Bioenergy Needs Assessment Study in Bhuta n – Sta tus,
Issues, Concerns a nd Opportunities
Feb rua ry 04, 2011
Rep ort sub m itted to Polic y a nd Pla nning Division, Ministry of Ag ric ulture a nd Forests, Roya l Governm ent of Bhuta n,
Thim p hu, Bhuta n.
Prep a red b y Sona m Tob g a y Found er/ Princ ip a l Consulta nt
Thim p hu Co nsulta nts Interna tio na l Ltd . Tel.975-02-324949/ 17119900
Em a il: sktob g a y@d ruknet.b t
ExecutiveSummary
The rep ort outlines a need a ssessm ent resea rc h stud y on the sta tus, issues, p riorities, c onstra ints a nd op p ortunities of b ioenerg y d evelop m ent p rosp ec ts in Bhuta n. The stud y is fund ed a s p a rt of the reg io na l resea rc h initia tive und er the Tec hnic a l Coop era tion Prog ra m Fa c ility und erta ken b y United Na tion’ s Food a nd Ag ric ulture Org a niza tion Reg iona l Offic e for Asia a nd Pa c ific in Ba ng kok, Tha ila nd . Sim ila r resea rc h stud ies a re c a rried out in Ba ng la d esh, Ind ia , Nep a l a nd Sri La nka . The resea rc h d esc rib es the p otentia ls of b ioenerg y sourc es, p olic ies, g a p s, a nd utiliza tion op tions b y streng thening the tec hnic a l und ersta nd ing a nd interrela tionship b etw een b ioenerg y usa g e a nd foo d sec urity ob jec tives in Bhuta n. Sub seq uently, the stud y p rovid es b a seline info rm a tion o n existing b io energ y sc ena rio in term s of p olic ies, institutions, a va ila b ility of b ioenerg y re sourc es a nd investm ent via b ility op tions for enterp rise d evelop m ent in the c ountry.
Cha p ter 1 offers a q uic k overview on the d efinition a nd ra tiona le of b ioenerg y resea rc h stud y in Bhuta n a nd a lso p resents a b rief c ountry p rofile hig hlig hting its d evelop m ent p hilosop hy of Gross Na tiona l Ha p p iness. Cha p ter 2 d isc usses the Renew a l Na tura l Resourc e sec tor c o m p rising a g ric ulture p rop er, livestoc k a nd forestry. It hig hlig hts Bhuta n b eing a lea st d evelop ed c ountry w ith m a jority of the p op ula tion d ep end ent on the p rim a ry sec tor of fa rm ing a nd b a c kya rd livestoc k rea ring . Sub sistenc e a g ric ulture c ontinues a s the d om ina nt livelihood sup p ort in rura l Bhuta n w ith sm a ll a m ounts fa rm p rod uc e sold either in the w eekend m a rkets a nd other m od est q ua ntities of c a sh c rop s suc h a s ora ng es a nd a p p les exp orted to reg iona l m a rkets of Ind ia a nd Ba ng la d esh. Sim ila rly, few non-w o od forest p rod uc ts like hig h va lue m ushroom s a re exp orted to Ja p a n a nd China . The c ountry is w orking tow a rd s d evelop ing the renew a l na tura l resourc e sec tor in p a rtnership w ith other sta kehold ers to a d d ress a nd a c c om p lish food sec urity ob jec tives. Cha p ter 2 a lso p rovid es a g lim p se on the na tiona l food sec urity p olic y d irec tives a nd rela ted p rog ra m s a nd p la ns. It a lso hig hlig hts the p reva lenc e of p overty esp ec ia lly in rura l a rea s of the c ountry.
Cha p ter 3 d isc usses the energ y sec tor in the c ountry sta rting w ith existing p olic ies in the p ip eline tow a rd s energ y d iversific a tion a nd b roa d ening future energ y sec urity p la ns of the energ y sec tor. It hig hlig hts the p red om ina nc e of the rela tively c hea p sup p ly of hyd rop ow er, resulting to a low p olic y p riority for d evelop ing other b ioenerg y sourc es in the c ountry. It further d isc usses the energ y d em a nd a nd sup p ly sc ena rios ela b ora ting on fuel w ood c onsum p tion a nd over d ep end enc e on it a s the m a in so urc e of fuel p a rtic ula rly in the rura l a rea s. The energ y sec tor a s d esc rib ed und er Cha p ter 4 is c ontrolled a nd m a na g ed b y the Roya l Governm ent of Bhuta n thro ug h va rious sta te o w ned c orp ora tions a nd a g enc ies. Rea lizing the over d ep end enc e on a sing le energ y
sourc e, the g overnm ent ha s initia ted a renew a b le energ y p olic y hing ing on tw o m a in them es, na m ely d iversifying the energ y b a se a nd energ y sec urity ob jec tives p a rtic ula rly w ith rising fossil fuel p ric es. This ha s p rovid ed o p p ortunities tow a rd s d evelop ing p otentia l enterp rises in the b io fuel sub sec tor. Bio m a ss c onstituting w ood y m a teria ls, forest m a te ria ls, a nd c ro p a nd a nim a l resid ues a re a rea s exa m ined in term s volum e a nd enterp rise via b ility. Ac c ord ing to Interna tiona l Energ y Ag enc y (2005), Bhuta n ha s b een rec ord ed the hig hest p er c a p ita energ y c onsum p tion w ith 0.63 Tons of Oil Eq uiva lent c orresp ond ing to 1,174 Kw h p er c a p ita p er yea r. Of the tota l b iom a ss m a teria l a va ila b le in the c ountry, a lm ost 77 p erc ent c onstitutes fuel w ood follow ed b y c rop resid ues a m o unting to 21 p erc ent. Ca ttle d ung a nd b iog a s a re other p rosp ec ts w ith the c ountry eng a g ing in b iog a s p la nt insta lla tion w ith tw o p ilot p rojec ts a lrea d y und erw a y in rura l Bhuta n. Cha p ter 4 d esc rib es on the need s a ssessm ent of b ioenerg y a nd p otentia ls in the c ountry fo c using on the a va ila b ility of b iom a ss resourc es a s a n a lterna tive sourc e of energ y. Sub seq uent d isc ussions a re ela b ora ted on three sourc es of b iom a ss na m ely, forest resid ues, c rop resid ues a nd livestoc k resid ues inc lud ing fa rm m a nure.
Cha p ter V p rovid es a d isc ussion on b ioenerg y d evelop m ent vis-à -vis food sec urity ob jec tives a nd g o a ls in Bhuta n. It ha s b een ob served tha t a t p resent, c ultiva b le a g ric ultura l la nd or forest la nd for hum a n c onsum p tion ha s not c om p eted w ith g row ing b iofuel p la nta tions. This ha s b een p a rtic ula rly a ttrib uted to lim iting fa c tors suc h a s lim ited la nd a rea , la c k of ec onom ies of sc a le a nd hig h c ost of p rod uc tion, a nd limited vertic a l integ ra tion. Nonetheless, it ha s b een ob served tha t there should b e no ro om for c om p la c enc y b ut ra ther b uild c a utiona ry step s a nd g ua rd a g a inst p ossib le im p a c ts on Bhuta n’ s food sec urity p rofile in the future from la nd use c om p etition. In ord er to d o so , im p orta nt linka g es b etw een food sec urity, la nd -use, b iod iversity a nd w a ter resourc es m ust b e fully und erstood . This req uires a n a na lysis of a ra ng e of environm enta l, soc ia l a nd ec onom ic fa c tors a nd tha t no p a rtic ula r op tion should a llow a ny d etrim enta l im p a c t on food sec urity either d irec tly or ind irec tly. Althoug h p relim ina ry c onc lusions on ec onom ies of sc a le a nd the vertic a l integ ra tio n req uired for b iofuel p rod uc tion a llow s little sc op e for via b ility of enterp rises.
Furtherm ore, insuffic ient d rivers c onstitutes c onserva tive p olic ies, e.g m a nd a tory 60 p erc ent forest c over, non-a va ila b ility of m inim um b iom a ss volum es a nd q ua ntities a nd threa t tow a rd s b iod iversity a nd w a ter resourc es from enc oura g ing exotic m ono c rop p ing sp ec ies.
