Balochistan's agriculture and related economic development during the last four decades has been driven by an enhancement in canal command areas and widespread use of tubewells. While it enabled yield increases and the growth of high value horticulture, it led to excessive mining of ground water. It is not only threatening sustainable agriculture and livelihoods but also creating severe environmental repercussions. It is generally believed that this unchecked groundwater extraction has been a result of policy regime, such as promoting installation of tubewells through various incentive schemes and tubewells subsidy which allows farmers to pay only 5-10% of the actual cost, and as a result the Federal and provincial governments have been paying PKR 23 billion per year. ; Non-PR ; IFPRI1; Pakistan Agricultural Capacity Enhancement Program (PACE); PSSP; CRP2 ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)
Social Accounting Matrix (SAM) multiplier analysis has been employed to assess the impacts of COVID-19 on various macroeconomic variables including Gross Domestic Product (GDP), employment, and poverty in Pakistan. SAM multiplier models are well-suited to estimate the direct and indirect effects of unanticipated demand-side shocks and short-term fluctuations on various sectors and agents in the economy, such as those caused by the COVID19 pandemic. The results show that Pakistan's GDP declined by 26.4 percent from mid-March to the end of June 2020 (14 weeks) compared to a non-COVID scenario. Services were hit the hardest, registering losses of 17.6 percent, followed by industry with losses of 6.7 percent. Agriculture turned out to be resilient and remained relatively unhurt, falling by 2.1 percent. All households witnessed a reduction in incomes, but higher-income quartiles appeared to have lost more than lower-income ones. Our approach for economic impact with mitigation measures is to assess the effectiveness of Emergency Response Packages (ERP) by altering the remittances to levels that reflect the magnitude of the support from the government. The total government expenditures were directed towards different kinds of households of PKR 318.6 billion (USD 2.12 billion). This led to a reduction of about USD 3.1 billion in GDP losses, which, compared to the amount spent implied a multiplier of 1.4 in GDP per PKR spent. The national poverty rate soared to 43 percent and 38.7 percent in April and May respectively. The Government's cash transfers program proved highly effective and led to 11 percent reduction in poverty rate during the pandemic. The recovery scenarios indicate a cumulative GDP loss of USD 11.8 billion and 11.1 USD billion under slow and fast recovery scenarios, respectively, by December 2020. Our estimates show that Pakistan's annual GDP (at market prices) will register a decline of 4.6 percent in the year 2020 due to negative effects of the pandemic and sluggish economic recovery. Poverty is expected to stabilize at 27.6 percent and 27.4 percent for the two recovery scenarios by December 2020. ; Non-PR ; IFPRI1; PSSP; Pakistan Agricultural Capacity Enhancement Program (PACE); CRP2; Capacity Strengthening; 3 Building Inclusive and Efficient Markets, Trade Systems, and Food Industry; 4 Transforming Agricultural and Rural Economies; 5 Strengthening Institutions and Governance; COVID-19 Measuring Impacts and Prioritizing Policies for Recovery ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)
Social Accounting Matrix (SAM) multiplier analysis has been employed to assess the impacts of COVID-19 on various macroeconomic variables including Gross Domestic Product (GDP), employment, and poverty in Pakistan. SAM multiplier models are well-suited to estimate the direct and indirect effects of unanticipated demand-side shocks and short-term fluctuations on various sectors and agents in the economy, such as those caused by the COVID-19 pandemic. The results show that Pakistan's GDP declined by 26.4 percent from mid-March to the end of June 2020 (14 weeks) compared to a non-COVID scenario. Services were hit the hardest, registering losses of 17.6 percent, followed by industry with losses of 6.7 percent. Agriculture turned out to be resilient and remained relatively unhurt, falling by 2.1 percent. All households witnessed a reduction in incomes, but higher-income quartiles appeared to have lost more than lower-income ones. Our approach for economic impact with mitigation measures is to assess the effectiveness of Emergency Response Packages (ERP) by altering the remittances to levels that reflect the magnitude of the support from the government. The total government expenditures were directed towards different kinds of households of PKR 318.6 billion (USD 2.12 billion). This led to a reduction of about USD 3.1 billion in GDP losses, which, compared to the amount spent implied a multiplier of 1.4 in GDP per PKR spent. The national poverty rate soared to 43 percent and 38.7 percent in April and May respectively. The Government's cash transfers program proved highly effective and led to 11 percent reduction in poverty rate during the pandemic. The recovery scenarios indicate a cumulative GDP loss of USD 11.8 billion and 11.1 USD billion under slow and fast recovery scenarios, respectively, by December 2020. Our estimates show that Pakistan's annual GDP (at market prices) will register a decline of 4.6 percent in the year 2020 due to negative effects of the pandemic and sluggish economic recovery. Poverty is expected to stabilize at 27.6 percent and 27.4 percent for the two recovery scenarios by December 2020. ; Non-PR ; IFPRI1; 3 Building Inclusive and Efficient Markets, Trade Systems, and Food Industry; 4 Transforming Agricultural and Rural Economies; 5 Strengthening Institutions and Governance; G Cross-cutting gender theme; Capacity Strengthening; Pakistan Agricultural Capacity Enhancement Program (PACE); CRP2 ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)
Prolonged droughts and depleting groundwater resources have been a serious challenge to the economy of province of Balochistan, Pakistan. Proliferation of tube-wells incentivized by government policy interventions and continued subsidy for electric tube-wells for agriculture and choice for high-water consumption crops have led to steep decline in water tables. This paper uses Social Accounting Matrix (SAM) Multiplier model approach to simulate impact of declining water tables on the provincial economy, a first ever effort. To capture the impact of declining water tables, increase in shadow prices of groundwater are calculated and the effects are traced on agricultural production. Using these effects, simulations are designed to reflect the impact of water tables' decline on macroeconomic variables including GDP, government's revenues/expenditures, households' income, and net exports. Agricultural policy options are also introduced in the model to explore their effectiveness in mitigating the effects of groundwater exploitation. Effects of non-agricultural policy options such as the debated removal of tube-well subsidy, shifting to non-agricultural sectors and investment in recharge mechanisms are also estimated on the overall provincial economy. Findings from the paper indicate that depleting water tables have adversely affected the provincial economy and the impact of widely recommended agricultural policy is moderate in mitigating these effects. Subsidy rationalization is observed to have substantial impact on GDP, households, and trade balance. However, investment in recharge mechanisms and expansion in processing, manufacturing and services sector can be crucial for the development of the province. ; Non-PR ; IFPRI1; PACE; PSSP; CRP2; 1 Fostering Climate-Resilient and Sustainable Food Supply; 4 Transforming Agricultural and Rural Economies; 5 Strengthening Institutions and Governance ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)
