Mountains offer ideal conditions for the development of hydropower, but the uneven distribution of benefits from project development can create friction and development disputes between communities and project developers. How can hydropower projects be designed and implemented in such a way that affected communities derive benefits beyond mere compensation and mitigation? Is there any evidence that benefits can be shared fairly and equitably with mountain communities? These questions are particularly important for Nepal, where despite immense hydropower potential only a fraction has been developed. The objective of this report is to document the various benefit-sharing practices in Nepal by developing a comprehensive typology of the benefit-sharing mechanisms that have evolved in the country over the last four decades and critically analysing each of these mechanisms in terms of what works, what doesn’t, and what can be done to fine-tune these mechanisms to better suit mountain communities.
