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The issue of transboundary river management is highly pertinent to South Asia with conflicts emerging in water resource management and utilization which indeed affect the beneficial uses of downstream states. The paper considers the situation of the Teesta river basin to assess the water unavailability driven agricultural shock, cost of loss and damage of the downstream region, identify the mutual benefits of water collaboration, and suggest potential adaptation options for water unavailability. The study found during 1995–2010, the annual mean discharge in the upper Teesta floodplain was 707 cumec, where the downstream discharge was 140 cumec and during 2005–2010 the downstream region received less than 8% of the mean annual discharge which may be attributed to reduced flow from the upstream region due to the intense operation of dams and barrage. Consequently, the water reliant 5,000 villages and 12 sub‐districts of lower Teesta basin of Bangladesh were found to be experiencing immense hydro‐socioeconomic impairment and food insecurity. The study estimates that in the Rangpur region, total loss and damage of Boro rice production is 15,08,020 metric tons during 2006–2015, and in the Nilphamri total loss and damage is estimated 9,83,054 metric tons during the same period. Here, the total computed economic loss for both the region is $564 million from 2006–15 FY, which remarkably trims down the overall agricultural production and socio‐economic situation in the lower Teesta region of Bangladesh and fuel the hydro‐economic and political tension between the close riparian. [ABSTRACT FROM AUTHOR]