District Swat is famous for its scenic beauty and clean environment. However, there are various factors, which affect the local natural environment. Among these, the important factors are population increase and resulting increase in the number of vehicles. NCP vehicles are not only causing air pollution, traffic jams and rod accidents in Malakand division but this illegal trade also costs the government of Pakistan. With this background, this study analyzed the economic and environmental effects of NCP vehicles in the district Swat. The study used both primary and secondary data. The primary data was collected from 300 vehicles users in district Swat through structured questionnaire. To estimate the emissions from the vehicles used, secondary data was used which has obtained from District Police Office (DPO), Swat. The sample was selected from three tehsils namely Mingora, Khwazakhela and Kabal. To estimate the economic and environmental costs of NCP vehicles in district Swat, both descriptive statistics and regression analysis is used. The regression analysis is use to estimate the determinants of the health cost due to air pollution, noise pollution and congestions. Furthermore, the perceptions of the users were noted and analyzed in the text. The findings revealed that majority of the respondents possessed 1300 CC engine vehicles. Small road width, increase in number of non-custom paid vehicles, improper management of traffic control were the key causes of congestion. Due to congestion, the residents suffer from headache, mental stress, tension, irritation and wastage of time. Not all but some of the respondents were willing to pay and support the congestion tax. Majority of the respondents reported that air quality is dirty. In comparison to the air quality of last 10 years, it worsened. Majority of respondents reported that increase in number of noncustom paid vehicles is the main cause of air pollution. Some of the respondents faced Eye, skin and breathing problems. Main reason of noise pollution in district Swat is increase in number of vehicles especially increase in number of non-custom paid vehicles followed by urbanization and industries. The respondents suffered from sleeping disturbance, patient mental disturbance, tiredness and hearing problem due to noise pollution. The regression results showed that traveling time, Distance from the main road and main bus stand has positive and statistically significant impact on the health cost. The age and income has negative and statistically significant impact on the health cost. Besides, willingness to pay for congestion tax of the rural people is more than that of the urban. The coefficient of monthly income has positive and statistically significant impact on the willingness to pay more congestion taxes. The coefficient for variable ‘distance of residence from main road’ and household size has positive and statistically significant impact on willing to pay more congestion taxes. According to the responses of the respondents, the prices of NCP impact the CP prices in the market. The simulations show that district Swat produces more CO2 emissions as compared to other areas. There needs strict monitoring over the boarders of Afghanistan which is the main source of NCP vehicles transfer in Swat. It is also suggested to the local government and local traffic police to control the excess flow of vehicle and strictly advise the drivers to follow the traffic rules in district Swat to avoid such problems. I recommend the local government to limit the number of registration and make changes in the legislation to control these NCP. I also suggest the head of Vehicle Emission Testing Station (VITS) to issue the stickers and certificate to those vehicles, which fulfil the national environmental quality standard (NEQS) and ban those, which failed to fulfill the standards. Supervisor:- Dr. Junaid Alam Memon