Climate crisis: Who should pay to rebuild Pakistan?

This is an audio transcript of the Behind the Money podcast episode: ‘Climate crisis: Who should pay to rebuild Pakistan?’

[SOUND ON TAPE]

Benjamin Parkin
We’re just approaching the canal with two embankments on either side...

Michela Tindera
It’s late January and FT’s south Asia correspondent Ben Parkin is riding in a car through Dadu district in south-eastern Pakistan.

Benjamin Parkin
Around us we have green fields of growing crops. We have quite a vibrant little village, and . . . 

Michela Tindera
On Ben’s side of the embankment is the Pakistan he recognises — people chatting, kids running against the backdrop of fields and trees.

Benjamin Parkin
This is the side that was saved from the floods. The embankments didn’t break and so . . . 

Michela Tindera
But then he crosses to the other side.

Benjamin Parkin
You can just see a complete dramatic change. It’s completely apocalyptic and the fields have all been washed away and are still flooded. The trees have fallen. What . . . The houses in there are damaged. It’s all sort of grey and dusty. There’s still stagnant water in the fields.

Michela Tindera
The stark difference is because on one side, an embankment, which is a wall of dirt or stones, held up during a catastrophic flood last year. On the other, the embankment failed.

Zahid Lashari
(Speaking in a foreign language)

Michela Tindera
Zahid Lashari is sitting in the car with Ben. He’s a community activist and he’s telling Ben how on the side where the embankment failed, people have been living in makeshift shelters and tents. Kids can’t go to school and people have no access to clean water after the summer monsoon hit.

Zahid Lashari
(Speaking in a foreign language)

Michela Tindera
That monsoon usually brings a fair amount of rain to Pakistan every year, and the country relies on that rain.

Benjamin Parkin
If you go right after the monsoon, the land will be really green. You’ll have crops growing, but six months later there won’t be much greenery left. And it’s entirely tied to those cycles of the monsoon. So it dries out really quickly. It becomes very arid and become quite lush once the rains have arrived, but then obviously are really vulnerable if something goes wrong with those rains.

Michela Tindera
Last year something did go wrong.

News clips
More than 1,500 people have been killed in monsoonal flooding in Pakistan . . . So-called “monsoon on steroids” . . . More than five times the average rainfall . . . The worst floods in the country’s history . . .

Benjamin Parkin
Houses were destroyed. Agricultural land was damaged. Crops were wiped out. Millions of people were displaced from their homes.

Michela Tindera
The abnormally intense monsoon rains caused the Indus River, which runs straight through Pakistan north to south, to overflow. All the country’s provinces were affected. But Sindh, which sits at the very end of the Indus River, was hit the hardest. The river overflowing turned Sindhi farmland into a massive lake.

Benjamin Parkin
In the worst affected areas, like in Sindh province, you could see people rowing around on boats, just the tops of cars and houses poking out of the muddy water.

Michela Tindera
In the weeks and months after the floods stopped, diseases like diphtheria and cholera spread because of all the standing water. In some places it still hasn’t receded. The floods caused an estimated $30bn in damage and economic losses, and scientists have linked them to climate change, which is making the monsoon more and more unpredictable in south Asia.

Benjamin Parkin
What happened in Pakistan was, in some sense is one of the most shocking and visible disasters that was really explicitly linked to climate change, that showed a lot of people that this isn’t a vague threat in the future. This is something that can upend an economy and a country and people’s lives here and now.

[MUSIC PLAYING] 

Michela Tindera
I’m Michela Tindera from the Financial Times. It’s been months since those floods hit. Today on Behind the Money, climate disasters are becoming a growing problem. We’re gonna discuss Pakistan’s plans to rebuild, how they’ll pay for it and whether that could become the blueprint for other vulnerable countries.

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Headlines of freak weather events seem never-ending nowadays. Wildfires, hurricanes, heatwaves — the list goes on. And poorer developing countries are often the ones most at risk to these disasters, despite contributing the least to climate change. Recovering from extreme weather events is expensive, and for now it’s an open question as to who should foot the bill so these countries can rebuild.

Take Pakistan, for example. It contributes just about 1 per cent of global emissions, but now it has an enormous rebuilding effort ahead of it. There are thousands of villages like the one Ben Parkin visited.

Benjamin Parkin
The world could learn a lot of lessons, right, if Pakistan gets it right or if Pakistan gets it wrong. So I think it’s turned into quite an important test of a lot of these ideas that still on some level remain theoretical.

Michela Tindera
These ideas were less theoretical last November. FT climate reporter Camilla Hodgson travelled to the Egyptian desert town of Sharm el-Sheikh for the UN’s climate change conference, COP27. While she was there, she witnessed a historic development.

Camilla Hodgson
After months of negotiations, there was finally an agreement reached to create a new “loss and damages” fund.

