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(Part II) The Gorkha Earthquake 2015: Economic Impact on Nepal Tourism

Tourism 2(Photo Source: Google)

3. Impact Indicators & Post Disaster Context

3.1 Gross Domestic Product (GDP):  

With hotels and restaurants contributing about 1.9 percent to GDP in 2012, international tourism contributed about 2% to GDP. The 2015-World Tourism and Travel Council (WTTC) report indicates that the direct contribution of tourism to the national GDP is 4.3 percent in 2014. The same report shows a GDP contribution of 8.9 percent in 2014 aggregating the contribution of hotels and restaurants including domestic tourism as well as other subsectors of tourism. Before the Gorkha Earthquake, the hotel and restaurant sector was expected to grow its GDP contribution by 6.6% while after the earthquake the estimated growth is only 3.9%.

3.2 Employment:

Tourism in Nepal creates employment thru various formal businesses such as hotels, airlines, restaurant, tours & travels, trekking, etc. while at the same time there are a number of informal value chain businesses such as guide, porter, taxi, handicraft, money exchange, food chain and many more helping create indirect jobs. Due to the earthquake the total workdays lost in tourism sector is estimated to be 29,662,443 including men and women. Likewise the losses in personal income stands over NPR 6 billion.  

The Tourism Employment Survey, 2014 of the Ministry of Culture, Tourism & Civil Aviation (MoCTCA) estimates that approximately 138,148 persons were engaged in the tourism sector. For the estimation, the survey utilized the data from 192 sampled industries out of the total 4,819 registered tourism industries(Table 3.2).

Table 3.2: Estimation of employment generated by tourism industries in NepalTable 3.2

 Source: Tourism Employment Survey, 2014, MoCTCA

The WTTC 2015 report, based on pre-earthquake data, indicates that in 2014 travel and tourism in Nepal directly supported 487,500 jobs (3.5 percent of total employment) and an additional 608,000 indirect jobs creation was estimated in the report. In the pre-earthquake scenario, the number of jobs was expected to rise by 4 percent in 2015 and by 3 percent per annum to 681,000 jobs in 2025.

As per MoCTA, about 80% workers in tourism are male. Likewise the proportion of male workers is higher than female workers in all types of tourist businesses, except in homestays, which employs 57% women. After the earthquake, more women have lost jobs than men, particularly when one considers that women occupy less skilled jobs such as housekeeping which can be easily taken over by men.

3.3 Tourist Arrival:

In recent years, the two main volume markets, India and China, have shown encouraging trends in arrivals to Nepal. In the past five years, the average annual growth rate of Chinese and Indian visitors has been 26 percent and 14 percent respectively. The growth from the rest of the world has been about 8 percent a year. As share of visitors from India and China accounts for about 36 percent, the overall growth in tourist arrivals has been pulled up to 10 percent a year over the past five years. The statistical survey in 2014 by MoCTCA shows an increasing trend of tourist arrivals in Nepal since 2000 (Table 3.3) and (Figure 3.3).

Table 3.3: Tourist arrival and average length of stay, 2000-2014Table 3.3

Source: Nepal Tourism Statistics, 2014, MoCTCA

Figure 3.3: Tourist arrivals in Nepal, 2000-2014Figure 3.3

Source: Nepal Tourism Statistics, 2014, MoCTCA

Post-earthquake, the number of tourist arrivals to Nepal has declined by 90 percent compared to May of 2014. The industry expects visitor numbers to be 40 percent lower in the fiscal year 2015-16 compared to 2014-15 and another 20 per cent reduction in the following 12 to 24 months. Thus a significantly reduced number of tourist arrivals is likely to be observed over the next two to three years.

In the long term, a sustained absence of visitors from highly affected areas is likely to lead to a permanent relocation of local residents to other areas, resulting in their livelihoods getting disconnected from their place of origin. In the long run, this could produce significant socio-cultural impacts to the people living in those regions.

3.4 Foreign Exchange Earnings:

At the macroeconomic level, after remittances and export of goods & services, tourism is the third largest economic sector for foreign exchange earnings. As per Nepal Rastra Bank data, in the year 2012-2013, the total foreign exchange earnings from tourism was over NPR 34 billion which is 4% of the total foreign exchange earnings or 2% of the national GDP as shown in the table below (Table 3.4). Further, based on eight months of FY 2013-14, the total foreign exchange earnings from tourism is still over NPR 34 billion, although the numbers won’t look promising after the Gorkha Earthquake.

