New Policy Brief on Financing Mechanisms for Water Management in Central Asia

Jun 2024; Georg Petersen, CAREC Institute

Central Asia’s water management is affected by outdated infrastructure along with limited funding for its upgrading from the government. The inefficient water management system can affect economic growth, agricultural productivity and public health, requiring alternative financing strategies. CAREC Institute’s recently published policy brief integrates a review of academic literature, the analysis of current policy frameworks and the empirical evaluation of the current situation in Central Asia related to existing and new financing mechanisms for water-related projects.

The limited investment and Soviet-era management practices have left Central Asia’s water sector ill-equipped to respond to increasing demand driven by population growth and climate change. Upgrades to infrastructure and an efficient management system are key factors for the long-term stability of the region’s economy.

Current national budgetary funding does not match the needs of maintenance or development of water infrastructure. A comprehensive approach must be adopted, where the fees for the provided water services cover the maintenance and operation costs. To achieve these goals, Central Asian governments should improve the metering and billing systems and start regulatory reforms to attract private investments.

Revision of tariffs, engagement with international development banks, clear PPP frameworks, regional collaboration and civil society participation can help improve water financing mechanisms. These steps will lead to a more sustainable and resilient path for Central Asian waters’ future purposes.

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