The Impact of Climate Change and Natural Disasters on Pakistan's GDP Growth: An ARDL Analysis

Abstract

The main objective of this study is to determine the impact of climate change and natural disasters on GDP growth rate. In order to examine long run association between climate change, natural disasters and GDP, an Auto Regressive Distributed Lag (ARDL) model and correlation matrix were employed, using 20 years data spanning from 2001 to 2021. The focus of the study was to investigate into how CO2 emission causes climate change and climate change, in turn, causes natural disasters and, in turn, natural disasters cause human and crop losses as well as high inflation. The empirical evidence reveals that climate change, CO2 emissions and natural disasters have negative association with GDP because natural disasters in the shape of earthquakes, heavy rains, and floods cause huge human and crop losses, have negative impact on GDP. The variables, agriculture production and employment, have positive and significant association with GDP growth because increase in agriculture production and employment will definitely have significant and positive impact on GDP growth in the long run. The study suggests to build resilient technologies to cope with climate change, control CO2 emissions and inflation as these three variables have negative impact on GDP growth in the long run. This study significantly contributes by highlighting the link between climate change and natural disasters and their consequential negative impact on GDP growth.