NEPAL, with an area of 147,181 sq. kilometers, comprises of three out of the 200 global eco-regions of WWF.  Known for its natural beauty from the alpine regions and hilly areas to the low lands Tarai with abundant resources of freshwater, sub-tropical forests and high biodiversity paints a picture of Nepal’s natural capital. However, in the lime light of such huge natural capital but positioned as a least developed country, the economic value of the nature has been limitedly understood and the valuation processes of natural capital have never been undertaken. Hence sidelining the concept of mainstreaming of natural capital into the economy.

The limitations lie in the fact that there is limited capacities and knowledge on natural capital and processes to undertaking its valuation within the country. Key domestic ministerial institutions that undertake the responsibility of planning and financing development do have a surficial understanding, but the understanding is not noted in the context of implementation. Processes like Environment Impact Assessments (EIAs) do take note of impacts on nature while recommending appropriate actions, but the financial value of protecting the environment is omitted. Hence, omitting financial valuation does not really help imbed the real value of nature and sustaining development.

As Nepal’s progresses as a developing country building large infrastructures that will take a toll of its natural capital in the near future; understanding the context of natural capital, its value, implementing proper land use planning and building capacities of the relevant stakeholder both government and non-government institutions are key.

This paper outlines the opportunities and challenges in the context of Nepal to understand and valuate natural capital. It also highlights the identification of key stakeholders and the processes to start up natural capital valuation in the country so as to contribute to Nepal’s overall sustainable development.

Key Words; Natural Capital, Economy, Sustainable development,