Bhutan: On the Path towards Sustainable Economic Development

Indo-Bhutan International Conference On Gross National Happiness Vol 02, October 2013 Pages: 105-112

International Journal of Business Intelligents (IJBI) 105 www.ijbui.com

Bhutan: On the Path towards Sustainable Economic Development

Mr. Aditya Banerjee1 , Mr. W. Jotin Singh2 1 Lecturer Gaeddu College of Business Studies, RUB 2 Lecturer Gaeddu College of Business Studies, RUB,

[email protected], [email protected] Abstract The world today is edging towards a precipice of crisis and disaster, pushed continually by unplanned development, and myopic vision of nations, and their leaders. The world requires moving towards sustainable development, which envisages the idea of meeting the world’s present needs, without compromising on the resources for future generations. Bhutan, a small Himalayan kingdom, is aspiring to achieve just that. This paper strives to highlight the uniqueness of Bhutan and discusses upon three of the vital tasks undertaken by Bhutan viz. promoting sustainable agriculture in the form of organic farming, sustainable energy production in the form of hydropower, and sustainable ecotourism as an important industry for the future, and in the process attempts to associate these factors to Bhutan’s ideology of ensuring happiness for all its citizen through a path of sustainable economic development. This paper attempts at sensitising the audience to the idea that Bhutan is marching ahead on the right path towards achieving sustainable economic development. Keywords: Sustainable Development, Gross National Happiness, Organic Farming, Hydropower, Tourism, Economy

Introduction The world of today is marked by large scale crises, which threaten to overwhelm entire nations and affect many other nations in the process. The world is also constantly facing the risk of increasing Global Warming, and other environmental issues that threaten humans, and other living beings with which they share this world. This all can be blamed upon unplanned development, driven, single-mindedly, by predominantly materialistic requirements. The fact is often ignored that, human actions have a long-bearing effect on this planet and its future. Sustainable development is probably the only way out for the world if humans want to save, the rapidly deteriorating biosphere of the Earth, and in the process, save them. Sustainable development is best described in the Brundtland Commissions Report of 1987, as, “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs1”. This description

1 What is Sustainable Development? Environmental, economic and social well-being for

talks about two things, first, is meeting the needs of present, and second, is not compromising the future generation’s ability to meet their own needs. This requires balancing conflicting issues, namely, economic growth, social wellbeing, and preservation of nature. These three factors are the three pillars of sustainable development. For example, rapidly developing countries like India and China have to focus on industrial development, cope with increasing urbanization and have to worry about feeding over billions of mouths. Clearly, none of these can be achieved wholesomely without compromising the natural environment. It is here that we look upon, the small mountainous kingdom of Bhutan. Bhutan is one such country that has managed to find a point of balance, among the three seemingly unbalancing forces mentioned above. Bhutan is poised to become a unique nation that will

today and tomorrow, International Institute for Sustainable Development, from http://www.iisd.org/sd/



guide the rest of the world in the future, on sustainable development. The Buddhist philosophy of ‘middle path’ and focus on Gross National Happiness, adopted by the government, and the people of Bhutan essentially promotes the preservation of nature along with fulfilling the basic requirements of its citizen. This is established by the fact that Bhutan has about 70.5% of its land area covered in forests (National Statistics Bureau, RGoB, 2010). In this paper, the authors strive to understand, a few of the many factors which lead Bhutan on its path towards sustainable development. The paper begins with the introduction, followed by a discussion of Bhutan’s guiding philosophy of GNH and then discusses organic farming, hydropower, and tourism in Bhutan, ending with a conclusion. This paper builds upon the works already done by various authors in this area, and incorporates their ideas and information already available from various sources to establish the author’s ideas.

Bhutan and its uniqueness When the rest of the world adopts Gross Domestic Product (GDP) and Gross National Product (GNP) as a measure of economic performance of a nation, Bhutan opts to follow a unique path of measuring economic wellbeing through Gross National Happiness (GNH). Where traditional methods of GDP and GNP tend to overleap the factors associated to the overall wellbeing of a person, focussing only upon materialistic achievements, GNH talks about happiness as a parameter of human welfare, and thus it not only includes the materialistic aspects but goes beyond to include the mental and spiritual eudemonia of a person. Though, Bhutan is the only country so far to adopt completely, the philosophy of GNH, the remainder of the world is fast waking up and taking note of this unique philosophy and we can expect GNH to become a norm rather than an exception in the future. Bhutan’s philosophy of GNH flows from its unique culture and society. A sparsely

populated country, Bhutan, has always focused on the preservation and promotion of culture. Bhutan’s unique vision of growth and development is that it stresses more on non-quantifiable objectives such as spiritual well-being and happiness, in addition to the conventional concept of development measured by quantified indicators. In this holistic approach, human happiness is linked with sustainability of the society. The main concern given to social sustainability is clear with the inclusion of "preservation and promotion of cultural and traditional values" as one of the objectives and strategies of GNH for the development of Bhutan2. Article 4 of the draft Constitution of the Kingdom of Bhutan provides for the state’s responsibility to preserve, protect and promote the Bhutanese cultural heritage, and through it, to enrich the cultural life of the people.3 This illustrates that Bhutan's philosophy of sustainable development is deep rooted in its culture, and requires that development must be, economically as well as socially, and ecologically sustainable. In the coming sections we will discuss a few of the long term strategies in some of the areas adopted by Bhutan, and try to understand how they are in agreement with sustainable economic development. Sustainable agriculture in Bhutan: Organic Farming The geography of Bhutan is distinguished by steep slopes and rugged mountains that are separated by valleys. Bhutan is one of the few countries in the world that has more than two thirds of its land area under forest cover. However, land under agricultural use in

2 Ensuring Social Sustainability: Can Bhutan's. (n.d.). Retrieved from http://www.bhutanstudies.org.bt/pubFiles/4.education.pdf

3Cultural Maintenance and Promotion: The Print Media’s Role in Providing Space for Knowledge and Discourse http://www.bhutanstudies.org.bt/pubFiles/M-6.pdf



Bhutan is very limited, at only 2.9% of the total land area; the agricultural land usage is depicted in Figure1 (National Statistics Bureau, RGoB, 2010). Organic farming is adopted by Bhutan officially as of 2007, and Bhutan plans to be “a country with environmentally clean food production systems and products” by the year 2020 (Ministry of Agriculture, RGoB). This policy is also known as National Framework for Organic Farming in Bhutan (NFOFB).

The thought behind opting for organic farming, is to cut down the use of chemicals such as pesticides and fertilizers, and in the process, ensure a reduction in the contamination of soil by these harmful chemicals, and also preserve soil fertility in the long run. Adopting bio-fertilizers and bio-pesticides cut down effectively, the use of external inputs in farming, maintains ecological balance, and makes farming sustainable in the long run. Crop such as Red rice, produced at a high altitude of Bhutan, is exported to USA and Europe to the extent of 100 tons of milled rice annually earning the producers a good profit4. Organic farming has the potential to alleviate poverty in the long 4 Duba, Sangay et. al.; Promoting Organic Farming In Bhutan: A Review Of Policy, Implementation And Constraints, Council for RNR Research of Bhutan, Ministry of Agriculture, RGoB, http://www.fao.org/sard/common/ecg/3120/en/BhutanEngNov08case.pdf

run as the high prices of organic produce can generate better revenues for the rural households. The Council for Renewable Natural Resources (RNR) Research of Bhutan is an agency which exists, with the purpose of carrying out various researches in the area of organic farming and gather data on the sustainability of the same. However, looking at the current scenario, where use of pesticide is on the rise, from 7.9 kg a hectare in 2007 to 26 kg a hectare in 2008 (source: Bhutan Observer, April 29th, 2011), Bhutan has a long way to go before organic farming becomes its principal source of agricultural income. At the same time, the high price of organic produce makes them to be unsuitable for large-scale domestic consumption. With high quantities of imports in vegetables (about Nu. 286 Million5 in 2011), and rice (about Nu. 1.1 Billion5 in 2011), and an increasing population, the strain on the agricultural land to produce more, is insistent. Bhutan, in the coming days, has to find a balance between sustainable organic farming, and self sufficiency in food production.

