This is an Institute of Policy Studies publication that highlights the growing interest.in recent years. in the economic dimensions of civil wars and other violent social conflicts. This paper discusses some of the conceptual and methodological problems associated with assessing the economic costs of such conflicts, and presents an evaluation of the costs of the ongoing conflict in Sri Lanka. On conservative assumptions, the war may have cost the equivalent of twice Sri Lanka’s 1996 GDP. Some of the topics in this publication include the background and consequences of the war; estimating the economic costs of war; previous studies of the cost of the war in Sri Lanka, and estimating the costs of the war.