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Glacial retreat causes the formation of glacier lakes with the potential of producing glacial lake outburst floods (GLOFs). Imja Lake in Nepal is considered at risk for a GLOF. Communities in the path of a potential Imja GLOF are implementing adaptation projects, yet no quantitative data or guidance is available to understand the benefits of these projects or how to weigh benefits against the cost of implementation. We develop and demonstrate a decision-making methodology for GLOF risk management, incorporating available scientific information and uncertainty. The methodology consists of (1) identifying flooding scenarios, (2) evaluating scenario consequences, and (3) performing an economic analysis of proposed adaptation projects. The methodology is applied to assess benefits in Dingboche of lowering Imja Lake by 3, 10 and 20 m. The results show that the baseline case (no lake lowering) has the lowest expected cost because of low valuation of agricultural land and homes in the literature. Nonetheless, the result is sensitive to changes in the analysis variables. We also found that lowering the lake by 10 or 20 m is efficient according only to the methodology used here; however, considering only direct economic damages and literature cost estimates, the costs outweigh the benefits for these projects.