Nepal-India Water Resources Cooperation: a Critical Review

Table of Content

Despite its abundant water resources, which are crucial for promoting economic prosperity in South Asia, Nepal has struggled with effectively utilizing these resources for necessities such as drinking water, irrigation, power generation, and navigation despite significant efforts over the past 50 years.

Nepal has made efforts to cooperate with neighboring countries in managing rivers that flow across borders, but these attempts have been unsuccessful. The main goal of this paper is to analyze Nepal’s water resources situation in the region. Firstly, we will examine the existing agreements regarding water sharing among neighboring countries. Furthermore, we will explore the past, present, and future interactions between India and Nepal, considering both successful and unsuccessful cooperation endeavors.

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The text will discuss the reasons for the current situation and suggest solutions by considering insights from regional and international agreements. It will explore the causes of India and Nepal’s strained relationship, as well as how similar issues with Bhutan have been advantageous for both nations. Keywords: GBM Basin of South Asia.

The GBM basin system, comprising the Ganges, Brahmaputra, and Meghna rivers, is the world’s second-largest. It spans Bangladesh, Bhutan, China, India, and Nepal and has a catchment area of 1.75 million square kilometers. Only the Amazon river basin surpasses it in size. All three river basins are shared by Bangladesh and India while China shares the Brahmaputra and Ganges basins. Nepal shares solely the Ganges basin and Bhutan exclusively shares the Brahmaputra basin (Salehin et al.). Despite ample water resources in this region, multiple water management issues have significantly impeded its development.

Unequal distribution of water over time and space is the primary reason for numerous issues in the region. As a result, many states in the area experience similar problems regarding water, including floods, droughts, scarcity during dry seasons, insufficient power supply, and pollution of available resources. The presence of factors like a large population, anticipated population growth, and prevailing poverty has made managing water resources increasingly difficult in the region.

Despite occupying just 1.2% of the Earth’s land area, this region is inhabited by around 10% of the world’s population. The governance and progress of the GBM basin have faced numerous geopolitical challenges, leading to well-known controversies surrounding international trans-boundary water problems. Nepal, which accounts for only 13% of the Ganges basin’s total size of 1.08 square kilometers, plays a vital role by contributing 45% of the annual flow on average and 75% during the driest months in the Ganges River basin (Upreti).

Regional Cooperation in Water Resources is the main subject of this section, as it delves into the existing cooperation arrangements within the South Asian region. The primary focus is on the relationship between India and Nepal. Although India and Bangladesh have a shared total of 54 rivers, their only official agreement regarding water sharing is known as the Ganges Water Treaty. However, even this particular agreement has its fair share of conflicts. One example is India’s construction of the Farakka dam, which redirects water from the Ganges to the Hoogly river. This action disregards Bangladesh’s water rights since it is a downstream riparian state.

The construction of the dam is connected to Bangladesh’s breakaway from Pakistan. While downstream water rights related to this agreement are an interesting topic for study, they are not included in this research. Moreover, ongoing discussions between India and Bangladesh focus on fairly sharing Teesta and Feni waters without causing harm to either side. Although draft agreements have been prepared, their signing has faced obstacles due to the West Bengal state government’s strong opposition.

The water sharing agreements between India and Bhutan have been highly advantageous for both nations. The main objective of this collaboration has been to promote the growth of hydropower in Bhutan, catering to its domestic needs while also exporting the excess to India. This arrangement has resulted in substantial profits for Bhutan due to India’s considerable power requirements, ultimately propelling it towards becoming South Asia’s leader in terms of Per Capita Income.

The first significant bilateral cooperation hydroelectric project in Bhutan, the 336 MW Chukhahydel Project across river Wangchu, was initiated with the signing of the Jaldhaka Agreement in 1961. A recent example of such collaboration is the Tala hydel project, which has an installed capacity of 1020 MW and was financed by the Government of India (GoI). The GoI provided 60% of the project cost as a grant and the remaining 40% as a loan. Additionally, India has also funded a scheme called ‘Comprehensive Scheme for Establishment of Hydro – meteorological and Flood Forecasting Network on Rivers Common to India and Bhutan’. The Royal Government of Bhutan (RGoB) is responsible for the maintenance of this network.

The successful implementation of cooperative efforts for sharing mutual benefits in Nepal can serve as a lesson to other nations in the region. Situated between India and Tibet – an autonomous region of China – Nepal is a landlocked Himalayan country covering 147,181 km2. It is home to approximately 6000 rivers and rivulets, making up a total drainage area of 194,471 km2, with 45.7% within Nepal’s borders. Out of these rivers, there are 33 that have a drainage area exceeding 1000 km2.

