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Mountain economies and BIMSTEC

The Fourth Summit of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is taking place in a Himalayan country for the first time. The Summit will be held in Nepal on 30 and 31 August 2018, amid great expectations from the participating countries. Mountains and hills cover around a quarter of the land area of the BIMSTEC member countries, and five of the seven countries – Bangladesh, Bhutan, India, Myanmar, and Nepal – lie in the Himalayan region. Although the BIMSTEC region has seen rapid economic and social development in recent decades, mountain and hill areas have lagged behind in most countries mostly due to poor connectivity and accessibility, and limited facilities for cross-border movement. Mountain communities hope that BIMSTEC will be able to transform their economies through better connections to the Bay of Bengal and to regional and global markets beyond.

Mountains are crucial for the ecological and economic security and development of the region, especially for achieving the sustainable development goals (SDGs). Mountains in the BIMSTEC region contain the headwaters of five major rivers in the Hindu Kush-Himalaya (HKH) – Brahmaputra, Ganges, Irrawaddy, Mekong, and Salween. These rivers provide a range of ecosystem services including freshwater for drinking, domestic use, agriculture, energy, and industry. They support urban and economic growth centres, serve as transport links, and contribute to trade, commerce, industry, and economic growth. Mountains and hills are also important sources of clean energy for the lowlands, containing most of the region’s existing and potential hydropower production. Products and services from the mountains and hills form the basis of many economic sectors including agriculture, forestry, pharmaceuticals, rangeland production, tourism, and biodiversity conservation. A large proportion of forests and rangelands are in the mountains and hills, and these areas support climate regulation and carbon sequestration, and help reduce disaster risks by moderating the effects of flood and drought.

Mountains and hills are hotspots of biological and cultural diversity. They contain diverse eco-regions rich in species and ecosystems of regional and global importance. As a result, they contain a high proportion of the region’s protected areas. These protected areas harbour diverse flora and fauna – many rare, endemic, and threatened – and safeguard regional and global interests, but mountain communities bear the costs by sacrificing development opportunities for conservation.

While lowland communities depend on mountains and hills for natural resources and ecosystem services, upland communities depend heavily on lowland areas for connectivity, trade, transit and transport facilities. The questions are: how can lowland countries support mountain countries to realize their potential, and how can development opportunities arising from regional cooperation be shared among mountain and lowland countries so that they participate equally in and benefit from regional and global economies. The landlocked mountainous countries of Bhutan and Nepal suffer particularly with poor infrastructure and accessibility as a result of difficult topography. They depend on road transport for regional and international trade and are confronted with several bottlenecks which increase trade costs. A World Bank study showed that Bhutan and Nepal face much higher transportation costs, and require more time and paperwork for exports and imports. Transportation costs determine trade volume, size of industry, and economic growth. Poor infrastructure and high transportation costs in mountain areas make trade more expensive and less competitive and profitable (Table 1).

To reap the benefits of cooperation under BIMSTEC, Bhutan and Nepal need to be well connected to the regional economies and gain access to the Bay of Bengal. Inland waterways offer a potential pathway for this. Water transportation is environmentally advantageous and cost-effective compared to other forms of transportation, particularly for bulk commodities. All rivers originating in or flowing through Nepal and Bhutan merge with the Ganges and Brahmaputra in India to ultimately reach the Bay of Bengal through Bangladesh.

The development of waterways has gained momentum following the declaration of 106 additional waterways by India, and amendment to the bilateral navigation protocol between India and Bangladesh in 2015, which allows third countries to use their waterways. This new policy initiative has opened up new opportunities for Bhutan and Nepal to gain direct access to the Bay of Bengal through the Indian National Waterways No 1 and 2.

Realizing the opportunities, the prime ministers of India Shri Narendra Modi and Nepal Rt. Hon’ble K.P. Sharma Oli took a landmark decision in April 2018 to develop inland waterways for the movement of cargo within the framework of trade and transit. The National Waterway-1 of India starts from Hooghly and continues along the Ganges via Farakka, Kanpur, Kursela, Kalughat, and Varanasi and can link with several points in Nepal, such as Chhatra and Bhardaha on the Koshi River, Trivenidham on the Gandaki, and Chisapani on the Karnali (Figure 1). The 165 km Koshi Navigation Canal can link Chhatra in Nepal with Kursela in Bihar (confluence of Koshi and Ganges rivers) and thus with National Waterway-1. Nepal could also use multi-modal transport to access the nearby terminals at Kursela and Kalughat in place of Haldia port, which could reduce transportation costs by at least one-third according to the World Bank study. Bhutan could be connected to the Bay of Bengal via the Brahmaputra and National Waterway-2. The transboundary Manas River of Bhutan connects with Assam in India and Bhutan can benefit immensely through expansion of National Waterway-2 (Figure 2). Bhutan signed an MoU with Bangladesh in 2017 to use its inland waterways for transportation of goods and services for import and export through the ports of Chittagong and Mongla.

Despite their challenges, mountain and hill areas have a huge potential to contribute to economic development in the BIMSTEC countries. Mountains and plains areas are interlinked and inter-dependent. The economic growth and sustainability of both upland and lowland communities will only be possible through better integration, improved connectivity, and sustainable use and management of natural resources. Since the mountains and hills play a vital role in the economic and ecological security of the BIMSTEC countries, their strategic importance needs to be recognized and special attention paid to connecting the mountain countries to the Bay of Bengal. The extent to which Bhutan and Nepal can benefit from BIMSTEC is largely dependent upon the possibilities for gaining direct access to the Bay of Bengal through waterways. This is also true for mountain areas within the better connected BIMSTEC countries. Northeast India and upland areas of Myanmar and Thailand need to be better connected to sea ports and regional and global markets. Finally, special attention needs to be paid to compensating mountains and hill communities for sacrificing development opportunities to conserve biodiversity, protect forests, sequester carbon, and provide other ecological services important to the BIMSTEC region and beyond.

Contributed by

 Golam Rasul and 

Nilhari Neupane 

International Centre for Integrated Mountain Development 

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