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    • Abstract: StrategyReportDEVELOPMENT AND GROWTH INNORTHEAST INDIAThe Natural Resources,Water, andEnvironment Nexus Report No. 36397-INDevelopment and Growth inNortheast IndiaThe Natural Resources, Water,and Environment Nexus

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The Natural Resources,
Water, and
Environment Nexus
Report No. 36397-IN
Development and Growth in
Northeast India
The Natural Resources, Water,
and Environment Nexus
Strategy Report
June 2007
South Asia Region
Sustainable Development Department
Environment & Water Resource Management Unit
Document of the World Bank
© 2007 The International Bank for Reconstruction and Development/ The World Bank
1818 H Street, NW
Washington, DC 20433
First published, 2007
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Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Acronyms and abbreviations
CDM Clean Development Mechanism
CFANE Community Forestry Alliance for Northeast India
CFM Community Forest Management
GEF Global Environment Facility
IFAD International Fund for Agricultural Development
IWAI Inland Waterways Authority of India
JFM Joint Forest Management
MoDONER Ministry of Development of North Eastern Region
NW-2 National Waterway 2
NSDP Net State Domestic Product
Exchange rate
US$ 1 = Indian Rs. 46.1 (8 September 2006)
Vice President - Praful Patel
Country Director - Isabel M. Guerrero
Sector Director - Constance Bernard
Task Leader - Karin Kemper
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Acronyms and abbreviations iii
Acknowledgments x
Executive summary xi
I. Introduction xiii
II. Objective, process, audience, and scope of the study xiii
III. The Northeastern Region: Water and forest resources xv
IV. Institutional environment xvi
V. Key findings of the study xvi
VI. Challenges for the Northeastern Region xxv
VII. Recommendations for priority activities xxviii
VIII. Conclusions xxix
1. Introduction and background 1
The natural resources, water, and environment nexus in the Northeast 3
Water 5
Forests 6
Institutions for resource development and management in the Northeast 7
2. Objectives of the study 9
3. Process, scope, and audience 11
4. Analytical framework 13
Development economics 15
Institutional economics 16
Water and natural resource management approaches 18
5. Path dependence in the Northeast: Why history matters 21
The history of the Northeastern Region: An exercise in historical accidents? 23
Overview of current situation 24
The economy of the Northeastern Region 25
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
6. Study findings: Water 31
Water resources in the Northeastern Region 33
Flood and erosion management 42
Hydropower 55
Inland water transport 66
7. Study findings: Forests 73
Forests and biodiversity in the Northeastern Region 75
Community forestry for sustainable development 76
Carbon finance opportunities for natural resources in Northeastern India 93
8. Towards an integrated vision of water resources and forests in
the Northeastern Region 99
Challenges facing the Northeastern Region 101
Priority activities 104
Institutional reforms and expected outcomes 104
9. Conclusions 109
Annex 1. Background Papers for the study 113
Annex 2. Program for stakeholder consultations and dissemination 114
Bibliography 116
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Table A. Priority activities at regional and local levels in the Northeast xxx
Table 1. States of the Northeast: Selected population and natural resource indicators 4
Table 2. Summary of water resources in the Barak and Brahmaputra basins and Northeast India 34
Table 3. Flood damage in the Northeastern Region 43
Table 4. Flood damage trends in the Brahmaputra valley of Assam 46
Table 5. Justifiable capital expenditure for corresponding percent reduction in
average annual flood damage 47
Table 6. Central flood assistance sought and received and area affected 48
Table 7. Northeastern Region flood management infrastructure by state 49
Table 8. 2001-2012 plan for electric power generation 56
Table 9. Status of hydroelectric development (as on 1 July, 2005) 57
Table 10. Status of major hydro development in the Northeastern Region, 2005 58
Table 11. Status of small hydro development in the Northeastern Region (as of 1999) 59
Table 12. Roads in the Northeast 66
Table 13. Transportation potential of major waterways in the Northeast 68
Table 14. Major identified cargo routes on NW-2 69
Table 15. Existing ferry services on NW-2 69
Table 16. Waterways not part of NW-2 with high development potential 70
