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The results of this study indicate that Kathmandu Valley's motorized travel demand increased 8.7 fold in 2004 from nearly one billion passenger-km in 1989. It suggests that the demand will increase to 27 billion passenger-km by 2025. Despite the drastic increase, the modal share of public and private transport modes have changed little since 1989: public transport still meets a little over 50 percent of the demand for motorized travel. As a result, the number of vehicles operating in the Valley will triple, expanded from the 170,000 currently operating to about half a million by 2025.The study developed an inventorty of priority air pollutants, energy use and CO2 emission associated with passenger transportation in the Kathmandu Valley for the past and projected these values into the future with the help of a bottom-up, dynamic accounting model and a scenario approach.