rural transport infrastructures by (i) rehabilitating and upgrading about 1,200 km of
existing rural roads to all weather standards, (ii) upgrading about 600 km of existing tracks to
dry season standard roads in remote hill districts, (iii) maintenance of about 1,600 km of rural
roads, and (iv) construction of 313 short span trail bridges in 13 districts.
64. Even though most of the roads are existing roads and land acquisition, if necessary,
is expected to be voluntary; a resettlement policy framework has been prepared in
December 2004, before the project appraisal. This will allow World Bank's Operational Policy
4.12 on Involuntary Resettlement and Operational Directive 4.20 on Indigenous Peoples to
be addressed in the policy framework.
3.8. Sunsari-Morang Irrigation Project Stage III
65. The Land Acquisition Plan for Sunsari-Morang Irrigation Project dated July 3, 1997
based on World Bank guidelines involved the following resettlement issues:
(i) Involved 28.2 hectare of land acquisition and 182 families1,516 people.
(ii) PAFs who lost 25% or more of their total land were classified as SPAF, who
were provided 50% additional amount of compensation.
(iii) No house-removal and no land for land replacement was involved.

3.9. Environment Impact Assessment Study of Middle Marsyangdi Hydroelectric

Project
66. Major information on Middle Marsyangdi Hydroelectric Project is briefly summarized

in Table 3.1
Table 3.1: Major Information on Middle Marsyangdi Hydro Electric Project

(in US$)
Particulars Data
Installed capacity 70 MW = 380 GWh per year
Total cost of project US$173 million
Resettlement and rehabilitation costs US$1.77 million
Land acquisition US$1.12 million = 62.9% of total resettlement and
rehabilitation costs.
Breakdown of resettlement and rehabilitation 62.9% land acquisition, 9.63% house acquisition,
costs 2.19% compensation for trees.
Compensation for fallen trees 12.14% infrastructure development at resettlement
site, 2.58% relocation cost of structures.
Relocation costs As per need
Additional cost 10.56% for other rehabilitation

Average land holding 15.8 ropani per family
Total cost of environmental management US$2.92million
Permanent land acquisition 64 ha
PAF 306 households238 permanent acquisition
House removal 67
Average land holding 15.8 ropanis per family
Squatter 4% of PAF
% = percentage, GWh= gigawatt per hour, ha= hactare, MW=megawatt, PAF=Project Affected Family, 1 ropani = 5,476sq ft.
Source: NEA, 2002.
67. Table 3.2 shows the number of households displaced by hydropower projects in
Nepal. Whereas, Table 3.3 is a projection of the number of households that would be
displaced due to some of the proposed hydropower projects (Upadhyaya 2004).
Table 3.2: Number of Displaced Households in Completed Hydropower Projects in

Nepal
Project Completed Capacity, MW Displaced,
No. of Households
Kulekhani 60 500
Kali Gandaki A 144 221
Marsyangdi 69 47
Khimti Khola 60 1018
Under Construction
Middle Marsyangdi 70 75
MW=megawatt, No.= number

Source: Upadhyaya, 2004
TA-4422-NEP CURRENT RESETTLEMENT PRACTICES IN NEPAL 18

Table 3.3: Number of Households to be Displaced in some of the Proposed

Hydropower Projects in Nepal
Project
Capacity, MW Displaced Households
Aandhi khola 180 4,896
Arun III 402 44
Budhi Gandaki 600 2,000
Kali Gandaki II 660 6,102
Kankai, Ilam 60 1,800
Karnali 10,800 10,000
Pancheswor 6,480 2,200
Saptakoshi 3,680 12,500
Upper Arun 335 Project not started
Upper Arun 335 "
Upper Arun 335 "
West Seti 750 1,114
MW=megawatt.
Source: Upadhyaya, 2004
68. Though the number of people displaced by projects in linear infrastructure

development is not alarming, the problem could be aggravated in future in large-scale
projectsparticularly hydropower projects. Table 3.2 shows a range of 10500 households
displaced from completed hydropower projects of 60 to 144 MW.
69. Similarly, Table 3.3 shows the number of households likely to be displaced in future
due to hydropower projects in Nepal. The increasing number of displaced households as
indicated by Table 3.3ranging from 44 to 12,500can be a cause for alarm, especially in
view of the scarcity of land for resettlement zones. Besides, the resettlement and
rehabilitation of an increasing number of displaced households can also become an
economic constraint on the project.
70. Similarly, development of roads and accessibility to transmission lines in rural areas
could run out of funds if land acquisition and compensation packages are not well designed.
Thus, there is a need for legal provisions that recognizes (i) limitations of land for land, (ii)
the cost of land inflated due to overly flexible compensation decisions and fraudulent claims,
(iii) bureaucratic complications in plotting or replotting and ownership transfer of land, and
(iv) problems that may arise in future due to private ownership of land in the right of way.
While there is a need to frame new regulations and amend the existing LAA 1977 to avoid
the above stated problems, there is also a need to resolve outstanding problems carried
over from past projects.

IV. STATUS OF VULNERABLE GROUPS IN NEPAL
4.1. Background
71. In Nepal, there are several factors that could determine a group's vulnerability. Even
though gender, caste and ethnicity have been officially acknowledged as primary factors that
determine a group's backwardness; other factors such as region, economic status and
patronage network play an equally important role. Thus, terminologies such as vulnerable
groups are fluid in nature and can differ in meaning depending on the factors they represent.
Nevertheless, policies and literature on development including the Tenth National Plan
(20022007) have identified three major groups as more vulnerable than others in the
context of Nepalwomen, Dalits and Adivasi/Janajati.
72. National Living Standard Surveys for 1996 and 2003, Human Development Report
2005 and major other statistical sources in Nepal clearly demonstrate that women,
disadvantaged Janjatis and Dalits are not just excluded socially but are also likely to be
economically backward compared to other groups. The degree of vulnerability of these three
groups increases if they are landless, live in remote locations and work as marginalized
farmers or agriculture laborers. Therefore, the above three groups are disadvantaged in
terms of (i) access to livelihood, assets and services; (ii) social inclusion and empowerment;
(iii) legal inclusion and representation in Government; and (iv) economic marginalization.
73. In this chapter, vulnerable groups refer to Adivasi/Janajati, Dalits and women. Even
though other groups of people such as the elderly, disabled and poor could also be
vulnerable in many ways, they are not included in this category. Vulnerable groups are
people historically marginalized and excluded from social, economic and political
development in Nepal. Thus, a larger process of social inclusion is necessary to include
vulnerable groups in the development process. Similarly, the fragility of their condition and
the backwardness of their status warrant planners and project owners to pay special
consideration to vulnerable groups while planning resettlement. Then again, issues identified
within vulnerable groups during resettlement planning could also be applicable to other
groups that may also be vulnerable because of various reasons.
74. Conceptually, social inclusion necessitates reform in institutional structures and state
policies to bring historically exploited, poor and marginalized social groups into the
mainstream of development. Accordingly, gender equality ensures perspectives of women
and men are equally recognized and addressed in all levels of policy and planning.
75. In a multicultural, multiethnic and topographically diverse Nepal, the interests of

vulnerable groups must be included for democracy to sustain and advance. Applying gender
and social equity measures in resettlement policies will help recognize the differential impact
of resettlement on different social groups.
4.2. Review of ADB's Resettlement Policy on Vulnerable Groups
76. ADB Policy Document on Involuntary Resettlement recognizes the poor and
vulnerable population as in need of separate consideration and specifies special attention to
vulnerable groups in planning and implementing resettlement policies and programs.
ADB handbook on involuntary resettlement 1998 defines vulnerable groups as people who
fall below the poverty line, without access to legal title to assets, indigenous groups, ethnic
minorities, herdsmen, women headed households and others that are not protected by
national land compensation legislation. Groups such as isolated communities, disabled
people or those unable to workelderly and childrenor those left behind when the majority
of their communities relocate are also considered vulnerable in resettlement.
TA-4422-NEP STATUS OF VULNERABLE GROUPS IN NEPAL 20

77. ADB has recognized the vulnerability of indigenous people in development

interventions, including resettlement, in both its Operational Manual 2000 and in a separate
indigenous people's policy document I998. ADB policy documents define indigenous people
as "groups with social or cultural identities distinct from the dominant or mainstream society."
Indigenous people in ADB policy include cultural minorities, ethnic minorities, indigenous
cultural communities, tribal people, scheduled tribes, natives and aboriginals. 2
4.3. Review of World Bank Resettlement Policy on Vulnerable Groups
78. World Bank Handbook on Resettlement 2003 refers to World Bank Operational
Policy 4.12 to emphasize special attention to the needs of those below the poverty line,
elders, women, children, ethnic minorities and other displaced persons who may not have
been protected through national land compensation legislation.
79. World Bank Operational Policy 4.12 advises development projects to explore all
viable alternative project designs to avoid physical displacement of indigenous groups.
However, when displacement is unavoidable, indigenous groups should be prioritised for
land-based resettlement, assuring compatibility with their cultural preferences in the process.
4.4. Status of Adivasi/Janajati in Nepal
80. The sections 4.4, 4.4 and 4.6 below briefly discusses the socioeconomic situations of
the Adivasi/Janajati, Dalit and and women so that their problems and issues with reference
to involuntary resesettlemt in Nepal could be properly understood. The complex social
structure of ethnic and caste groups in Nepal makes it very difficult to define and place the
country's indigenous people in the category described in ADB and World Bank policies on
involuntary resettlement. According to the 2001 census, 100 different social groups have
been identified in the country with over 92 languages and a mix of Hindu, Buddhist, Animism
and Muslim religious traditions.
81. The state has recognized indigenous groups in Nepal as ethnic nationalities. The
National Foundation for the Development of Indigenous Nationalities (NFDIN) Act 2002
defines indigenous or ethnic groups as a tribe, community or ethnic group having its own
mother language and traditional rites and customs, distinct cultural identity, distinct social
structure and written or unwritten history (NEFIN 2005).
82. NFDIN Act has identified 59 groups as ethnic/indigenous groups or nationalities in

Nepal. The 2001 Census has provided population data of only 43 indigenous nationalities,
which total 8.4 million and constitute 37.2% of the total population. NFDIN has been
advocating policies and measures for conservation of cultural heritage, protection of the right
to customary possession and use of land and natural resources, rehabilitation of displaced
Adivasi and protection of intellectual property rights and citizenship rights (Subba 2005).
4.4.1. Socio-economic Situation of Adivasi/Janajati Groups
83. The Adivasi/Janajati are a diverse group in Nepal and do not all come under one
socio-economic system. While indigenous groups such as Rajis are engaged in hunting and
collecting food, Chepangs and Kusundas are occupied in slash and burn, shifting cultivation
and depend mainly on natural resources (NEFIN 2005). On the other hand, Newars and
Gurungs are more exposed to modernity and are involved in service, industry and
2
Scheduled Tribe is used in the Indian Constitution to describe indigenous people in the caste system

commerce. Thus, educational attainment and representation in Government and NGOs are
not uniform among the different indigenous groups.
84. While characterising their economic and social features, Nepal Federation of
Indigenous Nationalities (NEFIN) 2004 has classified Adivasi/Janjati groups into five different
categories: (i) endangered, (ii) highly marginalized, (iii) marginalized, (iv) disadvantaged, and
(v) advantaged groups. These categories are based on their population size and other socio-
economic variables such as literacy, housing, land holdings, occupation, language and area
of residence (Acharya 2004).
85. The Janajati Empowerment Project under NEFIN has identified 24 Adivasi/Janajati
groups that fall under highly marginalized and vulnerable groups. This nationally recognized
sub-category of Adivasi/Janajati could be used to assess the degree and scale of
vulnerability of these groups and classify them into low, medium and high impact category in
resettlement programs.
86. Indegenous groups from the Tarai region, specifically the Tharus have been victims
of the Kamaiyabonded laborsystem. In the Ninth and Tenth Plans, the Government
passed a law to free the bonded laborers and launched Kamaiya emancipation and
rehabilitation programs, which include identifying homeless families and providing them with
financial assistance and materials for building their houses. The Tenth plan also has further
programs for Kamaiya rehabilitation.
87. Nepal Janajati Empowerment Project has produced a document on livelihood

analysis and needs assessment of highly disadvantaged indigenous groups of Nepal (NEFIN
2005). VDCs, DDCs and wards have been encouraged to keep data on Janajati groups in
their areas. The Tenth Plan under the Poverty Monitoring and Assessment System has
introduced poverty mapping by combining data from the census and the National Living
Standards Survey. This system identifies disadvantaged ethnic groups by DDC and in some
cases VDC level too. Poverty mapping in the health sector is already underway.
4.5. Status of Dalits in Nepal
88. The literal meaning of Dalit is 'crushed and downtrodden'. The Hindu concept of ritual
purity and pollution has discriminated Dalits in the personal, social, political, economical and
spiritual sphere. Dalits comprise about 11.5%26.5 million according to the 2001 census
of the total population of Nepal. Nevertheless, they lag far behind other social groups in
every human development indicator.
89. Socio-economic discrimination against Dalits include (i) limited access to common
resources such as drinking water, common trails, water facilities in schools, community
forests and cremation areas; (ii) outright denial or limited access to community services such
as loans, training and health care; (iii) occupation and work place related discrimination
based on coersion to continue their traditional occupation, denial of wages and prostitution in
the case of Devaki and Badi people; and (iv) most occupational castes are landless and
work as wage laborers, share croppers and bonded laborers for upper caste landlords. In
this context, ethnic groups such as Tharus are still affected by the bonded labor system.
90. The Tenth Plan outlines strategies for Dalit empowerment which include identifying
oppressed, downtrodden and neglected communities; and abolishing social oppression and
discrimination against them through economic and social development.
91. Patron-client relationships based on land ownership, socio-economic status,

traditional occupation and caste system to a large extent determine individuals access and

opportunities to resources and economic benefits. The occupational castes have been
providing skill based services to their patrons in exchange of payment in kind and rewards.
The following examples of some dalit groups providing skill-based services further illustrate
the above statement: Kamis manufacture agricultural tools, Damais provide tailoring services
and Sarkis provide leather goods and informal services (Rai 2005). Thus, a social system
that implicitly coerces Dalit groups to follow their traditional occupation denies them the
opportunity of socio-economic progress. In that backdrop, such rigid interdependencies
between caste groups based on discrimination increases the vulnerability of occupational
groups during resettlement.
92. The Tenth Plan strategy for Dalit empowerment includes mainstreaming the
knowledge and skills of Dalits in the development process, while acknowledging their
contribution at the national level. Hence, many traditional jobs associated with the oppressed
groups need to be modernized and goods produced by them made competitive for them to
progress in the modern era. Nepal has signed 16 human rights treaties that protect the rights
of socially marginalized groups.
4.6. Status of Women in Nepal
93. The total work load of women in Nepal11 hours a dayis much higher than the
global average and certainly higher than their Nepalese male counterparts7.5 hours a day
(Rai 2005). 70% of Nepalese women are confined to self-employment in the informal sector.
Stereotyped roles, limited access to education and skills, discriminatory wage rates, legal
discrimination and denial of right to property are some factors that negatively affect womens
participation in the formal economy. Discrimination against girls in child rearing practices is
still very much prevalent in Nepal.
94. Only 42.5% women are literate compared to 65% literacy rate among men. Despite
legislative mandates, women hold no more than 8% of national civil service positions and
only 5% of women are at the officer level (UNDP 2004). The problem of domestic violence is
also on the rise. Institutionalized prostitution practices like Deuki and Badi are still prevalent
in far midwestern Nepal. Women from the western hills of Nepal are also vulnerable to
health risks and sexual violence.
95. In Nepal, inheritance patterns are the traditional means to right to ownership of land
and property, which is based on a patriarchal system. Marital status determines females
access to land, other property and decision-making on the use of land. Thus, women own
only 8% of land holdings. Even though women can have land registered under their names,
yet they have no control over itwomen are not able to sell, rent, or transfer ownership
without the consent of their spouse or sons.
96. Women in Nepal in comparison to their male counterparts have a lower level of
education, training in skills, their mobility is restricted in various ways and they lack in
exposure to the outside world. These are factors that cause a limited choice of alternative
forms of livelihood for women. Thus, majority of Nepalese women are confined to traditional
forms of occupationhousehold task, livestock rearing and cultivation to some extentthat
have been stereotypically outlined for them by the patriarchal system.
97. In addition, gender disparities are common in Nepalese households and distribution
of resources is also not equitable. This manifests itself in greater morbidity or violence and
fall in nutritional status. Since women have poorer health status than men, women's status
for nutrition, mortality and morbidity is far behind men's status.