Table 17. Administrative classification of forest cover in Northeastern India 79
Table 18. Population change in the Northeastern Region 81
Table 19. Per capita availability of forestland 82
Table 20. Per capita grain production in Northeastern states, 1972 and 1991 82
Table 21. Forest area and shifting cultivation in the Northeastern Region 83
Table 22. Major forest management contexts in Northeastern India 86
Table 23. Comparison of community forest management and joint forest
management systems in Northeast India 87
Table 24. Agricultural net present benefits 96
Table 25. Forest conversion net present value 96
Table 26. Priority activities at regional and local levels in the Northeast 105
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Figure 1. Interlinkage of topics addressed in the study 7
Figure 2. Analytical framework and link with outputs 15
Figure 3. Summary of interactions defining institutional framework 17
Figure 4a. India: Per capita domestic product by state 25
Figure 4b. India: Percentage of population below poverty line by state 26
Figure 5. India: Mineral and forest share and per capita income by state 28
Figure 6. Finance Commission ranking of infrastructure 29
Figure 7a. Flood-affected crop area as percentage of total cropped area 45
Figure 7b. Flood-affected area as percentage of total area 45
Figure 8. Cargo transported on NW-2, 1999-2005 68
Figure 9. Forest cover over time, northeastern India 94
Figure 10. Percentage annual change in forest cover between 1987 and 2001 95
Figure 11. Land available for forest conversion in northeast India 96
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Box 1. Historical development of organizations dealing with Northeast rivers 38
Box 2. Functions of various agencies under Ministry of Water Resources 38
Box 3. The Brahmaputra Board 40
Box 4. The Brahmaputra River 44
Box 5. Land use trends in Northeast India 84
Box 6. Loktak Lake catchment conservation initiative in Tokpa Kabui village 89
Box 7. Moving away from jhum: Iskut growers in Sihphir village, Mizoram 91
Box 8. Kyoto Protocol and greenhouse gases 93
Box 9. Forest definition 95
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
This report is the product of a collaborative effort between the World Bank and several ministries and agencies of
the Government of India; and the state governments of Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, and Tripura under the overall leadership of the Government of India, Ministry of
Development of North Eastern Region (MoDONER). Special gratitude is extended to Ms. Sushma Singh,
Secretary, MoDONER; Ms. Gauri Chatterji, Secretary, Water Resources; Mr. D.S. Poonia, Joint Secretary,
MoDONER; Mr. R.P. Singh, Director, Department of Economic Affairs, Ministry of Finance; and Mr. S. Mittra,
Director, MoDONER, for their support and guidance throughout the study. The team would especially like to thank
the eight state governments that produced reports of the stakeholder meetings held in each state as an input to
the study and the Central Water Commission and Ministry of Water Resources for their detailed written comments.
Contributions by numerous participants in several meetings and workshops held at various stages of the study,
both in Delhi and in the Northeastern Region, are gratefully acknowledged.
The World Bank team was led by Karin Kemper and included Tapas Paul, Richard Damania, Sanjay Pahuja,
Siet Meijer, Sudip Mozumder, Judith Plummer, Grant Milne, Herb Wiebe, Bela Varma, Sadaf Alam, Vandana Mehra,
Kiran Negi, Catherine Tovey and David Meerbach. Background Papers were produced by B.G. Verghese,
Sanjoy Hazarika, Syed Naqvi, Chandan Mahanta, Dulal Goswami, Lian Chawii, V.V.R.K. Rao, Donald Blackmore,
Mark Poffenberger, M.K. Sharma, Richard Damania, Siet Meijer, Sanjay Pahuja, Inland Waterways Authority of
India (IWAI), and WWF-India. Thanks are due to John Dawson for his excellent editing.
Peer reviewers were Guy Alaerts, Peter Jipp, Salman Zaheer, Claudia Sadoff, and Barry Trembath of the World
Bank. Helpful comments and contributions were received from World Bank staff representing several sectors and
regions, including Barbara Miller, Sumir Lal, George Tharakan, Neeraj Prasad, and Martien van Nieuwkoop. Special
thanks are due to John Briscoe for his guidance, especially in the early stages of this activity. Jeffrey Racki,
former Acting Sector Director, South Asia Environment and Social Development Unit; Michael Carter, former
Country Director for India; Fayez Omar, Senior Manager, India program, and Rachid Benmessaoud, Operations
Advisor, India program, guided the overall effort.
