The Economics of Climate Change: Who Bears the Cost?

Muhammad Arif Moqueem
Climate change is no longer a distant threat; it is a reality that affects every corner of the globe, including Pakistan. The economic impact of climate change is profound and far-reaching, touching various sectors and communities in ways that are increasingly difficult to ignore. From the floods that devastate agricultural lands to the rising temperatures that threaten human health and the livelihoods of millions, climate change imposes a heavy economic burden. But who should bear the cost of mitigating its effects? Economic Impact on Vulnerable Sectors in Pakistan Pakistan, with its diverse geography and climate, is highly vulnerable to the impacts of climate change. The agricultural sector, which employs a significant portion of the population and contributes about 19% to the country’s GDP, is particularly at risk. Extreme weather events such as floods, droughts, and heatwaves have become more frequent and severe, leading to crop failures, reduced yields, and loss of livestock. The devastating floods of 2022, which submerged a third of the country and caused an estimated $30 billion in damages, are a stark reminder of the economic toll climate change can exact on a developing nation like Pakistan. The tourism sector, which holds significant potential for economic growth in Pakistan, is also being adversely affected. Glacial melting, unpredictable weather patterns, and increased frequency of natural disasters deter both domestic and international tourists. Iconic sites like the valleys of Swat, Hunza, and the Kaghan Valley, known for their breathtaking beauty, are at risk of losing their appeal due to the adverse effects of climate change. This, in turn, impacts local communities that rely heavily on tourism for their livelihoods. The Global Perspective: Shared Responsibility On a global scale, the economic impact of climate change is estimated to be in the trillions of dollars, affecting various sectors including agriculture, health, infrastructure, and tourism. However, the burden is not equally shared. Developed countries, which have historically contributed the most to greenhouse gas emissions, have the financial resources and technology to adapt to and mitigate the effects of climate change. In contrast, developing nations like Pakistan, which have contributed minimally to global emissions, face the brunt of the consequences without having the means to adequately respond. This disparity raises a critical question: Who should be financially responsible for mitigating the effects of climate change? The principle of “common but differentiated responsibilities” suggests that while all countries have a role to play in combating climate change, those with greater historical contributions to greenhouse gas emissions should bear a larger share of the cost. This principle is increasingly being advocated in international forums, with developing countries calling for more significant financial and technological support from developed nations. Tourism: A Double-Edged Sword Tourism presents a unique angle in the discussion of climate change economics. On one hand, it is a source of revenue and employment, especially in regions like Northern Pakistan, where communities rely heavily on tourist inflows. On the other hand, the tourism industry itself can contribute to environmental degradation, through increased carbon footprints from travel, deforestation for infrastructure, and strain on local resources. For Pakistan, sustainable tourism is not just an economic opportunity but also a necessity. Developing eco-friendly tourism practices can help mitigate some of the environmental impacts and promote the conservation of natural resources. [CONTINUE] This includes investing in renewable energy for tourist facilities, encouraging responsible travel practices, and educating tourists and locals alike on the importance of preserving the environment. Who Should Pay? The question of who should pay for climate change mitigation is complex, particularly for a country like Pakistan. It involves not just international responsibilities but also domestic considerations. The Pakistani government needs to prioritize climate adaptation and resilience-building as part of its national development strategy. However, this requires substantial investment, which is challenging given the country’s economic constraints. Internationally, there is a need for more equitable financing mechanisms that provide adequate support to countries like Pakistan. The establishment of the Loss and Damage Fund at COP27, aimed at compensating developing countries for climate-induced losses, is a step in the right direction. However, the effectiveness of such mechanisms depends on their implementation and the willingness of developed countries to contribute generously and consistently. A Call to Action Ultimately, addressing the economic impacts of climate change requires a collaborative effort. Pakistan must advocate for its rights and needs in international arenas while also taking proactive steps at home to build climate resilience. This includes investing in green infrastructure, enhancing disaster preparedness, and promoting sustainable tourism. The cost of inaction is far greater than the cost of proactive adaptation and mitigation. For Pakistan, this is not just a question of economics but of survival. The world must recognize the disproportionate burden borne by vulnerable countries and take urgent, decisive action to ensure a more just and sustainable future for all.