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 Sustainable Financing Mechanism for
Protected Areas of Nepal

Practical Solution Consultancy Nepal, Department of National Parks and

Kathmandu, Nepal, Phone: 1 4620373 Wildlife Conservation, Babarmahal,
Kathmandu, Nepal,, www.psplnepal.org Kathmandu, Ph: 1 4227926,
Email: psplnepal@gmail.com www.mofsc.gov.np,
Final Report

Sustainable Financing Mechanism for

Protected Areas of Nepal
Nepa

Submitted By:
Govinda Koirala, Mohan P.
P Wagley, Karan B. Shah,
Ram P. Acharya, Ripu M. Kunwar, Suman Dhakal and Prashant Paudel

Practical Solution Consultancy Nepal (PSPL)

Kathmandu, Nepal
Phone: 977 1 4620373,
Email: info@psplnepal.org,
info@psplnepal.org www.psplnepal.org.np

Submitted To:

Department of National Parks

Parks and Wildlife Conservation
(DNPWC), Babarmahal, Kathmandu, Nepal
Ph: 00977 1 4227926,
4227926 www.mofsc.gov.np

May 2012

ii
 Table of Contents
LIST OF TABLES ................................................................................................................................................ IV
LIST OF FIGURES ............................................................................................................................................... IV
LIST OF ANNEXES.............................................................................................................................................. IV
ACKNOWLEDGEMENTS ..................................................................................................................................... V
ACRONYMS ........................................................................................................................................................ VI
EXECUTIVE SUMMARY ................................................................................................................................... VIII
CHAPTER ONE: INTRODUCTION ...................................................................................................................... 1
1.1 BACKGROUND .................................................................................................................................................... 1
1.2 DEPARTMENT OF NATIONAL PARK AND WILDLIFE CONSERVATION............................................................................ 2
1.3 RATIONALE OF THE STUDY ................................................................................................................................... 3
1.4 SIGNIFICANCE OF THE STUDY ................................................................................................................................ 3
1.5 OBJECTIVES OF THE STUDY ................................................................................................................................... 3
1.6 SCOPE OF THE STUDY .......................................................................................................................................... 3
1.7 ORGANIZATION OF THE REPORT ............................................................................................................................ 4
1.8 DOCUMENT REVIEW............................................................................................................................................ 4
1.8.1 Sustainable financing mechanisms and practices in the World ........................................................... 4
1.8.2 Sustainable financing practices in the World ..................................................................................... 5
1.8.3 Sustainable financing mechanisms and practices in Nepal ............................................................... 6
1.8.4 National policies and laws related to sustainable financing.............................................................. 6
1.8.5 Sustainable financing strategies of national policy documents ......................................................... 7
1.8.6 Attracting funds ................................................................................................................................... 8
1.8.7 Market based funds .............................................................................................................................. 9
1.8.8 Sharing funds ..................................................................................................................................... 10
1.8.9 Institutional mechanisms for fund management.............................................................................. 10
CHAPTER TWO: MATERIALS AND METHODS...................................................................................................12
2.1 CONCEPTUAL FRAMEWORK ................................................................................................................................ 12
2.2 STUDY APPROACHES ......................................................................................................................................... 12
2.3 STUDY AREA AND SITES ..................................................................................................................................... 12
2.4 STUDY METHODS .............................................................................................................................................. 13
2.4.1 Literature review ............................................................................................................................... 13
2.4.2 Checklist survey .................................................................................................................................. 13
2.4.3 Consultation workshops .................................................................................................................... 13
2.4.4 Data analysis ...................................................................................................................................... 13
2.4.5 Gap analysis ....................................................................................................................................... 14
2.4.6 Limitation of the study....................................................................................................................... 14
CHAPTER THREE: RESULTS AND DISCUSSION ..............................................................................................15
3.1 SUSTAINABLE FINANCING MECHANISMS IN NEPAL ......................................................................................... 15
3.1.1 Fund generation: Sources of PA finance............................................................................................ 15
3.1.1.1 Domestic sources..................................................................................................................................... 15
3.1.1.2 External sources ............................................................................................................................................ 18
3.1.1.3 Bilateral and Multilateral funds .................................................................................................................... 18
3.1.1.4 Partnership fund...................................................................................................................................... 19
3.1.1.5 Private and community funds................................................................................................................. 20
3.1.2 Fund mobilization .............................................................................................................................. 20
3.1.3 Fund management ............................................................................................................................. 23
3.2 ECOSYSTEM SERVICES OF PAS OF NEPAL....................................................................................................... 23
3.3 GAP ANALYSIS............................................................................................................................................ 24
3.3.1 Fund generation ................................................................................................................................. 24
3.3.2 Fund mobilization and management ................................................................................................ 25
3.4 SUSTAINABLE FINANCING STRATEGIES .......................................................................................................... 26
3.4.1 Long term financial planning ................................................................................................................. 26

iii
 3.4.2 Economic valuation ................................................................................................................................. 26
3.4.3 Resource generation ................................................................................................................................ 26
3.4.4 Resource management ............................................................................................................................ 26
3.4.5 Innovative fund generation avenues ...................................................................................................... 26
CHAPTER FOUR: CONCLUSION AND RECOMMENDATIONS .............................................................................28
4.1 CONCLUSION .............................................................................................................................................. 28
4.2 RECOMMENDATIONS................................................................................................................................... 29
CHAPTER FIVE: BIBLIOGRAPHY .....................................................................................................................30

LIST OF TABLES
Table 1: Protect Areas of Nepal ................................................................................................... 1
Table 2: Policy documents of Nepal related to sustainable financing...................................... 6
Table 3: National policy instruments and their financing strategies ....................................... 7
Table 4. Traditional and Innovative Financing Mechanisms .................................................. 10
Table 5: Sample PAs and their biophysical settings ................................................................ 12
Table 6: Income sources of DNPWC (including KCA and DHR)(In NRs. ‘000) ...................... 15
Table 7: Total number of tourists visited in PAs of Nepal ....................................................... 16
Table 8: Budget planning in different management plans (NRs ‘000) ..................................... 18
Table 9: Collaborative/Partnership projects of DNPWC (2001-2010) .................................. 19
Table 10: Menu of options for fund generation ....................................................................... 20
Table 11: Fund mobilization trends (NRs ‘000) ....................................................................... 21
Table 12: Annual budget and expenditure trend of DNPWC .................................................. 21
Table 13: Annual government allotted budget and revenue generated by PAs (‘000) ........ 22
Table 14: Fund management scenario ...................................................................................... 23
Table 15: Major ecosystem services of national parks and wildlife reserves of Nepal ........ 24
LIST OF FIGURES
Figure 1: Sustainable financing mechanism ............................................................................... 8
Figure 2: Planning hierarchy for PA management ................................................................... 11
Figure 3: Basic Conceptual framework and elements of sustainable financing ......................... 12
Figure 4: Study area and sites.................................................................................................... 13
Figure 5: Number of tourists visited in PAs of Nepal .............................................................. 16
Figure 6: Number of tourists visited in PAs of Nepal .............................................................. 17
Figure 7: Investment from bilateral and multilateral funds ................................................... 19
Figure 8: Government budget and annual revenue collected ................................................. 20
Figure 9: Average annual revenue and budget by PAs ............................................................ 22

LIST OF ANNEXES
Annex 1: Survey Checklist for Group Discussion ..................................................................... 32
Annex 2: List of people consulted group discussions and informal interactions.................. 34
Annex 3. Number and trend of visiting tourists ....................................................................... 35
Annex 4. Frequency of income entities in PAs ......................................................................... 35
Annex 5: Revenue generation by selected PAs (NRs ‘000) ..................................................... 35
Annex 6: Budget expenditure PAs (NRs ‘000).......................................................................... 36
Annex 7: Fund generation, mobilization and management in protected areas .................... 36
Annex 8: Services rendered by your PA (tick appropriate) .................................................... 50

iv
ACKNOWLEDGEMENTS

Practical Solution Consultancy Pvt Ltd (PSPL) is thankful to Department of National Park and
Wildlife Conservation for providing us an opportunity to carry out the present study. In this
connection, PSPL would like to extend sincere gratitude to central, regional and local level
authorities of DNPWC, particularly to Mr. Krishna Prasad Acharya, Director General, Department of
National Park and Wildlife Conservation; Dr. Maheshwar Dhakal, Ecologist, DNPWC; and other
staffs of DNPWC. PSPL would also like to extend thanks to Mr. Tikaram Adhikari, Warden and his
team, Bardia National Park; Mr. Gopal Prakash Bhattarai, Warden and his team, Shivpuri-Nagarjun
National Park; Mr. Jhamak Bahadur Karki, Warden and his team, Chitwan National Park; Mr. Bed
Kumar Dhakal, Warden and his team, Langtang National Park and Mr. Yubraj Regmi, Warden and
his team, Shukla-Phanta Wildlife Reserve.

PSPL would also like to extend thanks to local communities and people who helped study by
allocating their invaluable time and sharing their ideas and experiences. The present form of this
report would not come into this shape without the comments, suggestions, inputs, and critics of the
stated stakeholders. We offer our sincere regards to all of those who supported us in any respect
during the completion of the present study.

Last but not least, we are indebted to a large number of individuals: Mr. Ranjit Pandey, Ms. Kabita
Karki, Mr. Yubaraj Dhakal, Mr. Achuyt Tiwari, Mr. Narayan Prasad Gaire, Mr. Umesh Bhandari, Mr.
Ram Pudasaini and Mr. Sudip Bhandari whose contribution in course of the study is worthy.

Practical Solution Consultancy (PSPL)

Kathmandu

v
ACRONYMS
ACA Annapurna Conservation Area
AEPC Alternative Energy Promotion Center
BaNP Banke National Park
BNP Bardia National Park
BNPBZ Bardia National Park and Buffer Zone
BOOT Build, own, operate and transfer
BS Bikram Samvat
BZ Buffer Zone
BZMC Buffer Zone Management Committee
CA Conservation Area
CBD Convention on Biological Diversity
CDM Clean Development Mechanism
CITES Convention on International Trade in Endangered Species of Wild Flora and Fauna
CMS Convention on Migratory Species of Wild Species
CNP Chitwan National Park
CNPBZ Chitwan National Park and Buffer Zone
COP Conference of Parties
DHR Dhorpatan Hunting Reserve
DNPWC Department of National Parks and Wildlife Conservation
DoF Department of Forest
FCDF Forest Conservation Development Fund
FDF Forest Development Fund
GEF Global Environment Facility
GoN Government of Nepal
GHGs Green House Gases
HR Hunting Reserve
ICIMOD International Center for Integrated Mountain Development
INGO International Non Governmental Organization
IUCN The World Conservation Union
KCA Kanchenjungha Conservation Area
KNP Khaptad National Park
KNPBZ Khaptad National Park and Buffer Zone
KrCA Krishnasar Conservation Area
KTWR Koshi-Tappu Wildlife Reserve
KTWR BZ Koshi-Tappu Wildlife Reserve and Buffer Zone
LNP Langtang National Park
LSGA Local Self Governance Act
MBNP Makalu Barun National Park
MCA Manaslu Conservation Area
MDG Millennium Development Goals
MoFSC Ministry of Forests and Soil Conservation
NBS Nepal Biodiversity Strategy
NGO Non Governmental Organization
NP National Park
NPWC National Parks and Wildlife Conservation
NTNC National Trust for Nature Conservation
PA Protected Area
PES Payment for Environmental Services
PWR Parsa Wildlife Reserve
REDD Reduce Emissions from Deforestation and Forest Degradation
RFSP Revised Forest Sector Policy
RNP Rara National Park
RNPBZ Rara National Park and Buffer Zone
SHL Sacred Himalayan Landscape
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ShNNP Shivapuri-Nagarjun National Park
SNP Sagarmatha National Park
SNPBZ Sagarmatha National Park and Buffer Zone
SNV The Netherland Government
SPNP Shey-Phoksundo National Park
SPNPBZ Shey-Phoksundo National Park and Buffer Zone
SWR Shukla-Phanta Wildlife Reserve
SWRBZ Shukla-Phanta Wildlife Reserve and Buffer Zone
TAL Terai Arc Landscape
TEV Total Economic Valuation
TYIP Three Years Interim Plan
TYP Three Year Plan
UNDP United Nations Development Programme
UNFCCC United Nations Framework Conventions for Climate Change
VAT Value Added Tax
VDC Village Development Committee
WCMC World Conservation Monitoring Center
WPMI Wildlife Premium Market Initiative
WR Wildlife Reserve
WTLCP Western Terai Landscape Complex Project
WWF World Wildlife Fund for Nature Conservation

vii
EXECUTIVE SUMMARY

Protected areas are cornerstones of virtually all national and international conservation strategies
used aside to maintain functioning natural ecosystems. They act as refuge for species and to maintain
ecological processes that cannot survive in most intensely managed landscapes and seascapes. They
provide significant economic benefits to surrounding communities and contribute to spiritual, mental
and physical wellbeing. Harmonized existence of human race on earth hinges on sustained and
extended operations of PAs. One of the basic pre-requisites for sustained operations of PAs is to
have adequate and sustained financing. In these pursuits, a need to explore innovative sources of
financing as conventional sources of funding to supplement the prevalent inadequacy of PA financing
was imperative and the present study was one of the initiatives.

Literature review, group discussions, informal meetings and consultations, field visit and observations
were organized to collect data and information regarding income sources, expenditures, sustainable
financing, PA services, sustainable strategies, etc. to acquire innovative ideas on funding and financing
mechanism put up by Department of National Parks and Wildlife Conservation, protected areas, donors
and stakeholders. Field level group discussions and visits were made in Shivpuri-Nagarjun, Chitwan,
Langtang and Bardia National Parks and Shukla-Phanta Wildlife Reserve.

Several national and international policies and practices clearly demonstrate that a comprehensive
milieu is essential for generating and mobilizing funds for sustainable management of natural
resources. There is consensus in the conservation community that the lack of adequate financing is
jeopardizing the attainments of the CBD and MDG goals, including the national targets and
priorities. Various financing mechanisms have been introduced in PAs of Nepal through attracting
funds (external supports, donations), generating funds (sharing revenue, charging service fees and
taxes) and introducing market based mechanisms (tourism fee, products sale, carbon finance, PES).
However, the coverage of these mechanisms is limited and lacking sustainability. As in other
countries of the world, government budget is the single largest source of PA financing in Nepal.

Additionally, there were 21 complementary sources of internal income for PAs and DNPWC. Entry
fee from the visiting tourists was the most amongst in revenue generation of PAs. The contribution
of revenue to the annual budget was about 50 percent. Average annual investment for PAs of Nepal
was about NRs 10,000.00 (US $ 125) per Km2 which was less than the global average (US $
157/Km2). On the basis of unit area, Chitwan NP, Parsa WR, Shivpuri-Nagarjun NP and Sagarmatha
NP were efficient in generating enough revenue per unit area i.e. more than NRs 25,000/Km2
whereas Rara, Khaptad, Makalu-Barun and Shey-Phoksundo National Parks were only able to generate
about NRs 1,000/Km2. poorly managed, urging substantial supports for sustainable financing.

The PAs particularly located in remote areas were inefficient in fund mobilization and victims of
under-financing. A range of innovative PA financing mechanisms: raising funds from new markets
(such as carbon offsets or other payments for ecosystem services), finding new donors (such as
large corporations, private philanthropists, other government agencies or tax revenue sharing),
sharing costs and benefits with local stakeholders and PAs, employing new financial tools (such as
business planning), improving wider policy and market conditions, and devolving funding and
management responsibilities (for example to NGOs, local communities, individuals or businesses)
were beneficial and strategically employed but still there was a considerable gap due to lack of
sustainable financing mechanism.

A conservancy will be financially viable or sustainable if its income exceeds its operational costs and
has a surplus to use for the benefits defined by its members. Of the thirteen study PAs, namely
Sagarmatha, Parsa, Chitwan and Shivuri-Nagarjun were about surplus in revenue-cost ratio. Only about
50 percent of budget was managed by revenue generation and the rest was sought from external
supports. Therefore the strategies as supports on internal resource generation, source diversification,
fund mobilization and scourage of dependency on external supports were inevitable and imperative to
all PAs for their sustainability. Promoting payments for ecosystem services, markets for green
viii
products, new forms of charity, and businesses engagement in biodiversity conservation
(private/public partnerships, etc) were sough as promising initiatives for sustainable financing of
PAs of Nepal. In particular, an approach of involving multistakeholders under the leadership of the
government of Nepal would be best fit. Financial management, recurrent fund availability, funding
sources, and governance (transparency and accountability), etc. are those that help institutions to
maintain their financial mechanism sustainable.

ix
CHAPTER ONE: INTRODUCTION

1.1 Background
Nepal provides a unique habitat for diverse flora and fauna as a result of the wide range of
environmental conditions especially physiographic and climatic conditions. According to an estimate
there are more than 6,653 species of flowering plants and 399 endemic plants in Nepal (Kunwar et al.
2010), of which about 2,000 species are considered useful (Shrestha et al. 2000, Baral and Kurmi 2006)
as vegetables, essential oils, fodder, medicines and for other purposes. The latter two usages are
substantial in Nepal Himalaya in terms of resource and indigenous knowledge (Manandhar 2002).

Biodiversity Profiles Project of Nepal (1996) recorded 181 mammal species, 844 bird species, 100
reptile species, 43 amphibian species, 185 freshwater fish species, and 635 butterfly species. The
Protected Areas (PAs) of Nepal has been proved a key means of protecting these species from
extinction. Nepal, at present, has a fairly extensive network of PAs that covers 23.3 percent (including
buffer zone) of its total land area, which includes ten national park, four wildlife reserves, five
conservation areas and one hunting reserve (Table 1).
Table 1: Protect Areas of Nepal
Type Name of PAs Protected zone Buffer zone
Year of est. Area Year of est. Area
National Park Banke 2010.07.12 (2067) 550 2010 (2067) 343
Bardia 1976 (2032) 968 1996 (2053) 507
Chitwan 1973 (2030) 932 1996 (2053) 750
Khaptad 1984 (2042) 225 2006 (2063) 216
Langtang 1976 (2032) 1,710 1998 (2055) 420
Makalu-Barun 1991 (2049) 1,500 1999 (2055) 830
Rara 1976 (2032) 106 2006 (2063) 198
Sagarmatha 1976 (2032) 1,148 2002 (2058) 275
Shey-Phoksundo 1984 (2040) 3,555 1998 (2055) 1,349
Shivpuri-Nagarjun 2002 (2058) 159 0
Total area (km2) 10,853 4,888
Wildlife Reserve Shukla-Phanta 1976 (2031) 305 2004 (2061) 243
Parsa 1984 (2040) 499 2005 (2062) 298
Koshi-Tappu 1976 (2032) 175 2004 (2061) 173
Total area (km2) 979 714
Conservation Area Kanchanjugha 1997 (2054) 2035
Gaurishankar 2010 (2066) 2179
Annapurna 1992 (2049) 7629
Manaslu 1998 (2055) 1663
Apinampa 2010.07.12 (2067) 1903
Blackbuck 2009.03 (2065) 16.95
Total area (km2) 15425.95
Hunting Reserve Dhorpatan 1987 (2044) 1325
Grant total (km2) 34184.95
Source: DNPWC annual reports

PAs are recognized by IUCN (1994) as areas of land and/or sea especially dedicated to the
protection and maintenance of biological diversity, and of natural and associated cultural
resources, and managed through legal or other effective means. They provide significant economic
benefits to surrounding communities and contribute to spiritual, mental and physical wellbeing. They
help to fulfill an ethical responsibility to respect nature and provide opportunities to learn about nature
and the environment (IUCN 2000). Again, they can effectively protect some elements of biodiversity
and contribute to the conservation of nature, are indirectly embedded to landscape conservation
approach in which multiple types of natural resources exploitation occurs. Effective biodiversity
conservation should therefore integrate use and protection across the landscapes (CBD 1992, Fox et al.
2006).
The PAs are cornerstones of virtually all national and international conservation strategies used aside
to maintain functioning natural ecosystems. They act as refuge for species and to maintain ecological
processes that cannot survive in most intensely managed landscapes and seascapes. PAs are, of course,
important because of the critical role they play in biodiversity conservation. This role is recognized by
most countries including the 177 Parties to the CBD (Davey 1998).

1.2 Department of National Park and Wildlife Conservation

In Nepal, the Department of National Park and Wildlife Conservation (DNPWC) works for conservation
and sustainable use of globally significant biodiversity through management of financial resources for
PAs. The department therefore holds a comprehensive approach of financing for environmentally
sustainable development. The conservation programs of PAs of Nepal traditionally have been managed
by government agencies and rely on government coffers. New model is also emerging on funding, for
instance Kanchenjungha Conservation Area (KCA) and Annapurna Conservation Area (ACA) parastatal
institutions are providing greater flexibility on management and innovative in securing financial
resources. Ensuring effective management and securing sufficient financial resources are vital if PAs are
to be continued to provide benefits and fulfill their role in sustainable biodiversity conservation.

An office was set up in 1972 under the Department of Forest (DoF) for protection of national flora and
fauna and for conservation, restoration, and management of habitat and landscape of the country.
Upgraded and institutionalized in 1980, the DNPWC is a conservation committed government
organization of Nepal with management authority of 10 National parks, 3 Wildlife Reserves, 1 Hunting
Reserve, 6 Conservation Areas and 12 buffer zones (occupies about 23.23 percent of land area of Nepal)
for conservation of country’s major representative ecosystems, unique natural and cultural heritage,
and protection of the valuable and endangered wildlife species and their habitats.

Despite being rich in biological diversity and natural splendors, Nepal faces some of the most serious
conservation threats plaguing any nation in the world today. Due to the country’s fragile geological
structure, floods, soil erosion and landslides have been common phenomena. Gradual loss of pristine
habitats coupled with other human induced activities, tigers, rhinoceros, elephants, snow leopards,
musk deer, gaur and several other faunal and floral species of the country are confronting increasing
threats. DNPWC, in these pursuits, is seeking more rigorous scientific research for the preservation of
wild genetic diversity and prioritizes the following activities within the basic tenets of participatory
protection, conservation and sustainable management of resources. In these regards, the specific
priorities of DNPWC are as follows:
i) Conservation of endangered species.
ii) Scientific management of habitat focusing on wildlife species.
iii) Buffer zone management in and around the parks and reserves.
iv) Promotion and regulation of eco-tourism to contribute both local and national economy and
capacity building.
v) Increasing conservation awareness through conservation education programs.
vi) Research and co-ordination.

In order to pursue annual and contemporary projects for conservation of genes, species, ecosystem
biodiversity, cultural heritage and landscape, self-generated and partnership projects are being
implemented. Various sustainable financing mechanisms have been introduced in national parks and
wildlife reserves through attracting funds (external supports, donations), generating funds (sharing
revenues, charging service fees and taxes) and introducing market based mechanisms (tourism fee,
products sale, carbon finance, and payment for environmental services (PES). However the goods and
services are significantly undervalued compared to prevailing market prices. PES is a financing
instrument that internalizes externalities in the environmental sector on a local basis. The underlying
principle is that those who provide environmental services get paid for doing so and those who damage
or get benefit from environmental services pay for these provisions. However, the PES is yet to be
extended in a comprehensive sense. Where these exist in a piloting nature and fragmented mode, there
are also problems of undervaluation in both penalty or service fee receipts and payment for services as
these are dictated by old and obsolete regulations.
2
1.3 Rationale of the study
The background presented above shows that i) human’s longer term and decent existence on earth
is intricately bound with the health of the nature itself represented by its immense biodiversity,
and that ii) PAs of the world including those in Nepal have significant contributions in protecting
such biodiversity. Hence, the sustained existence of human race on earth hinges on the sustained
and extended operations of the PAs. One of the basic pre-requisites for the sustained operations of
the PAs is to have adequate and sustained financing.

PAs worldwide are experiencing increasingly reduced financing both for capital investment and for
meeting the operational costs for running the PAs. While financing for capital costs are found to be
relatively uncomplicated, financing sources for meeting operational costs have become
increasingly problematic.

In Nepal, almost all PAs are facing not only funding crisis but also the predicament of sound financial
planning and management. In terms of planning and management, there is an urgent need to expand
and diversify PAs financial portfolios to ensure that funding reaches the groups and activities essential
for biodiversity conservation. As regards the funding sources, there is a need to explore other
innovative sources of financing as conventional sources of funding to supplement inadequacy in
funding. Realizing the funding crisis and necessitate to develop sound financial planning and
management, DNPWC has felt the need to carry out a study that reviews the current situation of
financing of PAs including the exploration of the program and financing gaps, and suggest appropriate
ways to ensure sustained financing and sustained operation of the PAs.

1.4 Significance of the study

The main aim of sustainable financing is to generate fund over the longer term to finance projects
and programmes through the introduction of innovative financing mechanisms. Several
institutions and organizations in the world including Nepal have adopted different institutional
mechanisms, processes and systems for sustainable financing within the Protected Areas system
(PAS). Although the concept of sustainable financing applies to all the sectors of the development
programmes and projects, its extensive use in the management of natural resources has been
widely recognized recently. There are handful studies carried out by different institutions on financing
mechanism but none of them focuses on sustainable financing.

1.5 Objectives of the study

The general objective of this study was to develop sustainable financing mechanism for PAs of Nepal
with critically reviewing biodiversity conservation efforts of DNPWC highlighting the financing needs
and gaps within the PASs.

Specifically, the present study aimed at:

a) Reviewing biodiversity conservation efforts of PAs of Nepal,
b) Assessing the funding sources, generation and mobilization patterns of the past efforts,
c) Documenting the financing needs and gaps of the efforts, and
d) Developing the sustainable financing mechanism by exploring the existing, current and potential
funding sources for PAs of Nepal.

1.6 Scope of the study

The scope of the study was to develop sustainable financing mechanism of PAs of Nepal. This is aimed
at help building a strategic and guiding framework based financing mechanism to provide incentives
for conservation along with the improvement in service delivery approaches. Since development of
sustainable financing mechanism helps creating balance between park and community people as some
of the revenue generated by park is allocated to community development, human-wildlife conflict
management, alternative energy development, conservation friendly livelihood promotion, etc.
Moreover, a sustainable financing mechanism leads to balanced biodiversity conservation and
livelihood improvement which is likely to be replicated in another PA and entire PAS that could be
sustainable in respect to financing and fund mobilization.
3
1.7 Organization of the report
This report has been organized into three chapters as follows:
Chapter 1 presents general background, study objectives, purpose, document review and organization
of the report. Chapter 2 accounts an overview of materials and methods, study area and study
approaches. Chapter 3 brings out results and discussion of the study.

1.8 Document review

Sustainable financial mechanism for PAs seeks the opportunity of generating, mobilizing and
management funds from external financing and through internal management. It is obvious that
generating funds through a sustainable management and business plan of a particular PA is most but
biodiversity conservation is a global concern and very often adjoining communities including
national development are least affected, therefore international financing as a commitment to global
partnership is always desired.

1.8.1 Sustainable financing mechanisms and practices in the World

Sustainable financing mechanism intends to address the problems of fund generation and
mobilization and to manage all the stakeholders affected by existing natural resource management.
The major concern of sustainable financing circumscribe about generation and mobilization of fund
over the long term for sustainable management of natural resources. Sustainable financing
mechanism and its allied policies that have been applied in different parts of the world to support
conservation efforts and sustainable management of natural resources are discussed herein.
Different international policies and conventions have prescribed innovative and sustainable
financing mechanisms to generate and manage the funds/finance for biodiversity conservation. The
major international conventions relating to sustainable financing are as follows:

The Convention on Biological Diversity (CBD)

The CBD identifies PA as an integral part of efforts to conserve and use biological resources
sustainably and in particular to conserve these resources in-situ. Specifically, Article 8 of the
Convention calls for each Contracting Party to establish a system of PA or areas where special
measures need to be taken to conserve biodiversity. Further, Article 8m requires for cooperation
among parties in providing financial support for PAS. The CBD has a fully developed funding
mechanism - the Global Environment Facility (GEF). This GEF fund supports initiatives relating to the
implementation and can complement national efforts to meet the objectives of the CBD for the benefit
of the global customers (www.biodiv.org).

The Convention on Migratory Species (CMS)

The signatories of CMS recognize that species do not respond to the existence of political borders and
that intergovernmental efforts are necessary to conserve certain species whose likely vulnerability in
some nations cannot be denied. This convention, which is implemented through regional agreements
between Range States, provides protection for endangered species throughout their range by
protecting both the species and their habitats. PAs play a vital role in conserving habitat for such
migratory species. The convention also advocates generating financial support to abide by the
agreements signed between nations for the protection of migratory species.

The World Heritage Convention

This convention provides special designation for natural and cultural sites considered to be of
outstanding universal value to humanity. The World Heritage Convention has a funding mechanism
to assist in preparing management plans or training for PA managers of World Heritage sites
(http://economics.iucn.org). Also, by affirming the international importance of these sites, the
convention enhances the prospect of international funding, e.g. from intergovernmental donors
(including the GEF), bilateral donors, the United Nations Fund (which has decided to allocate some of
its support on World Heritage sites) and philanthropic sources. It also increases the prospects of
funding from commercial sources, notably from tourism.

4
The Convention on the International Trade in Endangered Species (CITES)
This convention seeks to regulate international trade in wild fauna and flora. Because PAs are an
integral component of endangered species protection and recovery, CITES can be of assistance in
promoting protected areas to the governments.

The Ramsar Convention on Wetlands (Ramsar)

The Ramsar Convention seeks to protect wetlands through general global programmes using a
designated process. As with World Heritage designation, Ramsar adds value to particular sites.
Also, the Ramsar Secretariat provides a framework for wetland protection that includes both
scientific and management guidance, as well as some funding mechanisms, such as the Ramsar
Award and the Ramsar Small Grants Fund.

The United Nations Framework Convention on Climate Change (UNFCCC)

The Framework Convention on Climate Change came about as the international response to the
problems arising from potential changes in the global climate. Although it does not directly address
biodiversity, an important aspect of this convention is the concept of joint implementation which
enables countries to invest in activities which will mitigate the effects of rising levels of greenhouse
gases, such as through forest regeneration and conservation. It could thus become instrumental for
promoting forest conservation and management. The Clean Development Mechanism (CDM) under
the convention has the potential to provide a useful source of financing for protected areas.

1.8.2 Sustainable financing practices in the World

Development of innovative financing was designed about two decades ago and its active
implementation in exploring was pursed since 2001 (UN 2001). Millennium Development Goals
propounded through exploration helped generate a number of ideas and initiatives of financing.

Over the decades, arrays of initiatives (global solidarity levies proposed by France, frontloading
future aid commitment by the United Kingdom, and results-based financing by various actors,
including private foundations) were mechanized. From 2000 through 2008, innovative fund-
raising efforts at the global level yielded an estimated US$57 billion (World Bank 2009).
Development banks also started issuing new types of bonds that link resource mobilization and
development objectives. For their part, developing countries sought not only more financial flows
but better financial solutions, for example, partnerships that mobilize private finance for public
service delivery, risk mitigation efforts that promote private entry in the productive sectors, and
support for carbon trading. About one percent of the national budget is allocated to finance
reforestation, promote natural resources and improve natural forest management of both
production and protection sites in Guatemala. The state government share about 50 percent
budget to each conservation projects. In Brazil, 25 percent of the VAT revenue is shared for
forestry (establishment of conservation areas and indigenous resources) (IUCN 2000).

Conservation funds have been established to provide long term financing for biodiversity
conservation, sustainable management of natural resources and livelihood improvement through
endowment funds, sinking funds and revolving funds. WWF has been involved in establishing
conservation funds/swaps throughout the world (Spergel 2001). The swaps help ensure the
protection of some of the most biologically diverse and critically endangered habitats (for example
in Madagascar). Government of US helped Peru to preserve more than 27 million acres of
rainforest that provide habitat for Jaguars and pink river dolphins (WWF 2009). The government
of Cameroon and France signed debt swap to protect the worlds’ second largest tropical forest,
home to elephants, gorillas, etc.

In several countries, revenue generated by the trade of wildlife related products or services are
reinvested in conservation. About three to eleven percent tax revenue is earmarked for spending
on wildlife conservation, habitat improvement and restoration. Relief on personal income tax or
land tax is another effective mechanism used in many parts of the world. Private land is restricted
to reserve, environmental education and ecotourism and limited resource extraction. In return,
5
landowners receive breaks on property taxes and priority access to certain public financing
programmes (Emerton et al. 2006). Fines, levies and conservation concessions have been
introduced as alternative to land protection and wildlife conservation. Community financing
mechanisms aim at enabling communities to invest in alternative livelihood options that can
replace activities causing harm to biodiversity or involve the transfer of PA management or use
rights to local communities. In Tanzania, 7.5 percent of revenue is allotted to community support
programmes. About 20 percent license fee of hunting is paid back to provincial government of
Pakistan and 80 percent of the trophy hunting fee is paid to the local communities where the hunt
is possible (Emerton et al. 2006). In Chile, Namibia and South Africa, about one tenth of the country
land is protected by community managed conservancies, sharing management cost of PA.

The biodiversity enterprise fund provides credits/financial returns to the investors. The
Netherland green investment aims at stimulating fund for environmental projects. Financial
intermediaries are eligible for green status if they invest at least 70 percent of their assets in
nature, woodlands, landscape conservation, organic farming, renewable energy, etc. (Emerton et al.
206). The Asian Company, Terra capital biodiversity fund for Latin Americas, Verde ventures, etc.
provide affordable debt and equity financing to business of biodiversity conservation (WWF 2009).
The re-greening ad payment bonds are established in Indonesia, which is managed by national
government and shared with provincial governments. Production forest concessions are required
to pay into the fund, and their payment is returned if they have performed forest re-greening and
rehabilitation.

1.8.3 Sustainable financing mechanisms and practices in Nepal

Sustainable financing in Nepal is a relatively new paradigm and its practices are limited. DNPWC,
Nepal is the first institution that works for conservation and sustainable use of globally significant
biodiversity through sustainable management of financial resources. The department holds a
comprehensive approach of financing for environmentally sustainable development of PAs in
accordance with the NPWC Act 1973. The conservation programs of PAs of Nepal traditionally have
also been managed by government agencies and rely on government coffers. New models are emerging
on funding as strategies of sustainable financing: KCA and ACA parastatals are providing greater
flexibility on management and innovative in securing financial resources. Relevant policies and
strategies prescribing sustainable financing are discussed herewith.

1.8.4 National policies and laws related to sustainable financing

Over the past four decades, there have been considerable changes and reforms in the policies of
biodiversity conservation. Planned efforts in conservation and development have been in practice
in the country since the promulgation of NPWC Act, 1973. The act allows charging entry fees from
tourists for visiting and using protected areas. After NPWC Act, 1973, Government of Nepal has
enacted several legislations aiming at conserving the nation's biological diversity and utilizing the
natural resources in a sustainable way (Table 2).
Table 2: Policy documents of Nepal related to sustainable financing
SN Policies, guidelines and acts Date of promulgation
1 National Parks and Wildlife Conservation Act 1973 (2029 BS)
2 National Parks and Wildlife Conservation Regulation 1974 (2030 BS)
3 Chitwan National Park Regulation 1974 (2030 BS)
4 Wildlife Reserve Regulation 1978 (2034 BS)
5 Mountain National Parks Regulation 1980 (2036 BS)
6 Khaptad National Park Regulation 1987 (2044 BS)
7 National Conservation Strategy for Nepal 1989 (2046 BS)
8 Master Plan for the Forestry Sector 1989 (2046 BS)
9 Water Resource Act 1992 (2049 BS)
10 Nepal Environmental Policy and Action Plan I 1993 (2050 BS)
11 Forest Act 1993 (2050 BS)
12 Bardia National Park Regulation 1995 (2053 BS)
13 Conservation Area Management Regulation 1995 (2053 BS)
14 Forest Regulations 1995 (2053 BS)
6
 15 Environment Protection Act 1996 (2054 BS)
16 Buffer Zone Management Regulation 1996 (2054 BS)
17 Environment Protection Regulation 1997 (2055 BS)
18 Nepal Tourism Board Act 1997 (2055 BS)
19 Nepal Environmental Policy and Action Plan II 1998 (2055 BS)
20 Buffer Zone Management Guideline 1999 (2056 BS)
21 Local Self-Governance Act 1999 (2056 BS)
22 Revised Forest Sector Policy 2002 (2059 BS)
23 Nepal Biodiversity Strategy 2002 (2059 BS)
24 National Wetland Policy 2003 (2060 BS)
25 Sustainable Development Agenda for Nepal 2003 (2060 BS)
26 Working Policy on Wild Animal Farming, Breeding and Research 2003 (2060 BS)
27 Nepal Agriculture Policy 2004 (2061 BS)
28 Herbs and NTFPs Development Policy 2004 (2061 BS)
29 Terai Arc Landscape Strategy and Implementation Plan 2004 (2061 BS)
30 Local Infrastructure Development Policy 2004 (2061 BS)
31 National Water Plan 2005 (2062 BS)
32 Nepal Biodiversity Strategy Implementation Plan 2006 (2063 BS)
33 Irrigation Policy 2006 (2063 BS)
34 Tourism Policy 2006 (2063 BS)
35 Three Year Interim Plan 2007/08- 2010/11 (2064-2067)
36 Kanchenjungha Conservation Area Management Regulation 2008 (2065 BS)
37 Finance Act 2009 (2066 BS)
38 Working Policy on Construction and Operation of 2009 (2066 BS)
Development Projects in Protected Areas
39 Wildlife Damage Relief Guideline 2010 (2067 BS)
40 Three Year Plan Approach Paper 2010/11 -2012/13 (2067-2070)

1.8.5 Sustainable financing strategies of national policy documents

Enactment of NPWC Act (1973) lets direct and indirect bearing on fund mobilization for wildlife
and protected area management. This Act is the very first pragmatic legal document seeking
innovative financing options for PAs of Nepal. Other important policy documents accounting
innovative financing mechanism in forestry, biodiversity, and allied sectors are given in Table 3.
Table 3: National policy instruments and their financing strategies
SN Policy documents Strategies
1. National Park and Wildlife • Charge fees/penalties for using resources of protected areas.
Conservation Act (1973) • Share 30-50% of sale income with local communities.
2. Water Resource Act and Regulation • Charge fees for using water.
(1992, 1993)
3. Forest Act and Regulation (1993, • Royalty rate for collection of forest products.
1995)
4. Environment Protection Act and • Environment protection fund for protection of environment and
Regulation (1996, 1997) national heritages.
5. Buffer Zone Management Regulation • BZ users receive income from sale proceeds of forest products.
and Guidelines (1996, 1999) • 50% amount received from sharing revenue of respective PAs.
• Donations/financial assistance.
6. Tourism Board Act and Regulation • Establish fund through attracting resources, charging fees, and
(1997,1999) fund mobilization.
7. Local Self-Governance Act (1999) • Local body levy taxes, service charge, fees
• Share revenue with other local bodies
• Receive grants from central government and others
• Institutionalize and operationalize District Development Fund.
8. Revised Forest Sector Policy (2002) • Increase investment for forestry.
• Create conducive environment for investment.
• Reduce land tax on private land subjected to plantations.
9. Nepal Biodiversity Strategy (2002) • Establish Nepal Trust Fund for Biodiversity Conservation (NTFB).
7
 10. TAL Strategy and Implementation • Create market based mechanisms: entry fees, use of water rights,
Plan (2004) sale of products, carbon funds and creative conservation fee.
• Create TAL trust fund and community endowment fund.
11. National Agriculture Policy (2004) • Involve private sectors and donors in investments.
12. Local Infrastructure Development • Local body mobilizes 10% of their revenue to infrastructure
Policy (2004) development.
13. National Water Plan (2005) • Cost sharing from private and local communities.
14. Irrigation Policy (2006) • 80% of amount from irrigation services deposited in Emergency
maintenance fund.
15. Tourism Policy (2006) • Public private partnership through Build, Own, Operate and
Transfer (BOOT) approach.
16. Forest Development Fund (FDF) • Collect NRs 5/cu ft timber sale.
Establishment/Operation Directive • Establish FDF to promote livelihoods through conservation of
(2007) natural resources.
• Amount generate from CDM.
17. Construction and Operation of • 10% royalty to revenue account of respective PAs.
Development in PAs (2007) • Plant trees and manage cost for up to 5 years for post
management.
18. Finance Act (2009) • 15% of sale of Sal and Khayer to be deposited as government
revenue.
19. Three Year Plan Approach Paper • Establish Forest Conservation Development Fund (FCDF) by
2010/11-2012/13 depositing 10% revenue of sale of forest products.
• Share 30-50% of sale proceeds with local communities.
Source: MoFSC 2009

Three types of financing mechanisms such as fund attracting, cost/revenue sharing, and market
based fees for services (entry fee, service charge, royalty, levy, pollution control fee, forest product
fee, tourism development fee, etc.) are identified in Nepal. Mechanism of such provisions is shown
in Figure 1 which are dealt in policy review instruments and presented in Table 3.

