Despite important developments in recent years, Pakistan, with a rapidly growing population of over 215 million and with a per capita income of USD 1,285 (in 2019), faces several interlinked challenges . According to data from 2017/18, nearly 39% of the population live in multidimensional poverty while an additional 12.9% of the population is classified as vulnerable , highlighting the existing vulnerabilities of the people of Pakistan. These existing vulnerabilities are at further risk with the occurrence of climate change, biodiversity loss and environmental degradation .
Pakistan is consistently ranked as one of the world’s most climate vulnerable countries, despite contributing less than 1% of global greenhouse gas emissions . The country’s high vulnerability to climate change is a risk multiplier, compounding Pakistan’s human and economic development challenges. This has been evidenced by the 2022 floods . According to the Post-Disaster Needs Assessment of the floods, the national poverty rate may increase by 3.7 to 4.0 percentage points, potentially pushing between 8.4 and 9.1 million more people below the poverty line. Total flood damages are to exceed USD 14.9 billion, and total economic losses are to reach about USD 15.2 billion. Estimated needs for rehabilitation and reconstruction in a resilient way are at least USD 16.3 billion, not including much needed new investments beyond the affected assets, to support Pakistan’s adaptation to climate change and overall resilience of the country to future climate shocks .
To achieve sustainable development, Pakistan needs to significantly improve the living conditions of its most vulnerable. To do so, Pakistan must boost its inclusive economic opportunities and improve its basic services, in particular for youth, while advancing into an economic model that ensures low greenhouse gas (GHG) emissions intensity and more efficient use of dwindling resources, in particular water, energy, soils and biodiversity . According to United Nations Population Fund, with a population growth rate of 2%, 117 million jobs will be required in Pakistan by 2040 , a drastic increase from the employed labor force in 2020-21 of 67.2 million .
There is an urgent need to redirect the country’s growth trajectory towards green growth to protect social values and public interests. A green economy is important to counter the effects of emerging challenges like environmental degradation and climate change, which have the capacity to destabilize ecosystems and the country’s economy .
Challenges to achieving green growth in Pakistan include a lack of political commitment, poor implementation of environmental legislation and policies, distortive taxes and incentives, inadequate infrastructure and policy for green growth, and a lack of a proper regulatory structure.
Key policies and governance approach
In November 2022, Pakistan’s Minister for Planning, Development and Special Initiatives, Ahsan Iqbal, confirmed that promoting green investment in Pakistan was a top priority of the government in response to the country’s growing environmental issues .
Pakistan’s overarching economic and social development strategy is set out in the “Vision 2025”, which outlines the need for a more people-centric development planning, targeting the poor and marginalised population and providing access to essential public services. Pakistan's aspiration is to become a middle-income country and provide decent jobs to its expanding labor force while increasing the competitiveness of its economy. The country’s 12th five-year plan is to focus on: (i) balanced and equitable regional development; (ii) sustainable, inclusive, and export-led growth; (iii) improved governance; (iv) human resource development, social protection, and poverty alleviation; (v) food, energy, and water security; (vi) local, regional, and global connectivity; and (vii) a green and knowledge-based economy .
Pakistan's updated 2021 NDC represents a paradigm shift toward an inclusive, innovative, whole-of-economy approach to tackling climate change challenges. The high-priority adaptation actions include (i) the Recharge Pakistan Program (reducing flood risk and enhancing water recharge at six sites in the Indus Basin, building the resilience of 10 million people, and strengthening vulnerable ecosystems) and (ii) expanding protected areas from 12% of Pakistan's geographical area to 15% by 2023 .
Further, Pakistan has committed to unconditionally reducing its overall emissions by 15% by 2030, relative to its projected emissions. It has also committed to reducing emissions by an additional 35% conditional on the availability of climate finance. High-priority mitigation measures include (i) expanding renewable energy (RE); (ii) greening transportation (30% of all new vehicles sold in Pakistan in various categories must be Electric Vehicles by 2030); and (iii) reducing dependence on coal (there is a moratorium on new coal power plants from 2020 onward, a ban on imported coal, the shelving of plans for two new coal-fired power plants in favor of hydro-electric power, and a focus on coal gasification and liquefaction for indigenous coal). The NDC also commits the government to continue investments in nature-based solutions (NBSs) such as the Ten Billion Tree Tsunami Program (TBTTP), a four-year project that will have the benefits of natural capital restoration, carbon sequestration, and livelihood improvements, especially for poor households .
In support of Pakistan’s transition to clean energy, the country has also developed the Alternate Renewable Energy (ARE) Policy and the National Electric Vehicle Policy, which targets a 30% shift to electric by 2030. The ARE Policy aims to create a conducive environment for sustainable growth of the ARE sector in Pakistan and intends to have at least 20% of its generation capacity through ARE technologies by 2025 and 30% by 2030 .
Successes and remaining challenges
Provinces play a pivotal role in legislative transformation towards better environmental governance and green growth in Pakistan. In 2010, the 18th Amendment to the Constitution devolved several subjects to the provinces, particularly concerning the environment . However, this devolution process is still very much a work in progress. For example, there has been no effective devolution of responsibilities nor budgets below the provincial level. This continues to pose a significant constraint on the effective management and development of cities. It has also left rural villages without either the resources or the governance needed for critical investments in municipal services to improve the lives of the country’s vulnerable rural populations .
