Introduction

Hydropower is one of the most significant sources of renewable energy in Nepal. With more than 6,000 rivers and rivulets and an estimated economic potential of around 42,000 MW, Nepal has prioritized hydropower as the backbone of its energy sector and economic growth. However, hydropower projects directly interact with rivers, forests, wildlife, and local communities. Their impacts can be both beneficial and adverse. To ensure that hydropower development is environmentally sustainable and socially responsible, the law in Nepal requires hydropower developers to conduct an Environmental Impact Assessment (EIA).

The Environmental Impact Assessment process in Nepal is a legally mandated study that identifies, predicts, and evaluates the potential environmental and social impacts of hydropower projects. It also prescribes mitigation measures to reduce negative impacts and enhance positive outcomes. The process serves as a preventive tool, ensuring that development does not cause irreversible environmental damage.

In Nepal, the EIA system is guided primarily by the Environment Protection Act, 2019 (2076) and the Environment Protection Rules, 2020 (2077). These laws apply to all major development projects, including hydropower. The laws categorize projects based on their size and potential impact, determining whether they require an Initial Environmental Examination (IEE) or a full Environmental Impact Assessment (EIA). For hydropower, small projects may need an IEE, while medium and large-scale projects require a detailed EIA before receiving approval to proceed.

Hydropower EIAs in Nepal are also closely linked to other legal frameworks such as the Water Resources Act, 1992 (2049), the Electricity Act, 1992 (2049), and the Hydropower Development Policy, 2001. Together, these laws form the regulatory foundation for ensuring that hydropower projects are designed, constructed, and operated with due regard to environmental protection, sustainable resource use, and social accountability.

Therefore, for hydropower developers, investors, and stakeholders, understanding the Environmental Impact Assessment process in Nepal is not only a matter of legal compliance but also a means of ensuring long-term project sustainability and community acceptance. Medha Law and Partners Is a leading law firm in Nepal.

Legal Framework for Environmental Impact Assessment in Nepal

The Environmental Impact Assessment process in Nepal is shaped by a combination of domestic legislation, government rules, and international commitments. Several key laws and policies directly govern hydropower EIAs.

1. Environment Protection Act, 2019 (2076)

The Environment Protection Act, 2019 is the primary legal instrument governing environmental assessments in Nepal. It replaced the earlier Environment Protection Act, 1997 (2053). The Act mandates that any project, plan, or program that may cause significant adverse environmental impacts must undergo an environmental study. Depending on the project size and potential impacts, either an Initial Environmental Examination (IEE) or a full Environmental Impact Assessment (EIA) is required.

Key provisions relevant to hydropower EIAs under the Act include:

• Mandatory requirement of IEE or EIA before project approval.

• Obligation to conduct scoping and prepare Terms of Reference (ToR).

• Requirement to include physical, biological, socio-economic, and cultural impacts in the study.

• Public participation through notices and hearings.

• Review and approval by the Ministry of Forests and Environment.

• Monitoring and compliance reporting during project implementation.

The Act also prescribes penalties for non-compliance, such as starting construction without approval or violating conditions of environmental clearance.

2. Environment Protection Rules, 2020 (2077)

The Environment Protection Rules, 2020, provide detailed procedures for conducting EIAs. These Rules specify the types of projects that require IEE and EIA through annexed schedules. For hydropower projects, the thresholds are as follows:

• Hydropower projects up to 10 MW → require an IEE.

• Hydropower projects above 10 MW → require a full EIA.

The Rules outline:

• Step-by-step procedures for scoping, ToR preparation, and approval.

• Public hearing requirements.

• Report preparation and submission formats.

• Timeline for government review and decision.

• Environmental compliance and monitoring obligations.

Thus, for most medium and large-scale hydropower projects in Nepal, conducting a full EIA is mandatory under these Rules.

3. Water Resources Act, 1992 (2049)

The Water Resources Act, 1992 regulates the use, conservation, and management of water resources in Nepal. Since hydropower relies on river systems, this Act is directly relevant. It establishes priority uses of water and requires developers to obtain licenses for hydropower generation. Importantly, it obliges developers to comply with environmental requirements when using water resources for hydropower.

4. Electricity Act, 1992 (2049)

The Electricity Act, 1992 governs the licensing, generation, transmission, and distribution of electricity in Nepal. It requires project developers to secure licenses from the Department of Electricity Development (DoED). As part of the licensing process, developers must submit approved environmental studies (IEE or EIA). Therefore, hydropower EIAs are a legal prerequisite for securing electricity licenses.

5. Hydropower Development Policy, 2001

The Hydropower Development Policy, 2001 sets national objectives for hydropower development. It emphasizes the need for environmentally sustainable development, requiring project developers to prepare environmental studies and implement mitigation measures. The policy complements the Environment Protection Act and Rules by reinforcing the integration of environmental considerations into hydropower planning.

6. International Commitments

Nepal is a signatory to several international conventions and declarations that promote sustainable development and environmental protection. These commitments indirectly influence the EIA process for hydropower projects. Notable instruments include:

• Rio Declaration on Environment and Development (1992) – promotes environmental assessment as a tool for sustainable development.

• Paris Agreement (2015) – commits Nepal to reducing carbon emissions while promoting renewable energy like hydropower.

• Convention on Biological Diversity (1992) – requires assessment of impacts on biodiversity.

By incorporating these commitments, Nepal aligns its domestic EIA system with international standards, thereby strengthening the legitimacy and credibility of hydropower EIAs.

Environmental Study Requirements for Hydropower Projects

Every hydropower project in Nepal must undergo an environmental study before it can receive approval for construction and operation. The type of study depends on the scale of the project and its likely environmental impact. These studies serve as the foundation for informed decision-making by regulators, developers, and communities.

Environmental studies for hydropower projects typically include:

• Initial Environmental Examination (IEE): A preliminary study that identifies potential impacts and suggests mitigation measures for projects of smaller scale.

• Environmental Impact Assessment (EIA): A more comprehensive study required for larger projects with significant potential impacts on the environment and society.

The Environment Protection Rules, 2020 (2077) clearly categorize hydropower projects into IEE or EIA based on their installed capacity (MW). The purpose of these requirements is to ensure that environmental protection is integrated into project planning from the earliest stages.

IEE vs. EIA Thresholds for Hydropower in Nepal

The Government of Nepal has set thresholds for hydropower projects to determine whether they require an IEE or a full EIA. These thresholds are specified in the Schedules of the Environment Protection Rules, 2020.

1. Initial Environmental Examination (IEE) Requirement

Hydropower projects that fall within smaller capacity limits require an IEE. These projects generally have localized impacts that can be mitigated through standard measures.

IEE is required for:

• Hydropower projects with an installed capacity of up to 10 MW.

• Small-scale run-of-river projects with limited water diversion and minimal reservoir storage.

• Transmission lines below the specified length and voltage threshold (as defined in the Rules).

The IEE is less detailed than an EIA but still requires:

• Baseline environmental study.

• Identification of key physical, biological, and socio-economic impacts.

• Mitigation plan and monitoring framework.

• Public notice and limited public participation.

Approval for IEE reports is typically granted by the concerned line ministry such as the Ministry of Energy, Water Resources and Irrigation (MoEWRI), depending on the project.

2. Environmental Impact Assessment (EIA) Requirement

Larger hydropower projects with greater potential impacts require a full Environmental Impact Assessment.

EIA is required for:

• Hydropower projects with an installed capacity of above 10 MW.

• Projects that involve large-scale river diversion, tunneling, or reservoir construction.

• Transmission lines exceeding specific length and voltage thresholds.

• Projects located in environmentally sensitive areas such as national parks, protected forests, wetlands, or near cultural heritage sites.

The EIA is comprehensive and must cover:

• Scoping and Terms of Reference (ToR): Defining the scope of the study with government approval.

• Detailed Baseline Study: Covering physical (air, water, soil, geology), biological (flora, fauna, biodiversity), and socio-economic conditions.

• Impact Assessment: Predicting direct, indirect, and cumulative impacts of the project.

• Mitigation Measures: Strategies to avoid, minimize, or compensate for impacts.

• Environmental Management Plan (EMP): Outlining how mitigation will be implemented and monitored.

• Public Participation: Including public notice, hearings, and consultations.

• Environmental Auditing Plan: To ensure compliance during project operation.

Approval for EIA reports is granted by the Ministry of Forests and Environment (MoFE) after review and recommendations from concerned agencies.

