FeaturedNationalVOLUME 18 ISSUE # 01

Rising climate losses

Pakistan has been facing crisis after crisis, mostly of its own making. The country failed to improve its economy and the result is lack of basic necessities for its people. The situation has become really difficult to handle after worst effects of climate change. In fact, it has emerged as the most serious issue of the country, which threatens lives, livelihoods and all segments and sectors of the country.

It is a pity that Pakistan has not contributed to the climate change problem in the world but it is facing its worst fallout. Pakistan’s annual economic output could see a cut of 18pc to 20pc by 2050 due to climate change risks, according to a recent report by the World Bank. “The combined risks from the intensification of climate change and environmental degradation, unless addressed, will further aggravate Pakistan’s economic fragility; and could ultimately reduce annual GDP by 18pc to 20pc per year by 2050, based on the optimistic and pessimistic scenarios,” the report said.

It is feared that between 6.5pc and 9pc of GDP will likely be lost due to climate change (in the optimistic and pessimistic scenarios, respectively) as increased floods and heatwaves reduce agriculture and livestock yields, destroy infrastructure, sap labor productivity, and undermine health. Besides, water shortages in agriculture could reduce GDP by more than 4.6pc, and air pollution could impose a loss of 6.5pc of GDP per year. It highlighted that the use of water for non-agricultural purposes was likely to significantly increase with climate change. “Under a high-growth (4.9pc per year) and high-warming (3°C by 2047) scenario, water demand is projected to increase by almost 60 percent, with the highest rates of the increase coming from the domestic and industrial sectors.”

Climate warming will account for up to 15pc of this increase in demand. This heightened demand will result in unintended consequences that deprive downstream areas of water rights. The competition among sectors will necessitate inter-sectoral tradeoffs that will likely be made at the expense of water for agriculture. “It is projected that, in the next three decades, about 10pc of all irrigation water will need to be repurposed to meet non-agricultural demand.” Freeing up 10pc of irrigation water without compromising food security will be a complex challenge that would require substantial policy reforms to incentivize water conservation and increase water use efficiency in the agricultural sector and a shift away from water-thirsty crops as well as better environmental management, the report warns.

The projected costs of a forced reallocation of water out of agriculture, to meet non-agriculture demands, without such steps, could reduce GDP in 2047 by 4.6pc. The losses projected were the costs of forced reallocation of water to serve other urgent needs, including allocations for water, sanitation, and hygiene (WASH) and urgent environmental flows to sustain critical ecosystem services. Damage induced by climate-related extreme events will likely have economy-wide impacts on growth, fiscal space, employment, and poverty. Global warming and extreme events affect economic activity through multiple transmission channels: impacts on lives, infrastructure and assets, and on livelihoods, which can result in lost economic growth, worsening poverty, and longer-term threats to human capital and productivity. Existing macro models can help assess the expected scale of such events.

The report added that household poverty was expected to decline over time, but even a 9pc decline in GDP by 2050 was enough to stall poverty reduction, with disproportionate impacts on rural households. By 2030, the urban poverty rate is expected to be half that of rural areas and by 2050, urban poverty is projected to decline further to 10pc, while rural poverty will remain in the 25pc to 28pc range.

Economic losses from drought, floods and landslides have rocketed in Asia. In 2021 alone, weather and water-related hazards caused total damage of US$ 35.6 billion, affecting nearly 50 million people, according to a new report from the World Meteorological Organization (WMO).

The State of the Climate in Asia 2021 report highlighted how climate change impacts are wreaking an ever-increasing human, financial and environmental toll, worsening food insecurity and poverty and holding back sustainable development. The report also painted a gloomy scenario for future water stress. High Mountain Asia, including the Himalayas and the Tibetan Plateau, contains the largest volume of ice outside of the polar region, with approximately an area of 100,000 km2 of glacier coverage. The rate of glacier retreat is accelerating and many glaciers suffered from intense mass losses as the result of exceptionally warm and dry conditions in 2021. These so-called water towers of the world are vital for freshwater supplies for the most densely populated part of the planet and so glacier retreat has major implications for future generations.

The report, which was produced jointly with the UN Economic and Social Commission for Asia and the Pacific (ESCAP), was presented during the UN climate change negotiations, COP27, in Sharm El Sheikh, Egypt. It shows how, compared to the average in the past 20 years, economic losses are on the rise for most types of disasters. Economic damage from drought has increased by 63pc from flood has increased by 23pc, and from landslides has increased by 147pc compared to the 2001-2020 average.

In 2021, there were a total of more than 100 natural hazard events in Asia, of which 80pc were flood and storm events. These resulted in almost 4,000 fatalities, about 80pc caused by flooding. Overall, 48.3 million people were directly affected by these hazards, causing total economic damage of US$ 35.6 billion. While floods caused the highest fatalities and economic damage, drought in the region affected the highest number of people, according to the report. Sand and dust storms were also a major problem. In 2021, flooding caused the highest economic losses in China (US$ 18.4 billion), followed by India (US$ 3.2 billion), and Thailand (US$ 0.6 billion). Storms also caused significant economic damage, especially in India (US$ 4.4 billion), China (US$ 3.0 billion), and Japan (US$ 2 billion).

It is encouraging that the UN climate summit agreed to set up a “loss and damage” fund to support poor countries. It is good news for Pakistan. However, it will take years to metalise the plan. In the meanwhile, the country will have to make efforts to contain natural disasters and save people from their bad effects.