Environmental Armageddon

‘January 2025 was 1.75°C above the pre-industrial level and was the 18th month in the last 19 months for which the global-average surface air temperature was more than 1.5°C above the pre-industrial level,’ according to Copernicus Climate, a European climate agency. With the year starting with the warmest January, the following month was followed by the release of Germanwatch’s Climate Risk Index (CRI) 2025 report, which ranked Pakistan as the country most affected by extreme weather events’ impact in 2022, hit by ‘the world’s costliest flood ever in 2022.’
For many reading this, it won’t be hard to recall the heat waves, floods, and torrential rains of 2022.

SouthAsia Magazine spoke to David Eckstein, Senior Policy Advisor for Climate Finance at Germanwatch, a European think tank, to know what key factors contributed to Pakistan being the most affected country in 2022 due to extreme weather events ranking beyond the floods.

“The floods were the major reason Pakistan was featured so high in CRI. It was by far the biggest extreme weather event in 2022 in Pakistan. Also, if you compare it to extreme weather events that happened elsewhere that year, it was quite a severe event not only because of the high fatalities but also because it was a very costly, extreme weather event,” says Eckstein from Germanwatch.

According to CRI 2025, ‘The floods, described as the worst in the country’s history, affected more than 33 million people, leading to more than 1,700 fatalities and causing accumulated damage of nearly USD 15 billion. A national state of emergency was declared on 25 August 2022 because of the flooding, as 10% of the country was inundated. In October 2022, the World Bank estimated reconstruction would cost over USD 16 billion, making this one of the costliest disasters in world history.’

Discussing the heatwave that struck the country that year, Eckstein highlights the phenomenon of compound climate events. “There was also a heatwave in the middle of the year, around May and June, with temperatures soaring close to 50°C.” Citing an attribution study by World Weather Attribution, he notes, “This heatwave was made 30 times more likely due to climate change.”

Eckstein emphasizes that this finding underscores a broader trend in climate science—compound climate events are becoming increasingly significant. “These events occur either simultaneously or in quick succession, with one extreme weather event following another,” he explains, referencing the devastating sequence of heatwaves and floods that hit Pakistan.

Pakistan has faced back-to-back climate disasters, with the 2022 floods alone causing $15 billion in damages. SouthAsia Magazine asked Jamil Ahmad, the Director of Intergovernmental Affairs at the UN Environment Program (UNEP) in New York, how repeated climate shocks exacerbate economic fragility, particularly in a country already struggling with external debt and fiscal constraints.

“The immediate damages from the 2022 floods were nearly USD 30 billion. But the flood’s long-term damage, caused by the loss of infrastructure and communication networks, was more serious. Environmental disasters, like floods, can wash away years of development. Obviously, for countries that are already in debt distress, such losses exacerbate their woes and worsen financial and economic instability,” Ahmad shares.

Dr. Cullen Hendrix, Senior Fellow at the Peterson Institute for International Economics (PIIE), speaks of climate-related disasters exacerbating economic fragility through three primary and interrelated channels. “Firstly, they destroy physical, natural, and human capital (a very anodyne way of speaking about the human suffering they cause), reducing the stock of productive assets in the economy; secondly, they often necessitate borrowing for countries whose debt-to-GDP ratios and debt service requirements are onerous and crowd out other productive investment in say infrastructure or education; and thirdly the effects of the disaster, especially if not met with government policies that cushion the impact or foreign assistance is diverted to graft, can create grievances resulting in social and political instability, further harming the investment climate.”

Pakistan’s recurring need for IMF bailouts highlights its ongoing sovereign debt crisis, which is further exacerbated by climate disasters. Could it become an early case study of climate-induced financial distress leading to default?

“It might, though it is also possible that governments like to blame natural disasters – which are often referred to as acts of God, meaning acts for which no one can be held accountable – as an excuse to divert attention from other drivers of government and private borrowing that lead countries to accumulate unsustainable levels of debt,” says Dr. Hendrix from PIIE.

Despite being one of the least carbon-emitting nations, yet being the most impacted, as per the latest CRI report, Pakistan receives limited climate finance. What does this say about the effectiveness of international climate finance mechanisms, such as the Loss and Damage Fund and Green Climate Fund?

“It says, among other things, that these funds are woefully undercapitalised,” says Dr. Hendrix, Senior Fellow from PIIE. “Though COP29 made progress on sorely needed climate finance for developing and middle-income countries – with a tripling of the annual commitment from $100 to $300 billion by 2035 – it still falls short of the assessed need,” he adds. Speaking of the need, which is truly staggering, Dr. Hendrix states, that “the second Needs Determination Report by the United Nations Framework Convention on Climate Change (UNFCCC) identifies a cumulative financing gap of USD 5 – 6.9 trillion by 2030 to meet those countries’ nationally determined contributions.”

