Commentary

Bhutan’s Happiness Is Large Dam, Fast GDP

We should measure Gross National Happiness, not Gross National Product (GDP), said Bhutan in 1972. Ever since, it has been a poster child for happiness. Its pursuit of happiness has influenced many people including Nobel Laureates Joseph Stiglitz and Amartya Sen, who helped produce a recent UN report on ”The Measurement of Economic Performance and Social Progress.”

GDP is a vulgar measure that misses many issues that make people happy, says the report. So, countries should also measure quality-of-life indicators such as leisure, education, social relationships, political voice and governance. Bhutan’s own happiness index includes the frequency of meditation and prayer.

Now, everybody will agree that happiness is much more than GDP. However, Bhutan’s dirty secret is that it is world champion in GDP growth.

The global recession sent growth plunging in many countries in 2008, but Bhutan had the fastest GDP growth rate in the world at 21.4%, says the CIA World Factbook. Back in the 1980s, Bhutan was much poorer than India. Today, thanks to galloping economic growth for two decades, Bhutan is almost twice as rich as India: its per capita income was $1,900 in 2008 against India’s $1,070.

Was record GDP growth spurred by the pursuit of happiness? Actually, it was spurred by giant hydropower projects that India has been building in Bhutan for two decades. Bhutan’s current hydropower capacity is 1,480 MW, and it plans additional projects to generate 10,000 MW of power by 2020, almost entirely for export to India, which provides all the financing.

Large dams are not usually regarded as recipes for happiness. Environmentalists usually condemn them for displacing people and submerging forests. Bhutan’s neat ploy has been to adopt a green name (Druk Green Power Corporation) for its hydropower producer. It gets away with this since environmentalists don’t want to attack a much ballyhooed Shangri-La of happiness.

Its first big hydropower project of 336 MW capacity at Chuka was commissioned in 1988. This was followed by Kurichhu (60MW) in 2001, Basochho (40MW) in 2005 and the giant Tala project (1,020 MW) in 2007. The commissioning of Tala largely explains the subsequent huge jump in GDP in 2008. Electricity revenue will provide no less than 60% of the government’s entire revenue in 2009. Yet, barely 66% of Bhutanese households and 39% of its villages are electrified.

Developing countries with rich natural resources, like oil, often fare very badly (as in Africa). Economists talk of a “resource curse” that enables a kleptocratic ruling elite to become very rich, without any productive effort or decent governance. Revenues from natural resources flow directly to governments, bypassing citizens.

Hydropower potential is Bhutan’s big natural resource, generating vast revenues for its government. To its credit, kleptocracy and misgovernance have been kept at bay so far. Yet, as hydropower revenue keeps soaring, the risks will keep rising.

Bhutan has done many things to deserve its Shangri-La reputation. Its forest cover is a very high 72%, and it has pledged to keep this above 60% forever. It admits only a small number of high-end tourists, helping preserve the traditional character of its delightful towns. Tourists say the people are very friendly, tranquil and hospitable.

Yet, appearances can be deceptive. A nasty ethnic struggle has led Bhutan to expel 100,000 people of Nepali origin, who now languish in refugee camps in Nepal. Ethnic Bhutias constitute 50% of Bhutan’s population, and ethnic Nepalese 35%. Nepalese migrants have swamped original ethnic groups in neighbouring parts of India like Sikkim and Darjeeling. The Bhutias of Bhutan are determined not to be swamped too. Those expelled say they are regular citizens who have been ethnically cleansed, while the government claims they are illegal immigrants. Such ethnic strife does not look like a recipe for happiness.

In most countries women outnumber men. But Bhutan has only 89.2 females per 100 males. This is worse even than India (93.3 females per 100 males) where female foeticide and infanticide are common. Bhutan’s gender ratio suggests strong discrimination against female children in access to health and food.

The CIA World Factbook estimates literacy in Bhutan at 47%, while a recent Bhutanese publication puts it at 59.5%. The country banned TV for decades to protect its people from pernicious modern influences, but finally allowed TV in 1999. Low literacy and media bans are not usually associated with happiness, but some will say that ignorance is bliss.

I cannot say whether Bhutan is truly happy. But if that’s true, Bhutan seems to have proved that the happiness flowing from large dams and fast GDP growth more than compensates for the unhappiness caused by ethnic strife, gender discrimination and low literacy.

Swaminathan S. Anklesaria Aiyar is a research fellow at the Cato Institute’s Center for Global Liberty and Prosperity.