Final DRAFT Reconnaissance Report of Irrigation -Hydropower Trade-Off Study in Nepal Photo courtesy: Norwagian Development Agency By Prachanda Pradhan Rashmi Kiran Shrestha Devesh Belbase Pravakar Pradhan Kathmandu, Nepal May 2018 Table of Contents 1. Introduction 1 2. Literature Review 2 3. Objectives of the Study 8 4 Methodology of Study 8 Characteristics of the systems observed 5 Observations from the Reconnaissance Study 13 References 15 Appendix 1: Information on the Reconnaissance Study of the Hydropower and 17 IrriGation Systems. Appendix 2: Jhimruk Hydropower System on Trade off between Irrigation and 52 Hydropower Appendix 3: Checklist for trade-off between hydropower and irrigation 59 i 1. INTRODUCTION Nepal is rich in water resources. They have been used in irrigation for food production and water mills for food processinG and micro-hydropower projects. A few hydropower stations of small capacity were constructed in 1911 and after. Recently, many hydropower projects of different capacities have been constructed by securing generation and construction licenses in larGe number of rivers. Moreover, with availability of modern irriGational technoloGies and power, the land considered unfeasible to be irriGated in the past are beinG made feasible raisinG the possible water usaGe issues amonG different users in the riparian. Over 6000 river systems are found in Nepal, the first hydropower came about 107 years aGo. 3 more systems were added durinG 58 years period after the first hydropower project. There were thousands of irriGation systems in these rivers and streams. In 2018, altoGether 178 hydropower systems are either in operation or under construction in those river systems where quite a few of those irriGation systems also exist. Therefore, the intra- sector coordination and manaGement framework amonG sectors such as hydropower and irriGation is needed. Thus, a broader framework which contains mechanism for cost and benefit sharinG to balance the trade-off must be arranGed to address the issue. If proper attention is not Given in time, there will be a number of adverse competitions on water resources utilization in those river systems in Nepal. At present, it shows a stronG sectoral approach in water resources utilization. 1.1 History of Hydropower and Irrigation Development in Nepal In 1911, Pharping Hydro of 500 kW, the first hydropower plant, was established in Nepal. After an interval of 25 and 29 years, two other hydropower plants in Sundarijal with the capacity of 900 kW was established. In 1965, Khopasi hydropower plant with 2400 kW capacity came into operation. This plant used water from the existinG irriGation system. Demand of electricity increased after 1960's, and bigger hydropower plants including Trisuli and Devighat projects were constructed. In ten years period from 1965 to 1975 the installed capacity of hydropower increased almost 20 times. At the same time, it is estimated that about 20,000 units of irriGation systems exist in Nepal by utilizinG water from those larGe and small river systems in Nepal. In 2018, the Power Trade Department of Nepal Electricity Authority reported that there are 46 hydropower plants in operation and 132 systems are under construction. The classifications of hydropower plant are as follows: • Plants less than 100 kW (Micro) • Plants from 100 kW to 10 MW (Small) • Plants from 10 MW to 300 MW (Medium) • Plants above 300 MW (Big hydropower) 1 2. LITERATURE REVIEW 2.1 Trade-off between hydropower generation and irrigation for food production The notion of trade-off between hydropower and irrigation seems makinG choice between two opposinG elements. This means to make choice of a sector that brinGs more return. This applies more in reservoir system where the manaGer has the control over water. He can make decision of use of that water of reservoir either for hydropower Generation or in irriGation for aGriculture production. If the manaGer has to make decision based on the return of per unit of water use, he/she will Go for hydropower Generation because it brinGs more return of use of water than in irrigation for crop production. There are instances where the leGal system of a country also suGGests the use priority of water. In Nepal, the Water Resources Act, 1992 states the priority of water use like drinking water is first priority, then irrigation, agriculture use and hydropower. In Pakistan, it is irrigation which has first priority of water use. However, scenario will chanGe from reservoir system to run of the river system of hydropower Generation. The water flow in the river keeps on changing according to the season. Hence, the water use price per unit also changes. Can there be a trade-off between irrigation and hydropower in run- of- river system. In Nepal