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History of economics in Pakistan

First five decades

This is a chart of trend of gross domestic product of Pakistan at market prices estimated

by the International Monetary Fund with figures in millions of Pakistani Rupees.

YearGrossDomesticProduct

US DollarExchange

InflationIndex(2000=100)

1960 100 4.76 .Rs

1980 283,460 9.97 .Rs 21

1985 569,114 16.28 .Rs 30

1990 1,029,093 21.41 .Rs 41

1995 2,268,461 30.62 .Rs 68

2000 3,826,111 51.64 .Rs 100

2005 6,581,103 60.40 .Rs 126

Pakistan's average economic growth rate since independence has been higher than theaverage growth rate of the world economy during the period. Average annual real GDP

growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Averageannual growth fell to 4.6% in the 1990s with significantly lower growth in the secondhalf of that decade.Industrial-sector growth, including manufacturing, was also above average. In the late1960s Two wars with India in 1965 and 1971 adversely affected economic growth. Inparticular, the latter war brought the economy close to recession, although economicoutput rebounded sharply until the nationalizations of the mid-1970s.

Economic resilience

Historically, Pakistan's overall economic output (GDP) has grown every year since a1951 recession. Despite this record of sustained growth, Pakistan's economy had, until a

few years ago, been characterized as unstable and highly vulnerable to external andinternal shocks. However, the economy proved to be unexpectedly resilient in the face ofmultiple adverse events concentrated into an eight-year period

The Asian financial crisis;

Economic sanctions according to Colin Powell, Pakistan was "sanctioned to theeyeballs"

Lop recession

Severe rioting in the port city ofKarachi

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Manufacturing and finance

Pakistan's manufacturing sector has experienced double-digit growth in recent years,from 2000 to 2007, with Large-scale manufacturing growing from a minimal 1.5% in1999 to a RECORD 19.9% in 2004-05 and averaged 8.8% by end of 2007. The FederalBureau of Statistics valued FINANCE & INSURANCE sector at Rs.311,741 million in

2005 thus registering over 166% growth since 2000. A reduction in the fiscaldeficit hasresulted in less government borrowing in the domestic money market, lower interestrates, and an expansion inprivate sectorlending to businesses and consumers.

Growing middle class

Measured by purchasing power, Pakistan has a 30 million strong middle class, accordingto Dr. Ishrat Husain, Ex-Governor (2 December1999 - 1 December2005) of the StateBank of Pakistan. It is a figure that correlates with research by Standard Chartered Bankwhich estimates that Pakistan possesses a "a middle class of 30 million people thatStandard Chartered estimates now earn an average of about $10,000 a year." In addition,Pakistan has a growing upper class with relatively high per capita incomes.

On measures of income inequality, the country ranks slightly better than the median. Inlate 2006, the Central Board of Revenue estimated that there were almost 2.8 millionincome-tax payers in the country.

Poverty alleviation expenditures

Main article:Poverty in Pakistan

Pakistan government spent over 1 trillion Rupees (about $16.7 billion) on povertyalleviation programs during the past four years, cutting poverty from 35 percent in 2000-01 to 24 percent in 2006. Rural poverty remains a pressing issue, as development therehas been far slower then in the major urban areas.

Employment

The high population growth in the past few decades has ensured that a very large numberof young people are now entering the labor market. Even though it is among the sevenmost populous Asian nations, Pakistan has a lower population density than Bangladesh,Japan, India, and the Philippines. In the past, excessive red tape made firing from jobs,and consequently hiring, difficult. Significant progress in taxation and business reformshas ensured that many firms now are not compelled to operate in the undergroundeconomy.In late 2006, the government launched an ambitious nationwide service employmentscheme aimed at disbursing almost $2 billion over five years.

Tourism

In Pakistan's economy, tourism has the potential to play a vital role, due to the majesticlandscape of Pakistan and the variation of cultures within the nation. However, due to alack of proper infrastructure in certain areas, and a worsening security situation in others,Pakistan still faces major set backs. Otherwise, according to some international

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Investment

Foreign direct investment (FDI) in Pakistan soared by 180.6 per cent year-on-year toUS$2.22 billion and portfolio investment by 276 per cent to $407.4 million during thefirst nine months of fiscal year 2006, the State Bank of Pakistan (SBP) reported on April24. During July-March 2005-06, FDI year-on-year increased to $2.224 billion from only

$792.6 million and portfolio investment to $407.4 million, whereas it was $108.1 millionin the corresponding period last year, according to the latest statistics released by theState Bank. Pakistan has achieved FDI of almost $7 billion in the financial year 06/07,surpassing the government target of $4 billion.Pakistan is now the most investment-friendly nation in South Asia. Business regulationshave been profoundly overhauled along liberal lines, especially since 1999. Most barriersto the flow of capital and international direct investment have been removed. Foreigninvestors do not face any restrictions on the inflow of capital, and investment of up to100% of equity participation is allowed in most sectors (local partners must be brought inwithin 5 years and contribute up to 40% of the equity in the services and agriculturesectors). Unlimited remittance of profits, dividends, service fees or capital is now the

rule. Pakistan has been able to attract a large portion of the global private equityinvestments because of economic reforms initiated in 2003 that have provided foreigninvestors with greater assurances for the stability of the nation and their ability torepatriate invested funds in the future.Tariffs have been reduced to an average rate of 16%, with a maximum of 25% (except forthe car industry). The privatization process, which started in the early 1990s, has gainedmomentum, with most of the banking system privately owned, and the oil sector targetedto be the next big privatization operation. The recent improvements in the economy andthe business environment have been recognized by international rating agencies such asMoodys and standard and poors (country risk upgrade at the end of 2003).

