Climate "Loss and Damage": Pakistan Gets Flood Aid Pledges of $10 Billion

by Riaz Haq

Jan 9, 2023

Pakistan has received pledges of $10 billion worth of loans and grants to rebuild after devastating floods last year, according to Bloomberg News. The amount pledged exceeds the $8 billion that Pakistan sought at the United Nations Donors Conference that concluded today in Geneva, Switzerland. The massive floods affected 33 million people living on vast swathes of land in rural Sindh and Balochistan. The flood waters killed an estimated 1700 people and  millions of animals. The floods also washed away millions of acres of standing crops, tens of thousands of homes and thousands of kilometers of roads. The total flood damage is estimated at $33 billion in economic losses, and cost of rebuilding is estimated at $16.5 billion. Prime Minister Shahbaz Sharif and U.N. Secretary-General António Guterres attended in-person, while world leaders such as French President Emmanuel Macron and Turkish President Recep Tayyip Erdoğan took part virtually. 

UN Donors Conference For Pakistan Flood Aid in Geneva, Switzerland. Source: Reuters

UN Secretary General  António Guterres has passionately advocated for immediate help for the people in Pakistan affected by the severe floods resulting from climate change.  “We need to be honest about the brutal injustice of loss and damage suffered by developing countries because of climate change,” he told the gathering in Geneva. “If there is any doubt about loss and damage – go to Pakistan. There is loss. There is damage. The devastation of climate change is real.” Mr. Guterres added that people in South Asia are 15 times more likely to die from climate impacts than elsewhere, and his “heart broke” when he saw the devastation left behind from Pakistan’s floods. “No country deserves to endure what happened to Pakistan,” he said. “But it was especially bitter to watch that country’s generous spirit being repaid with a climate disaster of monumental scale.”  

After receiving the pledges, Prime Minister Sharif assured all donors and lenders that "every penny will be used in a transparent fashion. He said his government has prepared a comprehensive “4RF” framework, to strive for “recovery, rehabilitation, reconstruction and resilience”. 

Jeddah-based Islamic Development Bank pledged $4.2 billion accounting for the largest share of the total amount of $10 billion. The World Bank pledged $2 billion, Asian Development Bank $1.5 billion, France $345 million, China $100 million, US $100 million, European Union $93 million, Germany $88 million and Japan $77 million. 

At COP27, the United Nations climate summit, Pakistan led the fight for funding to compensate nations for “loss and damage”. Pakistan had the support of 134 developing nations. Earlier at COP26 in Scotland, discussions were mainly focused on funding "mitigation" and "adaptation", not compensation for "loss and damage".  

Pakistan Pavilion at COP27 Conference in Sharm Al-Sheikh, Egypt

The "loss and damage" agenda item was first proposed by Pakistan during talks at Bonn after the country suffered heavy losses in unprecedented floods that hit a third of the country.  “My country, Pakistan, has seen floods that have left 33 million lives in tatters and have caused loss and damage amounting to 10% of the GDP,” said Ambassador Munir Akram, the 2022 chair of the G77—a group of 134 developing countries, at the opening session of COP27 at Sharm al-Sheikh, Egypt. 

Cumulative CO2 Emissions By Country/Region. Source: The World

Pakistan has contributed only 0.28% of the CO2 emissions but it is among the biggest victims of climate change. The US, Europe, India, China and Japan, the world's biggest polluters, must accept responsibility for the catastrophic floods in Pakistan and climate disasters elsewhere. A direct link of the disaster in Pakistan to climate change has been confirmed by a team of 26 scientists affiliated with World Weather Attribution, a research initiative that specializes in rapid studies of extreme events, according to the New York Times. 

Top 5 Current Polluters. Source: Our World in Data

Currently, the biggest annual CO2 emitters are China, the US, India and Russia. Pakistan's annual CO2 emissions add up to just 235 million tons. On the other hand, China contributes 11.7 billion tons, the United States 4.5 billion tons, India 2.4 billion tons, Russia 1.6 billion tons and Japan 1.06 billion tons. 

Pakistan's Annual CO2 Emission. Source: Our World in Data

The United States has contributed 399 billion tons (25%) of CO2 emissions, the highest cumulative carbon emissions since the start of the Industrial Revolution in the late 18th century. The 28 countries of the European Union (EU28), including the United Kingdom, come in second with 353 billion tons of CO2 (22%), followed by China with 200 billion tons (12.7%). 

Cumulative CO2 Emissions. Source: Our World in Data

Pakistan's cumulative CO2 contribution in its entire history is just 4.4 billion tons (0.28%). Among Pakistan's neighbors, China's cumulative contribution is 200 billion tons (12.7%),  India's 48 billion tons (3%) and Iran's 17 billion tons (1%).  

Developing Asian Nations' CO2 Emissions. Source: Our World in Data

Pakistan has contributed little to climate change but it has become one of its biggest victims. In the 2015 Paris agreement on climate change, signatories agreed to recognize and “address” the loss and damage caused by those dangerous climate impacts, according to the Washington Post. In 2021, at the major U.N. climate conference in Glasgow, Scotland, negotiators from developing countries tried to establish a formal fund to help the countries like Pakistan most affected by climate disasters. It was blocked by rich countries led by the Biden administration. Pakistan finally succeeded in acceptance of "loss and damage" at COP27 conference in 2022. The UN-sponsored Pakistan Donors Conference in Geneva this year is an important milestone and a good start toward practically helping the victims of climate change in developing nations.   

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  • Riaz Haq

    Pakistan’s floods recovery ‘test case’ leaves millions still in tents


    https://www.ft.com/content/5dbcb6d5-d6bf-4549-9aa5-fd964efbc206



    Pakistan is a disappointing test case for global financial co-operation aimed at helping countries after extreme climate events, local and international officials said, as 12mn victims languish in tents and makeshift huts after devastating floods two years ago. The amount initially pledged to support the recovery was more than $10bn, coming from wealthy countries, the World Bank and multilateral development banks, out of an estimated $16.3bn needed in total. But government and international development officials in Pakistan said that the cash-strapped country of 240mn has since been short-changed by the international community.



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    Typically, most of the money pledged in assistance to needy nations comes in the form of more high-interest debt rather than grants, with developing nations pushing for reform of the World Bank and IMF systems at meetings this week



    Officials and aid workers in Sindh are racing before another disaster strikes to use the money that has been freed up to reconstruct more than 2mn homes in what they say is one of the world’s largest housing rehabilitation projects. Sindh People’s Housing for Flood Affectees (SPHF), a non-profit company launched by the provincial government armed with some $2bn, mostly from the World Bank and other development lenders, has already built 200,000 brick-and-cement homes with another 700,000 still under construction, sturdier replacements for the traditional mud-and-thatch huts. SPHF and the Sindh government faced a slow start, as they wrangled with cautious development banks, risk-shy local lenders and feudal landlords to secure project funding, open bank accounts for flood survivors, and provide formal land titles or tenancy agreements to allow victims, many of whom work as peasants, the right to build a home. Khalid Sheikh Mehmood, the chief executive of SPHF, expects that his organisation will be able to complete all of its reconstruction by 2026 and that the project will pay for itself threefold. “You’re giving someone a new house that doesn’t fall in heavy rains, a house they can protect their livestock, their asset, in, and a sense of empowerment,” he said. “That $2bn will easily turn into $7bn of value.”

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    A key figure in climate finance, Avinash Persaud, special adviser on climate change to the president of the Inter-American Development Bank, said Pakistan’s experience was not unusual for countries in its position. “As often happens that money doesn’t materialise or it is highly conditional. The conditions aren’t able to be reached; they are not practical. “It is a real problem when so much of loss and damage after a flood is not money you can recoup. You are rebuilding homes that have been washed away, schools and clinics that have been washed away. If nations have to do that every time they will sink on the oceans of debt before the sea levels rise up themselves. That is why we do need it to be grant-based. “The reality is what happened in Pakistan is not unusual. When people said this would be a test case [for loss and damage], what they were sort of saying was this can’t be a repeat of what normally happens. We need to show this is different. But unfortunately it wasn’t different.” Former Pakistan climate minister Rehman has a stark message for other vulnerable nations, particularly those near the equator, that are not climate resilient. “In a word, I’m disappointed. If there is a lesson in all this, it’s fend for yourselves.”


    Oct 22, 2024

  • Riaz Haq

    Pakistan requests $1 bln in IMF climate cash and sees reserves rising

    https://www.reuters.com/world/asia-pacific/pakistan-formally-reques...


    Pakistan seeks $1 bln from IMF climate facility, finance minister says
    Pakistan in talks on AIIB support for planned Panda bond
    Forex reserves expected to reach $13 bln by March
    WASHINGTON, Oct 24 (Reuters) - Pakistan is targeting around $1 billion in a formal request for funding from the IMF facility that helps low and middle income countries mitigate climate risk, its finance minister told Reuters.
    "We have formally requested to be considered for this facility," Finance Minister Muhammad Aurangzeb said in an interview on the sidelines of the IMF/World Bank autumn meetings in Washington.
    The International Monetary Fund had already agreed a $7 billion bailout for Pakistan, but has further funding available via its Resilience and Sustainability Trust (RST).
    The RST, created in 2022, provides long-term concessional cash for climate-related spending, such as adaptation and transitioning to cleaner energy.
    "We think we are a very good candidate to be considered for a facility like this," Aurangzeb said, adding that they aim to conclude the request in the coming months.
    The South Asian nation is one of the most vulnerable countries to climate change according to the Global Climate Risk Index.
    Floods in 2022, which scientists said were aggravated by global warming, affected at least 33 million people and killed more than 1,700. The country's economic struggles and high debt burden impinged its ability to respond to the disaster.
    Pakistan is also in talks with the Asian Infrastructure Investment Bank for a credit enhancement for a planned Panda bond, Aurangzeb said. It is targeting an initial issuance of $200-250 million by the end of June.

