Climate change in Ethiopia is occurring against a backdrop of rapid population growth and urbanization, entrenched poverty and a heavy burden of disease, and there is little information on specific health risks with which to approach adaptation planning and strengthen adaptive capacity. Using detailed household surveys (400 households, 1660 individuals, 100% participation) and focus groups in two informal urban communities in the Southern city of Shashemene, we identified locally relevant hazards and found that climate change is likely to intensify existing problems associated with poverty. We also showed that despite their proximity (situated only 1 km apart) the two communities differ in key characteristics that may affect climate change vulnerability and require nuanced approaches to adaptation. Detailed, community-level research is therefore necessary, especially where other sources of data are lacking, to ensure that adaptation activities in the world's poorest communities address relevant risks.