Sustainable Energy Production in Bhutan: Hydropower Bhutan has immense potential when it comes to hydropower. The aggregate capacity for hydropower generation in Bhutan is theoretically 26,760 MW (ADB, 2008), of this, approximately 6% is being used. Currently, there are five large hydroelectric power plants with the installed capacity of over 1500 MW, along with another 22 mini and micro hydroelectric power plants in Bhutan. In the year 2010, Bhutan produced a total of 6997.59 million units (MU) of electricity. By the year 2020, Bhutan plans to have an installed capacity of 10,000 MW (Press Information Bureau, GoI). The Royal Government of Bhutan has plans to provide

5 Self-sufficiency through commercialisation, Apr 18, 2012, http://www.kuenselonline.com



‘electricity to all’ by the year 20206. Bhutan is currently a net exporter of electricity with 76.5% of its produce being exported, the bulk of which is being exported to India. In the year 2010, electricity contributed to about 17.6% of Bhutan’s GDP making it the highest contributor so far (National Statistics Bureau, RGoB, 2010). With the development of industry, increasing urbanisation, and rural electrification, domestic consumption of electricity is on the rise (see figure 2 for trends in consumption and exports of electricity). However, with upcoming hydropower projects (see table 1), Bhutan will continue to be a major exporter of electricity. Because of the nature of hydropower projects, they are non-polluting and enduring, and are among the most sustainable and renewable sources of energy, thus making them compatible, with the idea of sustainability.

(Derived From: Statistical Yearbook of Bhutan, 2011)

6 Hydropower - Key to sustainable, socio-economic development of Bhutan, by, Mr. Sonam Tshering and Mr. Bharat Tamang, http://www.un.org/esa/sustdev/sdissues/energy/op/hydro_tsheringbhutan.pdf

Table 1: Upcoming Hydropower Projects in Bhutan7

River Basins

Name of the

Project

Installed

Capacity-MW

Mean annual Energy-GWH

Proposed for

construction in

Punatsangchhu

Punatsangchhu-I 2

1000 4770 2007-2012

Mangdechu

Mangdechu Hydel Project

670 2909 2009-2014

Punatsangchhu

Punatsangchhu-II 2

990 4667 2012-2017

Bumthangchhu

Zhemgang/Digala 5

670 3207 2015-2020

Bumthangchhu

Kheng/Shingkhar 4

570 2713 2017-2022

Drangmechhu

Kholongchhu (Gomkora)

485 2209 2020-2025

TOTAL 4385 20475 Sustainable Tourism in Bhutan Bhutan is a country blessed with unspoilt natural beauty, dense, untouched forests and a profusion of wildlife. Bhutan is yet to tap most of its potential when it comes to tourism; however, tourism as an industry is on the rise and Bhutan can develop tourism as a large scale, sustainable industry in the long run. As of 2010, Bhutan received a total of 27,195 tourists from across the world generating revenue of US$ 35.98 Million in foreign exchange which is an increase of 12.86% over 2009 (National Statistics Bureau, RGoB,

7 Hydropower - Key to sustainable, socio-economic development of Bhutan, by, Mr. Sonam Tshering and Mr. Bharat Tamang, http://www.un.org/esa/sustdev/sdissues/energy/op/hydro_tsheringbhutan.pdf



2010). The breakup of tourists from different continents is depicted in figure 3 below:

The 10th Five Year Plan of Bhutan aims at improving tourism industry by, promoting Bhutan as an exotic-tourist destination and improving the quality of services, developing human resource, increasing community participation in tourism, and developing infrastructure among various other measures. With the goal set for the tourism industry to contribute around 9% to the national income, and provide 40% more employment over the 2000 people already employed in year 2004 (10th Five Year Plan, 2008-13), Bhutan is clearly stressing on the need for developing tourism as an ecologically sustainable avenue for economic progress.

Bhutan: Towards Sustainable Economic Development With 60.2% of the projected population of 708,265 of Bhutan employed in the primary sector, it is the largest provider of income to the population as of year 2011. However, the contribution of the agricultural sector in the GDP of Bhutan is limited to the extent of 16.8% as of 2010. The five largest contributors to the GDP of Bhutan are depicted in figure 4.

