March 08, 2025 (MLN): Pakistan faces a massive climate financing gap of $348 billion between 2023 and 2030, posing a serious threat to its economic stability and sustainability, warns Dr Shamshad Akhtar.

The former finance minister, known for steering Pakistan out of default, is now raising alarms over environmental risks that jeopardise the country's progress.

In a comprehensive report co-authored with Memosh Khawaja, Dr Akhtar underscores the urgent need for climate financing to mitigate risks and build resilience.

The report underlined the critical shortfall in funds required for adaptation and decarbonization efforts, emphasizing that without immediate action, Pakistan’s economic gains could be undone by climate-related disasters.

The findings stressed the importance of international support, innovative financial solutions, and stronger policy measures to bridge the funding gap and secure Pakistan’s future against climate threats.

Pakistan ranks 5th globally in climate vulnerability, with a staggering 90% of its population exposed to climate-related risks. One-third of its land is threatened by rising sea levels, while recurring floods, droughts, and heat waves drain 14% of the country's annual GDP.

Moreover, a staggering 75% of Pakistan's water resources are compromised by climate change, confirming an extreme vulnerability level as reported by both the IPCC and UN. 

Climate financing and policy recommendations is a detailed investigative research report that assesses the adequacy of Pakistan’s climate finance generation in meeting its climate targets compared to other countries. It also examines Pakistan’s climate financing landscape, opportunities, challenges, and effectiveness in meeting climate finance requirements. 

Pakistan faces a significant financial challenge in addressing climate change, requiring a staggering $348 billion from 2023 to 2030 for adaptation and decarbonization efforts. However, the current funding levels average only $1.4 to $2 billion annually, highlighting a vast financing gap.

This shortfall underscores the urgent need for increased international support, innovative financing mechanisms, and robust domestic policies to bridge the gap. Effective climate action is crucial for Pakistan to build resilience, reduce emissions, and achieve sustainable development goals. 

Pakistan's climate governance system is ambitious and faces several issues that reduce its effectiveness. The National Climate Change Policy and the Climate Change Act of 2017 lack clear climate priorities and suffer from poor coordination among stakeholders. Despite addressing multiple sectors like water, agriculture, forestry, and biodiversity, the National Climate Change Policy often struggles in execution due to limited resources and capacity.

The Climate Change Act of 2017 established the Pakistan Climate Change Council and the Pakistan Climate Change Authority, but both face bureaucratic delays and slow responses to climate challenges. Additionally, the Act’s measures for adaptation and mitigation are frequently hindered by insufficient funding and weak enforcement.

Moreover, the overlapping roles of various institutions create confusion and delays in decision-making. To tackle these challenges, Pakistan needs stronger policies, better coordination, and more financial and technical support to effectively address climate change.

The report suggests exploring various sources of climate financing to effectively tackle climate challenges. These sources include multilateral funds such as the Green Climate Fund (GCF) and Global Environment Fund (GEF), which provide critical support for climate projects worldwide.

Bilateral funding from entities like the UK Government's Foreign Commonwealth Development Office also plays a significant role in supporting climate initiatives. Additionally, multilateral development banks like the Asian Development Bank (ADB) contribute substantial resources for climate action.

The finance lady also emphasizes the importance of leveraging private domestic finance to complement these international efforts, ensuring a comprehensive and sustainable approach to climate financing.

The report suggests various climate financing instruments that can effectively support climate action. She recommends developing a carbon market in Pakistan to incentivize emission reductions and create economic opportunities. Additionally, she highlights the potential of guarantees in mobilizing private finance by reducing investment risks.

Other instruments she mentions include concessional loans, which offer favorable terms for climate projects; project equity finance that involves investment in climate-related ventures; and thematic bonds that raise funds for specific climate initiatives. These instruments collectively provide a robust framework for securing the necessary financial resources to address climate challenges in Pakistan.

Dr. Shamshad also highlights the challenges associated with the effort. Pakistan's climate financing endeavors encounter several significant obstacles.

High return on investment risks for the domestic financial sector discourages private investors from participating in climate projects. Moreover, inefficient subsidization of high-risk sectors like agriculture diverts resources away from essential climate initiatives.

The limited capacities of both private and public sectors further impede the effective implementation of climate policies and projects. Additionally, inadequate government facilitation and coordination exacerbate these problems, resulting in fragmented efforts and slow progress in addressing climate change.

To overcome these barriers, targeted interventions, enhanced institutional capacities, and stronger government leadership are crucial to creating an enabling environment for sustainable climate financing.

The detailed report distills its findings into six key points: developing a mid-term strategic climate financing plan, fostering local financial markets, players, and instruments, designing fiscal policy measures to shape a green economy, steering international financing sources, fortifying the disaster financing ecosystem, and strengthening public planning, frameworks, and institutional capacity.

The report concludes by emphasizing the need for robust planning, comprehensive policy measures, and capacity building to bridge the climate financing gap and achieve Pakistan’s climate goals.

Copyright Mettis Link News

Posted on: 2025-03-08T18:59:08+05:00