Flood Damages and Economic Losses Over USD 30 billion

Dr. Jassim Taqui DG Al-Bab Institute for Strategic Studies

Islamabad, October 30, 2022:  A damage, loss, and needs assessment following the unprecedented floods in Pakistan calls for ‘building back better, based on the principles of the poor first, transparency, inclusion, and climate resilience. The assessment estimates total damages to exceed USD 14.9 billion, and total economic losses to reach about USD 15.2 billion. Estimated needs for rehabilitation and reconstruction are at least USD 16.3 billion, not including much-needed new investments to strengthen Pakistan’s adaptation to climate change and overall resilience to future climate shocks, or reconstruction needs of affected private entities.

Housing; Agriculture and Livestock; and Transport and Communications sectors suffered the most significant damage, at USD 5.6 billion, USD 3.7 billion, and USD 3.3 billion, respectively. Sindh is the worst affected province with close to 70 percent of total damages and losses, followed by Balochistan, Khyber Pakhtunkhwa, and Punjab.

The Ministry of Planning, Development and Special Initiatives led the Post-Disaster Needs Assessment (PDNA), which was conducted jointly with the Asian Development Bank (ADB), the European Union (EU), the United Nations agencies with technical facilitation by the United Nations Development Programme (UNDP), and the World Bank. The PDA, in addition to estimating damages, economic losses, and recovery and reconstruction needs, also assesses broader macro-economic and human impacts and recommends principles along which to develop a comprehensive recovery and reconstruction framework.

The floods affected 33 million people and more than 1730 lost their lives. They are particularly impacting the poorest and most vulnerable districts. The situation is still evolving, with flood waters stagnant in many areas, causing water-borne and vector-borne diseases to spread, and more than 8 million displaced people now facing a health crisis. The crisis thus risks having profound and lasting impacts on lives and livelihoods. Loss of household incomes, and assets, rising food prices, and disease outbreaks are impacting the most vulnerable groups. Women have suffered notable losses of their livelihoods, particularly those associated with agriculture and livestock.

The PDA Human Impact Assessment highlights that the national poverty rate may increase by 3.7 to 4.0 percentage points, potentially pushing between 8.4 and 9.1 million more people below the poverty line. Multidimensional poverty can potentially increase by 5.9 percentage points, implying that an additional 1.9 households+ are at risk of being pushed into non-monetary poverty.

Compounding the existing economic difficulties facing the country, the 2022 floods are expected to have a significant adverse impact on output, which will vary substantially by region and sector. Loss in the gross domestic product (GDP) as a direct impact of the floods is projected to be around 2.2 percent of FY22 GDP. The agriculture sector is projected to contract the most, at 0.9 percent of GDP. The damage and losses in agriculture will have spillover effects on the industry, external trade, and services sectors.