ISLAMABAD: Pakistan is confronted with a significant climate financing gap, requiring $348 billion between 2023 and 2030 to address the escalating climate crisis. This shortfall poses a grave threat to the nation’s economic stability and long-term sustainability, according to Dr. Shamshad Akhtar, former finance minister and a key figure in preventing Pakistan’s default.
Dr. Akhtar, in collaboration with Memosh Khawaja, has highlighted the urgent need for substantial financial resources to mitigate climate risks and bolster resilience. Their detailed report emphasizes that without immediate action, Pakistan’s economic progress could be undone by catastrophic climate-related events.
The report draws attention to the insufficient funds available for climate adaptation and decarbonization, stressing the risk of severe economic repercussions if the situation remains unaddressed. Pakistan, ranked 5th globally in terms of climate vulnerability, faces unparalleled risks, with 90% of its population exposed to climate hazards. Critical issues such as rising sea levels threaten one-third of the country’s land, while recurring natural disasters like floods, droughts, and heat waves drain 14% of Pakistan’s annual GDP.
Further complicating matters, climate change is endangering 75% of Pakistan’s water resources, deepening the nation’s vulnerabilities, as outlined by both the IPCC and the UN.
The research report thoroughly assesses Pakistan’s climate financing efforts and compares them to international standards, revealing a massive discrepancy. While the country needs $348 billion for climate action, current funding levels fall dramatically short, averaging just $1.4 to $2 billion annually.
To close this gap, the report calls for enhanced international support, innovative financial mechanisms, and stronger national policies. It stresses that effective climate action is critical for Pakistan to reduce emissions, build resilience, and achieve its sustainable development goals.
Pakistan’s climate governance, though ambitious, faces significant barriers. The National Climate Change Policy and the Climate Change Act of 2017, which established key institutions like the Pakistan Climate Change Authority, are hindered by poor coordination, limited resources, and slow implementation. These challenges weaken the nation’s ability to effectively address climate threats and deliver results.
The report advocates for improved governance, clearer climate priorities, and stronger institutional capacity to drive climate action. It suggests exploring diverse climate financing sources, such as multilateral funds (e.g., the Green Climate Fund and the Global Environment Facility), bilateral funding, and private sector contributions to bolster Pakistan’s climate response.
Dr. Akhtar also proposes utilizing a range of financial instruments, including carbon markets, guarantees, concessional loans, and thematic bonds, to encourage investment in climate solutions. These tools would help secure the necessary funds to address the country’s pressing climate challenges.
Despite these opportunities, Pakistan’s climate financing efforts are hindered by factors such as high investment risks and limited sector capacities, both public and private. The inefficiency of government policies, combined with fragmented efforts, further delays progress.
To overcome these barriers, the report emphasizes the need for targeted interventions, enhanced institutional capabilities, and stronger governmental leadership. It outlines six key strategies: crafting a mid-term strategic financing plan, fostering local financial markets, implementing fiscal policies to support a green economy, steering international financing, reinforcing disaster financing systems, and bolstering institutional capacities.
In conclusion, the report calls for comprehensive planning, enhanced policies, and capacity building to bridge the climate financing gap and ensure a sustainable future for Pakistan.
