While McLeod Ganj is the largest town, Upper Dharamshala also includes the communities of Gangchen Kyishong, Jogibara, Gamru, Hiroo, Bhagsu, Dharamkot, and Naddi. At any given time the area is home to 2000 - 3000 recently arrived refugees from Tibet as well as about 2000 - 3000 Tibetan monks from the settlements.  Additionally, there are tourists waiting to meet His Holiness the Dalai Lama, listen to his teachings, and to explore Tibetan culture and Buddhism. Consequently, the area has become a popular destination for tourists from throughout India and the world.

Due to the small size of Upper Dharamsala, urban problems such as traffic congestion and environmental degradation have proliferated. Remoteness and lack of infrastructure have significantly accentuated the difficulty of sold waste disposal. For centuries, the local people have been used to dumping waste outside their villages. Until recently, the waste was biodegradable and had minimal environmental impact. With the introduction of plastic and other non-biodegradable packaging in the early 80s, garbage began accumulating on the hillsides around Upper Dharamsala.

The problem was further exacerbated by an ever-increasing number of Tibetan refugees, Indian merchants, and tourists, who unlike the local people, do not own fields and depend entirely upon purchased goods. Increased tourism has further resulted in a general increase of income and consumption. This, along with the growing influence of commercials and advertising, has led to a shift in consumption from locally produced goods to products produced and packaged in factories outside the area.