The view of the relationship between environmental conservation and economic development has gone through significant transition during the last three decades. During the seventies, environmental conservation and economic development were generally considered as conflicting objectives. According to this view, economic development would necessarily entail the degradation of the environment and sometimes even cause its destruction. A dramatic example of such thinking was the landmark 1972 publication "The Limits to Growth " by the Club of Rome, which offered a deterministic prediction of the results of continuing economic development. "The Limits to Growth" developed scenarios of economic and industrial development and contrasted them with various estimates of the availability of natural resources. In all the cases, the book predicted that continuing economic growth would eventually lead to a collapse of the global environmental and ecological system.

Thinking in the nineties has gone beyond the concept of compatibility of the two objectives of economic growth and environmental conservation. In fact, economic growth and environmental conservation, at least in a sustainable manner, are believed to be prerequisites to one another. Hence, subsequent to another landmark publication "Our Common Future"  by WCED in 1987, scholars and planners have increasingly asserted that economic development could only be sustained through the conservation of natural resources and protection of the environment.

Lately, enlightened and pragmatic environmentalists and conservationists have also accepted that without economic development the protection of environment and conservation of natural resources is not achievable. The publication of the World Development Report "Development and the Environment" by the World Bank in 1992 acknowledged the mutually supporting two-way relationship between development and the environment. The report asserted that "without adequate environmental protection, development is undermined; without development, resources will be inadequate for needed investments, and environmental protection will fail ."  The accepted thinking now is that wisely planned and implemented sustainable economic growth and development and a prudent conservation and environmental management program are mutually reinforcing and are needed simultaneously.

Major Issues in Environment and Conservation : Major environmental problems currently include degradation of natural resources, such as land, forest, water and air. Continuous degradation of these natural resources reduces agricultural productivity and also hampers industrial outputs by increasing the costs of inputs. Pollution of air and water also adversely and drastically impacts the urban areas burdening residents with excess health costs, reducing earnings from tourism and increasing the cost of maintenance and management of the urban system. Hence, environmental degradation not only reduces the economic productivity of a country and society, but also imposes high costs for its subsistence and sustenance.

Economic development in a country like Nepal can be achieved mainly through agricultural production; enhancement of the production of both timber and non-timber products; utilisation of water resources both for harnessing power and for mining water as a resource; and exploiting the country's natural beauty for the sake of tourism. For example, if important water sources are polluted, then potential economic benefits can be seriously undermined.

Emerging Policies on Environmental Protection and Conservation in Nepal : Historically, environmental degradation was not a serious concern in Nepal because of the agrarian lifestyle of people closely tied to the land. Population density was manageable when adequate land and natural resources were available for every family. Thus, the "carrying capacity" of the land and ecosystem was not over-stretched. However, in the past few decades due to rapid growth of population followed by urbanization, industrialization and the modernization of agricultural practices (especially the use of chemical fertilizers and pesticides), environmental degradation in Nepal has become pronounced.

Lately, Nepal has appreciated the need for the protection of the environment. By preparing and endorsing the National Conservation Strategy (NCS) in collaboration with IUCN in 1989, Nepal has already shown its commitment to the conservation of nature and natural resources. However, it is only recently that environmental conservation has been taken seriously and has been integrated into mainstream economic development processes. The 9th Five Year Plan (1997-2002) of the Government of Nepal clearly highlights the need for conservation and environmental protection in the country's economic development. Several agencies dedicated to the environment, such as the Ministry of Population and Environment, Ministry of Forests and Soil Conservation and international organisations like IUCN, WWF and ICIMOD, as well as national organisations such as the King Mahendra Trust for Nature Conservation, NEFEJ and others have taken the lead in promoting the environment and conservation in Nepal.

The Environment and the Economy : As argued before, the positive inter-relationship between the environment and the economy is now well established. Research has shown that the conservation of nature and natural resources and the protection of the environment can only be supported by commensurate economic development. Applicable economic instruments can include incentives, charges, creation of the market for environmental management and instituting economic liabilities for polluting activities. If proper environmental charges are instituted, the use of nature as a free resource in which to dump pollutants would be controlled. On the regulatory side of encouraging conservation and protection of the environment, Nepal enacted the pioneering Environmental Protection Act in 1997. This Act puts in place a basic legal framework for deriving regulations and by-laws for environmental management. Such a regulatory system (the so-called "Command and Control" approach) in tandem with economic instruments can be effectively used to promote the conservation of the environment.

The economic costs of environmental degradation in Nepal are significant. For example, the excess health cost of air pollution in the Kathmandu Valley is estimated to be US$ 4 million (1996) . The annual cost of self-treating drinking water in the valley is estimated to be US$ 15 million . The economic impact of pollution on Nepal's tourism industry has not been well studied, but potential revenue losses from decreased tourism as a result of environmental degradation are considered to be significant.

If the economic costs of the degradation of land, deforestation and water pollution are aggregated for the entire country, they are likely to be substantial. For comparison, the health cost of air and water pollution in China is calculated as full 8% of the GDP . The clean-up costs for the polluted River Bogota in Columbia is estimated as US$ 1.4 billion . The cost of cleaning the polluted Bagmati and remediation of degraded land in Nepal are likely to run into hundreds of millions of US Dollars.

Conclusion : To sustain her economic development, Nepal needs to rapidly move ahead in creating and implementing a comprehensive system of environmental management. The system should include a well-developed set of laws and regulations supplemented by the appropriate economic tools of environmental policies.

Programs and priorities for economic development also need to take into consideration Nepal's fragile but unique environmental resources. For example, ecotourizm and conservation are compatible programs that satisfy the requirements of both economic development and environmental conservation. Similarly, sustainable harnessing of water resources for economic development can also be generally environmentally friendly while exploiting the comparative advantages of Nepal. The production and the commercialization of medicinal plants is yet another example where economic development can be simultaneously achieved while conserving the environment. Religious tourism involving shrines such as Lumbini, Pashupatinath and those at several other locations in Nepal can also be developed to contribute toward the sustainable development of Nepal. Hence, as conservation, environmental management and a sustainable economic development are mutual prerequisites, Nepal's programs and policies should be guided by this reality.