Table 3.4: Foreign exchange earnings from tourismTable 3.4

Source: Nepal Rastra Bank, 2012-2013

3.5 Government Revenue:

Following the increasing trend of the government’s revenue generation from tourism sector, the directly visible government revenue from the tourism sector in 2012 was nearly NPR 9 billion which represented about 3.6 % of the total government revenue that year (Table 3.5A).

Table 3.5A: Tourism sector’s contribution to the Government’s fiscal revenueTable 3.5A

Source: Post Disaster Needs Assessment (PDNA), National Planning Commission, GoN

Due to the earthquake there are losses to the government revenue streams such as national park permit fees, mountain trekking fees, tourist and tourism related fees, tax revenue to the government, etc. Nepal Mountaineering Association (NMA) received over NPR 51 million in royalty for mountain expeditions in 2014(Table 3.5B). The past data from the Department of National Park and Wildlife Conservation (DoNPWC) show an encouraging number of tourist arrivals every year in the national parks and protected areas (Table 3.5C). In the post-disaster days, these figures are certainly going to get impacted heavily.

Table 3.5B: Royalty received by peak, 2014Table 3.5B

Source: Nepal Mountaineering Association (NMA)

Table 3.5C: Tourist visitors on national parks and protected areasTable 3.5C

Source: Department of National Park and Wildlife Conservation (DoNPWC)

3.6 Tourism Revenue:

The revenue losses result from losses in tourism revenues, air transport revenues, tour operator revenues, trekking revenues and restaurant revenues. It was estimated that the decreased tourism arrivals would affect tourist spending and subsequently would lead to a revenue loss of over NPR 21 billion between May and December 2015. This is estimated to decrease by about half (to nearly NPR 13 billion) in the next six-month period in 2016. Another nearly NPR 13 billion is expected to be the tourism revenue loss during the year 2016-17. Due to the earthquakes the loss of tourism revenue is estimated to be over NPR 47 billion by the end of 2017.

Other impacted revenue sources are from various tourism sub-sectors such as airlines, travels & tours, trekking, restaurant, etc. After the earthquake disaster, a total of over NPR 62 billion of revenue losses is estimated due to a combination of destruction and non-availability of tourism facilities and the drastic decline in foreign tourist arrivals (Table 3.6).

Table 3.6: Summary table of estimates of lossesTable 3.6

Source: Post Disaster Needs Assessment (PDNA), National Planning Commission, GoN

3.7 Hazards & Vulnerabilities:

After the Gorkha Earthquake, there is increased potential of loss due to the hazards such as, landslides, outbursts of glacial lakes, avalanches, rock falls, floods and more aftershocks. Mountain tourism and the communities in those areas are more vulnerable to calamities due to geophysical challenges, weather conditions, climate change, etc. On one hand, the mountain residents and workers are exposed to the general increased risk of landslides, rock fall, floods, etc. associated with mountain settings, while on the other their families are highly vulnerable to changes in visitor numbers and travel patterns that directly affect their incomes and livelihoods. If no alternative income sources are available to the households, their condition is likely to become severe in the coming days.

Many trail and trekking sections are declared insecure based on assessments by trekking companies. National parks and conservation areas do not have an inventory system in place that assesses the safety of their areas with respect to natural disasters. There is an increased need to invest in an early warning system to ensure safe tourist experiences for all market segments.

At present the clear risk is the sustained loss of income due to the absence of tourist in the aftermath of the earthquakes. This risk is not limited to actual earthquake-affected areas but to the whole of Nepal. The risk is even higher due to our own vulnerabilities and lack of capabilities to timely respond to such disasters. Safety has risen as the biggest concern for the entire fraternity of tourism stakeholders and it will certainly cost money and extensive planning to address those critical issues.

(To Be Continued…)

(Part I) The Gorkha Earthquake 2015: Economic Impact on Nepal Tourism

(Part III) The Gorkha Earthquake 2015: Economic Impact on Nepal Tourism

Also Read:

(Part II) (2 of 2) Construction Focus Four: Struck-By Hazards

(Part II) (1 of 2) Construction Focus Four: Struck-By Hazards

(Part I) (1 of 2) Construction Focus Four: Fall Hazards

(Part I) (2 of 2) Construction Focus Four: Fall Hazards

Fire Prevention and Fire Protection – Air Pollution in Kathmandu – Construction PPE – Carbon Monoxide poisoning – Electrical Safety – Fall Protection in General Industry– Fearsome 4 of Construction Safety – Fall Restrain System Vs. Fall Arrest System – Respiratory Protection – Portable Ladder Safety – Confined Space Entry – Initiating First Aid/CPR – Are you too busy… – If you have $86,400 in your account… – Safety professionals have job prospects as Insurance Risk Surveyor or Loss Assessor

Series of disasters in Nepal: An urgent call

A hazard has numerous risks attached to it and can present itself in many forms such as natural calamity, technological crisis or man-made tragedy. Businesses could face technological disasters such as supply-chain interruption, building collapse, information technology failure, power disruptions etc. Likewise, massive earthquake, flood, landslide etc. could strike us in the form of natural disaster.

