With an average annual rainfall of less than 240 mm Pakistan is one of the most arid countries
in the world. Every year during the monsoon season from July to September Pakistan
experiences heavy rainfalls. However this year the substantial amount of unexpected monsoon
rainfall resulted in heavy floods as a consequence of the absence of adequate infrastructure
(dams barrages reservoirs). The heavy rainfall started in the last week of July 2010 and
continued for days in the regions of Balochistan followed closely by a second spell in Khyber
Pakhtunkhwa (KPK). The rain continued until the first few days of August 2010 causing
tremendous damage to both property and lives. The heavy rainfall flooded the already flooded
rivers and streams causing the river banks to burst. The flood water started causing
destruction in KPK and continued its journey towards Punjab and Sindh. The floods in Pakistan
have had an impact on all the sectors of the economy. Handling these problems would require a
model that could simultaneously capture the major relations among different sectors of the
economy and thereby trace through the indirect and secondary effects on the economy. The
model used to calculate the impact is subjected to a number of simulations that are run on
E-views. In this study the author uses a model that reports clearly what Pakistan will face in
terms of production loss and recovery. The results are assessed on the basis of past data and
the current situation in the country. The author's main purpose is to define the costs Pakistan
faces in such a situation and further to develop policy recommendations.
