The Act seeks to ensure utmost participation of the sovereign people of Nepal in the process of governance by means of decentralization. The Local Self-Governance Act, 2055 (1999) and the Local Self-Governance Regulation, 2056 (1999) are considered to be landmark achievements in the institutionalizing decentralization. These have delegated more power and autonomy to the local governing structures and have entrusted with expenditure responsibilities. The local governing bodies - Village Development Committees (VDCs), Municipalities at the local level and District Development Committees (DDCs) as intermediate level are constituted under this Act to make decisions on the matters affecting the day-to-date needs and lives of the people and to inculcate local leadership.

In Nepal, water resources are considered to be strategic natural resource having the potential to catalyze all round development and economic growth of the country. Management and utilization of water resources in the country is governed by the Water Resources Act 2049 (1992). The Act seeks to ensure rational utilization, conservation, management and development of the water resources in Nepal and forms the legal basis to prevent water pollution. It also deals with the Water Rights and establishes priorities for water utilization.

The foundation of the legal structure for environmental assessment and mitigation in Nepal was laid by the Environmental Protection Act 2053 (1996) and the subsequent Environmental Protection Rules 2054 (1997), which were further revised on 2055 (1999). This Act is supported by various provisions in other related Acts, such as, the Forest Act, the National Parks and Wildlife Conservation Act, and the Local Self-Governance Act and has been effective since its inception in 1996 in controlling the undesirable environmental pollution. The implementing agency is the Ministry of Population and Environment (MoPE), established in 1995 to formulate and implement environmental policies, plans and programs at the national level.