98. Gender norms and practices vary among different cultural groups in Nepal. Dominant
Hindu practices influenced by patriarchal norms and values have discriminated Nepalese
women from all backgrounds. At each level of the caste system and within all ethnic groups,
women are more disadvantaged than men.
99. Janajati women are generally known to have greater freedom and decision-making
authority at the household level than upper caste Hindu women. But in terms of access to
state resources like education and employment, Janajati women lag behind upper caste
women. Janajati women comprise the largest group among victims of girls trafficking in
Nepal. Janajati women have more advantageous property distribution and inheritance rights
within their family, even though they may have lower level of resources to inherit.
100. The literacy and health status of Dalit women is inferior compared to upper caste
women. Socio-economic discriminatory practices against Dalit women include (i) economic,
social and sexual exploitationBadi women are forced into prostitution; (ii) wage
differentials among men and women; (iii) underpaid agriculture laborers and laborers in road
construction work; and (iv) lack of access to state and community resources compared to
upper caste women and women living in urban areas.
101. Notwithstanding the overall inferior status designated to women by the patriarchal
system in Nepal, polygamous households suffer greater social and economic discrimination
compared to other women. Women in the mid and far western regions are more vulnerable
than women from other regions. Similarly, women from the hills are much more mobile
compared to Tarai women.
102. Nepal has signed many international conventions and treaties on women's rights,
including Convention on All Forms of Discrimination against Women (CEDAW); Beijing
Platform for Action; Convention on Economic, Social and Cultural Rights. The Government
has made national commitments and plans based on the principles of some of the above
treaties.
4.7. Impact on Adivasi/Janajati and Dalits
103. Adivasi/Janajati and Dalit issues should be based on the level of impact the project
has at different levels table 4.1 shows that women's issues are more intense at the
household level, Dalit issues are severe at the community level and Janajati issues are
related to the national level.
Table 4.1: Group Specific Issues at Different Levels
Household Community National

Women ***** ***** *****
Dalits ***** *****
Janajati/Adivasi ******
104. Besides direct acquisition of land and other assets, projects could affect
Adivasi/Janajati and Dalit groups in several other ways such as: (i) violate their right to
traditional land and natural resources, (ii) reduce access to public services, (iii) threat to
indigenous knowledge and skills, (iv) endanger cultural heritage sites and traditional
institutions, and (v) threaten traditional forms of livelihood.
105. Right to traditional land and natural resources has been a major demand of
Adivasi/Janajatis in Nepal. The National Human Rights Action Plan for Indigenous
Nationalities signed by the Government includes programs to review existing laws and
formulate new laws related to indigenous peoples rights. Similarly, the Tenth Plan working

policy has stated that providing indigenous women legal protection for traditional
development and rights will develop their capacity. NEFIN's recommendation to the
Government includes (i) legal recognition of right to traditional land and access to natural
resources, (ii) recognition of traditional community forests and community irrigation, and (iii)
prohibition of unauthentic use of land (NEFIN 2005).
106. In addition to the above recommendations, NEFIN has also stated that the right to
citizenship as one of the main priority areas of indigenous groups and Dalits. Citizenship
right as a fundamental right of all Nepalese people is guaranteed in the Constitution of Nepal
1990.
107. Another significant issue related to indigenous people is the protection of cultural
heritage and indigenous knowledge. A committee on national cultural policy and program
has recommended 12 points related to cultural policy of indigenous people in Nepal (NEFIN
2005). The Tenth Plan, NFDIN Act 2002, Local Self Governance Act 1999, National Human
Rights Action Plan 2005, Environmental Act 1997 and Forest Act 1993 have emphasized on
promotion of indigenous people's knowledge and cultural heritage.
108. The Tenth Plan Policy document states steps will be taken to establish model
villages or museums to enable identification of the multi-lingual, multi-cultural aspects of the
country (NPC 2003). Thus, indigenous people and ethnic groups will be made partners in
the process of national development by promoting diverse culture, language, knowledge and
skills inherent in them. A committee on national cultural policy and program has been
established for this purpose and has recommended 12 points related to cultural policy of
indigenous people.
109. Articles 25-26 of the Constitution of 1990 articulate state policies and principles for
the protection of disadvantaged people, including indigenous people. Strategies and working
policies of the Tenth Plan have emphasized participation of indigenous groups in
development planning and policy making through targeted programs. The government has
implemented affirmative action policy and planning in civil services, education, health, skills
training and employment.
110. The Tenth Plan highlights special arrangements to be made for monitoring and
evaluating investment programs launched by NGOs and CBOs to uplift ethnic groups. One
of the indicators of Ministry of Local Development (MoLD) run projects is that 30% of
beneficiaries should comprise of indigenous people and Dalits. The Local Self Government
Act 1999 has provision for mediation, state policies and principles to protect disadvantaged
communities and the Government has committed to building capacity and mainstreaming
indigenous groups in policy and planning of development projects. The Constitution of Nepal
1990 notes that the state will pursue policies that will help promote the interests of
economically and socially deprived groups.
4.7.1. Impact on Women and Their Livelihood
111. In Nepal, women conduct many agricultural activities. Ministry of Health 2002 states
that 90% of women workers are agricultural laborers compared to 64% male agricultural
laborers. Moreover, women increasingly dominate agricultural workforce, as men are moving
into non-agricultural work. According to the Food and Agriculture Organization (FAO) Report
2002, the primary responsibility of women is subsistence food production, while men
concentrate on cash crops. Besides, women are also responsible for collecting wood for fuel
and fodder for livestock. In conclusion, women are more dependant than men on agriculture
land and forest. Thus, land acquisition would have a much more severe impact on women
and it would mean that women would lose a greater amount in terms of access to resources.

Moreover, resettlement would probably not be an adequate compensation if the resettled

area imposes time, physical and other constraints in accessing resources necessary for
household production and livestock rearing.
112. Resettlement planners should be mindful that since women have a central role in the
functioning of a family, any adverse effect on them would also bear direct or indirect adverse
consequences on other members of family. Furthermore, in much of Nepalese rural societies
vulnerability to poverty is primarily determined by the degree of a woman's access to income
and productive assets such as land.
113. Another issue of significance that resettlement planners will need to be aware of is
that displacement could compel women into migration, which would expose them to further
social and economic exploitation. Unlike men, migration usually has an adverse impact on
women because they lack in skills training and exposure necessary for alternative
livelihoods.
114. The Tenth Plan outlines the necessity for social inclusion as one of the four pillars of
the plan. Thus, the Plan recognizes the need to empower women by removing social, legal,
economic and other constraints, which have traditionally hampered their access to and use
of resources. The Tenth Plan also cites implementation of the new inheritance laws on
parental property as one of its goals.

PART III: POLICY ANALYSES AND RECOMMENDATIONS
V. LAND ACQUISITION, ENTITLEMENT AND COMPENSATION
115. Traditionally, the procedure for entitlement and compensation follow only after the
acquisition of land and other assets. However, many projects in Nepal settle into the affected
zone upon notification of acquisition of land, while compensation is paid several years later.
Such practices impoverish the project affected people and cause people to perceive
development projects in a negative manner. Therefore, it is essential that civil works
commence only after compensation for all entitlement is paid and ownership of land is
transferred in the name of the project.
5.1. Land Acquisition
116. Most development projects affect property owners and occupants, their dependants
and community groups through acquisition of private and community assets such as land
and other assets. In Nepal, the LAA 1977 defines procedures for land acquisition for
development purposes and payment of compensation for the acquired land and other
assets. The Land Related Act 1964 has provisions relating to acquisition and compensation
of land in excess of the land holding ceiling prescribed by this Act. However, it does not
pertain to land acquisition, compensation and resettlement relating to development projects.
Land can be acquired for a project from the following means: (i) purchase through direct
negotiation with PAFs and SPAFs, (ii) voluntary contribution of land, (iii) land development
tax and (iv) eminent domain.
5.1.1. Land Purchased through Direct Negotiation with PAFs and SPAFs
117. Article 27 of the LAA 1977 states that Government can acquire land for public works
through direct negotiation with the land owner, in which case it is not necessary to follow
other procedures of this Act. This is a simple method of acquiring land but the process is
involuntary.
5.1.2. Land Acquisition through Voluntary Contribution
118. In many district level projects, land is also acquired voluntarily in the name of a
development project. In Nepal, there are many ongoing VDC, municipality and district level
development projects run from voluntary contribution of land. Although voluntary contribution
entails that a person or family contributes land free of cost, it could also involve a minimal
transfer of payment to economically deprived people such as marginal landholders. Such
acquisition from marginal landholders and specifically marginal farmers would further
impoverish the affected family.
5.1.3. Land Development Tax
119. Public Roads Act 1974 has provisions for the imposition of land development tax for
land within 250 m from the edge of the road. The Town Development Act 1988 has
provisions for town planning and guided land development plans. In other words, it has
provisions for land pooling for urban development. Similarly, for infrastructure development
such as roads, it should be possible to obtain about 20% of land in a corridor of
development about 250 m at both sides of the center line as a development levy from
nonmarginal land holders. Even though LAA 1977 does not clearly provide for such

arrangements, the provisions such as Article 26 of the LAA 1977 permits land acquisition
through mutual consent, and Article 12 of the Town Development Act 1988 has provisions
for guided land development. Nevertheless, it is recommended that clear provisions for
development levy in the corridor of development be made in the amended LAA 1977.
5.1.4. Eminent Domain
120. Eminent domain refers to regulatory measures enforced by Government to obtain

land. Land can be acquired for development of public infrastructures involuntarily that is
through the instruments of law, when it is not possible to acquire land through other means.
Thus, it would entail compulsory acquisition of land from PAFs and SPAFs following the
LAA 1977. Temporary involuntary acquisition of land may be done if required for the project.
Compulsory acquisition of land is done for two purposes: (i) public purposes, and (ii)
organizational purposes. There are several steps and procedures for acquiring land
compulsorily from affected people.
121. The process of acquiring land is initiated by the executing agency such as the
project office. This process involves the following sequential stages: (i) identifying the
location and quantity of land to be acquired for the project, (ii) officer's issuance of public
notice stating that the specific land is being acquired for public purpose, (iii) local authority
notifies the affected person or family, (iv) valuation of land and assets, (v) formation of
compensation determination committee usually chaired by the chief district officer, and (vi)
the committee determines the price of land compensation.
5.2. Issues of Land Ownership

122. There are several issues related to landownership and acquisition of land in the
context of development projects. Some of these issues are briefly discussed below.
5.2.1. Issues Concerning Marginal Landholders

123. Table 5.1 shows the trend of landholding in ropanis per household in Nepal. It may
be observed that about 25% of the population in the hills and the Tarai hold about less than
5 ropanis per household and 10 ropanis per household, respectively. In Kathmandu the
holdings are less than 2 ropanis per household for about 20% of the population.
124. The resettlement plans for the Melamchi Water Supply Project has shown that about
50% of the population of Kavre and Sindhupalchowk districts have less than 9.8 ropanis land
holding per household. About 25% of the households have less than 5 ropanis land holding.
The same study has shown that 62% of the households in Kathmandu have less than 6
ropanis of land per household and 19% of the households have less than 2 ropanis of land
per household.
125. Thus, the scaricity of land makes it impossible to adopt a 100% land for land policy
for all in Nepal. Still, the principle of providing land for land at least to marginal farmers
needs to be followed. It has been assumed that about 25% of PAFs normally fall in the
category of marginal farmers and application of land for land for such PAFs is
recommended.
126. In Nepal, land has been officially classified into four categories: Abbal, Doyam, Sim
and Chahar. These categories are based on the productivity of land. The marginal land
holding, for resettlement purposes needs to be fixed on the basis of minimum food
requirement in rural areas and minimum residential area or assets required in the case of
urban areas. The following land holding size is considered as a marginal land holding by a
family in Nepal. This is based on Table 5.1
TA-4422-NEP LAND ACQUISITION, ENTITLEMENT AND COMPENSATION 28

(i) Rural Areas. Two ropanis per family in the hills and five ropanis per family in
the Tarai in case of the land of best categoryAbbal; for each of the
remaining three lower categories of land, land holding size can be increased
by 50%.
(ii) Urban Areas. Two and a half anas or less per family in greater metropolitan
areas and four anas or less in metropolitan areas.
Table 5.1: Average Land Holding in Some Districts in Nepal
Project District Date of Percent Land holding per

Resettlement Population Household, in
Study Ropani
Melamchi Water Supply Kathmandu 2001 19 < 1.9
62 1.9 6.3
Kavre 2001 56 < 9.8
Sindhupalchowk 2001 49 < 9.8
Kaligandaki Hydropower Syangja, Beni, Gulmi 1996 26 < 4.9
Project 52 < 9.8
Middle Marsyangdi Lamjung 2001 100 15.8
Hydropower Project (average land
holding size)
Arun Access Road Chainpur, Khandbari 1990 100 5.6 (average land
holding size)
Sunsari-Morang Irrigation Sunsari, Morang 1998 26 < 9.8
Project 70 < 22
Note: 1Ropani = 5,476sq.ft
Source: Various documents compiled by B.B. Deoja
5.2.2. Issues Concerning Voluntary Contribution of land
127. Voluntary contribution of land cannot be avoided for the development of

infrastructures but it should also be ensured that no undue pressure is applied to PAFs to
obtain their land. Voluntary contribution should be accepted only if affected persons are not
marginal landholders, and less than 20% of total land owned by them is taken for the project.
The following additional conditions should be fulfilled for voluntary contribution of land:
(i) People affected by the project do not suffer from loss of income, business or
employment, and they are secure in terms of food at least for the following
nine months.
(ii) Affected persons do not belong to any of the identified vulnerable groups.
(iii) Project affected persons should be fully aware of their losses and their
entitlements to compensation, allowance and rehabilitation assistance.
(iv) The direct beneficiaries of the project should be people who are adversely
affected by the project.
(v) Consultation between project authorities and affected people should be

carried out in an open and transparent manner and the decision to voluntarily
contribute affected assets made without any pressure by project authorities or
local community.

5.3. Entitlements
128. Entitlement refers to the right of the projected affected person or family to
compensation for loss of land and other assets to development projects. In some cases a
person or family is considered for entitlement for having the usufructuary right to land or
other assets. Entitlements are based on the following principles: (i) units of Entitlement, and
(ii) types of Entitlement.
5.3.1. Units of Entitlement
129. Units of entitlement for compensation and rehabilitation measures include property
owners such as affected individuals and their households and groups.
a. Individuals
130. This category includes individuals who may suffer from one or a combination of the
following losses: (i) all or part of residential, agricultural, grazing and other private land under
any form of tenure; (ii) individuals who lose all or part of residential or commercial structures;
(iii) all or part of other structures; (iv) income sources and income earning capacity; and (v)
other losses such as reduced water flow for mill owners, irrigation users etc.
131. The tenure status of individuals can be a title-holder, tenant, a nonregistered tenant
or a squatter. This entitlement unit also includes household members of the affected family
suffering any of the above-mentioned losses.
132. For individual losses and special displacement allowances, an individual household
member will be the unit of entitlement. However, for rehabilitation assistance, the unit of
entitlement will be the household/family. For example, in some cases, household
subsistence and survival strategies may be disrupted by loss of land or business enterprises.
In such cases, rehabilitation assistance will be provided to the household and family.
b. Groups
133. The project may also have indirect, less quantifiable or unforeseen effects on groups
of people living within the affected area or in the vicinity of the project. Potential negative
impacts may include (i) reduced access to natural resources, (ii) impacts on water supply
and irrigation systems and (iii) changes in local employment practices. For example, people
living below the intake site may suffer from reduced water flow resulting in lower agricultural
production, fish harvests or reduced operation of water mills. Where these impacts occur,
groups of people under such impacts are entitled for compensation. Similarly, groups or the
community will be the unit of entitlement to reestablish community structures such as
cremation sites, temples, irrigation canals and compensation for loss of community forests.
5.3.2. Types of Entitlements
134. Not all affected persons and families are equally affected, some are partially affected
while some are seriously affected by a project. The type of entitlement depends upon the
extent of impact to project affected persons and families. In other words, not all affected
people and families deserve entitlements. If the partially affected families are entitled for
cash compensation then the seriously affected families are entitled for different type of
compensatory measures such as compensation, allowances, rehabilitation assistance and
other assistance. The key issues in entitlement are as follows: (i) issues related to
nonregistered tenants, and (ii) issues concerning squatters.