The team gratefully recognizes the collaboration of the many people who assisted in preparation of this report.
The opinions presented here and any errors are the sole responsibility of the authors and should not be attributed
to the individuals or institutions acknowledged above.
Executive summary
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
I. Introduction II. Objective, process, audience,
and scope of the study
India’s Northeastern Region consists of eight states –
Arunachal Pradesh, Assam, Manipur, Meghalaya, The overall objective of the study, Development and
Mizoram, Nagaland, Sikkim, and Tripura – occupying Growth in Northeast India: The Natural Resources,
262,179 square kilometers and with a population of Water, and Environment Nexus, is to develop a broad
39 million (2001 census). Most accounts and vision for water and natural resource development and
discussions about the Northeast point out its diversity management leading to sustainable and equitable
in people, plants, and animal life. The region is rich in economic development and growth in the region. It also
natural resources, especially water and forests, and seeks to identify options for harmonizing interventions
there is a feeling that it could potentially be one of the that are being carried out by agencies in the area of
wealthiest regions of India. However, several indicators water and natural resource development and
reveal a different picture: in spite of some progress in a management. The specific objectives are:
few of the northeastern states (for example, Mizoram),
overall growth rates over the past years have remained • To identify critical institutional reforms necessary
low, poverty incidence (especially in Assam) is high, for the more effective development and
there are still a number of areas subject to continued management of the region’s water and natural
violence, and there is an abundance of reports resources;
documenting natural resource degradation, depleting
the very assets that are usually highlighted as offering • To develop an analytical framework that can help
the greatest potential for growth and development in identify and prioritize high-return investments in
the Northeastern Region. Thus, in recent years, the physical and institutional infrastructure based on an
region has missed out on the economic growth inclusive and participatory approach; and
acceleration witnessed in much of India. The region’s
• To create a platform for interaction of the relevant
agriculture sector has been declining, and
stakeholders, ultimately leading to desired
diversification into services and manufacturing has
institutional reforms.
been inadequate.
This report has come about at the request of the The process followed in developing the study was
Indian Government for the World Bank to focus more multifaceted. It consisted of a range of stakeholder
of its attention on the Northeastern Region in order to workshops involving state and central government
support poverty reduction and development in the officials, experts, and representatives of
region. Accordingly, the Ministry of Development of nongovernmental organizations (NGOs), carried out in
North Eastern Region (MoDONER) and the Bank 2005 in both Delhi and in Guwahati. In parallel, and
devised a study that would provide a broad, regionwide based on the recommendations received during those
view. This report synthesizes the study, which focuses interactions, a total of 14 Background Papers covering
on water and forests, two key interconnected a wide range of topics related to water and natural
resources of the region, and the institutional framework resources in the Northeastern Region were
that deals with their management. These resources are commissioned (see Annex 1) from knowledgeable
abundant, renewable, and linked to significant experts and institutions. A first draft report was
development and growth options. produced based on all of the above and discussed at
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
state-level workshops across the region. The above It, therefore, needs to be pointed out that although this
documents have also been available on MoDONER’s study draws on all of the above sources, it is not
website at www.mdoner.gov.in. This final document comprehensive, and can only make a contribution to
incorporates the feedback received during the the ongoing development discussions in the region.
workshop held in New Delhi in June 2006 as well as Notably, the scope of the study with its focus on water
the comments received on the final draft from and forests was defined based on initial discussions
MoDONER, the Ministry of Water Resources, and from with a variety of stakeholders and on the important role
various northeastern state governments. It specifically that these natural resources could play in furthering
highlights the need to ensure that any developmental development in the Northeastern Region. The study, by
activities benefit local people in the Northeastern design, thus deals with the larger systemic issues and
Region, an issue that was consistently raised in all
does not deal with services (such as water supply) or
stakeholder consultations.
with environmental pollution issues, which are also
The audience for this report are the central and state important but could not be addressed at this stage.
government agencies concerned with the Northeastern It also needs to be pointed out that the significant data
Region and the numerous nongovernmental limitations, both on the water resources and the forest
organizations, donor and financing agencies, and biodiversity sides, have restricted some of the
corporations, academics, and any other engaged analysis. As outlined in the report, filling the knowledge
citizens of the region. gaps and increasing public accessibility to available
knowledge and data would be an important next step
The Northeastern Region is socially, culturally, and for the Northeastern Region in strengthening its basis
politically very complex and contains great for inclusive and participatory approaches to regional
environmental and natural resource diversity. growth and development.