Abbreviations
AMS Ag ric ulture Ma rketing Servic es BEA Bhuta n Elec tric ity Authority BEFS Bioenerg y a nd Food Sec urity BCCL Bhuta n Ca rb id e Chem ic a ls Lim ited BFAL Bhuta n Ferro Alloys Lim ited
BPC Bhuta n Pow er Corp ora tion DOE Dep a rtm ent of Energ y DOF Dep a rtm ent of Forest DOL Dep a rtm ent of Livestoc k DOT Dep a rtm ent of Tra d e
DGM Dep a rtm ent of Geolog y a nd Mines DGPC Druk Green Pow er Corp ora tion GEF Glo b a l Environm ent Fa c ility GDP Gross Dom estic Prod uc t
GIS Geog ra p hic Inform a tion System s
GJ Gig a Joules
GOI Governm ent of Ind ia GNH Gro ss Na tiona l Ha p p iness
FAO Food a nd Ag ric ulture Org a niza tion
FAORAP Food a nd Ag ric ulture Org a niza tion Reg iona l Offic e for Asia a nd Pa c ific FRDD Forest Resourc es Develop m ent Division
FMU Forest Ma na g em ent Units FYP Five Yea r Pla n
IEA Interna tiona l Energ y Ag enc y KWH Kilo Wa tt p er Hour
LPG Liq uefied Petroleum Ga s MDG Millennium Develop m ent Goa ls MOEA Ministry of Ec onom ic Affa irs MOAF Ministry of Ag ric ulture a nd Forests MSW Munic ip a l Solid Wa ste
MU Meg a Units
NRDCL Na tura l Resourc e Develop m ent Corp ora tion NSB Na tiona l Sta tistic a l Burea u
NTFP Non Tim b er Forest Prod uc ts PAR Poverty Ana lysis Rep ort RGOB Roya l Governm ent of Bhuta n RNR Renew a l Na tura l Resourc e
SNV Netherla nd s Develop m ent Assista nc e TCP Tec hnic a l Coop era tion Prog ra m
TCPF Tec hnic a l Coop era tion Prog ra m Fa c ility TERRI Energ y Resourc e Institute
TOE Tons of Oil Eq uiva lent
UNDP United Na tions Develop m ent Prog ra m
Ta b le o f Co ntents
Exec utive Sum m a ry ... ii
Ab b revia tions ... iv
List o f Ta b le s ... vi
List o f Fig ures ... vi
I. Intro d uc tion ... 1
1.1 Wha t is Bioenerg y? ... 1
1.2 Why Bio energ y Ne ed s Assessm ent Stud y in Bhuta n? ... 1
1.3 Brief Co untry Pro file a nd Develop m ent Philo so p hy ... 2
II. Ag ric ulture Sec tor a nd Ag ric ulture Sec tor Polic ies in Bhuta n ... 4
2.1 The Rene w a b le Na ture Reso urc e Se c to r ... 4
2.1.1 Ma rkets a nd Pro d uc ts o f Exp o rt ... 5
2.2 Na tio na l Foo d Sec urity Po lic y ... 10
2.3 Po verty in Bhuta n ... 11
III. The Energ y Sec tor in Bhuta n ... 12
3.1 Na tio na l Energ y Po lic y ... 13
3.2 Energ y De m a nd a nd Sup p ly Sc e na rio ... 14
3.2.1 Fuel w o o d c o nsum p tio n b y ind ustry typ e ... 16
3.2.2 Energ y Tra d e ... 17
3.2.3 Fuel Extra c ted b y Na tura l Reso urc e Develo p m ent Co rp o ra tio n ... 17
3.2.4 Typ es o f fuel used b y ho useho ld s ... 18
3.2.5 Avera g e Energ y Co nsum p tio n b y typ e b y ho useho ld ... 18
3.2.6 Bio m a ss Consum p tio n in Resid entia l Area s ... 19
3.2.7 Bio energ y Tec hno lo g y ... 19
3.2.8 Future Bio energ y Situa tio n ... 20
IV. Assessm ent o f Bio energ y Need s a nd Po tentia l in Bhuta n ... 21
4.1 Ava ila b ility o f Bio m a ss Reso urc es in the c o untry ... 21
4.2 Fo rest Bio m a ss ... 22
4.3 Cro p Resid ue ... 24
4.4 Ca ttle Dung ... 24
V. Bioenerg y a nd Food Sec urity in Bhuta n ... 26
5.1 FAO’ s BEFS Ana lytic a l Fra m ew o rk ... 27
5.2 Insuffic ient Drivers to w a rd s Bio energ y Develo p m ent in Bhuta n... 28
5.2.1 Po lic y, reso urc e s a nd via b ility ... 28
5.2.2 Na tio na l Energ y Se c urity Ob je c tives ... 29
5.2.3 Im p a c t o n Environm ent ... 29
VI. Conc lusion a nd Rec om m end a tions ... 30
Referenc es ... 33
Annex 1. Te rm s o f Refe renc e for Co nsulta nt ... 35
Annex 2. Brief o n Ja trop ha c urc a s ... 36
Annex 3 Peo p le c o nsulted d uring the a ssig nm ent p erio d ... 37
Annex 4 Peop le a ttend ed the na tiona l w orkshop on Bioenerg y a nd Food Sec urity, 13/ 01/ 11 38 Annex 5. Bio energ y Reso urc e Assessm ent Pro jec t Pro p o sa l ... 39
ListofTables
Ta b le 1. Pro d uc tio n in m etric tons o f m a jo r c ro p s, 2004-2007. ... 6
Ta b le 2. Sum m a ry o f p ro d uc tio n a nd exp o rt, 2004-2007. ... 7
Ta b le 3. NTFP exp ort in q ua ntity a nd va lue. ... 8
Ta b le 4. Pro d uc tio n q ua ntities a nd va lue ta ken over 2006 a nd 2007 d a ta . ... 9
Ta b le 5. Co m p a riso n of p er c a p ita energ y a nd elec tric ity sup p ly. ... 14
Ta b le 6. Da ta o n fuel w o od used in ind ustries... 17
Ta b le 7. Ab stra c t o f tim b er b y NRDCL, 2008, 2009, 2010. ... 17
Ta b le 8. Distrib ution of household s a s p er fuel used fo r c ooking a nd lig hting ... 18
Ta b le 9. Avera g e energ y c onsum p tion in household s b y energ y typ e, 2005. ... 18
Ta b le 10. Bio m a ss c onsum p tio n in the resid entia l sec to r (2005) ... 19
Ta b le 11. Bio m a ss Energ y Po tentia l in Bhuta n (2005) ... 21
Ta b le 12. Fo rest c o ver in Bhuta n b y fo rest typ e , 2009. ... 22
Ta b le 13. G row ing stoc k of forests a nd susta ina b le a nnua l yield b y d zong kha g , 2004. .. 23
Ta b le 14. Forest p rod uc tivity, rota tion, a nd b a sic d ensity... 23
Ta b le 15. Crop resid ue p o tentia l in selec ted c rop s in Bhuta n (2004-05). ... 24
Ta b le 16. Estim a tion of b io g a s energ y g enera tion p otentia l using c a ttle d ung . ... 24
ListofFigures Fig ure 1. Overview o f a vera g e a nnua l p ro d uc tio n (MT) of m a jor c rop s. ... 7
Fig ure 2. Bhuta n Energ y Sup p ly Mix 2005 ... 15
Fig ure 3. Biom a ss Energ y Potentia l b y Typ e of Biom a ss in 2005. ... 22
Fig ure 4. Glo b a l b io fuel p ro d uc tio n sc ena rio . ... 26
Fig ure 5. FAO Ana lytic a l Fra m ew o rk ... 28
I. Introduction
1.1 WhatisBioenergy?
Bioenerg y is energ y p rod uc ed from b iom a ss suc h a s energ y c rop s, forest resid ues a nd org a nic w a stes. When b iom a ss is p rod uc ed in a susta ina b le m a nner, it is a renew a b le energ y sourc e. It stores c hem ic a l energ y tha t c a n b e used to p rod uc e p ow er a nd hea t a s w ell a s liq uid a nd g a seous fuels (FAO, 2008, HLC/ 08/ INF/ 3, p a g e 1).
1.2 WhyBioenergyNeedsAssessmentStudyinBhutan?
As p a rt of the reg io na l initia tive und er the Tec hnic a l Coop era tion Prog ra m (TCP) Fa c ility und erta ken b y United Na tion’ s Food a nd Ag ric ulture Org a niza tion (FAO ), Bhuta n ha s b een extend ed tec hnic a l a ssista nc e to c ond uc t a need s a ssessm ent on the sta tus, issues, p riorities, c onstra ints a nd o p p o rtunities of b ioenerg y d evelop m ent p rosp ec ts in the c ountry. The TCP Fa c ility initia tive c overs sim ila r a ssessm ent stud ies in Ba ng la d esh, Ind ia , Nep a l a nd Sri La nka . Corresp ond ing to the Roya l Governm ent Bhuta n’ s need s, the stud y intend s to outline the p otentia ls of b ioenerg y sourc es, p olic ies, g a p s, a nd utiliza tion op tions b y streng thening the tec hnic a l und ersta nd ing a nd interrela tionship b etw een b ioenerg y usa g e a nd food sec urity ob jec tives in the c o untry. Sub seq uently, the a ssessm ent stud y is exp ec ted to p rovid e b a seline inform a tion on existing b ioenerg y sc ena rio in term s of p olic ies, institutions, a va ila b ility of energ y reso urc es a nd via b ility o p tio ns.
