This report presents the results and analysis of research that was carried out in Chitwan and Nawalparasi in 2010. The research was conducted within the remit of a participatory vulnerability assessment, within which vulnerability is defined as a function of exposure and sensitivity to climate change and adaptive capacity. The focus of this report is on adaptive capacity. Following a situation analysis of climate change and its impacts on livelihoods in the research sites, evidence of previous adaptation strategies is presented before an adaptive capacity assessment is made, drawing attention to common areas of adaptation. This is followed by a critical discussion of some key issues faced in adaptation and building adaptive capacity. The report concludes with a discussion of how the complexity of adaptive capacity can be built into its assessment.