135. In Nepal, there are many farmers who have no tenancy rights to land but are
cultivating the land of landowners either on a sharecropping or a rental basis. The project
should assist these nontitleholders to resolve land registration issues and obtain ownership
title where appropriate. This would facilitate assessment and payment of full compensation,
provided the PAF is making his/ her livelihood from the project impact area for more than
three years before the cut off date. If needed, the project should field a land registry task
force team to assist the land revenue officer and undertake necessary land acquisition
actions such as advice those without ownership title on the procedure to acquire the
document. The task force should have full authority to issue land title. The project should
also support the land survey officer to survey and map plots and update field books.
136. One of the dominant features of urban settlement is the increasing number of
squatter settlements. Squatting refers to occupation of land without possession of land
ownership certificate. In the case of renters, squatting refers to the occupation of land,
housing or rooms where the landlord possesses no ownership certificate.
137. According to MoPPW 2006, Kathmandu District alone has 69 squatter settlements
with 2,011 households and 15,095 people. The Commission of Squatters estimated 50,000
squatter populations throughout the country.
138. The LAA 1977 and the Land Act 1964 do not make provision of compensation for
squatters. In Nepal, every year squatter population is increasing because of displaced
population resulting from the recent conflict. According to Infromal Sector Service Centre
(INSEC) Report 2005, as of December 2004 there were 50,356 conflict-induced displaced
people in Nepal.
139. Squatters with no legal rights to land should not have automatic right to productive
land compensation. Similarly, encroachers with less than three years residence should not
have rights to replacement.
5.4. Compensation
140. Compensation refers to payment in cash or kind to project affected people, entitled to
replacement for loss of land, assets, resources or income. Though the LAA 1977 clearly
mentions compensation to PAF for loss of land, house or property, the compensation made
to PAFs in many development projects has been inadequate. The major reasons are (i) lack
of timely payment; (ii) no arrangement for land for land replacement; and (iii) reduced time
gap between notification and acquisition, and delay in payment of compensation.
The entitlements to PAFs may be divided into two categories: normal compensation and
additional compensation.
5.4.1. Normal Compensation
141. The general mechanisms for normal compensation to project affected people should
adopt the following approach:
a. Agricultural Land
(i) In case the entire land is being acquired or affected such that the remaining
land is of no use in production, or the land is acquired that the remaining land
reduces the PAF to a marginal farmer status; then the arrangement for
compensation should be land for land of the same category. Such person and
family should be treated as SPAF and compensation should be given

accordingly. In case suitable land is unavailable, cash compensation at current

market value should be provided. If the remaining land after acquisition is more
than marginal land holding size, cash compensation at full replacement value
for the affected portion should be made available.
(ii) When vulnerable groups are involved, preference should be given to replace
land for land entirely.
(iii) Where part of the land holding is affected and remaining land becomes
economically unviable, PAFs should be given the option of surrendering the
entire holding for compensation at full replacement value, or land for land
option.
(iv) The replacement of agricultural land should be provided to PAF free of any
transfer costs, registration fees or charges.
(v) Formal sharecroppers, including those in Guthi land should receive 50%
value of land and lost crop. This value is based on Land Reform Act 1964 and
Guthi Sansthan Act 1976.
142. Key issues related to the above context are the following:
(i) Land should be registered in the names of both landowner and spouse
wherever possible. The Government's national budget of the fiscal year 2005
2006 has made provision for registration of land under women. Additionally,
providing 20% discount in land tax for such registration.
(ii) The project needs to assist nontitle holders to resolve land registration issues
and obtain ownership title where appropriate to facilitate payment of
compensation.
b. Residential Land
(i) In case the entire land being acquired or affected is not useful for residential
purpose or the remaining land is less than 2 ropanis per family in rural areas
and 2.5 anas per household in urban areas, the arrangement for
compensation should be land for land of equivalent size and category.
(ii) Priority should be given to vulnerable groups to compensate with land in

housing compensation.
(iii) When the remaining land is more than the marginal land holding size and in
addition it is is viable for continued use, then cash compensation at full
replacement value for the affected portion will be provided to affected persons
and families.
(iv) Where only part of the land holding is affected but the remaining land becomes
unviable, affected persons and families should be entitled to surrender the
entire holding and should be compensated for the entire holding at full
replacement value, or should be granted the land for land option.
(v) The replacement land for resettlement in a resettlement zone should be

provided in fixed plot sizes according to prevailing standards and planning
practices. However, if the lost land of the affected persons and families is larger

in size than plot sizes for relocation, cash compensation to cover the difference
in area may be given to affected persons and families.
(vi) The replacement land should be provided to affected persons and families free
of any transfer costs, registration fee or charges at the time of transfer.
c. Residential and Other Structures
(i) The mechanism for compensating loss of residential and other structures
should be cash compensation reflecting full replacement cost of the structures
including cattle shed, walls, toilets etc., without depreciation or deduction for
salvaged building material, unless prebuilt housing is to be provided in a
resettlement zone.
(ii) If the house or structure is only partially affected by the project and the
remaining part is viable for continued use, the affected persons should be
entitled to cash compensation for the affected portion of the structure and the
cost of repairs to restore the remaining structure. However, if the remaining
structure is rendered unviable, affected persons should be entitled to surrender
the entire structure and should receive due compensation for the structure at
full replacement cost without depreciation or deductions for salvaged material.
d. Commercial Structures
143. The mechanism for compensating loss of commercial and other structures should be
cash compensation reflecting full replacement cost of the structures without depreciation or
deduction for salvaged building material unless prebuilt premises are to be provided in a
resettlement zone.
144. Owners of rented buildings should receive compensation equivalent to income lost
from three months rent in addition to compensation for the structure.
145. Where businesses are run and operated by women only, compensation should be
directed to women.
i. Community Structures
(i) Any impacts on community facilities such as irrigation, water supplies,

drainage networks, spiritual or religious land or edifices, schools, meeting
halls, market places, natural resources and forest products should be duly
compensated. This could be through either reconstruction or payment of full
costs for reconstruction to the community by the project. Compensation
should ensure that facilities are restored to a better condition than they were
prior to the project.
(ii) Loss of common resources has a direct impact on women. Thus,

compensations for common resources should be directed to women groups
only.
(iii) Compensation for loss of water resources should be paid to the user group of
such resources at the same rate as for individuals.
f. Compensation for Trees and Crops

(i) Cash compensation will be paid for lost trees and crops. Compensation for
affected trees should be based on annual value of produce and calculated
according to the Department of Agriculture.
(ii) Calculations for lost production from timber and fodder trees should be based
on district norms as decided by the Department of Forestry.
(iii) Compensation for trees lost by community forest groups will be calculated
using the above method of the Department of Forestry and paid to the group.
(iv) Compensation for annual crops shall be based on local market prices for one
year's produce, calculated as per district norms and decided by the
Department of Agriculture.
(v) For standing timber trees, the project shall reestablish a plantation at a new
site where applicable and provide additional compensation to cover the cost
of weeding and other plantation maintenance activities managed by the
community forestry user group or any right of way user group.
(vi) Compensation for trees lost by community forest user groups shall be paid to
the group at the rate paid to individuals.
g. No Compensation
146. Compensation for land should not be applicable in case of land acquisition under
development levy in the corridor of development, or voluntary contribution or other similar
programs clearly stated in the prevailing laws. However, compensation for structures and
other assets and additional assistance and rehabilitation benefits stated in this policy shall
apply in case of such programs. The time frame for replotting and title transfer shall be
agreed upon while preparing the land acquisition and resettlement plan.
5.4.2. Additional Compensation
147. The following compensation, resettlement and rehabilitation assistance may be

provided to project affected persons, in addition to the normal compensation described in the
policy:
(i) Compensation for kitchen garden. SPAFs suffering loss of kitchen
gardenthe source of food for the familyshall be entitled an additional sum
of 5% of the value of residential land, paid directly to the woman of the house.
This value is estimated considering the familys total income which is
supplemented 5% by producing vegetables from the kitchen garden.
(ii) Food support. All SPAFs that need to be relocated to a resettlement site,
more than four kilometers from their original residence, should be entitled to
food support for each person in the household for a period of six months. The
preferred mode of payment of this allowance is in kind20kg/ head/ month in
rice and 3kg in pulses/ person/ month provided to the woman of the
household. Thiis estimation of food grain is based on 2250 calories required
per person per day (WHOs Standard) which is derived from consumption of
0.667 grams of grain per day.
(iii) Compensation for loss of earnings and employment. Each PAF belonging
to the category of agricultural laborer or nonagricultural laborer should be
provided a one time financial assistance equivalent to 550 days (equivalent to
18 months) of the minimum district wage rate. Women should be given
preference in receiving the assistance. This estimation is based on the fact

that an agricultural/non-agricultural labourer spends 3-4 months in a year

doing such work in the project affected area. As this is one -time financial
assistance to the worker, a total of 5 years is considered for such
compensation.
(iv) Direct payment to women for businesses run and operated by women.
Compensation should be given directly to women for businesses operated by
women only.
(v) Household allowance. Households forced to relocate should be entitled to

household allowance to cover for additional expenses incurred in moving the
house.
(vi) Building materials transportation allowance. Households should be entitled

to transportation allowance to move materials from the demolished house or
business structure to the new site.
(vii) Business transfer allowance. Project affected persons who are forced to
relocate their businesses should be entitled to payment for business transfer
allowance to cover additional expenses incurred in moving business materials.
(viii) Rental stipend. Tenants, who have leased a house for residential or other
purposes and are forced to relocate by the project, should be given cash
assistance equivalent to three months rent, in addition to coverage for other
losses such as deposits. The project social mobilisers should assist tenants
identify alternative rental accommodation.
(ix) Compensation for loss of irrigation and other production structures.

When PAFs are deprived of irrigation or other facilities enjoyed before the
project, they should be compensated for loss in value of the land or resettled
through a resettlement plan at a similar area.
(x) Preferential employment. The contractor should be encouraged to employ

affected persons and families in the project. It is recommended that at least
one member of the family is paid above the district minimum wage rate.
Finally, the contractor should identify households that qualify for employment.
Women should be given priority in employment, preferably 33% of total
employment (Based on Nepals government reservation policy).
(xi) Poverty Intervention Measures. The following poverty intervention

measures should be incorporated in all land acquisition and compensation
plans:
a) After construction work of the project is completed, construction
workers from SPAF shall be shorlisted for employment as
maintenance workers.
b) Income earning will be supplemented by provision of savings and

credit schemes, which shall be facilitated by NGOs, CBOs, paid for by
the project.
(xii) Social mobilization income restoration and life skills program. PAFs
should be given necessary training for development of life skills, income
generating schemes, and savings and credit schemes so that PAFs can take

up self-employment projects at the resettlement zone. Women should be

given 33% reservation.
(xiii) Facilitate formation of local consultative forum. Social service workers

should be engaged to assist formation of local consultative forums and to
involve PAFs in the negotiation and payment of compensation entitlements.
(xiv) Relocation entitlement to fragmented communities. Members of

vulnerable groups immediately adjacent to acquired land but whose land has
not been acquired, shall be entitled to land acquisition and relocation with full
allowances, if without such acquisition, the remaining community would have
very few members and would lose their social support network to the
resettlement zone.
(xv) Preference to vulnerable groups for land for land. Affected persons
belonging to a vulnerable group shall be given preference for allotment of
land.
(xvi) Loss of customary rights. One member of each PAF of vulnerable groups
shall get one time additional financial assistance equivalent to 365 days
minimum district wage rate for loss of customary rights to forest produce or
source of livelihood. This one year period is considered so that he /she can
look for new option for livelihood.
(xvii) Preference for prebuilt houses. Prebuilt houses in resettlement zones shall
be prioritized for vulnerable groups.
(xviii) Adivasi/Janajati or Dalits to be resettled close to their natural habitat.

Disadvantaged Adivasi/Janajati or Dalits will be resettled close to their natural
habitat so that they can retain their ethnic, linguistic and cultural identity; and
socio-economic structure and network.
(xix) Direct payment to vulnerable groups for losses affecting them. Losses
affecting women and other vulnerable members of the family will be paid
directly to the affected member in both cash and through other rehabilitation
measures.
(xx) Land for community and religious gathering. Adivasi/Janajati, Dalits and
women headed-household affected by the project should get land free of cost
for community and religious gatherings in the resettlement zone.
(xxi) Fishing rights in the reservoir. Vulnerable groups residing in the project
affected areas having fishing rights shall be given fishing rights for fishing in
the newly constructed reservoir.
(xxii) Alternative business sites for project affected persons loosing

businesses. Project affected persons from vulnerable groups losing
businesses shall be given preference to establish their business at a different
site with good market opportunities. They will also get support in income
generation schemes.
(xxiii) Access to public facilities for vulnerable groups. Relocation sites should
ensure that vulnerable groups have access to public facilities such as water,
school, health services and employment opportunities.

(xxiv) Social awareness training. Social awareness training on gender and equity
issues is required for successful integration of vulnerable groups into the host
community.
(xxv) Provision of basic amenities. PAFs shall be provided with basic amenities
and infrastructural facilities at resettlement sites as per the norms specified by
the Government. Provision of drinking water, electricity, schools, health posts
and dispensaries must be included in the resettlement plan formulated by the
project.
(xxvi) Compensation for repair. Houses and other structures that are permitted
within the transmission line corridor but may need to be repaired to meet
security standards will be compensated for full cost of repair.
5.5. Mode of Payment of Compensation
148. Compensation for land acquisition should be paid by check at the district
administration office or at the project office. Compensation should be paid after completion of
an application for land transfer and verification of proof of land ownership. Other cash
compensation can be paid on site in the presence of representatives of local body, NGOs,
social service workers and representatives of affected people. A local consultative committee
meeting is a useful forum for payment of compensation.
The following measures need to be adopted to facilitate timely payment of compensation:
(i) Compensation should be paid to spouses or relatives after verifying their

relationship to absentee owners by a letter from the VDC or ward chairman.
(ii) The chief district officerin a savings or fixed account in a bank chosen by
the project ownershould deposit the absentee compensation amount on
behalf of the absentee landowner. If no claim is made within five years from
the first deposit date, the absentee compensation will be deposited in the
Government revenue account, after publication of notice to this effect in public
and private news papers three times. Project social service workers should
make efforts to trace absentee landowners and inform them of their rights to
compensation.
(iii) Replotting, updating field book, title transfer of land and reassessment of land
tax liability should be done at the time of payment of compensation amount or
deposit of absentee compensation in the suspense account.
(iv) Vulnerable groups should be assisted through social mobilization programs to

manage cash compensation and facilitate land for land replacement for lost
assets.
(v) All compensation and rehabilitation benefits should be paid prior to (a) letting
of contracts (b) taking possession of land by the project, and (c)
commencement of any physical activity on the ground.
(vi) When compensation payment is delayed, prevailing interest rate in each year
of the delay period plus 5% to that rate should be paid in addition to the
compensation amount. The interest on payment will accrue starting from the
date of publication of notice of acquisition and when the project starts holding
the land.