The stud y ha s b een c om m issioned to Mr. Sona m Tob g a y1, Found er/ Princ ip a l Consulta nt of Thim p hu Consulta nts Interna tiona l Ltd . throug h a d irec t
1Theconsultantcanbecontactedatsktobgay@druknet.bt,telephonenumber975Ͳ324949/17119900
Definitions
Biomass: non-fossil material of biological origin, such as energy crops, agricultural and forestry wastes and by- products, manure or microbial biomass.
Biofuel: fuel produced directly or indirectly from biomass such as fuel wood, charcoal, bioethanol, biodiesel, biogas (methane) or biohydrogen.
Bioenergy: energy derived from biofuels.
p roc urem ent from FAO’ s Reg iona l Offic e for Asia a nd Pa c ific (FAORAP).
Colla b ora tions a re held w ith Ms. Delg erm a a Chuluunb a a ta r, Ag ric ulture Offic er for Biofuel a nd Ind ustria l Crop s a nd Mr. Da m en Bea u, BEFS Exp ert b oth w orking a t the FAO Reg iona l Offic e for Asia a nd Pa c ific in Ba ng kok. Ms. Bind u Ta m a ng , Polic y a nd Pla nning Division of the Ministry of Ag ric ulture a nd Forests ha s b een instrum enta l in a d d ressing log istic a l c onc erns. Refer to Annex 1 for Term s o f Referenc e.
1.3 BriefCountryProfileandDevelopmentPhilosophy
Bhuta n the size of Sw itzerla nd is loc a ted in the Ea stern Him a la ya s neig hb oring China a nd Ind ia in So uth Asia n sub c o ntinent w ith a p op ula tion estim a ted a t 700,000 (NSB, Bhuta n 2010 Da ta sheet) a nd m a inta ins a n a p p roxim a te 72 p erc ent forest c over. Ag ric ulture is the m a in sourc e of livelihood w ith 65 p erc ent of the p op ula tion d ep end ing on sub sistenc e fa rm ing a s a n im p orta nt sec tor a nd hold s the p otentia l of b roa d b a sed a nd p ro-p oor g row th, furthering one step tow a rd s p overty red uc tion a nd food self-suffic ienc y. Ac c o rd ing to Sta tistic a l Yea r Book of Bhuta n 2009, a g ric ulture c ontrib uted 18.5 p erc ent to the tota l Gross Dom estic Prod uc t (GDP) in 2008. Ag ric ulture in Bhuta n c onstitutes a g ric ulture p rop er, livestoc k a nd forestry servic es. Other sec tors g a ining g ra d ua l m om entum c onstitute the c onstruc tion ind ustry a nd hyd rop ow er p rojec ts follow ed b y hig h end tourism .
A lea st d evelop ed c ountry, Bhuta n ha s b een ra nked 132 out of the 182 c ountries on the United Na tions Hum a n Develop m ent Ind ex w ith life exp ec ta nc y of 69 yea rs, a nd a d ult litera c y ra te rec ord ed a t c lose to 60 p erc ent. Poverty c ontinues to p reva il a t 23 p erc ent (PAR, 2007) w ith the g overnm ent p ursuing ob jec tives to a d d ress issues a nd c onc erns on household food sec urity, q ua lity of hea lth fa c ilities, q ua lity of ed uc a tion a nd skillful em p loym ent, p ub lic tra nsp orta tion system s a nd roa d netw orks a nd inc om e d isp a rity. The c ountry ha s rec ently tra nsitioned into a p a rlia m enta ry d em oc ra c y w ith 47 c onstituenc ies d istrib uted a c ross the 20 d istric ts.
The c ountry is d evelop ing ra p id ly w ith inc rea sing c onc entra tion on d evelop ing hyd roelec tric ity2 w ith strong sup p ort fro m the Governm ent of Ind ia (GoI) a nd
2Hydropowerresourcesinthecountryhavebeenestimatedat30,000megawatts.Hydropowerhasadominantrolein Bhutan’seconomy,evenwhileincreasingBhutan’srelianceonasinglecommodityexportedtoasinglemarketand strengtheningtheroleofthepublicsectorintheeconomy.TheGovernmentaimstoachieve85.6%electrificationby2013and develop5,000megawattshydropowergenerationforexporttoIndiaby2020.Currently,Chukhahydropowerdamgenerates 336megawatts,Kurichudam60megawatts,Talahydropower1020megawatts.ThereareplanstobuildAmochhuwith620 megawattsgeneratingcapacity,KuriGongriwith1800megawatts,ChamkharchhuͲIwith670megawatts,Kholongchhuwith 486megawatts,Wangchustorage900megawatts,Bunakhastorage180megawattsandSunkoshstorage4000megawatts.
PunatshangchhuI&IIcombinedhasatotalgeneratingcapacityof2200megawatts.(Source:http://www.dgpc.bt).
other d evelop m enta l p a rtners. Sta rting from the First Five Yea r Pla n (1961-1965) p eriod till the c urrent Tenth Five Yea r Pla n (2009-2013), Bhuta n ha s a c hieved c onsid era b le p rog ress in its soc io-ec onom ic d evelop m ent. This c a n b e exhib ited w ith the p er c a p ita g ross d om estic p ro d uc t so a ring US$ 1,514 in 2007 a s c om p a red to US$ 639 in 19983.
How ever, form id a b le g eog ra p hy p o ses serious c ha lleng es, w ith eleva tions ra ng ing fro m 100 to 7,500 m eters a b ove sea level, steep slop es, a nd the sm a ll size a nd d isp ersion of the p op ula tion g rea tly inc rea sing the m a rg ina l c ost of p rovid ing servic es. Ma ny villa g es a re sm a ll a nd isola ted , loc a ted severa l d a ys w a lk from the nea rest m otor roa d . Ind eed , im p roving a c c ess to hea lth, self suffic ienc y in food , ed uc a tion d evelop m ent, m a rkets a nd ec onom ic op p ortunities is one of the d efining d evelop m ent issues in Bhuta n’ s 10th FYP.
Althoug h urb a niza tion is c ontinuing ra p id ly, a lm ost 70 p erc ent of the p op ula tion lives in rura l a rea s; a nd urb a n a rea s, suc h a s the c a p ita l c ity - Thim p hu (p op ula tion of a b out 80,000), is exp a nd ing w ith b a sic urb a n infra struc ture strug g ling to keep p a c e. This m a kes it d iffic ult for the p eop le to ta ke a d va nta g e of ec onom ies of sc a le, a nd the m a jority of em p loym ent rem a ins in a g ric ulture, m uc h o f it in iso la ted sub sistenc e a c tivities. With Governm ent of Ind ia a ssista nc e, hyd rop ow er resourc es a re ra p id ly b eing d evelop ed , a c c elera ting soc ioec onom ic d evelo p m ent throug h exp ort ea rning s.
Environm enta l c onsid era tions a re hig h on p olic y m a kers’ a g end a s, w ith a ny log g ing tig htly c ontrolled a nd over 60 p erc ent of the c ountry’ s la nd a rea to b e p reserved und er forest c over in p erp etuity. These fa c tors fra m e the uniq ue d evelop m ent op p ortunities a nd c ha lleng es fa c ed b y Bhuta n.
Bhuta n’ s d istinc tive a p p ro a c h to d evelop m ent is g uid ed b y the overa rc hing p hilosop hy of Gross Na tiona l Ha p p iness (GNH), p rop ound ed b y the Fourth Mona rc h in the la te 1980s. It is b a sed on the four p illa rs: p rom otion of eq uita b le a nd susta ina b le soc io-ec onom ic d evelo p m ent, p reserva tion a nd p rom otion of c ultura l va lues, c o nserva tion of the na tura l environm ent, a nd esta b lishm ent of g ood g overna nc e. The GNH d evelo p m ent p hilosop hy em p ha sizes the im p orta nc e of b a la nc ing m a teria l, sp iritua l, em otiona l a nd c ultura l w ell-b eing a s elem ents tha t tog ether b ring ha p p iness to the ind ivid ua l.
