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Climate change-induced disasters could significantly set back Pakistan’s development ambitions and ability to reduce poverty. To foster people-centered climate adaptation and resilience, the country needs fundamental shifts in its development path and policies, requiring substantial investments, including international support, according to the World Bank Group. National Climate and Development Report (CCDR) for Pakistan published today.

This year’s climate change-induced heat wave, followed by devastating and unprecedented flooding, has claimed more than 1,700 lives and displaced more than 8 million people. The destructive effects on infrastructure, assets, crops and livestock have also been massive, with over 33 million people affected across the country and over $30 billion in damage and economic loss.

The report notes that the combined risks of extreme weather events, environmental degradation and air pollution are expected to reduce Pakistan’s GDP by at least 18-20% by 2050. This will hamper progress in in economic development and poverty reduction.

“The recent floods and humanitarian crisis are a wake-up call for urgent action to avoid further devastation to the people of Pakistan and their economy due to climate change,” saidMartin Raiser, World Bank Vice President for South Asia. “Accelerated climate actions can buffer the economy from shocks and ensure more sustainable and inclusive growth in Pakistan.”

The report recommends five priority transitions for adapting to climate change: transforming the agrifood system; building resilient and livable cities; accelerating a just transition to sustainable energy and low-carbon transport; strengthen human capital to achieve sustainable and equitable development and climate resilience; and align financing policies, incentives and institutions to support scaling up climate action.

To implement a climate-resilient and low-carbon development trajectory, estimates of total investment needs up to 2030 amount to more than 10% of cumulative GDP for the period. The report recommends accelerating reforms to increase domestic revenue mobilization, including increasing new municipal and property taxes to finance urban investments. It highlights the importance of improving the effectiveness and targeting of agriculture and energy subsidies while protecting the most vulnerable. Yet even ambitious increases in budgetary resources over the next few years will not be enough in Pakistan to finance all the necessary investments. International support and significant private investment will therefore be essential.

“If we are to tackle climate change, we must prioritize investment in adaptation to help prepare Pakistan for future climate-related calamities, which are increasing in frequency and intensity,” said Hela Cheikhrouhou, IFC Regional Vice President for the Middle East, Central Asia, Turkey, Afghanistan and Pakistan. “With the right policy frameworks, Pakistan has the opportunity to attract private investment to build resilience, especially in sectors such as water management, agriculture, urban infrastructure, municipal services and housing. .

Pakistan does not contribute significantly to global warming, but it is on a steep growth trajectory in carbon emissions from the use of fossil fuels. It is also a source of chronic fiscal stress in the country and worsening air pollution. Therefore, climate actions that bring both adaptation and mitigation co-benefits and contribute to improved development outcomes should be given the highest priority.

“Foreign private capital can play an important role in addressing climate change issues in Pakistan,” said Ethiopis Tafara, MIGA vice president and chief risk, legal, and administrative officer. “Maintaining foreign direct investment flows that support climate change mitigation and adaptation will help finance Pakistan’s low-carbon transition.”

The five sets of recommended policy transitions are:

1. Transforming the agri-food system: The agrifood system is the largest employer in Pakistan, especially for poor and vulnerable households. But the sector’s productivity is collapsing due to land degradation, overuse of chemical inputs and water, and lack of research. Productivity is expected to continue to decline, with yields set to drop another 50% by 2050, threatening food security. Redirecting environmentally harmful subsidies, promoting climate-smart and regenerative agriculture and livestock systems, and prioritizing ecosystem restoration will be key to increasing rural incomes and enhancing food and water security. .

2. Building resilient and livable cities: By 2050, 60% of Pakistan’s population will live in urban areas, which are already highly exposed to pollution and climate change. Making cities more livable and inclusive would bring significant economic benefits. Urgent reforms are needed for more integrated land use planning, investments in municipal services, the use of nature-based solutions, and investments in energy efficiency and clean transport. Strong city governments and the expansion of city finances through the property tax are essential.

3. Accelerate a just transition to sustainable energy and low-carbon transport: Pakistan’s energy sector is a key enabler of economic development and poverty reduction. However, it represents a huge drain on public finances and currencies and is one of the biggest contributors to the country’s GHG emissions. Pakistan should prioritize reducing generation costs, including through energy efficiency, ensuring cost-reflective tariffs and better targeting of subsidies, while addressing technical and collection losses in transmission and distribution. Increased investment in public transport can avoid being locked into highly polluting modes of transport.

4. Building human capital to achieve sustainable and equitable development and climate resilience: Pakistan needs to resolve its human capital crisis. This can be achieved by addressing poor water, sanitation and hygiene management, one of the main drivers of child stunting; and reducing the country’s high fertility rate. Pakistan should also ensure universal access to quality education and expand its social protection system by improving benefits, especially for those most at risk.

5. Align financing policies, incentives and institutions to support scaling up climate action: Implementing these policies and investments will require a comprehensive financing strategy, greater private sector involvement, domestic revenue mobilization, and strong institutions responsible for improving public spending. International climate finance will be essential to complement Pakistan’s commitment to resilient and inclusive development.

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