Climate Change Will Make Up to 9 Million People Poor in Pakistan: World Bank

Climate change is thought to be the biggest long-term and unmitigated external risk to water security in Pakistan, and it is a key reason why staple crop yields and livestock production are projected to decrease by up to 20 to 30%, respectively, according to the World Bank (WB).

In its latest report titled “Rethinking Social Protection in South Asia: Toward Progressive Universalism,” the bank stated that climate change will push between 5.7 million and 9.0 million additional people into poverty in Pakistan, and Bangladesh will have roughly 13.3 million internal climate change migrants by 2050.

WB’s report says that in Pakistan, the devastating 2022 floods – a direct result of the country’s vulnerability to climate change – left between 8.4 million and 9.1 million more people in poverty. These impacts have been further amplified by the global fuel and food crises in the wake of Russia’s invasion of Ukraine.

These issues hit those hard who are already the most vulnerable – ladies, youth, and children. These challenges are compounded by the need to create jobs for South Asia’s rapidly growing working-age population, at a time when new technologies impact the world of work perhaps like never before.

Punjab is home to almost half of the country’s poor. The poverty belt is concentrated in southern Punjab, where the poverty rate (39%) is almost twice as high as the provincial average (21%).

The prevalence of underemployment (the share of employed workers who work at less than minimum wage) is significant in many countries, reaching 33% in Bangladesh, 32% in Maldives, 18% in Nepal, 14% in Bhutan, 13% in Pakistan, and 10% in India.

The share of youth not in education, employment, or training (NEET) increased sharply in South Asian countries, including Pakistan, where an additional 1.6 million youth became idle.

The poorest three quintiles of the population in the informal economy lost 9, 13, and 16% of their incomes in Bangladesh, India, and Pakistan, respectively.

Pakistan spends the most on social protection (4.8% of GDP), followed by Nepal (3.5%), Maldives (2.8%), and Sri Lanka (2.7%). Pakistan’s relatively high social protection expenditure is driven by significant spending on explicit energy subsidies. Spending on public sector pensions is highest in Pakistan, at 2% of GDP.

South Asian countries, on average, spend approximately 1.14% of GDP on social assistance, compared with the world’s highest regional expenditure of 2% in Europe and Central Asia and other regional averages ranging from 1.8% in Latin America and the Caribbean to 0.8% in West Africa.

Within South Asia, Nepal is the highest spender, at 2.1%, followed by Maldives at 1.6%. The lowest spenders in the region are Pakistan and Sri Lanka, at 0.3 and 0.6%, respectively.

Pakistan has the lowest social assistance coverage of the richest quintile, followed by Bhutan in South Asia.

Civil service pension spending as a share of GDP stands at 0.83% in South Asia and between 0.4% in Bhutan and 2.0% in Pakistan. It is driven primarily by the generosity of public sector pension schemes. Individual replacement rates in Bangladesh, Pakistan, and Sri Lanka are considerably higher than those for contributory private pensions.

In the last two decades, despite a recent downward trend, most South Asian countries witnessed meaningful economic growth. Among the high achievers are Bangladesh and Bhutan, with average 5.7 and 4.6% real per capita growth in gross domestic product (GDP), respectively, between 2000 and 2018 and reached lower-middle-income status, as well as India and Sri Lanka, with average growth at 5.2 and 4.6%, respectively, during the same period.

In contrast, Maldives and Pakistan, with short spells of more rapid growth regularly followed by crises, have struggled to sustain economic growth. On average, their real per capita GDP growth rate was only 2.5 and 2.3%, respectively, during the same period, substantially below the performance of other countries in the region. Average per capita economic growth in South Asia declined from 3.9% in 2017 to 3.6% and 3.2% in 2018 and 2019, respectively.

Spending on public sector pensions is highest in Pakistan, at 2% of GDP. As a share of total social protection spending, spending on public sector spending is highest in Sri Lanka, at almost 50%, WB noted.