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Wednesday, May 22, 2024

Pakistan proposes debt-for-nature scheme to combat debt, climate change

The plan would work in a way that a creditor nation, or maybe even an IGO like the World Bank or IMF would agree to write off a portion of the newly issued debt or reduce repayment interest rates if the debtor (Pakistan) met agreed biodiversity and nature restoration targets.

The whole world is aware of the mounting burden of the debt on the country’s economy, amidst the ongoing coronavirus pandemic. However, Pakistanis are largely unaware of the Pakistani government’s debt-for-nature plan to combat climate change and debt all at once.

According to an article by Climate Change News, a leading news agency on global climate politics, Pakistan’s 10 billion tree tsunami is a first-of-its-kind initiative, where the nature performance bond would link debt retirement with nature restoration targets.

This bond would work in a way that a creditor nation, or maybe even an IGO like the World Bank or IMF would agree to write off a portion of the newly issued debt or reduce repayment interest rates if the debtor (Pakistan) met agreed biodiversity and nature restoration targets.

Prime Minister Imran Khan has targeted a 10 billion tree plantation drive to reverse or even slow down the impact of climate change on the country. Speaking on different occasions in the past, PM has reiterated the fact that even though Pakistan’s contributions to climate change are minimum, the country is one of the highest impacted countries by climate change in the world.

Keeping this in mind the incumbent government has a keen interest in the reafforestation of Pakistan. Speaking to Climate Change News, Special Adviser to Prime Minister on Climate Change, Malik Amin Aslam said, “We are investing heavily in nature so when this conversation started about the nature bond we were excited about it.”

“There is a push post-Covid-19 to ask for debt retirement and if we can link [relief] to nature performance, it gives more value to the world,” he added. If materialized, Pakistan’s economy would see high growth as these two are among the greatest problems Pakistan is facing on the international front.

Read More: Climate Change and Pakistan’s Water Security

Status quo

Imran Khan has been quite vocal in demanding debt relief and special drawing rights (SDRs) for developing nations to combat the pandemic and release the fiscal stimulus needed to overcome the unemployment caused by the pandemic.

According to International organizations, Pakistan has taken quite a hit during the pandemic, with World Bank’s latest estimates suggesting a heavy loss of 0.893 million jobs, and a staggering 5.8 million people descending into poverty due to the pandemic.

Even though the country has received debt service suspension, the State Bank of Pakistan estimates that it is not enough to overcome the cost of the pandemic on the economy. Thus, the government in Pakistan has been trying to avoid complete lockdowns and allowing businesses to function to avoid a major unemployment crisis.

Additionally, the government also announced the creation of fifteen national parks across the country over 7300 square kilometers of land. Reportedly, this would create employment opportunities for around five thousand people.

Read More: Billion tree Tsunami to 10bn tree initiative: PM Khan’s Naya Pakistan is the fastest greening country

Pakistan’s Plan to combat climate change

According to the International Union for Conservation of Nature (IUCN) Pakistan estimates, the environmental targets would cost the national exchequer $2.5 billion, compared to the government’s allocation of $1 billion for the project.

Talking to Climate Change News, Mahmood Akhtar Cheema, country representative for the IUCN said, “ The government is currently using its own resources, but there is a need for the international community to make investments.”

Thus, the government will benefit a lot if the international community makes investments in its efforts to combat environmental degradation.

According to Mark Halle, a member of the Finance for Biodiversity initiative, Pakistan is interested in the nature performance bond initiative but the country has to strictly follow the guidelines if the project is to wield results.

The news wrote that country’s progress would be measured using satellite imaging. Mark Halle said while speaking to Climate Change News, “We made it clear that we would be looking for performance measures that genuinely created change on the ground,” Halle said. “Designing a new national park wouldn’t work because that is essentially drawing a line on a map.” But the restoration of a designated area could be rewarded.

He added that the government would be incentivized to keep on track regarding the program as cutting trees or plowing of the designated areas would lead to an increase in the debt payment interest rates.

Read More: Pakistan’s 10 Billion Tree Tsunami project praised in the UK parliament

The various blockheads ahead

Pakistan has rampant corruption, and even though the PTI claims the KPK plantation drive a success, there has been a shadow cast on it by the Supreme Court and NAB in the past.

Moreover, the policymakers have argued in the past that Pakistan has not been planting the right species. In 2016, Dr. Lal Badshah, an ecologist and assistant professor at Botany department at the University of Peshawar talked to the News, commenting on KP tree plantation, “Undoubtedly, the tree plantation campaign is a wonderful initiative, but our main concern is that the PTI-led government has identified wrong species for wrong places.”

However, recently the government has claimed to use native species for the latest projects.

The biggest challenge however remains convincing the creditors to agree with such an initiative. Halle told Climate Change News, “Largely because it is new. Somebody has got to move first.”

Read More: Op-ed: Monsoon disasters just a trailer of climate change storm that lies ahead for Pakistan