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
III. The Northeastern Region: endemism, and is an important subcenter for the origin
Water and forest resources of cultivated crops. The region’s lowland and montane
moist to wet tropical evergreen forests are considered
The Northeastern Region has abundant water to be the northernmost limit of true tropical rain forests
resources. One-third of India’s runoff flows from the in the world. Northeast India probably supports the
Northeast through the Brahmaputra and Barak rivers. highest bird diversity in the East, with about 836 of the
These rivers constitute India’s National Waterway 2 1,200 bird species known from the Indian subcontinent.
(NW-2) and their basins contain seasonally flooded The richness of the region’s avifauna largely reflects
wetlands that sustain a broad range of biodiversity. the diversity of habitats associated with a wide
There is an estimated 60,000 megawatts of altitudinal range. Assam hosts the entire known world
economically viable hydropower potential, of which population of the pygmy hog, 75 percent of the world
only about 2004 megawatts is developed or under population of the Indian rhinoceros and wild water
construction. It is also clear that the abundant surface buffalo, and a sizable population of Asian elephants
water resource imposes severe distress and costs on and tigers.
the region through frequent flooding and erosive
Accordingly, the biodiversity of the Northeastern
processes and that this needs to be managed to
Region is of major importance globally and of great
improve economic development. The region also has a
significance locally for citizens’ livelihoods. In much of
substantial unutilized groundwater resource.
the literature about the region, its biodiversity is
The Northeastern Region can be physiographically highlighted as one of its great assets and as an
divided into the eastern Himalayas, the northeastern underlying resource for development. Suggestions
hills, and the Brahmaputra and Barak valley plains. abound with regard to improving livelihoods through
At the confluence of the Indo-Malayan and Palearctic developing forest produce, cultivation and export of
biogeographical realms, the region contains a profusion exotic fruits and plants, harnessing of medicinal
of habitats characterized by diverse biota with a high plants, and so on. Yet, the review undertaken for this
level of endemism. The region is also home to more study shows that there are still enormous knowledge
than 200 out of 450 of India’s tribes, the culture and gaps with regard not only to the biodiversity of the
customs of which have an important role in providing region, but also the potential sustainable uses of much
lessons for biodiversity conservation. of the flora. Despite the region’s recognition as a
biodiversity hotspot, biodiversity information is
The immense biodiversity of the Northeastern Region generally restricted to species inventories for specific
has made it a priority area for investment by the locations, mainly the protected areas. Important data
leading conservation agencies of the world. For such as distributional patterns and population
example, the World Wide Fund for Nature (WWF) has dynamics are unavailable, except for very few species.
identified the entire eastern Himalaya as a priority Documentation and systematic analysis of the region’s
Global 2000 Ecoregion; and Conservation International biodiversity is vital to understand correlations between
has subsumed its eastern Himalaya “hotspot” into a richness and distributional patterns, relationships
wider Indo-Burma hotspot, which now includes all the between landscape variables and species composition,
eight states of the Northeast. The region is one of the impacts of habitat fragmentation, and the role of
endemic bird areas defined by Birdlife International, biological corridors. All of these are vital for
harbors a World Conservation Union (IUCN) center of determining management strategies for the biodiversity
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
resource and options on how to make use of it in a certain institutional elements must be present. These
culturally appropriate manner for the sustainable include clear institutional arrangements; participatory
improvement of people’s lives. decisionmaking by the different levels of stakeholders
(ranging from state governments to water users and
Thus, appropriate water and forest development and forest-dependent producers); clear and transparent
management could provide benefits in the form of rules and regulations; and equitable enforcement of
hydropower, agriculture, inland water transport, those rules and regulations. In addition, an integrated
biodiversity conservation, reduced flood damage and management system is required with regard to river
erosion, longer dam-reservoir life, forestry, and basins and natural resources.
