Climate risks are increasingly undermining economic growth, fiscal stability, food security, and development gains in Pakistan. To address this, the government must integrate climate change considerations into economic and budgetary planning. This was the consensus at a parliamentary consultation titled 'Mainstreaming Climate Considerations in Pakistan’s Economic and Budgetary Planning', jointly organized by the Sustainable Development Policy Institute (SDPI) and the Embassy of Denmark in Islamabad.
Danish Ambassador Calls for Policy Action
Danish Ambassador to Pakistan Maja Mortensen emphasized that climate and environmental concerns can no longer be addressed in isolation and must become part of mainstream economic and political decision-making. 'The diagnosis of the problem already exists; the challenge now is how to translate it into policy action,' she said, describing the consultation as timely given the federal budget process. She stressed that climate resilience and economic development are complementary, not competing objectives, and offered Denmark's experience and technical cooperation in integrating climate priorities into development planning.
SDPI Director Highlights IMF-Driven Reforms
SDPI Executive Director Dr Abid Qaiyum Suleri noted that climate considerations must be reflected in both federal and provincial finance bills, as Pakistan’s budget framework is shaped under the International Monetary Fund’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes. He said IMF-supported reforms have encouraged greater allocations for disaster risk reduction, water conservation, and renewable energy projects. Some commitments are already reflected in budgets, including revised water tariffs in Punjab, increased disaster preparedness allocations, enhanced climate financing, and a pilot project linking grid-level battery storage with wind energy generation in Jhimpir. However, Dr Suleri warned that climate finance is shrinking globally and nationally despite rising climate challenges, and stressed stronger coordination between the federation and provinces.
Parliamentarians Stress Urgency
Member National Assembly Mirza Ikhtiar Baig (PPP) noted that Pakistan remains among the countries most affected by climate change despite contributing minimally to global emissions. Referring to the 2022 floods, he regretted that much of the international financial support pledged for reconstruction has not materialized. He highlighted Pakistan's access to climate financing under the IMF’s Resilience and Sustainability Facility and argued that revenues from carbon-related levies and petroleum levies reflect ordinary citizens' contributions to climate mitigation. He welcomed tax reductions on solar panels following political consultations. PPP MNA Asad Alam Niazi stressed that climate change is a national security challenge with inadequate public awareness about its economic and social consequences. He noted that erratic weather patterns and disasters affect agriculture, livelihoods, and productivity, while government allocations for climate action remain insufficient. Linking climate resilience with population growth, Niazi warned that Pakistan needs to create millions of jobs per year by 2050 while addressing climate vulnerability, malnutrition, and stunting.
Economic Losses and Fiscal Integration
SDPI Deputy Executive Director (Research) Dr Sajid Amin Javed said climate change causes annual losses equivalent to around 1.53% of global GDP, which could rise dramatically if mitigation and adaptation are delayed. 'Climate change should not be treated as a separate budgetary tag; it must become a core pillar of fiscal and economic planning,' he said, adding that employment, poverty, inequality, food security, and economic growth are now directly linked with climate resilience. Head of SDPI’s Energy Unit Engineer Ubaid ur Rehman Zia highlighted embedding climate considerations into fiscal planning and strengthening climate diplomacy. SDPI’s Head of Ecological Sustainability and Circular Economy Zainab Naeem presented findings that approximately Rs 2,026 billion had been tagged as green-linked revenues, but significant gaps remain in climate finance accountability and reporting. She suggested introducing climate fiscal buffers, mandatory climate impact reporting, anticipatory action funding, and stronger integration of climate risks into public finance mobilization. She noted SDPI is developing Pakistan’s first Climate Adaptation Investor Confidence Index, currently ranking in the moderate category with a score of 59.6. Former Managing Director of the Private Power and Infrastructure Board Shah Jahan Mirza urged regulators like SECP and NEPRA to formulate comprehensive climate risk guidelines and shift from reactive responses to proactive planning and budgetary allocations for climate adaptation.
