Agriculture in Nepal’s NDC 3.0: Economy-wide Impacts on Nepal’s Economy

Nepal’s agriculture sector, central to food security, and rural employment and livelihoods faces mounting pressures from climate change, land degradation, and declining productivity. The Third Nationally Determined Contribution (NDC 3.0) introduces a set of targeted agricultural interventions designed to enhance climate resilience while improving productivity and reducing greenhouse gas emissions. This policy brief assesses the economy-wide implications of achieving these agricultural targets using IFPRI’s dynamic Computable General Equilibrium (CGE) model calibrated to 2022 Nepal’s Social Accounting Matrix. Two scenarios are evaluated: a Business-as-Usual (BAU) scenario and an NDC 3.0 scenario reflecting successful implementation of interventions such as climate-smart agriculture, improved cattle shed management, soil organic matter enhancement, irrigation expansion, and post-harvest loss reduction. Model results indicate substantial economic and welfare gains: agricultural GDP increases by 2.85 percent annually through 2035, national GDP growth rises by 0.94 percentage points per year, and approximately 317,400 individuals are lifted above the $2.15/day poverty line. Among all interventions, post-harvest loss reduction contributes the most, followed by improved livestock management. While NDC-aligned agricultural interventions offer substantial economic potential, their success depends on addressing significant fiscal, institutional, and implementation challenges. Without strengthened coordination, adequate financing, and improved extension capacity, Nepal risks falling short of the productivity and resilience gains envisioned under NDC 3.0.

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