Comparative Overview: IEE vs. EIA

Importance of Defining Thresholds

The thresholds set by the Environment Protection Rules ensure that environmental regulation is proportionate. Smaller projects with relatively manageable impacts are subject to IEE, while larger projects with greater risks require the depth of analysis provided by EIA.

This differentiation:

• Prevents unnecessary delays for small projects.

• Ensures large-scale hydropower projects undergo rigorous scrutiny.

• Aligns Nepal’s hydropower development with environmental sustainability.

• Encourages responsible investment and project planning.

Step-by-Step EIA Process for Hydropower Projects

Conducting an Environmental Impact Assessment for hydropower projects in Nepal follows a legally defined sequence of steps. Each stage is outlined in the Environment Protection Act, 2019 (2076) and the Environment Protection Rules, 2020 (2077). The process ensures that environmental, social, and cultural considerations are integrated before construction begins.

1: Project Screening

• The first stage involves determining whether the proposed hydropower project requires an Initial Environmental Examination (IEE) or a full EIA.

• Screening is based on the installed capacity (MW) and location of the project as per the Environment Protection Rules.

• For hydropower projects above 10 MW, a full EIA is mandatory.

• If the project is located in a protected area (such as a national park, wildlife reserve, or conservation area), EIA is compulsory regardless of project size.

2: Scoping

• After confirming that an EIA is required, developers must prepare a Scoping Document.

• Scoping identifies the key issues that the EIA should focus on, including potential impacts on river flow, aquatic life, forests, resettlement, and cultural sites.

• The Scoping Document is submitted to the Ministry of Forests and Environment (MoFE) for review.

• MoFE consults with stakeholders, including government agencies and experts, to finalize the scope.

3: Terms of Reference (ToR) Preparation and Approval

• Based on scoping, the project proponent prepares Terms of Reference (ToR), which outlines the methodology, data collection plan, and structure of the EIA report.

• The ToR must include study methods for:

  • Physical environment (air, water, soil, geology)

  • Biological environment (biodiversity, ecosystems)

  • Socio-economic environment (settlement patterns, livelihoods, cultural heritage)

• The ToR is submitted to the MoFE for approval. Only after approval can the detailed EIA study begin.

4: Baseline Data Collection and Study

• The EIA study begins with comprehensive baseline surveys.

• The project proponent, usually through an environmental consultancy, collects data on:

  • Physical parameters: hydrology, water quality, soil, geology, seismic stability.

  • Biological parameters: flora, fauna, forests, aquatic life, biodiversity indices.

  • Socio-economic parameters: population, land use, income sources, health, cultural heritage.

• Baseline data provides the foundation for impact prediction and assessment.

5: Impact Assessment and Prediction

• The EIA must identify, predict, and evaluate all likely environmental and social impacts of the hydropower project.

• Impacts are categorized into:

  • Direct impacts: changes in river flow, deforestation, displacement of people.

  • Indirect impacts: pressure on local resources, migration, changes in livelihood.

  • Cumulative impacts: combined effect of multiple hydropower projects in the same river basin.

• Each impact is analyzed in terms of magnitude, duration, reversibility, and significance.

6: Mitigation Measures and Environmental Management Plan (EMP)

• The EIA must prescribe clear mitigation measures for all identified impacts. Examples include:

  • Construction of fish ladders to preserve aquatic life.

  • Compensatory afforestation for lost forest land.

  • Resettlement and rehabilitation plans for displaced households.

  • Sediment flushing systems to maintain river health.

• An Environmental Management Plan (EMP) is included in the report, detailing:

  • Mitigation strategies.

  • Roles and responsibilities of implementing agencies.

  • Estimated costs for environmental management.

  • Monitoring schedule.

7: Public Consultation and Hearing

• Public participation is a mandatory part of the EIA process.

• The proponent must publish a public notice in national and local newspapers informing communities about the project.

• A public hearing is conducted in the project-affected area to gather feedback and concerns from stakeholders, including local residents, community leaders, and civil society organizations.

• The concerns raised during consultations must be incorporated into the EIA report.

8: Preparation and Submission of the EIA Report

• After completing the study, the developer prepares the EIA Report in the prescribed format.

• The report must include:

  • Executive Summary.

  • Baseline data findings.

