In an era where climate change and environmental sustainability dominate global discourse, the role of governance structures in tackling ecological challenges cannot be overlooked. Fiscal decentralization—the process of transferring financial and decision-making powers from central to local government has emerged as a potential solution. However, in countries like Pakistan, the effectiveness of this approach is deeply intertwined with geopolitical risks, raising questions about its viability in fostering sustainable development.
Fiscal decentralization allows local governments to implement policies that directly address their region’s unique environmental challenges. By giving local authorities control over public spending, taxation, and resource allocation, decentralization enables them to tailor sustainability initiatives, such as reforestation projects, renewable energy programs, and waste management systems.
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When local governments have financial autonomy, they become more accountable to their communities, leading to efficient fund allocation and improved environmental outcomes. Countries with well-structured decentralized fiscal systems have demonstrated greater success in mitigating climate change through localized strategies and community-driven environmental policies.
Pakistan’s fiscal decentralization history has been characterized by fluctuating policies and inconsistent implementation. Despite attempts to empower local governments, political instability and centralized resource control have hindered meaningful devolution. The 1960s Basic Democracies system and 2001 Local Government Ordinance failed to ensure financial independence. The country’s fragile political landscape presents a major roadblock, causing sustainability initiatives to be underfunded or abandoned.
Pakistan’s fiscal decentralization faces significant challenges due to geopolitical risks, including political unrest, terrorism, and border conflicts. These factors create economic uncertainty, hindering local governments from prioritizing environmental initiatives. Security concerns in high-risk regions also divert funds from green projects. Corruption and political manipulation exacerbate the situation, leading to inefficiencies and lack of accountability.
To promote environmental sustainability in Pakistan, a strategic approach is required which involves strengthening local governance structures, ensuring consistent policy implementation, and insulating initiatives from political instability. Integrating climate policies with national security strategies can maintain focus on sustainability. International collaboration and foreign investment in local sustainability projects can provide financial stability and mitigate political instability risks.
Pakistan’s fiscal decentralization has potential to tackle environmental issues, but its success depends on the country’s geopolitical climate. Local governments can promote sustainability, but external risks can hinder their effectiveness. Prioritizing stability, strengthening institutional frameworks, and integrating sustainability into governance policies is crucial for its success.
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This article was contributed by: “Nabila Akram is currently pursuing her Master’s in Economics from the Institute of Business Administration (IBA), Karachi. She holds a Bachelor’s degree in Economics from COMSATS University Islamabad. Passionate about fostering inclusive economic growth, climate resilience, and human rights, she aims to develop impactful, data-driven policies that balance economic prosperity with social and environmental sustainability.”
