Impact of Climate Change on Economic Development in Pakistan

The relationship between climate change and economic growth is a major problem as greenhouse gas (GHG) emissions are increasing in developing economies. This results in higher temperatures and more severe issues with climate change. In terms of long-term production, climate change benefits some industrialized nations like Canada and the United States. For instance, the annual gain in farmland productivity in Canada’s prairies may be between 1% and 4%, or up to $4 billion, while its tourism sector is also projected to see growth thanks to warmer weather.  However, for developing nations such as Pakistan, climate change constricts water resources, and affects economically critical sectors like agricultural productivity, ecology, fisheries, and human health.

Pakistan has experienced industrialization since becoming independent in 1947, which has impacted the environment and caused an increase in GHG emissions. Structurally, climate change has induced an imbalance in terms of economic growth. Some economic sectors are growing faster than the others as a result of climate change, which alters the GDP’s size and composition.  In Pakistan, small and medium-sized businesses are responsible for 90% of economic growth, but they only account for 7% of the credit extended by the financial sector. 14.85% in the fiscal year 2021 represents a 16-year high level of growth for the large manufacturing industries. The government’s new policies, which have prompted growth in industries including textile, construction, food, tourism, and automotive, have a cumulative effect on country’s economic growth.

GHG emissions have an impact on productivity and human health. Thousands of labour hours are expected to be lost as a result of severe temperatures. In the past ten years, more than 100 studies have proven the health risks and decreased labour productivity incurred by workers in hot environments. Safe drinking water, clean air, sufficient food, and adequate housing are environmental and social factors that can be impacted by climate change. Extreme heat events, natural disasters, and erratic rainfall patterns could all have unbearable consequences for people’s living.

The frequency and length of heat wave episodes are expected to rise. More than 1,200 people died in Karachi alone during the June 2015 heat wave, while 200 more perished in other areas of the Sindh Province.  The second-highest temperature was 53.7°C, which was recorded at Turbat (Balochistan – May 2017). In the country’s plains, heat waves frequently occur in May and June before the monsoon season.

Being a developing nation, Pakistan does not significantly contribute to the rise in atmospheric GHG. Its contribution ranks 135th and is mere 0.8 percent of the world’s total GHG contribution. However, Pakistan remains among the top ten countries most vulnerable to climate change.

Pakistan is fortunate to have distinct geographic and socioeconomic conditions. The land is mainly arid and semi-arid. Pakistan is a warm country because of its location in a place where temperatures tend to climb quickly. In the northern mountain range, it has a long latitudinal area with more than 5,000 glaciers that store frozen water to supply the nation’s water needs. However, the glaciers of the Hindu Kush and Karakorum Himalayas, which are the primary sources of irrigation, are melting quickly due to global warming, which reduces the amount of rainfall. The annual rainfall for 60 percent of the land is less than 250 mm, while only 24 percent of the land gets between 250 and 500 mm of rain per annum.

Additionally, the melted glaciers and unfavourably heavy rainfalls result in devastating floods. For instance, the floods in Pakistan have caused over 1,000 deaths, destroyed more than 2 million acres of cultivated crops, destroyed over 2,000 miles of roads and displaced thousands; 1 in every 7 Pakistanis has been affected, while the huge monetary losses continue to climb. According to the Global Facility for Disaster Reduction and Recovery Organization (GFDRR), the south and coastal regions of Pakistan will experience an increase in temperature of 1.4–3.7 by the mid-2060s. Heavy rains might worsen existing problems and partially harm the agriculture and infrastructure sectors. As a result, Pakistan may see frequent and significant weather fluctuations, which would inevitably affect the agricultural productivity.

According to the GFDRR report, Pakistan’s agricultural productivity will decline by 8–10% until 2040, with wheat being among the potentially scare food commodities. Pakistan’s agricultural productivity, wheat and rice crops would see the harshest effects of climate change in the upcoming years. It presumes that wheat yield will decrease by 6% and the basmati rice yield will fall by 15-18% across Pakistan. Such a significant reduction in crops yield could lead to food shortage and push millions of the already impoverished people towards poverty.

The poor living in the semi-arid regions of Pakistan seem to be the primary targets of climate change. These areas already experience irregular rainfall that leads to both droughts and floods. The increased climate variability brought on by global warming will notably worsen poverty in these areas. Additionally, poor people reside in areas such as slums are most susceptible to the impacts of climate change.

Multiple fiscal shocks caused by the sea level rise could also have a severe effect on coastal economies. Sea level rise puts stress on coastal ecosystems as well as the actual coastline. Freshwater aquifers, many of which support municipal and agricultural water sources as well as natural ecosystems, can get contaminated by saltwater incursions. Because there is a significant lag until equilibrium is reached, the sea level will keep rising as long as global temperatures continue to rise. The rate of future carbon dioxide emissions and global warming will have a significant impact on the volume of the rise, and future glacier and ice sheet melting rates may have an increasing impact on the rate of the rise. For instance, the rise in the average global temperature leads the oceans to thermally expand, which, when combined with icebergs that are present on land and mountain glaciers, causes the sea level to rise.

Additionally, by altering the frequency and intensity of extreme weather events like storms and floods, climate change can quicken the rate at which the sea level rises. Land and fixed financial assets are flooded as a result of retreating coasts, and these damages are difficult to repair. Cropland that has been submerged, construction sites, and other assets pose a serious threat to the economy. The existing information and data on sea level rise in the archives of the National Institute of Oceanography, Karachi, concurs with the world average rate of 0.12 to 0.14 inches per year of increase in sea level. The rate of sea level rise in Pakistan coastal region has been tabulated   to approximate 1.1 mm per year.

Pakistan only accounts about 0.04% of global carbon emissions. However, Pakistan is one of   the most vulnerable nations that will experience several effects of climate change. Pakistan, like other nations, depends on livelihood sectors that are susceptible to climate change; among them, agriculture, forestry, and water resources are the most vulnerable. The trends of climate change suggest that such sectors are sensitive to a rise or reduction in temperature. The Review of Economies of climate change  also predicts that the overall costs and hazards of climate change will be comparable to losing at least 5% of global GDP year, now and forever, if we don’t take action. The estimated harm might reach 20% of GDP or more if a wider range of hazards and effects are included. According to the Global Climate Risk Index annual report for 2020, Pakistan experienced 152 extreme weather events between 1999 and 2018, lost 0.53 percent of GDP each unit, and sustained economic damages of US$ 3792.52 million.

The result shows that the increase in temperature has a negative and significant relationship with GDP as well as productivity in agriculture, manufacturing and services sector. If climate change is addressed, it will hurt economic growth to a great extent. At the micro level, both adaptation and mitigation measures are needed to cope with the impact of climate change in different sectors. However, climate change is an international issue. Pakistan along can do very little in controlling climate change as its share is very limited in GHG emission in comparison to developed countries.