Ethiopia is powering ahead with an energy development strategy that is highly reliant on abundant hydropower potential. A changing climate may pose a challenge to meeting expected targets. Bridging the modeling gaps between climate, energy, and economics, and effectively transforming climate changes into economic measures, is an emerging interdisciplinary field as nations attempt to position themselves for an uncertain future. Such a framework is adopted here to assess energy production and adaptation costs for four climate change scenarios over 2010–2049. Scenarios that favor a drying trend countrywide may lead to losses of 130–200 terawatt-hours over the 40-year period, translating to adaptation costs of US$2–4 billion, compared with a no climate change scenario. Even given these potential losses, energy development utilizing hydropower appears economically reasonable from this deterministic, sector-independent evaluation. This development is desperately needed, independent of future climate change trends, with the hope of appreciably reducing vulnerability to variability.

© 2012 Blackwell Publishing Ltd.