Nepal’s carbon trade deal: A breath of fresh air.

Nepal has signed a deal for carbon trade! This is great news, but many people may not be aware of what this means. Let’s explore what this is and what it means for Nepal.

CARBON TRADE what and why?

So what is carbon trading?

Carbon trading is an exchange of credits between nations designed to reduce emissions of carbon dioxide. This helps in reducing carbon emission which severe to the environment.

Carbon trade is also referred to as carbon emissions trading. Carbon emissions trading accounts for most emissions trading.

Why does this system exist?

Well, when countries use fossil fuels and produce carbon dioxide, they do not pay for the implications of burning those fossil fuels directly. There are some costs that they incur, like the price of the fuel itself. But there are other costs not included in the price of the fuel. These are known as externalities.

In the case of fossil fuel usage, often these externalities are negative, meaning that the consumption of the good has negative effects on third parties.

These externalities include health costs, (like the contribution that burning fossil fuels makes to heart disease, cancer, stroke, and lung diseases). And environmental costs, (like environmental degradation, pollution, climate change, and global warming).

Interestingly, research has found that, often, the burdens of climate change most directly affect countries with the lowest greenhouse emissions. So, if a country is going to burn fossil fuels, and produce these negative externalities, the thinking is that they should pay for them.



Nepal has signed for this type of carbon trade with the world bank forest carbon partnership facility. The government signed this on Thursday, 25th February 2021.

With this contract, Nepal gains the potential of earning Rs 5 billion by 2025 to mitigate its emissions.

The reason Nepal is signing up for this is that as an underdeveloped country it is eligible to sell its carbon. Developed countries who are trying to lower their intensive emission of carbon can buy from countries like ours.

Nepal had submitted a proposal for its project, ‘People and Forests: A Sustainable Forest Management-Based Emission Reduction Program in the Terai Arc Landscape, Nepal’ to the Forest Carbon Partnership Facility (FCPF) Carbon Fund in 2018.


For achieving the targets, Nepal has outlined seven activities.

The country will work towards improving management practices in existing community-based forest management. Likewise, officials plan to transfer national forests to communities that can work on restoring them.

It will also support and promote private sector forests. According to Poudel, nearly 30,000 hectares of private forests exist in 13 districts. The government also aims to encourage the use of alternative energy resources as well as work on leasehold forests. Likewise, it plans to improve integrated land use planning to reduce forest conversion for infrastructure development and promote better management of existing protected areas in the country.

The government will also work towards minimizing haphazard development which ends up adversely impacting forests. The government can not only focus on protecting forests outside while protected parks experience degradation of forests.

Also Read: Yatri Motorcycle: Will it be a new era for Nepali automobiles?


Nepal is taking a great step towards helping in the global climate crisis.

The selling of our carbon aids in the recession of carbon production in other major countries. This is a great way to kill two birds with one stone, as Nepal also learns a heavy amount of money. Let us just hope that the money we receive goes to a good cause.

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