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Business Recorder

2 days ago

EDITORIAL: The UN's latest report on disaster risk couldn't be clearer: the world is haemorrhaging money, lives, and futures to disasters, and doing next to nothing to stop it. The price tag has now ballooned to US$2.3 trillion a year — when cascading and ecosystem effects are counted — and yet just two percent of development aid is spent on reducing disaster risk. That's not a blind spot. That's willful neglect.
Pakistan, like many climate-vulnerable nations, is caught in the crosshairs. The 2022 floods alone inflicted US$30 billion in damages, killed over 1,700 people, and triggered a sovereign credit downgrade that continues to shape investor sentiment. And that was just one event, in one year. With floods rising by 134 percent since 2000 and over one-third of the world's children now exposed to water scarcity, this is no longer about disaster management — it's about survival strategy.
The report lays out the scope with terrifying precision. Earthquakes, storms, heat waves, droughts, and floods caused US$180 to US$200 billion in annual losses from 2001 to 2020. In 2023 alone, these 'big five' disasters triggered over US$195 billion in direct losses — just shy of 0.015 percent of global GDP. But for low- and middle-income countries like Pakistan, that slice represents a far bigger bite out of development and fiscal capacity.
The global funding gap remains the single biggest obstacle. Time and again, donors show up for photo-ops, make pledges at high-profile summits, then quietly walk away when it comes time to pay up. Even where commitments are honoured, disbursements are slow, conditional, and riddled with red tape. Meanwhile, exposure to climate disasters grows more lethal with each delay.
This is particularly damaging for countries that depend on capital markets to bridge fiscal deficits. Climate-induced disasters aren't just humanitarian tragedies — they're balance-sheet shocks. Credit ratings nosedive. Risk premiums surge. Market access dries up. As the report warns, climate shocks are increasingly being priced into sovereign debt. The implications for already-indebted nations are brutal: no money for prevention, no resilience when disaster hits, and no fiscal space to rebuild.
For Pakistan, whose schools shut down due to extreme weather and whose agriculture sector remains deeply exposed to drought and flood cycles, the window to act is closing fast. Already, the country has faced over eight major agricultural drought events since the 1980s — part of a larger regional pattern stretching from Central Asia to northwest India. The link to El Niño and La Niña cycles is well established, but policy alignment remains patchy and underfunded.
There's a myth that resilience is expensive. The truth is that inaction is ruinous. Risk reduction spending remains stuck at two percent of aid because disaster prevention doesn't cut the same political ribbon as emergency relief. But underestimating disaster risk — as the report states — means under-valuing the immense economic and human cost of doing nothing.
It's time for a reality check. Countries like Pakistan cannot keep absorbing billion-dollar losses without structural financing to reduce exposure. It's not just about building back better — it's about building forward safer, with real capital, not empty promises. That requires both international pressure and domestic resolve: pressure on donors to pay what they pledge, and domestic discipline to channel funds toward future-proofing the economy.
Without that, we're not bracing for disaster — we're budgeting for collapse.
Copyright Business Recorder, 2025