Climate Change Threatens Pakistan's Economic Foundation

Agriculture forms the backbone of Pakistan's economy, contributing 24 percent to the country's GDP and employing nearly half of the workforce. However, the reliability of this system is being eroded by climate change, which is causing unpredictable weather, devastating floods, and retreating glaciers. The country's economic foundation has been built on the assumption of predictable weather patterns, which has allowed farmers to plan their lives around crop cycles. Climate change, however, has shattered this predictability, threatening not only farms but also the country's economic stability.

Key Takeaways:

Pakistan's agricultural sector is vulnerable to climate change, with unpredictable weather patterns causing devastating floods and retreating glaciers.
The country's economic foundation has been built on the assumption of predictable weather patterns, which has allowed farmers to plan their lives around crop cycles.
Climate change has shattered this predictability, threatening not only farms but also the country's economic stability.
The 2022 floods in Sindh were a wake-up call for Pakistan, with 2.5 million hectares of agricultural land submerged and 18 percent of the province underwater.
Agricultural losses were staggering, with 1.9 million tonnes of rice destroyed, 10.5 million tonnes of sugarcane swept away, and 3.1 million cotton bales lost.
The climate crisis has created a vicious cycle of poverty, and breaking this cycle requires learning from models that have worked elsewhere, such as Bangladesh's green financing programme.
Bangladesh's experience shows that green financing can help farmers withstand climate shocks, with a Weather Index-Based Agriculture Insurance programme providing flexibility and reassurance in a volatile climate.
In its first three years, the programme reached 10,000 farmers across an area of 5,200 acres, with claims settled for 2,200 farmers facing losses from extreme weather.
Pakistan's banking system has yet to come up with a comparable solution to help its farmers, forcing them to turn to local moneylenders who charge exorbitant interest rates.
The demand for green financing from farmers is low due to a lack of awareness and negative stereotypes associated with formal lending channels, while the supply is low due to the disinterest and risk-averse strategies of financial institutions.
The policy-makers need to encourage both borrowers and lenders, providing farmers with the resources to adapt to climate change rather than forcing them to absorb disaster after disaster.

Statistics:

24 percent: Agricultural sector's contribution to Pakistan's GDP (Sindh's floodplains were submerged, 18 percent of the province underwater)
2.5 million hectares: Agricultural land submerged due to the 2022 floods in Sindh
1.9 million tonnes: Rice destroyed in the 2022 floods in Sindh (80 percent of Sindh's produce)
10.5 million tonnes: Sugarcane swept away in the 2022 floods in Sindh (61 percent of provincial output)
3.1 million: Cotton bales lost in the 2022 floods in Sindh (88 percent of the harvest)
5,200 acres: Area covered by Bangladesh's Weather Index-Based Agriculture Insurance programme
10,000: Number of farmers reached by Bangladesh's Weather Index-Based Agriculture Insurance programme in its first three years
2,200: Number of farmers facing losses from extreme weather whose claims were settled by the programme
13,000: Number of glaciers in Gilgit-Baltistan, which are retreating at unprecedented rates

Sources:

Pakistan Meteorological Department
International Centre for Integrated Mountain Development
International Finance Corporation
Green Delta Insurance PLC
Bangladesh's Weather Index-Based Agriculture Insurance programme