Pakistan is highly vulnerable to the effects of climate change and was ranked by the Global Climate Risk Index 1993-2012 ranked as 12th most affected by extreme weather events. Yet Pakistan’s response to climate change is less than desired and the country has not been able to make effective use of global climate finance. However, Pakistan’s Vision 2025 and National Climate Change Policy (2012) provide a sound basis for integrating climate-compatible and risk-informed budgeting into public financial investment and development plans.

Pakistan’s response and commitment to address climate change has remained mixed. Pakistan’s ability to effectively mobilize, manage, and target climate finance is considerably not high. Moreover, total climate change investment to date has been more limited in Pakistan compared to other countries in the region. 

In 2005, a Prime Minister’s Committee on Climate Change (PMCCC) was established to as an Inter-Ministerial platform to forge coherence between climate change and national development and planning. In the same year, a National Disaster Management Authority was established. But while the Government established a dedicated Ministry of Climate Change (MoCC) in April 2012, it was subsequently downgraded to a Division and only recently reinstated in January 2015. In 2012, Pakistan also developed a National Climate Change Policy (NCCP), which aims to “ensure that climate change is mainstreamed in the economically and socially vulnerable sectors of the economy and to steer Pakistan towards climate resilient development.” However, implementation of NCCP and decentralized approaches remains not very strong.
A Climate Change Financing Framework (CCFF) must be developed in the context of broader economic development and financing policy. The Government’s Vision 2025 developed by the National Planning Commission outlines a long-term economic development plan that will be realized through five-year and annual strategies and programmes . All development projects go through the usual process of approval from authorized forums to establish Annual Development Plans that reflect government priorities. The Vision 2025 provides a sound basis to integrate climate change budgeting into national development planning. Since 1948, ten 5-year economic plans have been developed by the National Planning Commission. Likewise, Pakistan has been working on reforming the budgeting through a medium term budgetary framework (MTBF) since 2003. The MTBF at the federal level is now largely in place with almost all the ministries following. The annual budget of the Federal Government is based on the MTBF.
By strengthening public financial management systems and policies to better integrate climate change into budgeting, UNDP seeks to enhance Pakistan’s ability to effectively mobilize, manage, and target finances to respond to climate change, thereby improving resilience, particularly of the poorest and most vulnerable.
Government of Pakistan is working with UNDP to increase the capabilities of the Ministry of Finance to track and monitor climate change related expenditures, and integrate climate change into budgetary and planning processes. Tracking Climate Change Expenditure (CCE) will start with coding, linkages with other ministries- this will be complemented with capacity building of the concerned officials- reporting on CCE and tracking. In Q1 of 2015, 
As part of the South-Asia regional programme in Strengthening Governance of Climate Change Finance supported by the UK Department for International Development (DFID) and UNDP, a project is formulated and now actively supporting the government of Pakistan with the objectives are follows:
  • Public sector expenditures related to climate change are systematically quantified, tracked, and reported;  
  • Climate policies and priority actions are integrated into budgetary processes ;
  • Demand and accountability are increased amongst both legislators and the public for the effective use of climate change finance;
  • Knowledge and good practices on climate-compatible budgeting are generated and shared in the region and internationally.

Expected Results

Under this project, UNDP provides technical assistance, institutional capacity development, skills building, and advocacy communications. These are, collectively, designed to increase the will and capacity of policymakers to mainstream climate finance into planning and budgeting systems under a “whole-of-government” approach. 
Key activities include:
  • Developing a Climate Change Financing Framework using the budget cycle as an entry point for broader reform.
  • Instituting a functional budget coding system and tracking and reporting mechanisms through and the development of innovative tools. 
  • Carrying out Climate Change Public Expenditure and Institutional Reviews (CPEIR) with federal and all provincial authorities.
  • Developing guidelines and methodological tools for line ministries to propose programmes for climate funding.
  • Undertaking policy advocacy and related communications.
  • Engaging with parliamentarians and civil society organizations to enhance public accountability.

Main achievements on Climate Change Finance in Pakistan

  • Climate Public Expenditures and Institutional Review (CPEIR) have been carried out at the federal level as well as in Khyber-Pakhtunkhwa province, Azad Jammu & Kashmir and Gilgit-Baltistan. This is the first ever assessment of climate change related expenditures and the sectors where these expenditures occur.
  • The project initiated a new awareness of the need to support climate responsive budgeting and effective spending in Pakistan.
  • The project helped the Ministry of Finance and the Climate Change division strengthen the budgetary process for climate change spending. 

Key Findings from Pakistan CPEIR

Climate Change expenditures represents 6% of total federal budget in 2013-2014 and over half of Climate Change expenditure budget were related to mitigation.

In Khyber-Pakhtunkhwa (KP) province,Climate Change expenditures represents 7% of total provincial budget and three quarter of KP’s climate change expenditure were related to adaptation and joint adaptation-mitigation.

What's next?

In the next two years, efforts will be made to provide technical assistance to the Government of Pakistan in integrating climate change finance in the country’s public financial management systems. Working with the federal Ministry of Finance and the KP Department of Finance the following initiatives will be implemented:
  • Develop a Climate Change Financing Framework (CCFF) and reporting mechanism, and integrate CCFF into existing budgeting processes (MTEF).
  • Provide technical assistance to the Ministry of Finance in designing a reliable and functional climate change budget coding system.
  • Increase awareness on climate change through advocacy and communication for stakeholders and the public. A media and communication strategy will be formulated and implemented.
  • Engage with parliamentarians and civil society organizations to increase understanding and enhance accountability on climate change expenditure.