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Research Paper
Impact of Climate Change on Pakistan’s Economy
Dr. M. Asghar Maan|Maarij Farooq|ICB G-6/3
Impact of Climate Change on Pakistan’s Economy
Dr. M. Asghar Maan|Maarij Farooq|ICB G-6/3
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Abstract: Climate Change is a global challenge that has profound implications for
economies, societies, and ecosystems. Pakistan, with its diverse ecosystems and
vulnerable geographical location, is particularly susceptible to the adverse effects of
climate change. This research paper aims to analyze the impact of climate change on
Pakistan’s economy, Focusing on key sectors such as agriculture, water resources,
energy, infrastructure, and human health. By examining the vulnerabilities and risks
associated with climate change in these sectors, the study assesses the potential
economic losses, implications for livelihoods and poverty levels, and identifies
adaptation and mitigation strategies to minimize negative effects. The research employs
a multidisciplinary approach, integrating qualitative and quantitative methods, and
utilizes various data sources, including historical climate records and economic
indicators. The findings highlight the urgent need for collective action to mitigate
greenhouse gas emissions and strengthen adaptive capacities. The research paper
contributes to existing knowledge on climate change impacts.
Key Words: Climate Change, Pakistan, Economy, Vulnerability, Adaptation,
Mitigation, Sustainable Development.
Introduction: Climate Change is a global challenge that has emerged as one of the most
pressing issues of our time. Affecting various aspects of human lie and the environment.
Its impacts are being observed worldwide, with the profound consequences for
economies, societies and ecosystems. Pakistan, a country located in South Asia, is
particularly vulnerable to the adverse effects of climate change due to its geographical
location, Topography, and socio-economic conditions.
Pakistan is characterized by a diverse range of ecosystems, form high mountain ranges in
the north to coastal areas in the south, and from arid deserts in the west to fertile plains
in the east. Such ecological diversity makes the country highly susceptible to the impacts
of climate change, including rising temperatures, changing precipitation patterns,
increased frequency and intensity of extreme weather events, and sea-level rise. These
Impact of Climate Change on Pakistan’s Economy
Dr. M. Asghar Maan|Maarij Farooq|ICB G-6/3
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changes have the potential to disrupt key sectors of the economy, posing significant
challenges to sustainable development and poverty eradication efforts.
This research Paper aims to provide a comprehensive analysis of the impact of climate
change on Pakistan’s economy, by examining various sectors that contribute to the
country’s economic growth, such as agriculture, water resources, energy, infrastructure
and human health, we seek to understand the specific vulnerabilities and risks associated
with climate change, Furthermore, this study will assess the potential economic losses
incurred by these sectors, Explore the implications for livelihoods and poverty levels, and
identify possible adaptation and mitigation strategies that can help minimize the negative
effects.
Understanding the economic ramifications if climate change is crucial for policymakers,
researchers and stakeholders in Pakistan. BY quantifying the economic costs associated
with climate change impacts, we can raise awareness, inform decision-making process,
and prioritize investments on adaptation and mitigation measures. This research paper
intends to contribute to the existing body of knowledge on climate change impacts and
provide valuable insights for designing effective policies and strategies to safeguard
Pakistan’s economy against the challenges posed by a changing climate
In order to achieve these objectives, this study employs a multidisciplinary approach,
incorporating a wide range of data sources including historical climate records, economic
indicators, modeling techniques, and scenario analysis. By integrating both qualitative and
quantitative methods. We aim to present a complete overview of the potential
consequences of climate change on Pakistan’s economy
As we delve into the following sections of this research paper, it is essential to recognize
the urgent need for collective action to mitigate greenhouse gas emissions and strengthen
adaptive capacities in order to minimize the adverse impacts of climate change. The
findings of this study can serve as a basis for informed decision making, policy formulation,
and resource allocation, ultimately contributing to a more resilient and sustainable future
for Pakistan’s economy and its people.
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Literature Review: This literature review aims to provide an overview of existing research
on impact of climate change on Pakistan’s economy. Focusing on key sectors and potential
economic implications.
