Environment : In a Nepalese Forest, the Catastrophe Never Came : Foreign aid groups saw the Himalayan kingdom’s woodcutters as a formidable environmental foe and predicted dire consequences. Guess what? They were wrong.

With an ax on his shoulder and a hefty log strapped to his back, Tamba Hadur looks more like a simple woodcutter than environmental enemy No. 1.

“It is for my family,” he explained, resting the log beside a rushing stream high on a rocky mountain trail. Like most Nepalese, he will burn it for heat and cooking.

But since the mid-1970s, foreign aid groups have accused the millions of Nepalis like Hadur who cut and burn wood--only 6% of the country has electricity--of causing untold damage in one of the world’s most fragile and most spectacular environments.

By their reckoning, dramatic erosion caused by deforestation is destroying not only the Himalayas, the world’s highest mountains, but causing devastating downstream floods that killed hundreds annually in distant Bangladesh.

As hundreds of millions of dollars and scores of Western experts flooded Nepal with elaborate forestry and dam projects, the World Bank warned in 1980 that Nepal would run out of trees by 1995. The so-called “eco-catastrophe” made headlines around the world.

There was only one problem.

“The conventional wisdom was wrong,” said Don Gilmore, head of an Australian-assisted forestry project based in Katmandu, the capital. “It was all a myth.”

“The data was inadequate,” agreed Fred Hubbard, an American environmental consultant working with Nepal’s government. “Sure, there’s forest destruction. But it’s not nearly as serious as was thought.”

Indeed, satellite photos and ground surveys show Nepal’s mountains may have more trees today than 30 years ago.

Buried in the story of Nepal’s nonexistent “eco-catastrophe” is a lesson that some say has parallels from Peru to Pakistan. It’s the story of a profound waste of resources that could have been used to address the country’s real human needs. It stems, critics charge, from the practice, prevalent among international banks and aid agencies, of measuring progress by how much money is spent rather than how efficiently their programs meet local needs.

“It’s the Katmandu syndrome,” said Heranta R. Mishra, head of the King Mahendra Trust for Nature Conservation, Nepal’s largest environmental group. “We sit in Katmandu and make proposals to each other, usually in English, and no one asks the villagers.”

“It took us, at least me, 20 years to learn that,” he added. “It’s why so many projects have failed, despite so much money being spent.”

“People are rewarded for pushing projects,” complains Dipak Gyawali, a Berkeley-trained engineer who heads an energy consulting group. “It makes money cheap. It makes money irresponsible. It makes money unaccountable.”

That’s not to say Nepal has no environmental problems. The 250,000 tourists a year have been a mixed blessing: Garbage and litter line many trekking trails. Climbers have left the world’s highest garbage dump on Mt. Everest’s South Col.

Moreover, overcutting of forests has ravaged part of the lowlands that border India, in the crowded Katmandu valley, and along the popular trekking routes.

But scientists now say Nepal’s deforestation has little to do with erosion or downstream flooding. The major culprit is nature: Tectonic forces are still pushing the Himalayas up, while earthquakes, wind, water and gravity fight to bring them down.

“I don’t consider soil erosion a man-made problem,” said Harka Gurung, head of a Nepalese environmental research group. “The Himalayas will erode whether man is here or not.”

The implications are profound. Led by the World Bank, foreign aid agencies and nations have pumped billions of dollars into Nepal, one of the world’s poorest nations. In 1988, the last year for which complete figures are available, the 27 donors disbursed more than $400 million.

Virtually every agency backed forest studies, tree nurseries, plantations and other projects ostensibly aimed at controlling the deteriorating environment. Critics now say millions were wasted.

“It was based on a false premise,” said Gilmore. “The result is there’s been tremendous money and effort spent to solve a catastrophe that wasn’t there.”

Often, 80% of the money went for foreign experts and administration, officials say. In the Kabhre Palanchok district east of Katmandu, workers couldn’t find a barren area for their tree nursery. So they cut down a small forest to make room.

The upshot was less money and effort to solve Nepal’s real needs. Only one-third of its 18 million people are literate, for example. Cholera, from bad water and sanitation, is epidemic: 6,700 people have been afflicted this summer. Population is booming, while food yields are static.

Major aid donors defend their programs, but concede that priorities may have been skewed.

“There will be floods in Bangladesh whether or not the forests in Nepal are saved,” said Kelly C. Kammerer, who heads the U.S. Agency for International Development office in Katmandu. “I feel kind of funny, because I’m arguing against some of our own aid.”

An Asian Development Bank official, who asked not to be identified, was even more critical. The Asian Development Bank is Nepal’s second-largest donor after the World Bank, approving $122-million in loans last year and about $862 million since 1968.

“In fact, the efforts of the aid agencies in the environment here probably have had marginal, if any, impact,” he said.

Critics say the aid groups believed the “eco-catastrophe” scenario because it justified spending huge amounts of money and sending endless “missions” of highly paid experts. Katmandu officials were happy to oblige.

“The exaggeration is good for us,” said Sushil Bhattarai, Nepal’s director of soil conservation and watershed management. “It drives the donor agencies to Nepal.”

And by all accounts, the bigger the project, the bigger the kickbacks and graft for local officials.

“I’ve worked in 37 countries, and this is the most corrupt,” said one Western consultant. “Any time there’s a contract, people come sniffing around to get some of it.”

He and others fear the old misperceptions and corruption are affecting Nepal’s next major stage of development: hydroelectric power.

It is an axiom that Nepal’s only exploitable resource are the 6,000 or so snow-fed rivers that roar out of Tibet and drain the Himalayas. Theoretically, they could provide more power than all the rivers in North America.

Practically, few of the rivers are accessible. The country has eight medium-size dams, and several dozen so-called “micro-hydro” projects, which provide enough power to light 40-watt bulbs in nearby villages but little else.

That may change now that the World Bank, the Asian Development Bank, the Japanese government and a consortium of German companies have joined to help finance and build an $800-million, 400-megawatt hydro-power project called Arun-III, south of Mt. Everest in eastern Nepal.

Arun-III would more than double Nepal’s generating capacity. Most of the power, however, would be sold to India.

Surveying has begun on building a 125-mile road to the site. The World Bank has ordered an environmental impact assessment to study the effects of massive construction by 10,000 laborers in one of the Himalayas’ last cloud forests.

Still, it’s small stuff compared to the proposed Karnali River project, not far from this village in western Nepal. A Canadian-U.S. consortium wants to build the world’s third-highest dam and largest underground power facility in remote mountains 360 miles from Katmandu.

A $12-million feasibility study completed last December under a World Bank contract says the Karnali dam would be 810 feet high, create a reservoir 125 miles long, and provide 10,800 megawatts of power for export to cities in northern India.

Karnali would cost $6 billion to $10 billion, or three times Nepal’s current gross national product. Advocates say the dam would provide jobs, “open” Nepal’s far west for development, and provide much-needed foreign exchange.

But critics say the environmental and social costs, including displacing 60,000 people, haven’t been calculated. And they say the mega-dams will soak up money needed for village-level development.

“Everyone, from the lowest to the highest, thinks these mega-dams will solve all our problems,” said Mishra. “But it’s just another myth.”