Climate Change and its Increasing Economic Cost in Nepal

Milipa Thapa
Posted July 19, 2018 from Nepal
Photograph Credit: Binod Bajgain; The Rising Photographer

Climate is the average weather of the place. Climate includes patterns of temperature, precipitation, snowfall, wind, humidity and seasons. These patterns play an important role in shaping natural ecosystems and the socio-cultural and economies value of human beings. According to IPCC, “Climate change refers to a change in the state of the climate that can be identified by changes in the mean and/or the variability of its properties. (IPCC). This climate change phenomenon is due to emission of greenhouse gases from fuel burning, deforestation, urbanization, and industrialization (Malla).As this change has hampered the lives in the world by affecting mainly in food production, water resources, vegetation, and geological processes such as landslide, and floods-- climate change is one of the burning issue that has caused biggest problem all around the world. This alteration in climate has already been a threat to our environment, social, and economical aspects and it implicates that the cost of climate change in future is even going to be very higher. 

Nepal is one among the countries facing climate change. The country is land locked with geographical diversity. Nepal is divided into three ecological belts. Such as: Mountain, hills, and Terai. Different ecological belts have different types of weather. The weather variance and diverse climatic conditions in various ecological belts has made Nepal even more vulnerable to climate change. Krishna P. Acharya who is the Director General of the Department of Forests said, “Nepal is a mountainous country with low incomes and diverse landscapes. It is one of the most climate-vulnerable countries in the world”(Seiff). In one hand, Nepal is very vulnerable to climate change and the other hand, low literacy rates, wide spread poverty and a high dependency on natural resources has restricted the capacity of Nepal in adapting climate change risks. Therefore, climate change in a less developed mountainous country like Nepal has high economic costs due to degradation in agricultural products, hindrance in tourism sites by inappropriate and sudden change in weather, destruction of valuable infrastructures and interruption in hydroelectric energy due to flood, landslides, and other natural calamities.

The main aim of this paper is to understand how and why the climate change in Nepal has caused high economic costs. In order to see the increasing economic cost of climate change, four main independent variables, i.e. agriculture, tourism, infrastructures (valuable plants and roads), and hydropower will be used. The methodology of this research paper is online research methods. The data used in this research paper are all secondary data. The secondary data are extracted from credible online sources. This paper includes only qualitative type of data. The paper strives to answer the following questions:

  1. How climate change has affected in agriculture, tourism, infrastructures, and hydropower?
  2. Why the climate change in Nepal has very high economic costs?

Literature Review

            Climate change is already hitting many countries around the world and the major victims of the global warming are especially the developing countries.  Africa is also very vulnerable to climate change that impacts across a variety of economic sectors. Some countries in Africa like Kenya are heavily dependent on natural resources for their economy therefore; these countries have significant impacts on the growth and their socioeconomic livelihood. Africa is predicted to experience greater impacts than other regions in the world, due to its great vulnerability and lower adaptive capacity. Stockholm Environmental Institute (2009) had estimated that at least $500 million would be required to adapt to the climate change in 2012. The adaptation cost could even be higher every year. Various studies in Africa has predicted that as the mean temperature rises to 2.2°c by 2060, economic costs increase to the equivalent of 3.4% of Africa’s GDP. By the end of the century, the economic costs might even be equivalent to  10% of GDP as the mean temperature reach to 4.1°c (Turpie, Winkler,Spalding, Midgley). Therefore, Africa is very vulnerable to climate change. The economic cost is already rising due to increasing in temperature, and if Africa allocated budget for climate adaptation then the country even suffers more because they have to cut down their budget in their basic consumption needs.

Indonesia is also one of the country in the world who is very vulnerable to climate change. The mean temperature has increased from 0.2 to 0.3°c per decade in Indonesia. The annual pecipitation across the majority of the Indonesian islands is dramatically increasing which leads to natural calamities like floods and distraction in the runoff whereas decreasing rainfall during critical times of the year put the country into high risk of drought and availability of drinking water. The country is facing high economic costs due to change in climate every year. For example, in February 2, 2007, due to high flooding in the country, 420,440 people were displaced and equialent of US$ 450 million property were desstroyed. Also, there is decreasing in rice yields and other agricultural products which has decreased the revenue of the country from the agriculture farm. An Indonesian computable general equilibrium (CGE) model that fouces on the agricultural sectors has predictated that global climate change by 2030 will have a signifiant and negative effect on the Indonesian economy as a whole (Case, Ardiansyah, Spector). Global climate change influences the economic performance of all countries across the world. Especially, climate change impacts in developing countries are very noticeable. Due to less ability of adapting system in poor nations, more frequent and sever heat waves, floods, extreme weather events have leaded large number of countries into  high economic costs.


