It has long been recognized that there is a link between sustainable development, poverty and consistent access to useable water. Increased population is requiring more water and changing climate is altering the hydrological cycle making the water less accessible at the time when it is required. Combining the measurement of water availability and the socioeconomic capacity towards its access gives new insights in the fields of water resources management and poverty alleviation, which ultimately address the agenda of sustainable development. This paper customizes the water poverty index (WPI) indicators to encompass the climatic extremes and social settings to analyse the water stresses to the community people and their capacity to manage the water extremes focusing on the water availability in climatic variability condition in Karnali river basin in western Nepal. The indicators of the WPI were based on the multiple aspects of water focusing to water quantity and availability. The WPI is not only a useful tool to monitor progress; but it can even be used to identify areas of greatest need, thereby enabling prioritization of action in the water sector.