Attracting funding Development Donations, Fund generation

agencies, donors, Grants, co-
NGOs, INGOs, funding

Leveraging, cost DNPWC/ Partnership and Fund management

effective management Implementing body sub-contracting

Performance/optimal IAs/EAs, Sales, levies Fund mobilization/

need based transparent beneficiaries, utilization
financing, PES local communities

Figure 1: Sustainable financing mechanism

1.8.6 Attracting funds

Attracting funds is targeted on mobilization and use of funds that originate from external sources,
particularly from the development organizations. Environment Protection Act (1996) is the first Act,
which allowed establishing environment protection fund as attracting fund for protection and control
of environment pollution and national heritages. Revised Forest Sector Policy (2002) is committed to
building and increasing investment in the environment of forestry sector. It has acknowledged the
need to reduce the land tax on private land that are put into plantation of forest. Nepal Trust Fund for
Biodiversity Conservation was conceived in Nepal Biodiversity Strategy Document (NBS, 2002).
8
Forest Development Fund (FDF), which was initiated by the Department of Forests in 2007 is
another attracting fund which envisaged covering the concurrent conservation costs through
rendering landscape to become productive. However, mechanisms for sustained use of such funds
are yet to be developed. Similarly, District Development Fund (DDF) has established within each DDC
in accordance with the LSGA (1999). LSGA has authorized district to collect 30 percent of royalty
from mountaineering to enrich DDF. DDF receives part of royalty collected from the sale of forest
products as contribution from Ministry of Forest and Soil Conservation (MFSC), which is one of the
sustained sources of DDF. The contribution of MFSC into DDF is generally limited due to serious
under-collection of royalty relative to the potential. Therefore, one avenue of fund enhancement is to
collect forest product royalty to its full potential.

Finance Act (2009) reveals that there are lot of possibilities to introduce innovative financing
mechanism in the forestry sector by imposing taxes, fees and service charge for biodiversity
conservation and sustainable utilization of natural resources. A number of possible and potential
financial resources that could be harnessed include carbon financing, payment for ecosystem
services, performance based financing, accounting of expenditure made by various forest user
groups, development and access to conservation fund, government/local fund, forest taxation, etc.

Community endowment fund has also been operated to encourage communities for biodiversity
conservation and livelihood development through offsetting biodiversity threats, offering
livelihood alternatives and income generating activities. Participatory Conservation Project (PCP)
established biodiversity conservation facility at buffer zones of PAs, and provided soft loan for
installing biogas and carrying out income generating activities. The tenets were followed by TAL
and WTLCP and established endowment fund for facilitating installment of eco-friendly devices
and income generation activities.

Fund attraction for PA management through local government has been minimal in account.
Donations and external grants are the important attraction fund for PA management. The
multilateral and bilateral development agencies such as UNDP, USAID, UKAID, GEF, SNV, Japan
International Co-operation Agency (JICA), etc. have been providing fund either directly to the
government or handle by themselves for implementing conservation and development works.
International conservancies such as FAO, WWF, IUCN, ICIMOD, etc. are also supporting the
conservation initiatives. The World Bank has adopted an approach of financing efforts to combat
climate change through reduce emissions from deforestation and forest deforestation (REDD).

1.8.7 Market based funds

Market based fees for goods and services deals with forest and its products, which have many goods
and services of high economic value to the consumers. Charging fee for goods and services help to
create or strengthen financial incentives for producers and consumers to support biodiversity
conservation and sustainable use as well as raising new funds. The sources for market-based fund
include:
a) tourism and ecotourism,
b) fee for sustainable and environment–friendly products (organic, certified, fair trade, etc) and
c) incipient field of international payments for ecosystem services (IPES), like bio-prospecting
and bio-carbon.

Entry fee from tourists to PAs is a major source of market based fund of PAs. Resource extraction
fee from sustainable harvesting is a feasible mean to collect funds for resource management. WWF
Nepal has already created a renewable energy carbon project based on 7,500 individual household
biogas units. This project is registered with the Gold standard APX registry.

9
Table 4. Traditional and Innovative Financing Mechanisms
Traditional Innovative
Local Level Financial Mechanisms
- Protected areas entrance and fees - Markets for all type of ecosystem services (PES)
- Tourism related incomes
- Local markets for sustainable rural products
- Local NGO and charities
- Local businesses goodwill investments
National Level Financial Mechanisms
- Government budgetary allocations - Earmarking public revenues
- National tourism - Environmental tax reform
- National NGO fund raising and fund granting - Reforming rural production subsidies
- National businesses goodwill investments - Green lotteries/markets
- New goodwill fundraising instruments (internet
based, rounds, up, etc)
- Businesses/public/NGO partnerships
- National markets for all type of ecosystem
services (PES)
International Level Financial Mechanisms
- Bilateral and multilateral aid - Long term international commitments
- Debt-for Nature-Swaps - International and environment related taxes
- Development banks and agencies - Green markets and lotteries
- GEF/International NGOs/foundations fundraising and - New goodwill fundraising instruments (internet
fund granting based, rounds, up, etc)
- International tourism - Businesses/public/NGO partnerships
- International businesses goodwill investments - International markets for all type of ecosystem
services (PES)
Modified from Gutman and Davidson (2008)

1.8.8 Sharing funds

Generating sharing funds is to encourage conservation initiatives for providing strong incentives
for biodiversity conservation and sustainable use as well as to raise finance. Three Year Plan
Approach Paper (2010/11-2012/13) has clearly spelled out sharing revenue to local bodies for
their overall development. Establishment of Forest Conservation Development Fund (FCDF) by
depositing 10 percent revenue of sale of forest products of production forests and sharing 30-50
percent of sale proceeds or revenue of protected forests to local communities are stipulated in the plan.
About 10 percent royalty and tree plantation and post management cost for up to five years is to be
shared by hydropower to the PAs where the hydropower is supposed to be built. Some PAs have been
handed over to national and local conservancies for sharing cost of management of PAs. Annapurna and
Manaslu Conservation Areas have been handed over to National Trust for Nature Conservation (NTNC)
and Kanchanjungha Conservation Area to local management council. About five percent revenue
sharing from high income to adjoining low income PAs is managed and but its implementation is yet to
be exercised. Conservation fee from the hotels inside the PAs is charged as per NPWC Act, 1973. Of
the total conservation fee collected, about 25 percent is to be spent for community development,
20 percent for conservation education and rest for biodiversity conservation. Investment for
community development is rationale in the sense that PAs of Nepal are set up in areas that were
traditionally used by local communities for their livelihood. Every year, PAs collect nominal fee
from the local communities for collecting thatch grass, canes and NTFPs for conservation of
biodiversity of PAs.

1.8.9 Institutional mechanisms for fund management

An important tool for the management of PAs is the development of a business and financial plan
(IUCN 2000). This differs from simple budgeting and cost accounting, in that it identifies not only
how much money is needed for different activities, but also locates the most appropriate funding
sources for short, medium and long-term needs. The PA management plan provides the essential
policy framework for the business and financial plans, by clarifying the management objectives of
the PAs, the relevant users, the financial needs and the resources available to the areas. A business
10
plan can also form the basis for priority setting, both in collecting revenue and spending it. This
information feeds into the annual plan for the PA, which examines in more detail the customer
base, goods and services, marketing strategy and implementation strategy for PA. This information
in turn contributes to the financial plan for PA, which further details key assumptions and provides
a break-even analysis (which identifies when the business is expected to turn in its first profit) and
profit and loss projections (Figure 2).

Management Plan

Business plan

Financial
plan

Figure 2: Planning hierarchy for PA management

A financial plan is a tool which helps to determine the protected area’s funding requirements
(including the amount and timing of that funding) and to match income sources with those needs.
The management plan in particular urges to continue to evolve and strengthen fund release and
project implementation system to ensure the continuation of a successful revenue
generation/sharing, raise park entry fee, levy fees to fund the conservation and development
works, share revenue and develop Trust Fund to manage long term funding and co-funding. The
Koshi-Tappu Wildlife Reserve and Buffer Zone management plan has placed special emphasis on
internal revenue generation and mobilization to sustain conservation efforts. All the PAs of Nepal
are funded by the government of Nepal through it annual budgetary provision. However, there is a
large budget deficit between estimated budget and actual allocated budget of government.
Therefore review of the pattern of budget disbursement and external support required for
implementation of program activities to be reviewed (CNP management plan 2001).

11
CHAPTER TWO: MATERIALS AND METHODS

2.1 Conceptual framework

A sustainable financing framework comprises of funds and other innovative financing mechanism
which aims to establish secure finance for sustainable resource management. The basic framework for
sustainable financing have three major components i.e., fund generation, fund management and fund
mobilization (Figure 3). Attracting funding, partnership funding and work based funding are the key
elements of sustainable financing.

Fund
generation
(attracting
fund)

Sustainable
Financing

Fund Fund
mobilization management
(partnership (work-based
funding) funding)

Figure 3: Basic Conceptual framework and elements of sustainable financing

2.2 Study approaches

Multi-Perspective approach was employed to reflect the views and concerns of local communities and
stakeholders who are directly or indirectly affected by PAs’ management. Local contexts, resource
generation, mobilization and leveraging mechanism were scrutinized while making participatory and
consultative discussions. Open communication with variety of stakeholders through both formal and
informal meetings and orientations helped collecting and exchanging opinions, knowledge and ideas on
financial resources, fund generations, sustainable financing, institutionalization and leverage.

2.3 Study area and sites

Almost 23 percent of land area of Nepal is protected under different forms of conservation and
management practices. There are 10 National Parks, 3 Wildlife Reserves, 1 Hunting Reserve, 6
Conservation Areas and 12 Buffer Zones which are under the sole responsibility of DNPWC for their
management. Of the total number of PAs of Nepal, all 10 national parks and 3 wildlife reserves have
been selected for this study (Table 5).
Table 5: Sample PAs and their biophysical settings
SN Name of PAs Region Bio-climate
1 Banke National Park and Buffer Zone West Nepal Tropical and Subtropical
2 Bardia National Park and Buffer Zone West Nepal Tropical and Subtropical
3 Chitwan National Park and Buffer Zone Central Nepal Tropical
4 Khaptad National Park and Buffer Zone West Nepal Temperate
5 Langtang National Park and Buffer Zone Central Nepal Subtropical, Temperate and Alpine
6 Makalu-Barun National Park and Buffer Zone East Nepal Tropical, Temperate and Alpine
7 Rara National Park and Buffer Zone West Nepal Temperate and Alpine
8 Sagarmatha National Park and Buffer Zone East Nepal Temperate and Alpine
9 Shey-Phoksundo National Park and Buffer Zone West Nepal Temperate and Alpine
10 Shivpuri-Nagarjun National Park Central Nepal Subtropical and Temperate
11 Shukla-Phanta Wildlife Reserve and Buffer Zone West Nepal Tropical
12 Parsa Wildlife Reserve and Buffer Zone Central Nepal Tropical and
13 Koshi-Tappu Wildlife Reserve and Buffer Zone East Nepal Tropical

12
Figure 4: Study area and sites

2.4 Study methods

2.4.1 Literature review
Various documents such as project documents, annual reports, departments’ newsletters, etc. were
collected and reviewed in order to understand the practices and mechanism of sustainable financing in
Nepal and elsewhere. Annual reports, audit reports and accounts of sample PAs and DNPWC were
reviewed thoroughly to record the success, accomplishments and impediments while funding and
financing.

2.4.2 Checklist survey

Checklist (Annex 1) survey was conducted with NPWC and PAs officials particularly to account/finance
officers asking details on past projects, their funding partners, income sources, expense details,
potential funding, resource leverage, etc. At field level, the survey was carried out in Langtang, Shivpuri-
Nagarjun, Chitwan, Koshi-Tappu, Bardia and Shukla-Phanta PAs with their authorities.

2.4.3 Consultation workshops

Informal meetings were organized with PAs authorities, line agencies, NGOs, local CBOs, and PAs
beneficiaries to collect data and information regarding income sources, expenditures, sustainable
financing, PA services, sustainable strategies, etc. These consultations were important to acquire
innovative ideas on funding and financing mechanism put up by donors and stakeholders. Field level
group discussions were made in Shivpuri-Nagarjun, Chitwan, Langtang and Bardia National Parks and
Shukla-Phanta Wildlife Reserve to garner the field level responses. The discussants and respondents of
the meetings and discussions are given in Annex 2.

2.4.4 Data analysis

The data/information generated through checklist survey, group discussions, consultations and field
observations were analyzed for in-depth discussion. The discussion was précised based on
management history (past and most recent PAs), financial resource allocation by DNPWC (the largest
and smallest amount allocated), self-revenue generation (the largest and smallest revenue generation),
fund mobilization, resource apportionment, donors’ contribution, etc.

13
2.4.5 Gap analysis
Commitment/responsibility by each of the partners in PAs by year were reviewed. A gap analysis was
made based on the total cost requirement, total amount generate, mobilize and manage, and total
contribution by partners for each PA by year. Such gaps are disaggregated, as far as practicable, by the
project components, sub-components and activities.

2.4.6 Limitation of the study

Documentation of financial transactions with respect to income sources, amount, mobilization and
expenses of PAs of Nepal was under-managed in Nepal. There were very few documents regarding
financial transactions of PAs and even they were discrepancies on the existing data and they limitedly
shared. Limited availability of related documents and literatures was a major factor for constraining
this study. Frequent Bandh and blockade posed complicated situations in frequent movement for
collecting information from the concerned authorities and carrying out consultations with
stakeholders. Intermittent electricity compounded by load shedding made deferment in study schedule.

14
CHAPTER THREE: RESULTS AND DISCUSSION

3.1 Sustainable financing mechanisms in Nepal

Nepal, as a signatory of CBD, has successfully developed a network of PAs by effectively and timely
amendments of policy environment and legal frameworks and by building connectivity among PAs
through landscape level conservation with adherence to Article 8. Article 8 m calls for cooperation
among parties in providing financial support for PAS. Considering the needs and funds for PA
network management, James et al. (1999a) estimated a 40 percent worldwide gap on the
management cost of the PAs.

Formal discussion on PA finance was initiated from the 5th IUCN World Park Congress (Durban,
September 2003), Seventh COP meeting for CBD (Kualalampur, February 2004), and UNESCO
meeting (France, January 2005) and all identified finance as one of several critical issues to be
addressed if the world is to meet the CBD/WSSD 2010 biodiversity target. Hence there was both a
global mandate for PAs and a specific responsibility for ensuring that the PAs are properly
financed. Again each and inherent values of PAs are important and should be taken into account for
financing.

3.1.1 Fund generation: Sources of PA finance

As in other countries of the world, government budget was the single largest source of PA financing
in Nepal. Additionally, there were different domestic sources of income.

3.1.1.1 Domestic sources

There were 21 complementary sources of internal income for DNPWC to administer the
programmes (Table 6). However, they were not applicable to all PAs except entry fee from visiting
tourists. Entry fee from the visiting tourists was a major source of income of all PAs of Nepal, which
was in increasing trend per annum (Annex 3).
Table 6: Income sources of DNPWC (including KCA and DHR)(In NRs. ‘000)
Income source 2062/63 2064/65 2065/66 2066/67 Av. Av. annual Variance
increase
Entry Fee 41,851.80 67,585.87 73,108.71 80,907.44 65,863.46 12,269 97,845
Hotel /lodge Royalty 11,251.30 15,456.32 16,936.33 7,837.88 12,870.46 -876 6,691
Sand/boulders 2,718.23 14,160.43 24,863.00 5,918.67 11,915.08 2,030 10,208
Vehicle fee 643.95 2,739.38 4,281.98 7,337.91 3,750.81 2,162 537
Auction 136.77 235.45 324.11 12,010.55 3,176.72 3,571 3,068
Penalties 3,663.93 1,272.13 2,451.43 3,947.22 2,833.68 203 258
Grazing/forest 1,273.51 2,287.15 2,117.86 2,583.06 2,065.40 375 32
products
Elephant ride 613.36 1,959.68 2,777.10 1,372.50 1,680.66 309 108
VAT 138.11 1,507.70 2,482.48 2,190.77 1,579.76 713 62
Ferry contract 650.10 695.00 1,773.31 1,944.53 1,265.74 496 54
Helicopter 50.00 1,478.00 1,275.20 1,496.00 1,074.80 414 26
Right of way 658.19 681.44 801.07 1,151.90 823.15 160 17
Camping fee 515.68 956.65 899.45 63.3 608.77 141 32
Misc. 0 346.13 690.53 679.27 428.98 167 7
Tender form 171.60 145.31 197.70 163.2 169.45 3 1
Boating/Rafting 60.80 134.20 194.85 24.5 103.59 -5 1
Illegal Grazing 32.59 200.61 144.04 0 94.31 -15 1
Filming 30.00 3.00 48.00 33.00 28.50 5 0
Misc. 99.03 0 0 0 24.76 -
Fishing 5.45 26.60 48.80 14.85 23.93 5 0
ID fee - 0 12.50 0 4.17 0
Total 64,581.90 111,871.05 135,428.45 129,676.55 110,389.49 21,884.14 279,285

15
Major sources of each individual PA were entry fee, fees for usage of park resources and tourism.
These all are market-based funds. Entry fee from tourists, royalty from hoteliers and fees for
provisional services, etc. were the most important in amongst. Within the revenue, fee from tourist
and elephant riders, royalty from hoteliers and sand/boulder extractors contributed the most and
their trend is in increasing order. Fees for water use (0.05 Rs per litre water in LNP, or charge from
Kulekhani watershed), carbon offsetting, hunting, etc. is also market-based funding.

The trend of number of tourists visited in PAs of Nepal showed that there have been annual
increments in both the number of visitors and the revenue from their entry. There was about 150
percent upsurge of visitors of PAs in the last decade of which 55 percent were foreign tourists. A
major interest of tourists visiting to PAs was recreational (PSPL 2011). The income account of all
PAs from the year 2062/63 to 2066/67 has been presented in Table 6.
500000

450000 455,237

400000
381,813
350000 349,195

300000 291,040
250000 245,910

200000 163,574 172,290

161,020
165,304
150000
148728 154,716
100000 110,340
124,108
50000

Fiscal year

Figure 5: Number of tourists visited in PAs of Nepal

The tourist number was increasing but at an erratic rate after the year 2004 (2061/62 BS). This is
among others, due to unstable political situation in the country which is believed to be more or less
stabilized gradually after the promulgation of the constitution. Such an erratic trend of tourist
number leads to difficulty in planning. The potential change in the existing governance such as the
shift into the federal system may initially create lot of confusion until the structures and systems
are well defined and implemented.
Table 7: Total number of tourists visited in PAs of Nepal
Fiscal Year 2064/65 2065/66 2066/67 2067/68 Av. Percentage
(2007) (2008) (2009) (2010) of cover Av. annual increase
Foreigner 160,250 193,855 207,002 239,580 200,172 55.18 % 25,113
SAARC 30,847 21,167 24,552 32,407 27,243 7.51 % 806
Nepalese 73,571 134,173 150,259 183,250 135,313 37.30 % 34,512
Total 264,668 349,195 381,813 455,237 362,728 100 % 60,432
Source: DNPWC Annual Report (2007-2011)

16
Other important sources of income of DNPWC were royalty paid by hotels/lodges inside PAs and
provisional services. However the royalty from the lodge/hoteliers was decreasing in trend. Since
the number of tourists was increasing per year, entry fee from the visitors to the PAs was
noticeably increased. Despite the entry fee from visitors and royalty from lodge/hotels, the
provisional services were significant in generating revenue to PAs. The entry fee and royalty rates
have not been revised since 2032/33. An initiative has been developed by DNPWC to increase the
park royalty rate and entry fee including imposing conservation fee. Stakeholders have agreed to
increase the royalty rate of various tourism activities including entry fee in PAs (DNPWC 2011).

Applicability of each income source in each PA has been given in Annex 4. With reference to higher
revenue generation and applicable to greater number of PAs, income from tourism fee, royalty
from hoteliers, and fee for provisional services/products were important. Total Economic
Valuation (TEV) of Bardia National Park showed that recreational and provisioning services were
important to generate about 58 percent revenue of BNP (Basnyat et al. 2012). Income sources such
as filming, rafting/boating, road facility, ghat contract, etc. were specific to PA and limitedly used
throughout. BNP was found to adopt 18 various sources of market based funds to generate income
followed by CNP 16. There were very limited income sources (3) in MBNP, however the revenue
from visiting tourists was common for all PAs.

It was revealed that the average revenue generation of each PAs was greatly varied (Figure 5). It
was highest for CNP, followed by SNP, PWR, ShNNP respectively. On the basis of unit area, Chitwan
NP, Parsa WR, Shivpuri-Nagarjun NP and Sagarmatha NP were efficient in generating good enough
revenue per unit area i.e. more than NRs 25000/Km2 (Figure 9). Revenue generation from BNP and
LNP was also increasing and about NRs 4500/km2 (Annex 5).
90000

80000 2063/64 2064/65 2065/66

70000 2066/67 2067/68 Average

Revenue (NRs '000)

60000

50000

40000

30000

20000

10000

0
CNP SNP PWR ShNNP DNPWC LNP BNP SWR MBNP KTWR SPNP RNP BaNP
Protected Area
Figure 6: Number of tourists visited in PAs of Nepal

Annual revenue generation in LNP was about NRs 9.4 million whereas the government annual
budget was about NRs 10 million. It shows that revenue budget ratio is about 0.86. An average
revenue generation in Rara National Park and Buffer Zone is estimated at Rs. 400,000.00. The
decreasing level of tourists in Makalu-Barun limits the major source of income – the entry fee.
Review of last five years budget of Sagarmatha National Park shows that the Park receives average
NRs. 6,000,000 per annum. About 50 percent amount has been used for park management and the
rest for administration. The major challenge to Sagarmatha NP is to attract more funds from
outside is less than one-third of the total budget. Tourist flow growth is stable at reasonable level
but the total fund generation variance poses a challenge to stabilize. With some additional effort,
this PA can attain sustainability in a much quicker time.
17
3.1.1.2 External sources
A wide range of external factors such as market, price, policy and institutional conditions influence
PA funding opportunities and financial status. Here the fund generated from other sources beside
own source is considered as external fund. External fund was pooled as donation support or
complementary funding either from governmental or non-governmental agencies. Despite the
external supports were parsimoniously documented in the reports, their contribution was largely
expected by the government (Table 8). In management plan of Bardia NP and Buffer Zone (2007-
2011), more than 90 percent budget was expected from external sources. In Sagarmatha NPBZ
management plan (2007-2012) twelve percent budget was expected from the government and in the
Shukla-Phanta WRBZ management plan (2007-2011), about 43 percent was expected from the
government. The rest budget was expected to arrange either from external sources or collaborations.
Similar trend was also observed in African countries (eg. Uganda), more than three quarters of
Uganda’s PA budgets were contributed by foreign donors (Howard 1995). Most of the PA financing
for implementation of actions to conserve biodiversity in south-east Asia (Iftikhar 2002) was also
accrued from external sources.
Table 8: Budget planning in different management plans (NRs ‘000)
GoN NTNC WWF/TAL WTLCP Rhino Tiger action Tourism Total
BNP action plan plan plan
(7%) (3%) (43%) (10%) (7%) (20%) (10%) (100%)
SWR GoN GoN/INGO/NGO INGO Total
(43%) (42%) (15%) 100%
SNP GoN Internal revenue INGO Others Total
(12%) (42%) (22%) (24%) (100%)
Source: Management plans of BNP, SWR and SNP

3.1.1.3 Bilateral and Multilateral funds

Nepal was heavily relied on external sources for PA financing before 2000. However, there are
evidences of a slight decline in biodiversity-related aid over the period, counterbalancing that there
was slightly increasing in domestic budget for PA financing particularly because of financing for
conservation of charismatic wild fauna (One horned rhinoceros, Tiger, Elephant, Swamp deer, Red
Panda, etc.) and development of PA dependent communities. Tiger Conservation Special Programme
(TCSP) has been launched for conservation and management of tiger population in Nepal. A total of
NRs. 60 million has been allocated for the programme which is to be implemented under the DNPWC
and Department of Forest (DoF). The amount is utilized in Bardia and Chitwan National Parks and
Parsa and Shukla-Phanta Wildlife Reserves.

Western Terai Landscape Complex Project (WTLCP) is implemented in the western Terai covering
approximately 7200 km2 of three districts namely Bardia, Kailali, and Kanchanpur with a particular
focus on four landscapes and corridors conservation. It supports the conservation programme in
Bardia NP and Shukla-Phanta WR including restoration and conservation of biological corroders and
their connectivity. Annually about 2.9 million NRs is supported to BNP and about 2.2 million to SWR
(Table 10) for conservation of globally significant biodiversity. Terai Arc Landscape (TAL)
programme (2004-2014) has jointly been implemented by DNPWC, the Department of Forests (DoF),
and WWF Nepal to link 12000 km2 area of 11 trans-border PAs of Nepal and India. It has allotted
average annual NRs. 13.1 million to PWR, CNP, BNP and SWR of Nepal to conserve the landscape and
biodiversity of Terai.

Sacred Himalayan Landscape (SHL) programme (2006-2016) covering an area of 39,021 km2 extends
from Langtang National Park in central Nepal through the Kangchenjunga region in Sikkim and
Darjeeling in India to Toorsa Strict Nature Reserve in western Bhutan. Annual investment by SHL
programme is about NRs 20 million to complement the biodiversity conservation programme of LNP
and SNP of Nepal. Conservation and Sustainable Use of Wetlands of Nepal (CSUWN), a collaborative
project of GoN, DNPWC, UNDP and GEF aims at building the capacity and legal environments for
ecosystem management for wetlands conservation and sustainable use of Koshi-Tappu Wildlife
Reserve and Ghodaghodi wetland of Nepal with annual investment about NRs 10.4 million.

18
 200,000,000
SHL WTLCP CSUWN TAL
180,000,000

160,000,000

140,000,000

120,000,000
NRs

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0
2006/07 2007/082008/09 2009/10 2010/11 2011/12
Fiscal Year
Figure 7: Investment from bilateral and multilateral funds

3.1.1.4 Partnership fund

Collaborative/partnership projects were instrumental in generating and mobilizing funds. In
particular, biodiversity conservation and livelihood promotions, human-wildlife conflict mitigation,
etc. were programmatic supports contributed from development agencies through
collaborative/partnership projects. Review of past collaborative/partnership projects of DNPWC
showed that there are a greater number of projects in CNPBZ, BNPBZ and SWRBZ. A number of
collaborative/partnership projects under DNPWC is presented in Table 9.
Table 9: Collaborative/Partnership projects of DNPWC (2001-2010)
SN Institution (Project name) Project sites # of
projects
1 NTNC (Biodiversity Conservation Center, Chitwan), WWF Nepal (Rhino CNPBZ 5
Conservation Program), (Terai Arc Landscape Conservation Project), BCN
(Vulture Conservation Project), Global Tiger Initiative
2 NTNC (Bardia Conservation Program), WWF Nepal (TAL Conservation BNPBZ 4
Project), WTLCP, Global Tiger Initiative
3 NTNC (Shuklaphanta Conservation Program), WWF Nepal (TAL SWRBZ 4
Conservation Project), WTLCP, Global Tiger Initiative
4 NTNC (Parsa Conservation Project), WWF Nepal (TAL Conservation PWRBZ 3
Project), Global Tiger Initiative
5 WWF Nepal (Sacred Himalayan Landscape Project), Himalayan Trust, SNPBZ 2
Community Agro-forestry Project
6 WWF Nepal (Northern Mountain Conservation Program), WWF Nepal-DFID SPNPBZ 2
(People and Plant Project)
7 WWF Nepal (Kanchanjungha Conservation Area Project) KCA 1
8 WWF Nepal (Sacred Himalayan Landscape) LNPBZ 1
9 TMI/Eco Himal project MBNPBZ 1
10 Conservation and Sustainable Use of Wetlands of Nepal (CSUWN) KTWRBZ, 1
Ghodaghodi lake

19
3.1.1.5 Private and community funds
Significant funding for PAs also comes from private sources, including business and philanthropic
foundations as well as non-governmental organizations and local communities. Endowment fund of
philanthropic foundations such as Ford foundation, Rufford Foundation, Rockfeller foundation, UN
foundation, Bill Gates Foundation, Gordon and Betty Moore Foundation, etc. is extensively used in
natural resource conservation (Emerton et al. 2006). Of them, fund from former two institutions is
substantial in support of country’s biodiversity conservation. Funding from national level private
and community institutions is not well developed. Yeti air lines do support in plantation from its
air fare. In order to generate sustainable fund for PA financing, following options might work as
menu.
Table 10: Menu of options for fund generation
Financing sources Government budget, bilateral and multilateral
donors, NGOs, foundations
Environmental funds Nepal trust fund for biodiversity conservation,
investment funds
Debt relief Debt-for-nature swaps
Payment for ecosystem services (PES) Local level arrangement for watershed services,
carbon sequestration, landscape amenity,
biodiversity conservation
Tourism-based revenues Entry and user fees, concessions
Earmarked “green” taxes Hotel, visa, airport, airline tickets, fuel, real estate
transfer
Biodiversity offsets/compensation Mining, oil and gas, hydropower
Private sector partnerships Licensing agreements, adopt-a-park

3.1.2 Fund mobilization

Fund mobilization is important in increasing revenue performance by enhancing activity
performance leading to result performance. Many donors’ contribution is intricately linked to
result performance. Both the external and internal funds are mobilized for protection of threatened
species and conservation of country’s biodiversity and improvement of livelihood of local residing
households at premises of PAs. Government has allotted certain budget to implement the programs
of which about 50 percent of that budget was complemented by revenue i.e. the budget deficit is
persisting in PAs of Nepal.
700000 643206

600000
Government Budget
500000
Annual revenue
376066.8
NRs ('000)

400000

300000 248504
213228.51 215155 215155
200000 135428 140310
117898
100000

0
2064/65 (2007) 2065/66 (2008) 2066/67 (2009) 2067/68 (2010) 2068/69 (2011)
Fiscal year
Figure 8: Government budget and annual revenue collected

20
A World Conservation Monitoring Center (WCMC) global review of PA budgets by James et al.
(1999) identified a global mean annual PA expenditure was US$ 893/km2. The average for
developed countries was US$ 2,058 /km2, compared to only US$ 157 /km2 in developing countries.
The review reported a budget of less than US$ 1 /km2 for Cambodia and Laos. Investment on
biodiversity conservation and PA management from government of Nepal varied across the PAs
and time. Government investment for Bardia NP was US $ 245/km2 (Basnyat et al. 2012). There
was annual increasing trend in investment, however the investment (US $ 125.46/km2) was less
than the global average (US $ 157/km2). Sustainable financing of PAs of Nepal was therefore
impeded attributed due to persisting annual budget deficit and it was exacerbated by insufficient
budget expenses (Table 11). Of the allotted budget, only about 98 percent budget was utilized
annually.
Table 11: Fund mobilization trends (NRs ‘000)
SN Fiscal year Government Annual Contribute Expenditure Budget
budget (NRs) revenue (NRs) by revenue (NRs) utilization
1 2064/65 (2007) 213228.51 117898.99 55.29% 204273.90 95.80%
2 2065/66 (2008) 215155.00 135428.45 65.21% 211112.00 98.13%
3 2066/67 (2009) 215155.00 140310.90 65.21% 211112.00 98.13%
4 2067/68 (2010) 643206.00 248504.79 38.29% 630251.00 97.98%
5 Average 321686.13 160535.78 314187.23
Total 1286744.51 642143.13 50% 1256748.9 97.66%
Source: DNPWC annual reports

Insufficient budget expense was compounded by inappropriate fund management. Financial flows
were inappropriately managed, either in relation to PA financing needs or conservation priorities.
In many cases, PA funding was skewed towards recurrent costs, especially staffing, while critical
investment needs remain under-funded.

In Nepal, PA financing has traditionally focused on meeting direct operational and management
costs (funding the salaries, infrastructure, equipment and maintenance required to establish and
run PAs). Of the total annual budget, about 40 percent was used for awareness programme, habitat
management, species conservation, eco-tourism, anti-poaching, buffer zone and national park
management, about 30 percent was used for wildlife reserves, 25 percent for administrative work,
5 percent for elephant management and less than one percent for NTFPs management (Table 12).
Making a PA truly sustainable in economic terms implies covering all of the indirect and
opportunity costs, and compensating those who bear them.

In only two cases, such as wildlife reserves and Hattisar, the expenditures have marginally
exceeded the budget. In others, the expenditures are equal or marginally less than the budget. It
should be noted that the failure to spend all budget does not mean that the funds were sufficient. It
could have been the case that either some activities were abandoned or partially done due to
financial management difficulties. Thus, efficient fund mobilization strategies are imperative.
Table 12: Annual budget and expenditure trend of DNPWC
SN Category 2064/65 (2007) 2065/66 (2008) 2067/68 (2010) % of
Bud. Exp. Bud. Exp. Bud. Exp. Bud.
1 Administration 33203 31437 22196 21854 153690 153690 24
2 National Parks 93807 89691 111155 107573 250925 247486 40
3 Wildlife Reserves 29542 27570 38241 38983 185418 185013 30
4 NTFP 1300 1130 1456 1456 2350 2350 1
5 Hattisar 35342 34641 42107 42246 50873 50873 5
6 Finance 21333 20932 0 0 0 0
TOTAL 214527 205401 215155 212112 643206 630251 100
Ratio 1 0.957 1 0.985 1 0.979
Bud. = Budget, Exp. = Expenditure

21
There was (95-97)% budget expenditure trend in PAs of Nepal. The rate was 95 percent for PAs
and 97 percent for PAs including DNPWC (Table 12 and 13). Within the PAs, BNP was the most
insufficient and PWR was unmanaged in terms of budget mobilization. BNP could not well utilize
the budget and PWR expensed over the planned one.
Table 13: Annual government allotted budget and revenue generated by PAs (‘000)
Protected Areas Av. annual Av. annual Contributed Expenditure Budget
gov. budget revenue by revenue utilization (%)
Chitwan NP 50,923.33 97,526 191% 47,985.00 94.22
Sagarmatha NP 7,864.77 34,314 436% 7,509.11 95.47
Parsa WR 12,793.67 20,944 164% 12,913.57 100.93
Bardia NP 22,144.70 12,073 54% 19,251.65 86.93
Langtang NP 12,998.38 9,713 74% 12,495.64 96.13
Shivpuri-Nagarjun NP 13,857.20 5,775 42% 12,696.67 91.62
Shukla-Phanta WR 16,795.50 2,239 13% 16,437.34 97.86
Makalu-Barun NP 11,431.99 2,180 19% 11,290.70 98.76
Koshi-Tappu WR 10,528.50 938 9% 10,044.31 95.40
Shey-Phoksundo NP 8,101.83 819 10% 7,536.25 93.01
BaNP 46,480.00 1,286 3% 46,480.00 100
Khaptad NP 7,472.00 267 4% 6,657.78 89.10
Rara NP 7,052.62 261 4% 6,874.72 97.47
Source: DNPWC (2011), ShNNP progress report (2011) expense till April, 2011, CNP annual report (2011),
BNPBZ annual report 2011; BNPBZ Management Plan 2007

Annual budget mobilization per protected area was the highest for Chitwan NP and the least for
Rara NP, however the budget per unit area was the highest for Chitwan and Shivpuri-Nagarjun
National Parks and the least for Shey-Phoksundo National Park and Makalu-Barun National Park
(Annex 5, 6, Figure 9). Chitwan, Sagarmatha and Parsa PAs are better off in fund mobilization than
most of other PAs in terms of revenue generation, and it might be due to easier access, presence of
logistics facilities and more number of collaborative projects (Table 9). However, there were
erratic trends in revenue generation. Revenue and government budget ratio was positive in CNP,
SNP and PWR (Figure 9).
120000

Av. revenue/km2 (NRs)

100000

Av. annual budget (NRs 000)

80000
Av. annual revenue (NRs 000)
NRs

60000

40000

20000

0
BaNP BNP CNP KNP KTWR LNP MBNP PWR RNP ShNNP SNP SPNP SWR
Protected Areas
Figure 9: Average annual revenue and budget by PAs

22
Minor difference between annual revenue and budget per unit area was revealed in Langtang and
Shivpuri-Nagarjun NPs. Therefore more revenue generation initiatives and better fund
mobilization/management interventions are needed. However the complementary conservation
programs were materialized by WWF Nepal aided Sacred Himalayan Landscape (SHL) project.
Community development and conservation objectives of PAs of Nepal are also supported by
conservation partners such as WWF Nepal, ICIMOD, IUCN, The Mountain Institute, UNDP, GEF,
USAID, UKAID, Government of India, Government of China, etc., indirectly contributing on fund
generation.