  • Impact assessment and mitigation measures.

  • Environmental Management Plan.

  • Record of public consultations.

• The report is submitted to the MoFE for review.

9: Review and Approval

• The MoFE coordinates a technical review involving experts and line ministries.

• The review examines the adequacy of baseline data, quality of impact prediction, and practicality of mitigation measures.

• If the report is satisfactory, MoFE grants Environmental Clearance.

• Approval conditions are attached, requiring the developer to comply with mitigation measures and monitoring commitments.

10: Implementation and Monitoring

• After approval, the developer must implement all mitigation measures outlined in the EMP.

• Regular monitoring reports must be submitted to MoFE and concerned agencies during project construction and operation.

• Monitoring ensures compliance with environmental standards and helps address unforeseen impacts.

11: Environmental Auditing

• Once the project is operational, the developer may be required to conduct an Environmental Audit to assess actual project impacts compared to predictions.

• The audit verifies whether mitigation measures were effective and whether additional actions are needed.

• This stage strengthens accountability and promotes adaptive management.

Required Documents for Hydropower EIA in Nepal

Conducting an Environmental Impact Assessment for a hydropower project in Nepal requires the submission of specific documents at different stages of the process. These documents are legally mandated under the Environment Protection Act, 2019 (2076) and the Environment Protection Rules, 2020 (2077). They provide the legal and technical foundation for obtaining environmental clearance.

1. Project Proposal Document

• A Project Proposal is the initial document prepared by the project developer.

• It includes:

  • Project title, location, and installed capacity.

  • Project objectives and expected benefits.

  • Preliminary description of the technology and design (run-of-river, reservoir type, tunnel length, etc.).

  • Justification for the project.

• This document is used for screening to determine whether the project requires an IEE or a full EIA.

2. Scoping Document

• The Scoping Document identifies the major environmental and social issues to be studied in the EIA.

• It is prepared by the project proponent and submitted to the Ministry of Forests and Environment (MoFE).

• The Scoping Document must outline:

  • Likely impacts on water resources, forests, biodiversity, and local communities.

  • Project area and potential alternatives.

  • Key stakeholders for consultation.

• Approval of the Scoping Document allows the preparation of the Terms of Reference (ToR).

3. Terms of Reference (ToR)

• The ToR defines the methodology and scope of the EIA study.

• It specifies what parameters will be studied and how data will be collected.

• Contents of ToR include:

  • Study area boundaries.

  • Baseline data requirements.

  • Methods for impact prediction.

  • Plans for public consultations.

• The ToR must be approved by MoFE before starting field surveys.

4. Baseline Study Reports

• Developers must prepare detailed reports of baseline environmental conditions.

• These reports cover:

  • Physical Environment: topography, geology, hydrology, air quality, noise levels.

  • Biological Environment: vegetation, wildlife, aquatic ecosystems.

  • Socio-Economic and Cultural Environment: settlements, land use, health, education, cultural heritage sites.

• Baseline studies provide reference points for assessing project impacts.

5. Public Notice and Consultation Records

• Project developers must publish a public notice in national and local newspapers.

• They must also place notices at the project site and local government offices.

• The notice invites stakeholders to provide feedback.

• A public hearing report is also required, documenting community concerns, questions, and suggestions.

• These records demonstrate that the project followed due process in engaging affected communities.

6. Draft EIA Report

• The Draft EIA Report is prepared in accordance with the approved ToR.

• It includes:

  • Project description.

  • Baseline data.

  • Impact prediction and assessment.

  • Mitigation measures.

  • Environmental Management Plan (EMP).

  • Summary of public consultations.

• The draft is shared with concerned stakeholders before finalization.

7. Final EIA Report

• The Final EIA Report incorporates feedback from stakeholders and government agencies.

• It is submitted to MoFE for approval.

• The report must follow the format prescribed by the Environment Protection Rules.

• It includes annexes such as maps, photographs, survey data, and modeling results.

8. Environmental Management Plan (EMP)

• The EMP is a critical document within the EIA.

• It details:

  • Mitigation measures for each identified impact.

  • Institutional responsibilities for implementation.

  • Cost estimates for environmental protection measures.

  • Monitoring and reporting framework.

• The EMP becomes a legally binding condition for the project once approved.

