Climate Risks to Nepal's Energy Transition: Loss and Damage from a Glacial Lake Disaster Disrupting the Trans-Himalayan EV Supply Chain • Stimson Center

Issue Brief

Climate Risks to Nepal’s Energy Transition: Loss and Damage from a Glacial Lake Disaster Disrupting the Trans-Himalayan EV Supply Chain

Analyzing post-disaster impacts to energy infrastructure and EV imports in Nepal highlights systemic climate-related risks to mountain trade corridors

By Abiral Khatri, Austin Lord and Jakob Steiner

A year after a transboundary glacial lake outburst flood (GLOF) severed Nepal’s primary trade corridor with China at Rasuwagadhi, the economic aftershocks continue. This brief quantifies what is rare in climate loss and damage research: a government-verified fiscal loss, traceable through a country’s own customs accounts to a single cryosphere event. Examining the economic aftermath of this disaster highlights the need to systematically assess the structural vulnerability of energy infrastructure and supply chains exposed to shifting climate risks in other corridors across High Mountain Asia.

August 4, 2026

Resilience & Sustainability

Executive Summary

In July 2025, a glacial lake on the Purepu Glacier roughly 30 kilometers north of the Nepal-China border drained suddenly, generating a flood surge that destroyed the critical Miteri “Friendship” Bridge at the Rasuwagadhi border post in addition to other critical infrastructure along the river corridor.¹ This event impacted Nepal’s energy landscape in two major ways: by disabling several hydropower projects for a sustained period and severing the overland corridor through which waves of electric vehicles are imported. These impacts highlight the criticality of this particular corridor, which became a chokepoint,² and highlights a structural vulnerability at the heart of Nepal’s energy transition that climate-related hazards are now exposing with increasing frequency.

In the six months following this event, Nepal’s customs data show a 95% collapse in trade through Rasuwagadhi, Nepal’s primary China-facing corridor – with a total of NPR 893 million (~USD 6.6 million) in foregone government revenue from electric vehicle (EV) imports alone. This interruption is significant because, as the New York Times recently noted, Nepal has recently emerged as a world leader in EV adoption, with 76% of new cars sold now electric”.³ In the wake of the disaster, ongoing demand for Chinese goods prompted a near-overnight shift to a previously marginal high-elevation route through Mustang district called the Kora La, which briefly became the country’s primary northern supply corridor.

This striking geographic shift in trans-Himalayan trade flows reflects a broader pattern, where disaster shut down Nepal-China corridors, prompting workarounds via other routes where infrastructure is still being developed. For example, the Rasuwagadhi route itself assumed primacy only after border infrastructure along the original Nepal-China “Friendship Highway” through the Tatopani in Sindhupalchowk district was damaged by the 2015 Gorkha Earthquake and co-seismic landslides along the route,⁴ which was then followed by a similarly devastating trans-Himalayan glacial lake outburst flood in 2016.⁵ Situating the 2025 flood within a broader context, we argue that this disaster and the supply-chain rerouting that followed are neither isolated nor anomalous events. Instead, they reflect a broader pattern of structural vulnerability across High Mountain Asia, where expanding trade networks, often concentrated within specific watersheds, intersect directly with unstable, climate-exposed cryospheric systems. Similar patterns of exposure are familiar in other trade corridors across High Mountain Asia, including focal areas for the Belt and Road Initiative (BRI) such as the Karakoram Highway in Pakistan and the Pamir Highway in Tajikistan.⁶ Amid increasing climatic volatility and recurring heat waves, both policies for infrastructure development and energy transition plans need to reckon with these shifting risks.

This brief also makes a methodological contribution to the growing conversation on climate loss and damage attribution. Nepal has spent years searching for ways to put hard numbers on climate loss and damage. The July 2025 Purepu GLOF provided one, not through modeling or post-disaster surveys, but through analysis of the government’s own trade records. This case study offers a useful method for linking a specific, quantifiable, and government-verified fiscal loss with a climate-induced hazard — indicating a workable approach for reckoning with cryosphere-related loss and damage⁷ across the Himalayas and other at-risk regions of High Mountain Asia.