ExportsPakistan's exports stood at $17.011 billion in the financial year 2006-2007, up by 3.4percent from last year's exports of $16.451 billion.Pakistan exports rice, furniture, cotton fiber, cement, tiles, marble, textiles, clothing,leather goods, sports goods (renowned for footballs/soccer balls), surgical instruments,electrical appliances, software, carpets, and rugs, ice cream, livestock meat, chicken,powdered milk, wheat, seafood (especially shrimp/prawns), vegetables, processed fooditems, Pakistani assembled Suzukis (to Afghanistan and other countries), defenseequipment (submarines, tanks, radars), salt, marble, onyx, engineering goods, and manyother items. Pakistan now is being very well recognized for producing and exportingcements in Asia and Mid-East.

Imports

Pakistan's imports stood at $30.54 billion in the financial year 2006-2007, up by 8.22percent from last year's imports of $28.58 billion. Pakistan's single largest importcategory is petroleum and petroleum products. Other imports include: industrialmachinery, construction machinery, trucks, automobiles, computers, computer parts,medicines, pharmaceutical products, food items, civilian aircraft, defense equipment,iron, steel, toys, electronics, and other consumer items. Sales tax is levied at 15 percent

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both on imports and domestically produced products. The income withholding tax islevied at 6 percent on imports and at 3.5 percent on the sales of domestic taxpayers.

A Portion from National Environmental Policy 2005

Policy Instruments

Economic and Market Based Instruments

a) Environmental fiscal reforms would be promoted.b) Trade barriers for the import of clean technologies, fuels, and pollution control

equipment would be removed.c) Incentives including reduced tariffs, tax concessions and other incentives (such as

environment and energy award) would be offered to private and public sector for

compliance with environmental laws and standards.d) Sustainable development funds would be operationalized at the federal and

provincial levels.e) Industries would be encouraged to introduce environmental accounting

systems in their financial management systems.f) Special credits/low interest loans/subsidies would be offered for the

establishment of waste management system, introduction of clean technology andrelocation of polluting industries.

g) Opportunities for green business such as environmental engineeringmanufacturing and installations, environmentally-certified products andbusinesses, energy service and conservation companies, and ecotourism would be

promoted.

Research areas of Environmental economics in Pakistan

Willingness to pay and demand elasticities for two national parks:Empirical evidence from two surveys in Pakistan

Himayatullah Khan

Using survey-based data approach for modeling the demand for environmentalGoods/resources, this study estimates income and price elasticities of demand forimproved environmental quality of two National Parks in Northern Pakistan. The studyuses data from two studies. The estimates indicate that improved environmental qualityeffects can be described as a luxury and an ordinary and price elastic service. Confidenceintervals show however that the classification as a luxury is not statistically significant.Income elasticities of willingness to pay are estimated for a broad range of environmental

services. The study finds that income and willingness to pay vary directly andsignificantly. The elasticity estimates, in general, are greater than zero, but less thanunity. The study concludes that environmental improvements are more beneficial to low-income groups than for high-income groups.The aim of this paper is to estimate demand elasticities and willingness to pay forenvironmental resources in two national parks in northern Pakistan. The income elasticityof willingness to pay is estimated for a broad range of environmental services, but a focuson the demand for one particular environmental service was needed for being able to

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estimate income and price elasticities of demand. More precisely, this service was theimproved environmental quality effects of two national parks. The contingent valuationand travel cost methods (TCM) are some of the most widely used methods for valuingenvironmental services. In this study we combine both CVM and TCM.The paper is organized as follows. Sections 2and 3 give description of the study area and

a theoretical background and defines elasticity measures, respectively. Estimates ofincome elasticities of willingness to pay for environmental services found by variousstudies are presented in Sect.4. The demand for improved environmental quality effectsof the national parks is modeled and estimated in Sect. 5 , which also includes estimatesof income and price elasticities of demand for this particular environmental service.Finally, conclusions are found in Sect. 6 .

Ayubia National Park, Abbottabad, Pakistan.

Ayubia National Park is a small national park in the Murree hills. It is located North ofMurree in the Himalayan Range Mountains. Ayubia consisting of four hill stations,namely, Khaira Gali, Changla Gali, Khanspur and Gora Dhaka is spread over an area of

26 km. These hill stations have been developed into a hill resort known as Ayubia. Thechairlifts provided at this place are a matter of great attraction. It is an important placefrom the viewpoint of wild life, nature, ecotourism, and education. This park providesrefuge to the elusive leopard and the black bear. Bird watching is excellent here. Thereare steep precipices and cliffs on one side and on the other are tall pine trees. The sceneryis superb with huge pine forests covering the hills and providing shelter to the larger andsmaller mammals. Wild animals are also found in the thick forests around. Mammals inthe park include Asiatic leopard, Black bear, Yellow throated marten, Kashmir hill fox,Red Flying squirrel, Himalayan palm civet, Masked civet and Rhesus Macaque. Birds inthe park are Golden eagle, Griffin vulture, Honey buzzard, Peregrine falcon, Kestrel,Indian sparrow hawk, Hill pigeon, Spotted dove and Collared dove.

(MHNP), Islamabad, Pakistan.

