This paper offers an evaluation of how climate change will impact Peru’s water resources, with particular reference on implications at the headwater catchments in the Andean mountains and the coastal region.The paper highlights the importance of tropical glaciers, particularly sensitive to variations in climate. The author claims that the use of glacial water resource is of vital social and economic importance in Peru. The paper draws attention to the fact that mountains glacial water sustains many economic activities, ranging from traditional stock-breeding and mountain crops to hydropower, to the international tourist trade and associated local development. The author stresses the fragility of the present economic situation is threatened by sudden changes to the glacier environment.In the coastal region, the paper states, nearly all of the available water originates in the mountains. The coastal region is home to about half of Peru’s population and is the major centre of economic activity, with large scale public and private investment in the form of irrigate agriculture. The author claims that climate change increases the risks related to water balance and availability in coastal economic and social systems.This paper was presented at the OECD Global Forum on Sustainable Development: Development and Climate Change, Paris 2004.