Pakistan’s flagship ecological project is in jeopardy as a lack of international climate financing collides with financial troubles at home, exacerbating the nation’s struggles with water shortages and food security risks.
As one of the top 10 countries vulnerable to climate change, Pakistan requires a staggering $17 billion investment to execute the “Indus Living Initiative,” which aims to revive the mighty Indus River, the backbone of the country’s agriculture and food production.
Government officials and analysts agree that securing this financing is “highly unlikely,” primarily due to unfavorable global economic conditions.
Launched in 2021 under the Ministry of Climate Change, the initiative is envisioned as a 10- to 15-year umbrella program focused on restoring the ecological health of the Indus Basin within Pakistan.
“Pakistan is facing significant hurdles in securing climate financing for critical projects like the Living Indus due to multiple reasons, mainly the global economic conditions,” said Saad Hayat Tamman, a former national coordinator of the Living Indus project.
Speaking to Anadolu, he noted that the COVID-19 pandemic, coupled with inflation, rising energy costs, and economic uncertainty, has reduced the availability of climate finance globally.
To complicate matters further, he added, Pakistan’s existing economic struggles – such as high debt levels, fiscal deficits, and currency devaluation – have raised concerns for potential lenders and donors.
“This project is very crucial for Pakistan because the Indus River sustains 90% of the country’s population, supports over 80% of its agriculture, and provides water to nine out of 10 largest cities,” maintained Tamman.
Echoing this sentiment, Hussain Jarwar, an Islamabad-based water expert, emphasized the river’s vital role in the country’s food security, water availability, and economic stability.
“Living Indus is a significant initiative to rehabilitate the Indus Delta, which is dying due to climate change, water scarcity, and sea intrusion,” he told Anadolu.
Competition for funds and administrative complexities
Beyond economic factors, Tamman identified growing competition among developing countries for climate funds and local administrative complexities as critical barriers to the project’s launch.
“Developing countries across the globe are competing for the same limited pool of climate finance, particularly those vulnerable to climate change. This makes it harder for Pakistan to secure a significant share of the available funds, especially when many other nations are in equally precarious positions,” he explained.
He asserted that Pakistan also faces internal challenges in streamlining processes for accessing international funds.
“Complex bureaucratic procedures, a lack of capacity in preparing compelling proposals, and weak institutional mechanisms for fund management hinder the ability to attract and mobilize climate finance,” he added.
Endorsing Tamman’s perspective, a senior official from the Climate Change Ministry admitted that Islamabad is “struggling” to secure the necessary financing for the project, which is “extremely” important, especially given the meager rainfall in the lower Indus Valley.
“A combination of global economic conditions and national fiscal challenges has made it difficult for the country to access the necessary funds,” said the official, who requested anonymity due to restrictions on speaking publicly.
Agreeing with this assessment, a spokesperson for the ministry’s Living Indus Team, responsible for coordinating required investments, stated, “A more concerted and coordinated approach to climate financing is crucial for the long-term success of the initiative.”
“Failing to act would not only escalate environmental crises but could result in economic losses estimated at $1.2 billion annually through natural disasters and resource depletion,” he warned.
Climate ‘debt trap’ and green-washing
The project encompasses 25 critical interventions aimed at restoring and preserving the ecological health of the Indus River Basin.
Key initiatives include ecological restoration through reforestation, water management, and biodiversity conservation, sustainable agriculture and water governance to address soil degradation and water scarcity, flood control and groundwater recharge through green infrastructure, as well as initiatives like zero plastic waste cities and urban forests.
The federal cabinet approved eight priority interventions in December 2022, yet execution remains elusive.
While climate financing is intended to mitigate the consequences of climate change, concerns linger regarding its negative impacts.
“Many forms of climate financing, particularly loans, come with strings attached. For countries like Pakistan, these funds may increase the national debt burden if they are provided as loans or concessional credits rather than grants,” cautioned Jarwar.
Although the terms may seem favorable, repayment can still strain already fragile economies, he observed.
This situation, he added, can lead to a “climate debt trap,” where countries are compelled to repay loans for issues they did not primarily cause, further deepening their financial challenges.
The World Bank Group has a history of promoting large hydro projects in Pakistan through its Investment Finance. However, little has been done to account for the perspectives of downstream communities and to address their grievances. This pursuit of unhindered hydropower development undermines the true potential of renewable energy generation in southern Pakistan, Jarwar argued.
Another factor hindering financing, according to Jarwar, is that debt-ridden Islamabad is cautious about accruing additional loans, relying instead on the “loss and damage fund” initiated by the UN Framework Convention on Climate following the catastrophic floods of 2022, which inundated one-third of Pakistan and caused colossal losses estimated at $30 billion.
“It can be an opportunity for Pakistan, but the commitments from rich countries, whose fossil fuel-based economic model is the main reason for climate change, are lacking,” he added.
Supporting this view, Tamman expressed concern that climate financing from developed nations or international financial institutions, including the World Bank, may sometimes prioritize donor interests over the actual needs of recipient countries.
“For instance, funding may be directed toward projects that align with the donor’s climate agenda, such as renewable energy development, rather than urgent local needs like flood protection or water management, which are more critical for Pakistan’s context,” he said.
Additionally, he argued that some donor countries or institutions may use climate financing as a means to improve their global image or offset their own emissions while continuing environmentally harmful practices domestically.
“This can lead to accusations of green-washing, where the actual impact of the financing in terms of mitigating climate change is limited, while the donor countries continue to benefit from industries that contribute to global warming,” he added.