Observed climate trends in Nepal:

            The effects of climate change are mostly demonstrated by rising temperature. Similar to the global temperature, in these recent years, temperature in Nepal is also increasing at a high rate. The average temperature has increased continuously at a rate of 0.05 °c each year from 1971 to 2005. Furthermore, the maximum temperature increased by 0.06 °c and minimum temperature increased by 0.03 °c per year  between 1975 to 2001. The study has showed that except for few districts, such as: Sankhuwasabha, Sunsari, Nawalparasi, Banke, and Bardia, the spatial pattern of mean maximum annual temperature in the rest of the districts is in increasing trend. It is also observed that the annual maximum temperature is lower in the southern parts and higher in the northern parts of the country (Marahatta, Dangol, Gurung). This increasing temperature trend in Nepal over these recent years shows that the vulnerability of Nepal’s climate varinace in coming future is even high riskier.

The fluctuation in annual average percipitation occuring throughout the decades shows the trend of climate change in Nepal. The large spatial variation in annual rainfall over the country ranges from less than 150 mm to more than 5,000 mm. From the observation of data, it has showed that the highest monthly percipitation occurs in July and the lowest in November. Moreover, the study has showed that 79.6% annual percipitation occurs during monsoon season, 4.2%,  3.5%, and 12.7% occur during post monsoon, winter, and pre monsoon seasons respectively. The extreme rainfall distribution in Hills and himalayas is different from the Terai. The Terai belt sometimes receive the highest twenty four hour rainfall, which generally get less total seasonal rainfall (Devkota).The rainfall trend in Nepal has been changing over years and the continous abnormality of rainfall in coming days could even be much harmer for the country’s environment.

Impacts of climate change in agriculture and its economic cost

Agriculture is one of the most important sources of income in Nepal. In rural parts of the country many poor people are dependent in agricultural sector, because they do not have any alternative source of income. Nepal still contributes about one-third of the GDP which means Nepal’s economy is dependent in agriculture (Karkee). Agriculture system in Nepal is not fully industrialized yet. Farmers are dependent on traditional system of cultivation which means Nepal’s agriculture is predominantly small-scale and highly dependent on natural rainfall. Ghanashyam Malla--the senior agronomist of the Agricultural Environment Research Division under the Ministry of Agricultural Development, said “The impacts of climate change—extreme temperatures, irregular rainfall, and droughts—have contributed to an overall drop in Nepal’s agricultural production. Also, Agriculture Perspective Plan (APP) has claimed that summer rainfall contributes for almost 80% of the total annual rainfall over Nepal and is very vital to Nepalese agriculture. Nepal experiences extreme monsoonal rainfall during July-August and low during November-December. Increasing in temperature and erratic rainfall directly affect agriculture through effects on irrigation systems, premature dropping of some crops, change in time of flowering and others. Insufficient rain and increasing temperature cause drought whereas heavy rainfall reduces ground water by accelerating water runoff which in results causes heavy floods and landslides. Since the country has not altered the cropping season yet, the increased temperature and unpredictable rainfall every year during the harvesting period has decreased the production of maize, rice, wheat and, barley (Deshar).  Nepal is still not being able to cope up with the change in climate happening every year. The impact of climate change witnessed over the years has adversely affected agriculture in various ways. A rainfall pattern is a serious threat to agriculture and thereby rural livelihood and national economy. This is time to alter the cropping season so that agriculture and food supply would not be affected much by the change in climate.

Soil fertility and plant nutrition have very important role in sustaining agricultural productivity in Nepal. Heavy and unexpected rainfall causes drought, heavy flooding, and soil erosion and these are the main factors that causes the decrement of land and soil nutrients in Nepal. Recent studies have shown that declining of soil fertility is one of the major factors responsible for downward trends of agricultural productivity in the country. Various studies regarding the soil fertility in Nepal have estimated the soil loss ranging from 0.2-105% (Acharya, Kafle). In comparison to Terai belt, soil nutrition losses in cultivated lands of hills and mountains are high ranging up to 40-200 Mt per hectare per year. It is estimated that it takes about 500-1000 years to form one inch of fertile soil, but the heavy flood and landslides every year in Nepal does not take much time to destroy the fertility and nutrients of soil. This degradation in the soil nutrients in not only because of climate change, but it is also because of inappropriate usage of chemical fertilizers. The data on soil science results indicate that majority of Nepalese soil are low to medium in major nutrients, and very low in organic matter. It is very important to understand the intake of chemical fertilizers in the lands of Nepal according to the variance in land in different ecological belts. Despite the low quality of soil causes by climate change, in order to increase the productivity, illiterate farmers, especially in rural parts of Nepal applies low dose of fertilizer elements and sometimes the unbalanced amount of chemical fertilizers hamper the agro-production negatively (Pandey, Tamang, Baidya). Climate sensitive activities like agriculture contribute a large proportion of the country’s gross domestic product. If the climate change and inappropriate usage of chemical fertilizers causes continuous degradation in the quality of soil, then, the number of farmers giving up agricultural farming could increase enormously in future.

Climate change influences crop production to a greater extent in countries like Nepal where agriculture depends highly on natural phenomena. Huge proportions of population in Nepal are highly dependent on major food-crops mainly, rice, wheat, maize, millet, barley and potato. In 2005/06 due to the rain deficit, crop production reduced by 12.5% in the eastern part of Terai region. The economic costs of major droughts happened in 2006 and 2009 estimates that the direct economic cost from lost agricultural output was equivalent to 1.9% (2006) and 0.4% (2009) of current GDP. In 2008/2009, due to variance in climate, 3.4 million people in the country were in threat of food security. In 2010/2011, nearly 10% of agricultural land was left barren due to rain deficit which reduced production by 30% on national basis. In 2012, due to the impact of climate change on agriculture and food security of Nepal, 25% of populations were living below the poverty line. Nepal was once a rice exporter, but now the country struggles to feed its own people and in 2010, Nepal imports 316,000 tons of food. It has been projected that, by the 2070s, the agricultural losses in Nepal will be equivalent to around 0.8% of current GDP per year (Synnott). The recent climate change has already increased the cost of crop production in Nepal. For instance, drought increases the costs of irrigation water, flood and landslide causes the land degradation and increases the additional cost of production because of the need of fertilizer application for maximizing production. The additional efforts of farmers in order to increase the crops production rises the opportunity cost because they need to spend extra time in agricultural fields than before which might encourage farmers to switch their jobs. Furthermore, the decrease in production could increase the price of agricultural inputs and raises the costs of production. Farmers who are selling their products can transfer some of the increased costs to the consumers because major crops like rice, wheat, potato are inelastic. But, for the farmers who grow crops for their own self consumption cannot transfer the costs to others. Especially for poor and marginalized people whose livelihood is fully dependent on agricultural products has enormous economic costs. It could even increase the rate of population living under poverty line in future. The stability of economic growth in Nepal is questionable due to high dependence of agricultural products in natural circumstances.

Impacts of climate change in tourism and economic costs

            Tourism has become an important economic activity in Nepal. Nepal was opened to foreign visitors in 1950. After 1965, tourist visit in Nepal dramatically increased. The total contribution of Travel and Tourism to GDP was 8.9% of total GDP in 2014. In 2014, total contribution of tourism to employment was 7.5% (Gautam). For Nepal, mountain tourism has been a vital growing and significant economic sector for over half a century. Mountain ranges have always been the center of attraction for trekking and mountaineering activities. For instance, Ski-industry is very popular in mountain areas. Therefore, snow is a pre-requisite factor for this industry. But, due to the rise in temperature, the melting of glaciers and snowcaps has kept this industry in danger. Moreover, flight delays and cancellation of travel plans due to poor weather conditions in November 2011 hampered a massive number of international tourists. The regularity of this weather inconvenience due to climate change has been discouraging international and local tourists from visiting the sites. Apart from mountainous region, other tourists sites such as: Chitwan National Park, Pokhara, and  other popular tourism regions are also affected because hotels and guest houses owners experience the cancellations of booking related to weather. Safety of tourists is the major factors that will shape their decision of travelling to Nepal (Bhandari). For example, “32 people were killed and hundreds of trekkers were trapped because of sudden snowstorm in Annapurna region at altitudes of more than 5,000m (Burke, Walker)”. There are other many incidents where national and international tourists have lost their lives due to sudden change in climate. Mount Everest is one of the great attractions for international tourists in Nepal. Nepali local guides who are known as Sherpa are employed in trekking and mountaineering activities as group leaders. They earn average of $7000 annually which is above the national average income. Moreover, a team of 7 people is charged $50,000 and additional 20,000 is charged if the team wants to climb Mount Everest from East Ridge route. The current change in climate has impacted the income earning from Mount Everest. For example, over 280 people died because of sudden change in weather while climbing Mount Everest (Low, Clark). Such kinds of incidents discourage tourists from climbing Everest due to the security reason. Therefore, as like agriculture, tourism has also become a highly climate-sensitive economic sector.

Impacts of climate change in infrastructure and its economic costs:

The land of Nepal has high steep slopes which increases the high rate of surface erosion. The combination of heavy precipitation in the central and eastern Himalayas during the monsoon poses high risks of floods, landslides, and soil erosion. After the 2015 earthquake, Nepal is even vulnerable to landslides. The record has showed that over 3,000 landslides have been observed after the earthquake. In June 16, 2013, the flood affected approximately 4,400 people overall in the country and displaced 2,500 houses only in Darchula district. Except in Darchula, one hundred and fifty eight homes were swept away in other districts. Moreover, the flood also damaged bridges, highways, roads, and hydropower houses in the country (Gaire, Delgado, Gonzalez). These disasters such as: floods and landslides occur almost every year in Nepal, seriously affects the everyday lives of people and causes enormous damages to physical properties. Nepal is already poor and the country struggles in investing of capital in physical properties like road, technological instruments, building, and others. There is very less possibility of compensation from government regarding this destruction of physical properties, so the economic cost of infrastructures in the country is very high due to climate change.

Impacts of climate change in hydropower and its economic costs

            Climate change has caused certain uncertainties associated with the hydropower systems. Hydropower is already a complex system and climatic changes add more complexities in the hydropower cycle. Fluctuation in Evaporation, precipitation, and runoff sometimes affect the magnitude of water and the new balance in the cycle of existing hydropower plants may not function with designed capacities. And the cost of changing the designed technology is very high. Moreover, hydroelectric plants are highly dependent on predictable runoff patterns and during the dry season the hydroelectric energy production could be in serious risk. As because of hot temperature increasing every year in Nepal, snow melts in Himalayas will increase hydro electric energy for some years while the potential will decrease after long years. Hydropower energy provides around 90% of total electricity in the country and it is one of the important key factors in achieving Nepal’s economic growth. Many large factories and industries are reliable in hydropower for their production because diesel, petrol, and fuel have to import from India which is very costly. During dry seasons, industries sometimes are forced to close down the production activities due to load shedding.  And it has been calculated that the stress of climate change on hydroelectricity production is costing the equivalent of 0.1% of GDP per year on average and 0.3 in every dry seasons (Pathak). Hydropower is clearly among the most vulnerable areas to climate change because water resources are closely linked to climate change. The economic cost of hydropower due to climate change could even be higher due to disruption in runoff in near future.