Rivers in Nepal can be classified into three types based on their discharge. The Kosi, Gandaki, Karnali, and Mahakali river systems originate in the Himalayas and have substantial discharge even during the dry season due to being snow-fed. The Mechi, Kamala, Bagmati, West Rapti, and Babai rivers originate in the midlands or Mahabharat range of mountains and are fed by both precipitation and groundwater regeneration. While these rivers are also perennial, they experience significant seasonal fluctuations in discharge.

Besides the mentioned river systems, there are many small rivers in the Terai region. These rivers come from the hills of the Southern Siwalik range and go through seasonal changes, with low flow during the dry season and sudden floods during the monsoon. Most of these rivers start in Nepal’s Himalayan range, while others start from the Tibetan Plateau. All these rivers flow southwards and eventually join the Ganges in Northern India before flowing into the Bay of Bengal. The Mechi and Mahakali rivers act as boundaries with India, while the rest of the rivers cross borders and enter India.

Based on the available hydrological data, it is evident that Nepal has an estimated annual runoff of 220 billion cubic meters into its rivers and an average annual precipitation of 1530 mm. Numerous studies have indicated that Nepal possesses a theoretical hydropower potential of 83000 MW, which exceeds the total combined generation capacity of the United States, Canada, and Mexico. Currently, approximately 43000 MW is deemed economically feasible for exploitation. Despite the abundance of water resources, only about one third of the population has access to safe water, and irrigation has been implemented on merely 42% of the net calculated land.

Three of the four Himalayan river systems in Nepal have already signed treaties with India, which are seen as unfair and harmful to Nepalese interests. One major issue is the Koshi River’s annual flooding. Table 1 displays Nepal’s potential for hydropower generation. The historical water-sharing arrangement between Nepal and India dates back to 1920 when Prime Minister Chandra Sumsher JBR corresponded with the head of the British Legation in Nepal about the Sarada (Mahakali) Barrage.

We will now provide an overview of the Water Resources treaties between Nepal and India.
1. Agreement on the Koshi Project, 1954 (amended on 19 December 1996): This treaty aimed to construct a Barrage and related structures on the Koshi River, upstream of Hanuman Nagar town in Nepal. It focused on flood control, irrigation, hydroelectric power generation, and prevention of erosion. Key provisions include Nepal’s entitlement to draw water from the Koshi River, regulation of water at the barrage site by the Government of India (GoI), Nepal’s entitlement to 50% of hydel generated by the Power House within a 10-mile radius of the barrage, and leasing the project area to the GoI for 199 years.
2. Agreement on Gandak Irrigation and Power Project, 1959 (amended on 30 April 1964): The objective here was to construct a Barrage and related structures below the Tribeni canal head regulators for irrigation and power development in Nepal and India.

The treaty has several significant features:

  • The Government of India (GoI) will construct the Eastern Nepal Canal to irrigate a gross command area of 40,000 acres.
  • The GoI will also construct the Western Nepal Canal to irrigate a gross command area of 1,03,500 acres.
  • The Government of Nepal (HMG) will construct distributaries below 20 cusecs capacity, and the GoI will reimburse the costs.
  • On the main Western Canal, the GoI will construct a 15 MW Power House on Nepalese territory for Nepalese use.

This treaty, known as the Treaty concerning the Integrated Development of Mahakali River including Sarada Barrage, Tanakpur Barrage, and Pancheshwor Project, was signed on February 12, 1996. It consists of three components:

  1. The Sarada Barrage, which had already been built under a 1920 agreement.
  2. The Tanakpur barrage, which was unilaterally constructed by India in violation of the spirit of International Water Law (IWL).
  3. The Pancheshwor Multipurpose Project, which is designed to generate MW of power in an integrated manner.

The main details of the Treaty are as follow:
* The Treaty was ratified by Nepal’s Joint Session of Parliament with a strong majority on September 20, 1996.
* This Treaty designates the Mahakali River as a trans-boundary river between Nepal and India.
* The ratification of the treaty included passing four national resolutions:
– Export of energy and its pricing principle
– Formation of the Mahakali River Commission
– Equal sharing of waters from the Mahakali River after the Pancheshwor Project
– Status of the Mahakali River

The treaty allows for its review every ten years.

A Critical Review of Nepal India Hydro Relationship:
Nepal’s water resource development situation is distinct from that of other countries. Nepal possesses vast water resources, but has limited land for irrigation and a low demand for hydroelectricity. Conversely, India is geographically vast but experiences a shortage of water during dry seasons, both for itself and for Bangladesh.

