Climate Finance in Pakistan

This was declared by then Climate Minister Sherry Rehman while addressing the devastating issue of floods in 2022. Pakistan, a nation contributing hardly 0.3 % of GHG emission, faces a staggering risk of climate induced crisis and disasters. Each year the country faces a loss of millions in terms of money as well as human life due to climate change. Meanwhile the most GHG contributing nations are far more prepared as compared to states like Pakistan. The climate is affecting Pakistan, both its economy and human security. Vast infrastructure lost and destroyed, thousands dead and displaced, health crisis looming and many more. This is the reality of Pakistan.

In this reality, Pakistan presents itself as a stark embodiment of climate injustice. Yet climate finance remains one of the most alarming and one of the most crucial issues for Pakistan. Climate finance, the very mechanism designed to address this injustice, refers to the financing (either national or international) that seeks to address the climate change issues faced by states and support the mitigation and adaptation plans drawn by states. Climate finance is usually utilized from different sources that can include both private and public, multilateral forums or directly from one state to another. 

Climate vulnerable nations, that consist mostly of the developing countries or the 3rd world, are forced to sustain millions each year in climate related damage and the cost is rapidly increasing. For the states already grappling with poverty and under-development, mobilizing funds for climate disaster becomes difficult. At COP 15 in 2009, countries agreed to mobilize 100 billion USD for finance for developing states. According to the reports by OECD in 2024, countries managed to mobilize 115.9 billion in 2022 which was more than expected, but still the issue of finance prevails even in 2026, because the disastrous events caused by climate change are increasing instead of decreasing and one cannot apply the one size fits all policies for each state fighting climate change. Each state has its own share of funds required.

In this contested and underfunded system, Pakistan represents as the best example of the consequences of failure of achieving climate finance. Climate change has brought Pakistan to a crossroad where it stands facing the consequences of the crisis it did not create. Pakistan is estimated to need around 348 billion USD (2023-2030) for its climate mitigation and adaptation plans according to UN Common Country Analysis 2024.

In 2021, Pakistan received an amount of 4 billion by different multilateral banks and bilateral sources which is far less than what it needed at that time. Around 84% of finance comes from international sources like World Bank, and Asian Development Bank because Pakistan does not have the capacity to extract such an amount from its domestic resources, as it remains highly dependent on international donors.