ABSTRACT Considering the intensified floods in the tropical river basins, this study assesses the climate change‐induced flood risk accounting for the reservoir releases associated with crop damage and the monetary benefits from paddy cultivation. Using the three best‐performing Global Climate Models (GCMs) out of nine, it analyzes the flood risk for agricultural production associated with a design flood in the typical Mahanadi River delta under a retrospective and six (2010s, 2040s and 2070s; and Representative Concentration Pathways (RCP): RCP4.5 and RCP8.5) projected scenarios. Subsequently, a probable flood adaptation strategy employing alternate rice planning in the near‐future period and a selected GCM is proposed. It reveals an increased flood hazard in the mid‐century followed by a decline towards the end of the century. Prolonged duration of low flood depth leads to very high crop vulnerability to floods in the projected periods under both RCP4.5 and RCP8.5 scenarios. While a little to moderate increase in overall flood risk is depicted by the MIROC‐ESM‐CHEM model‐based predictions, the HadGEM2‐AO and IPSL‐CM5A‐MR models indicate high flood risk in the future projected periods as compared to the historical episode. An alternate agricultural planning considering the net return from crop production can serve as a potential adaptation strategy dealing with the harsh effects of extreme floods in the river delta. The advocated methodology of flood risk assessment and adaptation using hydrodynamic flood modelling with consideration of reservoir releases is one of its kind and can be implemented in any world river basin.