Economics of a Disaster: Natural Disasters and their Impact on the Economy of Pakistan
Author: Zahra Khan Durrani

Pakistan is not new to disaster; it has been a disaster prone land for the most part of history and is continually being threatened by climatic changes. Natural Disasters are a globally occurring phenomenon; however Pakistan is facing a fair share of its brunt. The magnitude and frequency of disasters, like flood and droughts, that the country faces each year is increasing at an alarming rate. While the world is devising different frameworks and policies to prepare themselves against hazards of climatic change, Pakistan is still behind in coming up with an effective preparedness plan; while heavily focusing only on the mitigation strategies once the disaster has occurred. The first half of the thesis focuses on a qualitative analysis of Pakistan‟s economy and its macroeconomic decision making. It emphasizes on how a disaster can cost the economy in terms of weak macroeconomic policy and how Pakistan is suffering because of it. The second half of research seeks to study the quantitative impact of natural disasters on the economy of Pakistan for the period of 1976 to 2015. Autoregressive Distributed Lag (ARDL) using bounds testing approach to cointegration, and Vector Autoregressive Model are applied for this study. The dependent variables taken for the study are GDP, agricultural sector growth (AG) and industrial sector growth (IG), represented in the thesis as Model A, Model B, and Model C, respectively. This was done to investigate, firstly, the overall impact of disasters on the country‟s GDP, and secondly, to investigate the impact of disasters on the major sectors of Pakistan, separately, to see if disasters impact any one sector more than the other. The findings suggest that disaster variables do not significantly affect economic growth in both long run and short run. Our qualitative analysis, however, establishes the urgency to understand natural disasters and mainstream Disaster Risk Reduction, and also proposes policy recommendations to enhance Pakistan‟s preparedness in the face of natural disasters. It ends with the recommendation to 9 create a disaster management budget for Pakistan to ensure the economy has a safety net which will to some extent, initially, absorb and accommodate the costs of a disaster. Supervisor:- Dr. Javed Iqbal

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Keywords : Disaster Management, Economics of Disaster
Supervisor: Javed Iqbal

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