    A Panda bond would be Pakistan's first foray into China's capital markets. Aurangzeb said they were talking to "a few other institutions" in addition to the AIIB for a credit enhancement.
    Credit enhancements provide some level of guarantee for bonds, which can boost their rating, attract more investors and thus cut the government's borrowing costs.
    Issuing in the world's "second largest and the second deepest" capital market was, Aurangzeb said, the key aim, rather than a particular issuance size.

    "From our perspective it is diversification of the funding base," Aurangzeb. "Even if the inaugural issue is not significant in size, for us it is important that we print that and of course then we can keep it on tap."
    Aurangzeb said Pakistan has engaged with Middle Eastern banks regarding commercial loans, and one had submitted "a relatively significant proposal."
    Pakistan's foreign exchange reserves should reach $13 billion by the end of March, Aurangzeb said, which would help with commercial lending, and potentially its credit rating.

    The foreign exchange reserves reached $11.04 billion in the week ending Oct. 18, the central bank said.
    Moody's upgraded Pakistan's ratings to 'Caa2' in August, citing improving macroeconomic conditions, and Fitch boosted its rating to CCC+ in July following the IMF staff level agreement. But both ratings are sub investment grade.

    Oct 24, 2024

  • Riaz Haq

    Pakistan's housing initiative shines at COP29 - Daily Times

    https://dailytimes.com.pk/1240469/pakistans-housing-initiative-shin...


    (Murad Ali) Shah highlighted several key milestones: Currently, 2.1 million homes are being constructed. Over 1 million bank accounts have been opened, facilitating 810,000 disbursements to families affected by floods. In Sindh alone, 300,000 climate-resilient houses have already been completed. The next phase will focus on enhancing Water, Sanitation, and Hygiene (WASH) facilities, with 60,000 resilient settlements currently in progress.

    In a gesture of gratitude, a flood-affected village has been named after UN Secretary-General António Guterres, recognizing his support. CM Sindh expressed his sincere appreciation to the global community for their unwavering assistance.

    ————

    Beginning the session, Ms. Xiaohong Yang, when asked about the inclusion of technology and transparency in the project’s execution, said, “It truly deserves outstanding applause. The transformational digitalization through the MIS mechanism means that anywhere, anytime, we can see how funds are being spent and how many facilities are being built. We know the exact number of women beneficiaries and are working to create a resilient system for future floods by including community input in the project design. This strategy of transparency adopted by the Government of Sindh leadership has accelerated the efficiency of the project tremendously.”

    The initiative’s cutting-edge Management Information System (MIS) has revolutionized aid distribution through direct beneficiary transfers, eliminating intermediaries and setting new global benchmarks for transparency in humanitarian assistance.

    Addressing what motivated the Islamic Development Bank (IsDB) to support the SPHF initiative, Dr. Issa Faye stated, “It is in our charter to show solidarity and support the countries of our Ummah. We need to deliver for the people of Pakistan. Our strategy is based on two pillars: one, green, sustainable infrastructure development-building resilience-which completely aligns with this project; and second, human capital development. These two pillars provide the framework to support this project. Beyond this, we have witnessed the deep commitment from the Sindh government toward rehabilitating rural Sindh, reaffirming our ongoing support.”

    SPHF’s pioneering approach extends beyond housing to comprehensive community rebuilding. Through innovative settlement-level planning, the program integrates GIS technology, household surveys, and community engagement to create climate-resilient villages.

    -------

    Flood-damaged water channels restored in Balochistan

    https://tribune.com.pk/story/2511567/flood-damaged-water-channels-r...

    Balochistan govt has restored water channels damaged in the 2022 floods to support the province's agricultural sector, a move officials say will benefit 57,000 acres of farmland and boost annual agricultural output by an estimated Rs1 billion.

    Thousands of farmers in Balochistan are expected to see direct benefits from the restored channels, which will enhance irrigation and improve crop yields, Express News reported.

    The restored infrastructure is part of broader efforts to promote sustainable development in the region, supporting Balochistan's path to economic progress through agricultural advancements.

    Agricultural officials noted that the project not only aims to stabilise food security in Balochistan but also represents a milestone for economic growth by creating reliable water sources for local farming communities.

    Last week, the Sindh People's Housing Foundation (SPHF) completed the construction of more than 300,000 houses, the world's largest housing project, while 810,000 houses are in various stages of completion.

    Through this revolutionary project, houses will be constructed for more than 2.1 million families displaced in the 2022 floods in Sindh, all these houses are being built keeping in mind the challenges of climate change.

    Nov 28, 2024