These a sp ira tions a re further a rtic ula ted in the d oc um ent Bhuta n 2020: A Vision for Pea c e, Prosp erity a nd Ha p p iness, w hic h w a s p rep a red in 1999 throug h a hig hly c o nsulta tive p ro c ess invo lving rep resenta tives from the RGOB, the p riva te sec tor, the non-g overnm enta l org a niza tions, a nd the c o m m unity. It seeks to tra nsla te the notion of GNH into a series of na tiona l ob jec tives em p ha sizing : (i)
3AnnualReportoftheRoyalGovernmentofBhutanpresentedbythePrimeMinisterattheNationalAssemblyonJune2007, Annexurepage1.
hum a n d evelop m ent, (ii) c ultura l herita g e, (iii) eq uita b le d evelop m ent, (iv) g ood g overna nc e, a nd (v) environm enta l c onserva tion. Sim ila r to the enunc ia tion of the Millennium Develop m ent Goa ls (MDGs), Bhuta n 2020 a lso la ys out severa l long -term ta rg ets, suc h a s p rovid ing elec tric ity to 50 p erc ent o f the rura l p op ula tion, or ensuring tha t 75 p erc ent of the rura l p op ula tion lives w ithin ha lf a d a y’ s w a lk from the nea re st m otor roa d b y 2012. The d evelop m ent p a th is further ela b ora ted in sec tor p olic ies, stra teg ies a nd p rog ra m s throug h the p la nning p roc ess, m ost rec ently the 10th FYP d oc um ent.
II. AgricultureSectorandAgricultureSectorPoliciesinBhutan Ag ric ulture c ontinues to p rovid e a b roa d b a se of the Bhuta nese ec onom y w ith a m a jo rity o f the p op ula tio n living in rura l a rea s a nd p rim a rily d ep end ent on sub sistenc e a g ric ulture for their livelihood . Prec isely, a b out three-fourth of the Bhuta nese a re essentia lly sub sistenc e fa rm ing household s, d eriving inc om e from sourc es c onsisting of fa rm inc om e a nd a g ric ulture w a g e la b or. Cultiva b le la nd w hic h is a m a in a sset fo r sm a llhold er household s is a lrea d y in short sup p ly w ith a n a vera g e la nd hold ing size of 0.89 hec ta res (Tob g a y & Mc Culloug h, 2008). Pe r c a p ita a va ila b ility of a g ric ultura l la nd in Bhuta n is one of the low est in the w orld , even thoug h the p op ula tion d ensity is a lso one of the low est. Conseq uently, the p rosp ec ts for a g ric ultura l exp a nsion a re c onstra ined b y a la c k of a ra b le la nd a long w ith ina d eq ua te tec hnolog y, p oor roa d a c c ess a nd hig h tra nsa c tion c osts. Nonetheless, the sec tor eng a g ing 44.4 p erc ent4 of the la b or forc e hold s hig h p otentia l to ha ve a rela tively w id er im p a c t on p overty red uc tion a ssum ing the rig ht investm ents a re m a d e in the key nic he a rea s of hig h va lue a g ric ulture, non-fa rm inc om e g enera tion a c tivities a nd d evelop ing stra teg ic rura l infra struc ture a nd m a rkets. Ac c ord ing to RNR Census 2009, tota l a g ric ultura l la nd hold ing s a re rec ord ed a t 94,903 hec ta res, w et la nd c ultiva tion c onstitutes 20.57 p erc ent estim a ted a t 19,523 hec ta res. Ma in a g ric ulture inp uts used a re c om m erc ia l fertilizers in a d d ition to fa rm m a nure w ith extension servic es p rovid ed b y the Dep a rtm ent of Ag ric ulture on food fa rm m a na g em ent p ra c tic es. Fa rm m ec ha niza tion is limited to sm a ll d iesel eng ine p ow er-tillers a nd foot p ed a l ric e threshers.
2.1 TheRenewableNatureResourceSector
The Renew a l Na tura l Resourc e (RNR) sec to r in Bhuta n is d om ina ntly a rura l p henom enon integ ra ted into rea ring b a c kya rd c a ttle a nd p oultry, c rop p rod uc tion inc lud ing c ultiva tion of ric e, m a ize, c hilies, p ota to , a p p les a nd
4 La b o r Fo rc e Survey 2006, Mo LHR, 2008
m a nd a rin a s m a jo r c ro p s. Ab o ut 69.15 p erc ent of the p op ula tion still c ontinues to d w ell in the rura l a rea s d om ina ted b y sm a llhold er fa rm ers. Sm a llhold er fa rm ers a re fa rm s w ith less tha n the a vera g e a g ric ultura l size of 0.89 hec ta res not inc lud ing less p rod uc tive typ es of la nd hold ing s (Tob g a y & Mc Culloug h 2008).
Typ ic a lly, these household s a re c ha ra c terized a s low inc om e a nd resourc e p oor, w ith rela tively hig h vulnera b ility to ec onom ic a nd c lim a tic shoc ks.
The RNR sec tor c o m p rising a g ric ulture p rop er, livestoc k a nd forestry c onstitute a n im p orta nt c om p onent in Bhuta n’ s soc ioec onom ic d evelop m ent a nd g row th.
While the c ontrib ution of the RNR sec tor to GDP ha s b een d ec lining6 a nd is likely to d ec line even further in the future, it c ontinues to b e a n im p orta nt sec to r, p a rtic ula rly in the c ontext of im p roving p eop le’ s livelihood s a nd red uc ing p overty levels. This ha s b een p roven w ith the m a in thrust of the Ministry of Ag ric ulture a nd Forest’ s tenth p la n d ed ic a ted to enha nc ing susta ina b ility of rura l livelihood s throug h inc rea sing a g ric ultura l p rod uc tivity a nd tra nsform ing sub sistenc e a g ric ulture to sm a ll sc a le c om m erc ia liza tion g uid ed b y the b roa d stra teg ic a p p roa c h of enha nc ing p rod uc tion, im p roving a c c essib ility a nd p rom oting m a rkets a nd m a rketing .
The m a jority of fa rm ers a re still using tra d itiona l c ultiva tion tec hniq ues a nd lim ited a p p lic a tion of inp uts or im p roved seed . Poor la nd p rep a ra tion a nd c ultiva tio n p ra c tic es, lo w q ua lity a nd often m ixed seed a nd p oor p ost ha rvest p roc essing a nd stora g e a ll c ontrib ute to low yield s a nd p oor q ua lity p rod uc e.
Crop p ing intensity is low , inc orp ora ting m ixed fa rm ing system o f c ro p a nd livestoc k interfa c ing forest. Further, the la c k of infra struc ture lim its Bhuta nese fa rm ers from p rod uc ing m ore tha n tha t is a c tua lly req uired for their ow n c onsum p tion. Essentia l fa rm infra struc ture like a d eq ua te irrig a tion fa c ilities, fa rm roa d s, rura l elec trific a tion, m a rket inform a tio n system s, resea rc h a nd extension a re som e of the key fa c tors tow a rd s a p rosp erous a g ric ultura l sec tor.
2.1.1 MarketsandProductsofExport
In the a b senc e of household m a rket c onsum p tion d a ta , c om p rehensive a nd p rec ise estim a tes on c onsum p tion a re non-existent. Ma rkets for Bhuta nese g ood s c a n b e c a teg orized b roa d ly into d om estic m a rkets, reg iona l m a rkets a nd extra reg iona l. Dom estic m a rket c om p rises m a inly of w eekend m a rkets tha t is fa st exp a nd ing a nd op en to c hea p er food im p orts m a inly fro m Ind ia . Bhuta nese d om estic m a rket is sm a ll a nd c a n ea sily b e overb urd ened w ith exc ess sup p ly exp erienc ing p ric e d ec lines.
5 Out o f the 634,982 p erso ns, 438, 871 a re living in the rura l a rea s, Po p ula tio n a nd Ho using Census o f Bhuta n, 2005, RGOB.
6 The sha re of the a g ric ulture to GDP ha s d ec lined fro m 22.6 p erc ent in 2005 to 18.6 p erc ent in 2007 (NSB, 2008).
Reg iona l m a rkets a re g ea red tow a rd s Ba ng la d esh a nd Ind ia for exp orting a p p les, m a nd a rin a nd off-sea son veg eta b les. Ca sh c rop s like p ota toes a re sold p rim a rily throug h the a uc tion m a rket, w herea s sm a ll surp luses of veg eta b les a re sold in the d istric t a nd w eekend m a rkets. Weekend m a rkets a re m ostly referred to the m a in veg eta b le m a rkets of Thimp hu, Pa ro a nd P/ Ling , w hile d istric t m a rkets a re referred to the w eekly m a rkets c ond uc ted in resp ec tive d istric ts.
