The price of glacier retreat in the water resources sector

Glacier retreat is reshaping water availability in tropical mountain catchments, with direct consequences for water-dependent economic activities. This study quantifies the economic losses attributable specifically to glacier retreat in the hydropower and irrigation sectors of the Santa River Basin (Peru) for two future horizons (2040–2050 and 2090–2100) under three climate and socioeconomic scenarios (SSP1-2.6, SSP3-7.0, SSP5-8.5).

We combine a lumped hydrological model that explicitly represents glacier melt with an economic assessment of irrigated agriculture and hydropower production. To isolate the effect of glacier retreat from concurrent climate and socioeconomic changes, we apply a three-stage framework: (i) simulation of historical conditions (1981–2020) to calibrate and validate hydrology and define a baseline (2010–2020); (ii) future simulations driven by climate and socioeconomic scenarios with glacier extent fixed at baseline conditions; and (iii) future simulations including scenario-consistent glacier retreat. Economic losses due to glacier retreat are derived from the difference between stages (ii) and (iii). Agriculture losses are estimated from crop-specific water–production relationships for the main crops in the Ancash region, while hydropower losses are assessed for the Cañón del Pato plant based on flow-dependent turbine operation and electricity prices. Environmental flow requirements are included in the study.

Results show that glacier retreat reduces runoff in all months and scenarios, with the strongest impacts during the dry season. By mid-century, glacier retreat alone increases economic losses by ~8% in agriculture and ~15% in hydropower relative to futures without glacier change; by the end of the century these increases reach ~15% and ~30%, respectively. Averaged across scenarios, glacier retreat generates additional losses of about USD 170 million by 2050 and USD 360 million by 2100. Losses are highly scenario-dependent: under SSP5-8.5, mid-century losses are comparable to late-century losses under SSP1-2.6, highlighting the accelerating economic costs of high-emission pathways.

Our findings demonstrate that glacier retreat is not a marginal hydrological signal but a major economic driver in glacier-fed basins, with implications for long-term water and development planning.