The objective of this study was to examine the trends of climate change and its subsequent impact on human capital development under the reference of human health and education of rural community of drought prone areas in Western Sidama (6.36°–7.14°N Latitude and 38.01°–38.56°E) of Ethiopia. Tropical Application of Metrology using SATellite (TAMSAT) data of both monthly rainfall and temperature was collected from Ethiopian National Meteorological Agency (NMA) for the period of 1987–2017. Data on perceived climate change; change driven impacts people experienced mainly on their health and education and copying or/and adaptation strategies affected community practiced was collected by employing both survey and participatory rural appraisal (PRA) techniques. In order to collect data from the household level, survey was employed for 400 households who were systematically sampled from 245,592 households of five drought prone administrative districts whereas PRA was employed to collect community level data. Mann–KENDALL TEST AND SEN’S SLOPE ESTIMATES (MAKESENS) and descriptive statistics were employed to analyze these data. The analysis result shows that there is increasing and decreasing trends of both temperature and rainfall, respectively. And increasing trend is statistically significant for temperature (α = 0.05; N = 31). Consequently, this change of climate variables has brought negative impacts on human capital mainly on health and education through various paths. Physiological inconvenience, prevalence of various diseases, and malnutrition were the main paths through which climate change impacts on human health were seen whereas students’ failure in standard exam attributed to a roll over impacts of climate change since early child hood, increasing school dropout rate and decreasing demand of the households to family education mainly owing to diminish in agricultural yields were the education dimension impacts of change in climate variables. Though a temporary migration to less stress adjacent areas, receiving aids and use of health extension services were a household level copying mechanisms observed, the first two were seen to reproduce unintended negative effects such as interethnic conflicts, forcing children to drop the school and aid dependency syndrome among receivers that the household themselves, aid organizations and government should work in consortium on building resilience both at household and community levels.