Pakistan also faces several fiscal challenges to achieving green growth. Provinces rely mainly on federal transfers for their budgets, with little revenue-raising effort or capacity at the provincial level. As a result, provinces lack the budgets that are needed to deliver on their ambitious mandates. The mechanisms and incentives to induce cooperation and joint action are weak, across sectors within provinces as well as between the federal and provincial levels. Additionally, there is often a lack of coherence between federal and provincial spending plans. This lack of policy and financial coordination significantly constrains Pakistan's ability to operate as an integrated economy. Due to this, there are also challenges in managing transboundary issues, such as environmental and water resource management. Institutional and capacity challenges also limit policy formulation and implementation. These constraints are more binding at the provincial level and there has been virtually no investment in building capacity below the provincial level. Taken together, these structural impediments severely undermine the country's ability to design and implement the kind of sustainable green-growth policies that are needed for Pakistan to adopt a coordinated response to climate threats and environmental degradation, including addressing important transboundary issues .
However, in recent years, encouraging examples of provincial action exist under green-growth programs and the national afforestation program. Such examples include the Khyber Pakhtunkhwa's Green Growth Initiative and Punjab's Punjab Green Development Program. Several provinces have also made significant financial commitments to climate action within a green-growth approach. For example, Khyber Pakhtunkhwa (KP) allocated close to 9.7% of its 2014–2015 expenditure and 8.9% of its 2015–2016 expenditure to climate-related activities. Punjab allocated 9.3% of its 2014–2015 expenditure and 13.7% of its 2015–2016 expenditure to climate change-related activities .
Initiatives and Development Plans
In August 2022, Pakistan signed the Green Framework Engagement Agreement with Denmark, underpinned by the mutual interests, high ambitions and shared visions of the two countries in a green and sustainable future for the planet including through private sector engagement and public-private partnerships. The Green Framework Engagement will mark the first step in creating stronger collaboration in areas such as climate change mitigation and adaptation, and a just and sustainable green transition. Pakistan is keen to benefit from Danish expertise to build its capacity for dealing with the repercussions of Climate Change. Further, Denmark is already assisting Pakistan under its Danish Energy Transition Initiative (DETI), through which technical assistance is being provided to the Ministry of Energy in the areas of planning of long-term energy scenarios and integration of renewable energy into the existing grid .
A Team Europe Initiative (TEI) will also support Pakistan in its green transition, through sustainable natural resource-based green job creation. Under this initiative, the EU and Member States will support actions to ensure the availability of Pakistan’s skilled workforce, secure access to finance, and strengthen climate mitigation and adaptation to achieve inclusive and green development .
In response to the pandemic, Pakistan launched its Green Economic Stimulus in 2020, which aims at promoting environmental activities that have an economic impact. The Stimulus focuses on creating livelihood opportunities for daily wagers in the forestry and waste management sectors through their involvement in mass plantations, setting up of nurseries, protecting natural forests, and the promotion of honey, fruits and olive plantation in Pakistan .
Pakistan has also launched the Eco-System Restoration Initiative (ESRI) to attain Land Degradation Neutrality and facilitate Pakistan’s transition towards an environmentally resilient Pakistan by mainstreaming adaptation and mitigation through ecologically targeted initiatives covering afforestation, biodiversity conservation, and enabling and enhancing the policy environment consistent with the objectives outlined in Pakistan's Nationally Determined Contribution (NDC). As part of this initiative, the country seeks to establish an independent, transparent and comprehensive financial mechanism called “Eco-system Restoration Fund (ESRF)” to finance the projects and programmes under the initiative .
Additionally, the Pakistan government has also approved the National Solar Energy Initiative to produce 10,000 megawatts (MW) of electricity through solar energy projects over the next months. The initiative aims to reduce the import bill of costly diesel and furnace oil. It can also be counted as a major step on the path towards a green transition .
- The government needs to ensure appropriate devolution of responsibilities and resources to local governments, including arrangements for the mobilization of revenue, and provide avenues for citizens to register their concerns and hold service providers accountable.
- Mainstreaming decarbonization, resilience, and green growth across all sectoral and provincial-level programs is vital.
- Policy formation should focus on green investments, renewable energy, gender equality, ecosystem restoration and the transition to circular economies.
- Finalize and implement the National Adaptation Plan (NAP) for climate change and Provincial Action Plans to mainstream climate and broader environmental actions into development planning.
- Provincial-level commitment can begin to overcome pre-existing institutional constraints and drive the implementation of broad-based environmental action.
- The government needs to enhance the technical and human capacity of its environmental institutions at all levels. In addition, Environmental Departments and Protection Agencies need to have access to adequate and regular funding streams.
- Introduce innovative financing mechanisms, including carbon taxation, the implementation of green/blue bonds, and the promotion of Public-Private Partnerships (PPPs).
- Improve the policy, regulatory, institutional, and infrastructural framework for private sector development.
- The government is encouraged to explore the repurposing of subsidies in the energy, agriculture and water sectors and improving tax and tariff collection.
- Integrate Natural Capital Accounting into policy making and financing. In response to ecosystem degradation from rapid economic development, Pakistan needs to begin investing heavily in protecting and restoring natural capital, through implementation of eco-payment schemes with funding and government leadership.
- Transform Pakistan’s Agriculture-Food System, including through increasing water productivity by encouraging efficient water use, replacing of water-intensive crops such as sugarcane and rice with water efficient cash crops in selected areas, groundwater mapping, modernizing water accounting and infrastructure, promotion of subsidy reforms and good farming practices.
- Build resilient cities, including through strengthened urban planning and management capabilities, enhanced green urban mobility, climate-smart municipal services, and sustainable revenue streams for green and resilient urbanization.
- Accelerate a just transition in energy and transport, including through the transition from fossil fuels, addressing supply and demand, and decarbonizing the transport and industry sectors. The industry and the corporate sector in the country need to play a leading role in adapting to newer technologies in terms of sustainability.
- Green the financial sector, including through financial regulation, taxonomies, reporting and disclosure standards, and the development of green financial tools and instruments.
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