Climate Financing – Saving the Future

Posted by Sadia Sheikh
August 31, 2017

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Picture depicting the impact of floods in Pakistan. Picture courtesy: Internet

One can only begin to imagine the miseries of people in flood relief camps. With all belongings washed away, those who were once self-sustaining, must wait for government and donor agencies to provide them with drinking water and food, till the time they return and start building their lives again.

Pakistan is among the ten worst affected countries by climate change. Scientists warn, climate change, not terrorism, is going to be our next biggest threat. According to leading economist Ishrat Husain, serious flooding has hampered the economic growth rate, almost by a half. Unless we prepare ourselves to tackle the cause and effect of Climate Change, our economy will continue to suffer every year from losses emanating from floods, drought and other natural calamities brought forth by manmade activities.

Climate Financing refers to the financing of projects and activities used to fight climate change, mitigating its causes, and dealing with its after-effects. Funds pledged by richer, more carbon-emitting countries for less resourceful, climate vulnerable countries, in which Pakistan categorizes, are termed International Climate Finance. In the United Nations Framework Convention on Climate Change (UNFCCC) Cancun Conference 2010, agreement was reached to mobilize USD 100 billion per year by 2020 under the Green Climate Fund (GCF) to help developing countries with mitigation and adaptation activities. This figure would constitute not just aid, but also loans and private sector investments.

How effective this fund has been in helping developing countries against Climate Change? It should be noted that it’s the developed countries who have contributed the most to bring forth the perils of climate change, the grave consequences of which we are facing today in the form of frequent floods, and drought in Tharparkar. United States, which pulled out of its pledge to contribute towards the GCF, is responsible for almost one third of the excess CO2 that is in the atmosphere.

The pledged amount has never reached up to the agreed figure. A report released by the Organization for Economic Co-operation and Development (OECD) countries claims to have achieved funding of USD 52 billion in 2013, and USD 62 billion in 2014 for the developing countries. However, an Indian Finance Ministry paper challenges these claims, referring to the estimates as flawed and overstated.

What is Pakistan’s plan to fight against the perils of Climate Change? The imminent action required now is to focus on adaptation strategies to save human and economic losses, and focus on mitigation strategies in the long run to ensure that carbon emissions are kept controlled. The economy has already lost up to USD 20 billion in climate related disasters. Lack of funds and technology remain the top hurdles in implementing adaptation and mitigation strategies. Without a firm policy and strict implementation, Pakistan will continue to suffer year after year, from human and economic losses because of adverse climate conditions.

Institutional investors looking for long term investments, should be driven towards renewable energy sector to generate funds for the fight against Climate Change. Solar and wind energy projects have a lifespan of around 25 years, suiting long term investment opportunities and providing steady cash flows. Lack of supportive government policies, risk return adjustments, and investors’ understanding of clean energy projects have so far kept investors away from viewing the renewable energy sector as lucrative choice. An overseeing body needs to be set up to look after the renewable energy investments to secure investors’ confidence, and the utilization of resources transparently. As much as the country needs financial resources to embrace itself, it needs proper consumption of these resources to meet the objectives. A proper accountability system will also help in securing International funds for adaptation and mitigation projects.   

Water scarcity is just one of the threats posed by deteriorating climatic conditions. Inefficient irrigation system in Pakistan wastes 60% of the water running from the canal to the field, which is our self-made plan to further aggravate the situation. Drip and sprinkler irrigation techniques which save water and are good for yield, should be encouraged, and farmers should be educated on their proper usage. High initial cost of installation and lack of understanding makes it unfeasible for farmers to invest in this system.

Over the past 7 years, the country has been repeatedly affected by floods. 2010 saw massive floods that killed more than 2000 people, along with devastation of property, livestock and infrastructure. Following the terrible floods, the government worked on Natural Disaster Risk Reduction policy, along with the United Nations Development Program (UNDP), followed by the drafting of the National Climate Change Policy, outlining measures against climate change and adaptation against frequent floods. While the fact that the government is taking climate Change seriously is commendable, it fails to be made a priority.

Climate Change needs to be taken as a serious threat, with actions and plans, rather than drafting policies which fail to get implemented. While the developed countries have an obligation to rectify their actions that saw accelerated climate change, Pakistan needs to set up a body to raise funds internally, and see to their efficient utilization. Private investments should be encouraged in this sector by providing investors with information on clean energy projects and nullify their concerns.   

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