Michela Tindera
That loss and damage fund aims to get heavy-polluting, richer nations to provide funding for the low-polluting, vulnerable countries that face extreme weather events.

Camilla Hodgson
It’s the countries often that are the least able to cope and to rebuild that are hit the worst. And then do they get trapped into a cycle of climate destruction and poverty. They might be dealing with all sorts of other immediate problems like healthcare, education, access to energy.

Michela Tindera
Camilla wasn’t surprised that the loss and damage fund took such priority in climate talks. It’s become a key piece in a broader discussion that people are having around climate financing, which is basically funding that’s used to address climate change. Camilla says that climate financing has so far, for the most part, been based around two types of actions. The first is mitigation, which means doing things like reducing the amount of greenhouse gases that are emitted or increasing the use of clean energy. And the second term around climate financing is adaptation, which means doing things like building more resilient infrastructure, things such as flood walls or elevated buildings.

Camilla Hodgson
What climate justice advocates and also developing nations have said for a long time is that that’s all well and good. But it kind of misses this third piece, which is, if it’s too late to adapt, if the damage has already been done, if a flood has come and wiped away your town, what then? We need some support. We need some assistance in that instance, and it needs to come from the governments that have the money to finance that. It can’t all just come from philanthropists or some other source.

Michela Tindera
Loss and damage has been discussed for years, but countries only recently started taking the idea of a global fund seriously. What ultimately helped push it through at COP this time around? Ben Parkin says in part it was Pakistan’s disastrous flooding that happened just before COP started last year.

Benjamin Parkin
The floods were a really shocking, high-profile example of the havoc that climate change can cause. Pakistan was in the back of a lot of people’s minds and helped to create the political pressure to get something like a losses and damages fund over the line.

Michela Tindera
Now, who this fund will help, who will pay into it, and when it’ll be operational — that’s all up in the air. And while Pakistan would like to be at the front of the line, its need for funding is more immediate. So it’s taking matters into its own hands.

Benjamin Parkin
Pakistan in January held a conference in Geneva to raise money for its reconstruction and the what it called a climate-resilient Pakistan. You know, not just to build back the bare minimum, but to build back in a way that would help them withstand future climate shocks.

Michela Tindera
That conference raised $9bn in pledges — some from organisations like the World Bank and the Islamic Development Bank, and others from countries like the US, Saudi Arabia and China. But the floods caused more than triple that in damage and economic losses. So that money is only a fraction of what the country needs. And on top of that, Pakistan’s economy hasn’t been in great shape. For decades it’s been trapped in constant boom and bust cycles. Right now, it’s waiting on a bailout from the IMF to steer it away from defaulting. So it’s really in a pinch for cash.

While Ben was in Pakistan, he spoke to the country’s planning minister, Ahsan Iqbal. He’s a member of the cabinet and he’s in charge of how to spend the money raised in Geneva.

Benjamin Parkin
He’s a very powerful member of the government and he’s a very experienced official. I went to meet him at his office in Islamabad, which is largely a government town, sat in his office. It’s a big, big room. There are a continuous stream of people coming to meet him, asking him for things, making requests.

Michela Tindera
In his interview Iqbal outlined his country’s path to recovery. But it’s bigger than just flood resilience, given Pakistan’s geography. It’s dry and hot by the coasts, but cooler, mountainous and often snowing up north near the Himalayas. Here’s Iqbal.

Ahsan Iqbal
We are not only vulnerable to floods. We are now vulnerable to many more threats. For example, there will be very high temperatures, very hot weathers. There will be droughts. There can be glacial meltdowns.

Michela Tindera
And when it comes to flooding . . .

Ahsan Iqbal
One of the main projects is National Flood Protection Plan, which is a 10-year plan that will make sure that we construct new reservoirs or dams, new embankments, new waterways so that, you know, floods can move faster to the sea and we have less inundation of land.

Michela Tindera
But Ben says there are several caveats to this plan. One is actually getting that $9bn that Pakistan raised in Geneva.

Benjamin Parkin
It’s one thing to make a pledge at, you know, an international conference in the heat of the moment when there’s a lot of pressure and a lot of attention on a particular disaster. But it’s another to actually follow up and turn that pledge into money on the ground. A lot needs to happen between those two things. A lot of money that is pledged after these disasters, whether it’s humanitarian aid or whether it’s longer-term financing for reconstruction, never actually ends up where it’s supposed to. It turns out to be an empty pledge.

Michela Tindera
Even if all 9bn does materialise, that amount only addresses the immediate needs — things like getting people clean water and rebuilding houses. Pakistan will need more money to build infrastructure that will survive future disasters.

Benjamin Parkin
If a place is vulnerable to flooding, you need to start building your roads fundamentally differently, right. So your railways or your telecoms lines, they need to be stronger. They need to be on higher ground. But then when you start thinking long-term about all the investments that are going to need to be made to bolster climate resilience, there is a lot more money that they’re going to have to find along the way.

