Global Climate Risk Index 2019, places Pakistan at 8th position among themost vulnerable countries to climate change. From 1998 to 2017, climate change is implicating cost of US$ 3.9 billion on average per year. In terms of GDP the cost is 0.5 percenton annual basis. Further it was estimated that Pakistan suffered a loss of US$ 25.3 billion (5 % of GDP) due to single flood of 2010. National Economic and Environmental Development Study (NEEDS) 2011, by government of Pakistan calculated that Pakistan needs US$ 10.7 billion to adopt to climate on annual basis. It was also calculated that to introduce renewable energy resources in national energy up to 15 percent Pakistan needs US$ 17 billion. It is also vulnerable to multiple climate related disasters e.g. floods, drought, disease (dengue), Sea level rise etc. The problem becomes further augmented by looking at development and economic status of country. On development side, Pakistan is home to 58.8 percent food insecure population with 45 percent stunted children. According to latest HIICS 24 percent population lives below the national poverty line. The statebecomes more serious on Multiple Poverty Index, which indicates that 38.8 population is poor. Poverty is mostly concentrated in pre-urban and rural areas. According to World Bank report rural areas are home to 80 percent poor. Literacy rate stands at 58 percent, which indicates that 89 million are illiterate. Economic indicators also present a sorry state of affairs. Growth has shrunk to 3.3 percent. Pakistan is struggling to control current account and fiscal deficit. Current account deficit becomes marginally positive on monthly basis but it needs to be brought down further. Inflation has crossed the double digit and it is 11.04 percent according to latest data. National currency depreciated by 25.5 percent, which has multiple implication including a serious hit on national revenue. Owing to depreciation non-tax revenue decreased by 44 percent, which has grave implications on development expenditure (25 percent reduction). Energy price has been increased e.g.Gas 54.84%, Motor fuel 20.7% and Motor vehicles(18.61%) etc. The future projections of climate changewill further exacerbate the situation. It is predicted by IPCC that due to climate change it is expected that the productivity of agriculture will fall by 5 percent in Asia and Pakistan is no exception. As Pakistan is agriculture-based economy it will introduce multi-dimensional problem. The most affected area would be food security and poverty in rural areas. It shows that Pakistan is stuck between deep sea and devil. Economic and development needs of country are pushing to find any way to overcome economic and development problems. Climate change is asking for putting focusing on combating the serious threats on multiple fronts e.g. water, agriculture, health and disasters etc. Climate change is also bringing in serious concerns for national security. For example, insurgency became more prominent after the drought of 1999-2003 in Balochistan, where millions of animals died. Air pollution is further aggravating situation. According Advisor to Prime Minister for Climate Change, it is costing 9 percent to national GDP. Moreover, international commitments and position of Pakistan at different forum will further put pressure on Pakistan to act. Pakistan is vice chair of upcoming COP. Pakistan is also co-chair of Green Climate Fund. Pakistan is also diverting resources for building dams from its own resources. A comprehensive climate smart agriculture program has been development under new vision for agriculture Pakistan is at crossroad, either to focus on climate change, economic growth, development in isolation or innovate a smart strategy. The best solution would be a smart policy, which can help to tackle climate change and ensure a steady growth on development path. Climate Compatible development can be a policy option to follow in futureto fulfill the dream of environment and climate friendly development. It is a development model, which ensures the minimization of negative impacts of climate change and help to devise instruments for low carbon economy and growth for sustainable development. Moreover, it enhances the capacity to sustain present adversities, disasters and future negative impacts and shocks”. It is not an easy path to follow, it requires huge amount of financial and skilled human resources. Though, the first step would be to produce a right set of policies, development plans and identification of instruments. Pakistan is fortune enough that at present it has pro-environment and pro-climate government. Prime Minister himself is a great advocate and he is trying his best to create right institutions, initiate programs and formulate policies and execute plans. However, the real issue is financial resources. Financial resources management and allocation policies and strategies will be real test of the Pakistan’s determination and wisdom. It becomes more relevant in the context of prevailing economic situation. Pakistan’s economy is going through worst period of its history. CPEC is only major economic program at the moment. Pakistan is pinning high hopes on it. Pakistan used CPEC to tackle multiple problems including the energy crisis.Energy is critical factor in debate on climate compatible development model. Historically, energy is biggest contributor to global GHG emission and same is true for Pakistan. Therefore, Pakistan will have to strive for renewable and clean sources of energy to minimize GHG emissions without compromising on national needs. Prior to 1994 Pakistan’s energy mix was dominated by renewable sources like hydro. Introduction of IPPs and priority for fossil fuels disturbed this balance and today our energy mix is highly tilted towards fossil fuels. Pakistan needs to rationalize use of fossil fuel to implement the climate compatible development model. Previous government of PML-N, by realizing the importance of renewable energyfor future designed a good number of wind, solar and hydro-power projects under CPEC umbrella like Quaid-E- Azam Solar Park, UEP Wind Farm and Suki Kinari Hydropower station etc. Present government is also trying to create a balance between fossil fuel and renewable or clean energy projects in accordance with nationaleconomic and development needs. Few days back Prime Minister inaugurated wind energy project with collaboration of international donors and partners. Ministry of Climate Change has also finalized Electrical Vehicle Policy. Forest area is also increasing due to massive campaign and programs by government of Pakistan, which will help to capture carbon. Hydro-power is again gaining importance in national policy and Pakistan initiated few hydro projects under CPEC program. Pakistan is also diverting resources for building dams from its own resources. A comprehensive climate smart agriculture program has been development under new vision for agriculture. Despite all these interventions a lot need to be done. Pakistan is willing to do more but lack of financial resources is hindering the movement. Pakistan alone cannot generate such resources. Pakistan needs assistance from international partners like World Bank, EU, Green Climate Fund and Adaptation Fund of UNFCCC etc. In the absence of international support Pakistan should continue its step-wise policy according to its’ development status.Pakistan should not fall to trap of good boy or sudden shocks to economy.Yellow West movement of France and recent riots in Iran after increase in prices of energy should be kept in mind. NEED Study can provide a better strategy and solution for Pakistan to rationalize national policy and implementation frameworks. Malik Amin Aslam, Advisor to PM for Climate Change, has better idea of study as he was the lead author of the report. The writer is Executive Director at Zalmi Foundation, Visiting Fellow SDPI