1. Agriculture Sector: The agriculture sector plays a vital role in Pakistan’s economy,
employing a significant portion of the workforce and contributing to food security
and export earnings. Studies indicate that climate change is likely to have
substantial adverse effects on agricultural productivity in Pakistan. Increased
temperatures, changing rainfall patterns and water scarcity pose risks to crop yields,
livestock productivity, and overall agriculture income (Ali, 2018). Khal et al. (2019)
found that climate change negatively affects major crops such as wheat, rice, and
cotton, leading to reduced production and income for farmers.
In Pakistan, wheat and rice are the main crops and leading staple food of the
agriculture sector. A decrease of 14.7 and 20.5 % of wheat and rice crop due to
climate change has been observed in the past few years with their market price
shooting up (Haq, Boz, and Shahbaz. 2021)
A lot of decrease is witnessed in major crops of Pakistani agriculture which are also
backbone of pakistan exports and have the biggest share of exports in it. As
illustrated in table: 1
Table:1 Projected percentage changes in major crops yield (2020-2080)
compared to baseline yield (1961-1990) under A2 Scenario.
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Source: World Bank Climate Change Knowledge Portal: Agriculture Model by
IIASA
Weather has a lot of impact on agriculture, a sustainable weather is required
for a healthy crop but trends indicate that there will be a lot of increase in
the mean temperature of Pakistani climate in coming years as can be seen
in Figure:1(a) & 1(b). Both trends seem to be very alarming for a country
heavily breathing on its agriculture.
Figure:1(a) Annual Projected Mean Temperature Trends in Pakistan, 19952100.
Source: PIDE staff computations and World Bank 2022.
Figure:1(b) Annual Projected Mean Precipitation Trends in Pakistan, 19952100.
Source: PIDE staff computations and World Bank 2022.
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Concluding this agriculture portion, the Koppen=Geiger map of Pakistan
temperature provided by Wikipedia is must to show because is shows the
extremes of Temperatures fluctuations in Pakistan.
2. Water Resources: - Pakistan heavily relies on its water resources for
irrigation, hydropower generation, and domestic use. Climate change
induced shifts in rainfall patterns, glacier melt, and changes in river flows
pose significant challenges to water availability management. Studies
highlight the potential for decreased water availability, increased water
stress, and heightened competition among sectors. Adversely affecting
agriculture, industry, and energy sectors (Shahbaz et al., 2018; Abbasietal.,
2020)
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Figure:2 Climate Risk indexing and Pakistan’s vulnerability
SOURCE: CLIMATE CHANGE AND WATER CRISES IN PAKISTAN: IMPLICATIONS ON WATER QUALITY AND HEALTH RISKS.
WASEEM ISHAQUE,1RIDA TANVIR,2AND MUDASSIR MUKHTAR3ACADEMIC EDITOR: MUHAMMAD TAYYAB SOHAIL
The index shown in Figure:2 indicates the vulnerability of Pakistan to climate change
in 2021. Which in future was proved as Pakistan had to face devastated floods in all
over Pakistan due to abnormal rainfall. Around 33 million people in Pakistan or 1/7
people in the country have been impacted by the devastating floods that hit the
country over the summer. (British Red Cross, redcross.org.uk)
Figure:3 Show below illustrated that gradually the population has been increased
from 50 million to 200 million since 1951 and still counting with the water reserved
depressing and till 2025 It will get more worse as there is no such focus of Pakistani
State on development of large scale dams to store flood water future use.
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Figure:3 Water availability in Pakistan by 2025
Source: Dr Muhammad Ashraf’s research report.
Another important impact of climate change in water resources is that there’s is
abnormal pattern of rainfalls for which authorities are neither prepared and nor the
water reservoirs are sufficient enough to store that much amount of water in them
which results in devastated floods which causes heavy fatality and economic loss.