3.1.3 Fund management

Annual revenue, annual budget and the external supports from conservation agencies were taken into
account for analysis of fund management. Fund management has cash flow requirements that will
vary over time and PAs. Chitwan NP, Shivpuri-Nagarjun NP, Parsa WR, Sagarmatha NP, Bardia NP and
Shukla-Phanta WR were outstanding on continuous cash flow. Revenue budget ratio analysis showed
that the least revenue and the maximum budget were maintained from Banke, Khaptad and Rara
National Parks whereas, Chitwan NP, Shivpuri-Nagarjun NP, Parsa WR, Sagarmatha NP were well
managed in terms of revenue generation and budget expenditure. Banke NP was declared in 2010 and
it needs more financial investment and its revenue has not been institutionalized yet. Likewise, Bardia
NP, Banke, NP, Langtang NP, Shukla-Phanta WR and Koshitappu WR were moderately managed and
need complementary supports to sustain their financing mechanism. Rara, Khaptad, Makalu-Barun and
Shey-Phoksundo National Parks were poorly managed, urging substantial supports for sustainable
financing.
Table 14: Fund management scenario
Institutions Area Av. Av. Av. Av. Difference/km2 Rev. Bud ratio
occupied annual revenue/km2 annual budget/km2 (NRs)
(km2) revenue (NRs) budget
(000) (000)
CNP 1,682.00 97,526 57,982 50,923.00 30,275.26 27,706.74 1.91
SNP 1,423.00 34,314 24,114 7,864.00 5,526.35 18,587.65 4.36
PWR 797 20,944 26,279 12,793.00 16,051.44 10,227.56 1.63
BNP 1,475.00 12,073 8,185 22,144.00 15,012.88 -6,827.88 0.54
LNP 2,130.00 9,713 4,560 10,882.00 5,108.92 -548.92 0.89
ShNNP 159 5,775 36,322 13,857.00 87,150.94 -50,828.94 0.41
SWR 548 2,239 4,087 16,795.00 30,619.87 -26,532.87 0.13
MBNP 2,330.00 2,180 936 10,496.99 4,504.72 -3,568.72 0.02
KTWR 348 938 2,698 10,528.00 30,252.87 -27,554.87 0.08
SPNP 4,904.00 819 167 8,101.00 1,651.91 -1,484.91 0.10
BaNP 893 1,286 1,440 46,480.00 52,049.27 -50,609.27 0.01
KNP 441 267 607 7,472.00 16,943.31 -16,336.31 0.03
RNP 304 261 861 7,052.00 23,197.36 -22,336.36 0.03
Source: DNPWC annual reports, PA annual reports,

3.2 Ecosystem services of PAs of Nepal

Various sustainable financing mechanisms have been introduced in national parks and wildlife
reserve through generating funds and introducing market based mechanisms. However the
prevailing goods and services are undervalued compared to current market. There are more than
50 ecosystem services have been tabled for PAs by Millennium Ecosystem assessment (MEA 2005).
National Parks of Nepal are also enriched with different ecosystem services (Table 15), of which
provisioning, recreational, biodiversity, carbon sink, and option/bequeath values are important
ones. Accounts 20 ecosystem services were reported from Bardia National Park (PSPL 2011), and
seven from Shivpuri-Nagarjun National Park (Kunwar 2008). From the consultations and review,
major 21 important ecosystem services were sought to ask to refer services of each PAs of Nepal.
Moderation of extremes, temperatures and rainfall, nutrient cycling and seed dispersal, soil
conservation, regulating water run-off and ecotourism, etc. were the most important ecosystem
services of PAs of Nepal.

23
Table 15: Major ecosystem services of national parks and wildlife reserves of Nepal
SN Services from BNP BaNP BNP CNP KNP LNP MBNP RNP SNP SPNP ShNNP KTWR PWR SPWR
1. Moderating extremes 2 2 2 2 2 2 2 2 2 2 2 2 2 26
of temperatures, wind,
rainfall
2. Plant pollination, seed 2 2 1 2 2 2 2 2 2 2 1 1 1 22
dispersal and nutrient
cycling
3. Control soil erosion 1 1 1 2 2 2 2 2 2 2 2 1 1 21
and flood and drought
4. Regulating water run- 1 1 1 2 2 2 2 2 2 2 1 1 1 20
off
5. Soil formation and 2 2 2 1 1 1 1 1 1 1 2 2 2 19
fertility replenishment
6. Ecotourism and 0 2 2 1 2 1 1 2 1 2 1 1 1 17
recreational
7. Forest biodiversity 1 2 2 1 2 2 1 1 1 1 1 1 1 17
8. Research, development 0 2 2 1 2 1 0 2 1 2 1 1 1 16
and educational
9. Carbon sink 2 2 2 1 1 1 1 1 1 1 1 1 1 16
10. Watershed and 1 2 1 1 1 1 1 1 1 2 2 1 1 16
irrigation
11. Waste detoxification 2 1 2 1 1 1 0 2 1 2 1 1 1 16
and protection from
UV rays
12. Provisioning 2 2 1 2 1 1 1 0 1 1 1 1 1 15
(thatching
grass/fodder; wild
fruit, vegetables,
medicine)
13. Provisioning 1 1 1 1 1 1 1 1 1 1 1 1 1 13
(firewood, fuelwood,
etc.)
14. Air quality control 1 1 1 1 1 1 1 1 1 1 1 1 1 13
15. Pest and disease 1 1 1 1 1 1 1 1 1 1 1 1 1 13
control
16. Agricultural 1 1 1 1 1 1 1 1 1 0 1 1 1 12
biodiversity
17. Culture maintenance 1 2 2 1 1 1 0 2 2 0 0 0 0 12
18. Fire 1 1 1 1 1 1 1 1 1 1 0 0 0 10
prevention/control
19. Fisheries 0 1 1 0 1 1 1 0 1 1 2 0 0 9
20. Agriculture and 1 2 1 0 1 1 0 0 0 1 0 1 1 8
plantation
21. Hydroelectricity 0 0 0 0 1 1 0 1 1 1 0 0 0 5
Total 23 31 28 23 28 26 20 26 25 27 22 19 19
Note: 0 = none, 1 = moderate 2 = major service

3.3 Gap Analysis

Several gaps have been traced in the operation and management of PAs in Nepal. These gaps are
particularly related to fund generation and management which have been dealt below:

3.3.1 Fund generation

Low income and high dependency on external sources: Low level of internal fund generation
was a major problem and thus a challenge for PA’s financial sustainability. Income and expenditure
analysis showed that on aggregate, the PAs are generating only NRs. 15,768 as revenue per sq km
as against the expenditure of NRs. 24,488/sq km.

Lack of innovative fund generation mechanism: Payments for ecosystem services (PES) are
increasingly held up as a new solution to PA financing crisis. However, implementing PES is no
simple task, often requiring substantial investment in technical capacity as well as lengthy
processes of baseline research, lack of accounting system agreeable to all parties involved,

24
negotiation with stakeholders, legislative or regulatory lacuna, as well as absence of elaborate
monitoring, evaluation and enforcement mechanisms. Least number of market based funding
strategies was employed in MBNP and SPNP.

Lesser product development: Only limited sources of fund generation have been used in PA for
internal revenue. The challenge is to extend and diversify the number of internal revenue
generation sources which could also pave the way for enhanced government and donor
contributions. There are considerable gaps in product development, carbon marketing, PES, wild
life premium (Hunting, sports tourism, rabbit chasing, yarshagumba, panchaunle, research, etc.

Un-updated rate/revenue: Where PAs generate revenues directly by market based mechanisms
(by entry fee, charging for goods and services, etc.), there are several obstacles to increasing and
sustaining income. With respect to resource extraction and user fees, many PAs lack the scientific
basis for determining sustainable levels of use, or for determining appropriate fees, royalties and
other charges. Even where there is a willingness to optimize the use of, and revenues from,
resource extraction, PA management capacity and infrastructure are often insufficient to collect
fees and administer sustainable extractive regimes. In particular, there appears serious under-
pricing of the products produced by the PAs. For example, a study on economic valuation of BNP
(Basnyat et al. 2012) found the estimated service and product value of Rs.379 million in 2011 (NRs.
2,568 per ha) while the total expenditure made in the park was only Rs.50 million because the
products and services were disposed at much lesser price than their true worth.

Low awareness and capacity: Low awareness and capacity level, among both conservation and
development decision makers, of the role of PAs in supporting fund mobilization, management,
income source diversification, is another gap. Characteristics of PAs such as remoteness,
wilderness, distantness, etc. are other challenges of PA’s financial sustainability.

Less research and development: There is considerable under-investment in research and

development geared toward efficiency and effectiveness improvement; and this affected the
expansion of the array of tradable products and services. It is also found that while operational
budgets are fully spent and even exceeded, the development part of the budget is often not fully
spent. This practice has implications on the future resource generation potentials of the PAs.

Cost and revenue sharing: Cost/Benefit-sharing and revenue-sharing mechanisms have immense
potential to offset the local opportunity and other social costs associated with conserving
biodiversity in PAs. However, to date the mechanisms remain under-utilized to cover the costs of
PA management. Again, local communities are not always fully involved when funding decisions
are made by PA managers or donors, while financing strategies typically focus on the direct costs of
conservation to the exclusion of opportunity costs.

3.3.2 Fund mobilization and management

Governance: Governance in both project implementation and fund management has been the
weakest link in most PAs except those whose management is handed over to specialized
institutions such as NTNC. Transparency and accountability are particularly lacking. Although not
verified, the instances of misuse of funds, poaching of animals and illegal sales of forest products
are also frequently reported.

Human resource deployment: Total forest area in Nepal is 39.6 percent of which 23.3 percent is
covered by PAs. However, total number of forestry related staffs (conservation managers) in the
PAs is only 1,010 (6.8%) as opposed to 13,789 for the management of 16.3 forests outside the PAs
(GoN/FAO 2010). Therefore, there remains a big gap in PAs of forest related staffs.

25
3.4 Sustainable financing strategies
PAs’ financial sustainability is the capacity to secure stable and sufficient long-term financial
resources, and to allocate them in a timely manner and appropriate form, to cover the full costs of
PAs (both direct and indirect) and to ensure that PAs are managed effectively and efficiently with
respect to conservation and other objectives. Several institutions and organizations in the world
including Nepal have adopted different innovative and sustainable mechanisms, processes and
systems for financing within the PAS. For an assured financial sustainability, the PAs should ensure
that there is enough resource to finance the development and operational expenses and other
development initiatives which need to be planned on both - perspective and annual basis. The
second important part is that that there are no misappropriations of the resources. Tourism
charges through park fees, hotel taxes, and service charges are becoming a major source of funding
for parks and other conservation projects. Royalties and conservation concession fees are
generated from harvesting, processing and sale of products derived from natural resources. Carbon
finance is emerging strategy of sustainable financing. Carbon reduction is feasible by taxing the
burns of fossil fuels, including coal and petroleum products such as gasoline, etc. Clean
development mechanism helps greenhouse gas emission control. The following general strategies
for sustainable financing of PAS are thus posited:

3.4.1 Long term financial planning

A long term financial plan for at least 5 to 10 years needs to be prepared and revised in interval
specifying the expected income and other possible sources for government and donors to commit
and deliver funds.

3.4.2 Economic valuation

Documentation of economic flows and values of ecosystem services to determine the level of
undervaluation of the resources has to be done which will help to revisit the rates of goods and
services traded by the PAs in line with the existing market rates and willingness to pay by the
buyers. For this, some investment in the market analysis is inevitable. Specifically the financial
sustainability of PAs of Nepal is assured through management of the followings:

3.4.3 Resource generation

Design and enhance diverse revenue generation activities (initiate revenue generation activities
such as payment for environmental services, carbon financing, conservation fee, etc., levy
conservation fee on local products, special fee for filming, research, sporting such as cycling, rock
climbing, bird watching, etc.) for sustained sources and leverage conservation partners’ resources
and mobilize it to low income and remote PAs. PA product and service prices can be configured
based on their real market value. Special packages to attract private entrepreneurs to establish
eco-friendly enterprises could also help attract tourists in PAs and contribute on resource
generation.

3.4.4 Resource management

Strong monitoring and evaluation system for better financial administration, effectiveness and
efficiency is inevitable. The strong network with stakeholders and concerned agencies such as
embassies, hotels, tourist centers, filming and research centers, local communities helps improve
tourism, logistic arrangements, security situations, etc. resulting in surplus of income/revenue.
Minimum political interference in management of PAs and safety and quality amenities for tourism
are helpful in resource management.

3.4.5 Innovative fund generation avenues

Carbon trading: Climate change induced by ever increasing concentration of Green House Gases
(GHGs) in the atmosphere has been a blazing global issue. For setting aside forest with the purpose
of atmospheric carbon mitigation, developing countries can receive payments from industrialized
countries looking to offset their carbon emissions (Costa, 1996). Nepal could harness this
opportunity primarily by controlling the deforestation and forest degradation. TAL, which has
mission of conserving forests of Lowlands of Nepal, has obtained resources from carbon market to
26
finance its initiatives. This can be enhanced by improving the verifiable carbon emission
accounting system for which REDD is working out a methodology. Another related concept to the
above is to negotiate with richer industrialized countries for Tradable reforestation/
conservation credits. These countries can provide financial credits to poor but forest-rich
countries like Nepal in exchange for environmental protection.

Bio-prospecting fees: Nepal’s PAs have a plethora of native plants and animal species, the
ultimate utility of most such species have not yet been explored and fully understood. Some
identified species are known to have considerable pharmaceutical and aromatic applications. PAs
of Nepal can earn revenue by allowing pharmaceutical and aromatic companies to develop valuable
products from such native plants and animal species. Another avenue of resource generation which
is closely related to the above is to allow scientists to do research works within PAs on a contract
fee basis.

Corporate sponsorship: Large corporations are generally shying away from "adopting" parks but
they have the money and a marketing-driven interest in taking a closer look at such schemes. Such
plan could be a road for corporations to become involved in conservation as a public
relations/marketing tool. A given percentage of the proceeds could be put into a trust fund with the
payout ear-marked for ongoing conservation and sustainable development programs.

Mobilizing International Donors to Finance Trans-boundary Public Goods: Environment is a

trans-boundary public good in the sense that a country’s worsening environment can have global
effect, particularly with regard to burgeoning climate change, affecting other countries too. Most of
these are based on the concept that all nations should finance conservation since it will impact
everyone. Because a few temperate nations are the wealthiest, they should be the primary
financiers of these projects, since the richest environments are usually found in the world's poorest
countries, which cannot afford to sponsor such projects. To fund these projects, the governments
could also reduce subsidies currently given to certain polluting and environmentally damaging
industries.

Debt swapping for nature: One innovative method of financing conservation projects in
developing countries is debt swapping-for-nature programs where conservation and other
international organizations purchase a portion of a developing country's commercial debt at a
discount rate, or persuade creditor banks to donate some portion of the debt. This fund can be
used to reduce or forgive debt owed to the US by developing countries in exchange for establishing
forestry funds to be used for conservation and promoting economic reform. Another way, more or
less similar to the above, to help ease debt pressures on poor countries would be to reform the way
companies of the industrial world think about blocked funds. Blocked funds refer to a situation
where a country cannot pay a foreign company for services it performed and goods it provided.
The foreign company often considers the debt to be uncollectible in any reasonable amount of time.
Instead of tacking on additional interest that could seldom be collected anyway, the company could
donate the blocked funds in exchange for guarantees of forest protection and still receive a tax
write-off from its own government for the charitable contribution.

Wildlife premium: Despite intensive efforts by national governments, NGOs, and multi-lateral
institutions, critical wildlife habitats continue to be degraded and many charismatic and wide
ranging species have been pushed to the brink of extinction. Benefits from ecotourism and
payment for ecosystem service schemes may help recover some populations or protect some
reserves, but a financial mechanism to value wildlife and their habitats at a vast scale in developing
countries is sorely lacking. However, no comparable market exists for endangered species that can
reduce the opportunity costs of conservation for developing countries and local communities.
Therefore, disappearance of species will continue unless a mechanism can be put in place to
provide financial benefits for their conservation.

27
CHAPTER FOUR: CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion
Since the CBD ratification by Nepal in February 1994, the Nepal’s PAs grew by 161 percent in
number and 142 percent in size, yet in the same period financing for biodiversity conservation
grew only about 33 percent per annum. Several national and international policies and practices
clearly demonstrate that a comprehensive milieu is essential for generating and mobilizing funds
for sustainable management of natural resources. There is consensus in the conservation
community that the lack of adequate financing is jeopardizing the attainments of the CBD and MDG
goals, including the national targets and priorities.

Various financing mechanisms have been introduced in PAs of Nepal through attracting funds
(external supports, donations), generating funds (sharing revenue, charging service fees and taxes)
and introducing market based mechanisms (tourism fee, products sale, carbon finance, PES).
However, the coverage of these mechanisms is limited and lacking sustainability. Particular
sufferers of un-sustained financing are PAs located in remote areas (hilmali) and those having very
low number of visitors. So, external and GON support to these PAs should be considerably
enhanced.

A range of innovative PA financing mechanisms: raising funds from new markets (such as carbon
offsets or other payments for ecosystem services), finding new donors (such as large corporations,
private philanthropists, other government agencies or tax revenue sharing), sharing costs and
benefits with local stakeholders, employing new financial tools (such as business planning),
improving wider policy and market conditions, and devolving funding and management
responsibilities (for example to NGOs, local communities, individuals or businesses) are
increasingly used but still there is a considerable gap due to lack of research and distribution.

The goods and services marketed by the PAs are significantly undervalued compared to prevailing
market prices. Again they are not equally applicable in all circumstances and they require specific
financing strategies. Cost benefit analyses and market tests are an important first test to assessing
the potential for uptake of sustainable financing approaches.

A conservancy will be financially viable or sustainable if its income exceeds its operational costs and
has a surplus to use for the benefits defined by its members. Only about 50 percent annual budget was
managed by revenue generation and the rest was sought from external supports. The discussion
revealed that the DNPWC was relying on external supports for its full-fledged program implementation
and the sheer utilization of provided budget was inefficient. Forced abandoning or partial
undertaking of activities was made due to lack of adequate funding and untimely release of funds
due to complex governmental procedural requirements. It showed that the supports on internal
resource generation and fund mobilization and scourage of dependency on external supports are
inevitable. Of the thirteen study PAs, Sagarmatha, Parsa, Chitwan and Shivuri-Nagarjun are about
surplus in revenue-cost ratio.

Financial planning and especially diversification can help ensure that different funding
opportunities are identified and captured, different costs and funding needs are met, as well as
helping to minimize fluctuations over time. Government budget, visitors, tourism and NGOs, are
important as traditional sources of revenue for PAs, and they will still be important in the future
and have opportunities to grow and innovate. Shivpuri-Nagarjun, Chitwan, Sagarmatha, Bardia and
Langtang NPs and Parsa WR are able to supplement their budgets by earnings from diverse income
sources such as tourism and other resource use charges. Earnings from tourist visits, a staple
element of PA funding, can also be insecure and subject to fluctuations; thus demanding a
diversified funding base. A diversified entity can better enable PA managers to cope with risk and
uncertainty, and provide a measure of security should any single source of funding fail.

28
4.2 Recommendations
Promoting payments for ecosystem services, markets for green products, new forms of charity, and
businesses engagement in biodiversity conservation (private/public partnerships, etc) are
promising initiatives for future sustainable financing. However, the policy promulgations for easing
of traditional and innovative financing are painstakingly slow and their implementing
temperaments are yet to break through. Financing approaches for generating and mobilizing funds
varies by PA sites depending upon the resource potentiality and their objective of management
therefore the approaches to be considered for sustainable PAs financing should be strategic in
accordance with the nature of individual PA and approaches taken to address the existing hurdles.
In particular, an approach of involving multistakeholders under the leadership of the government
would be desirable. Without an institutional push, many innovative financial mechanisms will
never apposite and the progress of others will be dwindling. Institutional weakness associated with
lack of diverse income sources and efficiency on fund management is a major constraint of
improving the financial viability for sustainable financing of PAs.

PA financial sustainability will also require general reinforcement of PA management capacity, in

particular to become more responsive to changing opportunities and external demands strengthen
institutional capacity to use financial and business planning tools, establish more supportive
economic policy and market conditions and involve a wider range of stakeholders in PA
management. Additionally, national environmental agencies should work with financial and
economic agencies to ensure that policies, markets and prices in other sectors do not undermine
PA financial sustainability. PA authorities should construct financial portfolios incorporating a
diversity of funding sources and multiplicity of beneficiaries. Following are useful in building a
diverse, secure and stable funding:
• Income diversification, better use of community endowment funds, sinking funds and revolving
funds for PAs (supports from multinational, bilateral and conservancies), trust funds lying idle in
various sources.
• Generation of funds from carbon finance that offset carbon emissions by implementing
reduction of emissions from deforestation and degradation of forests (REDD) and installing
additional eco-friendly devices in buffer zone and PAs.
• Economic valuation of each PAs and imply fees, charges, PES and wildlife premium, carbon
financing, etc. based on study.
• Levy conservation fees to visiting tourists and tourism, forest, product and wildlife based
industries. Charge service to drinking water suppliers, hydropower developers, industrial
resource users, etc.
• Invigorate Nepal Trust Fund for Biodiversity Conservation conceived by NBS (2002) and channel
the Environment Protection Fund (EPF) for biodiversity conservation.

Fund raising is a means to an end, not an end in itself. Ultimately it is the effectiveness of PA
management which determines how biodiversity is conserved, and whether PAs are financially
sustainable. Followings are important to develop strong monitoring and evaluation system for
better financial administration, effectiveness and efficiency
• Reduce the unit cost of PA management and maintain good governance, transparency,
accountability and public auditing in each PA.
• Ensure that those who bear PA costs are recognized and adequately compensated, and that
those who benefit from PAs make a fair contribution to their maintenance.
• Hand over some PAs to conservancies, if applicable.
• Share revenue from high income PAs to low income ones. About five percent revenue sharing
from high income to adjoining low income PAs is suggested.
• Incentives like bonuses, perks that reward good management practices within agencies.
• Build capacity of human resources of PAs to use financial tools and mechanisms in a
sustainable ways: factoring financial analysis and mechanisms into PA planning processes.
• An important tool for financial management of PAs is the development of a business and
financial plan (IUCN 2000), therefore it is recommended to develop in each PAs.
29
CHAPTER FIVE: BIBLIOGRAPHY

Basnyat B, BP Sharma, RM Kunwar, RP Acharya, J Shrestha. 2012. Is current level of financing sufficient
for conserving Bardia National Park? A case study of Economic Valuation of Bardia National Park,
Nepal. Banko Janakari 22: 3-11.
Chestin I. 2001. WWF Ecoregional Climate Change and Biodiversity Decline, Issue 1, Altai-Sayan
Ecoregion, Russia. 28 pp.
CNPBZ. 2011. Chitwan National Park and Buffer Zone. Annual report 2067-68. Kasara, Chitwan, Nepal.
CBD. 1992. Convention on Biological Diversity. United Nations. http://www.cbd.int/doc/legal/cbd-
en.pdf.
Costa PM. 1996. Tropical forestry practices for carbon sequestration: a review and case study from
southeast Asia. Ambio Vol. 25 No. 4.
Davey. A. 1998. National System Planning for Protected Areas. IUCN, Cambridge, UK.
Emerton L, J Bishop, L Thomas. 2006. Sustainable financing of protected areas: a global review of
challenges and options. IUCN, Gland, Switzerland and Cambridge, UK.
FAO. 2009. Towards national financing strategies for sustainable forest management in Latin America:
overview of the present situation and the experience in selected countries. Food and Agriculture
Organization, Rome, Italy.
Fox J, P Yonzon, N Podger. 1996. Mapping conflict between biodiversity and human needs in Langtang
National Park, Nepal. Conservation Biology 10: 562-569.
GoN/DNPWC. 2001. Chitwan National Park and Buffer Zone Management Plan, 2001-2005. Department
of National Park and Wildlife Conservation, Kathmandu, Nepal.
GoN/DNPWC. 2007. Sagarmatha National Park and Buffer Zone Management Plan, 2007-2012.
Department of National Park and Wildlife Conservation, Kathmandu, Nepal.
GoN/DNPWC. 2010. Rara National Park and Buffer Zone Management Plan, 2010-2014. Department of
National Park and Wildlife Conservation, Kathmandu, Nepal.
GoN/DNPWC. 2007. Bardia National Park and Buffer Zone Management Plan, 2007-2011. Department of
National Park and Wildlife Conservation, Kathmandu, Nepal.
GoN/DNPWC. 2006. Shukla-Phanta Wildlife Reserve and Buffer Zone Management Plan, 2006-2011.
Department of National Park and Wildlife Conservation, Kathmandu, Nepal.
GoN/DNPWC. 2009. Koshi-Tappu Wildlife Reserve and Buffer Zone Management Plan, 2009-2013.
Department of National Park and Wildlife Conservation, Kathmandu, Nepal.
GoN/FAO. 2010. The future of Nepals forest outlook for 2020.
Howard P. 1995. The Economics of Protected Areas in Uganda: Costs, Benefits and Policy Issues.
Unpublished MSc Thesis submitted to the University of Edinburgh, UK.
Iftikhar U. 2002. Financing NBSAPs in Asia: Options and Opportunities. IUCN Regional Biodiversity
Programme: Colombo, Sri Lanka.
IUCN. 1994. Guidelines for Protected Area Management Categories. IUCN, Gland, Switzerland.
IUCN. 2000. Financing Protected Areas: Financing Protected Areas Task Force of the World Commission
on Protected Areas (WCPA) of IUCN. Economics Unit of IUCN, Gland, Switzerland and Cardiff
university, UK. 58 p.
James AN, Gaston KJ, Balmford A. 1999a. Balancing the Earth’s Accounts. Nature 401:323-324.
James AN, Green MJB, Paine JR. 1999b. A Global Review of Protected Area Budgets and Staffing. WCMC-
World Conservation Press, Cambridge, UK.
Kaeslin E, Redmond I, Dudley N. (Eds). 2012. Wildlife in a changing climate. FAO Rome.
Körner C. 2000b. The alpine life zone under global change. Gayana Bot. 57 (1)1-8.
Kunwar KJ. 2008. Payment for environmental services in Nepal, a case study from Shivpuri-Nagarjun
National Park, Nepal. Initiation 2: 63-72.
Kunwar RM, Katuwal Y, Shrestha RD, Karki J, Shrestha K and Bussmann RW. 2010. Climate change,
medicinal plants and ethnobotany: observations and review. In Proceeding of the First National
Youth Conference, June 3-4, 2010. Kathmandu, pp 180-189.
Kunwar RM, Shrestha KP, Dhungana SK, Shrestha PR, Shrestha KK. 2010a. Floral Biodiversity of Nepal:
an update. Journal of Natural History Museum 25: 295-311.
MEA. 2003. Millennium Ecosystem Assessment. Ecosystems and Human Well-being: A Framework for
Assessment. Washington: Island Press.
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MEA. 2005. Millennium Ecosystem Assessment: Ecosystems and human well being. Chapter 1: MA
Conceptual framework. Page 26-33. Island Press. Washington, DC. © World Resources Institute.
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Zanzibar. SEACAM: Maputo and WIOMSA: Zanzibar.
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Conservation, Kathmandu, Nepal.
PSPL. 2011. Economic valuation of protected area system: A case study from Bardia National Park.
Practical Solution Consultancy Nepal, Kathmandu.
Sprengel B. 2001. Raising revenues for protected areas – a menu of option. Center for conservation
finance, WWF, US.
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Conservation Organizations.
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Washington DC, US.
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and protective areas of Terai Arc Landscape (TAL), Nepal. Western Terai Landscape Complex
Project, Babar Mahal, Kathmandu.
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31
Annex 1: Survey Checklist for Group Discussion
Sustainable Financing Mechanism for Protected Areas of Nepal

We request you for your time to participate in a small survey about sustainable financing in Protected Areas of Nepal.
Feel very much free to express whatever you feel appropriate. We assure you that you are not entitled to receive any
benefit or suffer any loss due to what you have expressed in the survey.

Name of respondent: Name of PA: Location:

Name of the interviewer: Date of interview
What are the major sources of internal income? (NRs)
SN Sources 2068 2067 2066 2065 2064 Reliability
1
2
3
4
5
6
7
8
9
10

What can be done to increase/extend/strengthen each of them?

SN Sources To increase To extend To strengthen
1
2
3
4
5

What are the major sources of external income? (NRs)

SN Sources 2068 2067 2066 2065 2064 Reliability
1
2
3
4
5

Preconditions put forward by donors for each income source?

SN Sources 2068 2067 2066 2065 2064
1
2
3
4
5

What can be done to increase/extend/strengthen each income source?

SN Sources What can be done
1
2
3
4
5

32
What are the potential sources of income? (NRs)
SN Sources 2069 Reliability
1
2
3
4
5

Expense:
SN Items 2068 2067 2066 2065 2064
1
2
3
4
5
6
7
8
9
10

Budget details of each expense items of fiscal year 2068

SN Item Planned Received Budget spent Surplus/gap Where/how
budget 2068 budget 2068 in 2068 materialized
1
2
3
4
5
6
7
8
9
10

Were there any other components/activities which were neither planned nor implemented due to lack of funding?
[Yes] [No]

If yes, list them specifying the importance of each.

State how could these have been financed?

Fund flow mechanism

ITEMS At first → → → → At last
Government fund
Donor fund
Internal fund

33
Annex 2: List of people consulted group discussions and informal interactions
SN Name Organization/Address
1. Tikaram Adhikari Warden, BNP, Thakurdwara, Bardia
2. Yub Raj Regmi Warden, SWR, Kanchanpur
3. Krishna P Acharya DG, DNPWC, Kathmandu
4. Maheswar Dhakal Ecologist, DNPWC, Kathmandu
5. Phanindra Kharel Ecologist, DNPWC, Kathmandu
6. Gopal P Bhattarai Warden, Shivpuri-Nagarjun NP, Shivpuri
7. Jhamak B Karki Warden, Chitwan NP, Chitwan
8. Bed P Dhakal Warden, Langtang NP, Rasuwa
9. Asok Ram Warden, Koshi-Tappu WR, Sunsari
10. Bijendra Basnyat WTLCP, Babarmahal
11. Shalu Adhikari CSUWN, Kathmandu
12. Gokarna J Thapa WWF Nepal Program, Kathmandu
13. Hiralal Tamang Chisapani – 1, Nuwakot
14. Khet Raj Khatri Chisapani – 1, Nuwakot
15. Shree Prashad Gautam Chisapani – 1, Nuwakot
16. Krishna Prashad Guragain Chisapani – 1, Nuwakot
17. Gandesh Kumari K.C. Chisapani – 1, Nuwakot
18. Shiva Khatri Chisapani – 1, Nuwakot
19. Binod Simkhada Sundarijal – 8, Kathmandu
20. Rajan Simkhada Sundarijal – 8, Kathmandu
21. Sushil Simkhada Sundarijal – 8, Kathmandu
22. Bimala Dahal Sundarijal – 8, Kathmandu
23. Diskar Simkahda Sundarijal – 8, Kathmandu
24. Aita Nayaran Shrestha Sundarijal – 8, Kathmandu
25. Ramesh Simkhada Sundarijal – 8, Kathmandu
26. Lal Br. Tamang Sundarijal – 6, Kathmandu
27. Samar Lama Sundarijal – 6, Kathmandu
28. Mangali Tamang Sundarijal – 6, Kathmandu
29. Neema Sherpa Sundarijal – 6, Kathmandu
30. Sunil Tamanag Sundarijal – 6, Kathmandu
31. Maili Tamang Sundarijal – 6, Kathmandu
32. Anju Tamang Sundarijal – 6, Kathmandu
33. Bijuli Tamang Sundarijal – 6, Kathmandu
34. Bed K Dhakal (Warden) Langtang National Park
35. Subba Lama Chandanbari, Rasuwa
36. Pasang Tamang Chandanbari, Rasuwa
37. Karshang Chikki Tamang Chandanbari, Rasuwa
38. Karma Tamang Chandanbari, Rasuwa
39. Kami Ghale Chandanbari, Rasuwa
40. Hem Bdr. Jirel Chandanbari, Rasuwa
41. Karshang Tamang Chandanbari, Rasuwa
42. Om Dong Tamang Chandanbari, Rasuwa
43. Karsu Sonam Tamang Chandanbari, Rasuwa
44. Mindul lama Tamang Lauribina, Rasuwa
45. Dawa Bhote Lauribina, Rasuwa
46. Mingma D. Lama Lauribina, Rasuwa
47. Cheering Yangzin Lauribina, Rasuwa
48. Tenjing Lama Lauribina, Rasuwa
49. Pasang lama Lauribina, Rasuwa
50. Nawang Dorje Lauribina, Rasuwa
51. Dikki Cheering Lauribina, Rasuwa
52. Pema Dorje Tamang Thulosyabru, Rasuwa
53. Kharshang Tamang Thulosyabru, Rasuwa
54. Galbo Tamamg Thulosyabru, Rasuwa
55. Pasang Lama Thulosyabru, Rasuwa
56. Singi Tamang Thulosyabru, Rasuwa
57. Pema Tamang Thulosyabru, Rasuwa
58. Samdan Tamang Thulosyabru, Rasuwa
59. Kipa Tamang Thulosyabru, Rasuwa

34
Annex 3. Number and trend of visiting tourists
Fiscal Year BNP CNP KNP LNP MBNP RNP SNP SPNP ShNNP KTWR PWR SPWR
2060/61 (2003) 2,273 57,876 8 3,396 189 16 21,960 215 44,500 1,205 35 165
2061/62 (2004) 1,173 42,654 0 4,122 103 5 17,750 252 50,996 2,536 90 18
2062/63 (2005) 1,394 54,449 1 4,230 74 28 20,100 119 43,804 2,235 87 57
2063/64 (2006) 3,713 80,630 7 6,097 227 46 23,313 208 83,385 4,207 197 352
2064/65 (2007) 4,476 105,844 10 9,219 594 141 28,170 607 75,418 6,145 34 1,420
2065/66 (2008) 5,056 118,685 20 9,915 1,443 105 29,499 591 106,931 4,575 93 250
2066/67 (2009) 6,743 115,181 5 10,603 1,903 157 31,189 558 125,042 196 84 491
2067/68 (2010) 8,025 146,662 27 11,119 1,666 207 33,390 519 149,587 4,660 112 358
Annual increase 951 14,310 3 1,270 283 29 2,146 65 15,324 255 4 64
Source: DNPWC 2011; PAs’ annual report 2011

Annex 4. Frequency of income entities in PAs

SN Category BaNP BNP CNP KNP LNP MBNP RNP SNP SPNP ShNNP KTWR PWR SPWR Total
1. Entry fee NA + + + + + + + + + + + + 12
2. Grazing/forest NA + + + + + + + + + + + 11
products
3. Penalties NA + + + + + + + + + + + 11
4. Miscellaneous NA + + + + + + + + + 9
5. Tender forms NA + + + + + + + + 8
6. Hotel royalty NA + + + + + + + 6
7. Auction NA + + + + + 5
8. Elephant ride NA + + + + + 5
9. Illegal grazing NA + + + + + 5
10. Jungle NA + + + + + 5
drive/vehicle fee
11. Sand/boulders NA + + + + 4
12. Camping NA + + + 3
13. Fishing royalty NA + + + 3
14. Helicopter NA + + + 3
15. Khar-Khadai NA + + + 3
16. VAT NA + + + 3
17. Ghat contract NA + + 2
18. Rafting/boating NA + + 2
19. Road facility NA + + 2
20. Filming NA + 1
21. ID fee NA + 1
22. 18 16 8 7 3 9 7 5 8 8 10 6
NA = Not Available
Annex 5: Revenue generation by selected PAs (NRs ‘000)
Institutions 2064/65 2065/66 2066/67 2067/68 2068/69 Average Total Area NRs. Av.
occupied Revenue/k
(km2) m2
DNPWC 6,028 11,945 10,634 12,052 49,058 113,347 566,738 17,434 6,502
CNP 58,793 62,798 61,018 83,146 221,876 97,526 487,630 1,682 57,982
SNP 22,862 23,674 26,663 66,439 31,935 34,314 171,573 1,423 24,114
PWR 14,432 25,193 14,047 46,870 4,180 20,944 104,722 797 26,279
BNP 4,013 5,032 8,246 10,649 32,427 12,073 60,368 1,475 8,185
LNP 5,840 10,337 7,688 12,065 12,637 9,713 48,568 2,130 4,560
ShNNP 2,965 4,696 6,830 6,622 7,762 5,775 28,876 159 36,322
SWR 718 1,336 1,412 3,259 4,472 2,239 11,197 548 4,087
MBNP 748 784 1,247 1,823 4,902 2,180 8,721 2,330 936
KTWR 543 210 488 1,175 1,882 938 3,756 348 2,698
SPNP 391 263 540 702 2,201 819 4,097 4,904 167
BaNP 0 0 0 830 1,742 1,286 2,572 893 1440
KNP 70 113 208 219 728 267 1,339 441 607
RNP 190 128 293 434 264 261 1,309 304 861
TOTAL 117,898 135,428 140,310 248,504 376,066 305,657 1,528,287 17,434 17,532

35
Annex 6: Budget expenditure PAs (NRs ‘000)
Institutions 2064/65 2065/66 2066/67 Av. annual gov Area occupied Av. annual budget
budget (000) (km2) expenditure/km2
ShNNP 12,607 13,853 13,212 13,857 159 87,150.94
BaNP 46,480 893 52,049.27
SWR 11,442 15,595 23,349 16,795 548.50 30,619.87
CNP 38,654 43,518 70,598 50,923 1,682 30,275.26
KTWR 9,903 12,569 9,113 10,528 348 30,252.87
RNP 5,990 7,286 7,881 7,052 304 23,197.36
KNP 5,473 7,543 7,486 7,472 441 16,943.31
PWR 13,054 18,942 6,385 12,793 797 16,051.44
BNP 18,022 19,019 29,393 22,144 1,475 15,012.88
SNP 6,482 7,812 9,300 7,864 1,423 5,526.35
LNP 7,627 10,920 14,099 10,882 2,130 5,108.92
MBNP 9,170 10,571 11,749 10,496 2,330 4,504.72
SPNP 7,435 8,109 8,761 8,101 4,904 1,651.91

Annex 7: Fund generation, mobilization and management in protected areas

2.1 Banke National Park and Buffer Zone

Fund generation
According the available data, BaNPBZ generated Rs.830.3 million as total revenue in the FY 2067/68.

