As part of the Pathways to Resilience in Semi-arid Economies (PRISE) project,1
this working paper aims
to analyse existing data on the cotton and textile sector in Pakistan, and identify horizontal and vertical
linkages2
within the cotton value chain (CVC). A broader objective of the PRISE project is to reduce poverty
through increased climate resilience and inclusive economic growth.
This research into climate implications for business, as well as other sectors, applies the value chain
approach. It focuses on understanding the stakeholders that operate within the cotton sector (from input
suppliers to end market buyers), the policy environment in which they function, and the entire process of
textile manufacturing and export. This approach was chosen to understand the consequences of climate
risks as well as the adaptation measures needed to cope with adverse impacts in order to ensure the
resilience of all actors involved in the value chain.
Analysis based on literature and discussions with stakeholders suggests a negative association between
climate change impacts and cotton production. Cotton production in Pakistan has suffered huge losses
due to various climate extremes in the past 35 years. Major impacts of climate change can be observed for
both upstream (spinning, weaving etc.) and downstream (cotton producers, ginners etc.) actors/industries.
Analysis also reveals that governance can play a major role in increasing resilience to climate risks such as
floods and droughts.
There are also some clear entry points for climate change impact in the CVC. These appear closer to
upstream production processes, mainly cotton production at farm level. The impact then trickles down to
downstream industries, but in varying degrees. For example, large textile manufacturing units are more
resilient to climate change impact on cotton producing areas due to a high reliance on imports, whereas
small cottage industries suffer more because they solely rely on domestic cotton. Moreover, analysis of
relevant policy reveals that the textile sector is better protected, whereas the cotton production sector faces
a comparatively less supportive policy regime.
Due to a limited number of studies on the subject, there were some clear limitations on this paper. We did
not profoundly analyse the working relationships between actors and supporting market actors (transport,
agriculture banks, etc.). This will be done in the next phase of research.
This paper is organised as follows: Section 1 discusses the value chain approach in general and answers
how the value chain approach provides useful insights for climate risk analysis; Section 2 highlights the
methodology of the paper; Section 3 provides an in-depth situation analysis of the cotton and textile
sector in Pakistan; Section 4 focuses on mapping horizontal and vertical linkages in the CVC, institutional
framework, and the role of vulnerable groups in the CVC; Section 5 summarises the literature and historical
evidence of climate extremes and other climate-related vulnerabilities faced by Pakistan during the last two
decades; Section 6 provides site justification and ways forward for further research.