Greenhouse gases (GHG) are pollutants, produced by human activities, which cause an increase in surface temperature and have a serious impact on the climate. Climate change impacts production factors, causing a decrease in marginal productivity of capital and total aggregate output; this strongly affects long-run equilibrium growth. Despite having a global impact in general, climate change impacts the global south intensely and more rapidly. Currently, CO2 is being added at the level of 3ppm to the atmosphere, which will eventually build up to 750ppm by the end of the century thus raising global temperature by 4 °C. According to Climate Change experts, a rise in temperature to 3°C will have far-reaching socio-economic repercussions: 5 percent of the global GDP will be lost annually consequently. Scholars concluded that most market sector impacts of climate change have a hill shaped relationship with temperature. The colder countries of the world will, in-fact, initially benefit from warming due to reduced heating costs and cold-related health problems; temperate countries will see a moderate impact, and the warm, tropical countries of the Global South will be worst affected. Pakistan is a prime example of a country in the Global South that ,despite contributing nearly 0.6 percent to the global GHG emissions, is the eighth most vulnerable country to climate change (Akram and Hamid, 2015). The changing patterns of precipitation due to global warming hit South Asia significantly: Pakistan has been suffering from recurrent flooding over the last several years. During the 2010-11 floods, consequences worsened due to inefficiency of the land departments: the unlawful constructions of schools, buildings and settlements on the flood plains, caused mass destruction of capital stock (Hasan, 2019). Although capital stocks manage their survival, they cannot be used effectively due to overall damage to factor productivity (Stern, 2013). The devastating effects of these floods included the loss of human life, destruction of the roads, infrastructure and the country’s agricultural heartlands: rice, corn and wheat crops were drowned in the flood. The country lost 1,7000 human lives and therefore, millions of occupants displaced. As a result, the refugee crisis and the protests for government inaction and un-fulfilment of rehabilitation promises caused instability in the country. A rise in crime rates was observed due to large-scale unemployment for these internally displaced persons, causing greater political uncertainty in the country and obvious economic loss. Not only did these floods make at least 7.8 million people in Pakistan food insecure, but they also inflicted an economic loss of US$ 16 billion to the economy (lead, 2015). One of the reasons for the increased frequency of these floods was the rapid melting of the Himalayan glaciers (Sen Roy 2018). Moreover, the temperature change also caused droughts, desertification, water stress and flooding. A heat wave hit Karachi in 2015 lead to a subsequent water shortage that exists to date, and a drought in Balochistan and Tharparkar that caused large-scale deaths. In 2022, the heat wave in cholistan has caused the desert to sizzle with high temperature and absence of rainfall: around 200 water ponds have dried, causing hardships to local population and their animals, including cows and camels. Lack of infrastructure capacity, education and health care facilities were identified as major causes for high mortality, water borne and respiratory diseases. Rise in the levels of tropospheric ozone (O3) has led to lethal levels of smog in India and Pakistan (UNEP, 2000). The current smog levels in Pakistan are critically high which have resulted in the closure of schools and halted business activities, negatively impacting the economic cycle and the productivity of labour. Sea level rise is one another significant impact of climate change that yet again affects the Global South more severely. This may cause saltwater intrusion, flooding, further damage to infrastructure and a detrimental impact on the tourism industry. The higher population density concentration in these countries and their poor flood control infrastructure and planning makes them more vulnerable to this threat too. These natural disasters prevent governments from pursuing their developmental policies since they cause political unrest, social turmoil and a shift of resources and investments from current productive capital and technological advancements to reconstruction and climate change adaptation. According to Climate literature, global warming will affect the physical and cognitive performance of workers and thereby cause a decrease in effective labour supply. Extreme temperatures are injurious to health, making the labour morbid and even increasing mortality rates through the spread of diseases such as malaria. (Fankhauser and Tol, 2005). To avoid and mitigate these effects of climate, we need to adopt more environment friendly modes of production: enhance the efficiency of existing products by reducing the energy intensity used and reduce carbon intensive production and consumption (Batten 2018). These, however, have their own macroeconomic and financial burdens called transition risks (NGFS, 2019). This would require investment in: research, new technology and environment friendly (renewable) sources of energy. There will be adaptation expenditure on physical capital, such as insulations and air-conditioning. This capital is not productive per se, and will only be to prevent further losses from temperature increase.