ISLAMABAD: The World Bank has predicted a cut of 18 to 20 per cent in Pakistan’s annual economic output by 2050 due to climate change risks.
“The combined risks from the intensification of climate change and environmental degradation, unless addressed, will further aggravate Pakistan’s economic fragility; and could ultimately reduce annual GDP by 18pc to 20pc per year by 2050, based on the optimistic and pessimistic scenarios,” in its recently published report the World Bank stated.
The report stated that between 6.5 per cent and 9 per cent of GDP will likely be lost due to climate change (in the optimistic and pessimistic scenarios, respectively) as increased floods and heatwaves reduce agriculture and livestock yields, destroy infrastructure, sap labor productivity, and undermine health.
Additionally, water shortages in agriculture could reduce GDP by more than 4.6 per cent, and air pollution could impose a loss of 6.5 per cent of GDP per year.
The report highlighted that the use of water for non-agricultural purposes was likely to significantly increase with climate change. “Under a high-growth (4.9 per cent per year) and high-warming (3°C by 2047) scenario, water demand is projected to increase by almost 60 per cent, with the highest rates of the increase coming from the domestic and industrial sectors.”
It stated that climate warming will account for up to 15 per cent of this increase in demand. This heightened demand will result in unintended consequences that deprive downstream areas of water rights, the report said, adding that the competition among sectors will necessitate inter-sectoral tradeoffs that will likely be made at the expense of water for agriculture.
“It is projected that, in the next three decades, about 10pc of all irrigation water will need to be repurposed to meet non-agricultural demand.”
Freeing up 10 per cent of irrigation water without compromising food security will be a complex challenge that will require substantial policy reforms to incentivize water conservation and increase water use efficiency in the agricultural sector and a shift away from water-thirsty crops as well as better environmental management, the report stated.
The projected costs of a forced reallocation of water out of agriculture, to meet non-agriculture demands, without such steps, could reduce GDP in 2047 by 4.6 per cent.
It went on that the losses projected were the costs of forced reallocation of water to serve other urgent needs, including allocations for water, sanitation, and hygiene (WASH) and urgent environmental flows to sustain critical ecosystem services.
Damage induced by climate-related extreme events will likely have economy-wide impacts on growth, fiscal space, employment, and poverty. Global warming and extreme events affect economic activity through multiple transmission channels: impacts on lives, infrastructure and assets, and on livelihoods, which can result in lost economic growth, worsening poverty, and longer-term threats to human capital and productivity. Existing macro models can help assess the expected scale of such events.
The report added that household poverty was expected to decline over time, but even a 9 per cent decline in GDP by 2050 was enough to stall poverty reduction, with disproportionate impacts on rural households.
By 2030, the urban poverty rate was expected to be half that of rural areas, it said, adding that by 2050, urban poverty was projected to decline further to 10 per cent, while rural poverty remained in the 25 to 28 per cent range.
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