9. Compliance and Monitoring Reports

• After project approval, developers must regularly submit compliance reports.

• Reports should show:

  • Progress in implementing mitigation measures.

  • Monitoring results for water quality, biodiversity, and social impacts.

  • Corrective actions taken where necessary.

• These reports are reviewed by MoFE and concerned agencies.

10. Environmental Audit Report

• Once the hydropower project is operational, an Environmental Audit Report may be required.

• It evaluates:

  • Whether predicted impacts match actual impacts.

  • Effectiveness of mitigation measures.

  • Additional measures needed for long-term sustainability.

Checklist of Required Documents for Hydropower EIA

• Project Proposal

• Scoping Document

• Terms of Reference (ToR)

• Baseline Study Reports

• Public Notice and Hearing Records

• Draft EIA Report

• Final EIA Report

• Environmental Management Plan (EMP)

• Compliance Monitoring Reports

• Environmental Audit Report

Purpose of Document Requirements

These documents collectively ensure that:

• Project impacts are studied comprehensively.

• Communities have a voice in the decision-making process.

• Mitigation measures are identified, costed, and monitored.

• Developers remain accountable for long-term environmental performance.

Challenges and Gaps in Hydropower EIA Implementation in Nepal

Although Nepal has a comprehensive legal framework for Environmental Impact Assessment, the implementation of hydropower EIAs faces several challenges. These challenges reduce the effectiveness of the process in safeguarding the environment and ensuring social accountability.

1. Delay in Approval Process

• The EIA process in Nepal is often time-consuming.

• Scoping, ToR approval, public consultations, and final review stages can take longer than the legally prescribed timeline.

• Delays occur due to:

  • Limited institutional capacity at the Ministry of Forests and Environment (MoFE).

  • Overlapping responsibilities among government agencies.

  • Political and bureaucratic hurdles.

• For developers, delays result in increased costs and uncertainty, discouraging investment in hydropower.

2. Limited Institutional Capacity

• MoFE and line ministries often lack adequate technical experts to review hydropower EIAs.

• As a result, reports may be approved without thorough scrutiny of baseline data or impact predictions.

• Monitoring and compliance inspections are weak due to shortage of manpower and resources.

• This creates a gap between law on paper and practice on the ground.

3. Quality of EIA Reports

• Many EIA reports are prepared by consultants under time and budget constraints.

• Reports sometimes:

  • Repeat generic information without project-specific analysis.

  • Underestimate potential environmental impacts.

  • Provide incomplete mitigation plans.

• This undermines the credibility of the EIA system and reduces its value as a planning tool.

4. Inadequate Public Participation

• Although public consultation is mandatory, in practice it is often limited.

• Notices may not reach all affected communities.

• Public hearings may be conducted in a formal way without meaningful dialogue.

• Communities may lack awareness about their rights and the technical details of hydropower projects.

• As a result, the concerns of vulnerable groups—such as indigenous peoples, women, and farmers—may not be adequately represented.

5. Weak Monitoring and Enforcement

• After approval, implementation of the Environmental Management Plan (EMP) is frequently neglected.

• Monitoring reports may not be submitted regularly by developers.

• Government monitoring is irregular and sometimes influenced by resource limitations or political interference.

• This gap allows projects to proceed without implementing the required mitigation measures.

6. Overlapping Legal and Institutional Mandates

• Hydropower EIAs must comply with multiple laws, including the Environment Protection Act, Water Resources Act, and Electricity Act.

• Coordination among institutions such as MoFE, the Department of Electricity Development (DoED), and the Ministry of Energy is often weak.

• Overlapping jurisdictions cause confusion, duplication of work, and inconsistent decision-making.

7. Lack of Cumulative Impact Assessment

• Hydropower projects in Nepal are often developed in clusters within the same river basin.

• However, EIAs are conducted on a project-by-project basis, without considering cumulative impacts such as:

  • Alteration of entire river ecosystems.

  • Combined impact on fish migration.

  • Basin-wide changes in sediment flow.

• This gap leads to underestimation of long-term and large-scale impacts.

8. Limited Post-Project Environmental Audits

• Environmental audits are rarely conducted after projects become operational.

• Without audits, there is no systematic evaluation of whether predicted impacts match actual outcomes.

• This prevents lessons from being learned for future hydropower projects.

