Challenges and Opportunities – Diplomat

Uzbekistan has made significant strides to incorporate sustainable practices into its overall economic planning. The country began the transition from a planned economy to a market economy in 2016. The country has realized the need to intensify economic transformation using a “green” approach. The government has committed itself to building a more sustainable economic model.

Namely, Decree of the President signed in December 2022 outlines certain reforms that the authorities will have to carry out in this area. It adopted the Action Plan for the Transition to a Green Economy and Green Growth 2030, which includes measures to address current environmental and economic challenges in order to achieve green, sustainable and inclusive development.

Recent World Bank Report, which was prepared in collaboration with the Ministry of Economic Development and Poverty Reduction and other government agencies of Uzbekistan, analyzes the challenges and opportunities for the country’s transition to a green economy. It identifies the most urgent environmental and other risks and recommends policy changes and measures, some of which, such as energy efficiency measures and landscape restoration programs, benefit the economy and the environment at the same time. This article summarizes some of the findings report.

chart a green course

Uzbekistan will have to improve resource management. The country’s resource efficiency is much lower than in the European Union and other upper-middle-income countries. Water use in Uzbekistan is particularly inefficient, and the country’s energy consumption per unit of GDP is about three times higher than the average for the Europe and Central Asia region and twice that of neighboring Kazakhstan.

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Meanwhile, particulate air pollution from urban and industrial sources is exacerbated by windblown sand and dust from degraded land. A large proportion of the population is regularly exposed to air quality that is considered unhealthy. Land degradation is particularly costly to the economy and is driven by these intertwined environmental issues.

To realize its environmental ambitions, Uzbekistan will have to address these and other challenges, which are divided into three time frames: urgent, short-term and long-term. Given the country’s agriculture-driven economy and the gradual deterioration of air conditions in densely populated areas, its most pressing green priorities will be to improve air quality and use land and water sustainably. This can be achieved through landscape restoration, effective water management and measures to reduce air pollution.

Sustainable land use is an important practice that needs to be expanded in Uzbekistan. Climate-smart farming practices will further improve the sustainability of land use. In the longer term, the country should move away from agriculture towards more profitable and high-paying sectors. This will require the retraining of part of the agricultural labor force, in particular the most vulnerable women and youth.

Improving water use efficiency through water pricing and investment in irrigation should be a top priority, with some restrictions on water use as part of these new priorities. A prudent low-carbon policy will provide the necessary incentives for the transition to low-carbon energy and energy efficiency in Uzbekistan.

An analysis of the International Monetary Fund and World Bank Carbon Price Tool shows that in the case of Uzbekistan, carbon pricing can generate up to 5 percent of GDP in additional tax revenue that can be used to fund green projects or to mitigate economic impacts on households. most affected by the green transition.

In addition, job creation and resource redistribution strategies can help reduce some of the social costs of transitioning to a green economy. The global environmental transition presents significant opportunities for job creation and environmental sustainability, and Uzbekistan is well positioned to seize these opportunities.

Sectors that optimize both jobs and environmental outcomes include healthcare, education, finance, and clean mining. Agriculture, already the country’s largest employment sector, can provide even more green jobs and improve livelihoods by shifting to more profitable industries and optimizing land use through ecosystem services. In addition, a longer list of sectors based on renewable energy and other innovative technologies with similar green potential deserves further analysis.

Engaging the public sector and green finance is critical to ensure the success of the green transition. Policy action must close the funding gap while reducing social costs by creating new jobs in greener sectors. In addition, the policy should provide for the retraining, redistribution and social support of the most affected. These measures can become part of the Long-Term Decarbonization Strategy, which is currently being developed by the Uzbek authorities with the support of the World Bank.

Staying Green: From Challenges to Opportunities

As the world moves towards a more sustainable future, Uzbekistan faces major challenges in meeting global energy targets, especially in terms of high energy and carbon intensity. These conditions leave the country vulnerable to foreign trade policy and carbon frontier adjustment taxes. However, Uzbekistan can turn this challenge into an opportunity by embracing the global environmental transition and strengthening environmental and climate policies.

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As more countries adopt low-carbon policies to combat climate change, global demand for carbon-intensive products is predicted to decline in the medium to long term. This is likely to have a negative impact on Uzbekistan’s carbon-intensive exports, impacting the country’s GDP and wealth. Under different policy scenarios not only natural gas and oil of Uzbekistan, but also the export of carbon-intensive goods may be affected by 2050, including those that will face border taxes on carbon-intensive products.

In order not to be tied to technologies and systems that will later be much more expensive to give up, Uzbekistan must immediately begin the process of greening its economy. The prioritization of environmental objectives should be an integral part of ongoing efforts towards a broader transition to a market economy. Other green measures, such as improved resource efficiency and the development of green employment and finance, could also bring short-term benefits to Uzbekistan.

However, the country must also consider the impact of the transition to a green economy on society. Supporting green sectors and moving away from carbon and resource-intensive activities will change the pattern of investment and job creation, creating winners and losers. It is critical to support the most affected communities. These values ​​are at the center of just transition efforts.

The World Bank is committed to supporting Uzbekistan’s efforts to achieve green and inclusive growth. By adopting the right mix of environmental policies and reforms, a country can reap the benefits of a green, sustainable and inclusive future. As the global environmental transition opens up numerous opportunities for economic growth and development, Uzbekistan must pursue sustainable policies to secure its future.