Moreover, a lot of sweet water flows into the ocean with flood water making sweet
drinkable water scarcer as illustrated in Figure:4 the availability of water per capita
has been decreased in Past 7 decades
Figure:4 Per capita water availability in Pakistan, 1951-2025. Source: GOP 2017
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3. Energy Sector: - The energy sector in Pakistan faces several climate changerelated challenges. Rising temperatures and increased cooling demands impact
electricity consumption. Additionally, changing hydrological patterns affect
hydropower generation, while increased water scarcity affects thermal power
plants dependent on cooling water. Studies suggest that climate change can lead to
increased energy demand, reduced by hydropower potential, and increased
reliance on costly fuel imports (Ali and Khan, 2017; Ahmed et al., 2021).
Moreover, Energy sector is Pakistan is also a reason for abnormal climate change
activities. Figure:5(a) & 5(b) illustrate the total energy supply of Pakistan’s energy
production system and IPPs. It also categorizes the substance used for energy
production. As it can be seen that major energy requirements are fulfilled by
burning furnace oil, Natural gas and coal. This burning of fuels boosts the effect of
climate change increasing temperatures and thus increasing consumption and
demand of energy nationwide.
Figure:5(a) Sources of Pakistan’s total energy supply (in terajoules)
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Figure:5(b) Cumulative Shares of Electricity generation by source (in percentage)
Source: International Energy Association 2021 (www.iea.org/countries/pakistan)
4. Health Impacts: - Climate change poses risks to public health through increase
heat waves, changing disease patterns, and extreme weather events. Studies
indicate that rising temperature can lead to heat-related illness, waterborne
diseases, and vector-borne diseases such as dengue fever (Bosch et al., 2019; Saeed
et al., 2020).
These health impacts not only affect individuals’ well-being but also result in
increased healthcare costs and productivity losses, impacting overall economy.
Disability rate in Pakistan is relatively high due to polio and people with disabilities
face unique challenges to livelihood, accessibility and the risks of climate change
(Teherani and Pickering 2020). The threat of death of disable persons is two to four
times more in Natural Disasters (UNDP 2018).
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In Pakistan mostly people rely on agriculture for their livelihood (almost one third
as shown in figure below). As climate change impacts agriculture directly due to
floods or abnormal rain patterns. These people directly get effected and thus suffer
malnutrition which effects their health. Figure:6 shown below tells the percentage
on Anemic children in rural areas of Pakistan. Pakistan scores 24.6 in Global hunger
index, which places it at the lower end of the serious severity scale. Globally,
Pakistan ranks 88 out of 107 countries in terms of hunger (Global Hunger Index
2020)
Figure:6 Percentage of people dependent on Agriculture in Pakistan.
Source: RCRC_IFRC-Country-assessments-PAKISTAN-
Figure:7 Statistics of people effected from malnutrition
Source: RCRC_IFRC-Country-assessments-PAKISTANClimate change effects mostly health of people mostly living in rural areas. They
have many issues related to sanity and drinking water. The figure:8 below shows
the detailed view of situation that rural population faces in terms of sanity and
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drinking water and it all results in deadly diseases like diarrhea whose proportion
is also to be increased in future.
Figure:8 Sanitation, Drinking water and expected deaths from diarrhea
Source: RCRC_IFRC-Country-assessments-PAKISTAN
Livelihoods in Pakistan are heavily dependent on climate-sensitive resources with
agriculture, livestock rearing, forestry and fishing sectors employing about 42% of
the population and contributing to 21 % of the national GDP. Almost 90% of
agriculture depends on irrigation from the glacier-fed river Indus and its tributaries.
Climate change has hastened the pace of glacial melt which will increase the
incidence of glacier lake outburst floods (GLOF) and flash floods downstream.
(RCRC_IFRC-Country-assessments-PAKISTAN)
5. Economic Costs and Adaptation: - The economic costs of climate change in
Pakistan are significant. Extreme weather events, including floods and droughts,
result in infrastructure damage, loss of lives, and displacement of populations.
Studies estimate that the economic losses associated with climate change in
Pakistan range from 2-4 % of GDP annually (Asian Development Bank, 2020). To
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mitigate and adapt to climate change, Pakistan has initiated various policies and
measures, such as national climate change policy and the green climate fund
Projects.
