Economy & Biodiversity of Bhutan

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Despite Bhutan’s small population there has been much economic development in recent years and the economy is growing rapidly.

While a large part of the Bhutanese population is still illiterate and reside in rural areas with approximately 1 in 5 still living under the poverty line, the majority of all Bhutanese have shelter and are self-sufficient. Rapid modernization has brought about vast improvements in the living standard of the Bhutanese people. All villages now have access to basic amenities such as education, running water, basic healthcare and are connected by roads and electricity. Even the most remote villages have connection to the telecommunication network including mobile phone service.

The Bhutanese economy is predominantly agricultural. Farmers supplement their income through the sale of animal products such as cheese, butter and milk. Farmers’ markets are common throughout the country, supplying the people with fresh, organic, local produce.

The main staple crops are rice, maize, wheat and buckwheat while cash crops are predominantly potatoes, apples, oranges, cardamom, ginger, and chilies. A fruit based industry has been established in the capital allowing farmers from the nearby areas to sell their produce and thereby earn additional revenue.


agriculture remains the primary source of livelihood for the majority of the population. Pastoralism and farming are naturally complementary modes of subsistence in Bhutan. Cereals are important component of Bhutanese diet; maize and rice are the major crops cultivated. Other cultivated crops include wheat, barley, oil seeds, potato, and various vegetables. Among vegetables, chili and potato are most important. In addition, cash crops, such as apple, orange, and cardamom are cultivated and exported. Traditionally, shifting cultivation was an important land use practice. The area cultivated under shifting cultivation was estimated at 32,800 hectares in 1988. With an average fallow period of five years, the total area estimated then was around 200,000 hectares. The practice entailed two distinct systems, bush fallow and grass fallow. Modern agricultural development in Bhutan commenced from the 1960s with the start of planned development programs in the country.

Approximately 80% of the population of Bhutan are involved in agriculture. According to the National Accounts Statistics 2017, the agriculture sector was the highest contributor to the national economy with 16.52%, followed by construction industry and hydropower at 16.28% and 13.38%, respectively. The country's total geographical size is 38,394 km, of which cultivable land accounts for just 2.93%. Terraced rice cultivation is commonly referred to as wetland farming, which constitutes 27.86% of the country's cultivable land.

Cottage Industry

Bhutan’s rich biodiversity provides the country with ample forest resources and this has brought about the development of a thriving cane and bamboo handicraft industry. Craftsmen weave a number of beautiful and intricate items out of bamboo and cane including hats, backpacks, floor mats and traditional bowls. These items are then sold to tourists or Bhutanese, supplying a secondary income source.


The Bhutanese Tourism Industry was first opened in 1974. Since then, it has grown to become a major contributing factor to the Bhutanese economy creating countless employment opportunities and generating additional revenue for the government.

The government is committed to building a sustainable tourism industry that is not only financially viable but also limits the negative cultural and environmental impacts commonly associated with the culture of mass tourism. By establishing a policy of "High Value, Low Impact' tourism, the kingdom of Bhutan seeks to ensure that it attracts only the most discerning visitors with a deep respect for cultural values, traditions and the natural environment.To this end efforts have been made to ensure that even remote areas are publicized and able to reap the benefits of tourism while still respecting their traditions, culture and natural environment.


Due to its fast flowing, glacier-fed rivers, Bhutan has enormous potential to produce hydroelectricity. With the construction of several major dams, the power sector has undeniably been the biggest contributor to the Bhutanese exchequer. Over the last ten years, there have been significant transformation in the power sector of Bhutan, driven by the ongoing processes. Bhutan has a substantial hydropower potential, which is estimated to be 37,000 MW. Out of this 33,000MW is considered to be techno-economically feasible. Currently, Bhutan’s installed capacity stands at 2,344.35 MW. The majority of this capacity is derived from hydropower plants, accounting for 2,334.1 MW, including 8.1 MW from other embedded hydro sources. Notably, there are three major projects currently in the progress: Nikachhu, Punatshangchhu-1, and Punatshangchhu-2. Once these projects are completed, they will add an additional 2,338 MW to the installed capacity. Moreover, there are 3 ongoing small prpojects, namely Yunghichhu, Burgangchhu, and Suchhu. Consequently, the total installed capacity for the country willreach to 4786.48 MW. The Tala Hydro Power Corporation, Mangdechhu,Chhukha, Dagachhu, Basochhu and Kurichhuhydro power corporation under the umbrella of Druk Green Power Corporation, are some of the existing mega projects in the country. The most surplus power of which is exported to our neighbouring country India, barely scratches the surface of Bhutan’s untapped hydroelectric potential. However, the government is proceeding cautiously with new construction projects in order to minimize the impact upon the surrounding areas.


