Scientific research has predicted that the likelihood of flooding will increase in many countries particularly in Asia, due to rise in sea level and frequency of weather events as a consequence of climate change. For better future development of coastal cities and flood plains, countries need to know the cost and damages that accompany floods and how to minimize them. In Pakistan researchers have often focused on direct costs of floods neglecting the indirect losses from flood damages due to disruption of economic activity. As many of businesses depend upon physical infrastructure hence, they bear great losses when physical infrastructure is damaged by floods. This study follows a CGE approach using a static GTAP model to identify the sectors which are most affected when physical infrastructure is lost. We apply our model to all the provinces in Pakistan, considering a scenario where 39% of the physical infrastructure is lost in all the provinces due to 2014 floods. The simulation results show that loss to GDP is about -22% as compare to no flood scenario. Real export is found to be reduced by approximately -56% and welfare is decreased by US$ -50,275.8 million if physical infrastructure is damaged. Major losses in terms of output have accrued to key sectors including heavy manufacturing, light manufacturing, other services and transport & communication as all of them are highly dependent upon physical infrastructure. Supervisor:- Dr. Muhammad Nasir Co-Supervisor:- Dr. Muhammad Zeshan