Skip to content

How the Floods Weakened Pakistan’s Economy

A case for climate reparations.

Words: Minna Jaffery-Lindemulder
Pictures: Farid Amin

We Didn’t Start the Fire” is a column in collaboration with Foreign Policy for America’s NextGen network, a premier group of next generation foreign policy leaders committed to principled American engagement in the world. This column elevates the voices of diverse young leaders as they establish themselves as authorities in their areas of expertise and expose readers to new ideas and priorities. Here you can read about emergent perspectives, policies, risks, and opportunities that will shape the future of US foreign policy.

The flooding in Pakistan at the end of the summer has created a completely untenable situation across many sectors, healthcare and the economy chief among them. Poor central governance and climate resiliency mean that this disaster will last for months, if not years. In a predominantly agricultural country, the destruction of crops and livestock has meant that people’s livelihoods have been washed away, and rebuilding is a decades-long project that leaves Pakistan’s farmers in a dire situation. Over four million acres of crops have been destroyed, and $291 million of livestock have been lost. With 40% of the workforce reliant on agriculture, Pakistan faces compounding challenges.

The floods, however, are not the only cause for Pakistan’s economic turmoil. Before the flooding, the Pakistani rupee hit an all-time low against the dollar after several political changes. In August 2022, the International Monetary Fund (IMF) agreed to restart Pakistan’s Extended Fund Facility program, suspended earlier this year when the country could not meet its targets. However, IMF loans are partially responsible for keeping Pakistan trapped in a cycle of borrowing and defaulting on payments, exacerbating the already strained economy.

Though a welcome move, Pakistan needs more help than the IMF can — or is willing to — offer. So, who else can help? But, more importantly, who should help?


The Paris Agreement was signed by 196 Parties in December 2015 and legally binds signatories to reduce their greenhouse gas emissions in the future. The agreement aims to limit global temperature increases to 1.5 degrees Celsius compared to pre-industrial levels. Currently, we are at 1.1 degree Celsius above pre-industrial levels. However, while the agreement is a valuable tool to elevate the urgency of climate change, it does not address how to prevent climate catastrophes like the one Pakistan is currently facing.

By creating an alternative funding system, western allies would be able to cooperate on climate change with countries they may have complicated security relationships with.

One possible solution would be to adopt loss and damage funds to the global financial aid system. Though not formally adopted by the UN yet, loss and damage funds would create a plan for nations that emit higher amounts of greenhouse gasses (i.e., the United States, China, Russia, India, and Japan) to transfer funds to countries with lower emissions like Pakistan in order to protect those most at risk from climate change but least responsible for global warming. In Pakistan’s case, aside from future food insecurity, the large agricultural sector has been demolished by the flooding, leaving farm workers out of work for the foreseeable future. With over 6.4 million Pakistanis in need of immediate assistance, Pakistan’s economy simply cannot handle the sheer amount of investment needed to rebuild after the floods. Reparations from a loss and damage fund would help meet the urgent demand for cash.

There is some self-awareness. For example, Denmark has already pledged $13 million to assist countries affected by climate change, fundamentally adopting the loss and damage funding model. At last year’s UN climate change conference summit, Scotland pledged one million pounds. One-off promises, however, are not enough to mitigate the disproportionate effects of climate change on poorer nations. By creating an alternative funding system, western allies would be able to cooperate on climate change with countries they may have complicated security relationships with. For example, the US-Pakistan relationship is certainly fraught, but this mechanism would address the necessary harms of climate catastrophes without complicating the United States’ relationship with neighboring India.

The UN has found that people living in poorer countries are four times more likely to be displaced by extreme weather. Sherry Rehman, Pakistan’s climate change minister, stated: “It’s a clear case of loss and damage reparations, because this is the carbon footprint of other countries that have gotten rich on the back of fossil fuels.” While many western countries have signed onto agreements, such as the Paris Climate Accord to reduce their greenhouse gas emissions, the target emissions rates are still not enough to counteract rapidly warming temperatures in the Global South. In addition, industrialized nations that emit the majority of greenhouse gasses, including the United States (4,745 million metric tons of greenhouse gasses), China (9,877 million metric tons), and Russia (1,640 million metric tons), are not paying sufficient attention to the warning signs of climate change.

Other climate agreements, such as the Glasgow Climate Pact that was adopted at the UN climate change conference (also known as COP 2021), urge developed country signatories to increase their financial contributions to developing nations in order to curb the effects of climate change, but they do not require signatories to participate, nor does it lay out a mechanism. Similarly, the Marrakech Partnership for Global Climate Action lays out pathways for private companies to help meet climate benchmarks, but does not include any language about helping countries most affected by climate catastrophes. What these agreements lack is a binding commitment to fund climate resilience and rebuilding projects in countries that will be most immediately affected.


The damage caused by the flooding, which is still ongoing, is estimated to cost at least $40 billion. Though the IMF released up to $1.1 billion of funding, these reserves are estimated to run out within two months. Pakistan’s fate is a harbinger of what to expect if climate pledges are not drastically altered to address our current reality.

In areas with delicate ecosystems, no amount of preparation can make as much of an impact as larger industrialized nations shifting to renewable energy as soon as possible. Moreover, with the rampant effects of climate change worsening economic and security outcomes for poorer nations, it is of the utmost importance that industrialized countries and large multinational institutions of the world adjust their paradigms of development.

Minna Jaffery-Lindemulder is a Content Manager in the Analytical Development department at the New Lines Institute. Her research focuses on South Asia-Persian Gulf relations, terrorism, ideology, and US national security. Previously, she has done research at Columbia University’s Tow Center for Digital Journalism, the Center for American Progress, Hanover Research, and the National Partnership for Women & Families.

Minna Jaffery-Lindemulder

Hey there!

You made it to the bottom of the page! That means you must like what we do. In that case, can we ask for your help? Inkstick is changing the face of foreign policy, but we can’t do it without you. If our content is something that you’ve come to rely on, please make a tax-deductible donation today. Even $5 or $10 a month makes a huge difference. Together, we can tell the stories that need to be told.