Key Takeaways

In July 2025, a glacial lake outburst flood (GLOF) in the Tibet Autonomous Region (TAR) of China destroyed the main bridge that supports Nepal-China trade at Rasuwagadhi, severing the corridor through which around 85% (measured by value) of Nepal’s electric vehicles were imported, affecting a surging EV market central to the country’s energy transition.
Nepal’s own customs data⁸ show Rasuwagadhi’s trade volumes collapsed by over 95%, with an estimated NPR 893 million (~USD 6.6 million⁹ in foregone government revenue from electric vehicle imports alone over the same six-month window).
A previously marginal border crossing in Mustang district called the Kora La emerged almost overnight as the main alternate route. Recent trade data suggest it has become a durable fixture of Nepal’s EV supply chain rather than a temporary detour – eleven months later, the deficit had not closed.
This case shows how event-driven analysis of climate-impacted trade dynamics, using official customs data, can add a dimension to Loss & Damage estimation that is both firmly quantitative and evidence-based.
A proactive approach to assessing climate risk and potential loss and damage is needed to protect critical infrastructure and trade revenue from similar hazards in other at-risk regions of High Mountain Asia.

A Glacial Flood, a Friendship Bridge, and an Emerging EV Market

On July 8, 2025, the border and customs infrastructure at Rasuwagadhi (Figure 1) that enabled the majority of trans-Himalayan trade was destroyed by a floodpulse from an initially unknown source upstream in China. Satellite-based analysis later identified the source of the flood as a transient supraglacial lake on the Purepu Glacier, which sits above 5,000 meters on the northern flank of the trans-Himalayan divide, roughly 30 km north of the Nepal-China border. The resulting flood traveled down the uninhabited Lhende Valley, destroying the Miteri (Friendship) Bridge at the Rasuwagadhi border, inundating Nepal’s dry port at Timure, and damaging hydropower infrastructure along the river corridor in Nepal.

Background Reading: For more details on this disaster, supraglacial lake dynamics, and the ways satellite imagery helped scientists piece together this puzzle, please refer to this Issue Brief on “Investigating an Emerging Climate Hazard” that Stimson published in the immediate aftermath of the disaster last July.

Figure 1: The Rasuwagadhi border with the GLOF location and initial path shown in blue (after which the flood followed the highway shown in red), which destroyed the border bridge and impacted hydropower downstream, taking 8% of the national grid offline. Also shown are two past high impact events related to a changing cryosphere that occurred in the area, highlighting the clustered occurrence of such events in this region. (Source: Authors)

A total of 28 people were reported killed or missing in Nepal and China combined, making it one of the deadliest GLOF events in the Himalaya in recent decades.¹⁰ When the floodwaters hit the dry port at Timure, they swept away 64 vehicles, including container trucks and the cargo they were carrying — among them 35 brand-new electric vehicles imported from China.¹¹

Figure 2: Images of the wrecked dry port and submerged vehicles circulated widely on social media (Source: Setopati).

Figure 3: Inundation at the dry port and damaged EVs – others were carried away downstream by the flood.(Source: Online Khabar, July 8th 2025)

Notably, the event occurred during a lull in monsoon rainfall and following a warm period, pointing to glacial processes rather than precipitation-driven causes. The rapid melt that caused the lake to expand was likely caused by a previous warming trend and increasing climatic volatility that preceded the event. Time series analysis of satellite imagery indicated that this lake on the Purepu Glacier’s surface had been expanding rapidly through the spring of 2025, driven by above- average temperatures in the region that year; on July 7–8, the lake drained abruptly, with post-event imagery showing a surface area contraction of nearly one-third. (For more technical detail on the evolution of these hazards, see this detailed assessment from HiRISK, released in July 2025¹²). Supraglacial lakes are often ephemeral, and have not generally surfaced in national assessments of potentially at-risk glacial lakes – though this event clearly signals a crucial need to better account for and monitor them.