Despite not having the necessary financial and technical resources, Nepal has always been willing to share its waters with India in order to achieve mutual and equitable benefits. However, the relationship between the two countries has not been as satisfactory or mutually beneficial as anticipated.

It has been reported that Late King Birendra himself once commented that India cheated Nepal in regards to the Koshi and Gandak cases. In this article, we will provide a critical analysis of the Nepal-India Hydro Relationship, focusing on agreements made at different times.

1. Koshi Agreement (1954, Amended 1996)

* The agreement was seen as absurd because it allowed the Nepalese land to be leased indefinitely for the project, despite hydraulic structures typically having a lifespan of no more than 50 years.

In 1996, an amendment was made to extend the period to 199 years, which is equally ridiculous. Initially, the barrage site was planned to be at Barahakshetra, further upstream from its current location. If this had been the case, Nepal would have benefited more from irrigation and flood control measures, and Nepal should have stayed with the original plan. Nevertheless, Nepal agreed to the present site at the Nepal-India border, resulting in even greater loss. India had agreed to support the socioeconomic development of the region through investment (Clause 3), but this aspect of the agreement has not been fulfilled yet. Moreover, the government of India should have compensated the Nepalese landowners whose land was acquired for the project (Clause 8), but this is not the reality.

The treaty resulted in Nepal losing her inherent rights on her water, as the GoI was granted the exclusive power to regulate the barrage gate (Cl. 4, SubCl. i). Additionally, the regular maintenance of the barrage and embankment was supposed to be handled by the Indian side, but their negligence has caused breaches in the embankment over time. Moreover, Nepal does not receive any compensation when her land gets flooded during high floods, as the treaty does not include such provisions. The failure of Indian authorities to pay attention to flood warnings from the barrage control authorities resulted in the Bihar Flood of 2008. Furthermore, the Chatara Inundation Canal, which was meant to irrigate 60,000 hectares of Nepalese land and was supposed to be constructed by the GoI, only served 10,000 hectares. The Indian side did not fulfill their promise to carry out necessary repairs, causing the canal to become non-functional. In 1976, Nepal had to renovate it using an IDA loan after taking over its operation.

Hydel generation under the Koshi Agreement has not been carried out.

Gandak Agreement (1959, Ammended)

Though theoretically HMG is entitled to withdraw water from use in Gandak Valley, “the trans – Valley use of Gandak waters” is prohibited by the Clause 9 of the treaty. It means that water diversion into Kathmandu Valley from any tributary of this river system (like from Tadi Khola across the Shivapuri Range) is prohibited. Pursuant to the treaty India takes 32,000 cusecs of water for irrigation in Bihar and UP and leaves only 1,216 cusecs for Bara, Parsa, Rautahat and Nawalparasi District of Nepal.

The road bridge constructed under this project, for which Nepal was assured of a locking arrangement for facility of riverine traffic across the barrage free of any tolls (Cl. 5, SubCl. iii), has proved to be a provision that has so far remained mere theory, as no inland water navigation was developed.

The treaty lacks provisions for review or a timeframe. The Mahakali Agreement (1996) is believed to have hidden motives: to revive the Sarada Barrage, legitimize the Tanakpur Barrage despite its violation of the IWL, and gain control over the water of the Mahakali River. The Pancheshwor Multipurpose Project is merely a pretext to achieve these goals, and the Government of India (GoI) never intended to follow through with its implementation. The failure to complete the Panchshwor DPR within 6 months, as required by the treaty, supports this argument. While equal distribution of water after the Pancheshwor project may appear appealing, we must consider whether we have the necessary resources to benefit from our allocated share.

If Nepal is unable to utilize its share of water, India is permitted to use it without compensating Nepal. Although the treaty emphasizes equal sharing of water, there is disagreement regarding the consumptive use of water. It is not specified whether the sharing applies to the deduction of existing consumptive use before or after. The treaty does not provide a clear decision on energy export and pricing. While Nepal suggests using the principle of ‘avoided cost’, India has not made any commitments. During the treaty’s ratification, the Nepalese Parliament passed four National Strictures on September 20, 1996. However, there is no evidence of these concerns being raised by Nepalese delegates in subsequent joint meetings.

India is not bound by the restrictions of the Vienna Convention on Law of Treaties, Article 20. There is a conflict over the origin of the Mahakali River, but no steps have been taken to resolve it. Critics argue that the Nepalese territory will be flooded to ensure water availability for India. Pancheshwor DPR and Mahakali River Commission are not being considered, but Pancheshwor Development Authority was established during Madhav Kumar Nepal’s premiership, suggesting foul play. The actors involved in the signing and ratification of the Mahakali Treaty are using the current energy crisis as justification, which is deplorable. According to Article 3 of the Barcelona Convention, 1921, coastal states must allow free navigation for ships from other states in their sovereign waterways.

According to the United Nations Convention on the Law of the Sea (UNCLOS), Nepal, as a land-locked state without a sea-coast, shall have the right to access and transit through the territory of a transit state to and from the sea. This right entails freedom of transit without any customs duties, taxes, or other charges, except for charges related to specific services provided in connection with such transportation.

However, Nepal is unlikely to have these rights in the near future as India abandoned the Barcelona Convention in March 1956. The situation worsened when India finished the Farakka Dam Project, effectively cutting off Nepal’s closest route to the ocean. Despite the ongoing criticisms, there are some positive aspects – a silver lining in a difficult relationship – that need to be taken into account when analyzing the longstanding relationship between Nepal and India, particularly with regards to water sharing.

Some of the enumerated rights and agreements are as follows:
* Nepal has been entitled to the exclusive right to withdraw water for irrigation and other purposes through the Koshi and Gandak Treaties. These treaties have acknowledged Nepal’s right to these river waters.
* The Koshi Treaty does not impose any restrictions on trans-Valley water transfer. This is evident as India has never raised concerns about withdrawing water from the Melamchi River to supply drinking water in Kathmandu.
* Despite the ongoing dispute over the construction of the Tanakpur Barrage, the Tanakpur MoU states that India will provide 70 GWh of electricity for free in exchange for 10 hectares of Nepalese land.
* The Mahakali Agreement, despite its controversies, can be seen positively as it adopts an integrated basin planning approach. It is the first agreement where India has shown willingness to cooperate with Nepal in managing the river basin for long-term mutual benefits.
* If the Pancheshwor Multipurpose Project is implemented, it will fulfill Nepal’s energy requirements.

Causes behind the discordant relationship between Nepal and India despite their long-standing relationship have not been effectively addressed. Despite the Gujral Doctrine, which promotes a balanced neighborly relationship without taking advantage of smaller neighbors, India’s attitude towards Nepal has not adhered to this principle.

Unless the Gujral Doctrine is given utmost importance in all our mutual arrangements, no arrangement will be considered fair or equitable. India’s approach of “building first, negotiating later” has damaged its credibility with neighboring countries. Examples of this are the Tanakpur Barrage and Farakka Dam, which I will not elaborate on in this text. The wounds caused by the unjust Trade and Transit embargo and blockade imposed by India on Nepal in 1998, despite the existing Trade and Transit Treaty of 1978, will not heal easily. If we look at the history of these treaties, we see that most of them have been signed during periods of political instability in Nepal or by interim governments. Such governments do not have the legitimacy to enter into agreements that will have long-term consequences for the nation. However, since the international community does not consider this background, the dissatisfaction that follows will only further sour the relationship.

If we examine the context of the Mahakali Treaty, we can see that a democratic process was underway. Despite the presence of elected officials in parliament and government, the treaty was ultimately agreed upon by a coalition government. Santa Bahadur Pun and Surya Nath Upadhaya have expressed concerns about the sharing of the Mahakali river, suggesting that the treaty was ultimately finalized in order to maintain the coalition. This indicates that personal interests were prioritized over national interests. It is important to note that changes in foreign policy or personnel within a ruling party can hinder the establishment of a stable and harmonious foreign relationship. We can learn from international practices in order to navigate our water-related issues with India. The Columbia River Treaty, signed in 1961 between the USA and Canada, serves as an example of a treaty focused on flood control and power production objectives, implemented in 1964.

In the treaty, it was crucial to share the advantages of cooperative water management. The following are some notable characteristics of this agreement:

  • Canada was to be compensated 50 percent of the estimated worth of the US flood damage prevented for flood control.
  • Instead of receiving yearly payments for flood control benefits until 2024, Canada chose to receive a total of $64.4 million in lump sum payments.
  • In return for providing and operating treaty storage projects for power, Canada also obtained an entitlement to half of the estimated downstream benefits generated in the US.

Canada initially sold the Canadian Entitlement power to a consortium of US utilities for $254 million on a 30-year agreement. After the agreement expired in 2003, the Canadian Entitlement power is now delivered daily to the Province of British Columbia at the US-BC border for Canada’s use or resale. Both Canada and the US have the option to terminate most provisions of the Treaty on or after Sept. 16, 2024, with a minimum 10-year written advance notice. This treaty showcases a situation where the upstream riparian state has received an equal share of the downstream benefits.

This is a precedent which can be implemented in case of the Mahakali Treaty. 2. The Mekong River Commission (MRC) was established in 1995 by Laos, Thailand, Cambodia, and Vietnam for the integrated development of the Mekong River Basin. This river basin shares similarities with the Ganges River Basin, making it of interest to us: * Geopolitically, the Mekong River originates in the Tibetan Plateau and flows through China, Myanmar, Laos, Thailand, Cambodia, and Vietnam. Both river basins have China as the upstream riparian state but with little interest in integrated development due to limited benefits. * Among the remaining states, Thailand holds the most power – both economically and strategically – in the Mekong basin, similar to India’s role in the Ganges Basin. * The other states sharing the Mekong River are weak strategically and economically, having faced long periods of political instability and turmoil, like Nepal and Bangladesh in the Ganges Basin. The management of the Mekong River falls well short of an ideal transboundary water management effort compared to the Columbia River Treaty.

The current status and future outcome of the water sharing agreement between states with significant strategic, economic, and political differences can serve as a point of reference for us. A conflict regarding the Teesta River between India and Bangladesh resulted in the cancellation of the Teesta Water Treaty in September 2011. Indian Prime Minister Man Mohan Singh and Bangladeshi counterpart Seikh Hasina Begam were preparing to sign the agreement, but it was thwarted by objections from Mamata Banerjee, the Chief Minister of West Bengal.

The proposed treaty aimed for equal water sharing (50:50), but CM Banerjee disagreed with any agreement that gave less than a 75:25 split in favor of India. The reason for this objection was the water needs of West Bengal as an upper riparian state. Nepal, as an upper riparian state, should follow this example and only enter into water sharing deals that do not harm their interests. 4. Lesotho Highlands Water Project (LHWP) is a currently ongoing project for water supply with a hydropower component. It is being developed through a partnership between the governments of Lesotho and South Africa.

The project involves the construction of several large dams and tunnels in Lesotho to provide water for South Africa. In return for the flooding of land in Lesotho and the downstream benefits for South Africa, the Lesotho government will receive royalty payments for developmental purposes. Additionally, South Africa will assist in Lesotho’s hydropower development to meet its own demands. This project is remarkable not only for its cooperative efforts to fulfill mutual needs but also for its negative social and environmental impacts, caused by a lack of assessment during the treaty ratification process. Recommendations have been made to address these problems in our agreements with India. Therefore, various suggestions are presented to improve the relationship between India and Nepal:

  • General
  • Recognizing that Nepal does not possess the economic or technological potential, as an upper riparian state, it should advocate for “equal sharing of benefits” rather than “equal sharing of water”.

The Columbia River Treaty sets a precedent for the sustainable, reasonable, and equitable sharing of water and overall development of the Ganges Basin. This approach is similar to the integrated and adaptive management of the Mekong River Basin. In order to decide the fate of the Mahakali Treaty, Nepal could demand a review every 10 years, as allowed by the treaty, due to the non-implementation of the Pancheshwor Project. Additionally, Nepal should request that the Indian Government regularly maintains the Koshi Barrage and its appurtenant structures.

Limitations and Recommendations Despite our genuine attempt to portray a century old relationship on water resources, our study is full of limitations. Some of them are listed below: * Taking into account only the sharing of common waters while analyzing the relationship between Nepal and India would underestimate the relationship, considering their common ancestry, religion, culture, and tradition. It is recommended to conduct further studies that recognize this unique relationship. * The sharing of common rivers is not solely a technical or legal matter.

Its economic, social, cultural, and diplomatic implications are enormous, making it necessary for a multidisciplinary study. The study also suggests analyzing other agreements on water resources between Nepal and India. In conclusion, Nepal ranks second to Brazil in terms of water resources ownership. However, it is unfortunate that we have not been able to tap into this abundant resource to fulfill our drinking water, irrigation, and power needs. This is primarily because we lack both the economic independence and technological advancements required for this purpose.

Given the current circumstances, it is essential that we distribute our water resources among our neighboring communities. However, it is important to emphasize the fair distribution of benefits rather than strictly equal distribution of water. Our previous attempts at water sharing have not yielded the desired results and have faced considerable criticism. To avoid repeating past mistakes, failures, and draw from our experiences, we must adopt the principles of integrated and adaptive water management, ensuring equal sharing of benefits for the overall economic advancement of the region.

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Nepal-India Water Resources Cooperation: a Critical Review. (2016, Nov 25). Retrieved from

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