(vii) Compensation should be paid for withholding the land due to delays in
replotting and title transfer. The loss of land value may be calculated as the
difference in the value of the adjacent land and the current value of withheld
land at the time of payment.
(viii) Right of way or other land acquired prior to the LAA 1977 should be replotted,
updated in the cadastral survey map and field book. The land revenue liability
of such land should be reassessed and ownership established in the name of
the acquiring body.
149. For farmers without land title of ownership and squatters occupying public land in
nonprohibited areas, compensation should be paid in terms of rehabilitation cash
allowances, preferential employment and inclusion in income restoration programs. PAFs
should be earning their livelihood from the project impact area for more than three years
before the cut off date.
Retrospective compensation should not be paid for land taken without compensation prior to
the issue of this policy, or gazetted as right of way of a road prior to 1977.
5.6. Unit of Entitlement and Mode of Compensation to Vulnerable Groups
150. Adivasi/Janajatis, Dalits and women are more vulnerable than compared to other
groups to the overall effect of land acquisition and resettlement. Thus, this section is a
separate analysis and discussion on the unit of entitlement and mode of compensation for
these groups.
151. Vulnerability in resettlement can be categorized on the basis of individuals,

households, social groups and communities. Accordingly, units of entitlement can be
established to determine compensation and other assistance for vulnerable groups
belonging to different categories. Loss of fixed assets such as land, housing and other
assets can come under household unit of entitlement, while loss of livelihood such as
income, employment and access to common resources can come under individual unit of
entitlement. Loss of public and communal resources can come under group or community
unit of entitlement. Additional criteria for individuals to qualify as a unit of entitlement are
(i) Individuals can be nonregistered tenants or landless squatters living in

affected project boundaries for three years, or a resident member suffering
any of the above-mentioned losses.
(ii) Socially excluded individuals within the household such as widows,

abandoned members of family, dependants and unmarried or married
daughters who may or may not be entitled to inherit property.
(iii) Individuals belonging to socially excluded and marginalized groups such as

indigenous groups, occupational castes, women and landless.
152. Additional criteria for households to qualify as a unit of entitlement are
(i) Households should be below the poverty line or should belong to a socially
excluded group.
(ii) Nonregistered tenants or landless squatters living in the affected project

boundaries for three years, or a resident household undergoing direct or
indirect losses from resettlement.

5.7. Compensation Measures
(i) Cash compensation. Provision for cash compensation should entail

distribution of cash to all eligible household members as per nationally
recognized inheritance laws and rights.
(ii) Land for land. Women headed households and households belonging to
occupational castes and disadvantaged indigenous groups should be
prioritized for land for land option.
153. The following are other assistance that needs to be provided alongwith
compensation:
(i) Public information campaigns should be carried out to notify women and
vulnerable group members about their compensation and cash allowance
entitlements.
(ii) To ensure fair division of cash compensation among eligible household

members, provision should be made to obtain signature or certification from
eligible members of the household.
(iii) Assistance should be provided to members of vulnerable households to claim
ownership rights, certification of land and acknowledgement of traditional,
communal and customary rights.
(iv) Special assistance packages should be provided to below poverty line

households to improve their livelihood standards. Assistance should include
additional support programs such as increased access to and control over
resources and services, increased participation in decision making level,
building social capital, raising awareness, imparting literacy and improving
livelihood standards through income generating opportunities.
(v) Skills and priorities of household members should be assessed to provide

appropriate programs for them.
5.7.1. Compensation Measures for Vulnerable Groups
(i) Traditional rights to land, communal property and specific characteristics of

ethnic groups in relation to land and subsequent losses resulting from
resettlement should be assessed and compensated accordingly.
(ii) Affected public assets including Guthi land and community forests should be
compensated to concerning households, user groups and communities.
(iii) Acquisition of assets holding religious and archeological value should be

avoided or rebuilt at alternative sites, recommended by the affected
community.
(iv) Issues pertaining to communal ownership of land, water supply, community

forests, changes to local employment practices and social structures should
be addressed. Loss of public property and services should be compensated.
(v) Tenure and title arrangement of tenants, squatters and persons with usufruct
and customary rights should be identified. Full security of tenure and

registration charges should be covered to avoid further displacement and

impoverishment.
(vi) Land for land for vulnerable groups should consider compensating land in
locations that is preferred by the affected. In this process, traditional,
communal and customary rights of social groups should be recognized.
Market and access to facilities will also need to be considered.
(vii) Compensation for crops and loss of structure should be decided after
consulting with landowner and affected tenants.
(viii) Vulnerable groups should be prioritized for land for land compensation.
(ix) Appropriate measures should be adopted to advise vulnerable groups to

invest and save cash compensation.
(x) VDCs, NGOs and project social scientists should facilitate and support the
process of joint-land registration, under both husband and wife. The budget
announcement of 20% reduction in land tax if registered under a womans
name has increased registration of land under women's name in certain parts
of the country. This budget announcement should be made an official policy.
(xi) Eligibility criteria for compensation should not be restricted to ownership of

legal titles over land and property because this process would most likely
exclude a majority of women since they do not have ownership of property
and land.
(xii) Gender is a crucial factor for determining whether compensation adequately

takes into account intra-household financial and social dynamism. Thus,
necessary support has to be made for cash compensation for women. Money
could be deposited in the wife's account or in a joint-account with the
husband.
(xiii) Since women headed households usually undergo additional responsibility of

providing economic means and rearing family members, land for land option
should be prioritized for such households. Otherwise, compensation
packages should ensure that opportunities are provided for regular income.
154. The following measures need to be undertaken to ensure that women's livelihoods
are restored or even improved compared to what existed before resettlement: (i) increase
womens participation in program design and implementation; (ii) conduct sector wise gender
analysis to ensure economic rehabilitation measures address womens needs, priorities and
preferences; (iii) women should have access to savings and credit services to start their own
businesses and restore family income and livelihood; (iv) social awareness campaigns and
training opportunities should be organized to increase womens integration into social and
economic mainstream; (v) womens organizations, both community based and NGOs should
be strengthened; and (vi) Gender assessment and trainings should be provided to all
stakeholders involved in resettlement planning, implementing, monitoring and evaluating.
155. Resettlement policies and practices should be mindful of the heterogeneity among
women and their varying issues and needs. Thus, programs designed for women should
assess the socio-economic background of women based on income, marital status, caste,
ethnicity, culture and geographical location. For instance, Adivasi/Janajati women may
prioritize security of traditional rights and use of land, while Dalit women may prioritize

income security and social inclusion. Similarly, widows and abandoned women are more
prone to social violence compared to married women. Moreover, Tarai women and women
from western and midwestern Nepal are more vulnerable to social violence than women
from other regions in the country. Thus, all the above factors will need to be taken into
account when the program is designed.
156. Single women, widowed women, women in a polygamous marital relationships

should all be included in the consultation process. In addition, focused discussion of men
and women should be conducted separately for all affected groups. For this, necessary
capacity building programs should be introduced to increase participation.
157. Special arrangements should be made to ensure that cash compensation is utilized
effectively. Wherever possible, provision should be made to make payment in check, deposit
directly to joint accounts or cash handover to both husband and wife. Provision should also
be made for appropriate counseling to ensure that cash is not spent unwisely.
5.7.2. Beyond Cash Compensation
158. There are several problems that could arise from direct cash compensation. In some
circumstances when the man of the house is addicted to gambling or alcohol, the cash
meant for resettlement of housing and livelihood could be wasted. Hence, for vulnerable
groups besides cash compensation other forms of support should also be given.
159. In the Kulekhani project, ethnic Tamang men spent their cash compensation
gambling; as a result, their women became severely vulnerable to loss of housing, livelihood
and security of life (Rai 2005). For this reason, the situation was further aggravated when
some of these men took up loans for gambling. Thus, there were circumstances when the
creditor showed up at compensation sites to collect the loan amount. To avoid such
problems a clear policy concerning outstanding loan has to be articulated in the resettlement
plan.
160. Other mechanism that would empower the livelihoods of poor and vulnerable people
are cash compensation in the form of micro finance or matching grants for life skill training
with savings and credit schemes. Experiences in Nepal and elsewhere have shown that
small loans for women assure financial independence and provide opportunities for micro
enterprise. Such measures complemented by good book keeping and investment practices,
increase in savings, leadership skills and organizational development training can empower
women and other marginalized groups. Above all, it is important to incorporate gender
issues in micro finance schemes so that these schemes actually empower women.
Simultaneously, capacity building of existing traditional and nonprofit organizations is also
important to support sustainability of micro finance programs.
161. Finally, amalgamation of these small savings and micro finance programs into meso
level associations can strengthen voice and advocacy efforts of the vulnerable.
5.7.3. Other Strategies
162. An issue of paramount importance pertaining to resettlement is the potential loss of

livelihood of affected people. Thus, the resettlement plan should design result based
strategies to explore a range of livelihood options that complement traditional customs,
patronage relations, occupations and skill levels of vulnerable groups.
163. While emphasis is given to replace livelihood options with jobs that complement
traditional occupations, it is also recommended that Dalits should be supported appropriately

to break away from traditional occupations that are socially degrading. Hence, the following
measures need to be adopted to uplift occupational groups from the drudgery of their
traditional patterns of occupation: (i) upgrade skills and occupation of Dalits, (ii) provide
access to market for producers, (iii) educate them in cash earning opportunities, (iv)
reservations should be allotted for backward castes for vertical mobility, (v) appropriate laws
need to be formulated to combat work based discrimination, (vi) projects should engage
occupational groups in business opportunities, and (vii) Government should formulate
appropriate laws to penalize caste based discrimination and carry out campaigns to educate
society on the contribution of these groups to the nation.
164. Distribution of royalty of the project could be an important way to provide benefits to
the indirectly affected communities. This should be integrated into the project plan. Under
the local self Government regulations, the Government is required to recycle 10% of royalty
received from projects to DDCs (Rai 2005).
165. Vulnerable people should be eligible for receiving social and economic benefits
envisaged after the completion of the project. Vulnerable groups affected by development
projects will have to be entitled to special assistance, besides their entitlement to
compensation, allowances and rehabilitation assistance. Surveys and analysis and
consultations with vulnerable groups need to be conducted to identify types of special
assistance that these groups require.
Kali Gandaki A: Management of Cash Compensation

The project showed that in addition to cash and land as direct compensation, indirect
compensatory mechanisms such as provision of employment created positive impacts.
The research found that employment for the economically poorer groups provided them
opportunities to come out of their traditional debt bondage and helped raise their living
standards. The cash economy helped them to return loans and bargain for cash payment
in return for labor services.
The project realized the need to support management of cash compensation, as the
prevalence of poor investment decisions was high among vulnerable groups. Effective
linkages between agencies require carefully managed mechanism (Rai 2005).
5.7.4. Training
(i) Appropriate training to upgrade skills have to be provided to vulnerable

groups to empower them and enhance their livelihood programs.
(ii) Training has to address the needs of vulnerable groups and should be
conducted in a culturally sensitive manner. Training should be less theoretical
and more practical and not just limited to the project period, but for long-term
sustainability of the affected households and communities.
(iii) Identify formal and nonformal organizations to promote and sustain economic
rehabilitation programs. Also, provide appropriate trainings and capacity
building programs to upgrade knowledge and delivery services of these
organizations.
(iv) Assess gender responsive capacity of all stakeholders involved and provide
gender training to all stakeholders.

5.8. Policy Measures and Regulations to Reduce Adverse Social Impacts from Land
Acquisition and Resettlement
166. Michael Cernea demonstrated that involuntary resettlement tend to cause de-
capitalization of the affected through loss of capital in natural, productive, human and social
forms (Cernea 2001). Therefore, the main socio-economic concerns in resettlement revolve
around reducing risks related to impoverishment of the affected people and restoring their
livelihoods. Long term social benefits from development projects can be achieved by (i)
consulting the affected people, (ii) compensating for their losses, and (iii) assisting in
rebuilding their lost assets and livelihoods so that their standard of living is restored at least
to a level that existed prior to the project. Thus, simply paying compensation in cash is not
enough to restore their livelihood and living standards.
167. The development of policy and regulations on land acquisition and resettlement in
development projects should focus upon the following Nepal specific considerations:
(i) The level of infrastructure development in Nepal is low to the extent that the
provision of roads, electricity and piped water supply shall continue to dictate
the development agenda for quite some time. Land acquisition, compensation
and resettlement measures should therefore be affordable, acceptable and
implementable.
(ii) The cost of land acquisition and resettlement as per resettlement plans can
significantly increase project costssometimes many times more than the
cost of civil works. This will adversely affect development of infrastructure in
Nepal since donor agencies require land acquisition and resettlement related
costs to be fully borne by the Government, and compensation needs to be
paid before the start of construction. A large amount of budget outlay at the
beginning of the project is impractical for developing countries like Nepal.
(iii) The level of economic activities in Nepal does not permit a liberal approach to
the width of right of way in rural areas. Thus, right of way should be fixed to
the minimum width possible. For example, in Nepal it may be limited to 16m
including the setback distance for most of the north-south highways and mid-
hill East-West highway.
(iv) The nature of problems and the need for involuntary resettlement in projects
involving en masse displacements such as in major hydropower projects are
different from that of linear projects. Even linear projects vary in terms of use
of land within the right of way, for example the land below the right of way of
transmission lines and pipelines compared with those of roads and railways is
one example to demonstrate such variance in land use. Therefore, specific
provisions are required for such projects.
(v) Fixing the right of way and land use control without acquiring and properly
compensating the land is unjust, prone to encroachment, and problematic for
future improvements. Therefore, the entire width in the right of way and
setback distance must be acquired and owned by the agency concerned
before start of civil works, which could be done in phases for different
sections of a road.
(vi) Imposition of land use control through compensation such as easement fees
does not avoid encroachment, unless there is proper agreement and
documentation to this effect and regular monitoring carried out during the

entire life of the infrastructure. Therefore, full acquisition and ownership

transfer of the entire land in the right of way is the preferred option.
(vii) Encroachment of right of way is unavoidable in the absence of a fully

empowered right of way management unit. This unit will need to be structured
as part of the implementation unit or as a separate high power agency fully
dedicated to right of way management only.
(viii) The detailed assessment of affected land, people and other assets before
appraisal of the project cannot be accurate because the feasibility level
design is subject to change during the detail design and sometimes during the
construction stage as well. Therefore, flexibility is needed to alter the
resettlement plan during the detailed design stage and to some extent in the
construction stage.
(ix) Benefits from long infrastructures such as roads, transmission lines, and
irrigation canals must accrue to the rural people through simultaneous
development of market or urban centres at certain intervals along the length
of such infrastructures. Benefits from involving Rural Housing Company Ltd.,
and the Town Development Committee in such programs or in
implementation of resettlement and rehabilitation plans should be explored.
(x) Land occupied by roads in most district roads and village roads were initially
voluntary contributions. However, landowners still hold ownership titles and
are still paying land revenue on the donated portion. The road agency or the
DDC or VDC have no formal ownership of land under such roads and their
right of way. The operation, maintenance and improvements of such roads
are extremely difficult because of increasing expectations for greater
compensation in future. As a result, the concept of voluntary contributions has
only provided temporary solutions while leading to much bigger problems in
the future.
(xi) Public Private Partnership (PPP) or Build, Operate, and Transfer (BOT)
system in hydropower sector have acquired land on purchase through
negotiation. This has to some extent reduced the problems of land
acquisition. Even though the success of PPP programs can be greatly
enhanced by providing land free of all encumbrances, any new provisions in
law must also ensure that the approach to resolving problems of land
acquisition and compensations directly through private parties are not
negated.
(xii) Public Works Directives (PWD) should be updated to include criteria for
project planning and design based on minimising involuntary land acquisition.
In addition, planning should also be based on minimizing the time involved in
land acquisition and awarding compensation before the start of construction
through sector specific guidelines.
(xiii) Real squatters deserve a place to live but they should be differentiated from
nonsquatters and policy measures should not encourage fake or fraudulent
practices. Therefore, squatters should be correctly identified and given
replacement land, but without the right to buy, sell or transfer the rights.
Nevertheless, they must be entitled to usual compensation for all other assets
lost as a result of the project.