The MHN Park is spread over an area of about 15,800 hectares. It is situated on thenorthern, eastern and western sides of Islamabad. It includes the Margalla Hills, RawalLake and Shakar Parian and was given the status of a national park in 1980 after thegovernment recognized the growing threat to its flora and fauna. Of the three distinctunits, the largest area, the Margalla Hills, of approximately 12,600 hectares has beenaffected by villagers living in direct contact and depending on the fertility of the land.The proper conservation of the area will gradually re-establish the environment to itsnatural state providing prospects for outdoor recreation in unspoiled nature with afocus on wildlife viewing, hiking and camping. The Margalla Hills consists of mountain

wilderness, an urban recreation and cultural centre, and a large reservoir. The Rawal Lakeof approximately 1,900 hectares represents a man-made park environment, which has theappearance of a natural ecosystem. To provide a continuous supply of drinking water,city planners reestablished part of a pre-historic lake, which created a rare opportunity forthe population in the Capital Territory to experience a lake environment and waterfowl,enjoy sports in addition to common outdoor recreation activities such as picnics, strollsand jogging. It has a 2-km perimeter around the lakeshore buffer, which is a domesticwater supply, waterfowl habitat, and recreational area. Shakar Parian, covering

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approximately 1,300 hectares represents an urban recreational and cultural park andprovides the urban population with an excellent recreational facility for activities such assports, jogging, strolls and picnics.The Park is a habitat for various species of animals and birds. The Gray Goral, BarkingDeer, Monkey, Kalij, Grey and Black Partridges and Chir Pheasants particularly arouse

the interest of wild life enthusiasts. The Margalla Hills Park provides an excellentopportunity for bird watching. A Chir Pheasant hatchery has been established at ChakJabri to raise captive Chir Pheasants that have become extinct in the hills. These are thenreleased in the wild. Other mammals in the park include the Asiatic Leopard, Wild Boar,Jackal, Rhesus Macaque, Leopard Cat, Gray Goral Sheep, Chinkara Gazelle (rare), RedFox, Pangolin, Porcupine, Yellow Throated Marten and Fruit Bats. Reptiles in the parkare Russelles Viper, Indian Cobra and Saw Scaled Viper. Other birds in the park are theGriffin Vulture,Laggar Falcon, Peregrine Falcon, Kestrel, Indian Sparrow Hawk, Egyptian Vulture,White Cheeked Bulbul, Yellow Vented Bulbul, Paradise Flycatcher, Golden Oriole,Spotted Dove, Collared Dove, Larks, Shrikes, and Buntings.

IntroductionLike many other developing countries, Pakistan is seeking torevitalize its tourism sector, including nature tourism to an expandingsystem of national parks and reserves. In South Asia, Pakistan is one ofthe poorest in bio-diversity. It has experienced high rates ofdeforestation in recent years (World Resource Institute, 1996). Forestscover as little as 5 % of the countrys area. Due to an ever-increasingpopulation, it is losing more and more forest cover primarily because ofconversion of forest to agricultural as well as residential uses. TheGovernment of Pakistan has, in recent years, expressed a seriousconcern over deforestation and has shown significant interest in the

growth of a renowned national park system. Pakistan has a number ofnational parks, reserves, and wildlife refuges in different parts of thecountry. Despite the limited number of national parks and reserves,their management is far from satisfactory. This is partly because ofinsufficient government funds and open access of visitors to theseplaces. Currently, entry to national parks in Pakistan is free. However,revenue can be generated by introducing entry fees that could bespent on the improvement of the quality of the parks. There is a needfor a thorough investigation of how these parks can be well managedand how these environmental resources can be valued. No study onthe valuation of national parks in Pakistan has ever been conducted.

Natural resource systems such as lakes, rivers, streams, estuaries, forests andparks are used extensively by people for various kinds of recreational activities. Naturalresource systems provide valuable services to people. From an economic perspective,these services have two important features. The first is that the economic value of theseservices depends upon the characteristics of the natural resource system. Knowledge ofthe values of these services may be important for a variety of resource managementdecisions. The second important feature is that access to the resource for recreation is

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Recreational Value of the MHN ParkTable-6 shows consumer surplus and total recreational value of theMHN Park for the year 2002-03. The total recreational value equalsthe consumer surplus plus total cost of the visit. The annualmonetary recreational value of the MHN Park is about Rs. 200 million(approximately US $3.47 million). This is the value that the parkyields every year for the economy. However, this is not the revenueof the park. This value is distinguished into consumer surplus of thevisitors and total travel cost of the visitors. The total travel costspaid by the visitors go to transportation companies and agents forservice providers such as hotels, restaurants, tourist agencies, etc.In addition, the total recreational value was also projected in thecase of park improvements which amounted to Rs. 209 million.

Ideally, we would have liked to compare revenues generated from theentry fee with the costs of improvements in park quality. But, in theabsence of reliable cost estimates for park improvements, the presentstudy could not make such a comparison. The recommendation thatthe entry fee be set at Rs. 20 is based on revenue and consumersurplus as well as the researchers own observations.

Conclusions and policy implications

In the wake of growing eco-tourism and the increasing interest on thepart of NGOs and governments in natural resource conservation, non-market valuation techniques are needed to estimate the economicbenefits of environmental resources such as national parks in theseareas. The present study used the individual travel cost model (ITCM)for analyzing and measuring the total recreational value of the MHNPark.

