Integrating the Value of Ecosystems & Biodiversity
Hydropower Development Strategies

(c) Hans Christian Andersen

 © Inga Vitola/Flickr

Country Overview

Nestled in the southern slopes of the Eastern Himalayas, Bhutan has rich and diverse natural resources and has been identified as a global biodiversity hotspot. However, the rapid pace of development and urbanization in Bhutan places significant strain on its natural resources and endangers their long-term viability. While the country’s natural legacy remains largely intact, the pressures of economic growth pose major threats to environmental resources.

Hydropower development is a priority for the Royal Government of Bhutan. Total installed capacity is currently 1,488 MW, and the Government plans to develop an additional capacity of 10,000 MW by 2020. The Government of India has already committed to importing 5,000 MW of this energy by 2020 (Sustainable Hydropower Development Policy of 2008). While this upscaling could increase government revenues, there is much discussion around the social and environmental impacts of large-scale hydropower development. There are also discussions centered around investing in medium- and small-scale hydropower plants, as well as other forms of renewable energy (Alternative Renewable Energy Policy of 2013).


Project Overview

TEEB Bhutan will inform the Sustainable Hydropower Development Policy of 2008 and the Alternative Renewable Energy Policy of 2013, both of which call for a diversification of Bhutan’s energy sources. The TEEB study assesses changes in ecosystem services provisioning under hydropower development, with a focus on watershed services.



There are three main technical components to the TEEB assessments in Bhutan. First, spatial models at the watershed level would be used to understand how land use changes due to hydropower development relate to environmental changes downstream. Secondly, spatial models, would also be used to understand how upstream land use changes impact the quality ofwater delivered to hydropower stations. Lastly, these spatial models would be linked to systems models which would include social and economic variables to ensure that relationships between hydropower development and socio-economic variables are also captured.


Ecosystem Services Focus

Any expansion in hydropower capacity will have direct and indirect impacts on the provisioning of ecosystem services and on biodiversity, affecting in turn the livelihoods of Bhutanese communities. During a scoping workshop, participants identified services that may be valued as part of TEEB Bhutan, including habitat, freshwater, aesthetics and spirituality, food, and raw materials provisioning services.



Provision of freshwater (quality and quantity): The study assesses changes in freshwater provisioning to downstream communities, both from upstream deforestation and from dam construction. Land use changes in surrounding areas (habitat conversion and land degradation) may also lead to changes in water availability, which could in turn affect hydropower operations.

materialProvision of food/fuel wood: Hydropower development may change land use in the surrounding areas. Both dam-related infrastructure and transmission infrastructure are likely to encroach on agricultural and forest land that provides food and livelihoods, such as areas used for the collection of non-timber forest products.

habitatHabitat for species: The study assesses changes in riverine ecosystems based on ecological requirements for base flow and fluvial transport. Endemism is high in Bhutan and endemic species in Bhutan are listed under the Forest Nature Conservation Act. All hydropower facilities are required to conduct an environmental impact assessment (EIA) which addresses the protection of endemic species. While the EIA process may minimize direct impacts on key species, land fragmentation may impact migratory species.


Special features of TEEB Bhutan

1.- Recommend policy instruments, including Payments for Ecosystems Services (PES), to ensure the regular and reliable flow of water and deliver benefits to local communities.
2.- Focus on policy recommendations and outputs that generate multiple, gender-sensitive co-benefits related to poverty alleviation and food security, consistent with ecosystem-based management goals.





National Focal Point

Ministry of Agriculture and Forests
Department of Forestand Park Services


Host Institution

Ugyen Wangchuck Institute for
Conservation and Environment (UWICE)

Other engaged actors: Druk Green Power Corporation, Department of Agriculture, Department of Renewable Energy, UNDP Bhutan, WWF Bhutan, Nature Recreation and Ecotourism Division, Forest Resources Management Division, National Environment Commission, Social Forestry and Extension Division, Ministry of Finance, and National Biodiversity Centre.


TEEB_Diamond_Blk_TypeTEEB focal point

Salman Hussain, TEEB Coordinator –
Kavita Sharma, Technical Expert, TEEB National Implementation



THIS project is funded by the EU

Latest Publications

Measuring what matters in agriculture and food systems: a synthesis

The Economics of Ecosystems and Biodiversity (TEEB) (2018). Measuring what matters in agriculture and food systems: a synthesis of the results and recommendations of TEEB for Agriculture and Food’s Scientific and Economic Foundations report. Geneva: UN Environment. Download report

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Scientific and Economic Foundations Report

The TEEBAgriFood ‘Scientific and Economic Foundations’ report addresses the core theoretical issues and controversies underpinning the evaluation of the nexus between the agri-food sector, biodiversity and ecosystem services and externalities including human health impacts from agriculture on a global scale. It argues the…

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TEEB Challenges and Responses

TEEB ‘s progress, challenges and responses towards mainstreaming the economics of nature. [ENG] [ESP]

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TEEB for Agriculture & Food Concept Note

February 2014- The Concept Note presents the case for and proposed outline content of a TEEB for Agriculture & Food study.

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Natural Capital Accounting and Water Quality: Commitments, Benefits, Needs and Progress

December 2013 – The briefing note outlines existing guidance and examples on water quality accounting and identifies the ongoing challenges related to the development of natural capital accounting and water quality accounting. Inspired by the growing global focus on natural capital accounting, the note identifies the ongoing challenges related to the development of natural capital accounting and water quality accounting, in order to encourage debate and commitment towards effective water and biodiversity policy.

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