168. An entitlement matrix showing a summary of normal and additional

compensation is given in Table 5.2
Table 5.2: Entitlement MatrixSummary of Normal and Additional Compensation

S.N. Type of Entitlement Unit of Mode of Payment Remarks
Entitlement /
Recipient of
Compensation
Normal Compensation
1 Agriculture Land
Marginal land holding Owner Land for land
Nonmarginal land holding Owner Cash at market value
Share cropping Tenant Three months income
in cash
Partially affectedwhere Owner Cash at market value Acquire remaining land
remaining land is no longer also
useful
2 Residential Land
Marginal land holding Land owner Land for land for
marginal land holding
and cash for
nonmarginal land
holders
Loss of tenancy Tenant three months rent in
cash
Partially affectedremaining Land owner Acquire remaining
land is no longer useful land with cash
3 Residential Structures
Loss of residential structure Owner Full replacement in
cash. Replacement in
kind in case
prefabricated houses
are available and
acceptable to SPAFs
Tenancy loss Tenant Three months rent in
cash
Partially affectedwhere Owner Cash Acquire the remaining
remaining structure is no longer structure
useful
4 Community Structures Community Full replacement in

cash or kind
Partially affectedremaining Community Acquire remaining
structure not useful portion in cash or kind
5 Other Structures Owner or Full replacement in
community cash
6 Business Structures
Owner Owner Full replacement in
cash
Tenant or lessee Tenant Three months rent in Assist in finding an
cash equivalent site
Partially affectedremaining Owner Acquire remaining
structure not useful portion in cash
7 Business, shops, trading etc Owner Provide equivalent
business site on
lease, where
available
8 Trees PAF As per the norms of
Department of Forest

9 Crops PAF As per the norms of

Department of
Agriculture
Table 5.2: Continued

Entitlement /
Recipient of
Compensation
Additional Compensation or
Resettlement and Rehabilitation
Assistance
1 SPAFs undergoing loss of kitchen Responsible 5% of the value of
garden woman member land
2 Food Support SPAFwomen Food for six months 20 kg of rice and 3
kg of pulses per
head per month
3 Compensation for loss of SPAF Cash 550 days of
earnings and employment agriculture minimum district
or wage rate.
nonagricultural Preference to
laborer women
4 Businesses run and operated by women As per valuation of
women and loss of common losspayment in
resources cash
5 Household allowance SPAF Additional expenses
incurred in moving
housepayment in
cash
6 Building materials transportation SPAF Cash to move
allowance materials from
demolished house or
business structure to
the new site
payment in cash
7 Business transfer allowance Additional expenses
incurred in moving
business materials,
stock, tools etc
payment in cash
8 Rental stipend PAF Cash Three months rent
to cover other
losses such as
deposits
9 Loss of Irrigation and other PAF Loss in land value in
production structures cash or a minimum
replacement land in
command area
10 Preferential employment PAF Employment to at Employment
least one member of reservation upto
PAF 33% for women
11 Poverty intervention measures PAF Savings and credit
schemes,
employment during
maintenance
12 Social mobilization, income PAF Training Upto 33%
restoration and life skills program reservation for
women

13 Relocation entitlement to Members of Acquire land and Vulnerable groups

fragmented communities vulnerable relocate at par with who have lost their
groups PAF. social support
networks to the
resettlement zone
14 Vulnerable groups shall be given PAF belonging Land for land
preference during allotment of to vulnerable
land groups
Table 5.2: Continued

Entitlement /
Recipient of
Compensation
15 Loss of customary rights to forest One member of 365 days minimum

produce PAF belonging district wage rate in
to a vulnerable cash
group
16 Loss of houses PAF from Prefabricated houses Preference to
vulnerable vulnerable groups
groups
17 Disadvantaged Adivasi/Janajati PAF from Land, house
or Dalits will be resettled close to vulnerable
their natural habitat in a compact groups
block
18 Adivasi/Janajati, Dalits and SPAF belonging Land
women headed households shall to vulnerable
get land free of cost for groups
community and religious
gathering in resettlement zones
19 Fishing rights in rivers, ponds etc Vulnerable Rights
groups
20 Vulnerable groups losing Affected Preference Support in income
businesses persons from generation
vulnerable schemes
groups
21 Relocation sites should ensure Affected Public facilities Water, school,
that vulnerable groups have persons from health services,
access to public facilities vulnerable employment
groups opportunities
specially for women
and Dalits
22 Social awareness training PAFs Training Training to PAF
and host families
23 Resettle en masse in a compact PAFs from Resettlement Ensure non
area vulnerable disruption of socio
groups cultural and
economic ties by
resettling in a
compact area or in
nearby localities
24 Basic amenities and SPAF Facilities Drinking water,
infrastructure facilities at the electricity, schools,
resettlement site as per norms health posts and
specified by the Government dispensaries to be
provided at
resettlement site as
per Governement
norms
25 Houses and other structures that PAF Cash
are permitted within the

transmission line corridor but

may need to be repaired to meet
security standards will be
compensated fully
kg= kilogram, PAF= Project Affected Family, S.N = Serial Number, SPAF= Seriously Project Affected Family
Source: Compiled by B.B. Deoja
VI. CHARACTERISTICS AND ISSUES IN LINEAR AND URBAN PROJECTS
6.1. Linear Projects
169. There is a growing emphasis on infrastructure development of linear projects

mainly of roads and transmission lines in developing countries such as Nepal. Linear
projects such as railways, pipelines or irrigation canals are characterized by long but
relatively narrow corridor of impacts. The resettlement impact of linear projects is less severe
compared to projects involving large scale displacement such as hydropower projects. The
reason behind this is alignment of these corridors can often be shifted to minimize socio-
economic impact; in addition, narrow corridors tend to require only partial acquisition of land
and other assets. Nevertheless, even in cases of relatively minor impact, linear projects can
pose unique challenges in land acquisition, compensation and resettlement planning.
Projects involving roads or railways frequently necessitate resettlement of squatters or
encroachers, which can raise legal and political issues in project areas. Consultation and
participation may be difficult if the project stretches across more than one cultural or
linguistic area. Furthermore, issues concerning organizational coordination are likely to arise
if linear projects stretch between multiple administrative units.
6.2. Characteristics of Linear Projects
170. The characteristics of various types of linear projects are briefly discussed below.
6.2.1. Roads
171. Existing roads usually have an established right of way. Although new land may
need to be acquired for bypasses, curve straightening or roadside improvements; land
acquisition for this purpose is likely to be minor compared to projects requiring completely
new corridors. Even when there is little or no formal land acquisition, displacement may still
take placesometimes on a large scalewithin an existing right of way. This kind of
problem arises either due to encroachment of fully acquired right of way or from lack of
completeness in compensation, replotting and ownership transfer of land, declared by the
Government as right of way. While the scale of resettlement may be different, challenges
related to resettlement will still have to be addressed.
172. Development of road corridors provides immense economic opportunities for local
people. Two examples that validate the above statement is evident in rising property values
for land adjacent to roads and the concentration of population around road construction
sites. Even though road construction has its negative impacts on people who lose land or
property and are compelled to displacement, the socio-economic benefits that result from
road development is greater than the losses caused.
173. Land acquisition and resettlement impacts generally are confined within a fairly
narrow corridor of impact. These are usually prohibited and unsafe areas. The width of this

corridor of impact varies depending upon the type of road. There is a general feeling that the
present right of way limits in Nepal10 m from center line for district roads, 15 m from
center line for feeder roads and 25 m from center line for highways.
174. The encroachment of right of way and the incompleteness of ownership transfer of
land have gradually urbanized sections of the highways and feeder roads. As a result, a
section of the population is applying socio-political pressure to reduce the width of right of
way.
175. Currently, the right of way in urban areas ranges from 31 m from the centerline for
Ring Road, 25 m for highways, 11 m for arterial roads, 7 m for connector roads and 5.5 m for
feeder roads from center line. The 31 m setback distance for Kathmandu Ring Road has
been relaxed to 11 m, 12 m and15 m in several sections. Nevertheless, several roads in
Kathmandu valley have setback distance much less than these standards.
176. While the practice of reducing right of way standard in urbanized sections of
highways reduces the efficiency of highways, this reduction is necessary and results from
the scarcity of land. Some of the measures that could be adopted to resolve the above
contradiction are (i) at every 2550 km road intervals in rural areas, the concept of planned
market centers need to be adopted; and (ii) the standards for right of way should only be
reduced in low traffic, north-south highways, feeder roads and district roads. By contrast,
right of way in built up areas in urban sectors should be limited to the prescribed width of the
road including width for utility space.
177. It is possible to obtain land for right of way, free of cost, under a benefit-sharing
scheme by imposing a development levy in the corridor of development for nonmarginal
landholders. The acquisition of entire land in the right of way requires up to 20% land within
the corridor of development, up to 250 m both sides from the centerline is taken free of cost.
This will involve (i) listing entire plots of land in the corridor of development; (ii) deducting
20% share from each plot; (iii) replotting 80% remaining land between the outer edge of the
right of way and the corridor of development; (iv) replacing 80% of land of each plot within
the right of way; (v) transferring ownership of the entire land in the right of way in the name
of the project owner; and (vi) issuing new ownership certificates for the rearranged land in
the corridor of development to the concerned land owners. However, free of cost acquisition
is applicable to marginal farmers. Any surplus land shall be handed over to the respective
community for community development programs
6.2.2. Irrigation Canal
178. In many respects, irrigation canals are similar to pipelines. Resettlement of rural
population as a result of canal construction or improvement also has distinctive features.
Farmers that lose land as a result of canal construction can be relocated to land where there
are better irrigation facilities. Thus, they could also benefit from new irrigation infrastructure
and establishing an equitable distribution of costs and benefits can optimise resettlement.
6.2.3. Water, Sanitation, Gas and Oil Pipelines
179. There are several reasons why construction of pipelines typically do not require much
land acquisition and resettlement: (i) the corridor is generally narrow, typically 618 m in
width; (ii) Many are built within the right of way to facilitate access and maintenance; (iii) The
impacts may be largely temporary; and (iv) the path alignment can be easily modified to
avoid and minimize unnecessary displacement.

180. However, significant land acquisition might be necessary for primary infrastructure
associated with these projects such as installation of pumping stations, treatment plants,
access roads and storage facilities. An integral approach linking these ancillary facilities is
recommended to identify the full range of negative impacts.
181. Unlike roads and railway projects, establishing right of way for water supply and
sanitation pipelines does not generally require transfer of land ownership. Thus, time and
cost involved in acquiring free of cost right of way through land pooling mechanism for a
wider corridor is very low in these cases.
182. Easement fees and payment for crop damages are an appropriate way of
compensating those whose fields are subject to periodic intrusion for maintenance purposes.
To make certain that maintenance takes place in a smooth manner after the payment of fees
there should be (i) a provision in the law stating those who have received easement fees are
not entitled to make any claims regarding restrictions on land use, or (ii) an agreement with
the landowner on the conditions of restricted use of land before payment of easement fees.
183. Like other linear projects, pipelines can cause unanticipated indirect displacement.
Pipelines crossing through isolated forests, natural parks or indigenous reserves can cause
negative impacts upon people whose livelihoods depend on these resources. In these
cases, careful considerations of midterm effects need to be assessed before taking
irreversible decisions regarding alignments. Participatory assessment of environmental and
social risks, along with adoption of a mitigation action plan is highly recommended.
6.2.4. Transmission Lines
184. Depending on technical specifications, transmission lines require a corridor of impact

ranging from 1225 m wide. Though the impact of a particular tower is likely to be slight,
especially in rural areas, transmission lines extending hundreds of kilometers may
nonetheless produce a significant level of aggregate displacementespecially if the lines
cannot avoid heavily populated areas.
185. Besides towers, transmission lines themselves do not normally require land
acquisition. Instead, a right of way is established imposing height restrictions upon use,
especially for trees and structures. Depending upon local laws and regulations, practices
vary with regard to structures underneath transmission lines. Some countries prohibit digging
or mining near towers, while activities such as cattle ranching are permitted.
186. While construction of transmission lines may not require much land acquisition,
construction of associated works such as power substations, buildings or widening of access
roads might entail significant displacement. During construction phase, there may be
temporary impacts on assets and crops that could be compensated with an easement fee
combined with payment for any crop damage. In most cases, no compensation is paid for a
decrease in nonagricultural property value resulting from construction of transmission lines.
Where small landholdings are dissected by a transmission line with each part being
rendered unviable for economic use, acquisition of entire land holding and payment of
compensation at replacement cost is recommended.
6.2.5. Water Supply Lines, Sewer Lines, and Ropeways
187. Despite the possibility of use of easement fees to avoid land acquisition in case of
linear infrastructures, it is advisable to acquire land within the right of way and transfer
ownership in the name of the project. This would allow projects to avoid future complications
October 2006 LAND ACQUISITION, ENTITLEMENT AND COMPENSATION 50

when improvements, maintenance and land use management become necessary. Thus, the
following measures are recommended wherever possible:
(i) If the land in the right of way of electricity transmission lines, ropeways, water
supply and sewer lines is a rural land without any houses, the land within the
right of way shall be acquired and subsequently leased back to the original
owner. Compensation equal to the value of the land at the time of cutoff date,
less the value of the lease rental shall be paid to the PAF.
(ii) If the land within the right of way does not have any structure but is a
residential land where agriculture is possible, the land ownership shall be
transferred in the name of the acquiring body. The original landowner shall be
permitted to use the land on a lease basis for 30 or more years.
Compensation shall be equal to the value of the land at the cutoff date less
the value of the lease rental.
(iii) When more than 70% of the right of way is covered by houses, the entire land
and structures within the right of way will be permanently acquired and
compensation shall be paid in accordance with this policy.
(iv) If the land within the right of way has less than 70% area occupied, that land
shall be acquired and ownership transferred in the name of the acquiring
body. However, the original owners will be allowed to continue use of the land
and buildings, on a nontransferable basis, without ownership certificate. Thus,
the original owners can continue usage on a lease agreement of 30 or more
years, with the requiring body placing restrictions on the height of the building,
construction of new buildings and other safety related matters. Compensation
shall be paid for value of the land at the cutoff date less the value of rental
charges.
6.2.6. Railways
188. Depending on the type of train and transportation technology, railway corridors
typically range from 1624 m. In many instances, squatters encroach upon railway corridors
because they are among the most easily accessible urban spaces that are not used for other
purposes.
189. As with gas and oil pipelines, there are valid reasons concerning safety for restricting
human habitation within railway corridors. In some situations it may be inappropriate to
minimize displacement if it causes risks to local residents or to the inhabitants of the
corridors. On the other hand, the established right of way in railway corridors is often wider
than necessary. Under such conditions, it may be possible to move existing residents a few
meters back while providing adequate safety measures such as fences, or pedestrian
overpasses. In contrast to roadways, railway construction often causes a depreciation of
property values and deterioration of living conditions in residential areas. Project designs
should include efforts to avoid or mitigate such indirect effects.
190. In the course of extensive development of new railway lines, the concept of corridor
of development as in the case of roads may be applied. Thus, the cost of land acquisition will
not become a bottleneck when the greater benefits of development have been realized and
articulated.
191. In all forms of linear resettlement, social assessment and case-by-case analysis of
impacts is recommended. In many cases, even a slight loss of land might be critical to

families living at the margins of poverty. Linear projects may cut across areas where land
has been fractionated into small supplemental garden plots for self-consumption. Experience
has shown that under certain circumstances, households prefer not to move if additional
assistance for complementary economic activities is granted.
6.3. Impact upon Economic Activities
192. Widening of roads and railways also displace business enterprises located along the
right of way. On the other hand, it also creates greater economic opportunities. Project
preparation and design should consider such impacts and make certain that benefits are
equitably distributed. In several circumstances, the project affected people had to bear
severe mental, economical and social losses; while people with access to more resources
reap most of the benefits. To make matters worse, losses resulting from land acquisition
start showing immediately while economic opportunities are likely to arise much later.
6.3.1. Informal Traders and Mobile Vendors
193. Improvement of an existing road may require space occupied by informal traders,
mobile vendors etc. The project should ensure that it does not become the primary cause of
total loss of livelihood of these businesses. Loss of businesses to projects not only affects
business owners but they also have an adverse affect on consumers. Thus, economic
activities should be relocated in planned shopping areas, open shoulders and other
commercial facilities along the transport corridors.
194. Resettlement planners should take into account the different categories of vendors
that make their living off the roads. These categories can then be used to determine the
types of resettlement necessary for each group. While fully mobile vendors may only need
an alternative space, vendors who lose structures will need to be appropriately compensated
for loss of property and assets. Similarly, vendors with officially recognized licenses will also
need to be adequately resettled so that their access to market opportunities is restored at
least to predisplacement levels. Above all, resettlement problems of businesses such as
vendors and traders should be understood in the broader context of urban development and
land use planning. Thus, provision should be made for development of market centers at
appropriate locations as per urban development plans. Relocation should be carried out
making sure that displaced vendors are relocated to an alternative, equally thriving market
site so that their clientele and economic opportunities are restored.
6.3.2. Squatters and Encroachers
195. Governments often fail to restrict private use of public right of way leading to
encroachment of public land. On the other hand, projects frequently displace squatters and
encroachers. Following this, it would seem obvious that a continuous tension between
project owners and displaced squatters and encroachers would result as a lack of policy and
the necessity to build and extend projects on public land. The LAA 1977 does no provide any
claim to compensation and resettlement for those encroaching upon public land. Therefore,
many Government officials and project owners view any assistance to displaced
encroachers as encouraging them to further encroach upon public land. Against this
backdrop, they feel that assistance would set a wrong precedence that could establish
unjustifiable and expensive new entitlements. Above all, such compensations to displaced
encroachers from public property undermine the fundamental spirit of legal private property.
However, the above views only represent a minor section of the population and are not
unequivocal and consistent.

