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Hydropower development is the only development activity that yields multiple benefits and, in many cases, can be an effective agent for poverty alleviation. Apart from being a source of renewable and clean energy, to stabilize the supply of electricity, it helps provide year round irrigation resulting in the increase in the cropping intensity and changing cropping pattern, and it reduces both deforestation and greenhouse gas (GHG) emissions. Nepal has adopted a policy of Integrated Water Resources Management (IWRM), by which hydropower projects are developed in conjunction with irrigation, flood control, water supply and navigation components whenever feasible. As an agriculture dependent country, Nepal should maximize the irrigation benefit, by providing year round irrigation through storage projects developed for peak energy generation. Nepal has planned to provide year round irrigation to 67% of the total irrigated area by 2027. Electricity from hydropower projects currently contributes only 1% of energy need, whereas fuelwood contributes 68%, and fossil fuels 8%. Development of hydropower not only helps reduce deforestation, reported at the rate of 0.7% per annum, but also helps reduce GHG emission by substitution of imported fossil fuels. The annual fossil fuel import bill for Nepal 2004/05 was about 310 million USD. Nepal could benefit substantially if consumption of petroleum products were replaced by hydropower. Where the Clean Development Mechanism (CDM) is effectively used to address the impact on climate change, hydropower gains significance in contributing positively to climate change.   Key words: Hydropower, IWRM, maximization of benefit, poverty alleviation, growth, Nepal   Hydro Nepal: Journal of Water, Energy and Environment Vol. I, Issue No. 1 (2007) pp. 29-34

Maximizing Benefits from Hydropower: A Nepal Case