Paying for the world’s emissions: Flood debt, attribution and the cost of loan-financed recovery in Pakistan

Abstract

Pakistan emits under one per cent of global greenhouse gases, yet flooded catastrophically again in 2025. This paper asks how much larger its 2045 debt burden is under loan rather than grant financing, and how interest on the climate attributable share compares with the loss and damage fund. A ledger simulates public finances to FY2045 under four regimes: no flood, loans, grants, polluter pays. Grant financing leaves debt 5.2 percentage points of GDP lower by 2045 than loan financing of the same damage, robust to fiscal paths, crowding out and hazard assumptions. The fiscal path determines the level of debt; the financing rule determines the gap, and it is the gap this paper claims. On a 30 per cent attribution fraction, tested 15–50 per cent, interest on that share reaches USD 2.29 billion by 2045 under rollover, 2.8 times the fund’s pledges, but USD 0.4–1.2 billion if the debt amortises.