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Case study: Nepal Municipal Development and Earthquake Reconstruction Project

Alcira Kreimer and Martha Preece

The Nepal Municipal Development and Earthquake Reconstruction Project emphasized the disaster-resistant reconstruction of housing and schools, the adoption of improved building techniques, and the development of building codes. It also stressed the need for vulnerability analysis through hazard mapping and the establishment of a centralized data bank. Community participation was central to Nepal’s strategy for disaster prevention and mitigation. Self-help housing reconstruction moved along quickly because there were few land tenure problems and most homes were owner-occupied. The reconstruction experience is expected to demonstrate the feasibility of low-cost housing solutions so banks will be encouraged to embark on a full home financing system.

The effects of disasters can in large part be traced to poor planning, inappropriate design, faulty construction, lack of maintenance, and the effects of poverty. Direct and indirect losses and institutional demands are often the result of inappropriate or no preventive measures, compounded by years of neglected maintenance and reduced public and private investment. Prevention and mitigation policies and programs can reduce social vulnerability. Earthquakes exert enormous pressures on public finances, reducing public revenues on the one hand and increasing public spending on the other. After a calamity, a rapid response is required not only for relief activities but also to reduce the vulnerability of human settlements and capital investment to seismic events.


Nepal is among the world’s poorest countries. Life expectancy at birth is 54 years for males and 51 for females. The infant mortality rate is 111 per 1,000. More than 40 percent of the population (18 million people) live below the poverty line. More than 90 percent of the Nepalese live in small towns or in the remote countryside.

National economic policy in Nepal emphasizes development of the rural sector, but urban areas are growing rapidly. New and improved roads, together with limited farm employment opportunities, have encouraged rural migration to urban areas. The number of urban settlers is expected to grow at least 4 percent a year. Towns play a key role in Nepal’s economic growth. They not only absorb much of the surplus rural labor, but also provide essential services for the rural economy. Managing rather than constraining urban growth will be a major challenge. More than 90 percent of homes are said to be owner-occupied but pressure on the housing stock because of rural-to-urban migration is upsetting home-ownership ratios. There has been no planning and control for the growth of cities. Many landless people have become squatters on marginal, disaster-prone lands. Services and basic infrastructure are constrained by limited institutional and managerial capabilities and scarce financial resources, both central and local.

Nepal’s vulnerability to earthquakes

Sixty-eight percent of Nepal’s land area is mountainous and exposed to heavy seismic activity. Earthquakes that register 5 to 8 on the Richter scale are experienced throughout the country; 279 earthquakes with epicenters in Nepal and magnitudes above 3.9 were recorded between 1963 and 1986 (Asian Institute of Technology 1990).

After an earthquake measuring 6.7 on the Richter scale struck parts of central and eastern Nepal on August 21, 1988, it was difficult to assess damages and assist victims. Although the tremor lasted only 30 seconds, more than 720 people died, over 6,000 were injured, and housing, schools, hospitals, public buildings, roads, and bridges were extensively damaged. In the months after the earthquake, helicopter surveys identified about 66,000 damaged or destroyed homesites; an estimated 460,000 persons were without shelter. More than 2,000 schools (about 17 percent of all educational facilities) were ruined beyond repair and more than 300 required extensive rehabilitation. Other public buildings were also ruined. The total direct cost of destruction was US$172 million. The greatest losses were to housing (US$78 million), roads and bridges (US$62.4 million), and schools (US$32 million).

Despite the earthquake’s relatively low intensity, there was widespread devastation because of the region’s vulnerability. Nepal lies in a tectonically active zone, but does not enforce earthquake-resistant construction measures and has no seismic maps. Before 1988, there was no building code for low-cost and nonengineered building construction, and no appropriate zoning and land-use policies and regulations. Not even basic construction techniques, much less earthquake-resistant features, were always part of building practices. Most construction was done in the informal sector, so no training programs on seismic-resistant construction were available. Rural families commonly build their own dwellings with the help of unskilled artisans.

Most collapsing houses were two- to three-story mudbrick constructions. Faulty construction, especially lack of framing, was identified as the principal cause of structural failure but housing units of better quality - built of stone or with cement mortar - were also badly cracked. Only houses with framed construction or reinforced concrete escaped damage. Infrastructure was also vulnerable to disaster. Many of the hill roads had been built without engineering surveys and were prone to flash floods and landslides. Nor were there national awareness campaigns to mitigate disaster.


Immediately after the earthquake, the central government, with the help of the local and the international donor community, mounted a relief operation. Two thousand NRs (Nepalese rupees) (US$82) were provided to a family in which someone was killed and 1,000 rupees (US$41) to families that lost a house. Some families were provided with a temporary shelter as part of disaster relief. At the same time, the government embarked on a program of reconstruction, recovery, and disaster mitigation and management. In December 1988, the government asked for help to rehabilitate about 2,350 schools damaged in the earthquake and provide temporary accommodations for schools not included in the first year’s construction plan (Patrick McCarthy 1989). The international community supported the relief and rehabilitation operations.