context, the flow of water in river systems chanGes tremendously by season. In run of the river, flow of water becomes abundant for almost 8 months for both irriGation and hydropower. However, the crucial decision about trade-off has to make durinG lean period like from December to May. The system of inter-basin water transfer for irrigation and hydropower has different characteristics for trade-off analysis of per unit of water use (Bheri-Babai and Jhimruk and Khimti). ThouGh both of them are of inter-basin water transfer, the characteristics are different. In Bheri-Babai, it is not between hydropower and irrigation, it is rather water use for both purposes. Hence, the trade-off between hydropower and irrigation will be different. In Jhimruk and Khimti, it is between hydropower and irriGation, mostly, durinG lean period of water flow. Based on reconnaissance of 20 hydropower stations across Nepal, the trade-off analysis factors differ. They are influenced by policy of water allocation for example Marsyangdi Hydropower at Abu Khairani durinG lean period. It has defined catchment area for the systems (catchment area for water use for hydropower only like MarsyanGdi, Abu Khairani,). It is assumed that no other activity upstream of dam and power house within assiGned catchment area of 3500 km3 is allowed. Water use practices both for hydropower and irriGation (Khopasi Hydropower and Rani Jamara and Kulariya System) are also in practice. Other systems like Seti, Bijayapur and Task of Kaski have interestinG arranGement that DOI takes responsibility in maintaininG headworks for Seti Irrigation System as well as the coordination and cooperation amonG the power producers and irrigation water users. Sunsari MoranG IrriGation system and Chatara power house and Trisuli and Devight Hydropower have different story. Khudi Hydropower of LamjunG is only for power generation, no substantial adverse impact on irriGation systems around the vicinity exist. 2 Hence, the trade-off analysis per unit of water use differ amonG different systems. The present study will focus more on how benefit sharinG have been the practice both in hydropower and irrigation in Nepal. Hydropower development often has a large social and ecological footprint on river basins, and adverse socio-environmental impacts are particularly common at the local level. To address such concerns, it is important for national and local Governments to develop policies and reGulations that promote more equitable benefit-sharing mechanisms with the affected parties, as well as the wider community. In the past, hydropower projects have primarily focused on national and regional economic priorities, while payinG little attention to the adverse impacts on affected local populations (mostly mountain communities) and surroundinG mountain environments. This has resulted in the inequitable distribution of hydropower-related benefits and costs, in which the key beneficiaries of hydropower projects are generally located in distant areas, while mostly mountain people are affected by project-induced negative externalities, but do not derive commensurate benefits Hydropower development leads to short-term and lonG-term chanGes in the hydroloGy of project-affected areas and often impinGes on local formal and informal water riGhts. Hydropower projects are required to mitiGate or compensate local people for losses related to the reduction of flow in project-affected areas that are either partially or completely dewatered. However, the water-related benefits that are described in this subsection Go beyond mitiGation and compensation and, as such, can be defined as ‘benefits’. Several hydropower projects support local farmers in the construction of check dams and irrigation canals. In some cases, support the reGular maintenance of these facilities. In most cases, there is unresolved conflict between hydropower projects and local communities’ vis-à-vis irriGation issues. In Kulekhani I, Jhimruk and Khimti, farmers have complained of less water for irriGation due to diversion or beinG in the dewatered zone and low productivity due to the hydropower project (Shrestha, et al. 2016). Irrigation has a very long history in Nepal, with well-established traditional institutions and procedures for the manaGement of the thousands of Farmer ManaGed IrriGation Systems (FMIS) in the country. Most of the FMIS are in the hills, while Agency Managed IrriGation Systems (AMIS) in the Terai commonly cover tens of thousands of hectares, with thousands of users. Conflicts can be minimized or manaGed throuGh Good Governance in IrriGation Water Users Associations (IWUA) and Good technical desiGn of systems. Only a fraction of the hydropower potential of Nepal is developed, but the few systems that exist have produced