As p resented in Ta b le 1, ric e a nd m a ize a re im p orta nt sta p les rec ord ing a n a vera g e a nnua l p rod uc tion of 67,688 m etric tons a nd 79,346 m etric tons resp ec tively. Pota to a m a jor c a sh c rop ha s a n a nnua l a vera g e p rod uc tion of 57,545 m etric tons a nd m a nd a rin a t 51,978 m etric tons. Tota l p rod uc tion c a p a c ity of m a jor c rop s a g g reg a ted results to roug hly 282,522 m etric tons.
Com p ound a vera g e g row th ra te ha s show n hig hest for m a nd a rin w ith c lose to 23 p erc ent inc rea se, w hile m a ize exp erienc es neg a tive g row th ra te, p ossib ly c ontrib uted b y w ild a nim a l c rop d a m a g e a nd la c k of a c tive fa rm la b or. Ric e ha s w itnessed a d ra m a tic inc rea se of 26 p erc ent in 2007 a s c om p a red to p rod uc tion fig ures of 54,326 m etric tones in 2004.
Im p ort of ric e in 2007 w a s rec ord ed a t 7,414 m etric to ns w hile im p ort o f d a iry p rod uc ts (c onstituting b utter, c heese a nd m ilk), w a s rec ord ed a t 3,038 m etric tons a c c ord ing to Bhuta n Tra d e Sta tistic s, 2004-2007 fig ures. Currently, the Ministry of Ag ric ulture a nd Forests c la im s the c ountry is 50 p erc ent self suffic ient in ric e p rod uc tion w ith the rem a ining 50 p erc ent m et throug h im p orts from Ind ia a nd Tha ila nd . The d ra ft Food a nd Nutrition Sec urity Polic y 2010 sta tes 65 p erc ent of the c erea l req uirem ent in the c ountry is m et b y d om estic p rod uc tion.
How ever, ric e is the m a in c erea l c onsum ed in the c ountry a nd c onstitutes 60 p erc ent o f the c erea l d em a nd . It ha s b een noted tha t d om estic p rod uc tion is only a b le to m eet 48 p erc ent o f the ric e d em a nd .
Ta b le 1. Prod uc tion in m etric tons of m a jor c rop s, 2004-2007.
Year Apple Mandarin Potato Rice Maize Ginger Chilies Cardamom Total
2004 5,917 31,915 47,403 54,326 90,566 6,225 4,455 814.6 241,622
2005 10,421 48,367 53,594 67,606 93,968 6,901 10,447 1,190 292,494
2006 7,406 55,558 68,048 74,380 71,062 7,571 11,606 3,477 299,108
2007 7,076 72,071 61,133 74,438 61,789 9,870 8,368 2,121 296,866
Avg 7,705 51,978 57,545 67,688 79,346 7,642 8,719 1,901 282,522
CAGR 4.57% 22.59% 6.57% 8.19% Ͳ9.12% 12.21% 17.07% 27.03%
Sourc e: Ag ric ulture Sta tistic s of 2004-2007.
Fig ure 1. Overview of a vera g e a nnua l p rod uc tion (MT) o f m a jor c rop s.
Sourc e: Ag ric ulture Sta tistic s va rious sourc es, AMS.
Ma nd a rin a nd p ota to p rovid e the hig hest exp ort ea rning s rec ord ed jointly c lose to US$ 10 m illion a s show n in Ta b le 2. How ever, susta ina b ility on suc h p ositive outlook for the tw o exp ort c rop s w ill la rg ely d ep end on the va g a ries of the w ea ther, d isea se outb rea ks a nd a void a nc e of w ild life d ep red a tion. Proc essed fruit juic es p loug h in US$ 2.68 m illion p er a nnum follow ed b y a p p le g enera ting US$ 1.3 m illion p er a nnum resp ec tively. Ging er, c a rd a m om a nd m a nd a rin show p rom ising exp ort p otentia l ra ng ing b etw een US$ 0.44 to 0.67 m illion. Sm a ll volum e of ric e exp orts a re g ra d ua lly p ic king up a vera g ing 60 m etric tons of exp orts to USA, Germ a ny a nd United King d om a nnua lly va luing c lose to US$
100,000 m illion. The tota l exp ort m a rket c o m p rising p rioritized p rod uc ts listed in Ta b le 2 is estim a ted a t US$ 14.66 m illio n.
Ta b le 2. Sum m a ry of p rod uc tion a nd exp ort, 2004-2007.
Avg.MT Nu('000) $value
Appleproduction 7,805 Ͳ Ͳ
Appleexports 4,387 57,690 1,311,367
Mandarinproduction 50,784 Ͳ Ͳ
Mandarinexports 18,535 218,441 4,965,460
Potatoproduction 54,043 Ͳ Ͳ
Potatoexports 63,659 194,473 4,420,636
Riceproduction 57,467 Ͳ Ͳ
Riceexports 59 4,353 98,959
Cardamomexports
371 22,171 503,967
Gingerexports
858 29,751 676,290
Fruitjuiceexports
4,080 118,059 2,683,640
Total 262,050 644,937 14,660,319
So urc e: Bhuta n Tra d e Sta tistic s, 2004-2007.
Ͳ 50,000 100,000 150,000 200,000 250,000 300,000 350,000
2004 2005 2006 2007
Metrictons
Annualproductionofmajorcrops
Cardamon Chilies Ginger Maize Rice Potato Orange Apple
Sim ila rly, non-tim b er forest p rod uc ts (NTFPs) p la y a n im p orta nt role in the d a ily lives a nd overa ll w ell b eing of the Bhuta nese p eop le esp ec ia lly a m ong the rura l fa rm ing c om m unity; for insta nc e they a re a m a jor sourc e of off fa rm inc om e7, fo o d , m ed ic ine, fo d d er, fib er, a nd a lso used for loc a l c o nstruc tion m a teria ls.
Ma ny of them a re im p orta ntly tra d ed c om m od ities a t loc a l, na tiona l a nd interna tiona l levels, p ro vid ing em p lo ym ent a nd inc om e a t ea c h level. The c ountry ha s p roven a ha ven for a w id e a rra y of NTFPs a nd to d a te m ore tha n 600 m ed ic ina l p la nts8, 97 m ushroom , 97 fruits a nd nuts, 34 b a m b oos, 14 c a nes, 25 oil/ resin sp ec ies, 20 sp ec ies, 38 fib ers, 70 orna m enta l p la nts, 181 fod d er sp ec ies, 36 d yes, 12 food c rop s (ya m s) a nd 77 forest veg eta b les ha ve b een id entified a nd d esc rib ed (FRDD, 2008).
The m ost c om m erc ia lly im p orta nt NTFPs exp orted a re hig h va lue m a tshuta ki m ushroom Cord yc ep s sinensis, Him a la ya n inc ense (Poe) a nd lem on g ra ss extra c t9. Attra c tive m a rkets for m a tsuta ki m ushroom s a re in Ja p a n, Sing a p ore, Tha ila nd a nd United King d om . Bhuta nese essentia l oils ha ve b een w ell rec eived in the Europ ea n m a rkets w ith g row ing d em a nd s from United King d om a nd Ca na d a . Inc ense stic ks in Sing a p ore, Ta iw a n, United Sta tes of Am eric a , United King d om a nd Hong Kong . Cord yc ep s a re in hug e d em a nd from Hong Kong , Sing a p ore, China a nd in the sta te of Ca lifornia in the USA.
Ta b le 3. NTFP exp ort in q ua ntity a nd va lue.
Averageexports,2004Ͳ2007
Vol(MT) Value('000Nu.) Value$
Othermushroom 2 3,967 90,176
Cordyceps 33410 1,483,971 1,483,971
Matshutaki 3 5,240 119,122
Lemongrassextract11 111 1,285 29,202
Incense 1 169,045 3,842,633
Total 451 1,663,508 5,565,104
So urc e: Bhuta n Tra d e Sta tistic s, 2004-2007, BAFRA, AMS, Mo A.
As seen from Ta b le 3 Him a la ya n inc ense or loc a lly know n a s Poe ra nks the first exp ort p rod uc t w ith va lue ra ng ing c lose to US$ 4 m illion d olla rs p er a nnum . Cord yc ep s is sec ond w ith a n a vera g e q ua ntity of 334 kilog ra m s ea rning US$ 1.5 m illion p er a nnum . Tota l NTFP c om p rising the p rod uc ts listed in Ta b le 3 c onstitute US$ 5.6 m illion p er a nnum a vera g e.
7FarmersfromMongar,Lhuentse,Trashigang,andTrashiyangtseearnedanincomeworthNu.51,247,045fromthesaleof lemongrassextractaccordingtoreportsfromEssentialOilsIndustryofBhutan:APerspectivebyEODP,2004.
8Ofwhich267or85%ofthespeciesarecollectedforingredientsintraditionalmedicinebyITMS.
