ISLAMABAD (GNP): Climate risks are increasingly undermining economic growth, fiscal stability, food security, and development gains, and thus, the government needs to integrate climate change considerations into Pakistan’s economic and budgetary planning.
This was the consensus among policy experts and parliamentarians at a parliamentary consultation on ‘Mainstreaming Climate Considerations in Pakistan’s Economic and Budgetary Planning’, jointly organized by Sustainable Development Policy Institute (SDPI) and the Embassy of Denmark.
Danish Ambassador to Pakistan, Maja Mortensen, said climate and environmental concerns could 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 in the wake of the federal budget process.
She emphasized that climate resilience and economic development are complementary rather than competing objectives. She also offered Denish experience and technical cooperation in integrating climate priorities into development planning.
SDPI Executive Director, Dr Abid Qaiyum Suleri, said climate considerations must be reflected in both federal and provincial finance bills, as Pakistan’s budget framework is being shaped under the International Monetary Fund’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes.
The IMF-supported reforms had encouraged greater allocations for disaster risk reduction, water conservation and renewable energy projects, he said, adding that some of these commitments had already been reflected in federal and provincial budgets. He cited revised water tariffs in the Punjab, increased allocations for disaster preparedness, enhanced climate financing and plans for a pilot project linking grid-level battery storage with wind energy generation in Jhimpir.
Dr Suleri, however, warned that climate finance was shrinking globally and nationally despite rising climate-related challenges. He also stressed the need for stronger coordination between the federation and provinces to meet climate commitments.
Pakistan People’s Party (PPP) MNA and Member NA Standing Committee on Economic Affairs, Mirza Ikhtiar Baig said Pakistan remained among the countries most affected by climate change despite contributing minimally to global emissions. Referring to the aftermath of the 2022 flood, he regretted that much of the international financial support pledged for reconstruction had not been materialized so far.
He noted that Pakistan had secured access to climate-related financing under the IMF’s Resilience and Sustainability Facility. He argued that revenues generated through carbon-related levies and petroleum levies reflected the contribution of ordinary citizens toward climate mitigation efforts. He also welcomed the reduction in taxation on solar panels following political consultations.
PPP Member of National Assembly, Asad Alam Niazi, stressed that climate change had emerged as a national security challenge and there is still inadequate public awareness about its economic and social consequences.
He noted that erratic weather patterns and climate-induced disasters were affecting agriculture, livelihoods and economic productivity, while government allocations for climate action remained insufficient.
Linking climate resilience with population growth, Niazi warned that Pakistan needs to create millions of jobs per year by 2050 keeping in view the population growth rate while simultaneously addressing climate vulnerability, malnutrition and stunting.
SDPI Deputy Executive Director (Research), Dr Sajid Amin Javed, said climate change is causing annual losses equivalent to around 1.53 per cent of global GDP which could rise dramatically in coming decades if mitigation and adaptation measures were 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 were now directly linked with climate resilience.
Head of SDPI’s Energy Unit, Engineer Ubaid ur Rehman Zia, highlighted the importance of embedding climate considerations into fiscal and economic planning. He said Pakistan, being among the countries most vulnerable to climate change, needed to strengthen climate diplomacy and leverage international partnerships to mobilize climate finance and support climate-resilient development.
Presenting key findings on climate budgeting, SDPI’s Head of Ecological Sustainability and Circular Economy, Zainab Naeem, said that climate-related allocations in the federal budget 2026-27 had declined by around 70 per cent compared to the previous year.
She noted that while approximately Rs 2,026 billion had been tagged as green-linked revenues, significant gaps remained in climate finance accountability and reporting mechanisms. She also highlighted an 84 percent decline in allocations for the Ministry of Climate Change between 2021 and 2027.
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Zainab suggested introducing climate fiscal buffers, mandatory climate impact reporting, anticipatory action funding mechanisms and stronger integration of climate risks into public finance mobilization. She further stressed the need for a comprehensive climate mitigation plan and informed participants that SDPI was developing Pakistan’s first Climate Adaptation Investor Confidence Index, under which the country currently ranked in the moderate category with a score of 59.6
Former Managing Director of the Private Power and Infrastructure Board (PPIB), Shah Jahan Mirza, observed that the Petroleum Development Levy had increasingly become a tool for managing budget deficits. He urged regulators, including SECP and NEPRA, to formulate comprehensive climate risk guidelines and called for a shift from reactive responses toward proactive planning and budgetary allocations for climate adaptation.
Sohail Majeed is a Special Correspondent at The Diplomatic Insight. He has twelve plus years of experience in journalism & reporting. He covers International Affairs, Diplomacy, UN, Sports, Climate Change, Economy, Technology, and Health.
