In an era where climate change and environmental sustainability dominate global discourse, the role of governance structures in tackling ecological challenges cannot be overlooked.
In recent times, the world has witnessed a doubled amount of carbon dioxide emissions (NASA 2023), the average loss of 750 tons of ice per year (The World Counts 2023), and hazardous weather events that occur more frequently and severely than ever. Unsustainable ecology has now become an alerting issue that threatens human survival and economic prosperity for any economy.
The COP26 summit held in 2021 highlighted financial assistance as a crucial strategy for environmental protection and reducing fossil fuel dependency. In response to this calling, fiscal decentralization is adopted by governments to enhance resource utilization and encourage sub-governmental levels to compete for better environmental quality.
However, in countries like Pakistan, the effectiveness of this approach is deeply intertwined with geopolitical risks, raising questions about its viability in fostering sustainable development. Pakistan’s fiscal decentralization history has been characterized by fluctuating policies and inconsistent implementation.
Despite attempts to empower local governments, political instability and centralized resources control have hindered meaningful devolution. The 1960s Basic Democracies system and 2001 Local Government Ordinance failed to ensure financial independence. The country’s fragile political landscape presents a major roadblock, causing sustainability initiatives to be underfunded or abandoned.
Currently, fiscal structure in Pakistan operates under a complex revenue-sharing arrangement governed by the National Finance Commission (NFC) Award. While the NFC Award ensures the distribution of federal revenues among provinces, it does not adequately empower local governments.
Provincial administrations retain significant financial authority, limiting the fiscal autonomy of local governments. According to the State of Local Governance Report (2022), provinces often fail to transfer the required funds and functions to local bodies, restricting their ability to implement sustainability projects effectively.
Fiscal decentralization in Pakistan, has encountered significant challenges due to geopolitical risks and environmental sustainability concerns. These challenges have impeded the effectiveness of decentralized governance in addressing both economic and ecological issues.
The country’s complex security dynamics require substantial defense expenditures, with the 2023-24 federal budget projected at Rs14.46 trillion, leaving limited resources for provincial development.
Political instability further aggravates the tendencies of centralization. Regular change of government and policy shifts create an environment where the federal government often holds control over financial matters, undermining the autonomy of provinces.
The distribution of tax income demonstrates this centralization; for instance, the Federal Board of Revenue’s collection has increased significantly, but the advantages are not shared equally across provinces, resulting in unequal resource allocation.
Additionally, environmental sustainability has not been adequately addressed by the current budgetary framework. Insufficient local finance and planning hinder the effectiveness of schemes like the “10 billion Tree Tsunami,” which aimed to plant billions of trees nationwide.
Even though more than a billion trees were planted in the first few years, the ambitious target of planting nine billion more in the coming years is a significant challenge, especially in the absence of strong local governance frameworks.
Moreover, resource allocation often overlooks environmental priorities. For example, the 2023–24 Sindh budget, with a total outlay of Rs2.247 trillion, significantly increased the development budget by 72% to Rs700 billion.
However, this substantial budget did not allocate funds specifically for environmental protection, which highlights a gap in addressing ecological concerns at the provincial level.
Additionally, while Pakistan has designated around 400 protected areas, covering approximately 13% of its landmass as of 2020, the management and expansion of these areas require effective local governance and adequate funding.
The federal government’s plan to increase protected land to 15% by 2023 underscores the need for decentralized fiscal policies that empower local authorities to manage and protect these regions effectively.
Pakistan’s experience illustrates that without addressing underlying geopolitical risks and ensuring that fiscal decentralization includes provisions for environmental sustainability, the goals of equitable development and ecological preservation remain elusive.
To promote environmental sustainability in Pakistan, a strategic approach is required which involves strengthening local governance structures, ensuring consistent policy implementation, and insulating initiatives from political instability.
Integrating climate policies with national security strategies can maintain a focus on sustainability. International collaboration and foreign investment in local sustainability projects can provide financial stability and mitigate political instability risks.
Writer is MS Economics student at IBA Karachi.