The finance division in its survey chapter 20/16 for climate change writes
that according to German watch Pakistan in globally ranked among top ten
countries most effected by climate change in past 2 decades due to its
geographical location. According to the Global Climate Risk Index annual
report for 2020, Pakistan has lost 0.53 percent per unit GDP, suffered
economic losses worth US$ 3792.52 million and witnessed 152 extreme
weather events from 1999 to 2018. World Bank says that Pakistan needs
348$ billion in eight years. 800% more than its currents budget to overcome
climate induced disasters. However, if no action is taken, the climate change
will shove off 50% of the economy. (Tribune, Nov-22)
Conclusion: - The literature review highlights the substantial impact of
climate change in Pakistan’s economy across sectors. The agricultural sector,
water resources, energy sector, health impacts, and associated economic
costs are identified as key areas affected by climate change. Understanding
these impacts is crucial for policymakers and stakeholders to develop
effective adaptation and mitigation strategies, ensure resilience, and
minimize economic losses. Further research is needed to explore sector
specific interventions and asses the cost-effectiveness of adaptation
measures to safeguard Pakistan’s economy against the challenges posed by
climate change
Methodology: For conducting our research, we will use secondary data for all our
variables. This data is available on different economic portals online like Finance Ministry,
SBP, IMF, Economic Survey of Pakistan. But we found it more convenient to take the data
from Macro Trends (macrotrends.net) because they have compiled all the data in
categories and it is easily accessible and can used to run an analysis.
For analysis we will use SPSS Data analytics software which will give the end results of our
research. We will take past 20 years data as sample for each variable and run an analysis
Impact of Climate Change on Pakistan’s Economy
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so first of all let’s set the data chronologically according to our variables in the form of a
table and then at the end the results will be displayed.
Conceptual Model: -
GDP
H1
UnEmployment
H2
Inflation
H3
Climate
change’s
Trade
Balances
H4
impact on
Pakistan’s
economy
Government
H5
expenditures
GDP = f (Climate Change)
Un-employment = g (Climate Change)
Inflation = h (Climate Change)
Trade Balances = I (Climate Change)
Government Expenditures = j (Climate Change)
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In this equation, the independent variable is “climate change” which refers to the
changes in weather patterns, temperature, precipitation and other climatic factors
that are occurring is Pakistan.
The dependent variables are:
1. GDP (Gross Domestic Product): This variable represents overall
economic output of Pakistan. It captures the value of goods and services
produced within the country’s borders. Climate change can affect GDP
through its impact on sectors such as agriculture, industry and services.
2. Un-employment: This variable measures the number of people
employed or the labor force participation rate in Pakistan. Climate change
can influence employment levels through its impact on sectors such as
agriculture, tourism, and construction.
3. Inflation: This variable represents the rate at which the general level of
prices for goods and services is rising and, subsequently, eroding purchasing
power. Climate change can affect inflation through its impact on agriculture,
energy costs, and supply chain disruptions.
4. Trade Balance: This variable represents the difference between the value
of a country’s exports and imports. Climate change can influence the trade
balance through its impact on agricultural exports, changes in demand for
certain products, and disruptions in supply chains/
5. Government Expenditures: This variable represents the amount of
money spent by the government on various sectors and public goods.
Climate change can affect government expenditure through increased
spending on adaptation measures, disaster management, and infrastructure
development.
The functions f(), g(), h(), I(), J() in the conceptual model signify that the specific
relationship between climate change and each dependent variable may vary
and would be determined through empirical analysis or modeling techniques
based on available data and research methodologies.
All gathered data for the upper variable is displayed In the tables below: -
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Impact of Climate Change on Pakistan’s Economy
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Results and Analysis: After analyzing the data of the following variables, we concluded the
following results in graphical representation.