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as an eco-tourism destination. It is representative of a number ofnational parks in Pakistan. It is in need of improved management sothat economic and other benefits can be restored and enhanced. TheMHN Park can generate enormous economic value through recreation.Keeping in view the large amount of consumer surplus and recreational

value of the MHN Park, the Federal and provincial level governmentscan justify larger annual budget allocations for the management ofnatural resources.

Alternatively, the government may also consider using an entry fee to the MHN Park.The generated user value of the park provides a guideline for the possible introductionof entrance fees and makes a strong argument for sustaining the area, as it has beendemonstrated that benefits derived are large. In addition, the estimated value may alsohelp in promoting the protection of other natural areas, and are thus presumably evenmore dependent on fair decision-making within the policy arena. Since the consumers(visitors) are willing to pay much higher than they actually pay for Park visitation, an

entry fee of about Rs.20 per person may be used. This would generate a great deal ofmoney that could be used for improving park management.

The study showed that the visitors were willing to pay more than whatthey actually pay and that an entrance fee of Rs.20 per person per visitwould generate sufficient amount of money to be used for parkimprovement. This, however, would reduce the overall consumersurplus. Thus, the drawback of this would be that the poor will benegatively affected as they would be less able to visit the park if anentrance fee were charged.

Critical issues remain to be explored further before the recommended

policy for the benefit value capture can be fully realized. These includepolicy procedures and the process for implementation, includinginformation sharing and consultation. The administrative organizationfor implementation and enforcement will also require investigation.

Economic Evaluation of Pesticide Use Externalities in the CottonZones of Punjab, Pakistan.

Pakistan Institute of Development Economics 2002

Khan, M. Azeem, Iqbal, Muhammad, Ahmad, Iftikhar and Soomro,

ManzoorI. INTRODUCTIONAt the inception of Pakistan in 1947, there was practically no plant protection service inthe country and economic soundness of plant protection measures was not even realizedfor a long time. The use of chemicals as preventive measures to reduce losses by insectsand diseases was almost non-existent during 1960s. However, the grow more pressurerendered the traditional methods insufficient, to control the ever increasing pest problemfrom 1970s onwards. Consumption of pesticides in Pakistan has increased from 665

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metric tones in 1980 to 69897 MT in 2002. This colossal increase in pesticideconsumption has not led necessarily to an increase in the yield of crops, as demonstratedby Poswal and Williamson (1998) and Ahmad and Poswal (2000). This indiscriminateuse of pesticides has destroyed the bio-control agents in the agro-ecosystems and thepopulations of natural enemies of the insects and pests have declined up to 90 percent

during the last decade (of the past century) especially, in cotton growing areas of thecountryThe farmers are mainly concerned about the private cost of pesticide they have to incur toachieve desirable outputs and are least concerned about the undesirable by-products oftheir production processes. The pressure to maximize output is enormous especially, onlow-income resource-poor small farms and the tenants.

Analytical Framework

The external costs are categorized as actual and potential costs in terms of damage costsor damage abatement costs respectively Table 1. The potential costs include costs ofestablishment of laboratories for pesticide residue analyses, residue monitoring

programmes, and training programmes on the safe use of pesticides. The loss ofbiodiversity, pest resistance, fatalities are the instances of actual cost born by the society.The assessment of the actual and potential external costs was required to specificallydesign the corrective measures in accordance to the pesticide use level and its relativeimpact on health, pest resistance and environment.

Externalities of Pesticide Use

The environmental and social cost of pesticide use to the nation amounted to 11941million rupees per year (Table 2). The bulk of the cost is caused through productionlosses due to resistance development in cotton pests and damages to domestic animals,followed by damage to human health, loss of biodiversity and monitoring costs of

residues in food chain. The costs of monitoring through residue analysis andimplementation of pesticide use regulations belong to the damage prevention costs.

The Cost Benefit Analysis of Pesticide Use

The benefit cost ratios were estimated separately using private costs as well as socialcosts associated with pesticide use and are reported in Table 4. Potential yield gains ofpest control were estimated by calculating 27 percent yield loss of cotton due to insectpests and assuming 50 percent effectiveness of insecticide control under farmerconditions. The production loss estimates are based on the results presented in the annualreports (1992-1999) of Central Cotton Research Institute, Multan. About 272 kg perhectare increase in the yield of seed-cotton was estimated with pesticide use. The actual

gross benefit of pest control was calculated as 8069 million rupees by multiplyingincremental yield with price of seed-cotton (Rs 17.5/kg) and the total cotton area of 9districts (1.7 million hectare). In order to calculate benefit cost ratio, the private costs ofpesticides were added to the producer rent yielding the gross value added from this inputThe social cost (private plus the external cost) resulted into a benefit-cost ratio of about0.43. This shows that benefit cost ratio of 1.14 reduced significantly when external costwas added in the total cost. However, the ratio of external costs to the private cost of

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pesticide use is quite high (1.64), which shows other tradeoffs involving environmentalquality, irreversible damages to agro-ecosystem and human health problems.

Conclusion

The studies conducted at the international arena have shown massive external costs,

associated with the use of pesticides in agriculture, to the respective societies. Pimental,et al. (1992) estimated that the external cost of pesticide use for the USA amounted to $8billion per annum. A second attempt was made by Steiner, et al. (1995) who estimated acost of externalities of the order of $1.3 billion to $3.6 billion for theUSA economy. This was two to three time less than the externality cost estimated byPimental and his colleagues. Waibel, et al. (1999) estimated an external cost of pesticideuse amounting to at least 252 million DM per year for Ex Federal State of Germany. Thiscost accounted for 23 percent of the respective private cost actually paid by theproducers.These external costs are not paid for the impairment of health among pesticide users,reduction in biodiversity, ground water contamination, residues in food items, and so on.

These costs need to be internalized by making all the stakeholders to consider it into theiraccounts. This study attempts at highlighting the external costs associated with pesticideuse in Pakistan and to suggest appropriate guidelines for regulating the safe use ofpesticides in the country. The externalities assessed in this study arise from the routineand legal use of pesticides on cotton crop in Multan and Bahawalpur, the two maincotton-producing divisions of Punjab. The estimates include the quantitative extent ofadverse impacts of pesticide on human health, natural resources, food chain, productionlosses, and domestic animal poisoning.

Role of Youth in Environmental Preservation and SustainableDevelopment in Pakistan

The subject of the environment has to be transformed into a movement. With thelaunching of this movement the following objectives should be achieved:AwarenessWhen the subject environment would develop into a movement, there will be an increasein awareness in public, at all levels. People would come to know of the importance of thisissue.Participation of the People

No scheme or plan launched by the government can be successful until and unless thereis involvement on behalf of the people. When people will get involved then they will takepersonal interest in this matter and make the movement a success. It is true that unless theissue of environment is not so widely understood in the country, it will be very difficult

for the agencies to get the involvement and the participation of the people.Planning the Movement

To introduce and form environmental clubs in schools and colleges in various cities.Exhibition, debates and essay competitions in schools and colleges, emphasizing thenecessity and importance of a clean environment.Learned people in the field of environment and well-known personalities should be askedto address the students on this issue. Celebrities, sportsmen and television personalitiescan be involved at this stage. The young people cannot be expected to do everything and

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anything on their own. For them the easiest and most effective method is to set outcertain scales in front of them.For example: Classroom/Home School/College/Locality

District City CountryYouth should first try to work towards one scale and then proceed to the next.

Estimating entry charges for the Margalla Hills National Park inPakistan

The study reveals that the benefits from the park to consumers or consumer surplus,amounts to a significant Rs. 23 million per year. Based on simulated demand for parkservices, the study recommends an entrance fee of Rs. 20 per visitor. Implementing sucha fee would generate annual revenues to the extent of approximately Rs. 11 million to theGovernment of Pakistan. This is a sizable sum, since it equals 4 percent of Pakistansbudget allocated to the environment sector. For natural systems and Governmentmanagers perpetually strapped for funds, this valuation exercise provides importantlessons that go beyond the MHNP itself.Himayatullah Khan values the recreational benefits from Margalla Hills National Park inNorthern Pakistan in what is the first valuation study of its kind in the country. The studyis based on a survey of 1000 visitors to the Park in 2002-03.

WHO VISITS THE MHN AND WHAT DO THEY LIKE?

The authors survey of a 1000 visitors to the MHNP provides an opportunity to assess themarket for recreation in Pakistan. The data shows that the average visitor who enjoysnatural areas around Islamabad is approximately 39 years old, has at least a primary

school education and is married with seven children. Sixty % of the visitors are fromurban areas. Some 65% of the sample respondents earned between Rs.5000 to Rs.20,000in monthly income.The response from the sample respondents establishes that the majority of visitors arehappy with the recreational quality of the park. However, 62 percent of visitors wantedimprovements in the quality of the services available at the park. A significant 38 percentof visitors felt that Park entry fees should be raised to finance improvements. Thus, thismarket survey suggests that the MHNP is visited often by middle-class households wholive in nearby Rawalpindi and Islamabad, and also by people from out of town. Visitorsappear to truly appreciate the amenities of the MHNP and may even be willing to pay forimprovements.

THE RECREATIONAL VALUE OF THE MHNPHimayatullah Khan estimates the total recreational value from MHNP to be 3.5 millionUSD. This sum equals economic benefits plus the total cost of the site visit. Totaleconomic benefits alone are estimated to be a whopping Rs. 23 million or 8 percent of thetotal budget allocation for Pakistans environment sector. Further, the improved parkservices would increase economic benefits by Rs. 9 million. This jump in surplusindicates that visitors are willing to pay for park improvements.

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USING AN ENTRY FEE TO RAISE PARK REVENUESAnother relevant outcome from the study is the estimation of an entry fee. As shown inthe next figure, a fee increase from the present charge of 0 to Rs. 50 would result inrevenues for MHNP first increasing and then decreasing as visitors

POLICY OUTCOMESAt a basic level the study underlines the importance of using non- market valuationtechniques to estimate hitherto un-captured and under-captured economic benefits fromenvironmental resources such as national parks. In the context of Pakistan, the studyplaces the spot light on three important issues. Increased budget outlays for MHNPmaintenance are viable and justified, as an improved park would attract more visits andcould in turn generate revenues. Clearly, the government should look at such allocationas an investment in itself.An entrance fee of Rs.20 for MHNP could be introduced, as consumers are willing to payfor benefits from the park. This charge would generate close to 11 million rupees for theexchequer. The implications of the valuation exercise for MHNP go beyond this park,and need valuation more national parks

Eco NewsPakistan has formulated Policy for Development of Renewable Energy for PowerGeneration - 2006, for using all alternative energy sources to generate electricity tomeet the growing demand by 10 to 12 percent annually. The policy is toencourage employing of small hydra, wind, and solar technologies by offeringattractive incentives to attract investment. For example, small projects for self-use will not require any permission from government.

