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. Key risks include significant agricultural losses in the Terai region, highly uncertain impacts on hydroelectricity investment costs depending on river flow projections, and a 20–100% increase in the intensity and frequency of high river flows. To address these, the report 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 already impose direct economic costs on Nepal equivalent to 1.5–2% of current GDP per year, 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 hydroelectricity, agriculture, and water-induced disaster sectors are projected to be equivalent to 2–3% of current GDP per year.
• Agricultural impacts are expected to be highest in the Terai region, particularly for wheat and rice. By the 2070s, net agricultural losses are estimated at US$140 million per year, or 0.8% of current GDP equivalent, though this does not account for potential mitigation from irrigation and farm-level adaptation.
• The hydroelectricity sector faces high uncertainty; one climate 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 model projects increased river flows that would reduce investment costs by US$170 million.
• Water-induced disasters are projected to increase in severity by mid-century, with a 20–100% increase in the intensity and frequency of high river flows. Direct annual economic costs for these disasters are estimated to increase by US$100–200 million per year (0.6–1.1% of current GDP), with an upper estimate of nearly 3%.
• To mainstream adaptation across the three assessed sectors through 2030, 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/ids_nepal_brief7.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/ids_nepal_brief7.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/ids_nepal_brief7.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/ids_nepal_brief7.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }