Adaptation to Climate Change in the Hydroelectricity Sector in Nepal

plane Status: Completed

Current climate variability and extreme events lead to major impacts and economic costs in Nepal. A recent Climate & Development Knowledge (CDKN) funded study on the economic impacts of climate change in Nepal (IDS, 2014) estimated that the annual cost of current climate variability is equivalent to 1.5% to 2% of current GDP. The study also found that climate change could exacerbate these impacts, leading to potentially much larger costs in the future.

One of the key risks of climate change identified in the study was for the hydroelectricity sector. Hydropower provides around 90% of the current electricity production in Nepal, but it is severely affected by climate variability (rainfall). During the dry season, river flows are insufficient to fully operate run-of-river plants (those without storage reservoirs), leading to high economic costs from unmet demand. Hydropower plants are also affected by water-induced natural disasters, notably floods and landslides associated with the summer monsoon, severe erosion and sedimentation problems and the risks of Glacial Lake Outburst Floods (GLOFs).

These risks may increase with climate change, and are thus critically important as Nepal has a very large potential for hydroelectricity. Moreover, the development of the sector is a key part of future development plans and for domestic and export growth, with planned investments of billions of dollars in the near-term.

However, responding to these climate-related risks – with adaptation –involves decision-making in a rapidly changing world. This is due to the very high uncertainty over future climate change in Nepal, particularly regarding future precipitation and runoff variability. Nepal has an extremely complex and variable climate across regions and seasons. It has high variation in elevation across the country, as well as the regional influence of the Himalaya and the annual monsoon. These factors also make the modeling of future climate change difficult; current climate projections indicate large differences in future rainfall – even in terms of the sign of change – highlighting the need to recognize uncertainty in planning adaptation.

In the above context, there is a dire need to conduct an assessment of impacts of climate change in hydroelectricity sector in Nepal. Therefore, this project aims to:
• Develop a solid evidence base on the vulnerability of the hydroelectricity sector to climate change;
• Identify viable adaptation options that enhance resilience;
• Understand and address the challenges of mainstreaming adaptation in the sector;
• Build capacity and help enable adaptation action amongst policy makers.

The project has a number of innovative aspects. First, for the analysis of vulnerability, the study is using a Climate Risk Assessment (CRA) methodology, based on a "bottom-up" decision scaling approach. This starts with assessing the Sensitivity of the performance of Nepal’s present and future hydropower systems to future climate Changes (“stress test”) and then assesses how likely climate changes are that could significantly impact the systems’ performance.

Second, in response to these risks and high uncertainty involved, the study is building iterative adaptation pathways. These start with the identification of early low and no-regret options for addressing the impacts of current climate variability (i.e. options which are good to do anyway, even without future climate change).They then identify opportunities for including low-cost measures, flexibility or robustness in the planned hydro investments over the next few years. Finally, they advance early planning and iterative responses to address the challenges facing the sector in the long-term.

Third, the study will consider how to mainstream (i.e. to integrate) adaptation into the hydroelectricity sector of Nepal. As well as raising awareness and building capacity, the study will investigate the entry points for mainstreaming and relevant institutional issues. To enable this, the study design includes the strong participatory engagement of stakeholders from the very start, including government planners and regulators, project designers, financiers, owners and operators (including the private sector) and civil society, taking into account their roles and interests in the sector.

The project is funded by Climate Development Knowledge Network (CDKN ) and is led by Nepal Development Research Institute (NDRI) in partnership with Practical Action Consulting Limited (PAC), Nepal and Global Climate Adaptation Partnership (GCAP).

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