Fund mobilization
The challenges are to increase the revenue performance by enhancing activity performance leading to result
performance. Many donors’ contribution is intricately linked to result performance.
Table: Fund mobilization in BaNPBZ
Fiscal Government Annual Contributed Expenditure Budget utilization
year budget (000) revenue by revenue (000)
2067/68 46,480 830.29 1.78% 46,480 100%
(2010)
2068/69 1,742.29
(2011)
Av. 1,286.29
Source: DNPWC, 2011

Institutions Area Av. annual Av. annual Av. annual gov Av. annual Difference
occupied revenue revenue/km2 budget (000) budget/km2 /km2
(km2) (000)
BaNP 893 1,286.29 1,440.93 10,496 4,504.72 - 4194.79

Recommended sustainable strategies:

• Design and enhance more revenue generating based activities.
• Identify the ecosystem services of the park and mechanise the PES and respective market based
funding strategies, conservation fee, and carbon financing.
• Develop strong monitoring and evaluation system for result performance.

36
2.2 Bardia National Park and Buffer Zone
Fund generation
The BNP is funded by the government of Nepal through it annual budgetary provision. Bardia NP itself
generates about 40 percent revenue for its annual budget and program budget. There is about NRs 180,000
annual increment in revenue, which is largely contributed by government budget and revenue. Within the
revenue, fee from tourist and elephant riders, royalty from hoteliers and sand/boulder extractors
contributed the most and their trend is in increasing order. The number of tourists visiting to BNP is also
increasing. The average annual increase of tourist visiting to BNP is 951.
Table: Detail on revenue generation of BNPBZ
Category 2064/65 (2007) 2065/66 2067/68 Av. Contribution Av. annual
(2008) (2009) increase
Entry fee 1,282,260 1,279,280 2,072,400 1,544,646 20.86% 395,070
Penalties 450,769 544,810 2,312,245 1,102,608 14.90% 930,738
Hotel royalty 840,701 816,169 992,529 883,133 11.94% 75,914
Sand/boulders 232,295 1,480,076 856,185 11.57% 1,247,781
Elephant ride 670,400 867,200 947,000 828,200 11.19% 138,300
Auction 509,500 509,500 6.88%
Grazing/forest 30,000 853,194 441,597 5.97% 823,194
products
Khar-Khadai 257,920 303,980 405,240 322,380 4.35% 73,660
Jungle drive/ 211,000 152,000 470,500 277,833 3.75% 129,750
vehicle fee
Rafting/boating 126,300 170,700 174,100 157,033 2.12% 23,900
Miscellaneous 36,213 276,709 128,857 147,259 1.99% 46,322
Camping 71,700 152,250 11,600 78,516 1.06% (30,050)
Road facility 750 150,900 75,825 1.02% 150,150
Illegal grazing 25,000 119,790 72,395 0.97% 94,790
Tender forms 13,900 22,000 99,600 45,166 0.61% 42,850
Fishing royalty 26,600 48,800 35,200 36,866 0.49% 4,300
ID fee 12,500 12,500 0.16%
Ghat contract 3,000 4,000 3,500 0.04% 1,000
Total 4,012,763 5,032,233 10,648,950 6,564.648 100% 3,318,094
Source: CNPBZ management plan 2001, CNPBZ annual report 2011.

Fund mobilization
Overall performance and efficacy of BNPBZ was about 86 percent in terms of budget utilization. Of the total
budget, the contribution from revenue of BNPBZ is about 40 percent. The budget has been mobilizing for the
followings activities: physical infrastructure development, conservation education, habitat management,
species conservation and research, religious area conservation and promotion, eco-tourism, anti-poaching
and buffer zone management programs.
Table: Annual government allotted budget and revenue generated by BNP (‘000)
SN Fiscal year Government Annual Contributed Expenditure Budget
budget (000) revenue (000) by revenue (000) utilization
1 2064/65 (2007) 18,022.00 4,012.76 22.26% 17,226.00 95.58%
2 2065/66 (2008) 19,019.00 5,032.23 23.93% 18,604.00 97.81%
3 2066/67 (2009) 8,246
4 2067/68 (2010) 29,393.10 10,648.95 36.22% 21,924.95 74.58%
5 2068/69 (2011) 32,427
Average 22,144.7 12,073.39 40.91% 19,251.65 86.93%
Total 109,900.51 44,961.82 57,754.95
Source: DNPWC 2011; BNPBZ annual report 2011; BNPBZ Management Plan 2007

The annual average revenue generation from BNP is NRs 65 million and that of per square km is NRs
4450.62. Average annual government budget allocation for BNP is NRs 15012/km2. There is a loss of NRs
10562.26 annually from BNP from the current financing and fund mobilization procedures. Therefore more
revenue generation initiatives and better fund mobilization/management interventions are needed.

37
Institutions Area Av. annual Av. annual Av. annual Av. annual Difference
occupied revenue revenue/km2 gov budget budget/km2 per km2
(km2) (000) (000)
BNP 1,475 6,564.67 4,450.62 22,144 15,012.88 - 10,562.26

The tourist number is increasing but at an erratic rate after the year 2004. This is among others, due to
unstable political situation in the country which is believed to be more or less stabilized gradually after the
promulgation of the constitution. Such an erratic trend of tourist number leads to difficulty in planning. The
potential change in the existing governance such as the shift into the federal system may initially create lot of
confusion until the structures and systems are well defined and implemented.

Recommended sustainable strategies:

Arrange fairs and campaigns to increase the flow of tourists into Nepal and Park.
Improve mobility and logistic arrangements for the tourists.
Improve the revenue performance with proper documentation.
Lunch revenue generation initiatives such as payment for environmental services, carbon financing,
and conservation fee, etc.

38
2.3 Chitwan National Park and Buffer Zone
Fund generation
There is a large (58%) budget deficit between estimated budget and actual allocated budget of government.
Therefore the plan had suggested reviewing the pattern of budget disbursement and seeking external
support for implementation of program activities (CNP management plan 2001). The analysis showed that
there was annual increment in revenue generation in CNP by about 16 million. As in other PAs of Nepal, the
contribution of tourism fee for CNP revenue was most. Only the tourism fee shares about 62 percent of the
park revenue. There was annual increment in visiting tourists in CNP except some fluctuations.
Table: Revenue generated in Chitwan National Park and Buffer Zone
Category 1994/95 1998/99 2007/08 2008/09 2009/10 2067/68 Av. Contributi Av. annual
(2064/65) (2065/66) (2066/67) (2010/11) on increase
(%) trend
Entry fee 25,522,000 34,859,000 36,605,503 38,346,328 40,316,520 49,165,060 37,469,068 62.81 3,895,105
Hotel royalty 4,497,000 3,776,000 13,738,452 12,272,325 3,952,784 14,157,473 8,732,339 14.63 1,353,331
Elephant ride 7,470,000 7,833,000 1,268,280 1,841,700 1,295,100 1,268,800 3,496,146 5.86 -1,429,894
Transportatio 770,000 1,450,000 2,034,980 3,320,000 4,668,000 4,868,000 2,851,830 4.77 897,972
n fee (Jungle
drive)
Miscellaneous 756,000 273,000 266,609 386,254 666,977 7,251,185 1,600,004 2.68 965,071
Ghat contract 641,000 243,000 695,000 1,770,313 1,944,539 2,238,055 1,255,317 2.10 404,720
Road facility 150,000 179,000 681,440 800,320 1,151,900 1,778,610 790,211 1.32 319,447
Auction 0 0 0 0 4,588,503 0 764,750 1.28 393,300
Camping 849,000 1,231,000 866,950 725,400 49,700 530,800 708,808 1.18 -150,756
Penalties 239,000 260,000 300,852 637,545 1,337,374 686,764 576,922 0.96 165,932
Sand boulders 0 0 1,157,036 1,891,884 0 0 508,153 0.85 20,996
Khar-Khadai 364,000 422,000 329,890 330,450 371,530 304,150 353,670 0.59 -12,860
Grazing/forest 220,000 107,000 605,323 169,236 13,000 806,568 320,187 0.53 63,279
products
VAT 0 0 162,736 250,817 599,563 0 168,852 0.28 53,908
Tender forms 34,000 15,000 63,950 55,400 62,200 90,500 53,508 0.08 11,873
Illegal grazing 0 0 16,100 0 0 0 2,683 0.004 -460
Total 41,512,000 50,648,000 58,793,101 62,797,972 61,017,690 83,145,930 59,652,448 6,950,960
Source: CNPBZ management plan 2001, CNPBZ annual report 2011.

Fund mobilization
As in other PAs of Nepal, the contribution of tourism fee for CNP revenue was most. Only the
tourism fee shares about 62 percent of the CNP revenue. There was annual increment in visiting
tourists in CNP except some fluctuations. There is annual increase in visiting tourists in PAs of
Nepal, causing annual increase in revenue as entry fee.
Table: Revenue generated in CNPBZ (NRs in 000)
Fiscal year Budget Revenue Contribute by Expenditure Budget
(000) (000) revenue (000) utilization
2064/65 (2007) 38,654.00 58,793.10 152.1% 37,677.00 97.47%
2065/66 (2008) 43,518.00 62,797.97 144.30% 43,147.00 99.97%
2067/68 (2010) 70,598.00 83,145.93 117.77% 63,131.00 89.42%
Average annual 50,923.33 68,245.67 134% 47,985.00 94.22%
Source: DNPWC (2011); CNP annual report (2011)

Chitwan is better off in fund mobilization than most of other PAs in terms of revenue generation due to easier
access and presence of logistics facilities. However, the erratic trend in revenue generation remains in this PA
as well. Revenue and government budget ratio was positive in CNP.

Recommended sustainable strategies:

• Create environment for minimum political interference in the management of the PA.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.
• Avoid weakness in the overall governance practices within the PA.
• Strengthen tourist promotion measures.
• Assure tourist security initiatives.

39
2.4 Khaptad National Park and Buffer Zone
Fund generation
As in other PAs, entry fee and hotel royalty are major sources of income of Khaptad NP, however the average
annual income of KNP was the least. The least revenue was attributed to the least number of visitors because
of the remoteness. It shows that the revenue per square km is NRs 304.1.
Table: Detail on revenue generation of KNPBZ
Category 2064/65 2065/66 2066/67 Av. Av. annual increase Variance
(2007) (2008) (2009) trend
Hotel royalty 18,501 33,700 30,000 27,400.33 5,749.5 6282.11
Entry fee 6,000 41,000 14,000 20,333.33 4,000 33633.33
Tender forms 0 0 54,000 18,000 27,000 97200
Grazing/forest 15,411 0 26,846 14,085.67 5,717.5 18149.43
products
Miscellaneous 20,770 0 10,956 10,575.33 -4,907 10795.69
Penalties 0 19,415 0 6,471.67 0 12564.74
Illegal grazing 9,714 8,560 0 6,091.33 -4,857 2816.11
Khar-Khadai 0 10,136 0 3,378.67 0 3424.61
Rafting/boating 0 0 0 0 0 0
ID fee 0 0 0 0 0 0
Total 70,396 112,811 219,100 134,102.33 32,703 110092.71

Fund mobilization
Despite the trivial revenue generation (1.80 percent of allotted budget) from the park, the government has
allocated significant budget to the park management. There was average NRs 16940 annual investment per
square km. The revenue budget ratio for KNP was 0.017.
Table: Revenue generated in KNPBZ (000)
Fiscal year Budget Revenue Contribute by Expenditure Budget
(000) (000) revenue (000) utilization
2064/65 (2007) 5,473.00 70.396 1.29% 5,309.33 97%
2065/66 (2008) 7,543.00 112.811 1.50% 7,178.00 95.17%
2066/67 (2009) 7,486.00 219.117 2.93% 7,486.00 100%

Average 6,834.00 134.069 1.80% 6,657.78 97.43%

Source: DNPWC, 2011

Generating higher internal revenue is the major challenge for this PA due to remoteness and distance from
Kathmandu. None of the collaborative projects was managed in KNP because the donors who look for
matching contributions with the internal revenue generation performance are also shying away due to
inaccessibility.

Recommended sustainable strategies:

• Plan and adopt internal revenue generation performance through different promotion measures to
attract eco and religious tourists.
• Develop special and attractive tourist package that attracts ecotourism in the remote area.
• Ensure special security initiatives for the tourists visiting remote and wilderness environment.
• Develop strong network and communication with PAs, tourists centers and hotels based on Terai.
• Develop attractive information and incentive packages for the tourists.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

40
2.5 Langtang National Park and Buffer Zone
Fund generation
Market based funds from entry fee from visiting tourists, royalty from hoteliers and provisional services are
the most important revenue generating strategies for all PAs of Nepal. There is annual increase in visiting
tourists in LNP and causing annual increase in revenue as entry fee. Fee for water use (0.05 Rs per litre)
is another source of internal income.
Table: Detail on revenue generation of LNPBZ
Category 2064/65 2065/66 2066/67 Av. Av. annual Variance
(2007) (2008) (2009) increase
trend
Entry fee 5,354,000 6,355,847 6,793,200 6,167,682 719,600 54437865.96
Hotel royalty 98,475 3,125,585 151,243 1,125,101 26,384 300214829.1
Grazing/forest 276,439 493,159.2 569,907 446,501 146,734 2316355.70
products
Penalties 13,000 248,850 39,538 100,462 13,269 1669016.68
VAT 37,437 82,562.61 66,211 62,070 14,387 52193.98
Helicopter 58,000 30,000 68,000 52,000 5,000 38800
Miscellaneous 2,549 811.5 0 1,120 -1,274.5 169.58
Auction 0 0 0 0 0 0
Tender forms 0 0 0 0 0 0
ID fee 0 0 0 0 0 0
Total 5,839,900 10,336,816 7,688,099 7,954,938 924,099.5 510896475.2

Fund mobilization
Annual revenue generation in LNP was about NRs 8 million whereas the government annual budget was
about NRs 10 million. It shows that revenue budget ratio is about 0.86. Contribution of revenue to the budget
was about 70 percent. Average revenue generation per square km is NRs 4420 and the budget per square km
is NRs 5100. The analysis showed that the LNP is unsustainable in financing. However the complementary
conservation programs were materialized by WWF Nepal aided Sacred Himalayan Landscape (SHL) project.
Table: Revenue generated in LNPBZ (NRs ‘000)
Fiscal year Budget (000) Revenue (000) Contribute by Expenditure Budget
revenue (000) utilization
2064/65 7,627.50 5,839.900 76.56% 7,553.55 99%
(2007)
2065/66 10,920.00 10,336.815 94.65% 10,725.00 98.21%
(2008)
2066/67 14,099.00 7,688.099 53.11% 12,357.00 87.64%
(2009)
2067/68 19,347.00 12,065.458 63.36% 19,347.00 100.00%
(2010)
Average 12,998.38 8,982.568 69.10% 12,495.64 96.13%
Source: DNPWC, 2011

Recommended sustainable strategies :

• Stabilize the growth of funds and target programmes to attract the donor funding.
• Fund was under-utilized in LNP, therefore capacity enhance the capacity of stakeholders on fund
mobilization, innovative fund generation and management.
• Diversify internal revenue generation sources
• Plan different promotion measures to attract eco and religious tourists.
• Develop special packages to attract private entrepreneurs to establish eco-friendly enterprises.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

41
2.6 Makalu-Barun National Park and Buffer Zone

Fund generation
There were limited income sources in MBNP. Only three market based funding sources (entry fee
from visiting tourists, fee from provisional services, and taxes from tender forms) were common.

Table: Detail on revenue generation of MBNPBZ

Category 2064/65 2065/66 2066/67 Av. Av. annual Variance
(2007) (2008) (2009) increase trend
Entry fee 594,000 572,000 1,111,062 759,020.67 258,531 9307082.53
Grazing/forest 148,000 212,208 136,382 165,530 -5,809 166787.12
products
Tender forms 6,463 0 0 2,154 -3,231.5 1392.34
Penalties 0 0 0 0 0 0
Sand/boulders 0 0 0 0 0 0
Hotel royalty 0 0 0 0 0 0
Auction 0 0 0 0 0 0
Miscellaneous 0 0 0 0 0 0
Illegal grazing 0 0 0 0 0 0
Total 748,463 784,208 1,247,444 926,705 249,490.5 7747455.58

Fund management

Table: Revenue generated in MBNPBZ

Fiscal year Budget Revenue Contribute by Expenditure Budget
(000) (000) revenue (000) utilization
2064/65 9,170.94 748.463 8.16% 8,824.79 96.22%
(2007)
2065/66 10,571.00 784.208 7.41% 10,568.00 99.97%
(2008)
2066/67 11,749.00 1,247.444 10.62% 11,533.00 98.16%
(2009)
2067/68 14,237.00 1,822.892 12.80% 14,237.00 100%
(2010)
2068/69 4,902.00
Average 11,431.99 1,901.00 10.06% 11,290.7 98.75%
Source: DNPWC, 2011

The challenge of the Makalu Barun is the decreasing level of tourists which limits the major source of income
– the entry fee. The annual variation of tourist flow is also very high.

Recommended sustainable strategies :

• Attract tourists on a consistent and also to contribute much more in equity terms to the total
available fund.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.
• Develop special packages to attract private entrepreneurs to establish eco-friendly enterprises.
• Create initiatives to enhance the growth performance of the PA.