Eighth Sustainable Development Conference

The Eighth Sustainable Development Conference (SDC) was held from December 7th

to 9th 2005 at the Best Western Hotel in Islamabad, Pakistan. The SustainableDevelopment Conference is a significant engagement on the research and academiccalendar in Asia, attracting intellectuals and policy-makers to assemble in Islamabad.

The Eighth SDC probed multiple facets of sustainable development in the contexts ofSouth Asia through six major themes. Overall, 30 panels were organized, and 94

speakers from 11 countries presented their work at the conference.

Sustainable Natural Resource Management: The Way Forward

Session 1Chair: Mohammad Boota

Discussant: Syed Qasim Shah

Ms. Mita Dutta from CUTS, India, in her presentation Natural Resource and BenefitSharing: The Indian Scenario argued that in the era of globalization, poor

communities in this region are facing various threats in earning their livelihoods.Particularly the mountain farmers are disadvantaged compared to the farmers of the

lowland areas. The local people used to live in harmony with the nature and had theirown system of protecting natural resources and local knowledge but with the

increase of commercial logging, the livelihood of marginalized communities has been

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seriously threatened. Trade Related Aspects of Intellectual Property Rights (TRIPs)agreement under WTO recognizes monopoly rights over property, be it natural or

intellectual. But that results in loss of rights of the community nurturing theseresources and preserving it for generations.

India has established the National Biodiversity Authority and legal tools to protect itsnatural resources. These Acts keep provisions for benefit sharing and prior informed

consent, which are key to the effective natural resource management by distributingthe rights equally. These Acts, if implemented carefully, can take care of basic issuesof supporting poor communities. Certain rights over the natural resources have also

been recognized by the Government of India and there is a mechanism for benefit

sharing. She concluded with the recommendation that the capacity building of thecommunities is essential regarding decision making on NRM and ABS.

Roshani Sidgel from SAWTEE, Nepal in her presentation Implications for Farmer'sRights to Livelihoods discussed Nepal's position during the TRIPS review

negotiations. Nepal is tremendously rich in biodiversity, which, in turn, is intrinsicallyassociated with the way of life of peoples. It is one of the major sources of food and

income for a large section of the society as around 78 percent of the people dependon agriculture. The country is, however, weak in technological capability, which could

be applied for turning the traditional knowledge and biodiversity wealth into

economic strength and removal of rampant poverty and hunger. The convention onbiological diversity (CDB) recognizes the right of state over their biological resourceand provides ABS mechanism for the commercial use of the resources. Nepal ratified

CBD in 1992 and a law on ABS was promulgated in 2002. The major concern ofNepal is about the patent and plant variety protection provision under article 27.3 b

of TRIPS. In Doha declaration it was recognized that the TRIPS should not conflictwith the provisions of the CBD. Article 27.3 (b) of the Agreement is being reviewed

and the Nepal's position for review is that the TRIPS review should be based on theprinciples of CBD, and the sovereign right of the state over its biological resources

must be respected. The farmers should have the right over seed, traditionalknowledge and benefit sharing.

Mehnaz Ajmal from SDPI in her presentation Historic Practices and Customs for ABS

and PIC for Plant Genetic Resources in the Mountainous Rural Communitiespresented in context with ABS, the case study of a medicinal plant kuth which is

found in the mountains of Azad Jammu & Kashmir (AJK) and Hazara. Local peopleuse the roots ofkuth for various purposes for example when countering asthma,

fever, skin diseases pests, livestock diseases etc. Contractors extract kuthexcessively even though legally the extraction of the medicinal plants is prohibited.

Kuth is a public property and endangered specie but the Government of AJK has

violated the laws and allowed the commercial extraction. The unscientific andunsustainable extraction of this plant had serious implications on the livelihoods of

the local communities. The contractors paid little to local people and sold kuth athigh prices. Mehnaz elaborated that Pakistan is signatory to various international

agreements that recognize the right of local people over access and benefit sharingon natural resources and emphasized awareness raising and empowerment of the

farmers about ABS.The chair Muhammad Boota from SCD, Islamabad underlined the need to remove the

conflicts between the CBD and TRIPS, and to simplify and institutionalize the ABSmechanism. He argued that every developing country needs genetic resources for its

development and imposing a complicated system of ABS will affect theirdevelopment. He concluded with the remarks that the stakeholders should direct

their efforts in evolving proper legislation on proper protection of intellectualproperty rights and traditional knowledge. The discussant Syed Qasim Ali Shah from

ActionAid, Pakistan was of the view that the local communities should be rewarded in

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the ABS and that the laws and mechanism regarding ABS should be implemented intrue spirit.

