Scenario-Based Economic Valuation of Forest Carbon Sequestration in Nepal: Implications for REDD+ (2030–2050)

Land use and land cover (LULC) change strongly influences national carbon dynamics and the effectiveness of forest-based climate mitigation strategies, particularly in mountainous developing countries. This study integrates scenario-based LULC modeling, spatially explicit carbon accounting, and economic valuation to assess how alternative development pathways affect carbon storage and its economic value in Nepal over the 2020–2050 period. LULC projections for four scenarios: Business-as-Usual (BAU), Rapid Urban Development (RUD), Forest Degradation and Terai Contraction (FDTC), and Agricultural Land Abandonment and Ecological Recovery (ALER), were generated using the TerrSet Land Change Modeler, with 2020 as the baseline. These projections were then used as inputs to the Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST) Carbon Storage and Sequestration model to estimate changes in ecosystem carbon stocks, integrating aboveground biomass, belowground biomass, soil organic carbon, and dead organic matter pools. Carbon stock changes were monetized using a constant carbon price of USD 5/tCO2e and a 3% discount rate to estimate net present values (NPV). Results reveal strong divergence across scenarios. National carbon storage remains near-neutral under BAU (−0.46% by 2050), declines under RUD (−2.42%) and FDTC (−5.32%), and increases substantially under ALER (+11.74%). These biophysical outcomes translate into contrasting economic values: BAU yields a small negative NPV, RUD and FDTC generate large discounted losses, and ALER produces a strongly positive NPV exceeding USD 800 million by 2050. Spatially, forest and other wooded land dominate national carbon dynamics, while urban expansion and forest degradation drive disproportionate losses. Overall, the study results demonstrate that recovery-oriented land-use pathways offer substantially greater long-term carbon and economic benefits than development trajectories dominated by urban expansion or forest degradation, providing a policy-relevant framework to support Reducing Emissions from Deforestation and Forest Degradation, together with conservation, sustainable forest management, and enhancement of forest carbon stocks (REDD+) planning and long-term mitigation assessment in Nepal.