42
2.7 Rara National Park and Buffer Zone
An average revenue generated in Rara National Park and Buffer Zone is estimated at Rs. 400,000.00. Average
annual budget of fiscal year (2009-2010) is about 73,14,000.00. Major sources of park and buffer zone are as
follows:
1. Entry fee
2. Fees for usage of park resources
3. Tourism

Table: Detail on revenue generation of RNPBZ

Category 2064/65 2065/66 2066/67 Av. Av. annual Variance
(2007) (2008) (2009) increase
trend
Entry fee 141,000 99,600 131,000 123,866 -5,000 46665
Penalties 0 0 121,820 40,606 60,910 494670
Hotel royalty 6,000 2,000 23,600 10,533 8,800 13205
Illegal grazing 15,500 14,890 0 10,130 -7,750 7706
Tender forms 25,500 0 4,500 10,000 -10,500 18525
Fishing royalty 0 0 8,500 2,833 4,250 2408
Grazing/forest 2,040 9,030 0 3,690 -1,020 508
products
Helicopter 0 0 4,000 1333 2,000 533
Miscellaneous 0 2,500 0 833 0 208
Total 190,040 128,020 293,420 203,826 51,690 698184

Financial sustainability of Rara National Park and Buffer Zone is assured through management of the
followings:
1. Park entry fee
2. Special fee for filming, research, etc.
3. Conservation levy on local products
4. Grant from donors
5. Leveraging conservation partners’s resources
6. Contribution from BZs organizations
7. Private entrepreneurs/developers to establish eco-friendly enterprises
Table: Revenue generated in RNPBZ
Fiscal year Budget Revenue (000) Contribute Expenditure Budget
(000) by revenue (000) utilization
2064/65 (2007) 5990.85 190.040 3.17% 5787.17 96.60%
2065/66 (2008) 7286.00 128.020 1.75% 7242.00 99.39%
2066/67 (2010) 7881.00 293.420 3.71% 7595.00 96.37%
Average 7052.62 167.894 2.38% 6874.72 97.47%
Source: DNPWC, 2011

Rara National Park is growing steadily with no significant variation in its fund generation. However, the
challenge is to grow at higher activity level through additional fund generation. No. of tourists are also
steadily but from a very low base.

Recommended sustainable strategies :

• Upscale the activities to generate more internal funds.
• Develop special packages to attract private entrepreneurs to establish eco-friendly enterprises.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.
• Develop strong network with hotel, filming and research centers,

43
2.8 Sagarmatha National Park and Buffer Zone
In Sagarmatha national park and buffer zone (SNPBZ), much of the regular costs are covered by government
managed budget. Community development and conservation activities that are supported by conservation
partners. The conservation partners supported to SNPBZ are as follows:
• The New Zealand Government
• WWF Nepal
• Himalayan Trust
• The Austrian government and Eco-Himal
• TRPAP

Since 2003, buffer zone programs have been implemented. It allows community living in and around the park
to receive up to 50 percent of the park revenue. The management plan of SNPBZ urged the following to:
• Continue to evolve and strengthen the buffer zone fund release and project implementation system
to ensure the continuation of a successful revenue generation/sharing.
• Raise park entry fee
• Levy fees to fund the conservation and development works
• Share mountaineering revenue
• Sagarmatha Trust Fund to manage long term funding and co-funding.

Table: Detail on revenue generation of SNPBZ

Category 2064/65 2065/66 2066/67 Average Av. annual Variance
(2007) (2008) (2009) increase trend
Entry fee 20,352,800 21,452,200 22,841,200 21,548,733 1,244,200 155502265
Helicopter 1,410,000 1,229,200 1,420,000 1,353,066 5,000 1153221
Hotel royalty 728,209 682,111 2,007,291 1,139,203 639,541 56571283
Grazing/forest 259,088 228,198 297,747 261,677 19,330 121428
products
Sand/boulders 106,041 75,391 90,278 90,570 -7,882 23492
Penalties 5,790 500 6,333 4,207 272 1038
Miscellaneous 0 5,961 113 2,024 57 1162
Auction 0 0 0 0 0 0
Thatch grass 0 0 0 0 0 0
Tender forms 0 0 0 0 0 0
VAT 0 0 0 0 0 0
Total 22,861,928 23,673,562 26,662,962 24,399,484 1,900,517 400718702

Table: Revenue generation in SNPBZ (NRs ‘000)

Fiscal year Budget Revenue (000) Contribute by Expenditure Budget
(000) revenue (000) utilization
2064/65 (2007) 6,482.30 22,861.928 352% 6,434.33 99.25%
2065/66 (2008) 7,812.00 23,673.562 303% 7,798.00 99.82%
2066/67 (2009) 9,300.00 26,662.962 286% 8,295.00 89.19%
Average 7,864.77 26,312.841 334% 7,509.11 95.48%
Source: DNPWC, 2011

Review of last five years budget of SNP shows that the Park received average annual budget of Rs. 6,000,000
per year. Out of this approximately Rs.3, 000,000 (50%) has been spent in the Park Management activities.
The remaining Rs.3, 000,000 has been absorbed to over administrative costs. Based on the past trend, it can
be expected that the Park can continue to contribute NRs. 15 million for the 5 year towards implementation
of this plan. The major challenge of this PA is to attract more funds from outside is less than one-third of the
total budget. Tourist flow growth is stable at reasonable level but the total fund generation variance poses a
challenge to stabilize. With some additional effort, this PA can attain sustainability in a much quicker time.

Recommended sustainable strategies :

• Perform more publicity of the performance of the PA to attract more government contribution and donor
funding.
• Develop special packages to attract private entrepreneurs to establish eco-friendly enterprises.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.
44
2.9 Shey-Phoksundo National Park and Buffer Zone

Table: Detail on revenue generation of SPNPBZ

Category 2064/65 2065/66 2066/67 Av. Av. annual Variance
(2007) (2008) (2009) increase trend
Entry fee 320,000 197,045 284,400 267,148 -17,800 400270
Grazing/forest 59,140 61,415 245,007 121,854 92,934 1137629
products
Tender forms 0 3,900 10,200 4,700 5,100 2649
Miscellaneous 11,700 0 0 3,900 -5,850 4563
Penalties 0 500 0 250 -500 13
Sand/boulders 0 0 0 0 0 0
Hotel royalty 0 0 0 0 0 0
Auction 0 0 0 0 0 0
Thatch grass 0 0 0 0 0 0
Fishing royalty 0 0 0 0 0 0
Illegal grazing 0 0 0 0 0 0
ID fee 0 0 0 0 0 0
Helicopter 0 0 0 0 0 0
VAT 0 0 0 0 0 0
Total 390,840 262,860 539,607 397,769 74,384 1918323

Table: Revenue generated in SPNPBZ

Fiscal year Budget (000) Revenue (000) Contribute Expenditure Budget
by revenue (000) utilization
2064/65 7,435.50 390.84 5.25% 7,405.75 99.59%
(2007)
2065/66 8,109.00 262.86 3.23% 8,085.00 99.70%
(2008)
2066/67 8,761.00 539.607 6.15% 7,118.00 81.24%
(2009)
Average 8,101.83 349.011 4.32% 7,536.25 93.02%
Source: DNPWC, 2011

Low level of internal fund generation (average revenue/Km2) is a major problem and thus a challenge for
this PA. Due to remoteness, tourist flow is low but consistent over time. Upscaling of tourist flow is another
challenge. Only limited sources of fund generation have been used in this PA for internal revenue generation.
The challenge is to extend the number of internal revenue generation sources which could also pave the way
for enhanced government and donor contributions.

Recommended sustainable strategies :

• Enhance internal revenue generation performance through different promotional measures.
• Enhance special incentive and attractive eco-tourist package to promote ecotourism in the remote
area.
• Ensure special security initiatives for the tourists visiting remote and wilderness environment.
• Develop attractive information and incentive packages for the tourists.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

45
2.10 Shivpuri-Nagarjun National Park

Fund generation
Despite the contribution of entry fee in park revenue generation was significant, annual increase trend was
overwhelming in jungle drive and vehicle fee because of skyrocketing visiting tourists. Penalty was the third
most important causes of most revenue generation, showed that there was prevalent malpractice of parks
resource use.
Table: Detail on revenue generation of ShNNP
Category 2064/65 2065/66 2066/67 Av. Av. annual Variance
(2007) (2008) (2009) increase trend
Entry fee 2,380,660 3,605,870 4,120,000 3,368,843 869,670 79846214
Jungle 375,710 802,780 2,601,725 1,260,071 1,113,008 139562245
drive/vehicle fee
Penalties 134,000 87,440 61,250 94,230 -36,375 135772
Auction 36,648 112,259 200 49,702 -18,224 326712
Filming 3,000 48,000 33,000 28,000 15,000 52500
Camping 18,000 21,800 13,600 17,800 -2,200 1684
Miscellaneous 0 18,300 0 6,100 0 11163
Tender forms 16,600 0 0 5,533 -8,300 9185
Hotel royalty 0 0 0 0 0 0
Grazing/forest 0 0 0 0 0 0
products
Illegal grazing 0 0 0 0 0 0
ID fee 0 0 0 0 0 0
VAT 0 0 0 0 0 0
Total 2,964,618 4,696,449 6,829,775 4,830,280 1,932,579 374829284

Table: Revenue generated in ShNNP

Fiscal Allocated Revenue Contribute Expenditure Budget
year budget (000) (000) by revenue (000) utilization
2064/65 12,607.00 2,964.618 23.51% 11,248.40 89.22%
(2007)
2065/66 13,853.00 4,696.449 33.9% 13,374.00 96.54%
(2008)
2066/67 11,967.00 6,829.775 57% 12,863.00 107.48%
(2009)
2067/68 13,212.00 6,622.356 50.12% 13,212.00 100%
(2010)
2068/69 17,647.00 12,785.96*
(2011)
Average 13,857.20 3,418.698 24.67% 12,696.67 91.62%
Source: DNPWC (2011), *ShNNP progress report (2011) expense till April, 2011.

Recommended sustainable strategies :

• Since the park is characterized with various ecosystem services, major environmental services of the
park is needed to be identified and valued properly.
• Enhance internal revenue generation performance through different promotional measures.
• Enhance special incentive and attractive eco-tourist package to promote ecotourism in the remote
area.
• Ensure special security initiatives for the tourists visiting remote and wilderness environment.
• Develop attractive information and incentive packages for the tourists.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

46
2.11 Koshi-Tappu Wildlife Reserve and Buffer Zone
The Koshi-Tappu Wildlife Reserve and Buffer Zone management plan has placed special emphasis on
internal revenue generation and mobilization to sustain conservation efforts. Only about 19 percent of the
total budget of the wildlife reserve is expected exclusively from various conservation partners and about the
same from government-conservation partner projects.

Table: Revenue generation scenario in KTWRBZ

Revenue source Percentage
GoN 36.3%
GoN-Conservation partners 41.8%
Conservation partners 19.4%
GoN/BZMC 2.5%
Total 100%

GoN/DNPWC should review the budget disbursement to increase current allocation. as about 40 percent
budget of the wildlife reserve is conservation partner dependant, Programs such as ecotourism and external
fund leveraging are likely to complement the revenue generation.

Table: Detail on revenue generation scenario in KTWRBZ

Revenue 1995 1999 2063/64 2064/65 2065/66 2066/67 Av. Av. annual Variance
source increase
(2006) (2007) (2008) (2009)
trend
Thatch grass 0 0 0 64,440 76,580 0 316,285 8,405 134051
Entry fee 172,580 330,210 202,540 202,540 82,400 227,020 202,881 -13,464 644588
Jungle drive 2,540 45,825 0 117,320 6,200 66,140 39,670 9,041 216813
Penalties 0 0 0 4,302 8,700 136,215 24,869 20,328 298755
Illegal grazing 0 0 0 134,300 800 0 22,516 3,906 299903
Elephant riding 7,150 26,650 11,200 11,200 11,200 27,800 15,866 1,626 8000
Rafting/boating 0 0 0 7,900 24,150 24,500 9,425 5,796 14258
Fishing 0 0 0 0 0 6,352 1,058 907 672
Total 182,270 402,685 213,740 542,002 210,030 488,027 339,792 36,545 2487170
Source: KTWRBZ Management Plan (2009), DNPWC annual reports

Table: Revenue generation in KTWRBZ

Fiscal year Budget (000) Revenue (000) Contribute by Expenditure Budget
revenue (000) utilization
2064/65 9,903.50 542.842 5.47% 9,393.94 94.85%
(2007)
2065/66 12,569.00 210.030 1.67% 12,173.00 96.84%
(2008)
2066/67 9,113.00 488.027 5.35% 8,566.00 93.99%
(2010)
Average 1,0528.5 531.931 5.05% 10,044.31 95.40%
Source: DNPWC, 2011

Recommended sustainable strategies:

• Develop strong initiative to promote ecotourism.
• Develop mechanism for leveraging external fund.
• Strengthen the existing practice of internal resource generation.
• Strengthen fund mobilization and management systems through capacity buildings and good
governances.
• Scope diverse sources of revenue generation.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

47
2.12 Parsa Wildlife Reserve and Buffer Zone
Different from other PAs of Nepal, PWR received greater revenue from sand boulders and auctions. Fees for
provisional services, elephant riding and reserve entry were less common in the reserve. Elephant ride for
sighting charismatic wildlife (one-horned Rhinoceros, tiger) is common in tropical PAs (Chitwan, Bardia,
Parsa, Koshi-Tappu and Shukla-Phanta), however it was also common and effective for revenue generation in
Chitwan NP.
Table: Detail on revenue generation scenario in PWRBZ
Revenue 2064/65 2065/66 2066/67 Av. Av. annual Variance
source (2007) (2008) (2009) increase trend

Sand boulders 12,897,360 22,663,430 4,910,359 13,490,383 -3,993,501 7905663969

Auction 0 53,160 7,356,890 2,470,016 3,678,445 1791185473
VAT 1,307,535 2,149,104 1,525,004 1,660,547 108,735 19083866
Penalties 157,515 39,295 161,600 119,470 2,043 482519
Thatch grass 38,910 118,535 16,420 57,955 -11,245 287890
Tender forms 17,700 111,900 20,700 50,100 1,500 286668
Elephant 9,800 50,400 49,600 36,600 19,900 53884
riding
Entry fee 600 5,960 4,060 3,540 1,730 739
Jungle drive 370 1,000 2,050 1,140 840 72
Misc. 2,500 0 0 833 -1,250 208
Illegal grazing 0 0 0 0 0 0
Total 14,432,290 25,192,784 14,046,683 17,890,585 -192,804 4002874856

PWR is one of the sustained Pas of Nepal in terms of financing. The analysis showed that the contribution of
revenue to the annual budget was always appreciated, i.e always greater than the allotted budget.
Table: Revenue generation in PWRBZ
Fiscal year Budget (000) Revenue (000) Contribute by Expenditure Budget
revenue (000) utilization (%)
2064/65 13,054.00 14,432.290 110.55% 12,149.72 93.07
(2007)
2065/66 18,942.00 25,192.784 132% 20,231.00 106
(2008)
2066/67 6,385.00 14,046.683 219.98% 6,360.00 99.60
(2010)
Average 12,793.67 14,140.691 110.52% 12,913.57 99.56
Source: DNPWC, 2011

Recommended sustainable strategies:

• Enhance internal revenue generation performance through different promotional measures.
• Enhance special incentive and attractive eco-tourist package to promote ecotourism in the remote
area.
• Ensure special security initiatives for the tourists visiting remote and wilderness environment.
• Develop attractive information and incentive packages for the tourists.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

48
2.13 Shukla-Phanta Wildlife Reserve and Buffer Zone
Shukla-Phanta Wildlife Reserve is one of the biodiversity rich PA of Nepal, however its richness and
management program are constrained by human-wildlife conflict. To safeguard the rich natural endowments
of the Shukla-Phanta Wildlife Reserve and to reduce park-people conflict, a strategic five year management
plan (2006-2011) has been developed with defining strategies and specific activities on the following
components : 1) Bird diversity and management, 2) Societal Diagnosis and management, 3) Vegetation
Ecology and management, 4) Investment Opportunities and Approaches to Biodiversity Conservation and
Development, and 5) Resettlement history and management.

GoN and INGOs are the major funding sources of funding for management of Shukla-Phanta Wildlife Reserve
and Buffer Zone. In the Management plan of SWRBZ, 43 percent funding was estimated from government, 42
percent from NGOs and rest 15 percent from their collaborative projects.
Table: Summary budget of a 5 Yr Management plan of SWRBZ (2006-2011)
SN Program activity Cost (000) Percentage
1 Reserve management 68,390 33
2 Biodiversity conservation 66,015 31
3 Buffer zone development 49,610 24
4 Infrastructure development 17,370 8
5 Ecotourism management 5,685 3
6 Operation modality and evaluation 2,595 1
Total 209,665 100
Source: SWRBZ management Plan (2006)

There are limited internal sources of income of PAs of Nepal, and among them, only the provisional goods
and penalty sources contribute the positive trend in income generation. Despite the entry fee was most and
common income sources in PAs of Nepal, it could not contribute the positive trend in come generation.
Table: Detail on revenue generation scenario in SWRBZ
Revenue source 2064/65 2065/66 2066/67 Av. Av. annual Variance
(2007) (2008) (2009) increase trend
Penalties 190,888 864,384 1,070,960 708,744 440,036 21179954
Entry fee 136,514 301,480 133,407 190,467 -1,554 924533
Thatch grass 165,760 0 207,935 124,565 21,088 1208201
Auction 198,810 158,700 0 119,170 -99,405 1105332
Hotel royalty 25,987 4,412 0 10,133 -12,994 19338
Elephant riding 0 6,600 0 2,200 0 1452
Jungle drive 0 0 0 0 0 0
Illegal grazing 0 0 0 0 0 0
Tender forms 0 0 0 0 0 0
VAT 0 0 0 0 0 0
Total 717,959 1,335,576 1,412,302 1,155,279 347,172 14490831

Because of the limited income sources and even they are erratic in revenue generation, only about 8 percent
annual budget of SWR was contributed by its revenue.

Table: Revenue generation in SPWRBZ

Fiscal year Budget Revenue (000) Contribute by Expenditure Budget
(000) revenue (000) utilization
2064/65 (2007) 11,442.50 717.959 6.27% 10,875.02 95.04%
2065/66 (2008) 15,595.00 1,335.576 8.56% 15,088.00 96.74%
2067/68 (2010) 23,349 3,258.988 13.95% 23,349 100%
Average 16,795.5 1,328.078 7.90% 16,437.34 97.86%
Source: DNPWC, 2011
Recommended sustainable strategies
• Design and adopt sustainable investment opportunities on B/D conservation.
• Prepare Action plan for bird diversity and management.
• Enhance and strengthen the present context of internal revenue and fund generation approach.
• Identify major ecosystem services of the park and devise PES and respective market based funding
strategies, conservation fee, and carbon financing.

49
 Annex 8: Services rendered by your PA (tick appropriate)
SN Ecosystem Services of PAs Do the users pay for these Could they pay more?
services?
1. Provisioning (firewood, fuelwood, etc.)
2. Provisioning (thatching grass/fodder; wild
fruit, vegetables, medicine)
3. Ecotourism and recreational
4. Research, development and educational
5. Carbon sink
6. Watershed and irrigation
7. Forest biodiversity
8. Agricultural biodiversity
9. Control soil erosion and flood and drought
10. Hydroelectricity
11. Fisheries
12. Air quality control
13. Fire prevention
14. Culture maintenance
15. Regulating water run-off
16. Pest and disease control
17. Plant pollination, seed dispersal and nutrient
cycling
18. Waste detoxification and protection from UV
rays
19. Soil formation and fertility replenishment
20. Moderating extremes of temperatures, wind,
rainfall
21.
22.
23.
24.
25.

What losses are incurring due to these PA activities?

What activities are needed to generate sustainable income for this institution?

What activities are needed to better conserve the biodiversity by this institution?

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