GDP
$ 400.00
$ 350.00
$ 300.00
BILLION $
$ 250.00
$ 200.00
$ 150.00
$ 100.00
$ 50.00
GDP Billion $
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
-$ 50.00
2002
$ 0.00
Growth
INFLATION
25.0
20.3
%age
20.0
13.6 12.9
15.0
9.1
10.0
5.0
7.4
12.2
11.9
10.6
9.7
7.9 7.6
9.7 9.5
7.7 7.2
3.3 2.9
2.5
3.8 4.1
5.1
Inflation Rate
Impact of Climate Change on Pakistan’s Economy
Dr. M. Asghar Maan|Maarij Farooq|ICB G-6/3
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2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0.0
18
TRADE BALANCES
5
0
-5
Billion $
-10
-15
-20
0.491.01
4.24
-0.07
-10.18-10
-10.34
-10.69
-12.24
-15.67
-15.68
-17.44
-17.98
-18.42
-25
-22.67
-24.39
-30
-30.63
-35
-32.49
-31.11
-37.26
-40
-40.14
-45
Trade Balances
UNEMPLOYMENT
7.00%
6.42%
6.00%
5.00%
4.35%
4.30%
4.08%
3.92%
3.78%
3.57%
3.54%
4.00%
2.95%
3.00%
1.85%
2.00%
1.83%
0.80%
0.65%
0.61%
0.59%
0.59%
0.58%
0.54%
1.00% 0.55%
0.42%
0.40%
0.00%
Unemployment Rate
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Government Expenditure
10000
9000
8000
BILLION (RS)
7000
6000
5000
4000
3000
2000
1000
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0
Government Expenditure
References: • Abbasi, Q. A., Abbasi, S. A., & Abbasi, N. (2020). Impact of Climate Change on Water
Resources in Pakistan. In Climate Change Impacts and Adaptation Strategies for Coastal
Communities (pp. 207-234). Springer.
• Ahmed, M., Latif, M., Ullah, S., Zhang, Y., & Khattak, N. S. (2021). Climate Change
Impacts on Energy Consumption in Pakistan: An ARDL Approach. Environmental
Progress & SustainableEnergy, 40(2), e13428.
• Ali, S. (2018). The Impact of Climate Change on Agricultural Productivity in South
Asia: Evidence from Pakistan. International Journal of Environmental Research and
Public Health, 15(7), 1378.
• Ali, G., & Khan, M. (2017). Assessment of Climate Change Impacts on Hydropower Generation
in Upper Indus Basin Using RCMs. Sustainable Water Resources Management, 3(4), 357-370.
• Asian Development Bank. (2020). The Cost of Climate Change in Pakistan. Asian
DevelopmentBank.
• Bosch, J., Beebee, T. J., Din, J. U., Martel, A., & Schmidt, B. R. (2019). Climate Change
Impactson Species and Ecosystems: Review of Evidence and Adaptation Measures. In
Water for the Environment: From Policy and Science to Implementation and
Management (pp. 271-288).Elsevier.
• Khan, N. A., Qayyum, A., & Shahzad, K. (2019). Climate Change, Agriculture and
Poverty Linkages in Pakistan: A Dynamic Computable General Equilibrium Analysis.
Climate and Development, 11(5), 422-437.
Impact of Climate Change on Pakistan’s Economy
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• Saeed, S., Javed, A., Ashfaq, M., & Saeed, Q. (2020). Impact of Climate Change on
Vector- Borne Diseases: A Review. Environmental Science and Pollution Research,
27(22), 27317-27328.
• Shahbaz, M., Leitão, N. C., & Arouri, M. (2018). Tourism and Environmental Degradation:
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57(3), 295-312.
• NAZAM MAQBOOL Pakistan Institute of Development Economics, Islamabad. “The water
issue is critically related to climate change. People say that carbon is the currency of climate
change. Water is the teeth.” Jim Yong Kim, Former President, World Bank
• How reforming energy systems can tackle climate risks: Evidence from Pakistan.
(https://www.theigc.org/blogs/climate-priorities-developing-countries/how-reforming-energy-systemscan-tackle-climate-risks)
Impact of Climate Change on Pakistan’s Economy
Dr. M. Asghar Maan|Maarij Farooq|ICB G-6/3