Dr. Iskandar Abdullaev, Deputy Director Two of the CAREC Institute, presented at the Asia Water Forum on the issues of promoting sustainable financing and private participation in the Central Asian water infrastructure. The Asia Water Forum was organized by the Asian Development Bank under the title of “Toward a Resilient and Water-Secure Asia and the Pacific” from 8 to 11 August 2022.
The Asia Water Forum provides a platform for sharing knowledge on water information, innovation, and technology. It aims at discussing ways to identify and adopt innovations that best address the requirements for a resilient and water-secure Asia and the Pacific, and to keep the profile of water high on the region’s development agenda.
Dr. Abdullaev spoke about water sector problems in the Central Asian region, which are exacerbating due to climate change and increasing demand for water. Water remains the main engine of social and economic development in Central Asia, and access to water resources is a key economic, social, and political priority of national governments in the region. However, the region is already facing water shortages because of the impact of climate change. Projections show that the per capita water supply in Central Asia will decrease from 2500 to 1400 cubic meters/per capita per annum. The impact of climate change and the growing demand for water because of the increasing population are leading to stronger regional competition for water resources, which may limit the future economic development of the region.
The Central Asian region faces high demand for infrastructure financing, which amounts to 8-10% of GDP per annum. The World Bank estimates that the Central Asian region needs investments of at least US$20-25 billion to restore or expand outdated and develop new infrastructure. However, countries’ investment opportunities are limited due to infrastructure bottlenecks and high public debt. The participation of the private sector in investments in the water sector is practically non-existent due to the lack of investment incentives. As a result, the water sector is predominantly financed from state budgets and managed by state or semi-state organizations. Current government funding is insufficient to meet the growing needs, leading to the deterioration of the water supply infrastructure.
In his closing remarks, Dr. Abdullaev presented policy recommendations for improving private sector participation in water sector finance in the Central Asian region. He emphasized the importance of introducing public-private partnerships in the field of irrigation services, improving the legal framework and investment climate for private sector participation, increasing efficiency, accountability, and transparency in water management, promoting integrated water resources management, building the necessary skills, reforming the agriculture sector to generate higher demand for private sector water services, leasing irrigation facilities to the private sector, etc. Dr. Abdullaev proposed the creation of a water-energy consortium for Syr Darya and Amu Darya to jointly finance and operate transboundary infrastructure. Such a consortium will enhance the region’s ability to access international funding, which could benefit regional water infrastructure.