For nearly a decade prior to the disaster, Rasuwagadhi was the dominant gateway for Chinese goods entering Nepal, including the overwhelming majority of the country’s electric vehicles.¹³ At the same time, repeated closures suggest that Rasuwagadhi has also proven to be a chokepoint¹⁴ in the most literal sense: a narrow yet critical passage whose fragility was structurally embedded long before the flood arrived. In the decade before the disaster, damage inflicted by the 2015 Gorkha Earthquake, recurring landslides, and prolonged closures during the COVID-19 pandemic had all highlighted its vulnerability.¹⁵ Most importantly, a 2024 study that assessed GLOF risk across major China-Nepal trade corridors had identified this corridor as the one with the highest potential GLOF risk.¹⁶ Even though this specific supraglacial lake was not previously identified as a major risk, researchers had already flagged this specific corridor as highly exposed. In this way, despite common depictions of the event, this was not truly a “surprise’”.

This event disrupted both current energy systems, damaging hydropower facilities and complicating Nepal’s search for energy security, and ongoing energy transitions to the imagined electric future, embodied in Nepal’s rapidly growing market for electric vehicles. In the wake of the flood, the bridge at Rasuwagadhi remained impassable for close to six months, severely impacting trade. The construction of a temporary Bailey bridge restored a physical connection at Rasuwagadhi in January 2026, but as Nepal’s customs data show, trade did not bounce back to pre-flood levels. Rather, analysis of customs data shows that the disaster prompted an immediate and marked shift in traffic, especially for Chinese EV imports, to a different route through Mustang district that lies roughly 200km to the west and crosses a high elevation pass called the Kora La (4,660 meters, or 15,290 feet).

Cascading Impacts on Energy Infrastructure & Trade Corridors

The flood also impacted energy infrastructure along the Bhotekoshi-Trishuli River below Rasuwagadhi: damaging several hydropower projects and taking approximately 250 MW of power generation capacity offline (equivalent to ~8% of Nepal’s national total). Restoration timelines varied by project, but the full resumption of reduced hydropower production took several months – reducing power supply and resulting in significant lost hydropower revenues.

While precise figures remain difficult to establish given the tapering nature of the outages, we estimate a total loss of foregone generation revenue on the order of ~USD 15 million.¹⁷ This estimate is consistent with the scale of hydropower-related losses documented due to comparable events in Nepal, such as the late-monsoon storm of September 2024¹⁸ and the flooding in Eastern Nepal in June 2025 Eastern Nepal floods caused an estimated USD 63 million in losses.¹⁹

The 111 MW Rasuwagadhi Hydropower Project located immediately downstream of the border facilities, was directly impacted by the flood.²⁰ This project had begun construction in 2014, but progress was repeatedly stalled or delayed due to the impacts of the 2015 Gorkha Earthquake, the COVID-19 pandemic, and a series of lesser crises and shocks. The project was only completed in early 2025 before being shut down entirely after the July flood for more than five months, and a year later, the project was still only functioning at 60% capacity. In early July 2026, plans to resume full project operations were again disrupted by a smaller sediment-laden flood that hit Rasuwa in July 2026.²¹ This tale of this project’s encounter with recurring geophysical hazards and delays highlights chronic challenges within the Rasuwa corridor that precede the 2025 disaster—as well as general patterns of promise and precarity that shape hydropower development across the Himalayas.²².

A brief review of the geopolitical context that surrounds Nepal’s hydropower development also adds another important dimension here. Nepal is dependent on hydropower for over 95% of its electricity and has long struggled to achieve domestic energy security. As more hydropower projects have been completed and Nepal has achieved greater energy security, new policies designed to increase domestic electricity consumption, raising energy access and living standards for the Nepali people, have been a priority. The push to expand the market share of electric vehicles is a critical part of this, buoyed also by an interest in combatting air pollution in Kathmandu.

However, in recent years, Nepal’s power export market has been further constrained by India’s directives on cross-border electricity trade,²³ which since 2021 have effectively blocked power purchase agreements for hydropower projects involving Chinese equity, financing, or engineering content. Nepal has responded by redirecting licenses and contracts away from Chinese developers toward Indian ones,²⁴ hoping to unlock India’s power market — which currently remains the only viable large-scale export destination.²⁵ For this reason, facilitating the rapid import of Chinese electric vehicles — the primary technology through which Nepal planned to monetize its stranded electricity surplus — via low border tariffs was never a purely environmental initiative. It functioned as a macroeconomic release valve, converting surplus generation capacity into reduced reliance on imported petroleum.

Critically, the July 2025 flood exposed the systemic risk in this arrangement by striking both sides of the energy ledger simultaneously: The mass-flow event that cut off the vehicle imports needed to consume clean power also physically affected hydropower generation capacity in the same river basin. While analysis of risks to Himalayan hydropower is more common (if still largely and strategically ignored²⁶), analysis of how disasters like this affect other aspects of energy transition are underexplored. Therefore, we have conducted an in-depth analysis of the impacts to the EV supply chain, which offers fascinating insights into how systemic risks and adaptations to those risks are evolving.

Nepal’s EV Transition and a Chokepoint for Clean Trade

Over the past five years, Nepal has become one of the most striking electric vehicle adoption stories in the world ²⁷ –transforming from a market where EVs were a rarity to one where they account for 76% of new four-wheeler registrations, a share rivaled by few countries anywhere. By some measures, this would rank Nepal second only to Norway in EV adoption.²⁸ This was not accidental. Nepal’s government used customs and excise policies, including low or zero duties on EVs relative to steep rates on petrol and diesel vehicles, to channel demand toward electric vehicles. In part, this was also another way of putting the country’s growing hydropower surplus to productive domestic use rather than letting generation capacity sit idle.

Chinese manufacturers, led by BYD alongside MG, Deepal, GWM, Omoda, and others, have been the overwhelming beneficiaries of this transition, supplying approximately 85% of Nepal’s EV imports by value in the pre-flood baseline.²⁹ This dominant position made Nepal one of the Chinese carmaker BYD’s most strategically prioritized emerging markets as early as 2010.

Figure 4: Individual EVs transported on flatbed trucks through Syafru Besi in October 2022, just south of the Rasuwagadhi border, destination Kathmandu (Source: Authors)

Crucially, this is not only a private-car story. Nepal’s public transport fleet has also been electrifying: Small electric buses and microbuses have become increasingly common on urban and inter-city routes, again sourced almost entirely from China. The stakes here have risen further in recent months: Rising tensions in West Asia have stoked fears of a renewed petroleum supply crunch,³⁰ and Nepali commentators have argued that the priority for electrification should shift toward public buses and freight rather than private cars, precisely the segment of Nepal’s EV fleet that, as the data below show, was hit hardest by the Rasuwagadhi closure.

Both the private and public transport components of this electric transition relied overwhelmingly on the same physical pathway into the country: Rasuwagadhi (Figure 2). The corridor’s importance is not new, nor is the difficulty of getting heavy vehicles across it. When Nepal’s first batch of Chinese electric buses arrived for Kathmandu’s Sajha Yatayat cooperative in 2022, they had to be carried from the Tatopani border crossing to Kathmandu on flatbed trucks because the mountain highway itself was too rough for their low ground clearance.³¹ In retrospect, the vulnerability was hiding in plain sight: Nepal’s EV ambitions had always depended on infrastructure too fragile for the weight being placed on it.

Figure 5. The three main trade corridors from China to Nepal: from east to west, the Zhangmu/Tatopani crossing on G318 (where trade reduced substantially after the 2015 earthquake), the Rasuwagadhi crossing on the Kyirong Highway (which picked up substantially from 2015 onwards), and the Kora La crossing through Mustang. Red is the original China-Nepal Friendship Highway, in grey dashed lines is the connecting highway between the Kyirong Highway and the G318, an alternative route especially crucial when borders are suddenly closed and trade needs to be rerouted. In light blue, the sources of historic GLOF events are shown (Source: Shrestha et al. 2023), while the 2025 Purepu supraglacial flood event is shown in dark blue. Panels A and B show elevation profiles of the Kora La and the Kiyrong corridors, respectively. Labels 1 and 2 show the Nyanang Phu Glacier and the Gongbatongsha GLOF location, respectively, referred to in the brief. (Source: Authors)

Analyzing Nepal’s Import Numbers

Nepal’s Department of Customs maintains transaction-level trade records through its ASYCUDA system.³² These records are not media estimates, but the government’s own accounting makes it possible to measure the GLOF’s economic footprint with unusual precision.