Reported by Babar Shahbaz

Sustainable Natural Resource Management: The Way Forward

Session IIChair: Anwar Naseem

Discussant: Najam Jami

Ms. Arjumand Nizami in her presentation Forest Management in NWFP: Issue of

Access and Benefit Sharing made a case for ensuring the meaningful participation of

the marginalized communities by involving their experiences and knowledge at astrategic level. This will make certain that we have sustainable livelihood approach at

policy making levels.The livelihood approach not only gives better understanding of poverty but it also

helps in building strategies which are pro poor and de-mystifies misconception aboutthe participation of the stakeholders. On the basis of the DFID livelihood framework,

ten different projects are running in Nepal, India, Bhutan, Bangladesh, and Pakistan.These follow strategies like identification of correct clients, setting of priorities, and

working around those priorities in interest groups.Shreekant Gupta from DSE, India in his presentation The Effect of Natural Resource

availability on Women's time Allocation decisions in Rural India expressed his viewthat the greatest challenge facing India is improving the economic well being of 30%

of its rural people who live in abject poverty, particularly women. Resourcedegradation forces rural households, especially women to spend more time in

collection of natural resources. Spending time collecting resources such as water andfirewoodwhich are essential commodities for these households means that they will

have less time for income generating activities.Nizamuddin Nizamani, in his presentation Share of Native Balochs in Balochistan's

Natural Resources and Prosperityelaborated on how Balochistan though conflict

ridden, being rich in natural resources remains an important territory of Pakistan.Balochistan remains an impoverished province with the lowest per capita income ascompared to other provinces in Pakistan. Disparity in income and distribution of

resources have brought about upheavals and insurgencies in the province during thelast few decades. He recommended that the federal government and other

stakeholders should ensure that people get their rightful and legal share of natural

resources.Ismail Khan in his presentation entitled Case Studies of Access Benefit Sharing in

Northern Areas, highlighted concerns at the international and national levels about

the fair and equitable benefit sharing of genetic resources and the need toacknowledge the traditional knowledge of indigenous communities. The process of

globalization and mutual economic dependencies demands frameworks andmechanisms to regulate access and procurement of genetic resources in a way that

would ensure prior informed consent and sharing of benefit to the country orcommunity, from where resource is extracted.

The process of globalization' and change' witnessed in the South Asian region hascarried both positive and negative impacts. The Karakoram Highway opened a

number of avenues in trade. Nonetheless, there have been negative effects ofunanticipated and unplanned developments. The cultural and indigenous knowledge

base has seen a decline, with local languages and traditional dietary and healthpractices being effected. Social, physical and economic development witness

diminishing local tradition, customs and livelihood practices. Now that entrepreneurs

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and middle men are buying certain indigenous resources from mountain farmers,these farmers are finding themselves hard pressed between their food and livelihood

security. There are also companies competing to seek more control over the supplyand extraction rights.

The session was chaired by Anwar Naseem from COMSTECH. Gul Najam Jami as thediscussant pointed out that sustainable natural resource management in Pakistan

lacks planning. It is also essential to draw policy relevant conclusions. Naturalresources such as natural gas in Balochiastan or medicinal plants in the northernareas should be used in a sustainable manner and keeping in mind the concerns of

local communities.

Reported by Mehnaz Ajmal Paracha

TROUBLED TIMES Sustainable Development and Governance in theAge of Extremes

Pages 665

The book titled, Troubled Times: Sustainable Development and Governance in the Ageof Extremes was launched at the inaugural of the Eighth Sustainable Development

Conference on 7 December 2005. The book has been jointly published by the SustainableDevelopment Policy Institute (SDPI) and Sama Editorial and Publishing Services(SAMA). Based on 41 chapters and 5 sub-sections (economics; politics and sociology;health; history and culture; and, literature), the book highlights the crosscutting linkagesbetween diverse themes and the increasingly complex demands upon the policy arena torespond to issues of sustainable development quickly and effectively. Defining momentsin history are frequently symbolized by events that indicate a turn of tide. The definingmoment for the 21st century appears to be what has become known as 9/11. While 9/11has not taken place in isolation sans history and sans politics, it appears to have heraldeda new era of viewing the world differently. In the present times, the troubling aspect (notthat we in the Third World were not troubled before) is that our troubles appear to haveundergone a change. This raises, for us in the global South, important questions ofagency and choice. Do we have choices? And if we do, how can we best exercise them inthe age of extremes ushered in by globalization, by globalized wars, and symbolized bythe events of 9/11. The book results from the strong view that while various issues ofconcern for South Asia remain, they have taken on urgency in view of the deterioratingindices and post 9/11 realities.It critically reassesses strategies for good governance and sustainable development andarrives at ways of making them more meaningful. It examines how much progress hasbeen achieved in South Asia vis--vis governance. It questions whether government ismore transparent today than it was a decade ago, and whether the governments have kepttheir promises to the marginalized, the poor, women or minorities. The book sharesstrategic lessons by researchers, theorists, activists, and creative thinkers from South Asiaand other regions of the world. The authors also recommend policy interventions basedon prior experiences.STATE OF PAKISTAN ECONOMY

Real Sector Developments

Pakistan has remained an agrarian economy for most part of its economic history. Since its

independence in 1947 agriculture remained the most important sector in the economy. However

with the changes in the global demand, the shift towards industry and services sectors became

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inevitable. Although agriculture now contributes less than 25 per cent in the national output,

however it employs more that 50 per cent of the active labour force in the country. The growth

rates of manufacturing and services sectors show relatively less instances of fluctuations whereas

the agriculture sector has faced much more volatility. This can be endorsed through economic

history and theory. Historically Pakistan has been very slow to modernise its agriculture sector.

Almost all federal budgets to-date have: a)exempted agriculture from taxation thus bringing abouteconomic inefficiencies, and b) protected agriculture sector through high tariffs. Retrospectively

the climatic conditions in Pakistan have been getting worse for the traditionally harvested crops.

