griculture forms the economic backbone of Pakistan, generating 24 percent of the GDP and employing nearly half the workforce. Drive through the Punjab’s vast wheat fields or witness the cotton harvest in Sindh and the scale of this dependence becomes clear. Economies of entire districts revolve around crop cycles. Rural families typically plan their lives around planting seasons and harvests. Pakistan’s foreign exchange reserves, too, depend heavily on agricultural exports. The country has built its economy on the reliability of these agricultural systems. Today, climate change is eroding that reliability and threatening not just farms but the country’s economic foundation.

This economic foundation has rested on one fundamental assumption — predictable weather. Pakistani farmers have structured their lives around the monsoon for generations. 70 percent of the country’s rainfall has historically arrived between June and September. The pattern was once so consistent that elderly farmers could often predict the planting dates. Climate change has shattered this predictability. When temperatures in Gilgit-Baltistan hit 48°C in 2025, meteorologists were recording unprecedented facts. This region is home to over 13,000 glaciers; there is more frozen water here than anywhere outside the polar regions. Pakistan Meteorological Department data has now confirmed what local communities have already been talking about: the glaciers are retreating at unprecedented rates. Many have transformed from reliable water sources into flood threats. The so-called third pole has become unstable, with consequences that will reshape Pakistan’s geography and economy.

The scale of this instability is becoming clearer each year. Flood warnings from the Pakistan Meteorological Department have become a grim routine. While cities are forced to build new drainage systems and raise embankments, farmers in many areas are exposed to impacts of weather extremes. Walk through any farming district during the flood season and the anxiety is palpable. Farming families watch weather reports like stock traders monitoring markets, knowing that their incomes now depend on climate patterns they can no longer predict with confidence.

The 2022 floods were a wakeup all. Pakistan is among the world’s most climate-vulnerable countries. Its agricultural sector bears the heaviest burden of environmental disruption. International Centre for Integrated Mountain Development researchers have documented the 2022 destruction in Sindh. 2.5 million hectares were submerged so that 18 percent of the province was under water. Agricultural losses were staggering, with 1.9 million tonnes of rice destroyed (80 percent of Sindh’s produce), 10.5 million tonnes of sugarcane swept away (61 percent of provincial output) and 3.1 million cotton bales lost (88 percent of the harvest). Behind these figures lay thousands of farming families who watched their tractors disappear under muddy water, saw irrigation channels they had maintained for decades get destroyed and witnessed topsoil that had taken generations to build wash away. Many fields remained waterlogged for months afterwards, some suffering permanent damage to their productive capacity.

Every climate disaster has degraded the country’s long-term agricultural potential. This degradation creates a vicious cycle of poverty.

Breaking this cycle requires learning from models that have worked elsewhere. Countries facing similar climate pressures have shown that green financing can turn precarious agriculture into a resilient sector. Bangladesh is an example of how green financing can help farmers withstand climate shocks. Facing many of the same challenges as Pakistan, such as rising temperatures, unpredictable monsoons and destructive cyclones, the country’s agricultural sector has turned to innovation rather than retreat.

A one-size-fits-all blueprint will not work. Sindh’s floodplains, Balochistan’s drought corridors and Gilgit-Baltistan’s glacier-fed valleys face unique risks that demand tailored approaches. 

Green Delta Insurance PLC, in partnership with the International Finance Corporation, launched a Weather Index-Based Agriculture Insurance programme to shield farmers from weather-related losses during cultivation. Unlike traditional insurance, which often involves lengthy claim processes and strict conditions, this programme uses weather data and indices to trigger swift payouts. It can be applied to any crop, at any time of year, and across regions. It provides flexibility and reassurance in a volatile climate.

The farmers pay a modest premium, gaining assurance that they will receive compensation if unseasonal rainfall, cyclones or sudden temperature swings damage their harvests. In its first three years, the programme reached 10,000 farmers across an area of 5,200 acres. Claims were settled for 2,200 farmers facing losses from extreme weather, helping them recover and replant rather than abandon their livelihoods. Beyond the financial safety net, the programme also built trust between farmers and formal financial systems, encouraging wider adoption of risk-mitigation practices. Bangladesh’s experience shows that with the right structures, green finance can move from theory to tangible results, stabilising rural economies even as the climate becomes more hostile.

Pakistan’s banking system has yet to come up with a comparable solution to help its farmers. The farmers have nowhere to turn for recovery capital. Commercial banks have collateral requirements that practically exclude smallholder farmers. Many of them may own land but lack the formal documentation that banks demand. Financial institutions routinely classify agriculture as “high-risk.” Most have shown little interest in green financing mechanisms that could reduce these risks. The knowledge gap makes matters worse.

Many farmers are unaware of existing credit programmes. Banks meanwhile claim that there is insufficient demand for agricultural loans. This forces desperate farming families to turn to local moneylenders who charge interest rates that can trap households in debt for generations.

The dilemma can be explained through the mechanism of market forces of demand and supply. The supply, heavily influenced by banks, of green financing products is considerably low owing to the disinterest and risk-averse strategies that most financial institutions resort to. On the other hand, the demand for green financing from farmers is similarly low due to a lack of awareness and the negative stereotypes associated with formal lending channels. Thus, a low equilibrium prevails. For green financing to become popular, there is a need to move the equilibrium higher. For that, both demand and supply need to increase. The policy-makers need to encourage both borrowers and lenders.

Green financing programmes succeed worldwide because they provide farmers with the resources to adapt — to purchase drought-resistant seeds, install efficient irrigation systems and construct storage facilities that can withstand extreme weather — rather than forcing them to absorb disaster after disaster. The challenge is cost. Most smallholder farmers cannot afford these technologies without support. Pakistan’s financial institutions have barely begun to address this gap.

Green financing is not a luxury. It is the difference between adaptation and collapse. Banks and insurers must change their approach to rural lending, treating farmers not as risky borrowers but as essential stewards of the nation’s food security. Without this shift, Pakistan will continue to lose farmland, livelihoods and economic stability with every climate disaster.

The survival of agriculture hinges on investments and strategies that match the scale of the threat. Modernising farming and expanding access to green finance can give rural communities a fighting chance against floods, droughts and shifting seasons. Credit, insurance and funding for climate-resilient tools must move from pilot programmes to widespread adoption.

A one-size-fits-all blueprint will not work. Sindh’s floodplains, Balochistan’s drought corridors and Gilgit-Baltistan’s glacier-fed valleys face unique risks that demand tailored approaches. Building policies on detailed risk assessments and long-term planning is the only way to protect Pakistan’s food supply and rural economy. Without swift action, the country risks losing its farmland, livelihoods and economic backbone wash away with each disaster.

The writer is an assistant consultant for climate policy and finance at Oxford Policy Management