9EasternBhutanhasthecapacitytosustainablyproduce50MTlemongrassoilayear.Ifthiscouldberealizeditwouldcapture about10percentoftheworldmarket(Dhungyel,D2002).
10InKilograms
11Volumeisinactualliters.
Coryd c ep s exp ort va lue exp erienc es a c om p ound a nnua l g row th ra te of 22.28 p erc ent over la st six yea rs sta rting 2004 w ith a n a vera g e tota l exp ort va lue w orth US$ 1.5 m illion. Ab out 90 p erc ent of the ha rvest is exp orted throug h loc a l a uc tions org a nized b y the Dep a rtm ent of Ag ric ulture Ma rketing a nd Coop era tives onc e a yea r. There is lim ited d a ta on the rem a ining 10 p erc ent tha t ha s not b een a uc tioned a nd one c ould a ssum e c ollec tors either c onsum ing it p ersona lly for m ed ic ina l p urp o ses o r eng a g ing in inform a l tra d ing b oth insid e the c ountry a nd a c ross the northern b ord ers to Tib et-China .
Livestoc k in Bhuta n like in m ost d eve lop ing c ountries p la y a vita l role in a g ric ultura l d evelop m ent in rura l ec onom ies a nd is a key elem ent in the a g ric ultura l p rod uc tion system . Livestoc k sta tistic s revea l a nnua l p rod uc tion of fresh m ilk rec ord ed a t 20,748 m etric tons w orth US$16.5 m illion. Sim ila rly, fresh c heese ra nks sec ond in p rod uc tion c onstituting 6,399 m etric tons a nnua lly w orth US$15.3 m illio n. Lo c a l b utter is estim a ted a t 1,351 m etric to ns p er a nnum w o rth over US$ 6 m illion, w hile p ork a nd b eef p rod uc tion estim a ted a t US$ 1.5 ea c h resp ec tively. Tota l va lue of d a iry p rod uc tion a s show n from Ta b le 4 is estim a ted a t US$ 41.37 m illion a lso rep resenting the size of the interna l d a iry a nd livestoc k m a rket.
Ta b le 4. Prod uc tion q ua ntities a nd va lue ta ken over 2006 a nd 2007 d a ta .
Qty. MT Nu/MT Nu. Value $ value
Butter 1,351 200,000
270,266,000 6,143,526 Cheese 6,399
105,000 671,888,700 15,272,975 Milk 20,748
35,000
726,194,350 16,507,418 Pork 521
120,000
62,530,800 1,421,413 Beef 610
110,000
67,150,050 1,526,415 Yak meat 109
200,000
21,872,000 497,181
Total 29,740 1,819,901,900 41,368,928
Sourc e: Livestoc k Sta tistic s 2006, 2007.
Loc a l p ro d uc tion is sup p lem ented throug h im p orts rec ord ed w orth US$ 12.47 m illion p er a nnum inc lud ing fish a nd eg g s. Tetra p a c k m ilk a nd m ilk p ow d er c onstitutes the hig hest im p orts w orth US$ 4.3 m illion w ith overa ll im p orts estim a ted a t US$ 12.49 m illion.
2.2 NationalFoodSecurityPolicy
Fo o d sec urity in Bhuta n is very m uc h a n issue of a c c ess to resourc es a nd ec onom ic op p ortunities. For the rura l household s w ho m a ke up a b out 69 p erc ent o f the p op ula tion, it is p a rtic ula rly a m a tter of sta b le a c c ess to la nd a nd w a ter a s the b a sic resourc es from w hic h to p ro d uc e their ow n food . For the urb a n a nd non-fa rm ing rura l p op ula tion a nd the la nd less household s, it is a b out ec onom ic op p ortunities to ea rn a living throug h p rod uc tive em p loym ent.
Therefore, the stra teg ic a p p roa c h to food sec urity sta rts b y id entifying the size a nd loc a tion of the p op ula tion a nd d efining the va rious p op ula tion g roup s in term s of their c a p a c ity to c op e w ith food insec urity. Dista nc e to m a rkets a nd p oor infra struc ture c a n sig nific a ntly influenc e w ha t resourc es ind ivid ua ls c a n c om m a nd to p rod uc e or a c c ess to food .
Food sec urity is a lso a c ross-c utting them e in the RNR Sec tor a nd the releva nt p olic y ob jec tives a nd stra teg ies c onta ined in the d oc um ents p erta ining to the Tenth Five-Yea r Pla n 10th FYP (2008-2013). These inc lud e the sub -sec tora l p la nning d oc um ents of the Ministry of Ag ric ulture a nd Forest on a ra b le a g ric ulture, hortic ulture, forestry a nd livestoc k. Ea c h of these volum es ha s a b ea ring on food sec urity issues a nd c ontrib utes to the Roya l Governm ent of Bhuta n’ s overa ll food sec urity p olic y ob jec tives a nd stra teg ies. Furtherm ore, food sec urity for the p eop le o f Bhuta n ha s long b een rec og nized a s a p rim a ry ob jec tive of the Roya l Governm ent of Bhuta n (RGOB) throug h b roa d b a sed m a c roec onom ic interventions foc using on sc a ling up p rod uc tion, inc rea sing a va ila b ility of nutritiona lly a d eq ua te a nd sa fe food , a nd im p roved a c c ess to a c q uire food .
Polic ies ha ve b een outlined w ith resp ec t to im p roving a va ila b ility, enha nc ing a c c essib ility a nd p rom oting nutrition. A foc us ha s b een p ut on im p roving food a va ila b ility, ta rg eting food g ra in self-suffic ienc y a nd inc rea sing d om estic p rod uc tion of ric e a nd other m a jor c erea ls a lthoug h there is still a need for d iversific a tion of p rod uc tion, inc lud ing inc rea sing veg eta b le a nd hortic ulture p rod uc tion.
As a n a lterna te to a c hieving food sec urity a nd rura l d evelop m ent, the Ministry of Ag ric ulture a nd Forests ha s la unc hed the One Geog Three Prod uc ts sm a ll b usiness c onc ep t, a s a via b le vehic le b y w hic h the low er inc om e g roup s in the ec onom y c a n g a in a c c ess to ec onom ic op p ortunities throug h inc rea sed p rod uc tion a nd im p roved m a rket linka g es. Suc h a stra teg y em p ha sizes a s o ne of the p otentia l a nd effec tive instrum ents in p rom oting rura l ec onom ic d evelop m ent resulting to a n effic ient a b so rp tion of sub sistenc e fa rm ers into the m a instrea m ec o nom y. Rec ent initia tives a re ta ken o n “ c om p a c t sig ning ” a s
p a rt of a na tiona l stra teg y to foc us on key c om m od ities w ith w ell d evelop ed sup p ly c ha ins reinforc ing institutio na l resp o nsib ilities a nd a c c ounta b ility.
The stra teg y to m eet the food sec urity c om m itm ent inc lud es im p lem enting p olic ies a nd p ra c tic es to:
x a llevia te p overty a nd im p rove p hysic a l a nd ec onom ic a c c ess of the p oorest a nd m ost vulnera b le to suffic ient, nutritiona lly a d eq ua te a nd sa fe fo o d ;
x ensure a g ric ultura l tra d e is c ond uc ive to fostering food sec urity for a ll, throug h a n op en m a rket-oriented w orld tra d e system ;
x p rom ote rura l d evelop m ent, inc lud ing susta ina b le a g ric ultura l, livesto c k a nd forestry p rod uc tion a nd m a na g em ent of na tura l resourc es;
x und erta ke a g ric ultura l resea rc h a nd d evelop m ent;
2.3 PovertyinBhutan
Poverty is a nother p red om ina nt fa c tor tha t influenc es food sec urity in Bhuta n.
Rura l p overty c ontinues to b e Bhuta n’ s m ost c ha lleng ing p rob lem a nd the m ost c ritic a l c onstra int on its ec onom ic d evelop m ent. Like elsew here in South Asia , p overty in Bhuta n is d isp rop ortiona tely c onc entra ted in rura l a rea s w ith 31 p erc ent p overty p reva lenc e in rura l villa g es (Sourc e : PAR, 2007). Rura l p overty trend s va ry c onsid era b ly b y d zong kha g s w ith Zhem g a ng , Ga sa , Pem a g ya tshel, Da g a na , a nd Sa m tse b eing the m ost vulnera b ility a s c om p a red to the other d zong kha g s. Over tim e, the p overty g a p b etw een rura l a nd urb a n is w id ening w ith a g eni-c oeffic ient ra tio of 0.3512. A m a jor rea son for this rising ineq ua lity is the g row ing d isp a rity in ec onom ic g row th a rising from a c onc entra tion of ec onom ic a c tivity in c erta in a rea s to the exc lusion of others. Less-fa vored a rea s a nd d isa d va nta g ed g roup s (w om en, ind ig enous p eop les) fa c e m a ny p rob lem s rela ted to p rod uc tion a nd m a rket a c c ess. An im p orta nt p rob lem is p ersona l im m ob ility, w hic h freq uently im p a irs resp onses to c ha ng ing inc entives. Rura l p oor in rem ote a rea s find a c c ess to m a rkets restric ted b y hig h tra nsa c tion c osts a nd b y their la c k of know led g e of m a rket m ec ha nism s, a c onseq uenc e of la c k of inform a tion a nd org a niza tion. The situa tion is further a ffec ted b y the struc ture of the m a rkets them selves, the lim ited m a rket interm ed ia ries a nd a sym m etric a l m a rket p ow er.