Comparing the same six-month window in the year before the flood³³ and the year after, trade through Rasuwagadhi fell by 95%, from USD 302 million to USD 15 million. Kora La, previously negligible, absorbed USD 87 million, a meaningful but partial offset. Birgunj, Nepal’s largest India-facing customs point, surged 59% from USD 2.0 billion to USD 3.2 billion, suggesting active rerouting southward rather than simple concentration of loss at the northern border (Figure 4).

Figure 6. Trade corridor import volumes, H1 comparison: mid-July 2024 to mid-January 2025 (FY2081/82 baseline) vs mid-July 2025 to mid-January 2026 (FY2082/83, post-GLOF). Rasuwa and Kora La in USD Millions; Birgunj in USD Billions. Exchange rate: NPR 135 = USD 1. Source: Nepal Department of Customs, ASYCUDA Foreign Trade Statistics; authors’ calculations.

For electric vehicles specifically, private EV unit volumes rose modestly by 3.8% (14,795 to 15,357 units), though the total value of Cost, Insurance, and Freight (CIF) value fell 6.5% — a shift toward lower-priced models rather than genuine market expansion. Electric bus imports fell sharply by 41.4% (1,070 to 627 units), freezing clean municipal transport expansion at precisely the moment petroleum-supply anxieties were highest. This six-month freeze on public electric bus expansion and forced rerouting through high elevation passes added cost and time to every shipment.

On the fiscal side, customs duty, excise, and VAT collected on EV imports fell by NPR 893 million (~USD 6.6 million) over the same window — a directly attributable, government-verified fiscal loss from a single climate event on a single corridor, the kind of clean causal link that loss and damage accounting rarely achieves.³⁴

Eleven months on, the picture had not normalized. Cumulative foregone EV-related revenue reached approximately NPR 2.7 billion (~USD 20 million), with Rasuwagadhi recovering to only 44% of its prior-year run rate,³⁵ even with a temporary bridge in place. This figure is best read as an outer bound rather than a pure climate-attribution number: the longer horizon conflates corridor disruption with a separate demand-side credit tightening that took hold over the same period (Figure 5).³⁶

Figure 7. Cumulative foregone EV-related government revenue, H1 vs. eleven-month window. Source: authors’ calculations from DoC ASYCUDA data.

While the Rasuwagadhi corridor reopened in January 2026; by these measures, it has not recovered. This indicates that when these arteries fail, the shock is asymmetric: China can reroute internally, while the landlocked destination country typically cannot — producing fiscal loss and delayed development on one side of the border only.

If trade through Rasuwagadhi did not simply resume once the bridge reopened, where did it go?

Rerouting to the Kora La: The Post-Disaster Emergence of a Third Corridor

In the wake of the flood, selective trade between Nepal-China was rerouted to a tertiary western corridor, the Kora La border crossing in Mustang district (see Figure 3, above). Customs data shows that this became the dominant route for Nepal’s vehicle trade, even though it played essentially no role in vehicle trade prior. In the six-month window after the flood, trade through Kora La rose from a negligible baseline to roughly NPR 11.7 billion (USD 87 million), absorbing a meaningful, though partial, share of what Rasuwagadhi lost.³⁷

This route was important for trans-Himalayan trade and conflict for centuries – one of the few options in the central Himalaya, running south down the Kali Gandaki gorge through Jomsom to Beni – before being closed for geopolitical reasons in the 1960s. The route began to open selectively for semiannual trade fairs in the early 2000s, and border infrastructure has been significantly improved and expanded in the past decade years.³⁸ but exchange was paused during COVID-19. This route only officially reopened for operation in November 2023. ³⁹

In the case of EVs, automotive manufacturers globally rely on optimized, predictable logistics: specialized car carrier trucks moving along multi-lane paved highways. Moving vehicle fleets through the Himalayas requires reckoning with obvious geographical challenges. A well-orchestrated logistical system, coupled with infrastructure investment to enable overland shipping to the Gyirong hub on the other side of Rasuwagadhi, has enabled the rise of Chinese EV imports in recent years. That said, improvisation in response to changing conditions is often necessary – for trade through all main Nepal-China corridors, frictionless travel remains elusive.

When the shift to the Kora La route occurred, supply chains and logistics system needed to be further adapted to deal with new frictions. Much of the Kora La route now runs on paved highways on the Chinese side, but the Nepal side of the route still requires days of travel largely on unpaved roads, some of them subject to landslides, debris flows, and other hazard-induced interruptions. The road along the Kali Gandaki from Upper Mustang to Beni and on to Pokhara is, by several accounts, even more fragile than the Rasuwagadhi route, which is a major reason why it wasn’t used prior. In short, the Kora La was a “backup” route had not been tested prior because it carries its own latent climate and landslide exposure. The road’s condition had not changed; the willingness to use it had.

Reports from Mustang district describe Chinese exporters using bringing teams of individual drivers in by bus who would then pilot vehicles one by one over unpaved riverbeds and active scree at high altitude.⁴⁰Interestingly, this was not a one-off emergency response, but an apparently routine operation that continued for months, even after the Rasuwagadhi route partially reopened. This acceptance of suboptimal logistics points to additional operational costs, which analysis of customs data and foregone revenue alone cannot easily capture.

The persistence of this shift in flows is perhaps best illustrated by a single data point, emerging from recent events. In June 2026, a wave of EVs was imported ahead of the formal release of the Government of Nepal’s annual budget, which included a substantial overhaul of Nepal’s EV taxation policy.⁴¹ While investigating a potential leak that may have tipped off EV importers, Nepal’s Armed Police Force impounded 776 recently imported vehicles, and 774 had entered via Kora La.⁴² Ten months after the flood, Nepal’s largest EV distributor was still routing virtually its entire fleet through the backup corridor.

The shift to the Kora La route offers a compelling example of the resourceful adaptation to infrastructural vulnerability, but it also raises broader questions about planning and enhancing resilience in the overall system. In short, the Kora La corridor has been functioning as critical backup infrastructure for a significant slice of Nepal’s vehicle imports, yet it exists in administrative limbo, neither planned nor formally resourced. On a positive note: persistent demand for EVs within a favorable policy environment prompted importers to craft an improvised workaround that rewired supply chains and kept cars moving over the Himalayas. On a negative note: subsequent reporting confirmed that EV imports fell 24% over the full fiscal year.⁴³ The broader question seems to be: for how long can the Government of Nepal’s climate adaptation strategy rely on improvisation?

Looking Back, Looking Ahead: A Year After the Flood

A year ago, the Stimson Center argued that the Purepu disaster created “an opportunity to rethink transboundary hazard monitoring, disaster governance systems, and infrastructure planning processes in this region”.⁴⁴ After a year filled with intense political transitions which resulted in the election of a new government, it doesn’t seem that formal changes in disaster and climate risk management policy or transboundary communications have been made. Though intermittent dialogue between Nepalese and Chinese authorities remains ongoing, formal systems for transboundary hazard monitoring or alerting systems have not yet been proposed. In short, it remains to be seen if and how Nepal’s newly elected central government will adjust plans for infrastructure development to begin to truly account for these chronic risks.

Nepal-China trade corridors have closed and shifted repeatedly in recent years. As stated above, the Rasuwagadhi-Gyirong corridor only became the primary route in 2015, after the 7.8 magnitude Gorkha Earthquake and recurring landslides shut the long-dominant Tatopani route, necessitating the fast-track opening and subsequent improvement of the Rasuwagadhi route .⁴⁵ Recurrent landslides along seismically destabilized slopes near Tatopani and a separate yet similar GLOF from the Gongbatongsha Glacier that damaged border infrastructure and hydropower assets in July 2016 led to protracted closures and the de-prioritization of this route⁴⁶ (refer to Figure 3, above). The July 2025 GLOF reflects a different variation on this pattern, foregrounding climate-related glacial risks, but it reflects a broader trend of vulnerability. In some ways, it also seems that the transition to the Kora La route helped relieve pressure and defer these challenging questions for another day.

Crucially, risks of similar climate-related disasters persist across all three corridors.⁴⁷ At Rasuwagadhi, multiple high-risk glacial lakes exist upstream within and beyond the Purepu watershed, and future events could far exceed what we document here.⁴⁸ The Kora La route also leads through a region that is no stranger to hazard events: a smaller GLOF took out a bridge there in 2025, and much more damaging debris flows regularly occurring in downstream Mustang and the Kali Gandaki, which typically block the road for days on end. In the days and weeks following the July 2025 disaster, a similarly large lake on the Nyanang Phu Glacier in Nyalam County, in the watershed above the Tatopani/Sindhupalchowk corridor, was also identified as a concern by Nepali authorities (see Figure 3).⁴⁹ While this lake drained steadily as opposed to catastrophically, the risk remains—particularly given higher temperatures expected across the Himalaya during the 2026 monsoon, driven by El Nino. The proximity of these risks is stark: a recent study details how a supraglacial lake on the Nielangpu Glacier just 16 kilometers from Purepu also drained on July 7, 2025, the day just before the Purepu-Rasuwa glacial flood occurred.⁵⁰ Downstream damage from this event was negligible, but this case highlights how close Nepal came to dealing with simultaneous transboundary flood events within two corridors at once.

A year after the July 2025 flood that his Rasuwa, three things seem clear.

Climate hazards are a major risk factor for mountain economies, and the overlapping development of trade and energy infrastructure along a handful of river corridors creates increased systemic risk. In this brief, we have highlighted the lingering impacts on hydropower development and the import of electric vehicles — two trends which undermine Nepal’s energy transition.
The closure and phased reopening of Rasuwagadhi’s border infrastructure offers an unusually clean illustration of how climate-related loss and damage can be quantified through a country’s own fiscal accounts: not through modeling or estimation, but through the straightforward arithmetic of revenue collected versus revenue that would otherwise have been collected.
An improvisational shift to the Kora La helped prevent even greater losses and setbacks to Nepal’s EV transition. Given its role, the Government of Nepal should consider investing in road infrastructure upgrades and risk assessment along this route to formalize its role within contingency plans.

Zooming Out: On Economic Chokepoints in Mountain Asia

While the July 2025 GLOF was an exceptional event, it is also part of a larger pattern of infrastructural vulnerability to geohazards and emergent climate risks — a problem that needs to be more systematically assessed. This event, a product of rapid and ongoing changes in the Himalayan cryosphere, simultaneously disrupted the generation of clean energy and the functional corridor required to import its primary end-use consumption technology, demonstrating how deeply transboundary climate hazards can scramble regional economic strategies that were not designed with this kind of correlated risk in mind (Figure 7). None of these connections was engineered by any single actor, but together, they describe a system in which a single geophysical event on a single river touched multiple, otherwise-separate policy domains at once.

Similar vulnerabilities exist along other corridors connecting to Chinese markets elsewhere in High Mountain Asia where latent fragilities surface despite significant investment, engineering efforts to mitigate risks, and infrastructure development via the Belt and Road Initiative.⁵¹ While Chinese dependency is perhaps particularly acute for landlocked Nepal’s EV market, and less exaggerated in countries with better access to maritime shipping, mountain hazards regularly create chokepoints. The Karakoram Highway, for example, the backbone of the China-Pakistan Economic Corridor (CPEC), has been repeatedly severed by cascading cryosphere hazards, most notably the 2010 landslide dam on the Hunza river near Attabad,⁵² which cut the highway for roughly five years and reduced overland bilateral trade by an estimated 90%. More recently, recurrent GLOF episodes at the Shisper Glacier⁵³ have produced bridge failure mechanics strikingly similar to those seen at Rasuwagadhi. Comparable risks run through the Pamir highway corridor linking China to Tajikistan, where glacial retreat and glacial lake expansion have accelerated well above regional norms, concentrating hazard exposure precisely along the route’s most trade-critical stretches.⁵⁴ Across Nepal, Pakistan, and Tajikistan, developing economies have concentrated multi-billion-dollar trade dependencies onto a handful of narrow mountain channels.

While basic geomorphological hazard assessments have been conducted in most cases, a more thoughtful approach to modeling exposure and potential hazard chains that recognizes localized risks and quantifies potential impacts is needed.

Estimating Loss & Damage: Building from this Case Study

Attention to climate change-induced loss and damage has been steadily increasing in Nepal, and the country adopted a national loss and damage (L&D) framework in 2021.⁵⁵ A handful of prior assessments have documented significant economic losses from catastrophic events such as the Melamchi debris flood of 2021⁵⁶ / ⁵⁷ or the late-monsoon storm that caused flood-related damage across Nepal in September 2024.⁵⁸ One recent analysis estimates that climate shocks are already erasing up to 2 % of Nepal’s GDP annually, though these costs are rarely accounted for in fiscal planning.⁵⁹ What has been harder to find are official statistics, verified by the state, which can serve as hard evidence — figures derived not from modeling or post-disaster surveys, but from a government’s own routine administrative records.⁶⁰

The trade-oriented fiscal analysis presented here is exactly of this kind: based on foregone revenue figures drawn directly from Nepal’s customs accounts, with an effective tax rate essentially constant before and after the event that helps attribute these losses. ⁶¹ The July 8 GLOF triggered a six-stage cascade — from glacial trigger to structural rerouting — that converted a physical infrastructure shock into a measurable fiscal and energy transition loss (Figure 9).

Figure 9. Summarizing the transboundary risk and impact cascade, from glacial trigger to fiscal impact.

Researchers have long highlighted a lack of comprehensive assessments of loss and damage related to change in the cryosphere ⁶² Transboundary analysis of climate impacts has been attempted for other cases in Southeast Asia and the Arctic⁶³but remains challenging to do in mountain environments where data is often more scarce.⁶⁴ While trade is just one dimension of loss and damage caused by the July 2025 GLOF — and a full accounting would fully quantify infrastructural impacts losses, livelihood impacts, and non-economic losses in Rasuwa — the method utilized here is valuable because it is state-verified and therefore difficult to dismiss.

We argue that the forensic approach demonstrated in this brief, which traces a single cryosphere event through customs accounts to a government-verified fiscal loss, is replicable. Applied systematically across the known neuralgic points of High Mountain Asia’s trade corridors, it could give planners, finance ministries, and climate negotiators something they currently lack: the ability to go beyond hazard maps and offer maps of potential impacts and economic consequences. In closing, this analysis of disruption to trans-Himalayan trade in the wake of a GLOF shows not just direct losses but also how such an event can shape the broader landscape of energy transition.

The question is no longer only where the likelihood of glacial hazards is increasing — but rather what hazard exposure and the vulnerability of critical infrastructure might mean for mountain economies, energy transition plans, and national budgets built for a climate reality that no longer exists.

—

Coda

As this brief went to press, reporting confirmed that none of Nepal’s three major China-facing trade corridors were fully operational. Tatopani remained closed due to monsoon landslides, Rasuwagadhi continued operating under constrained and uncertain conditions one year after the July 2025 GLOF, and Kora La was clearing only two to three vehicles per day. This convergence of disruptions across all three corridors reflects the compounding vulnerabilities and structural fragility highlighted in this brief, as well as the urgent need for systematic climate risk assessment for trans-Himalayan trade infrastructure.⁶⁵

About the Authors

Abiral Khatri is a National Finance Specialist at Steer Group, currently advising on the ADB-GCF financed Sustainable Urban Electric Mobility Project in Nepal. He teaches Sustainability at Tribhuvan University and Embark College, Kathmandu, and is a Fellow at the Asian Mountain Academic Alliance (AMAA).

Austin Lord, PhD is a Senior Fellow with the Energy, Water, & Sustainability Program at Stimson where he leads the Early Warning Systems for Cascading Disasters in Nepal project. He provides technical support to the Government of Nepal on disaster and climate risk management and has been conducting research on energy, water, and infrastructure issues in the Himalayan region since 2012.

Jakob Steiner, PhD is a PostDoc at the University of Graz, Visiting Scientist at the Global Mountain Safeguard Research Program (GLOMOS) at UNU-EHS, Bonn, and a Fellow at the Asian Mountain Academic Alliance (AMAA). He advises the Nepal government on multi-hazard risks at Hydrosolutions. Ltd. Zurich through the Asian Development Bank’s Building Adaptation and Resilience for the Hindukush Himalaya (BARHKH) project.

Header image: Images of flood-damaged EVs and cargo trucks at the dry port just below the Nepal-China border crossing near Rasuwaghadi in the aftermath of the July 2025 disaster. (Source: Nepal News / Nepal News Library)

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