On September 22, 1988, the government launched a comprehensive reconstruction and rehabilitation program that cost US$54.8 million for housing and US$30.2 million for schools. With the help of a Bank credit, the Nepalese government designed a scheme to grant concessional loans to all homeless families under a system of interest rebates. Annual lending rates for reconstruction loans vary between 1 percent and 15 percent. The government pays the banks the difference between those interest rates and the standard annual lending rate - at the time, 19 percent. All families who received early assistance through the initial payments for loss were eligible for these loans. So many low-income victims were affected that few had the resources or savings to rebuild independently. Most loans of US$400 covered only housing repairs, mostly in rural areas. About 5 percent of housing loans for about US$2,000 were provided to finance starter homes in urban areas. Any family with a certificate of need (eligibility) could qualify for a loan, which was unusual in Nepal, where housing loans are not generally available. The reconstruction experience is expected to demonstrate the feasibility of low-cost housing solutions so banks will be encouraged to embark on a fall home financing system.

The Bank agreed to help the government with long-term housing reconstruction geared to reduce vulnerability and mitigate the effects of natural disasters. The idea of the reconstruction program was (1) to provide technical assistance and training for both rural and urban housing, (2) to help nongovernment organizations (NGOs), (3) to improve construction standards, and (4) to address the environmental problem of the building industry’s overuse of wood.

One of two project investment streams was for municipal development; the other, for emergency housing reconstruction, aimed to provide immediate and longer-term assistance to householders hurt by the earthquake. The housing component focused on (1) improving building techniques and earthquake-resistance, (2) supporting NGOs in the provision of such resources as low-cost sanitation, water, improved stoves in rural areas, and innovative building materials, (3) helping entrepreneurs and community groups manufacture such building products as cement blocks and steel doors, and (4) encouraging the use of alternative building materials that would reduce the use of timber. In addition, the longer-term technical assistance and training program would help with (5) disaster management, (6) preparation of a national building code that encourages earthquake-resistant construction, and (7) implementation of epicentric and seismic mapping for Nepal.

Twenty-five percent of the funds for housing reconstruction were disbursed in the first five months of project implementation. Each member of a reconstruction team directed the activities of two “panchayats” or municipalities. Each team was guided by ten “overseers,” or technical officers - local contractors and engineering students especially trained in earthquake-resistant construction. To ensure that more hazardproof building methods were used in rehabilitation, overseers reviewed designs and construction onsite. Moreover, the use of earthquake-resistant techniques was a condition of the loan. Building inspections were not always possible because many damaged homes were inaccessible. To give loan recipients the opportunity to make adequate choices about disaster-resistant construction, they were required to walk through demonstration houses built near the lending banks. The models emphasized simple, cost-effective, earthquake-resistant features such as bonding at the comers, securing gable walls, and providing lintels over openings and secure roof structures. In district headquarters and urban areas it was mandatory to incorporate such features. The Housing Ministry took advantage of the reconstruction effort to promote better sanitation and low-energy cooking stoves. Both were included in the demonstration houses and financial incentives for their construction were part of the loan packages.

Immediately after the earthquake, the Bank proposed reallocating savings from an ongoing Primary Education Project to help rehabilitate school buildings. But the government’s priorities were on housing reconstruction, so not until December 1988 was a formal request made for Bank assistance in school rehabilitation. IDA agreed to launch a major school rehabilitation project, based on the Bank’s emergency assistance procedures - which give prominence to disaster prevention, mitigation, and preparedness.

The idea of the schools project was to build five to 13 classrooms in the shortest possible time in all affected communities. Plans were to provide a basic reinforced, earthquake-resistant school structure with roofs, foundations and floors, sill perimeter walls, and door and window frames. The community was responsible for finishing works, providing building supplies from nearby, and some construction work.

The School Rehabilitation Project’s most difficult challenge was to deliver construction supplies and undertake construction at more than 2,000 sites, many of them remote. Strategically located temporary storage and distribution centers made it possible to provide recovery supplies to outlying areas.

In the first of two phases in the emergency recovery project the community helped provide construction materials; in the second phase, the school walls were completed and the schools finished. The project was to be implemented in three years. By January 1990, 40 pilot schools had been completed, located mostly in easier-to-reach areas.

Both the housing and school rehabilitation projects were coordinated by a central technical unit that made periodic site visits. A central coordinating committee chaired by the Ministry of Housing and Physical Planning coordinated the reconstruction program.

What the project accomplished

Several factors helped in Nepal’s reconstruction efforts. Most important, more than 95 percent of homes were owner-occupied, so land tenure was not an issue and families began rebuilding their homes almost immediately after the earthquake. The project promoted public awareness of disaster mitigation by distributing booklets showing earthquake-resistant designs and providing guidelines on the construction and use of materials for disaster-resistant construction. The project relied heavily on self-help construction and emphasized community participation - particularly through the dissemination of information about and the adoption of hazard-resistant technology. The government moved quickly to keep up with the rapid pace of reconstruction.

The project was realistically targeted to reconstruction-specific issues: carrying out short-term rehabilitation, strengthening domestic construction capability to repair earthquake damage, and maximizing disaster prevention and mitigation. The project agreement included measures geared to preventing losses and reducing vulnerability to earthquakes. Efforts focused on allocating resources to restore the economy and to generate income-earning opportunities. The goal of disaster prevention training was to reduce seismic vulnerability and to strengthen the government’s ability to cope with catastrophic events. The project focused on broadening policymakers’ understanding of natural disaster vulnerability and mechanisms to reduce it.

This project laid the foundation for stronger disaster management practices in Nepal but much remains to be done at the institutional level. Nepal still needs an appropriate legal framework, institutional management, and mechanisms to coordinate and develop a coherent policy that integrates technical disaster prevention into national development programs. The development of such instruments as building codes and land-use regulations must be incorporated in the national strategy for reducing vulnerability to calamities.