Country Profile: 

Population (thousand) : 774.83
Multidimensional Poverty Index Value : 0.12 
Inequality-adjusted Human Development Index, Country Rank: 132
Gross Domestic Product per capita, at Purchasing Price Parity (US$): 8,077.0


The PEI program was launched in Bhutan . “Gross National Happiness” in Bhutan is used in place of “Gross Domestic Product” where social, environmental and cultural factors define the quality of life. This development philosophy has received global recognition, but meeting future development needs without compromising the environment remains a great challenge. Currently, Bhutan has a forest cover of 72.5 percent and protected areas cover 51.44 percent of the country. Bhutan’s socio-economic growth is driven by sectors dependent on the environment.  Electricity generated by hydropower is used by more than 70 percent of the population. Agriculture and forestry provide a livelihood and employment for 60 percent of Bhutan’s population. 

The PEI ensures environment, climate and poverty are integrated into Bhutan’s policies, plans, programmes and budgets to achieve a greener, more inclusive and more sustainable development path. PEI Bhutan’s earlier phase, the “Joint Support Programme” (JSP) was coordinated by the Gross National Happiness Commission (GNHC) and supported by the Government of Denmark. Building on this, PEI’s current phase of programming is part of the larger “Local Governance Sustainable Development Programme (LGSDP)” that aims to promote inclusive and equitable socio-economic development, sustainable use of natural resources and strengthened governance at the local level. 

PEI works closely with the Gross National Happiness Commission, Department of Local Governance and the Ministry of Finance along with the United Nations Capital Development Fund (UNCDF), the UNDP CO and other donor agencies including Government of Denmark, Switzerland and the EU to implement the LGSDP programme.

  • Bhutan’s 11th five year plan aims to deliver inclusive green development in line with Gross National Happiness and sustainable development. ‘National Strategy and Action Plan for Low Carbon Development’ laid the basis for Bhutan to become the first carbon neutral country in South Asia. PEI through the LGSDP has integrated poverty-environment issues into the 11th Plan and its 16 National Key Results Areas, 250 Sectors Key Results Area and key performance indicators. .  
  • Bhutan pioneered an Environment-Climate-Poverty Mainstreaming Reference Group (MRG) institutionalized , which aims to green Government’s work. The institutionalization of MRG was endorsed by the Prime Minister’s Office through executive order . The MRG has improved the capacity of sectoral and local officials to address environment climate and poverty gaps in the analysis and design of new policies, plans and programmes. With the set-up of local level MRG in 10 districts, PEI in Bhutan has also influenced the annual plans of 10 districts (Dagana, Gasa, Pemagatshel, Trashi Yangtse, Tsirang, Lhuentse, Mongar, Zhemgang, Wangdue Phodrang, Samtse).  
  • The government has integrated environment-climate-poverty concerns into the Local Development Planning Manual and the GNHC Screening Tool. The screening tools were applied to review and screen draft policies. This ensured early integration of sustainability aspects and enhanced GNH values of public policies.  11 approved polices actively integrated gender, environment, climate, disaster and poverty issues: (1) Forest Policy; (2) Employment Policy; (3) Food and Nutrition Security Policy; (4) RNR Research Policy; (5) Cottage, Small and Medium Industry Policy; (6) FDI Policy; (7) Economic Development Policy; (8) Bhutan Renewable Energy Policy; (9) National Population Policy; (10) Bhutan telecommunications and broadband policy; (11) Subsidized timber and other forest produce allotment policy.  
  •  Bhutan’s “National Environment Strategy for Sustainable Development : Pursuing environmental sustainability for GNH”, coordinated by the National Environment Commission (NEC), identifies P-E mainstreaming as the strategic plan in achieving environmentally sustainable development. The strategy reflects on the achievements made in P-E mainstreaming in Bhutan through (i) the setup of the PEI-supported MRG, which the NEC is a member; and (ii) the development of mainstreaming tools that have taken into account cross-cutting issues of climate change, disaster and gender, which was used in the formulation of the 11th FYP. PEI did not provide direct support to the National Environment Strategy, but members of the MRG (established with PEI support) were directly involved, particularly from the NEC during consultation stages.
  • At the sectoral level, the Ministry of Agriculture and Forest is promoting schemes to reduce wildlife damage affecting poor families and is putting in place the valuation of ecosystem services such as watershed protection, ecotourism; the Education Ministry is promoting green jobs through non-formal education systems, while the infrastructure sector is promoting climate resilient environmentally friendly road constructions.  
  • The PEI supported integrated socio-economic and environmental assessments of mining and quarrying activities that recommended institutional and fiscal reforms. This initiative has helped the government optimize national mining revenue for pro-poor and environmental sustainability.
  • Local Climate Finance Mechanisms are being strengthened and the Local Governments in Bhutan recorded increased expenditure for sustainable development during the first two years of the 11th Plan. Further, the Ministry of Finance’s budget call circulation stated that “in formulating the budget proposal, budgetary agencies shall incorporate gender and ECP (Environment, Climate Change and Poverty) concerns into the respective budgets.”
  • The Public Environmental Expenditure Review process and findings have influenced the government’s interest to increase state revenues from natural resources and to initiate a green economy process. Sound research has been developed in areas such as energy efficient transportation.
  • Through Bhutan’s Tarayana Foundation, PEI supported the Rural Economy Advancement Programme (REAP) where 25 households benefited from eco-friendly and disaster resilient houses. Villagers now have secure shelter and are able to concentrate their efforts in agricultural activities and other off-farm opportunities through the skills that they have acquired thereby demonstrating sustainable utilization of natural resources in improving poor people’s livelihoods.
  • PEI’s engagement with the Ministry of Finance in Bhutan resulted in incorporating pro-poor environment and climate change, including gender concerns in the budget call notification for the fiscal year . MoF’s budget call notification for financial year has a specific section on promoting gender equality and women empowerment as part of its initiative on gender responsive planning and budgeting. Three ministries of Agriculture and Forests, Education and Health has been mandated to provide a narrative policy statement in their budget proposals on how each ministry would contribute to gender-related goals and National Key Result Areas, priority issues and relevant interventions to promote gender equality. This was a result of PEI’s engagement with the MoF through the MRG’s work to integrate GECDP issues into the budget call notification.
  • Through a PEI collaborated multi-donor programme to implement the Local Governance Sustainable Development Programme, Bhutan has mobilized $14.26 million, equivalent to 86% of the total estimated budget. This commitment to mainstream P-E-Climate objectives is reflective of the high level of ownership achieved by the country.


Key Documents

Influencing policy processes at national level – National Poverty Plans and Strategies and Poverty-Environment Mainstreaming Guidelines

Influencing policy processes at sector level

Economic instruments

Strengthening institutions and capacities

Raising awareness, communications and building partnerships

Influencing policy processes at sub-national level

Developing country-specific evidence

Understanding the governmental, political and institutional context

Study visits

Public expenditure reviews and green budgeting

Mainstreaming Resources: 
Gross National Happiness Commission:
National Environment Commission:

The National Environment Commission is a high-level autonomous agency of the Royal Government of Bhutan and is mandated to look after all issues related to environment in Bhutan.

Centre for Bhutan Studies:

The Centre for Bhutan Studies is an independent research institute dedicated towards promoting research and scholarship on Bhutan:

Royal Society for Protection of Nature

A citizen based non-profit environment organization, the Royal Society for the Protection of Nature (RSPN) works on environment conservation and sustainable development.`