Economic Assessment of the Impacts of Climate Change in Uganda

This case study assesses the economic impacts of climate change on the water and energy sectors within the Mpanga River catchment in Uganda. It focuses on the potential for conflict between hydroelectric power generation and other water needs (domestic, agricultural, and industrial) as climate change and socioeconomic development increase pressure on water resources. The study utilizes climate modelling and economic valuation to estimate future losses and evaluates the cost-effectiveness of various adaptation strategies.

• Climate change is projected to cause significant economic losses in the energy sector, specifically affecting the AEMS-Mpanga hydro power plant. Annual welfare costs by 2035 to 2040 are estimated between 62,733 and 246,795 million shillings (US$25 million to US$98 million), reflecting the value consumers place on electricity shortages.
• The Rushango area of the catchment is expected to face the most significant water supply impacts. Annual average economic losses from non-energy water use in this area are estimated between 114 and 198 million shillings (US$45,400 to US$78,900) by 2035, potentially rising to 472 million shillings (US$188,000) depending on future per capita GDP and willingness to pay.
• Climate modelling for the Mpanga River basin indicates that temperatures are likely to rise significantly, with average annual increases between 3 and 4.8 degrees Celsius. Rainfall projections are mixed, showing a general decline toward 2060 before rising slightly, with annual changes ranging from 0% to -8%.
• The AEMS-Mpanga hydro power plant is highly vulnerable to water flow reductions. Modelling under a pessimistic scenario suggests a gradual reduction in river flow rates from 2041, leading to an estimated energy loss of 115 GWh over the period 2046–2050, which represents approximately 26% of average production.
• Adaptation measures in the energy sector are considered cost-effective if they can offset a relatively small percentage of estimated losses. Based on a 10% discount rate, interventions would need to reduce losses by between 2.8% and 32.8% to be justified. The most effective regional measures are identified as better management of water for hydropower and water catchment protection.
• Several barriers hinder effective water policy and adaptation in the region, including a lack of political will, insufficient funding for Community Development Officers to enforce laws, low community educational levels, and cultural practices such as bush burning.
• Enabling factors for adaptation include the implementation of better weather forecasting, early warning systems for water shortages, and measures to reduce the demand for wood fuel.
• There is a critical deficiency in hydrological data for the Mpanga River. None of the gauging stations were functioning correctly at the time of the BRL ingénierie study, and data since 2011 for some stations is unreliable due to road works.

APA

Taylor, T., Markandya, A., Mwebaze, T., Sebbit, A., & Rautenbach, H. (2015). Economic Assessment of the Impacts of Climate Change in Uganda. Climate and Development Knowledge Network. https://cdkn.org/sites/default/files/files/Uganda_CC-Economics_MPANGA_Case-study2.pdf

Chicago

Taylor, Tim, Anil Markandya, Tom Mwebaze, Adam Sebbit, and Hannes Rautenbach. Economic Assessment of the Impacts of Climate Change in Uganda. Climate and Development Knowledge Network, 2015. https://cdkn.org/sites/default/files/files/Uganda_CC-Economics_MPANGA_Case-study2.pdf.

Wikipedia

{{cite report |last1=Taylor |first1=Tim |last2=Markandya |first2=Anil |last3=Mwebaze |first3=Tom |last4=Sebbit |first4=Adam |last5=Rautenbach |first5=Hannes |title=Economic Assessment of the Impacts of Climate Change in Uganda |publisher=Climate and Development Knowledge Network |date=October 2015 |url=https://cdkn.org/sites/default/files/files/Uganda_CC-Economics_MPANGA_Case-study2.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{taylor2015economic, author = {Taylor, Tim and Markandya, Anil and Mwebaze, Tom and Sebbit, Adam and Rautenbach, Hannes}, title = {{Economic Assessment of the Impacts of Climate Change in Uganda}}, institution = {Climate and Development Knowledge Network}, year = {2015}, month = oct, url = {https://cdkn.org/sites/default/files/files/Uganda_CC-Economics_MPANGA_Case-study2.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }