World Bank tells Uzbekistan climate action will bring economic benefits

A transition to a carbon neutral economy will stimulate economic growth in Uzbekistan by raising productivity and creating market opportunities, a World Bank report has said.

The benefits of climate adaptation investments will be two to three times higher than the costs, according to the World Bank Country Climate and Development Report released this week.

The country’s economy might shrink by 10 percent by 2050 due to the impact of climate change, which would cause higher unemployment and poverty.

Without adaptation steps, labour productivity could drop 3.5 percent, livestock productivity by 16 percent, hydropower potential by 9 percent, and cotton production by 8 percent, the report said.

Uzbekistan is already suffering from the effects of climate change — droughts, extreme heat, rainfall volatility, and dust storms. The damage to people’s health from environmental pollution costs 6.5 percent of GDP annually.

The report said that the economic reforms started by President Shavkat Mirziyoyev in 2016 have resulted in higher economic growth and the reduction of poverty but failed to create enough new jobs.

Meanwhile, the country is experiencing a rapid demographic growth – the population is expected to be over 50m people by 2050 – which coupled with the steady economic growth in recent years will cause a significant growth in emissions.

“Uzbekistan must now complete a tougher phase of reforms to deliver lasting change for people,” the report said.

The Uzbek government has set an ambitious goal to achieve carbon neutrality by 2060.

To achieve that, it needs to rethink its energy supply structure – the country’s own gas production is depleting, while domestic consumption is growing. In the past winter the country faced an acute energy crisis, the World Bank report said.

It recommended a more efficient use of natural gas and diversification away from natural gas in transport and heating.

The Bank’s report said that Uzbek natural gas consumption would decline by 40 percent in a net zero 2060 scenario.

Keeping to this scenario would strengthen the country’s energy security, reducing dependence on imported natural gas to 8 percent by 2060. If no action is taken, natural gas imports could reach 66 percent by that year.

The report said that renewables could provide 70 percent of domestic energy supply by 2060, and over 85 percent when combined with hydrogen, and domestic extraction and production.

Another serious problem linked to climate change is shrinking water resources.

World Bank projections show that water availability in the main rivers will be down by up to 15 percent by 2050, which would result in water shortages of 15bn cu.m. by 2050.

To adapt, Uzbekistan would need to invest an additional 46.7bn dollars over 2023–2060 in the labour productivity, roads and bridges, livestock, and irrigation sectors alone in the wet/warm scenario and 59.8bn dollars in the dry/hot scenario, the report said.

Investment costs for modernizing the irrigation and drainage system are estimated at 6bn dollars between 2023 and 2030.

The World Bank also urged the expansion of Uzbekistan’s private sector to absorb the costs and take advantage of the opportunities of the green transition.

Decarbonization would bring an estimated 178bn dollars to the infrastructure sector between 2023 to 2060, it said.

The report added that if Uzbekistan succeeded in creating a green economy, apart from ensuring growth, it could be making more than 2bn dollars annually in potential exports to serve current green value chains.

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