196. Even if the Government recognizes compensation eligibility for fraudulent

encroachers, it is necessary to set appropriate criteria for defining eligibility. Thus, it is
recommended that a cut off date be set which would be based as eligibility criteria for claims
on compensation. Accordingly, a census survey of the affected area should be conducted to
identify all eligible residents, structures and fixed assets that qualify for compensation. After
identifying affected persons, resettlement of the urban poor should be seen as an
opportunity for sustainable urban development of squatters and low income communities.
6.4. Issue of Corridor Development Levy
197. In Nepal, development of infrastructure such as roads and electricity is very low
compared to neighbouring countries. Thus, only (i) 10 km per 100 sq km of roads constitute
all weather roads, (ii) 9 km per 100 sq km make up fair weather roads, (iii) only 30% of the
population have access to electricity, and (iv) 50% of the population have access to pipe
water supply.
198. The following reasons explain the lack of basic infrastructure development:
(i) Lack of resources for land acquisition, compensation and resettlement.
(ii) Excessive delays in compensation and ownership transfer process.
(iii) Restriction on construction of structures within the right of way without

compensation.
(iv) Incomplete acquisition in case of voluntary contribution of land leading to

legitimate claim for huge compensation at a much later date.
(v) Overall scarcity of land required for infrastructure development.
6.5. Characteristics of Urban Projects
199. Urban development projects have the potential to attract much more people around
the project area, while the level of displacement is usually a lot higher than rural projects.
Another characteristic feature of urban projects is that even though they a have higher
potential to generate greater economic opportunities, the cost of resettlement is also higher.
200. People associated with addressing problems related to urban displacement first need
to recognize the dynamic process of urbanization and the various types of people that live in
urban areas. Hence, besides consisting greater disparities in income and standards of living,
urban areas also constitute a wider range of people based on caste and ethnicity. Moreover,
migrants and squatters constitute a huge population in urban areas. Even in the economic
sphere, urban areas constitute a wide variety of sectors both formal and informal, organized
and unorganised. Consequently, in most situations urban areas have higher degrees of
income inequality, and resettlement plans must have the level of improvisation required to
address the uniqueness of the above discussed features. Above all, since squatters are
usually involved in urban projects, their resettlement is the most controversial of all issues
concerning urban projects.
6.6. Public Responsiveness
201. In economic theory information is characterized as a public good, which involves

problems concerning free riders. Several urban projects have been alleged for lack of
transparency as far as providing the public with information related to the project is

concerned. While the public good characteristic of information may be one reason for lack in
information dissemination, other likely reasons could be (i) the need to protect insider
information for economic and technological optimality, and (ii) management's decision to
keep public participation at a minimum.
202. Notwithstanding the costs associated with information dissemination and public
participation in project planning, soliciting advice and cooperation from those affected from
the project is still beneficial in the long run. Community support and cooperation will yield
significant benefits such as (i) increased community support for project related benefits, (ii)
improved project design resulting from positive and participatory community feedback, (iii)
reduction in displacement, (iv) reduction in resistance towards the project, and (v) greater
community support in operating and maintaining project related facilities or services.
6.7. Marginal Impacts in Urban Linear Projects
203. Although the acquisition of land in urban linear projects primarily for widening of
roads, drainage improvement and distribution of electricity lines is minimal; they may still
affect a large number of people. However, the benefits from such projects clearly exceed the
costs, resulting in (i) better access to basic facilities, (ii) improved roads and other physical
infrastructure leading to overall development of the area, (iii) rise in property values, and ( iv)
improvement in standard of living of the people from the surrounding area.
204. To this extent, affected persons may lose a narrow strip of land or a small portion of
the front part of their business structures. In such cases, temporarily affected persons may
be given a fixed lump sum amount as compensation for inconvenience or loss of clientele.
Persons affected by marginal loss of assets may be compensated with either a fixed lump
sum of money or a standard per unit rate for affected area or assets.
6.8. Replacement Cost for Urban Land
205. The scarcity of replacement land and housing in urban areas is a serious constraint
in resettlement in urban projects. Normally, compensation and resettlement costs are
determined by the quantity of land acquired, location and productive capacity of the land.
However, determining replacement costs in urban areas is not as simpleland prices in
these areas vary, largely depending on the location of land. Furthermore, the value of land
could vary depending on other factors such as proximity to place of employment and other
socio-cultural factors. Hence, asset price increase is not necessarily the primary factor in
determining the value of land for every affected person.
206. Even though resettlement sites may not be available at preferred locations, this can
be compensated by restoring the living standards of affected people through provision of (i)
land parcels located at urban fringes, (ii) improved tenure security and improved housing
standards, (iii) employment and income generation activities, (iv) access to improved
infrastructure and community services, and (v) sufficient community area for informal
economic activities at suitable locations within the resettlement site.
6.9. Resolving Issues in Urban Resettlement Site
207. Housing construction and real estate are booming sectors in most developing
countries. Successful urban resettlement can provide opportunities to add to the property
value of the displaced population. The following necessary measures are required to ensure
the opportunities stated above are realized: (i) provision of fully serviced plots with long term
security of tenure, (ii) provide 'shell housing' or 'core housing' arrangements with
opportunities for incremental construction, (iii) consult with affected persons during the site
selection process, (iv) ensure adequate infrastructure facilities, (v) provide opportunities for

business and income generating activities, and (vi) household priorities and affordability
criteria should be met.
6.10. Economic Rehabilitation in Urban Projects
208. Restoring livelihoods of people displaced in urban areas is one of the most complex
tasks in resettlement. In fact, even projects designed primarily to improve urban incomes
frequently falter because of the complexities involved in urban resettlement. Economies in
urban areas are more diverse and incomes for most urban population are derived from
employment rather than utilization of fixed assets, as in rural areas. Thus, compensatory
measures tend to be disadvantageous to a large proportion of displaced urban population.
209. This is especially true for urban residents engaged in informal economic activities,
where investment in fixed assets is almost nonexistent. Therefore, the prevalence of informal
economic activities represents a second major impediment to income restoration in urban
area.
210. Some of the factors significant to successful resettlement in urban areas are the
following:
(i) Distance
Affordable and available replacement housing sites are more likely to be

found in suburban areas. So, urban residential relocation frequently takes
place in areas distant from central urban locations. This could result in
difficulty in maintaining employment and business incomes. An alternative
solution to this predicament would be to coordinate with public transportation
services to ensure that conveyance is available and affordable.
(ii) Employment
Loss of employment, business income or other forms of livelihood is the most

crucial aspect that could have detrimental consequences on displaced
people. Relocation often requires displaced people to travel a greater
distance to get to their place of work often resulting in loss of employment.
Therefore, relocation plan should prioritize on providing alternative
employment to displaced people. It is also imperative that such plans not
overlook prior subsistence and informal incomes and due compensation
should be given.
(iii) Businesses
Business relocation is a complex process requiring an analysis of the sector,

scale and size of businesses. Accordingly, these businesses would be
affected depending on whether its a service based business with little fixed
capital or a business that has a substantial amount of fixed capital invested
and transfer of plant and equipment would entail huge costs. Furthermore,
access to market and other opportunities are also important factors to
account for while relocating. Thus, simply relocating businesses may not
assure restoration to previous levels. So, business owners should be given
options to assess whether their business is restorable or whether new
business opportunities should be considered. Also, planners and business
owners should consult and reach an agreement on the basis of which
replacement costs for business would be determined.

(iv) Obstacles at the Relocation Site
Thorough resettlement planning should be conducted to identify and address

problems that might occur at the resettlement site. For example, municipal
zoning at the new site may prohibit small scale income generating activities,
in which case alternative arrangements for reviving income generating
activities will need to be implemented. Other losses that affected people might
have to bear are licensing costs and loss of previously owned subsistence
gardens. Providing transitional allowances and allocation of private or
community plots to replace subsistence gardens could compensate the above
mentioned losses.

VII. PREPARATION OF LAND ACQUISITION AND RESETTELMENT PLAN
211. Resettlement planning and implementation activities are an integral part of any
development project. Even if there is no displacement in a project, there is a need for
planning of land acquisition so that impoverishment of the project affected people due to
inadequate and delayed compensation do not occur. Therefore, land acquisition and
resettlement planning need not take place simultaneously with project planning and
implementation. Even though most of the activities related to acquisition of land, payment of
compensation and resettlement of displaced people need to be completed before the start of
civil works, the process of economic rehabilitation will continue beyond the completion of the
project. Thus, land acquisition, compensation and resettlement plan will need to be
implemented in a phased manner.
7.1. Project Cycle
212. Specific resettlement activities and outputs required at various stages of project cycle
are shown in Table 7.1 below.
Table 7.1: Project Process and Resettlement Outputs
SN Stages in a Typical Project Resettlement Activities/Outputs
1 Project identification Conduct desk study and prepare Terms of Reference

(TOR) for initial social assessment and prefeasibility study
2 Prefeasibility Conduct field surveysinventories, socio-economic

status Initial Social Assessment (ISA) prepare TOR for
Social Assessment (SA) Land Acquisition and
Compensation Plan (LACP), Resettlement and
Rehabilitation Plan (RRP) as necessary
3 Feasibility Prepare SA, LACP and RRP as necessary
4 Project approval LACP, RRP, and Vulnerable Group Development Plan

(VGDP) and other documents are approved by relevant
line agencies or executing agency
5 Detail technical design Adjustment or finalization of SA, LACP, RRP and VGDP
Implementation stage for LACP or and other documents following detailed design with specific
RRP project boundaries
6 Implementation Implementation of LACP, RRP, SA and VGDP,
and monitoring and supervision
ISA= Initial Social Assessment, LACP= Land Acquisition and Compensation Plan, RRP= Resettlement and
Rehabilitation Plan, SA= Social Assessment, SN= Serial Number, TOR=Terms of Reference, VGDP= Vulnerable
Group Development Plan
Source: Seta Lao Report, 2005
7.2. Social Assessment and Impact
7.2.1. Initial Social Assessment
213. Initial social assessment is undertaken during the prefeasibility stage of the project
and it involves identification of (i) potential social issues, (ii) impacts, and (iii) key
stakeholders. The exercise also includes screening of available information for assessment
of type, scale and degree of impactsincluding land acquisition impactsand to determine
the need for various documents that may be necessary during different stages of project
process. Based on the results of the screening exercise, the decision is taken on the kind of
surveys required and the types of information necessary for various documents.

7.2.2. Social Assessment
214. Based on the recommendations of screening exercises and the resulting indirect
social impacts of the project, a detailed social assessment study may be necessary. The
social impact assessment study is conducted during the feasibility phase of project
preparation. Detailed investigations carried out for social impact assessment include
identification of type and scale of social impacts, stakeholder analysis and institutional
analysis. The studies help in formulating appropriate mitigation measures and instruments
necessary to address social issues in the project. Social assessment generally covers macro
level social issues and provides a framework for detailed investigation of the causes and
effects of displacement and planning and implementation of mitigation measures to address
specific issues.
7.2.3. Potential Social Impact Resulting from the Project
215. A full resettlement plan is required for a project that has significant displacement
impact on the people residing in the project site and around the area. On the other hand, the
level of displacement itself may differ among various groups of affected people. A single
project may affect different people in various ways: while some families may only lose a
small fraction of land and may be marginally affected, others may be affected in a significant
way from loss of a greater deal of land. Thus, while preparing resettlement plan, projects will
need to distinguish the level of impacts of the various affected people into the following
categories: (i) significant impacts, (ii) marginal Impacts, and (iii) negligible impacts.
7.2.4. Projects Having Significant Impacts
216. Projects involving permanent displacement of 200 people and above within a radius
of five kilometres are defined as those having significant impacts.
7.2.5. Projects Having Marginal Impacts
217. Projects involving permanent displacement of less than 200 people within a radius of
five kilometres are defined as those having marginal impacts.
7.2.6. Projects Having Negligible Impacts
218. Projects involving permanent displacement of less than 11 people per km radius are
defined as those having negligible impacts. Land acquisition, compensation and
resettlement plan should be prepared during the feasibility study stage of project
preparation. These documents should be based on field surveys, which cover census of
affected people and a detailed inventory of affected assets. Information on project physical
boundaries is necessary for project preparation and to make relevant decision on resource
allocation. Thus, even if project physical boundaries are not finalized during the feasibility
stage, the documents verifying project boundaries will still need to be prepared for the above
mentioned reasons. At any stage of the project process if there is a change in design
parameters, which may result in a change in project boundaries, then corresponding
changes in resettlement planning also will be necessary. Hence, these changes will be
followed and reflected in the latter stages of project design and implementation. On the other
hand, if changes in the design parameters are only minor, then corresponding changes in
the resettlement plan can be made only during implementation of resettlement activities
without any need for revision of these reports.
7.3. Gender, Adivasi/Janajati and Dalits
TA-4422-NEP PREPARATION OF LAND ACQUISITION AND RESETTELMENT PLAN 58

219. It is necessary to prepare a separate chapter on gender, Adivasi/Janajati and Dalits

in the resettlement plan of the project. Necessary surveys and investigations need to be
prepared and should be carried out as an integral part of project preparation.
7.3.1. Special Attention to Vulnerable Population
220. Issues that are unique to vulnerable groups in project resettlement should be
assessed during the prefeasibility stage. The process will include activities such as (i)
collection of national and local level data and policy documents on the poor and
marginalized population; (ii) identification of different categories of vulnerable groups and
their needs; (iii) development of proper criteria for vulnerability to collect a comprehensive
data on vulnerable groups; and (iv) development of proper guidelines to determine eligibility
of vulnerable groups.
221. Social scientists that have knowledge of vulnerable groups and expertise in carrying
out social assessment surveys should be hired to enumerate field findings. Enumerators
should be familiar with local socioeconomic conditions and be able to identify and assess
vulnerable groups and the impact of resettlement on them. Knowledge on gender issues is
crucial for enumerators to understand and assess resettlement impacts on women.
222. Social scientists should identify key resource personspreferably members of

vulnerable groupsfor field investigation in the project site. These resource persons will
work with other stakeholders to access the degree and scale of vulnerability of identified
subgroups. In addition, they will also work out strategies required for information gathering
and special assistance programs.
223. Besides identifying criteria of vulnerability and collecting information on poverty,

gender, social exclusion and level of displacement; survey methods for vulnerable groups
provide information on (i) assessment of practical needs and strategic interests of vulnerable
groups to identify appropriate compensation packages, (ii) level of access to public services
and resources, (iii) level of equity in distribution of resources and information, (iv) degree of
participation and decision making roles of vulnerable groups, (v) access and use of forest
resources, and (vi) women's participation in decision making processes.
224. Vulnerability mapping tools including techniques to rank different groupswell being
ranking, venn diagram, mobility mapping, problem tree/profile, SWOT analysis,
communication flow diagram, household division of labourcan be applied in the process
225. Cultural and traditional characteristics of social groups related to use and
maintenance of natural resources, institutional arrangements that determine channels of
communications, leadership, economic and social livelihoods, spiritual and ecological
sensitivity should also be assessed at this stage. This will allow us to understand the
magnitude of indirect impact on vulnerable groups as well as allow us to incorporate
community concerns in the plan and implement appropriate measures for the project
affected vulnerable population.
7.4. Resettlement Schemes
226. General problems of land acquisition in Nepal have been discussed in chapter V and
the problems of linear infrastructures have been discussed in chapter VI. In case of projects
involving en masse displacements such as in hydropower projects, the issues of
resettlements are wide ranging and much deeper compared to most linear infrastructure
projects. Large-scale displacement requires replication of original environment at a new site.

227. The following are some considerations that have to be met in resettlement planning
in general and projects involving en masse displacements in particular:
(i) While all efforts should be made to avoid disruption and relocation of
community and religious assets, appropriate reestablishment at alternative
sites should take place. The cost of construction and transportation shall be
borne by the project.
(ii) Resettlement sites should be located as near as possible to previous

locations with similar environmental and geographical features.
(iii) Resettlement sites must have adequate opportunities for business and
income generation activities to enable affected persons achieve sustainable
livelihoods.
(iv) Resettlement zones for large scale resettlement must be located in places
free from any environmental risk or natural hazard and must be laid out in
accordance with local prevailing planning standards. The site must be within
convenient distance from community facilities such as schools, clinics,
religious sites etc. These resettlement sites should be fully developed prior to
displacement of PAFs from their existing locations.
(v) Housing and other replacement infrastructure in the resettlement zone must
meet local standards; and cultural, social and economic livelihood systems
must be preserved.
(vi) Selection of resettlement sites for agricultural purposes must be based on

detailed field investigations, taking into account productivity of land so that
sustainable agriculture production is ensured.
(vii) Agricultural resettlement areas must provide homestead plots of sufficient

size to include appropriate space for storage of agricultural products, livestock
cultivation and for kitchen gardens.
(viii) PAFs affected by loss of community resources such as forests and irrigation
water should be ensured continued access to forest resources, pasture land,
community forests and irrigation facilities.
(ix) All PAFs relocated to resettlement zones must be provided with secured
tenure and land use right certificates. All costs incurred in surveys,
registration and allocation of land must be borne by the project.
(x) Cost of resettlement site development including cost of land survey, field
investigations, land development and cost of community facilities,
infrastructure, access to local distribution roads etc should be included in the
resettlement cost.
(xi) Location of resettlement sites must be selected in consultation and

agreement with both male and female affected persons.
(xii) Land for resettlement shall consist of Government land available for allotment
to project affected families.

(xiii) Resettlement of PAFs should be ensured within the area that will
accommodate people of their own community.
(xiv) The project should assist resettlers to integrate socially and economically with
the host communities so that adverse impacts on host communities are
minimized.
(xv) Benefits should be provided to host communities to ensure fairness and to

avoid unnecessary problems that may arise due to differences in allocation of
infrastructure or services between resettlers and host families.
(xvi) The costs of design, implementation and management of these benefits

should be included in project costs.
(xvii) If sufficient Government land is not available, land has to be acquired for
purposes of resettlement and rehabilitation. However, it should ensure that
such acquisition of land should not lead to another list of affected families.
(xviii) Resettlement should be taken as an opportunity for development of

vulnerable people and a Vulnerable Group Development Plan (VGDP) should
be prepared as an integral part of land acquisition and compensation plan.
7.5. Preparation of Resettlement Plan
228. Lack of a complete resettlement plan prior to acquisition of land is bound to result in
delays in compensation payment, which would further aggravate the detrimental situation of
affected persons. Thus, the preparation of a land acquisition and compensation plan prior to
acquisition of land is paramount for the successful completion of a project. The following are
aspects and measures that will need to be considered while developing a resettlement plan:
(i) Resettlement plan should be prepared in view of the level of social impact
assessed at the planning stage of the project.
(ii) Resettlement plans should also be prepared for projects that do not involve
any displacement. Resettlement plans for the development of vulnerable
people shall be carried out irrespective of the numbers of people affected.
(iii) A short resettlement plan should be prepared for projects having one or more
settlements involving displacement of 200 or less people within a radius of 5
km.
(iv) A full resettlement plan should be prepared for projects involving en masse
displacements or any project having one or more settlements displacing more
than 200 people within a radius of 5 km.
(v) A resettlement plan should be prepared in consultation with affected people,

social service workers, and members of civil society.
(vi) Grievance redress mechanism should be addressed at various levels during

planning and implementation of the resettlement plan.
(vii) Resettlement plans should incorporate data from findings based on baseline
surveys, census of affected households and in consultation with
representatives of PAFs and representatives of vulnerable groups.

(viii) A separate VGDP is needed for projects under significant social impact
category. Nationally recognized sub-category of specific vulnerable groups
should be consulted to identify specific needs and measures for vulnerable
groups during resettlement and rehabilitation.
(ix) Resettlement plans should specify the formation process of local consultative
forum and responsibilities of its members.
(x) Programs for skills and income generation should be defined in the
resettlement plan.
229. In addition to the above mentioned necessary stages and measures, the following
are details that should be incorporated into every resettlement plan:
(i) Resettlement plan should spell out the extent of the area to be acquired for
the project.
(ii) All household and community data should be presented in a gender-

disaggregated format.
(iii) The resettlement plan should have detailed data on affected families and
persons in every village. Furthermore, the plan should also enlist the number
of people that could potentially be displaced and should make an inventory of
land and other forms of property in their possession.
(iv) A detailed list of agricultural laborers and their households and people whose
livelihood depend on agricultural activities should be prepared.
(v) A list should be prepared of people who have lost their livelihood or
employment or who are likely to loose their source of income due to
displacement.
(vi) The resettlement plan should have a complete list of public utilities and
Government buildings, which are likely to be affected by the project.
(vii) A comprehensive list of people entitled to benefits and packages should be

prepared.
(viii) Details of the extent of land available for resettling and allotting to PAFs
should be made available.
(ix) Basic amenities and infrastructure facilities should be provided during

resettlement.
(x) Time schedule for shifting and resettling displaced families in resettlement
zones should be outlined in the plan.

VIII. INSTITUTIONAL ARRANGEMENT FOR PLANNING AND

IMPLEMENTATION OF RESETTLEMENT PLAN
8.1. Community Participation and Consultation
230. Community consultation, participation and grievance redress mechanisms are

essential in resettlement planning and implementation. The effectiveness of any resettlement
program is largely dependent upon the participation and feedback from various
stakeholderspersons affected negatively or positively by the projectthroughout all stages
of the project cycle (ADB 1998).
231. Participation of stakeholders in a development project encompasses two distinct

dimensions: (i) information exchange, dissemination and consultation, and (ii) a collaborative
form of decision-making. Dissemination refers to transfer of information from project
authorities to the affected population. Consultation, on the other hand, generally refers to
joint discussion between project authorities and the affected population that serves as a
means for transfer of information and sharing of ideas. In the context of environment and
social assessment, public participation generally encompasses both these dimensions,
which overlap at times. Public participation is an ongoing process undertaken as part of
project planning and implementation. The level of information disseminated and the issues
that consultation should address vary depending on the stage of the project cycle.
8.1.1. Objectives of Public Information and Consultation
232. Consultation with affected people should take place at the initial stages of all
resettlement activities. This process is significant due to the following reasons: (i)
consultation gives a voice to primary beneficiaries and especially to those who are exposed
to risks and undergo loss of property and livelihood; (ii) a participatory approach involving
stakeholders will increase the chances of successfully carrying out resettlement and
compensation measures; (iii) it will provide planners with feedback and help them prioritise
on issues regarding reduction of risks, and socio-economic impact assessment; (iv)
consultations with stakeholders will increase the degree of transparency in the project cycle
process and will help in consensus building, and (v) disclosure of information relevant to
affected people such as resettlement options, compensation, rehabilitation arrangements
and land registration issues are crucial to sustain the life of the project.
233. Effective external relations and disclosure of information are central elements in
building partnerships with stakeholders (ADB 2005). Information disclosure policy is
necessary for the following reasons:
(i) Sharing knowledge and information relevant to the project, enhances the cost
effectiveness of development projects.
(ii) Disclosure of timely information will allow community level participation in

decision making. Above all, affected people need to possess information in a
timely and accurate manner because they are the primary recipients of
project impacts. Thus, their inputs in project design are both necessary and
valuable.
(iii) As mentioned above, it will improve the overall transparency of the project
cycle process.

(iv) It will facilitate interaction between decision makers, affected people, NGOs,
consultants, academics, private sector partners, service providers, media etc.
234. The objectives of public information and consultation are the following:
(i) To fully share information with affected people on the proposed project and its
associated environmental impact.
(ii) Consultation will allow planners to understand the needs and priorities of
affected people. Moreover, it will also give them an understanding of the
reaction of affected people to proposed policies and activities.
(iii) Planners require information on the various options for relocation and
rehabilitation measures available.
(iv) A successful resettlement plan and implementation needs cooperation and

participation of affected people and communities.
(v) A primary objective of consultation is to ensure transparency in all activities

related to environmentally related operational procedures, land acquisition,
resettlement and rehabilitation.
(vi) To make the entire process gender and socially inclusive and to seek
participation of vulnerable groups in identifying impact and developing
appropriate mitigation measures.
8.1.2. Identification of Stakeholders
235. Stakeholders are persons or institutions that have either a direct or an indirect
interest in project development and are affected negatively or positively by the project.
Primary and secondary are two types of stakeholders.
236. The following are primary stakeholders of any project: (i) project affected people and
households, (ii) project beneficiaries, (iii) host populations in the planned resettlement sites,
and (iv) implementing agencies
237. The secondary stakeholders of the project include groups or persons that have an
interest in the project. The following is a list secondary stakeholdersthe list is not
exhaustive: (i) Government, (ii) policy makers, (iii) elected officials, (iv) advocacy groups and
NGOs, and (v) donors.
8.1.3. Mechanisms of Participation for Stakeholders
238. The main principle of participation is information sharing with stakeholders. Most
often, opposition to development project arises from lack of information or misinformation.
For the success of development projects, management must share information on all
aspects of the project including its impact, compensation policies, schedule, grievance
mechanisms, relocation sites and the agency responsible for implementation.
Representatives of various stakeholder groups must be involved at all stages of project
identification and implementation.
239. Some of the ways in which participation of stakeholders can be ensured is through (i)
public meetings in the project area, (ii) information campaign through media, (iii) interviews
TA-4422-NEP INSTITUTIONAL ARRANGEMENT FOR PLANNING AND 64

with project affected persons and families, (iv) formation of committees and groups
comprising of stakeholders at various stages of the project, (v) formation of focus groups
discussion among various groups of stakeholders, and (vi) creation of forums for grievance
redresses mechanism within the project premise.
8.1.4. Participation of Stakeholders in the Project Cycle
240. Stakeholders should be involved in all the stages of the project cycle. Effective
consultations with local administration, CBOs and project affected persons facilitate timely
execution of the project.
241. In any project public participation, consultation and information dissemination should
begin with environment and social impact assessment. Public consultation activities and
information dissemination to affected people and local authorities continue as activities
proceed through different stages in a project. Project affected people should be regularly
provided with information on the project and the resettlement process prior to and during the
resettlement action plan preparation and implementation stage. Information can be provided
through the respective local governments and civil society.
242. Project proponents are required to ensure that local authorities as well as
representatives of project affected people are included in the implementation and decision
making process. Project proponents are also required to continue dialogue with local officials
and representatives of affected people during the project implementation process.
Participation of affected people should also be ensured during final assessment of
compensation, resettlement and monitoring. Specific public participation and consultation
activities that should take place in the project cycle are summarized in Table 8.1.
Table 8.1: The Stages in a Project and the Nature of Participation of Stakeholders in
the Process
S.N. Project Stage Participation of stakeholders
1. Project identification Participate in public meetings,
identify alternatives to minimize resettlement, and
assist in developing and choosing alternative options for relocation
and income restoration.
2. Feasibility study and Assist in selecting resettlement site,
resettlement planning participate in surveys,
participate in meetings,
provide suggestions to entitlement provisions,
provide inputs in resettlement plan preparation, and
use established mechanism for grievance redress and conflict
resolution.
3. Project implementation Participate in the implementation process,
join local decision making committees,
decide on management of common property,
use established mechanisms for grievance redress, and
provide inputs to local consultative groups
S.N = Serial Number

Source: SETA Lao Report, 2005
8.2. Participation, Consultation and Information Disclosure Mechanism to

Vulnerable Population
243. To ensure genuine representation of vulnerable groups, effective channels for

communication should be maintained and information disseminated in local languages. It is
necessary to identify existing informal and formal institutions working in behalf of identified
vulnerable groups including user groups, traditional organizations, NGOs, VDCs and DDCs.
These institutions should be involved in consultation and information dissemination.