Mentioning that in 2022, OECD countries finally surpassed the $100 billion mark in climate finance and agreed to triple that commitment at COP29, Dr. Hendrix refers to it as “a notable win but an order of magnitude smaller than the assessed need just to 2030 – and these estimates likely understate the combined need not just for finance but also for technology development and transfer and capacity building. Developing country ire is palpable: Chandni Raina, a member of India’s negotiating team at COP29, called the outcome a “travesty of justice.”’

As for Ahmad, the UNEP’s Director of Intergovernmental Affairs, Pakistan, among the most vulnerable countries to climate change, “needs to better utilise the available international mechanisms for climate finance.” “The Loss and Damage Fund is new, but other finance facilities, like the Green Climate Fund and the Adaptation Fund, are assisting developing countries.” However, Ahmad stresses, “Compared to other South Asian countries, Pakistan has not availed these fundings as it should have.”

With the next UN Climate Change Conference, COP30, set to take place in Belém, Brazil, what should Pakistan be advocating for? Discussing the New Collective Quantified Goal (NCQG) on climate finance – a key component of the 2015 Paris Agreement and a primary focus at COP29 in Baku – Eckstein, Senior Policy Advisor for Climate Finance at Germanwatch, highlights a critical gap. “Explicit quantified targets for adaptation and loss and damage are missing in the NCQG,” he notes, emphasizing the need for clear financial commitments to support developing countries in addressing climate change.

Eckstein explains, “The NCQG includes a provision for a roadmap—an outlined plan to increase climate finance to USD 1.3 trillion per year by 2035. This is a critical political process to define what such a roadmap should look like.” He adds that at COP30 in Brazil, parties will discuss how this roadmap will take shape and be implemented.

For Eckstein, ramping up climate finance is an opportunity for developing countries to push for more ambitious climate finance commitments, especially after the disappointing outcomes of the previous COP. These outcomes were disappointing not just for NGOs but particularly for developing countries.

“The USD 300 billion target by 2035 is vastly inadequate,” Eckstein asserts. “We now need to explore ways to scale this up to around USD 1.3 trillion, a figure many African negotiating groups have called for. Even though this is several times higher than USD 300 billion, it still falls short of addressing the full scope of expected climate impacts. However, securing a meaningful roadmap to reach this goal – ideally even before 2035 – would still be a major step forward,” he emphasizes.

For Dr. Hendrix from PIIE, the current global financing structure is fundamentally flawed, but a bigger challenge exists. “The bigger challenge is the exit from the scene of the United States. Without its participation, the world faces an even more challenging collective action problem – and will be doing so in a very unstable global economic environment for some time.”

Eckstein, Senior Policy Advisor for Climate Finance at Germanwatch, highlights the failure of developed countries to meet their climate finance commitments. “If you look at the United States, especially under President Trump, they have either cut or announced plans to cut all financial contributions to UN climate funds and the UN system. Even before Trump took office in 2016, the US had already reduced its climate finance budgets. This shows that fulfilling commitments remains a significant challenge.”

Pakistan is already a water-stressed country – it cannot afford to do business as usual.

Discussing the policy measures that Pakistan can adopt to climate-proof its economy, particularly in sectors like agriculture and energy, which remain highly vulnerable, Ahmad from UNEP says, “Environmental and climate change matters must be mainstreamed into all development policies and strategies. Pakistan is already a water-stressed country – it cannot afford to do business as usual. Agriculture accounts for almost 90 percent of water in Pakistan. There is an urgent need to change this by adopting smart agriculture practices and policies. We also need to look at options for crop substitution and shift from water-intensive crops that lead to soil degradation and waterlogging.”

With Pakistan’s economic and climate vulnerabilities intertwined, can it become a test case for how international financial institutions (IFIs) respond to climate-induced economic crises? Dr. Hendrix, Senior Fellow at PIIE, shares that it could be the case. “It could be such a test case, but the challenge is that the ground under the IFIs is moving fast. The rapid changes in the global economic and policy landscape ushered in by the Donald Trump administration mean that the IFIs are largely preoccupied with navigating uncharted waters and are likely to be particularly careful about programming and messaging around climate-related issues in the near term.”

With a slow disbursement of loss and damage funds, how can Pakistan recover from these climate-related events and rebuild

Eckstein from the European think tank Germanwatch says, “Developing nations (like Pakistan) must consistently reiterate their demands and apply pressure on developed countries to prioritise and significantly scale up adaptation funding.” Speaking of the climate funds in their current form, Eckstein mentions that they do not significantly address post-disaster rebuilding or recovery from extreme weather events. However, they play a crucial role in preparedness by providing financial resources for adaptation measures, early warning systems, and other strategies to minimise the impact of climate-related disasters. Given the increasing frequency of extreme weather events due to climate change, these funds must take on a much more significant role in ensuring adequate adaptation measures for vulnerable countries.

Currently, according to Eckstein, “a significant portion of climate finance is directed towards mitigation projects, which are undeniably important for reducing the likelihood of extreme weather events. However, adaptation funding remains severely insufficient. The imbalance in fund allocation must be addressed urgently. There is an ongoing UN process to tackle this, with COP29 discussing the issue and COP30 in Brazil set to continue the conversation.”