Nepal is considered to be highly vulnerable to the effects of climate change. Current climate variability and major events such as landslides, soil erosion, floods, and droughts, are already causing major impacts and economic costs in Nepal. The effects of climate change in agriculture, tourism, infrastructural losses, and hydropower energy is very high. Nepal is mainly dependent in agriculture and tourism for the country’s economic development and climate change has already hit sharply in these two major factors. If we combine all the losses from various factors due to climate change, the overall economic cost is very high. It is estimated that the loss happening from the extreme events of climate change in Nepal is equivalent to an annual cost of 1.5 to 2% of GDP. If we do not respond to these climate related risk areas now, then the future economic cost of climate change in Nepal could even be higher i.e. the additional of 2 to 3% of current GDP per year by mid-century (Ministry of Science, Technology and Environment). The threat of climate change is really the serious concern of Nepal. Large number of population in Nepal is still not aware of climate change condition. Due to the lack of knowledge on climate change, mainly indigenous people living in rural parts of Nepal who are solely dependent in agricultural products for their livelihoods are more vulnerable groups in Nepal. Therefore, it is time to play vital leadership roles regarding climate change in the country. Local leaders, media, and local community head should raise awareness of the impacts of climate change and the need for integrating adaptation to fight against climate change. Communities who are highly at risk of climate change should be trained in understanding the climate vulnerability and the tools in managing risks by identifying the adaptation methods. The individual citizens’ leadership role is very important to reduce the human activities that have been causing global warming. Leadership roles play by individual citizens is the major effective contribution to climate protection.









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Comments 10

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Jill Langhus
Jul 19, 2018
Jul 19, 2018

Hi Milipa,

Thanks for sharing your very thorough and informative post about the problems associated with climate change in Nepal. I'm glad to see that you addressed the problem but then gave solutions at the end. What do you consider to be the best "adaptation methods" for communities to use to work around the changes they are experiencing? Have you seen in increase in awareness and education recently?

Jul 19, 2018
Jul 19, 2018

Hi Milipa, it is great to see your focus on being proactive to reduce the impact climate change is having and will continue to have in Nepal. I hope you can continue to lead the way and find cost-effective solutions that the government, communities and businesses can implement to help protect local people and the environment.

Sunita Basnet
Jul 19, 2018
Jul 19, 2018

Hi Milipa,
Thank you for sharing a very rich and informative article on the impact of climate change in Nepal. In general, climate change has been a big issue in Nepal and it has severely affected our everyday life in Nepal. In the future I am interested to read more about how the climate change has affected local people’s everyday life and more from local people’s perspectives. Does climate change affect men and women disproportionately and if so how.

Waiting to read more from you.

With lots of love and support

Stephanie Mah
Jul 20, 2018
Jul 20, 2018

Hi Milipa,
Thanks for sharing on climate change in Nepal.thank God you were able to fine solution to the problem, may he Continu to give you knowledge and strainght.

Jul 20, 2018
Jul 20, 2018

Dear Milipa,
Thanks for the information shared about Nepal and climate change.Climate change generally is an issue for discussion all over the world.Apart from Government , media educating the people about climate change and its effect, the community of people itself has a lot of role to play when its comes to preventing hazardous effect of the change in climate.
We can only hope climates get better in Nepal and all over the world.
Much Love

Sister Zeph
Jul 21, 2018
Jul 21, 2018

Thank you for writing such a powerful note my dear, I have been thinking that Nepal is all about hills and weather is so nice but after reading your essay it feels like we have to take most serious the climate change not only for Nepal but for all world, thank you very much for all your sincere efforts to spread the awareness about climate change

Jane Frances Mufua
Jul 23, 2018
Jul 23, 2018

Thanks Milipa for sharing this post. In as much as it helps us to understand the issues related to climate change in Nepal, at the same time it is challenging us to also look at this issues in our community.

Naheda Shaikh
Aug 03, 2018
Aug 03, 2018

Hey Milipa,
thank you so much for sharing research base article, climate change is the burning issue at present and grassroot people are suffering more than urban people. I have been working in this field from last ten years, produces some radio programmes too. keep writing and sharing.


Jacqueline Namutaawe
Aug 06, 2018
Aug 06, 2018

Climate change is now global in nature unlike a few years ago. It is now universal in most of the communities,nations as it transcends regional and national boundaries. The causes and sources of the challenges posed by climate change are increasingly complex and multidimensional thanks to the solutions you have highlighted.

Veronica Ngum Ndi
Aug 09, 2018
Aug 09, 2018

Dear Milipa
Thanks for sharing your inspiring story.Climate change is an issue that affects us all.Thanks for the solutions you suggested