Sometimes hazards could be accidental or human-induced such as fire, chemical spill, strike, blockade, riot, and as extreme as terrorism. Nowadays, increasing number of disaster is rapidly becoming a global phenomenon. We do not need to look elsewhere as we revisit a series of recent disasters that took place in our own backyard.

1(Photo Source: Google)

Escalating number of disasters

Mid April 2014, a deadly avalanche on Mt. Everest killed over a dozen Sherpa guides. After a long dispute between the Nepalese government and the Sherpas, few of the insurance, compensation and safety related demands were met by the government. Foresight of the government and the relevant agencies would have made the aftermath a lot smoother as far as adequate insurance compensations for the deceased trekkers’ families were concerned.

Around the same time, late April 2014, A landslide hit the tunnel of Upper Madi Hydropower Project (25 MW) in Sildjure VDC, Kaski district of Nepal.  Over a dozen workers including a Chinese national were trapped in the under-construction tunnel. Three workers were found dead while rest were saved after a long and treacherous rescue efforts.

A massive landslide in Sindhupalchowk district of Nepal took hundreds of lives in early August, 2014. The Sunkoshi River and the roads were blocked in the region for weeks. Thousands of people in the region were affected and struggled for livelihood. The Sunkoshi Small Hydropower Plant (2.5MW) remained submerged underwater for weeks when the river rose up to 30 meters in height forming a pool of water following the landslide and river-blockage.

The landslide triggered chain of events including loss of lives, properties, infrastructures, supply-chain and businesses in many sectors. Ministry of Home Affairs (MoHA) estimates that, between June and September, 2014, there were 265 dead, 256 missing and 157 injured due to floods and landslides alone.

2(Photo Source: Google)

Around mid-October 2014, cyclone Hudhud, hovering in Nepalese sky, claimed dozens of lives and left unforgettable scars in the domestic tourism circuit. Although storms and heavy rain caused by Hudhud was devastating in the Indian states of Orissa and Adhra Pradesh, the scale of damages predicted for Nepal was rather moderate at the time. On the contrary, by the time the cyclone reached the heights of Nepalese mountains, it triggered deadly snow blizzards and avalanches in the Himalayas.

There were hundreds of trekkers (national and foreign) on the mountains while means of communication were mostly disrupted when the storm hit the region. It is apparent that the weather related information were not spread out in accurate and timely manner to the end users. The hydrological system in South Asia is strongly controlled by the Himalayas, which act as barriers for monsoon rains. The Hudhud’s effects could have been expected (if not predicted) by the State and preparedness/response procedure (if it already had one in place) could have been followed to mitigate the loss.

Nearly 82 years after the mega earthquake of BS 1990, Nepalese were heavily shaken by the recent M 7.6 earthquake on Saturday, 25th April, 2015 at 11:56 NST and a major aftershock of M 6.8 on Tuesday, 12th May, 2015 at 12:50 NST. Although the earthquake-epicenters were located in Gorkha and Dolakha districts respectively, the devastations left around 9,000 dead, 23,000 injured and thousands homeless all over the country.

As per the Post Disaster Needs Assessment (PDNA), the private sectors have sustained over three times in damages and losses i.e. NPR 540 billion compared to the damages and losses of NPR 166 billion incurred by the public sectors.

3(Photo Source: Google)

More recently, the economic blockade imposed by India is no less than a man-made disaster for the Nepalese people and businesses facing dire need of petroleum products and other emergency supplies. Besides day to day inconveniences faced by the people, thousands of private sector industries and businesses were shut down within a week due to inadequate supply of fuel and raw materials from India.

The blockade has interfered with every possible socio-economic dynamics of the country including, transportation, schools, hospitals, offices, business, services, households, festivals, entertainment, etc.

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Business threats

The aforementioned events were devastating in many ways compelling us to ask important questions such as, “Are our politicians liable?”, “Did the government envision such dreadful consequences?”, “Were the businesses prepared?”, “What is their response or plan ‘B’?” Although, under normal circumstances, the probability of similar cataclysmic events repeating in the near future could be predicted relatively low but as we see, the consequences are certainly going to be catastrophic for people, businesses, communities and the country as a whole.