12The g ini-c oeffic ient is a m ea sure of the ineq ua lity of a d istrib ution, a va lue of 0 exp ressing tota l eq ua lity a nd a va lue of 1 m a xim a l ineq ua lity. It is m ost c om m only used m ea sure of ineq ua lity using the Lorenz c urve.
Typ ic a lly, rura l livelihood in Bhuta n is sup p orted b y fa rm ing w hic h is c ha ra c terized b y inherent interd ep end enc e a m ong forests, livestoc k a nd a g ric ultura l enterp rises. Therefore, enha nc em ent of rura l livelihood w ill involve im p rovem ent of ec onom ic returns from these enterp rises. Im p ro vem ent of ec onom ic va lue of fa rm enterp rise is to b e p ursued thro ug h intellig ent d evelop m ent, utiliza tion, a nd m a na g em ent of forest, a g ric ulture a nd livestoc k resourc es a s a step tow a rd s p overty a llevia tion.
Sinc e p overty in Bhuta n is a m a ssive p rob lem , its susta ined red uc tion w ill b e c ruc ia l in a c hieving the Millennium Develop m ent Goa l of ha lving p overty b y the yea r 2015. Poverty in this c ountry is b a sic a lly a rura l p rob lem , a s the overw helm ing m a jority of the p oor lives a nd w ork in rura l a rea s. Therefore, for rura l p overty red uc tion, key interventions a re enha nc ing a c c ess of the p oor to p rod uc tive resourc es (la nd , w a ter, a nd forests), tec hnolog y, fina nc ia l servic es, a nd m a rkets, a nd to streng then the c a p a c ity of the rura l p oor a nd their org a niza tions. Given the g eog ra p hic a l a nd soc ia l c onc entra tion of p overty a m ong c erta in a rea s a nd g roup s of rura l p oor, it is sug g ested tha t rura l p overty red uc tion efforts should foc us on the less-fa vored a rea s (rem ote up la nd s a nd m ounta ins, m a rg ina l a rea s a nd vulnera b le g eo g s) a nd on soc ia lly m a rg ina lized g roup s suc h a s w om en, a nd ind ig enous p eop les. While the c a uses of p overty in Bhuta n ha ve yet to b e thoroug hly stud ied , there is c onsensus tha t p overty is linked to low ec onom ic g row th a nd ina d eq ua te inc om e-g enera ting op p ortunities, p a rtic ula rly in rura l a rea s of Bhuta n.
III. TheEnergySectorinBhutan
Hyd rop ow er is the la rg est renew a b le energ y resourc e in Bhuta n w ith a n estim a ted know n p otentia l of 30,000 m eg a w a tt, b ut only a b out 1,480 m eg a w a tt ha s b een ha rvested a t the tim e of w riting . While hyd ro-p ow er is the la rg est id entified sourc e of elec tric ity in the c ountry, a t p resent it c a n only m eet a fra c tion of the c ountry's d em a nd for energ y. Bioenerg y in the form of fuel w ood is the b y fa r the la rg est sourc e of energ y in Bhuta n p rovid ing c lose to 60 p erc ent, w hile elec tric ity p rovid es c lose to 16 p erc ent. The rem a ining 24 p erc ent of the energ y resourc e is p rovid ed b y im p orted p etroleum p rod uc ts.
Dep a rtm ent of Energ y (DoE) und er the Ministry of Ec onom ic Affa irs (MoEA) is resp onsib le for the form ula tion of energ y a nd p ow er sec tor p olic y, p la ns, p rog ra m s a nd g uid elines a nd reg ula tions for hyd rop ow er a nd other sourc es of a lterna tive energ y. DoE a lso g overns a nd fa c ilita tes integ ra ted d evelop m ent of a susta ina b le a nd rob ust energ y sec tor tha t d rives the na tiona l ec onom y a nd m eets the d em a nd for q ua lity m od ern energ y servic es of the Bhuta nese soc iety.
The Dep a rtm ent of Tra d e (DoT) ha nd les im p ort of oil a nd other p etroleum
p rod uc ts w hile the Dep a rtm ent of Geolog y a nd Mines (DGM) m a na g es a nd c ontrols m ining of m inera ls a nd c oa l. Ministry of Ag ric ulture a nd Forests (MoAF) a nd Na tura l Resourc e Develop m ent Corp ora tion Lim ited (NRDCL) a re resp onsib le for the sup p ly of b iom a ss m a teria ls. Other institutio ns invo lved in the energ y sec tor inc lud e Bhuta n Pow er Corp ora tion (BPC), Druk Green Pow er Corp ora tion (DGPC) a nd Bhuta n Elec tric ity Authority (BEA).
3.1 NationalEnergyPolicy
It c a n b e seen a s b eing d erived from a n overa rc hing na tiona l vision a im ing to p rom ote soc io-ec onom ic d evelop m ent of the na tion throug h op tim um d evelop m ent of the energ y sec tor p a rtic ula rly the hyd ro-p ow er, g iving d ue reg a rd to the p rinc ip les of susta ina b ility, p rotec tion of environm ent a nd c onserva tion a nd ra tiona l use of na tura l reso urc es. An o vera rc hing na tio na l energ y p olic y is to p rovid e elec tric ity for a ll b y yea r 2020 a nd b e a b le to g enera te 10,000 m eg a w a tt of hyd roelec tric ity b y 2020. The g overnm ent p la ns to a c hieve this m issio n b y intro d uc ing reform s, fo rm ula ting a p p ro p ria te p o lic ies a nd reg ula tio ns, p rep a ring p la ns a nd p ro g ra m s a nd streng thening institutiona l c a p a c ity.
Currently w ithin the Dep a rtm ent of Energ y, sp ec ific a p p roved p olic ies on a lterna tive sourc es of renew a b le energ y w ith sp ec ific referenc e to b ioenerg y a re sc a nty exc ep t for Artic le 60.3(v) of the Elec tric ity Ac t 2001 tha t m a nd a tes the lic ensee to use renew a b le energ y resourc es a s p a rt of the soc ia l ob lig a tion.
In a d d ition, a n overa ll ob jec tive of the Energ y Sec tor Tenth Pla n rep o rt outlines the susta ina b le d evelop m ent a nd effic ient use of energ y resourc es for soc ioec onom ic d evelop m ent in the c ountry.
Within the energ y sec tor, p riorities a re foc used on the hyd rop ow er sec tor tha t ha s c ost lea d ership a nd na tura l a b und a nc e a d va nta g e. How ever, rea lizing the over d ep end enc e on a sing le sourc e of energ y from hyd rop ow er a lone ha s led d ec ision m a kers to exp lore d iversific a tion of the energ y b a se into other a lterna tive form s of energ y m ix suc h a s w ind , sola r, m ini hyd rop o w er, a nd b iom a ss. This ha s a lso led to c rea ting a new d ivision - Renew a b le Energ y Division w ithin the Dep a rtm ent of Energ y. A new p olic y form ula tion w ithin this d ivision hing es on tw o m a in them es na m ely, 1) energ y sec urity a nd 2) d iversific a tion of resourc es to a b roa d er b a se.
The c onc ep t of energ y sec urity is ta ken se riously in Bhuta n sinc e the c ountry ha s no know n reserves of fossil fuel a nd ha s no op tion b ut to im p ort oil to sa tisfy g row ing need s. While hyd rop ow er is a va ila b le to m eet c ountry’ s need s, there a re c onc erns a b out the shorta g e of elec tric ity in the lea n w inter sea son, esp ec ia lly to m eet the need s of the g row ing ind ustry. The energ y sec tor is a lso
vulnera b le to the im p a c ts of c lim a te c ha ng e, g iven tha t w a ter flow s a re likely to b e a ffec ted d ue to g lob a l w a rm ing .