The decline in water tables is a major concern. Between the years 2001 and 2002 the growth rateof agriculture was in negative due to the on-going drought in almost half of the entire farmingland. The growth in services sectors particularly after 2001 is remarkable and in fact exhibits thefact that the economy is getting diversified in products and services which have a stable domesticand global demand as compared to purely commodity-based production. Sectors such as banking,insurance, communications and transport have grown at an unprecedented rate. However there isa limit to the domestic demand of these services and Pakistan is still lagging behind as regards theexport of services. Pakistans share in the worlds services sector is only 0.06 per cent. The totalservices exports stood at $1.5 billion in 2003-04 while the total services imports stood at $2.5

billion for the same year. According to the initial findings from a study conducted incollaboration with International Trade Centre (ITC), Pakistans services exports in variouscountries mainly face the problems of quality, acceptance of professional credentials, visaapproval difficulties (particularly for exporters), re-certification process, multiple taxationregime, and countrys image problem after 9/11 (Khan 2005). In 2003 the industrial sector inPakistan surpassed the agriculture sector in terms of their respective sectoral shares. The servicessector shows more or less a constant pattern which is slightly above 50 per cent. However we donot know if the actual product value addition in Pakistan has increased or decreased. TheQuantum Index of Manufacturing observes that the move towards the production of more valueadded products is slow. There is a dire need to cut costs and increase productivity to cater theinternational import demand. Quality control may be another issue to consider for the industrialsectors in the developing economies. Keeping in view the importance of ISO-standards and

accreditation processes in a quota-free environment, the government established PakistanStandards and Quality Control Authority (PSQCA) and the previously operational organisationsnamely, Pakistan Standards Institution (now SDC), Central Testing Laboratories (now QCC) andMetal Industries Research and Development centre (now TSC) have already been merged inPSQCA to provide one window standardisation, quality control and other technical services.

Sectoral growth rates may also be attributed to the changes in the fixed investment being done in

these sectors. The activity-wise fixed capital formation in agriculture and manufacturing sectors

exhibits a decline in agriculture from around Rs. 78 billion in the year 2000 to about Rs. 43

billion in the year 2006. However this decrease in the agriculture sector has not been matched by

an increase in the manufacturing sector. This can have longer term impact on the structure of the

economy. If the resources diverted from agricultural investment are now forming a part of the

consumption expenditure, then GDP growth in Pakistan may not be sustainable in the mediumterm. If however the resources diverted from agriculture are moving into services sectors, then

this implies a pre-mature shift towards the tertiary sectors. Given Pakistans export base have

relatively less services based exports therefore the later concern can also prove to be dangerous in

the medium to longer term.

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Willingness to pay and demand elasticities for two national parks:empirical evidence from two surveys in Pakistan

Himayatullah Khan

That income tends to influence willingness to pay positively and significantly is a basic

finding from the analysis in Sect. 3of the income elasticites of WTP for the case ofenvironmental services in Pakistan. Consistent with the findings of Kristrom and Riera(1996) and Hobky and Soderqvist (2003), the analysis also showed the estimates of theincome elasticity of WTP that tend to be positive and less than unity. Hence,improvements in the quality of environmental resources are generally more beneficial topoor than the rich. It is also worth mentioning that the income elasticity of demand andthe income elasticity of willingness to pay are two different concepts and should not beconfused with each other. For estimating the income elasticity of demand we need anestimated demand function. CVM studies are far from always enough advanced to allowsuch estimation. This obstacle was overcome in our study by merging data from twodifferent surveys that contained data on CVM and TCM. Taken together, they involved a

variety of suggested prices and supplied quantities of one particular environmentalservice, viz. improvement in park quality. The point estimates of the income elasticity ofdemand for this environmental service tended to be greater than unity. This implies thatimproved quality of parks is a luxury good. The confidence interval for the base casesuggests that a 1% increase (decrease) in income would result in about a 0.71.5%increase (decrease) in the demand for reduced eutrophication effects. This indicates thatincome changes would indeed cause changes in the demand for this particularenvironmental service, but not any dramatic ones. With reference to the discussion on theshape of the environmental Kuznets curve, this result does not give any room forconcluding we are dealing with a general finding for environmental services.Environmental services are different in character, and people might very well conceive

some of them as necessities and others as luxuries. This seems also to be true for otherpublic goods than environmental services; the studies of the demand for public goodsreferred to resulted in elasticities ranging from 0.2 to 1.3. It deserves to be emphasizedthat preferences govern whether a service happens to be a necessity or luxury.Preferences are changeable and so are thus classifications in necessities and luxuries; theymight, for example, be influenced from a more widespread public knowledge of howenvironmental services provide support to society (Daily1997).Turning to the price elasticity of demand, the results clearly suggest that improved qualityeffects and park services are an ordinary and price elastic good. According to theconfidence interval for the base case, a 1% increase (decrease) in price would result inabout a 1.82.4% decrease (increase) in the demand for reduced eutrophication effects.

This suggests that technological innovations that would make it possible to supply theimproved environmental services at a lower cost would have a relatively large impact onthe demanded quantity.

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References:

1. World Bank Country Classification Groups, (July 2006 data)2. http://www.unep-wcmc.org/forest/projects/fra.htm Date: 23/12/20083. http://en.wikipedia.org/wiki/Pakistan

4. http://mpra.ub.uni-muenchen.de/9267/5. http://geo.tv/11-27-2008/29648.htm6. http://www.statpak.gov.pk/depts/fbs/statistics/national_accounts/table13.p

df7. http://mpra.ub.uni-muenchen.de/2688/8. http://www.economist.com/countries/Pakistan/profile.9. http://mpra.ub.uni-muenchen.de/10477/

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