During the last decade Pakistan economy has been facing severe economic crisis and instability, and it fails to maintain sustainable development and to bring the peoples out of poverty. Where as the economic policies are being formulated without taking care of environmental issues, energy security, food security and water security which in turn resulting severe energy crisis, food insecurity, water scarcity and climate change.
According to environmental assessment report 2006 by World Bank, Pakistan bear the cost around PKR 249 billion due to environmental degradation and damages. A recent Sustainable Development Policy Institute (SDPI) report on multidimensional poverty revealed that one third of the households in Pakistan fall below the poverty line which mean that 58.7 million Pakistanis deprived from basic necessities. In addition to this, SDPI and WFP report suggests that 48.6 percent population in Pakistan is food insecure which mean that almost half of the population in Pakistan is food insecure. It is estimated that these figures may have grown by 10% immediately after the 2010 floods.
From the experience of Pakistan and other developing countries, it can be inferred that “period of high economic growth occurred at the expense of macroeconomic stability, but it did not produced the desired outcomes with regards to poverty reduction in a sustainable manner.” It poses the question that how we can make growth more inclusive? How can be the dividend of the growth is accessible to large segment of the population? How policymakers can stimulate the markets led growth and also protect the environment and vulnerable segment of the society in Pakistan.
Current situation of Pakistan economy
Pakistan has a growth rate of 3.7 percent in 2011-12 after turmoil of economic growth of two years. With this stagnant growth rate Pakistan can not meet with its challenges in near future. Pakistan is far lagging behind from its neighbor where India and China is growing with high GDP rate 5.2 % and 7.9 % respectively. There is huge gape in revenue and expenditure and the fiscal deficit as a percentage of GDP stood at 4.3 percent as of fiscal year 2011- 12 which means total budget deficit is stood at Rs. 894.9 billion.
Pakistan economy is also facing trade deficit during last decades, which is widening in upward trend. If we look into statistics which shows that trade deficit in 2001-02 was $294 million, which increases to $8.259 billion in 2005-06 and $15.587 billion in 2010-11. Now the economy accumulated a trade deficit of $21.27 billion during FY2012 (Pakistan Bureau of Statistics). At end of March 2012, public debt stood at Rs. 12,024 billion and as a percent of GDP stood at 58.2 percent by end- March 2012 compared to 55.5 percent of GDP during the same period last year. There is $ 625 million net decline of Foreign Direct Investment (FDI) during last year and FDI stood at $ 668 million during July-April 2011-12 as against $ 1293 million last year. The rate of unemployment is 5.6 % which means that 3.1 million of total labor force is unemployed in 2010-11 (Pakistan Economic Survey 2011-12). With marginal increase, Per capita Income stood at $ 1256.8 (Rs 114370) during 2010-11 but the real purchasing power of the people also eroded rapidly as inflation entered into double-digits (PBS).
These current economic upheavals will lead Pakistan economy in to severe crisis. Pakistan needs move toward Green Economy and development, because current economic model has no capacity to protect the environment and future generations. So there is dire need to revisit policies and rethink discourse according to green economy concept. The conventional economy that we have is not viable to meet the challenges of the future. Business community is also in favor of the concept of green economy because green economy has the huge potential for sustainable profit in long run.
Of course Pakistan has the opportunities to prevent from huge loss and damages of climate change if it adopts green production mechanism to avoid the severe consequences of climate change. Pakistan has the space for green economy and green development having very low position in the GHG emission index. As we have witnessed that in 2010 floods approximately 22 millions people were displaced and our country face huge loss of infrastructure and our economy become collapse.
According to the World Bank and the Asian Development Bank (ADB) Damage and Needs Assessment (DNA) report, total damages estimated to agriculture, energy, transport and communication, health, environment as well as the forestry, water supply and sanitation amount to Rs. 324.5 billion (US$ 3.7 billion) and ruined 6.2 million acres of crops.
In order to ensure food security in the short as well as the long term, there is urgent needs to shift towards sustainable agricultural practices, including integrated water management to ensure promote sustainable rural development, including investment in sustainable agriculture, support for small and landless farmers, especially women farmers, and integrated rural development programmes. Pakistan has immense resources of renewable energy, including hydel, micro hydro, solar, wind, and waste-to-energy.
Pakistan is the most urbanized country in South Asia. The government should undertake reforms and policies for sustainable urban development, including sustainable urban design, land use management, vertical development to limit urban sprawl, definition of city limits, sustainable transport systems based on public transport instead of proliferation of private transport, sustainable waste management, energy efficient building design, and good governance.
So if we go for green economy and development it will improve human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. For doing so there is need to invest huge financial resources for mitigation, adaptation and technology innovation and transfer. In addition to this policy makers must be very careful while making any strategy to solve the public problems which ensure that the propose policy is environment friendly or not.
On top of that political will require at highest levels of the political leadership of the country because challenges to sustainable development mostly due to continuing weakness of governance mechanisms. It is fundamentally important that the pursuit of sustainable development and the green economy must be based on the principles of transparency.
The Writer is Public Policy Analyst and consultant at Sustainable Development Policy Institute Islamabad.
Published in The Express Tribune, February 11th, 2013.