Economic Impact Assessment of Climate Change for Key Risks in Nepal

The study finds that current climate variability already costs Nepal 1.5–2% of its annual GDP, with future climate change projected to add another 2–3% of current GDP per year by mid-century. The most significant drivers of these costs are water-induced disasters, particularly floods. Sectoral analysis indicates that while agriculture faces net losses of approximately 0.8% of current GDP per year by the 2070s, the hydroelectricity sector faces high uncertainty, with projections ranging from increased investment costs of US$2.6 billion due to decreased dry season flows to potential savings of US$170 million if flows increase. To address these risks, the study recommends an iterative adaptation pathway, estimating a need for US$2.4 billion in additional investment by 2030 to mainstream resilience.

• Current climate variability and extreme events result in estimated direct economic costs equivalent to 1.5–2% of Nepal's current GDP annually (approximately US$270–360 million/year in 2013 prices), which can rise to 5% or more during extreme years, primarily driven by flood-related risks.
• By mid-century, the additional economic costs of climate change for the agriculture, hydroelectricity, and water-induced disaster sectors are projected to be equivalent to 2–3% of current GDP per year.
• Agricultural impacts by the 2070s are estimated as net losses of around 0.8% of current GDP equivalent per year, or US$140 million/year, with particularly high impacts projected for rice and wheat production in the Terai region.
• The hydroelectricity sector faces divergent future scenarios: one model projects a decrease in dry season flows requiring an additional 2,800 MW of capacity by 2050 and increasing investment costs by US$2.6 billion, while another projects increased river flows that could reduce investment costs by US$170 million.
• Water-induced disasters are expected to increase in intensity and frequency by 20–100% by mid-century, with direct annual economic costs estimated to increase by US$100–200 million/year (0.6–1.1% of current GDP), potentially reaching nearly 3%.
• To mainstream adaptation through 2030 across the three assessed sectors, the study estimates that an additional investment of US$2.4 billion (present value) is required.

APA

Climate and Development Knowledge Network (2014). Economic Impact Assessment of Climate Change for Key Risks in Nepal. https://cdkn.org/sites/default/files/files/EIA-Nepal-study-brief.pdf

Chicago

Climate and Development Knowledge Network. Economic Impact Assessment of Climate Change for Key Risks in Nepal. 2014. https://cdkn.org/sites/default/files/files/EIA-Nepal-study-brief.pdf.

Wikipedia

{{cite report |author=Climate and Development Knowledge Network |title=Economic Impact Assessment of Climate Change for Key Risks in Nepal |date=2014 |url=https://cdkn.org/sites/default/files/files/EIA-Nepal-study-brief.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climateanddevelopmentknowledgenetwork2014economic, author = {{Climate and Development Knowledge Network}}, title = {{Economic Impact Assessment of Climate Change for Key Risks in Nepal}}, institution = {Climate and Development Knowledge Network}, year = {2014}, url = {https://cdkn.org/sites/default/files/files/EIA-Nepal-study-brief.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }