After the flood: Nepal from geological to economic and social reckoning

Nepal is recurrently exposed to a wide range of natural and human-induced hazards, including earthquakes, floods, landslides, fires, heat waves, cold waves, lightning, windstorms, hailstorms, droughts, and epidemics. These hazards do not arise solely from natural processes; anthropogenic activities also play a significant role in exacerbating existing risks, transforming hazards into disasters, and amplifying the magnitude and severity of their impacts.

Each year, such disasters result in substantial loss of human life, property, livelihoods, infrastructure, and productive assets, while simultaneously posing significant impediments to Nepal’s pursuit of sustainable development objectives. In recent years, the adverse impacts of climate change have further intensified disaster risks and heightened uncertainty across the Himalayan, Hill, and Terai regions of the country. Consequently, Nepal is recognised as the “Hot Spot” of disaster risk.

The disaster that occurred in the Bhotekoshi–Trishuli region on August 26 appears to have resulted from a complex geological process. It should not be understood merely as a flood or a single hazard event. Rather, it demonstrated how a high-mountain geological process can, within a matter of hours, escalate into a major humanitarian, physical, social, economic, and national-scale disaster.

Initially, the event was interpreted as a glacial lake outburst flood (GLOF), earthquake, or ice–rock landslide. However, subsequent satellite-based analysis indicated that a large mass of ice and rock descended rapidly from an elevation of approximately 5,200 meters to around 1,200 meters, generating a highly destructive debris flow composed of rock, soil, ice, and water. Within a few hours, this cascading process caused extensive loss and damage to downstream settlements and infrastructure.

According to preliminary analysis, the rapid descent of the rockslide generated seismic vibrations equivalent to approximately a magnitude 5.2 earthquake. The resulting debris flow, consisting of rock, soil, ice, and water, travelled approximately 17–18 kilometers towards Rasuwagadhi within about seven to eight minutes. Studies indicate that the average velocity of the resulting flood flow was approximately 180–185 kilometers per hour. As the debris flow moved downstream through the Lhende Khola, the ice progressively fragmented and partially melted. The high-velocity flow entrained water, rock, sediment, and other materials from the river and its tributaries, transporting substantial quantities of debris and sediment downstream.

Approximately three hours later, a second landslide generated seismic vibrations equivalent to a magnitude 4.2 earthquake. Consequently, several natural impoundments formed in the Lhende Khola. As water and debris accumulated behind these impoundments, the potential for further cascading hazards and downstream impacts increased. After some time, however, the impounded water was released as the natural impoundments drained.

The event clearly demonstrates the need for Nepal to strengthen an integrated multi-hazard early warning system by linking seismic monitoring, satellite and remote-sensing technologies, glacier and mountain-hazard monitoring, river and hydrological observation, and cross-border information and data sharing.

The disaster originating in the upper Himalayan region of the Lhende Khola was not confined to local-level impacts. It also highlighted the significant interdependence between national economic systems and strategic infrastructure. The high-velocity flow of water, ice, rock, soil, and sediment damaged roads, bridges, settlements, hydropower projects, and electricity-transmission infrastructure, with cascading impacts on the continuity of transportation, energy, and communication services.

According to the Government’s preliminary assessment, loss and damage of approximately $US 2.7 billion has been estimated. This loss and damage can broadly be categorised into three dimensions:

First, the human and social impacts, including loss of human life, displacement and disruption affecting families and communities, and impacts on health, education, livelihoods, and social systems.

Second, physical and economic loss and damage, including damage to roads, bridges, settlements, hydropower projects, electricity-transmission infrastructure, private property, productive assets, and other critical infrastructure.

Third, long-term economic, social, and national development impacts, including direct and indirect impacts on production, employment, trade, service delivery, investment, public finances, and Nepal’s long-term development objectives.

Among these dimensions, loss of human life constitutes the most severe and irreversible impact of the disaster.

The Bhotekoshi–Trishuli disaster has significant fiscal and public-revenue implications, extending beyond the direct destruction of physical assets. Damage to roads, bridges, border infrastructure, hydropower facilities, electricity-transmission systems, commercial establishments, and other productive assets has disrupted economic activity and, consequently, reduced the government’s potential revenue base.

The disruption of major cross-border trade and transportation corridors is particularly important from a fiscal perspective. Reduced imports and exports, interruptions in the movement of commercial goods, and lower business turnover can result in declines in customs duties, value-added tax, excise duties, income-related taxes, and other trade- and commerce-related government revenues. Prolonged disruption of border trade could therefore have implications for both central government revenue collection and the revenues of affected local governments.

At the local level, the decline in commercial activity can also reduce local taxes, business registration and service fees, property-related revenues, and other locally generated income. Businesses and households affected by the disaster may simultaneously require greater public assistance, creating a situation in which local governments face declining revenues while demand for public expenditure increases.

The disaster is also likely to generate substantial additional public expenditure. Government resources will be required for search and rescue, emergency response, humanitarian assistance, temporary shelter, restoration of essential services, road and bridge rehabilitation, reconstruction of damaged public infrastructure, and recovery of affected communities. These unplanned expenditures may place considerable pressure on government budgets and require the reallocation of resources originally intended for development programmes and other public services.

Damage to hydropower generation and electricity-transmission infrastructure has additional fiscal implications. Reduced electricity generation or transmission capacity may affect government revenues associated with the energy sector, while prolonged disruption could increase the fiscal cost of infrastructure repair and reconstruction. If electricity exports are affected, the country could also experience reduced foreign-exchange earnings and associated public-sector revenues.

The disaster may therefore create a fiscal imbalance through the simultaneous occurrence of revenue losses and increased expenditure requirements. The government may need to mobilise additional domestic resources, reallocate budgetary allocations, obtain concessional financing or external assistance, and establish special recovery and reconstruction mechanisms. If recovery and reconstruction requirements remain substantial over an extended period, public debt and debt-servicing pressures could also increase.

From a macro-fiscal perspective, the implications extend beyond the immediate disaster-affected areas. Disruptions to trade, transportation, energy, production, tourism, and supply chains can reduce the overall tax base and economic activity, while reconstruction requirements increase public expenditure. The resulting fiscal pressure may constrain the government’s capacity to finance other national development priorities.

Accordingly, the economic assessment of the Bhotekoshi–Trishuli disaster should distinguish clearly between direct asset losses, indirect economic losses, foregone public revenues, additional public expenditure, and long-term fiscal consequences. Such an assessment is essential for determining the actual fiscal burden of the disaster and for designing appropriate financing mechanisms for recovery, reconstruction, and future disaster-risk reduction.

The disaster therefore demonstrates that a high-mountain hazard can rapidly evolve into a national fiscal and economic shock, particularly when it affects strategically important trade corridors, border infrastructure, energy systems, and interconnected economic activities. Strengthening fiscal risk assessment, disaster-risk financing, contingency funds, resilient public infrastructure, business continuity, and diversified trade and transport routes should consequently form an integral part of Nepal’s disaster-risk management and national development planning.

Disasters propagating through river systems such as the Bhotekoshi–Trishuli–Narayani can generate impacts far beyond a single district, disrupting transportation, energy, supply chains, trade, tourism, and national economic activity. Such cascading risks threaten economic stability, infrastructure continuity, energy security, and strategic connectivity. Nepal must therefore shift from reactive disaster response toward risk-informed prevention, preparedness, early warning, and resilience. Major infrastructure projects should incorporate multi-hazard risk assessments and resilient design. Priority should be given to real-time monitoring, satellite observation, automated hydrometeorological systems, AI-based risk analysis, and cross-border information sharing. Although disasters cannot always be prevented, their human, social, economic, and environmental impacts can be substantially reduced.

Meen B. Poudyal Chhetri is an Adjunct Professor, at the Queensland University of Technology (QUT) and Executive Director, Nepal Centre for Disaster Management (NCDM), Kathmandu, Nepal. He also is Vice President, Public Administration Association of Nepal (PAAN), and Nepal Advisor and Past President, Disaster Preparedness Network-Nepal (DPNet-Nepal).