9. Conflict Between Development and Conservation Goals

• Nepal seeks to expand hydropower as a key driver of economic growth and energy security.

• At the same time, it has commitments to protect biodiversity, forests, and local livelihoods.

• In practice, development goals often take priority over conservation.

• This imbalance weakens the effectiveness of EIAs in preventing environmental harm.

Recommendations and Way Forward for Strengthening Hydropower EIAs in Nepal

The Environmental Impact Assessment (EIA) framework for hydropower in Nepal is well-established under the Environment Protection Act, 2019 (2076) and the Environment Protection Rules, 2020 (2077). However, its effectiveness depends on strong implementation, enforcement, and integration with broader environmental and development goals. Strengthening the EIA system will ensure that hydropower development is both sustainable and socially responsible.

1. Strengthening Institutional Capacity

• Increase the number of technical experts in the Ministry of Forests and Environment (MoFE) and related agencies.

• Provide specialized training in hydrology, ecology, social sciences, and environmental law.

• Allocate adequate financial and human resources for monitoring and compliance inspections.

2. Improving Quality of EIA Reports

• Establish strict guidelines and quality standards for consultants preparing EIA reports.

• Introduce a system of independent peer review of EIA reports before approval.

• Blacklist consulting firms that repeatedly produce poor-quality or plagiarized reports.

3. Ensuring Effective Public Participation

• Improve accessibility of public notices by using local languages, radio, and community meetings.

• Provide communities with simplified versions of EIA summaries for better understanding.

• Strengthen the role of local governments under Nepal’s federal system in organizing consultations.

• Ensure meaningful participation of indigenous peoples, women, and vulnerable groups.

4. Strengthening Monitoring and Enforcement

• Require project developers to submit compliance reports at fixed intervals (quarterly or annually).

• Increase frequency of government monitoring visits and make reports publicly available.

• Impose penalties for non-compliance with Environmental Management Plans (EMP).

• Encourage civil society and local communities to play a role in citizen monitoring.

5. Integrating Cumulative Impact Assessments

• Introduce basin-wide Environmental Impact Assessments for rivers with multiple hydropower projects.

• Require developers to assess combined effects on:

  • River flow and aquatic life.

  • Sediment transport.

  • Livelihoods of downstream communities.

• Strengthen coordination between MoFE, the Department of Electricity Development (DoED), and the Ministry of Energy.

6. Enhancing Post-Project Audits

• Make environmental audits mandatory within 2–3 years of project operation.

• Use audit findings to revise future project approvals and mitigation plans.

• Encourage adaptive management to correct unexpected impacts.

7. Streamlining Legal and Institutional Coordination

• Clarify overlapping responsibilities between MoFE, DoED, and other ministries.

• Develop a centralized digital platform for EIA applications, approvals, monitoring, and public access.

• Align hydropower EIA policies with Nepal’s commitments to international treaties such as the Convention on Biological Diversity (CBD) and Paris Agreement on Climate Change.

8. Balancing Development and Environmental Protection

• Promote sustainable hydropower that minimizes ecological disruption.

• Encourage projects that adopt fish-friendly turbines, sediment management systems, and watershed conservation programs.

• Ensure that benefits from hydropower projects are shared with local communities through employment, infrastructure, and royalty distribution.

Way Forward

The future of hydropower development in Nepal depends on striking a balance between energy production and environmental sustainability. Strengthening the EIA framework requires:

• Stronger institutions with adequate resources.

• Transparent and participatory decision-making.

• Higher accountability for project developers.

• Integration of scientific research, traditional knowledge, and modern technology.

By implementing these reforms, Nepal can ensure that hydropower projects support both economic growth and environmental protection, contributing to long-term energy security and sustainable development.

Required Documents for Hydropower EIA in Nepal

FAQs

What is EIA in hydropower?
EIA is a legal study assessing environmental and social impacts of hydropower projects.

How long does EIA approval take?
EIA approval generally takes 6 to 12 months based on project size and documentation.

What does EIA include?
EIA includes baseline data, impact analysis, mitigation plan, and monitoring framework.

Who approves the EIA?
The Ministry of Forest and Environment is responsible for reviewing and approving EIA reports.

Is EMP part of EIA?
Yes, the Environmental Management Plan (EMP) is an integral part of the EIA report.