More than 45 percent of tourists to Nepal visit the country’s wealth of natural resources, including snow-capped mountains, abundant rivers, and sub-tropical forests. The country’s significant biodiversity and wildlife assets are managed within 20 protected areas, including 12 national parks covering about 20 percent of the country’s land area.
The tourism industry contributed about 6.7 percent to Nepal’s GDP, while its total impact was US$ 2.2 billion. In addition, in 2019, tourism supported over one million direct and indirect jobs, or 6.7 percent of total employment. Approximately 80 percent of these jobs are in the most remote and resource-constrained regions.
While tourism already contributes significantly to Nepal’s economy, there are opportunities for further investments in the sector to reap additional benefits, especially for local livelihoods. This is important since Nepal is one of the many countries working to control unprecedented biodiversity losses while trying to address the development setbacks from the COVID-19 pandemic.
As a result, there is increased awareness of two critical challenges: the steep declines in global biodiversity and the need for a green recovery from the pandemic. Policymakers recognize that these challenges need to be jointly addressed as one cannot be solved without the other.
A new report released by the World Bank is providing some answers. Economic Impacts of Protected Area Tourism on Local Communities in Nepal estimates the direct and indirect benefits of protected area tourism to the local economies, thereby making the case that the economic benefits of protected areas far outweigh the benefits reaped by protected area management alone. Moreover, the report argues that promoting sustainable and inclusive tourism in Nepal’s protected areas is foundational for the country’s Green, Resilient, and Inclusive Development (GRID).
Promoting sustainable and inclusive tourism in Nepal’s protected areas is foundational for the country’s Green, Resilient, and Inclusive Development (GRID).
The report is centered on a study of the country’s famous Chitwan National Park, which is home to iconic species like the Greater One-Horned Rhino. Surveys were conducted in communities around the park, such as the Khairahani, Ratnanagar, and Bharatpur municipalities.
Data was also gathered from tourists, lodges, resorts, and local businesses and formed the basis for a general equilibrium model for local economy-wide impact evaluation (LEWIE) to analyze tourism’s direct and indirect impacts. Direct impacts cover the money spent by tourists in the protected areas.
In contrast, indirect impacts are the ripple effects that the spending has on the tourism market and how these are transferred through the local economy. For instance, the revenue generated by protected areas through park fees is an essential source of funding for biodiversity conservation.
The revenue generated by protected areas through park fees is an essential source of funding for biodiversity conservation.
The study finds that each visitor to Chitwan National Park adds, on average, about US$ 84 million annually to the real income of households in communities around the park. In addition, tourism to protected areas generates 4,309 jobs. The expenditures by tourists in protected areas generate significant household income multipliers – the change in local household incomes per the amount spent on local retail, services, and transport.
These multipliers benefit many households, including those not directly involved in the tourism sector. Two-thirds of tourists in the country visit protected areas but are concentrated in only four of 20 protected areas despite good conservation records. In addition, protected areas cover over 23 percent of the country’s land area and include national parks, conservation areas, and wildlife and hunting reserves.
Despite the increasing visitor flow (1.19 million in 2019), Nepal has been facing the risk of becoming a low-value mass tourism destination, damaging the very natural assets on which the sector depends. While visitor numbers increased sharply from 2016 to 2019, tourism receipts declined and have been low compared to competing destinations – an average of US$48 per day per international visitor in 2019 – almost half the global average and one-third of those in Thailand and India.
However, Nepal has a lower benefit ratio for tourism, unlike other countries. This is because the country’s tourism industry infrastructure (trails, bridges, activities, and lodging) is underdeveloped and undermaintained. The country’s comparative advantage in nature-based tourism lies in its network of protected areas therefore, developing a high-value tourism offering, alongside infrastructure development (to make it easier for people to reach the improved offerings), can enhance development benefits.
Nepal’s comparative advantage in nature-based tourism lies in its network of protected areas. Therefore, developing a high-value tourism offering, alongside infrastructure development can enhance development benefits.
The report also suggests other ways the government could improve the benefits to the communities, such as providing incentives to businesses around Chitwan National Park to source locally. For example, a five percent increase in local purchases could increase local incomes by about US$ 2.8 million. In addition, two other critical challenges in Nepal’s tourism sector are highlighted: a shortage of skilled labor and a lower-than-average earning potential for workers.
The government could address these challenges by directing targeted investments to skills development and providing training and capacity-building opportunities to increase labor productivity and benefit households in the local economy. In addition, incentives could be introduced which would attract private sector investments.
The report makes recommendations for policymakers to enhance the protection of Nepal’s natural assets, grow and diversify the country’s tourism sector and distribute the benefits to the local communities. These recommendations include an increase in public investment in protected area management by building the capacity of the park managers, managing the environmental footprint of tourism, and conducting a targeted assessment of the impacts of visitor spending.
In addition, Nepal’s tourism sector needs to expand and diversify beyond the four parks that are the main tourist attractions. This will require policies, programs, and investments extending beyond the protected areas and developing reliable commercial services and concession programs to create new sites, attract tourists, and generate revenue. Finally, the government also needs to explore opportunities for strengthening the linkages between the tourism value chains and the stakeholders in the local economy.
The World Bank supports the development of an upgraded concessional policy, which will facilitate businesses to partner with the government of Nepal to boost the economic role of protected areas in job creation while generating revenues to preserve biodiversity and landscapes.
The World Bank supports the development of an upgraded concessional policy, which will facilitate businesses to partner with the government of Nepal to boost the economic role of protected areas in job creation while generating revenues to preserve biodiversity and landscapes—assets that also generate climate resilience and mitigation benefits.
Furthermore, by enhancing private investment in demand-driven nature-based tourism development, Nepal can generate income and other benefits for the communities living around these globally renowned protected area assets.
Last Updated: Nov 24, 2022
