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Understanding the Effects of Water Insecurity on Micro, Small, and Medium Enterprises in Faisalabad

Climate change has direct impacts on individuals’ socio-economic status. Because of their limited coping capacity and lack of resources, poor and marginalised people are generally more vulnerable to climate shocks and stresses. Adding to this, their high dependence on natural resources as a source of income (especially in rural areas) makes them even more vulnerable to climate change effects.

This is true even for private, informal sector, which employs a majority of these rural poor communities. However, little is known about the ways in which micro, small and medium enterprises (MSMEs) are affected by climate change, their resilience, or how they can adapt.

The overarching goal of this project was to understand the effects of water insecurity on MSMEs employing people from lower socio-economic backgrounds in Pakistan. The study focused on microenterprises in the informal sector and those employing rural migrants. A qualitative analysis of institutional frameworks was carried out to inform the policy recommendations for addressing water insecurity and overcoming water-related constraints on economic growth. As a secondary objective, the study also provided useful insights into the rural-to-urban migration patterns in Faisalabad and the other fundamental challenges faced by MSMEs in the area.

Considering the fact there has been little to no research done on this important topic in Pakistan, this study – generously funded by ODI – was a pioneering exercise that addressed the following:

  1. The composition of microenterprises in Faisalabad (e.g. in terms of size, sector, employee profile, turnover, water demand)
  2. How MSMEs in Pakistan source and use water (e.g. in terms of suppliers, price, opportunity costs, indirect costs, etc.).
  3. The main water insecurities faced by MSMEs in Pakistan (e.g. availability, access, reliability, quality, cost, etc.), and the significance of water insecurity risks
  4. Whether or not employee profiles of MSMEs can provide indicators for rural-to-urban migration (e.g. number of employees/workers that are not long-term native residents).

LEAD Pakistan carried out a comprehensive survey on MSMEs in the project area, with a representative and robust sample size to relate the enterprise information to employee profiles, water demand characteristics and water insecurity dimensions.
In addition, a situational analysis was carried out through desk research, KIIs and FGDs to provide context. The analysis included information about the case study district (Faisalabad), the key enterprises that provide employment to the poor people and migrants living there and the water sources that are available in the area.

The project has resulted in a comprehensive Working Paper, policy brief and special LEAD Update, all published by LEAD Pakistan. Moreover, we are planning to hold a policy dialogue with policymakers in the Punjab provincial government, City District/Metropolitan Corporation of Faisalabad and other relevant stakeholders to share the results of our situational analysis and survey.

Implementing Partners

The Urban Unit, Government of Punjab

City District Government, Faisalabad Water and Sanitation Agency (WASA)

Tehsil Municipal Administrations (TMAs) of Faisalabad

Small and Medium Enterprises Development Authority (SMEDA)

Other Details

Start Date:10/01/2016
End Date:03/31/2017
Funded by:Overseas Development Institute (ODI)
Status:Completed

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