Climate disasters cost Pakistan $58.8 billion as financing need reaches $331 billion by 2030 

The State Bank of Pakistan (SBP) has said climate disasters have already caused Pakistan economic losses of $58.8 billion by 2025, while the country will need an estimated $331 billion in climate financing between 2024 and 2030 to strengthen resilience and limit further losses from climate change.

Citing estimates by Climate Policy Initiative (CPI), the SBP said the requirement is equal to around 10% of Pakistan’s cumulative GDP, or about $47 billion a year, during the 2024-2030 period.

Pakistan was the 15th most affected country by climatic events between 1995 and 2024, despite contributing only around 1% to global greenhouse gas emissions.

The report said the top 10 greenhouse gas-emitting economies together account for around 70% of global emissions.

According to the SBP, Government of Pakistan estimates place the country’s climate finance needs between $200 billion and $348 billion by 2030 for climate-resilient development and implementation of its Nationally Determined Contribution.

The government’s Pakistan Climate Prosperity Plan has identified a much larger investment requirement of $1.6 trillion by 2050, focusing on development, climate, nature, technology access and phased investment.

The central bank said floods have had a direct negative impact on GDP, although this was partly offset by post-flood recovery in agriculture and rehabilitation activity. However, floods also hurt GDP indirectly by increasing input prices, the report said.

Despite the scale of need, Pakistan received only $1.4 billion to $2 billion in climate finance annually on average over the past decade.

Inflows peaked at around $4 billion in 2021, but remained far below the level required to meet Pakistan’s conditional climate commitments.

The SBP said climate finance flows to Pakistan are also lower on a per-capita basis compared with peer economies, including Bangladesh, the Philippines, Kenya and India.

The report identified three main reasons for the financing gap.

First, global climate finance is more heavily directed towards mitigation projects, which are seen as more bankable than adaptation projects, while Pakistan’s financing needs are more tilted towards adaptation.

Second, project bankability in Pakistan is affected by repeated macroeconomic instability, exchange rate volatility, elevated sovereign risk, political uncertainty, underdeveloped financial markets and weak institutional and regulatory frameworks.

The SBP said bankability depends on factors including sovereign risk, credit risk, exchange rate risk, political risk and macroeconomic stability.

Third, Pakistan has limited capacity to prepare strong climate project pipelines.

The SBP said project pipelines are important because they provide direction and confidence to Multilateral Development Banks and market participants, helping increase financing commitments.

The report said Pakistan also needs evidence-based estimates of the cost of climate inaction to strengthen the case for grants and concessional financing.

It added that Multilateral Development Banks have reported that climate finance disbursements in Pakistan are slowed by bureaucratic bottlenecks and shifting political priorities.

The report cited the World Bank’s Pakistan Hydromet and Climate Services Project, which concluded in mid-2025 with key components removed.

According to the World Bank’s completion report, weather radars, automatic weather stations and observatories were dropped because of procurement delays and institutional frictions.

The SBP said the absence of technical data systems, including an integrated Monitoring, Reporting and Verification system, makes it harder for donors to track outcomes and increases risk aversion among international lenders.

The report also cited World Bank projections that Pakistan’s GDP could fall by 4.5% to 6.5% by 2050 under an optimistic climate scenario and by 7% to 9% under a pessimistic scenario.

Agriculture and industry are expected to be the most exposed sectors.