{"id":1509461,"date":"2026-08-31T10:44:46","date_gmt":"2026-08-31T08:44:46","guid":{"rendered":"https:\/\/www.ie.edu\/insights\/?post_type=articles&p=1509461"},"modified":"2026-08-31T11:24:11","modified_gmt":"2026-08-31T09:24:11","slug":"nepal-and-the-economic-value-of-continuity","status":"publish","type":"articles","link":"https:\/\/www.ie.edu\/insights\/articles\/nepal-and-the-economic-value-of-continuity\/","title":{"rendered":"Nepal and the Economic Value of Continuity"},"featured_media":1509463,"template":"","meta":{"_has_post_settings":{"highlight_sharing":"default","image_sharing":"default","headline_sharing":"default"}},"schools":[],"areas":[506],"subjects":[425],"class_list":["post-1509461","articles","type-articles","status-publish","has-post-thumbnail","hentry","areas-climate-change","subjects-sustainability"],"custom-fields":{"wpcf-article-leadin":["As climate risks intensify, climate resilience must be valued as productive capital that preserves economic continuity, writes Gonzalo Delac\u00e1mara."],"wpcf-article-body":["Climate change has become a problem of persuasion. Those of us who work on natural resources and climate risk are routinely cautioned against sounding apocalyptic. Doom, we are told, is a poor currency for engagement: invoke catastrophe often enough and urgency curdles into fatalism.\r\n\r\nThat caution is not without merit. But occasionally reality refuses to abide by the conventions of good climate communication.\r\n\r\nSometimes the catastrophe actually happens.\r\n\r\nWhat unfolded along the Nepal-China border, including in Tibet, on August 26 is one such occasion. A large rock-and-ice avalanche detached in the Himalayas and entered the river system below, generating a debris-laden flood wave that propagated rapidly downstream. The resulting surge reportedly raised the Trishuli River by as much as nine meters within thirty minutes. As of the morning of August 31, more than 900 people have been confirmed dead by Nepal\u2019s disaster management authority, while 4,247 remain missing.\r\n\r\nThe economic toll is no less sobering. At least 41 bridges and some 42 kilometers of road were reportedly destroyed; more than 430 megawatts of operational generating capacity were affected \u2013 roughly one-eighth of Nepal\u2019s installed hydropower capacity.\r\n\r\nThese are not merely entries on a disaster-loss ledger. They are parts of an economic system that have abruptly stopped performing their functions. This raises a deceptively simple question: how do we value what allows life itself to carry on?\r\n\r\nEconomics is relatively well equipped to value realized losses. We can estimate the capital destroyed, output forgone, and cost of restoring disrupted services. It is more difficult to place a value on the counterfactual: the losses that resilience prevents.\r\n\r\nA reinforced bridge that withstands the flood generates no reconstruction bill. The early-warning system that keeps a community out of harm\u2019s way leaves no rubble against which to measure its return. Resilience is systematically undervalued because much of its return is realized through absence: the loss that never occurs, the disruption that never materializes.\r\n\r\nInfrastructure, moreover, derives its economic value not merely from the capital it embodies but from the flows it sustains. Before earlier flooding disrupted the Rasuwagadhi-Gyirong corridor, the crossing handled some $609 million in imports during Nepal\u2019s 2024\/25 fiscal year \u2013 roughly a quarter of the country\u2019s imports from China. When a critical node fails, the shock propagates through supply chains, prices, and employment. Climate disasters destroy more than stocks of physical capital; they impair the economic and social functions from which that capital derives its value.\r\n\r\nWe continue to describe such events as \u201cnatural disasters,\u201d as though the adjective absolves us of responsibility. The underlying hazard may be natural; the scale of the resulting risk increasingly is not. Risk is shaped by exposure and vulnerability \u2013 by what we protect and what we leave exposed.\r\n\r\nAttributing this particular collapse to anthropogenic climate change would be premature without formal analysis. The broader physical trend, however, is well established. Rising temperatures are altering high-mountain environments as glaciers retreat, permafrost degrades, and slopes become less stable. Across the Hindu Kush Himalaya, glaciers lost ice 65 percent faster in 2011-2020 than in the preceding decade. The region\u2019s cryosphere helps regulate river systems that nearly two billion people depend on.\r\n\r\nClimate change represents a negative externality on an exceptional scale: the benefits associated with the activities that generated emissions have accrued unevenly, while the resulting damages are increasingly borne elsewhere. The geography of causation and the geography of consequence scarcely coincide. Nepal has contributed only a negligible share of cumulative global emissions, yet the country must allocate its scarce resources to protecting infrastructure, livelihoods, and development gains against risks generated largely beyond its borders.\r\n\r\nA second dimension of human agency is omission. Risk reflects not only what humanity has done \u2013 accumulating greenhouse gases \u2013 but what it has failed to do: decarbonize fast enough, reduce vulnerabilities, and mobilize adaptation finance at the scale required.\r\n\r\nThis makes the conventional treatment of adaptation as environmental expenditure increasingly untenable. Climate resilience is not an alternative use of capital; it is an attribute that increasingly determines whether capital continues to perform its economic function. Adaptation is not what economies spend on instead of investing. It is becoming part of what investment itself means.\r\n\r\nThe empirical case is compelling. A 2025 World Resources Institute analysis of 320 adaptation investments across 12 countries, representing $133 billion, estimated more than $1.4 trillion in benefits over ten years<\/a> \u00a0\u2013 over $10.50 for every dollar invested. Those benefits extend beyond avoided damages to productivity, health, and broader development gains.\r\n\r\nYet capital remains strikingly scarce. UNEP estimates that developing economies will require $310-365 billion a year for adaptation by 2035<\/a>. International public adaptation finance amounted to just $26 billion in 2023. Calling this an \u201cadaptation finance gap\u201d almost understates the problem. It is a misallocation of capital.\r\n\r\nNepal makes the paradox painfully clear. Its annual GDP is around $45 billion. Its National Adaptation Plan puts priority adaptation costs through 2050 at $47.4 billion, of which only $1.5 billion is expected domestically.\r\n\r\nThrough the narrow lens of fiscal affordability, Nepal cannot afford adaptation. Through the economics of risk, the conclusion is almost the reverse: Nepal cannot afford the consequences of being unable to afford it. And through the economics of externalities comes a third conclusion: it makes little sense to expect countries bearing a disproportionate share of the damage to finance the adjustment alone.\r\n\r\nBreaking this trap requires a broader understanding of productive capital. Alongside physical, human and natural capital, there is a case for resilience capital: the accumulated capacity of an economy to absorb shocks while preserving the essential functions on which economic and social life depend.\r\n\r\nThe word resilience itself deserves rescuing. Praising vulnerable communities for their \u201cresilience\u201d can amount to congratulating them for enduring conditions they should never have been expected to endure. The mistake is to confuse resilience with resignation.\r\n\r\nProperly understood, resilience is a form of economic optionality: the capacity to preserve room for maneuver as conditions deteriorate. Alternative routes, reserve capacity, fiscal headroom, insurance, and early-warning systems take different forms but perform a common economic function: they preserve choices that a shock might otherwise eliminate.\r\n\r\nThis also challenges our understanding of efficiency. For decades, firms and governments have been encouraged to strip out slack, minimize inventories, consolidate suppliers, and maximize asset utilization. Under deep uncertainty, what appears efficient today may prove a source of fragility tomorrow.\r\n\r\nWhat looks like slack in a spreadsheet may be insurance embedded in the productive system.\r\n\r\nThis is not an argument for indiscriminate redundancy. As probability distributions change, so does the economically efficient level of redundancy. Efficiency asks how much output we can extract when things go right. Resilience asks how much we can preserve when they do not.\r\n\r\nWalter Benjamin once wrote \u201cthat things \u2018just go on\u2019 is the catastrophe.\u201d He targeted the comforting idea of progress as an uninterrupted continuum. Climate change poses a different but related problem for economics. Our models have long treated continuity as the baseline \u2013 infrastructure functions, electricity flows, supply chains hold. As those assumptions become less secure, continuity itself acquires economic value.\r\n\r\nYet much of economic analysis still proceeds as though continuity were the default. We discount future cash flows with extraordinary sophistication while often assuming the physical conditions required to generate them will persist.\r\n\r\nThe question is no longer merely what adaptation costs. It is what kind of future our prices are assuming \u2013 and who pays when those assumptions prove wrong.\r\n\r\nEconomics has become remarkably adept at valuing failure once it occurs. The harder task is to value the counterfactual: the losses resilience prevents, the productive capacity it preserves, and the continuity it makes possible.\r\n\r\nIn an unstable climate, continuity can no longer be treated as the default.\r\n\r\n \r\n\r\n\u00a9 IE Insights."],"wpcf-audio-article":["https:\/\/www.ie.edu\/insights\/wp-content\/uploads\/2026\/08\/Delacamara-Audio-26.mp3"],"wpcf-article-extract":["As climate risks intensify, climate resilience must be valued as productive capital that preserves economic continuity, writes Gonzalo Delac\u00e1mara."],"wpcf-article-extract-enable":["1"]},"_links":{"self":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles\/1509461","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/types\/articles"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media\/1509463"}],"wp:attachment":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media?parent=1509461"}],"wp:term":[{"taxonomy":"schools","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/schools?post=1509461"},{"taxonomy":"areas","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/areas?post=1509461"},{"taxonomy":"subjects","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/subjects?post=1509461"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}