The Asian Development Bank’s funding aims to enhance institutional capacity and mobilise climate finance in response to escalating climate threats

On 29 October 2024, the Asian Development Bank (ADB) announced the approval of a substantial $500 million policy-based loan aimed at bolstering climate change mitigation and disaster risk resilience in Pakistan. The initiative, known as the Climate and Disaster Resilience Enhancement Program (CDREP), is set to enhance Pakistan’s institutional capacity for effective planning, preparedness, and response to natural disasters, as well as promoting inclusive investments in disaster risk reduction and climate resilience.

Pakistan ranks among the most vulnerable countries in Asia and the Pacific, facing severe threats from climate change and natural disasters. The country experiences average losses exceeding $2 billion annually due to such events. Vulnerable populations, including women and marginalized groups, bear the brunt of these challenges, necessitating urgent action.

ADB’s Director General for Central and West Asia, Yevgeniy Zhukov, underscored the bank’s commitment to supporting Pakistan in understanding and mitigating climate and disaster risks. “This program builds on ADB’s longstanding work in Pakistan to understand and reduce climate and disaster risks and support effective disaster response,” he stated. The initiative aims to implement an integrated approach to disaster risk management, utilising a variety of financing instruments to ensure timely and sufficient funding for disaster responses.

The CDREP will enhance Pakistan’s capacity for disaster risk mapping and modelling, enabling informed investment and development decisions. It will improve coordination for disaster monitoring and response, ensuring that the government can act swiftly and efficiently in the face of crises. Additionally, the program will promote gender-sensitive and resilient public investments, including integrated flood risk management and nature-based solutions that leverage the country’s natural resources.

A significant aspect of the program involves mobilising climate finance from both public and private sources. This includes the issuance of domestic green sukuk, or Islamic bonds, to finance environmentally sustainable initiatives. Notably, ADB will introduce its Contingent Disaster Financing option for the first time in the Central and West Asia region, allowing for rapid budget support in the aftermath of disasters.

Moreover, the program is designed to establish a solidarity fund that will facilitate the adoption of risk transfer solutions, such as agricultural insurance, to protect farmers and their livelihoods from climate-induced shocks. Additionally, it will support shock-responsive social protection measures that provide cash assistance during disasters, ensuring that vulnerable communities receive the help they need when they need it most.

In tandem with the loan, ADB has also approved a technical assistance grant of $1 million to aid in the program’s implementation, further solidifying its commitment to enhancing Pakistan’s resilience to climate and disaster-related challenges.

Pakistan has been a founding member of ADB since its inception in 1966. Over the years, the bank has committed more than $52 billion in public and private sector loans, grants, and various financing mechanisms to promote inclusive economic growth in the country. This extensive support has aimed to improve Pakistan’s infrastructure, energy and food security, transport networks, and social services.

ADB remains dedicated to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. The organisation is steadfast in its mission to eradicate extreme poverty while addressing the multifaceted challenges posed by climate change.

As Pakistan grapples with the urgent realities of climate change and natural disasters, the ADB’s latest financial commitment signifies a crucial step toward enhancing the nation’s resilience and ensuring a more secure future for its citizens.