ecotourism. These benefits, which would accrue at
both regional and local levels, would, in turn, directly Little of the above exists in the Northeast today.
and indirectly increase incomes and enhance Certain key themes keep emerging in all sectors,
economic growth and poverty reduction. notably (a) the central government has taken on a
large role, partially due to weak state capacity,
Such accelerated broad-based development of the for instance in areas such as water resources;
region could be achieved through a resource-led (b) institutional arrangements are very complex but at
strategy within an institutional environment that has the same time incomplete; (c) the natural resource
been appropriately reformed and strengthened. knowledge base is incomplete and partly inaccessible;
Institutions must be able to create and manage an and (d) local stakeholders question current approaches
environment of incentives and disincentives that and their benefits to local populations. The region is
encourage initiatives consistent with sound policy plagued by large fiscal deficits and poor service
objectives, and discourage initiatives that channel quality, including poor infrastructure provision, despite
benefits to a small group while externalizing social and generous transfers from the central government.
environmental costs to the broader community. Institutions continue to overfocus on top-down
accountability. Public sector goals are defined in terms
Low connectivity with the rest of India is perhaps the
of readily observed and assessed physical outputs
greatest economic impediment in the region. Road
rather than in terms of desired functional outcomes:
access cannot be much improved, but improved inland typical criteria are embankment length constructed
water transport would benefit some areas. Another rather than flood protection provided, and number of
difficulty is the civil unrest associated with conflicts schools built rather than education quality. But physical
between and within some of the region’s states. outputs are meaningful only insofar as they achieve
In general, development and growth can help reduce desired functional outcomes; and frequently, outputs
conflict by enlarging the economic pie, but a risk of and outcomes are not well correlated.
resource-led development is the creation of localized
assets that then become foci of intensified conflict A further challenge is the need for an integrated
between potential winners and losers. This report approach that increases cooperation at and between
highlights the need to manage this risk. regional and local levels. This involves developing a
shared vision of costs and benefits through strategic
planning and infrastructure interventions that improve
IV. Institutional environment the lives and livelihoods of communities and citizens.
This report outlines an analytical framework drawing on
institutional, resource, and development economics, V. Key findings of the study
and on water and other natural resource management
approaches. Broadly, these imply that for a country or One of the key messages of the study focuses on the
region to benefit from its natural resource wealth, major benefits that regionwide investments can
Development and Growth in Northeast India: The Natural Resources, Water, and Environment Nexus – STRATEGY REPORT
provide for the Northeast. This includes not only the need to reduce leakage and to increase
investments in “hardware” (for example, construction of accountability in order to fully reap the benefits of the
infrastructure), but also regional “soft” investments, large financial investments that are made annually in
such as coordinated research and information-sharing. the Northeast. It is thus clear that envisaged benefits
Major benefits can be derived from hydropower; inland from investments may not materialize if the
water transport; joint water resource management, institutional framework is not addressed upfront.
including flood and erosion management; biodiversity
research and cataloging; and joint creation of Each sector covered in the present study has its own
ecotourism approaches and related infrastructure. institutional framework and its own strengths and
Cooperation across states can be designed to ensure weaknesses, and the solutions for each sector will be
that these benefits are equitably distributed among different. However, there are also common themes
all stakeholders. across the sectors, indicating the need for more
transparency and involvement of stakeholders at the
At the same time as these cross-regional investments different levels; redesign of organizations (for example,
are elaborated and implemented, it is also of major the Brahmaputra Board and the Forest Service) and
importance that benefits are created at local levels. their internal incentives to provide better services;
This type of activity would focus, for instance, on focus on investments reaching local stakeholders (for
community-based forest management, built on local example, for flood warning and management systems
traditions; creation of access to local markets for or for improved livelihoods from forest produce); and
produce; enhancement of local inland water transport changes in the way budget allocations are made.
options; watershed management and local erosion
control; local adaptation to floods; and management of This type of change requires a specific in-depth
beels (seasonally flooded wetlands). analysis by sector. This study has

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