From the above, it is clear that agriculture and industry contributed to more than one third of Bhutan’s GDP of Nu. 72,477.6 million in 2010. Bhutan has vast untapped potential in mining with deposits of limestone, coal, graphite, gypsum, slate and dolomite. However, mining industry is still at a nascent stage, contributing to about 2.2% of GDP in 2010. Bhutan, however, has many small scale and cottage industries making up for the largest number of industrial licenseholders (National Statistics Bureau, RGoB, 2010). For a country which arrived in the global arena much late, Bhutan should take the approach of careful planning and formulation of economic policies. Being an economy in its growth phase, Bhutan faces many challenges, the ongoing foreign exchange crisis (of Indian Rupees) can be stated as one of them. The crisis has its roots in increased lending by commercial banks in the country, which, ensued a strong surge in consumption and imports that amounted to about Nu. 39.084 Billion, of which Nu. 29.33 Billion came from its neighbouring country India in 2010 (National Statistics Bureau, RGoB, 2010). The total imports in 2010 rose to the extent of



52.37% over imports in 2009. Such crisis can be controlled by achieving self reliance in the production of necessary commodities, like rice and other foodgrains, further improving public transportation system, limiting imports, and controlling the availability of credit8. Bhutan still has many other challenges, 23.2% of the population was below the national poverty line in 2007 which is expected to fall to 20% or less by 2015 (UNDP, 2010). Bhutan has to centre upon alleviating rural poverty the most, which, is around 30.9%, and in some areas as high as 52.9% as per a UNDP report in 2009-10. No wonder, the 10th Five Year Plan (2008-2013), of Bhutan states its main objective as poverty reduction (Preface, 10th Five Year Plan, 2008-13). Bhutan however, has been progressing remarkably, in achievement of the Millennium Development Goals (MDGs), with its GDP growth rate of 6% and per capita income of $1,800 in 2008 (UNDP, 2010). Following a path of sustainable development in the field of agriculture, hydropower, and tourism, the country is rightfully moving toward a direction of achieving economic growth and happiness for its citizen. Conclusion This paper limits itself to the study of only a few of the domains where Bhutan endeavors to adopt sustainable development, namely agriculture, power, and tourism. What this paper could not reflect upon, are many other areas where Bhutan has adequate opportunities of developing, while staying on the path to sustainable development. On his visit to Gaeddu College of Business Studies, the Prime Minister of Bhutan, Honorable, Jigme Y. Thinley, hinted at the 8 Bhutan economy feels the rupee pinch, By, Pushkar Chhetri, March 10, 2012, The Bhutan Observer, extracted from http://www.bhutanobserver.bt/bhutan-economy-feels-rupee-pinch/

possibility that Bhutan can cater to the world in many other ways in the future, with possibilities ranging from, IT and IT enabled services (ITES) which is now a reality with the upcoming IT hub at Thimphu, providing quality healthcare services and, becoming a centre for providing quality education in the future, among others. All of these can garner significant revenues for the country while also being ecologically sustainable. Bhutan also has the potential to develop other industries and mining in the future, though, it should be cautious, so that it doesn’t upset its natural environment in the process. As for the domains discussed in this paper, Bhutan still has the potential to grow much more. What remains to be seen is how Bhutan contrives to balance between development and sustainability. Bhutan’s foresightful leaders have already set the nation on the right path, though, roadblocks are inevitable for any nation trying to achieve a goal of sustainable development. However, with its citizen being harmonic with, and supportive towards the idea of GNH and sustainable development, it will not be long before Bhutan comes to realize the fruits of its efforts. Abbreviations: RGoB: Royal Government of Bhutan UNDP: United Nations Development Programme ADB: Asian Development Bank GoI: Government of India References Research & Scholarly Articles & Papers [1] Duba, Sangay et. al. (2008). Promoting Organic Farming In Bhutan: A Review Of Policy, Implementation And Constraints. August. Retrieved 6th May, 2012 from http://www.fao.org/sard/common/ecg/3120/en/BhutanEngNov08case.pdf, [2] Thinley, Dorji. Cultural Maintenance and Promotion: The Print Media’s Role in Providing Space for Knowledge and Discourse. P70-106. Retrieved 6th May, 2012