5(Photo Source: Google)

Flood, landslide and earthquake are some of the high risk natural hazards the nation is facing for a long time. Moreover, the businesses today cannot disregard other potential threats posed by fire, explosion, utility failure, communication breakdown, computer crash, equipment malfunction, operator error, terrorism, criminal activities or a blockade. Are our private businesses ready to face such painful surprises? How prepared are we to sustain and recover our businesses out of these catastrophes?

6(Photo Source: Google)

Disasters might occur locally but their effects can be sensed throughout the country if not globally. In March, 2011, after the Tohuku-Tsunami in northeastern Japan, 656 Small and Mid-sized Enterprises (SMEs) went bankrupt within a year. Surprisingly, only 12% of the businesses were located in the vicinity where the disaster actually took place. Rest of the businesses were scattered throughout the country and were bankrupted by indirect loss of supply-chain disruption caused by the tsunami.

We need not look further as these scenarios are largely shaping in front of us and as a matter of fact, quite frequently these past couple of years. An avalanche occurs in the remote slopes of Himalayas and we see thinning crowd of domestic and international tourists in our airports for months. A landslide occurs in Sindhupalchok district while people and businesses in the capital go panic due to elevated hours of load shedding and reduced supplies. Likewise, onset of political strikes in the southern belt can close down thousands of business all over the country within a week.

7(Photo Source: Google)

The rising frequency, ferocity and the extent of damages caused by natural disasters are not only threatening the growth of businesses but also questioning the sustainability of the entire country’s economy as the disaster loss of the nation takes away a big chunk of GDP every year. When businesses are disrupted, it costs money. Lost revenues plus extra expenses means reduced profits. Insurance does not cover all the losses and cannot get back valued customers.

Role of private sector             

It is a prevalent norm around the globe that less probable threats such as natural & technological disasters or the issues pertaining to emergency preparedness for that matter get lower priority than most of other functionalities within a business organization. In a country like Nepal this seems even more evident due to the lack of adequate government policies, visionary business model and culture of disaster preparedness.

As an engine for economic growth, private sector provides employment, standard of living as well as socio-economic growth of a country. Private sector businesses should not ignore the fact that their productivity and services are closely correlated with the safety and well-being of employees, community and the country as a whole. On the contrary, more often than not private sectors long for profit at the cost of disaster preparedness, environmental impact, business resilience and safety of people.

Many times, we have experienced in the past that the Government of Nepal as well as private sectors are awake for a few months during the flooding season. Authorities, communities, business houses and others come forward with titbits which are labeled ’emergency response’ and ‘disaster relief’ efforts in bits and pieces. After another few months the issues settle in oblivion as no sustainable effort is made for the recovery of people, community and businesses in the region.

Although the efforts and contributions are highly commendable and encouraging, the targeted CSR (Corporate Social Responsibility) value seems to get diluted and become unsustainable over time from a comprehensive Disaster Risk Management (DRM) perspective.

Anticipating, mitigating and managing disaster risks should be a collective effort because when disasters strike, “Business as usual” is disrupted for all. Avoiding supply-chain disruptions and maintaining smooth operations are in private sectors’ interest while at the same time this could be motivated by the CSR principle of the company, eventually adding value to the business by creating loyal customers.

Private companies could engage with their local or national communities, and undertake a systematic policy of ‘Giving Back’ to customers through DRM programs which would create a feedback loop resulting in long term customer loyalty, improved brand image as well as employee satisfaction.

Way forward

In Nepalese context, policies look good on paper but commendable action is nowhere near to be seen. A consolidating national authority (such as National Disaster Management Authority; NDMA)  and coordinated policies and efforts (comprising communities, private sectors, NGOs etc.) are still missing to prevent and mitigate the potential of loss due to natural, technological or human induced disasters.

Current Government policies are largely focused on reactive approach mostly responding to disasters rather than proactive measures such as prevention and risk mitigation initiatives. Thus, systematically embedding and infusing DRM strategy into the national infrastructure development projects is critical if the country honestly envisions proactive as well as sustainable DRM in the country.

Witnessing series of disasters throughout the country, it is proven that economic and the humanitarian catastrophes are imminent following a disaster such as a massive earthquake, extended flooding, landslide or a blockade.

Over the years, many independent humanitarian and development organizations have been propagating their DRR (Disaster Risk Reduction) efforts through public-private partnerships, awareness presentations, preparedness seminars, emergency response trainings and capability building workshops with a mission to achieve more resilient communities and safer societies around the country.

In today’s world of supply-chain network, business sectors and livelihoods of people are intertwined so intricately that they have to support each other to survive and sustain. The government and the private sectors must work together to make the businesses & communities more resilient to future disasters. Hence the pressing need of public-private partnership for the risk prevention, emergency preparedness, and business continuity planning in the event of recurring disasters, natural or otherwise.

At this juncture, it is high time now that the private businesses of Nepal should rightfully intervene for their own good and come together to join hands with the government as well as non-government agencies to increase their own disaster resilience and business continuity.


Cement Industries in Nepal: Aftermath of the Gorkha Earthquake 2015


Cement Manufacturers Association of Nepal (CMAN) claimed that the ban on building construction immediately after the Gorkha Earthquake induced an estimated 85 percent dip in the demand for cement. Since before the quake cement factories were operating only at about 50 percent of their installed capacity, it was estimated that they could fulfill an additional 50 percent demand in the coming months when reconstruction would start in full swing. As per CMAN there were 46 cement industries producing a total of around 4 million MT cement every year before the earthquake. Major 16 cement industries had the annual production capacity of around 3.5 million MT cement nationwide. Please see Table 1.

Table 1. Factory location and production capacity of Cement industries in Nepal (Source: NSET)



Except for some minor injuries to employees and their families, there was no significant casualty in cement industries. Only minor damages were recorded in some factories ranging from NPR 50,000 to NPR 15 million in loss. The damages were mostly to the sheds and boundary walls. Overall the total damage loss was estimated to be over NPR 100 million.

Following the Gorkha Earthquake, individual factories incurred 25% to 95% loss of revenue due to reduced demand, production and sales. It was estimated that the industry experienced a total revenue loss of NPR 3 billion in the first 3 months alone. Out of over 10,000 workers employed in cement industries all over the country, around 25% were believed to have lost their jobs after the disaster. Most of them were daily wage workers. Please see Table 2.

Table 2. Information related to employee casualty, damage loss, revenue loss and employment loss


Since the earthquake damages were not significant, most of the factories were able to recover their production within a couple of weeks. The estimated production downtime due to the earthquake ranged from 2 days to 2 weeks for different factories; majorly due to the employees’ fear of future shaking. In the immediate aftermath of the quake, the production capacity of individual factories came down by only 30% to 35%. Later, due to the government restrictions on construction followed by reduced demand the production significantly dropped by 75%.

Before the earthquake the country had an estimated demand of around 5 million MT cement annually. In the next couple of years the demand was expected to shoot up by around 25% due to reconstruction activities. The market price of OPC Cement ranged from NPR 650 to NPR 750 per bag before the earthquake. But due to the hike in transportation cost and fuel crisis after the border closure, the unit market price increased by 15%. Please see Table 3.

Table 3. Information related to business recovery, production capacity, demand and market prices


Based on the trend of first 3 months after the earthquake the projected annual production was mere 1 million MT. The nationwide annual demand before the earthquake was around 5 million MT. In the months following the earthquake, due to the government regulations on construction bar, the demand for cement drastically came down to negligible numbers, although total annual projected demand after the earthquake was around 7 million MT. Please see Table 4.

Table 4. A comparison of nationwide production and demand projection for cement industries



The national annual demand for cement before the earthquake was around 5 million MT while the annual projected demand increased to 7 million MT after the earthquake. Since the projected annual production of around 1 million MT was based on the first three months’ production trend after the earthquake and the reduced production was mainly due to fuel crisis, power shortage and supply-chain disruptions, the cement industries were certain that the future reconstruction demand could be met as the situations started improving in the country.

It is worth mentioning here that around 2 million MT of additional cement would be required to meet reconstruction demand alone; as projected by Post Disaster Needs Assessment. This demand would spread out in next couple of years or so hence might not overburden the industries’ annual targets in the future. Also, CMAN estimated that due to reconstruction activities there would be only 25% hike in total demand which could be easily sustained by Nepalese cement factories as most of them were operating 50% below their installed capacity even before the earthquake.

Also Read:

(Part II) (2 of 2) Construction Focus Four: Struck-By Hazards

(Part II) (1 of 2) Construction Focus Four: Struck-By Hazards

(Part I) (1 of 2) Construction Focus Four: Fall Hazards

(Part I) (2 of 2) Construction Focus Four: Fall Hazards

Fire Prevention and Fire Protection – Air Pollution in Kathmandu – Construction PPE – Carbon Monoxide poisoning – Electrical Safety – Fall Protection in General Industry– Fearsome 4 of Construction Safety – Fall Restrain System Vs. Fall Arrest System – Respiratory Protection – Portable Ladder Safety – Confined Space Entry – Initiating First Aid/CPR – Are you too busy… – If you have $86,400 in your account… – Safety professionals have job prospects as Insurance Risk Surveyor or Loss Assessor

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