Michela Tindera
And yet another roadblock to long-term recovery, the country’s economic and political instability.

Benjamin Parkin
In Pakistan, you have the weakness of the state and the fact that you have different levels of government — the federal government, provincial governments, your district governments — who are often at odds with one another and controlled by different parties. And this makes sort of co-operation that’s needed really difficult. On the other hand, you have issues like corruption and mismanagement where money that’s supposed to go to one place ends up going to another.

Michela Tindera
Pakistan’s planning minister Ahsan Iqbal said the country is setting up a third-party monitoring system to make sure that the Geneva pledges are spent properly. But third-party monitoring might not be enough, given all the roadblocks that Pakistan faces — not having enough money, political instability, corruption. Camilla Hodgson says that all that can make the idea of climate financing unappealing for richer countries.

Camilla Hodgson
If you are a donor government or a donor organisation, to what extent do you want to attach strings to the money that you’re giving? Do you want to be dictating to this country how they should be spending it or like how they track spending, how they monitor progress? There’s probably a line to walk there between trying to encourage good management and good spending but not being too prescriptive, dictatorial. And so that’s complicated. This question as well of, will the money be well spent? How do we make sure of that? And so all of that difficulty can be a kind of dampener on the willingness of donors to give money.

Michela Tindera
And that’s just one of the challenges the UN’s loss and damage fund faces as officials figure out how it will operate.

Camilla Hodgson
What happens in Pakistan, I think, will be a kind of example for anyone and everyone involved in the loss and damages conversation to look at. There’ll be examples of where things have gone well, where things haven’t gone well — what you need to prioritise, what kind of, like, planning framework works, like, what are the time horizons that you’re planning over when you’ve got this huge rebuilding effort. There are gonna be infinite lessons to be learnt from it.

Michela Tindera
Meanwhile, many Pakistanis have little faith that any of this aid will come through, especially in the areas hardest hit by the floods. And with the next monsoon just a couple months away, rebuilding anything with the long term in mind is tough. It’s hard not to put a Band-Aid on a bullet hole. And Ben Parkin’s seen how that approach can backfire.

Benjamin Parkin
So one of the risks is that you start rebuilding something, thinking it’s what you need but turns out to actually potentially make future problems worse, right. So sort of a maladaptation. And there are already examples that people point to of this. So there’s a drain in Sindh, which was partly financed by the World Bank years ago that was designed to help with water management but ultimately, you know, a lot of critics and local activists say, made the flooding worse because it burst. And in some cases, water was trapped. It’s really difficult to get it right. And there are lots of examples where they happened.

Zahid Lashari
(Speaking in a foreign language)

Michela Tindera
Back in Dadu district, Zahid Lashari, who we heard from earlier, passes a school. He’s telling Ben how the building was ruined by floodwaters and the kids sit outside and study under tents.

Zahid Lashari
(Speaking in a foreign language)

Michela Tindera
He says the children are haunted by the floods’ destruction and are scared it could happen again.

That’s not the only destroyed school Ben saw on his trip. The next day he travelled to a different area and visited a village called Khoundi to see the rebuilding efforts there.

Benjamin Parkin
We’re at the site of a school in the village. The building is still standing, but inside it’s complete ruins. There’s dung everywhere and cobwebs. Apparently it’s used basically as a donkey shed.

Michela Tindera
Ben assumed the school was damaged last fall, but it was actually destroyed over a decade ago when floods hit the country in 2010. This school is just one reason why people here don’t trust the government’s big talk about rebuilding. To them, it seems like empty promises.

Benjamin Parkin
It’s been 13 years and no one has repaired this school, so why should they have any confidence at all that that’s gonna be different this time around?

Michela Tindera
While this village and hundreds of others wait for assistance, The conversation of who will pay for disasters worsened by climate change isn’t going away. The UN’s loss and damage fund has been created. But that’s just the first step. Camilla says it’ll be on the agenda again at COP28 later this year.

Camilla Hodgson
We don’t know how large this fund is gonna be. We don’t know exactly who it will help, who will have to pay into it, how it will operate. All of those kind of mechanical questions are still to be answered. And in the meantime, there are all sorts of other ideas floating around which still relate to loss and damage, still relate to this idea of how do you help the people that are suffering the most and have done the least to cause climate change through other means. It doesn’t necessarily have to be a UN fund. It could be some kind of new insurance mechanism. It could be about financing, early warning systems and resilience, that sort of thing. So the loss and damage fund is important. It’s very symbolic, but it’s kind of not the be-all and end-all.

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Michela Tindera
Behind the Money is hosted by me, Michela Tindera. Saffeya Ahmed is our producer. Topher Forhecz is our executive producer. Sound design and mixing by Sam Giovinco. Special thanks to Julia Barton, John Reed and Jyotsna Singh. Cheryl Brumley is the global head of audio. Thanks for listening. See you next week.