Strong sustainability in Nepal: A structural economics approach

This dissertation analyzes the sustainability of the economy of Nepal. The main empirical question addressed is whether the Tenth Plan of Nepal (2002–2007) will meet its projected economic output goal and achieve its primary goal of reducing poverty. To this end, economic growth scenarios are examined in terms of availability of energy demand and supply, and income disparity among different households. The structure of the Nepali economy is examined using a Leontief input-output table, a Ghosian supply-side input-output table, and a social accounting matrix for the year 1999.; Based on the input-output analysis of energy demand and supply for the 10th Plan, it is unlikely that energy requirements of the projected output will be met, unless some extra sources of energy are developed. Households need to switch their energy use from fuel wood/biomass to other alternatives. In order to meet the target of the Plan vis-à-vis energy demand or supply, a few policy measures are urgently needed, though some of these options require many years to develop.; Household income inequality and distribution is examined through the SAM multipliers; namely aggregate, transfer, open-loop, and closed-loop multipliers. The investment-income multiplier scenarios for the 10th Plan indicate that the nominal income of households may increase due to the increased investment, which will not necessarily improve the bottom deciles households, particularly socio-economically deprived households.; Economic growth in Nepal during the past fifty years demonstrates that the modernization model is unsuccessful. Economic growth occurred at some centers at the cost of periphery. A huge regional disparity has developed between hills and plains, east and west, city and rural areas. Nepal's persistent poverty indicates a failure of modernization theory. The Tenth Plan would be another continuation of a failed legacy, unless social and natural endowments are considered for sustainability.; Nepal could be an example of a poor country moving along a path toward strong sustainability. To this end, a sincere intervention at the social and natural capital along with economic growth is necessary. Poverty alleviation efforts should target the socio-economically deprived households by enriching their human capital. Since community based social structures, such as the forest user groups, are already setting an example of strong sustainability, such community based social capital initiatives should be encouraged by granting rights and other resources to augment further economic activities like harnessing hydropower that may eventually transform the socio-ecological-economic system.