The Manufacturing sector is another major contributor to national revenue. With the industrial sector established in Pasakha, small scale industries such as cement plants, calcium and carbide, steel and Ferro silicon, Coca Cola and also wood based industries have started developing.

As a result of the recent economic development, Bhutan has one of the highest per capita incomes in South Asia at US$1,321. However, despite this high level of growth and development, efforts stringent regulations have been enacted in order to protect Bhutan’s natural environment.


Throughout the centuries, the Bhutanese have treasured their natural environment and have looked upon it as the source of all life.  This traditional reverence for nature has delivered us into the twentieth century with our environment still richly intact.

Bhutan straddle two major bio-geographic realms, the Indo-Malayan realm consisting of the lowland rain forests of South and Southeast Asia and the Pale-arctic realm consisting of conifer forests and alpine meadows of northern Asia and Europe.

Ecosystem Diversity:

Bhutan ranks among the most bio-diverse country in the world and has an incredible range of habitat type due to her location. The warm southern part of Bhutan supports wildlife that is usually associated with a tropical-jungle climate. As one progresses north, the wildlife changes accordingly as the elevation increases. Bhutan falls under one of the ten global biodiversity ‘hotspots’ with many animal and plant species. Considering her size, Bhutan has the most diverse ecosystem at lease in Asia. Bhutan is also characterized by strong species diversity and density, with about 5,603 flowering plant species, under 220 families and 1,415 genera, close to 200 species of mammals (which is extraordinary for a country which is one of the smallest nations in the Asian region), 800 to 900 species of butterfly and 50 freshwater fish species (with overall fish fauna not yet properly assessed in the country). Also, according to herpetological survey training conducted in the Royal Manas National Park in 1999, 23 species of reptiles and amphibians exist in the country. In particular, the country is enormously rich in bird and crop diversity, with 678 bird species recorded, 78% of which are resident and breeding, 7% migratory and 8% winter visitors. Crop species is quite impressive, with about 80 species of crops known to occur in the country, including cereals such as rice, maize, barley, millet, wheat, and buckwheat (pseudo cereal); fruits such as apple, orange, and pear; vegetables such as potato, bean and cabbage; and spices such as chili, cardamom, garlic and ginger.

According to the fourth national report, most the country’s ecosystems are safeguarded under various protected areas. In terms of globally threatened mammal species, Bhutan notably counts one critically endangered mammal species, 11endangered species and 15 vulnerable species. Bhutan is enormously rich in bird diversity, with 678 species recorded, of which one is critically endangered, one is endangered and 13 are vulnerable. Medicinal plants and other non-wood forest product species, such as ferns, bamboos and canes, etc., which used to be collected in abundance, are rarefying. Local and seasonal water shortages are becoming more frequent and there is evidence of increasing sediment loads in the river system. In regard to natural forest habitats, relevant analyses of trends of changes in the status of forests are mixed. One analysis indicated that the area under closed forests has increased significantly while those under open forest categories have decreased. Another analysis shows the exact opposite trend, and points out that the loss of natural forests between 1978 and 1989 was much more accentuated than over the two previous decades. In 1991, the Ministry of Agriculture estimated that 231,000 ha of forest area is degraded, with an estimated annual degradation rate of 0.5%.

Forest Ecosystems:

Forests are Bhutan’s largest renewable resource and the most dominant land cover measuring 72.5 percent of Bhutan’s total landmass. Bhutan’s forests can be classified into three broad and distinct eco-floristic zones comprising of alpine forests (above 4000 meters above sea level, temperate forests (2000-4000 m) and sub-tropical forests (150-2000 m).The benefits derived from nature is the relationship between the Bhutanese society and its forests. With 69.1% of the population living in rural areas, farming and forest resources (including timber, fuel wood, fodder and non-wood forest products) form a major source of livelihoods, as well as a considerable source of cultural identification and traditional practices.