Managing Transition Costs Critical for Pakistan’s Poor in Shift to Low-Carbon Economy
As Pakistan navigates the global push towards a low-carbon economy, a new World Bank report underscores the need for carefully designed policies to shield the country’s vulnerable population from economic shocks linked to green transitions. The Poverty, Prosperity, and Planet Report suggests that without targeted support, Pakistan’s economically disadvantaged communities risk bearing a disproportionate share of the transition costs, particularly in areas dependent on carbon-intensive industries.
The report highlights how green industry transitions may lead to job displacement, especially in regions heavily reliant on fossil fuels. This is a pressing concern for Pakistan, where certain areas depend on pollution-intensive sectors. Workers in these industries are often informally employed and lack the skills needed for green jobs. The report’s regional analysis of six South Asian countries, including Pakistan, shows that workers in pollution-heavy roles tend to have lower levels of formal education, further complicating their transition to green industries.
“Policies aimed at managing transition costs in Pakistan must focus on targeted support for displaced workers, skill development, and accessible education to mitigate potential poverty increases,” said World Bank Senior Managing Director Axel van Trotsenburg. “This is especially important for low-income communities that face risks of employment disruption and may struggle with increased energy costs.”
Read Also: World Bank Warns Poverty Eradication for Half the World May Take Over a Century
The report stresses the need for Pakistan to prioritize re-skilling programs. Green jobs typically require skills in numeracy, literacy, and problem-solving, which are often lacking among those in carbon-intensive roles. Strengthening foundational education and implementing programs that provide training in green industries will be critical in ensuring a smoother shift to sustainable jobs.
Additionally, the World Bank warns of price shocks stemming from policies like carbon pricing or reduced fossil fuel subsidies. For poorer households in Pakistan, which allocate a large share of their income to basic necessities, a surge in energy prices could deepen poverty without counterbalancing measures. To address this, the report advises policies that include cash transfers, subsidies for public transportation, and housing incentives near job centers to alleviate costs while supporting emission reduction goals.
The World Bank report also calls for social protection measures tailored to Pakistan’s local context. Redistribution measures—like climate dividends funded by carbon revenue—could provide a financial cushion for low-income families, potentially lifting millions out of poverty globally. Programs that focus on climate-smart agriculture and support for migration to areas with green job opportunities are other solutions that can safeguard Pakistan’s vulnerable communities during this transition.
For Pakistan, balancing economic growth with environmental sustainability will require collaboration between government, the private sector, and civil society. With timely and well-structured policy measures, Pakistan can reduce the adverse effects of the green transition, fostering a resilient, inclusive, and sustainable economy for its people.