IMPACT OF CLIMATE CHANGE ON THE FINANCIAL DEVELOPMENT OF AGRICULTURAL SECTOR OF PAKISTAN: RISKS FACTOR AND SOLUTIONS

Abstract

Agriculture serves as the lifeline of Pakistan’s economy whose contribution is huge to GDP and employment. However, climate change threat is severe to the financial development, undermining agriculture productivity, food security, and farmers’ income. In this study, the impact of the climate change on the financial development of Pakistani agricultural sector was critically analyzed along with the key risk factors, and possible solutions were given.

It was data collected through quantitative research method involving 400 respondents, which included farmers, agricultural experts, and policymakers. Analysis of statistical results, including regression and mediation models, demonstrates how temperature increase and soil degradation negatively affect agricultural productivity and financial stability. We found mitigating factors related to water availability and to adopting technology, which increases productivity, and increases resilience to the changes in climate. The results suggest that climate change is aggravating farmers’ economic vulnerability, resulting in reduced income and posing a threat to food security. Additionally, the moderate effectiveness of government policies in addressing climate related financial risks is also addressed in the study.

According to the findings, agricultural policies that promote climate resilience, investments in infrastructure for water management and enhancement of modern farming technologies are both necessary and urgently needed. It becomes important to enhance the support mechanisms of the financial sector, including the agricultural credit and insurance programs, in order to maintain economic viability of the sector. If these strategies were followed, Pakistan would minimize the negative effects of climate change and thus could have a stable and sustainable agricultural economy