244. Information should be gathered through general mass meetings and specific focus
group meetings comprising different vulnerable groups. It is important to include household
members of vulnerable groups while collecting household data and conducting household
interviews.
245. Participation and consultation process should be conducted in a culturally

appropriate manner and project owners should be sensitised on cultural issues.
246. The enumerators should make sure that influential and articulate leaders
representing social groups are invited to these mass meetings and are encouraged to
provide inputs and other necessary assistance. In addition, agencies and people possessing
knowledge on vulnerable groups and poor people should also be invited to these meetings.
247. The prevailing practice putting up notices in newspapers and other public places will
not work for vulnerable groups, who are largely illiterate and generally live in isolated
locations. The following measures should be considered to establish an effective
information system:
(i) Establish a public information centre at a convenient location for information

dissemination and to answer queries related to the project and resettlement.
(ii) Ensure different categories of stakeholders are adequately represented in

information collection, dissemination, compensation fixation and grievance
redress committee.
(iii) Utilize local advisory groups and their federations in information dissemination
and public outreach programs.
8.3. Grievance Redress Procedure
248. A substantial portion of this book has been talking about the most undesirable
consequences of development projects manifesting as loss of livelihood, property, income,
environment and traditions. An appropriate form must be ensured for the affected population
to address the above mentioned losses so that they are duly compensated. Thus, affected
people should have access to effective procedures for lodging complaints and for their
appropriate resolution.
249. A grievance redress committee should be constituted at the beginning of the detailed
design stage. At least 33% of grievance redress committee members should be female.
250. The Grievance Redress Committee should comprise of (i) a high level representative
of the central Government in case of central level projects, or heads of local government as
chairperson, in case of local level projects; (ii) representatives of local bodies; (iii)
representatives of affected families; (iv) village elders or local level representatives of mass
organizations or other relevant agencies; (v) representatives of project proponent; and (vi)
social service workers and NGOs to attend as observers and to provide support to project
affected persons.
251. The Grievance Redress Committee should have the power to consider and dispose
of all complaints relating to land acquisition, compensation, resettlement and rehabilitation
against the decision of the project manager. The Committee may issue necessary directions

to the project manager or local bodies, whichever seems proper for redress of such
grievances.
8.3.1. Grievance Redress for Vulnerable Population
252. Grievance redress for vulnerable groups have to be handled very delicately as they
are an underrepresented group with limited access to assets and resources.
Grievance redress mechanism should involve local advisory committees representing
different vulnerable groups. These groups along with project social scientists and community
NGOs can play an important role in mediation, complaint handling and providing necessary
support.
253. The grievance redress procedure is one of the most controversial stages in the entire
project cycle. While the affected population would have its interest in trying to inflate their
losses to secure a higher compensation, project owners would want to reduce the level of
compensation to ultimately reduce project costs. Hence, the potential for at least a subtle
form of conflict between the owners and the affected exist at this stage of the cycle.
Therefore, it may be of no surprise if many cases are unresolved at lower levels requiring
participation of representatives of second tier local advisory groups, elected representatives,
civil society representatives and other influential local representatives to ensure fairness to
all parties.
254. Support services include providing assistance to vulnerable groups in filing

grievances before and during project implementation. This will require understanding the
process of resettlement and compensation, processing formal requestscomplaint filing,
reaching appropriate people etcsupporting genuine cases in claiming ownership,
entitlement rights and land registration.
255. It is important for all members of local advisory groups and grievance redress
committee to fully understand policy and entitlement criteria, procedure related to data
collection, assessment of impact and compensation rates, public consultation and
participation process and gender issues. In this context, a short training for these groups in
project cycle, resettlement planning, conflict mediation, support service delivery, social
exclusion and gender issues will be fruitful.
8.4. Responsibility for Planning and Implementation of Land Acquisition and

Compensation Plan
256. Planning and implementation of resettlement and rehabilitation should be the

responsibility of central level agencies for central level projects and local bodies for local
level projects.
8.4.1. Planning
257. Each line agency concerned with infrastructure development should have a land
acquisition, compensation, resettlement and rehabilitation unit. This unit should be headed
by a social scientist, responsible for not only carrying out initial social assessment during the
prefeasibility stage, but also for preparing initial land acquisition and compensation plan
during the feasibility stage of a project. When budget constraints do not permit the
contracting of a social scientist as head of the unit, the head of the infrastructural unit of local
government can act as the head of the above unit.
8.4.2. Approval of Land Acquisition and Compensation Plan

258. The concerned line ministry or head of local body should approve the resettlement
plan at the feasibility stage of the project. Final resettlement plan, at the detail design stage
should be approved by the cabinet in case of central level projects or by the head of local
body in case of local level projects.
8.4.3. Implementation of Land Acquisition and Compensation Plan
259. A land acquisition, compensation, resettlement and rehabilitation office should be

established for each project, which should be responsible for the preparation of final land
acquisition compensation plan or final resettlement plan and their implementation.
260. The local government should appoint the head of the above office and the project
should provide full cost of establishment, operation and maintenance of such office and the
implementation of the entire resettlement plan.
261. The project manager shall normally be appointed by the Government as the head of
the compensation, resettlement and rehabilitation office for the implementation of the short
resettlement plan.
8.4.4. Implementation of Full Resettlement Plan
262. The Government should appoint a commissioner to head the office of land
acquisition compensation resettlement and rehabilitation for projects involving a full
resettlement plan.The head and commissioner of the land acquisition, compensation,
resettlement and rehabilitation office should be given full authority to decide on all matters
relating to preparation of final resettlement plan and its implementation.
263. Since all land acquisition and transfer of title should be completed before the start of
civil works of the project, the implementation stage of the resettlement plan should actually
start at the detailed design stage of the project. The final resettlement plan can be prepared
in most major projects during the detail design stage only. The payment of compensation
and title transfer of land in case of linear projects may be carried out in sectionsof say 5
km length of the projectduring the implementation of civil works so that there is no
significant time gap between the title transfer stage and the start of civil works. However,
long time gaps between the cut off date and the title transfer period should be avoided
because census data would change significantly over such long periods.
8.5. Compensation Determination Committee
264. The existing LAA 1977 does not include representatives of PAFs, NGOs, social
service workers and civil society in the Compensation Determination Committee, which
should decide on issues related to compensation and other rehabilitation assistance. The
following arrangement is suggested in the policy or the legal instruments for the
Compensation Determination Committee:
(i) Chief district officer or appropriate authority of the central Government or

commissioner of land acquisition, compensation, resettlement and
rehabilitation officechairperson.
(ii) Member of parliament of the concerned constituencymember.
(iii) Project managermember secretary.

(iv) Representative of related local bodymember.
(v) District land revenue officesmember.
(vi) District cadastral survey officesmember.
(vii) Representative of PAFobserver.
(viii) Representative of civil societyobserver.

IX. MONITORING AND EVALUATION
9.1. Project Level Monitoring and Evaluation
265. Project planners should make necessary arrangements for continuous monitoring
and supervision of resettlement implementation as per the technical guidelines on land
acquisition compensation and resettlement.
266. Monitoring and supervision of resettlement should include the following activities:
(i) Follow up and monitor progress at each step of the resettlement and
compensation process making sure it is compliant with provisions of the
resettlement policy.
(ii) Monitor the delivery of budgetary funds from headquarters to field units for
availability of funds on time and in accordance with implementation schedule.
Above all, monitoring of funds is necessary to ensure that the budget is
expended in the names envisaged and for the purposes envisaged in the
resettlement plan and the VGDP.
267. Project planners should establish appropriate procedures for preparation of periodic
reports covering monitoring activities for internal review by project managers and for onward
transmission to supervisors and to the concerned line ministries as part of the project
progress reports. These reports can be prepared at least once in six months.
268. Projects with significant social impacts will need special monitoring to mitigate the
damage upon the affected people. For this, an external consulting agency experienced in
such practises should be hired on contract to fulfil the above functions.
269. The contracted external monitoring agency should carry out monitoring in accordance
with its terms of reference and submit periodic reports at least once in every six months to
the project owner. It should also submit a copy of the external monitoring report to the
concerned ministry within the time frame specified in the technical guidelines.
270. The internal and external monitoring of resettlement implementation activities should
continue until all resettlement and rehabilitation activities of the project are completed.
9.1.1. Monitoring and Evaluation of Vulnerable Groups
271. Local advisory groups of different vulnerable groups, federation of local advisory
groups, NGOs and national level organizations working on poverty reduction and social
inclusion issues should be involved in monitoring resettlement activities on behalf of
vulnerable groups. Independent consultants with background and expertise in the social
sciences and gender studies should also be mobilized and encouraged to participate in
monitoring activities.
9.2. National Level Monitoring and Evaluation
272. A national monitoring committee should be constituted for each project to

monitor the implementation of resettlement plan. The National Monitoring Committee
should meet once a year and monitor the progress and problems of the resettlement
TA-4422-NEP MONITORING AND EVALUATION 70

plan. Identification of common issues in resettlement and project specific issues should
be undertaken by the National Monitoring Committee to improve policies and
regulations. Other functions of the National Monitoring Committee are to resolve
budget and funding issues, solve institutional problems and conduct impact evaluation
of completed projects.
273. The National Monitoring Committee should have the following organizational
structure:
(i) Member of National Planning Commissionchairperson.
(ii) Member of Parliament of the concerned constituencymember.
(iii) Project manager of the concerned projectmember secretary.
(iv) Representative of civil societymember.
(v) Representative of PAFmember.
(vi) Representative of NGOs and CBOsmember.

BIBLIOGRAPHY
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Macro-Level Statistical Profile. Kathmandu.
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Practice. Manila.
.2002. Regional Workshop on National Resettlement Policy Enhancement and

Capacity Building. Manila, 1820 February.
.2003. Project Completion Report on the Melamchi Water Supply Project in Nepal.
Manila.
Bhattarai, Ananda Mohan. 2001. Displacement and Rehabilitation in Nepal: Law, Policy and
Practice. New Delhi: Anmol Publications.
Bisangkhe, Shiva. 2004. Water Project Related Involuntary Displacement in Nepal. Water
Nepal 11(1) 85103.
Byrne, Hilary. 2004. Road Network Development Project Resettlement Framework. Report
prepared for the Ministry of Physical Planning and Works, Kathmandu.
Cernea, Michael M. 2001. Risk Assessment and Management in Involuntary Resettlement.

Paper delivered at the Asia and Pacific Forum on Poverty: Reforming Policies and
Institutions for Poverty Reduction, ADB, Manila, 59 February.
Constitution of the Kingdom of Nepal, 1990, Kathmandu.
Department of Industries. 1998. Resettlement Plan and Framework for Sunsari Morang
Irrigation Project, Stage III, Phase I, Kathmandu.
Department of Local Infrastructure Development and Agricultural Roads. 2004. Environment

and Social Management Framework for Rural Access Improvement Project, Ministry
of Local Development, Kathmandu.
Department of Roads. 2005. Jumla-Kalikot Road (36km), Status of Site Implementation.

Report prepared for the Road Maintenance and Development Project, Kathmandu.
Dixit, Ajaya. 1994. Water Projects in Nepal: Lessons from Displacement and Rehabilitation.
Water Nepal 4(1) 7485.
Dixit, Ajaya, Pradeep Adhikari and Shiva Bisangkhe, eds. 2004. Constructive Dialogue on
Dams and Development in Nepal. Kathmandu: International Conservation Union
(IUCN).
Dixit, Ajaya, Ansu Tumbahangfe and Shiva Bisangkhe. 2005. Involuntary Displacement and
Livelihood: An Analysis of Nepals Proposed Five High Dam Projects. Action Aid
Nepal and Nepal Water Conservation Foundation, Kathmandu.

Kali Gandaki Environment Management Unit (KGEMU). 2002. Impoverishment Risks

Monitoring and Management in Kali Gandaki A Hydroelectric Project: A Social
Synthesis Report. Kali Gandaki Environmental Management Unit, Beltari, Syangja.
Melamchi Water Development Committee. 2003. Melamchi Water Supply Project,

Resettlement Policy, Kathmandu.
Ministry of Land Reform and Management. 2005 Bhumisangha Sambandhit Niyamharuko

Sanghalo (Collection of Rules and Regulations Related to Land), Kathmandu.
Morrison Knudsen International Inc. 1996. Environmental Impact Assessment, Final Report,
Kali Gandaki A Associates, Morrison Knundsen Corporation, USA, Norconsult
International, Norway, and IVO International LTD, Finland.
National Planning Commission. 2003. The Tenth Plan (Poverty Reduction Strategy Paper
20022007). Kathmandu: His Majestys Government of Nepal.
Nepal Federation of Indigenous Nationalities (NEFIN). 2005. Janjati Empowerment Project,

Kathmandu.
New Era. 1999. ADB Regional Technical Assistance Report on Nepal Resettlement Policy
and Practice, Kathmandu.
. 2002. ADB Regional Technical Assistance Report on Guidelines for Resettlement

Planning and Implementation, Kathmandu.
Rai, Kavita. 2005. Dam Development: The Dynamics of Social Inequality in a Hydropower
Project in Nepal. Doctoral Dissertation submitted to the Faculty of Philosophy in
Rheinische Friedrich-Wilhelms-University, Bonn.
Science Technology and Environment Agency (SETA), Lao. 2005. Technical Guidelines on
Compensation and Resettlement in Development Projects, Lao People's Democratic
Republic.
Scott Wilson and Kirkpatrick. 1990. Acquisition, Compensation and Rehabilitation Plan
(ACRP), Arun III Access Road Project. Report prepared for Department of Roads,
Kathmandu.
Snowy Mountain Engineering Corporation (SMEC), and CEMAT Consultants (Pvt). Ltd.
1999. Environmental Impact Assessment, Kathmandu.
. 1999. Final Report on Resettlement Plan, Kathmandu.
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Constraints and Opportunities, Institute for Integrated Development Studies (IIDS),
Kathmandu.
. 2005. Report on Culture Ethnicity and Gender Issues, IIDS, Kathmandu.
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Hydroelectric Project. Report prepared for Nepal Electricity Authority, Kathmandu.
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Hydropower Projects. Kathmandu: Winrock International.
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Washington, DC.

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Technical Assistance Consultants Report

Project Number: 3821501

Nepal: Preparation of National Resettlement Policy

Prepared by Dilli Ram Dahal

For National Planning Commission

Dilli Ram Dahal

PART II: REVIEWS 5

CHAPTER 3: CURRENT RESETTLEMENT PRACTICES IN NEPAL 15

CHAPTER 4: STATUS OF VULNERABLE GROUPS IN NEPAL 20

PART III: POLICY ANALYSES AND RECOMMENDATIONS 27

CHAPTER 5: LAND ACQUISITION, ENTITLEMENT AND COMPENSATION 27

CHAPTER 6: CHARACTERISTICS AND ISSUES IN LINEAR AND URBAN

CHAPTER 7: PREPARATION OF LAND ACQUISITION AND RESETTELMENT PLAN 56

CHAPTER IX MONITORING AND EVALUATION 69

(As of 21 September 2006)

Currency Unit Nepalese rupees (NRs)

ADB Asian Development Bank

Ropani unit of land measurement

Adivasi/Janajati The National Academy for Upliftment of Adivasi/Janajati Act

Census Account of the socio-economic data of 100% of project

Compensation Payment in cash or kind to cover for lost assets, resources or

Dalit A socially excluded personusually from the occupational

Entitlement Range of measures such as compensation, income

Involuntary resettlement When individuals and households are required to forfeit

Local body Village Municipality or District Development Committee (DDC).

Notification Acquisition notification published in newspapers for

Project proponent Ministry, department or DDC responsible for planning and

Rehabilitation Assistance provided to project affected persons to restore

Replacement cost Amount needed to replace an affected asset at replacement

(i) Agricultural land, forest products and fishponds are

Resettlement plan A plan for undertaking resettlement and rehabilitation of

Ropani Unit of land measurement where 1 ropani = 5,476 sq.ft =

Resettlement Declared area acquired or proposed to be acquired by the

Requiring body Any institution, company, organization, corporation or

Squatters People living on land not owned by themselves and without

Vulnerability Criteria It is based on the severity of loss or damage resulting from

Land acquisition, compensation and resettlement are crucial issues concerning

In Nepal, most development projects are donor funded. A lack of adequate

(iv) In major projects such as Kali Gandaki A Hydroelectricity Project, Melamchi

Discrepancy between developing project specific involuntary resettlement policies for

The major objective of the TA-4422-NEP is to formulate a national policy on

B. Outputs of the TA 4422-NEP

(ii) Based on Nepal's terrain; vulnerable groups, compensation, laws

(iii) Relevant policies of other countries.

(iv) Lessons from project based practices in Nepal.

(v) Affordability, sustainability, and growth of infrastructure development in

(vi) Specific provisions for linear infrastructures such as roads, transmission

(vii) Specific needs of projects involving large-scale displacements such as

(viii) Based on extensive and intensive reviews, comments and feedbacks

1.1. Rationale for Resettlement Policy Framework for Nepal

2. It is imperative to guarantee appropriate compensation packages for people who

5. Against this backdrop of insufficient and irrelevant resettlement policies, there is an

1 October 2006 TA-4422-NEP

(i) Government cannot run packages of involuntary resettlement on a project

(ii) Social impact assessment is an essential stage in the process of developing

(iii) A comprehensive policy is necessary to guide the formulation of acts, rules

(iv) Besides protecting the projected affected people, a comprehensive national

1.2. Objectives of the TA-4422-NEP

9. The major objective of the TA-4422-NEP is the formulation of a national policy on

(ii) Review current resettlement practices and their level of effectiveness in

(iii) Identify required policy measures to improve resettlement practices.

(iv) Develop mechanisms to prepare effective resettlement plans in project

(v) Work out appropriate compensation, entitlement and rehabilitation principles.