Externalities in Kathmandu

Abstract

There is the rapid growth of squatter settlements (SS) with urbanization in Kathmandu. Squatter settlement is an urban phenomenon, but it is closely associated with rural-urban migration. The SS are termed as Sukumbasi basti in Nepal and the people are called Sukumbasis. Sukumbasi describes a landless person who is illegally occupying land to live. Squatter populations are mostly involved in the informal sector of urban economy. Unplanned development and political instability have intensified the complexity of urbanization in Nepal; however, the growth of SS is quite a new phenomenon. We measured the incidence of externalities faced by the SS and non-squatter settlements (NSS). The differences were statistically tested using a t test to confirm whether SS or NSS faced negative externalities from their activities. The intensity of the externalities is conditional upon incidence; to measure the distribution of intensity among the various degrees such as very high, high, moderate, low, and very low, weights of incidences were used. The results suggested that average cost of negative externalities for per household was NRS 662.56 and average WTP per household was NRs 4213.28. An annual net economic benefit of reducing negative externalities for per household is NRS 3550.72. The annual total societal benefit of reducing externalities is 1409 million Nepalese rupees. The allocation of resources for the intervention of reducing the negative externalities in the SS would improve the societal welfare.