As a n o ng oing initia tive, Renew a b le Energ y Division w ithin the Dep a rtm ent of Energ y w ith fina nc ia l sup p ort from the Asia n Develop m ent Ba nk (ADB) is c olla b ora ting w ith the Dep a rtm ent of Livestoc k (DoL) w ithin the Ministry of Ag ric ulture a nd Fo rest o n setting up 1,600 b iog a s p la nts a c ross the c ountry. Tw o p ilot p rojec ts a re a lrea d y und erta ken w ith one in Pa ro a nd the other in Thim p hu.
Sim ila rly, the Renew a b le Energ y Division w ith sup p ort from Glob a l Environm ent Fa c ility (GEF) is und erta king to d istrib ute 20,000 b iom a ss fuel effic ient c ooking stoves in a ll the 20 d zong kha g s w ithin the next three yea rs. The p rop osed p rojec t intend s to foc us on the p rom otion a nd use of b iom a ss energ y resourc es for the p rovision of energ y servic es in rura l a rea s. Overa ll, the Projec t is exp ec ted to result in a red uc tion in the a nnua l b iom a ss/ fuel w ood c onsum p tion in Bhuta n throug h the g ra d ua l utiliza tion of b iom a ss-b a sed energ y system s a nd effic ienc y im p rovem ents in the rura l a rea s of the c o untry a s influenc ed b y the Pro jec t.
3.2 EnergyDemandandSupplyScenario
Bhuta n's p er c a p ita energ y c onsum p tion is rela tively hig h c om p a red to other neig hb oring c ountries b ec a use its forest reso urc es p rovid e a n a b und a nt a nd rea d ily a va ila b le sourc e of energ y w ith d em a nd rising b y a b out 12 p erc ent ea c h yea r. Ac c ord ing to Interna tiona l Energ y Ag enc y (2005), p er c a p ita energ y c onsum p tion for Bhuta n ha s b een estim a ted a t 0.63 ton of oil eq uiva lent (TOE), w hile the p er c a p ita elec tric ity c onsum p tion of 1,174 kilow a tt hour p er yea r in South Asia (refer to Ta b le 5).
Ta b le 5. Com p a rison of p er c a p ita energ y c onsum p tion a nd elec tric ity sup p ly.
Country Per c a p ita energ y c onsum p tion (TOE/ c a p ita / yea r)
Per c a p ita elec tric ity sup p ly (kWh/ c a p ita / yea r)
Ba ng la d esh 0.16 140
Bhuta n 0.63 1,174
Ind ia 0.53 457
Mya nm a r 0.28 104
Nep a l 0.34 69
Pa kista n 0.49 425
Sri La nka 0.49 345
Wo rld 1.77 2,516
Sourc e: Interna tiona l Energ y Ag enc y (2005). Key w orld sta tistic s, exc ep t for Bhuta n d a ta .
A sec tora l energ y c onsum p tion und erta ken b y the Dep a rtm ent of Energ y, Ministry of Ec onom ic Affa irs in 2005 revea led resid entia l sec tor a s the hig hest energ y c onsum ing sec tor, a c c ounting fo r 48.7 p erc ent of the tota l energ y c onsum p tion, follow ed b y the ind ustria l sec tor c onsum ing 25 p erc ent o f the tota l
energ y a nd tra nsp ort sec tor a c c ounting for 14.3 p erc ent of the tota l energ y (Sourc e: Bhuta n Energ y Da ta Direc to r, 2005, fig . 2., p g . 86).
The p resent energ y d em a nd in Bhuta n is p rim a rily b a sed on renew a b le energ y sourc es. Firew ood is the m a in sourc e of p rim a ry energ y for Bhuta n, a nd it rep resents the la rg est slic e of energ y c onsum p tion w ith 1.3 tons p er c a p ita used for c ooking , sp a c e hea ting a nd for lig hting p urp oses in rem ote ina c c essib le a rea s (Sourc e: Interview w ith offic ia ls from Renew a b le Energ y Division, DoE). At a na tiona l level, a b o ut 75 p erc ent of the energ y c onsum p tion c onstitutes fuel w ood a nd d om ina ntly used in the rura l a rea s. The household sec tor c onsum es 95 p erc ent of the fuel w ood , the g overnm ent a nd c om m erc ia l entities use 3 p erc ent, a nd a g ric ulture a nd ind ustry use a b out 1 p erc ent ea c h (Bhuta n Energ y Da ta Direc tory, 2005, DoE). Sinc e Bhuta n ha s no know n reserves of fossil energ y resourc es suc h a s oil a nd na tura l g a s, a ll p etroleum p rod uc ts suc h a s kerosene, d iesel oil, p etrol, a nd liq uefied p rop a ne g a s a re im p orted for lig hting , tra nsp ort, c ooking a nd hea ting p urp oses. Fig ure 1 b elow g ives the d eta il of energ y sup p ly m ix of Bhuta n.
Fig ure 2. Bhuta n Energ y Sup p ly Mix 2005 (Sourc e: Bhuta n Energ y Da ta Direc tory 2005).
The c o untry sup p lied 231,871 Tons o f Oil Eq uiva lent (TOE), roug hly 724,597 m etric tons of fuel w ood in 2005, w hic h a c c ounted for 57.7 p erc ent of the tota l p rim a ry energ y sup p ly (Sourc e: Bhuta n Energ y Da ta Direc tor, 2005, Ch.5., fig . 1., p g . 85). In a d d ition to fuel w ood , other b iom a ss fuels tha t w ere used in sm a ll q ua ntities inc lud ing b riq uettes m a d e from sa w d ust c onstituted 204 tons or 65 TOE (UNDP, 2010, Susta ina b le Rura l Biom a ss Projec t Prop osa l und er the UNDP Environm enta l Fina nc ia l Servic es, p g .5).
3.2.1 Fuelwoodconsumptionbyindustrytype
Ta b le 6 p resents a n estim a te d 817 tons of fuel w ood c onsum ed for lem on g ra ss oil d istilla tion d uring 2005 p rod uc ing c lose to 10 tons of lem on g ra ss extra c t.
Sim ila rly, BPBL used a b o ut 10,000 m etric tons of fuel w ood in its b oilers for stea m g enera tion. BCCL a nd BFAL jointly c onsum ed 46,500 m etric tons of fuel w ood in 2005. Ca rb on m a nufa c turing c onsum ed 29,000 m etric tons w ith ha nd m a d e p a p er fa c to ries utilizing 8,000 m etric tons for the sa m e yea r.
Ta b le 6. Da ta on fuel w ood used in ind ustries.
Ind ustry Typ e Fuel w ood c onsum p tion in 2005(tons)
Lem on g ra ss 817
BPBL 10,000
BCCL/ BFAL 46,500
Ha nd m a d e p a p er 8000
Resin a nd turp entine 335
Ya rn d ying 91
Ca rb o n m a nufa c turing 29,000
Sourc e: Dep a rtm ent of Energ y, 2005 in Bhuta n Energ y Da ta Direc tor, 2005, p g . 48, Ta b le 6.
Note: Bhuta n Ca rb id e Chem ic a ls Ltd . (BCCL), Bhuta n Ferrosilic on a nd Alloys Ltd . Bhuta n Pa rtic le Boa rd Ltd . (BPBL).
3.2.2 EnergyTrade
In 2009, Bhuta n im p orted m otor sp irit inc lud ing a via tio n sp irit a m ounting to 20 m illion liters w orth Nu. 724 m illion. In the sa m e yea r 5.7 m illion liters of Kerosene (SK Oil) w a s im p orted w orth Nu. 49 m illion. While in the sa m e yea r, on the exp ort front, a c om b ined (Chukha , Kuric hu a nd Ta la ), 5,402 m eg a units (MU) of elec tric ity w orth Nu. 10, 090 m illion w a s exp orted to Ind ia .
3.2.3 FuelExtractedbyNaturalResourceDevelopmentCorporation
Na tura l Resourc e Develop m ent Corp ora tion (NRDCL) is the sta te ow ned c orp ora tion resp onsib le for extra c ting tim b er from a ssig ned forest m a na g em ent units (FMUs) in the c ountry. The Corp ora tion m a inta ins seven (7) a uc tion d ep ots a c ross the c ountry. Ta b le 7 b elow p resents the q ua ntity of timb er ha rvested from the la st three yea rs.
Ta b le 7. Ab stra c t of tim b er ha rvested b y NRDCL, 2008, 2009, 2010.
Reg ion 2008 2009 2010
Wa ng 283,106 264,980 130,389
Rinp ung 492,138 393,956 297,374
Zho ng g a r 231,089 263,715 202,071
Sha 310,010 365,819 347,670
Zhem g a ng 93,069 101,621 94,691
P/ Ling 231,375 117,706 52,884
Ja ka r 417,129 358,597 310,013
To ta l 2,057,916 1,866,394 1,435,092
Sourc e: NRDCL rep orts.
