A change for the worse

Climate change poses critical challenges to Pakistan

— Photo by Rahat Dar

Greenhouse gasses (GHG) are pollutants, which are produced by human activities. They cause an increase in surface temperatures and have a serious impact on the climate. Climate change impacts production factors, causes a decrease in marginal productivity of capital and total aggregate output. This strongly affects long-run growth.

We are currently adding CO2 at the level of 3ppm (parts per million), which is likely to build up to 750ppm by the end of the century causing a rise in global temperature by 4°C. According to climate change experts a rise in temperature by 3°C will have far-reaching socio-economic repercussions. It would result in the loss of five per cent of the global GDP annually. Experts concluded that most market sector impacts of climate change have a hill-shaped relationship with temperature. The colder countries of the world will in fact initially benefit from warming due to reduced heating costs and cold-related health problems. Temperate countries will see a moderate impact and the worst hit will be the warm, tropical countries of the global south.

Extreme weather events, desertification, gradual global warming, collapse of forests and biodiversity, storm surges from oceans and the rise in sea level are some of the physical risks to humanity and macro-economy. They can affect the macro economy through various supply and demand or transmission channels. On the demand side, extreme weather catastrophes not only reduce household wealth, but also make people more risk averse and increase their propensity to save so that they can safeguard themselves against anticipatory losses caused by climate change (Fankhauser and Tol, 2005). Perceptions of uncertainty in the international business community also reduce foreign investments.

Pakistan is a prime example of a country in the global south that, despite contributing less that 0.8 per cent to the global GHG emissions, is the eighth most vulnerable country to climate change (Akram and Hamid, 2015). The changing patterns of precipitation due to global warming hit South Asia significantly. Pakistan has been suffering from recurrent flooding over the last several years. During the 2010-11 floods, consequences were worse because the land departments were inefficient. There were unlawful constructions of even schools, buildings and settlements on the flood plains, causing mass destruction of capital stock.

As a result of these floods the country’s agricultural heartlands, its rice, corn and wheat crops were destroyed; roads and other infrastructure were damaged and so were the lives of 22 million other Pakistanis. These floods killed 1,7000 people and displaced millions. These extreme weather events led to a refugee crisis in the country, protests against government inaction and un-fulfilment of rehabilitation promises. These floods made at least 7.8 million people in Pakistan food insure and inflicted an economic loss of US$ 16 billion on the economy.

The frequency of these floods increased due to the rapid melting of the Himalayan glaciers. The temperature change also caused droughts, desertification, water stress and flooding. A heat wave hit Karachi in 2015 leading to a subsequent water shortage that exists to date and drought in Balochistan and Tharparker that caused many deaths.

Rise in the levels of tropospheric ozone (O3) has led to lethal levels of smog in India and Pakistan (UNEP, 2000). The current smog levels in Pakistan are critically high. Sea level rise is another significant impact of climate change that affects the global south more severely. This may cause saltwater intrusion, flooding, further damage to infrastructure, and especially a detrimental impact on the tourism industry. The higher population density concentration in these countries and their poor flood control infrastructure and planning make them more vulnerable. These natural disasters prevent governments from pursuing their developmental policies as they cause political unrest, social turmoil and a shift of resources and investments from current productive capital and technological advancements to reconstruction and climate change adaptation.

Climate literature shows us that global warming will affect the physical and cognitive performance of workers and thereby cause a decrease in effective labour supply. Extreme temperatures are detrimental to health, making the labour morbid and cause increasing mortality rates through the spread of diseases such as malaria. (Fankhauser and Tol, 2005).

To avoid these effects, we need to transition to more environment-friendly modes of production, enhance the efficiency of existing products and reduce carbon intensive production and consumption (Batten 2018). These, however, have their own macroeconomic and financial burdens called transition risks. Transition impacts are more severe for economies that have a greater dependency on fossil fuels. Almost all of the countries where fossil fuels account for more than 90 per cent of their total exports are in the global south, including Azerbaijan, Iraq, Libya, and Venezuela (Hutt, 2016).

The developed countries, despite having the capacity for transition, are barely taking steps to reduce emissions. According to the World Meteorological Organisation Secretary-General Petteri Taalas, “Despite all the commitments at the Paris Agreement for climate change, there is no sign of slowdown or reduction in greenhouse gasses.” (Sky News, 2019). Developed economies with stable financial systems, liquid markets and bigger banks are better suited to mitigate these effects and rectify the damages caused by natural disasters.

Climate change in Pakistan: A change for the worse