fromhttp://www.bhutanstudies.org.bt/pubFiles/M-6.pdf [3] Thinley, J. Y. (1999a). Gross National Happiness and Human Development: Searching for Common Ground. Retrieved 6th May, 2012 from http://www.bhutanstudies.org.bt/publications/gnh/gnh.htm [4]Thinley, J. Y. (1999b). Values and Development: "Gross National Happiness". Retrieved 6th May, 2012 from http://www.bhutanstudies.org.bt/publications/gnh/gnh.htm [5] Tobgay, Sonam (2005). Agriculture Diversification in Bhutan. Ministry of Agriculture. November. Retrieved 6th May, 2012 from http://www.moaf.gov.bt/moa/downloads/downloadFiles/MoADownload4ig6471vj.pdf, [6] Tshering, Sonam & Tamang, Bharat. Hydropower - Key to sustainable, socio-economic development of Bhutan. Retrieved 6th May, 2012 from http://www.un.org/esa/sustdev/sdissues/energy/op/hydro_tsheringbhutan.pdf [7] Wangyal, T. (2001). Ensuring Social Sustainability: Can Bhutan's Education System Ensure Intergenerational Transmission of Values? The Journal of Bhutan Studies, 3 (1), 106-131. Retrieved 6th May, 2012 from http://mtnforum.net/sites/default/files/pub/6472.pdf News Articles [1]Pelden, Sonam (2012). Self-sufficiency through commercialisation. 18th April. Retrieved 6th May, 2012 from http://www.kuenselonline.com/2011/?p=30114, [2]Wangchuk, Jigme (2011). The Myth and Reality of Organic Farming, April 29, Bhutan [3]Observer Newspaper. Retrieved 6th May, 2012 from http://www.bhutanobserver.bt/myth reality-organic-farming/; [4]Yezer, Pema. Going Organic. Bhutantimes. Retrieved 6th May, 2012 fromhttp://www.bhutantimes.bt/index.php?option=com_content&task=view&id=1815&Itemid=89,

Other Publications [1]Agriculture Statistics, 2009 Volume I and Volume II. Department of Agriculture, Ministry of Agriculture & Forests, Royal government of Bhutan. Retrieved 6th May, 2012 from http://www.moaf.gov.bt/moaf/?p=33&wpfb_cat=5, [2]A Guide to Organic Agriculture in Bhutan. National Organic Programme. Department of Agriculture. Ministry of Agriculture, Royal Government of Bhutan. Retrieved 6th May, 2012 from http://www.moa.gov.bt/moa/downloads/downloadFiles/MoADownload8aa2349am.pdf, [3]Bhutan at a glance. 29-03-2012. Retrieved 6th May, 2012 from http://devdata.worldbank.org/AAG/btn_aag.pdf [4]BHUTAN, Country Strategy Paper, 2007-2013. Retrieved 6th May, 2012 from http://eeas.europa.eu/bhutan/csp/07_13_en.pdf [5]Bhutan: Priorities for Agriculture and Rural Development. Retrieved 6th May, 2012 fromhttp://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/EXTSAREGTOPAGRI/0,,contentMDK:20753248~menuPK:2007425~pagePK:34004173~piPK:34003707~theSitePK:452766,00.html [6]India to develop 10,000MW Hydro Power in Bhutan, Press Information Bureau, Government of India. Nov 25th, 2011, Retrieved 6th May, 2012 from http://pib.nic.in/newsite/erelease.aspx?relid=77616, [7]Proposed Loans, Asian Development Fund Grant, Technical Assistance Grant, and Administration of Grant, Bhutan: Green Power Development Project. Asian Development Bank. Project Number: 37399. October 2008. Retrieved 6th May, 2012 from http://www2.adb.org/Documents/RRPs/BHU/37399-BHU-RRP.pdf, [8]Statistical Yearbook of Bhutan, 2011. National Statistics Bureau, Royal Government of Bhutan. 2011 Retrieved 5th May, 2012 from http://www.nsb.gov.bt/pub/syb/syb2011.pdf



[9]Sustainable Development in Bhutan, The Middle Path . Chapter1 .National Environment Strategy. P17-25. Retrieved 5th May, 2012 fromhttp://www.searo.who.int/LinkFiles/National_Environment_&_Health_Action_Plan_chapter1.pdf,

[10]UNDP Bhutan. Annual Report, 2010. Retrieved 5th May, 2012 from http://www.undp.org.bt/assets/files/publication/UNDP%20Bhutan%20Report.2010.pdf