Date: March 8, 2025
Pakistan is facing a serious problem with climate financing, needing an eye-watering $348 billion between 2023 and 2030. This funding shortfall threatens the country’s stability and sustainability, according to Dr. Shamshad Akhtar, a former finance minister.
Dr. Akhtar and co-author Memosh Khawaja highlight the pressing need for financial support to tackle climate risks and strengthen resilience. They point out that without this funding, Pakistan’s hard-earned economic progress could be wiped out by climate-related disasters.
Sadly, Pakistan is the fifth most vulnerable country to climate change, with 90% of its population at risk. Rising sea levels endanger one-third of the land, while floods, droughts, and heat waves impact around 14% of the GDP each year. Additionally, climate change jeopardizes 75% of the country’s fresh water resources, a fact confirmed by reports from the IPCC and UN.
The report assesses Pakistan’s climate financing situation, comparing it to other countries. Currently, the country only generates between $1.4 billion and $2 billion annually for climate-related efforts, which is far below the required amount.
To narrow this gap, the report calls for better international cooperation, creative financing strategies, and stronger local policies. These efforts are crucial for Pakistan to reduce emissions and meet its sustainability goals.
Pakistan’s existing climate governance system faces challenges. Although the National Climate Change Policy and the Climate Change Act of 2017 aim to address various sectors like water and agriculture, poor coordination and limited resources hinder effective execution. The Pakistan Climate Change Council and Authority established under these acts frequently encounter bureaucratic delays and funding shortages.
Moreover, unclear roles among different institutions cause confusion and slow down decision-making. To improve the situation, Pakistan needs firmer policies, enhanced cooperation, and increased financial and technical support.
The report notes that Pakistan can seek funds from various sources, such as the Green Climate Fund and the Global Environment Facility. Additional financial support can come from bilateral partnerships, like the UK’s Foreign Commonwealth Development Office and multilateral development banks, including the Asian Development Bank.
Dr. Akhtar emphasizes leveraging local private finance to complement international resources. This approach can help create a balanced and sustainable funding solution. Various instruments can facilitate this, including a carbon market to encourage emission reductions, concessional loans for climate projects, and thematic bonds for specific initiatives. Together, these tools provide a solid strategy for securing vital financial resources.
However, several challenges remain. High investment risks can deter private investors from participating in climate projects, while inefficiencies in key sectors, like agriculture, divert funds from essential climate initiatives. Limited capacity within both public and private sectors also complicates policy implementation.
To address these issues, targeted strategies, improved institutional capacities, and decisive government actions are necessary to foster a supportive environment for sustainable climate financing.
The report sums up its findings with six key recommendations: develop a strategic climate financing plan, stimulate local financial markets, design fiscal policies to promote a green economy, tap into international funding sources, enhance disaster financing, and strengthen institutional capacity.
In conclusion, the report underscores the urgent need for clear planning, strong policies, and building capacities to close the climate financing gap and accomplish Pakistan’s climate objectives.
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