Climate Change Might Cause Pak’s GDP to Decline

Islamabad: Based on the optimistic and pessimistic scenarios, the combined risks from the escalation of climate change and environmental degradation will ultimately worsen Pakistan’s economic fragility and might cut annual Gross Domestic Product (GDP) by 18 to 20 per cent per year by 2050.

According to a report recently published by the World Bank, rising heatwaves and floods will likely cause the loss of between 6.5 and 9.0 per cent of GDP (in the optimistic and pessimistic scenarios, respectively); as they lower agricultural and livestock production, obliterate infrastructure, lower labour productivity, and harm health.

Additionally, air pollution might cause a loss of 6.5 percent of GDP annually and water shortages in agriculture could lower GDP by more than 4.6 percent.

With climate change, there will certainly be a large increase in non-agricultural water demand. According to the analysis, water consumption is expected to rise by over 60 per cent under a high-growth (4.9 percent per year) and high-warming (3°C by 2047) scenario. The home and industrial sectors are expected to see the highest rates of the increase.

“The increase in demand will be caused by global warming to the extent of up to 15 per cent Unintended repercussions of this increased demand will deprive downstream regions of their water rights. Inter-sectoral tradeoffs will likely be made at the expense of water for agriculture due to the sectoral competition,” the report mentioned.

It is anticipated that within the next three decades, 10 per cent of all irrigation water will need to be used for purposes other than agriculture.

It will be a difficult task to release 10 per cent of irrigation water without compromising food security, and it will require significant policy changes to encourage water conservation, increase water use efficiency in agriculture, shift away from crops that require a lot of water, and improve environmental management.

Without taking such action, the predicted costs of a forced reallocation of water away from agriculture to meet non-agricultural demands might lower GDP in 2047 by 4.6 per cent.

The costs of forced water reallocation to meet other urgent needs, such as allocations for water, sanitation, and hygiene (WASH) and urgent environmental flows to maintain essential ecosystem functions, are thus included in the losses estimated here.

Extreme weather-related damage will probably have an influence on the economy’s growth, financial flexibility, employment, and poverty. Extreme weather and global warming have a variety of effects on economic activity, including effects on people’s lives, infrastructure, and means of subsistence.

These effects can lead to lost economic growth, escalating poverty, and long-term risks to human capital and productivity. The scale of such catastrophes can be estimated with the aid of existing macro models.

According to the analysis, although household poverty is predicted to decrease over time, poverty reduction will be significantly slowed down for rural households by even a 9 per cent GDP fall by 2050.

The rate of urban poverty is anticipated to be half that of rural areas by 2030. Urban poverty is expected to reach 10 per cent by 2050, but rural poverty is expected to stay between 25 and 28 percent. Agencies