Central Asia will need to raise an additional $12 billion in investment to provide clean drinking water to its entire population by the year 2030
Almost 10 million people have poor access to safe drinking water in Central Asia. Water withdrawals for drinking and domestic uses increased twofold between 1994 and 2020, yet investments in drinking water supply infrastructure were inadequate to match that growth. As a result, water and sanitation equipment wear and tear is extremely high. To solve the problem, the sector needs additional investments of about $2 billion per year between 2025 and 2030. Given the high priority of drinking water supply in ensuring public health and the scope of existing challenges, the region needs an integrated approach. The new EDB research “Drinking Water Supply and Sanitation in Central Asia” proposes a broad range of practical steps required to implement that approach.
Almaty, 28 June 2024. Water security in many regions of the world is currently under threat. According to the UN, about 2 billion people have no access to safe drinking water, and 3.6 billion people have no access to safe sanitation. Over 40% of people in the world live in regions afflicted with a critical shortage of water. More than 80% of domestic wastewater in developing countries is dumped into rivers and seas without preliminary treatment. Water pollution undermines global water supply security. It is projected that by 2025 about 33% of the world’s river sub-basins will be affected by water scarcity caused primarily by water pollution and the confluence of hydrologic and climatic factors.
The situation is set to deteriorate in the longer term. Drinking water consumption will increase by more than 50% by 2050. The key driver is population growth, primarily in urban areas: by 2050, 70% of people in the world will be living in towns and cities. Water supply, in turn, will be affected by the adverse impact of climate change, ageing infrastructure, and declining water quality. That is why water security and sustainable sanitation comprise a separate Sustainable Development Goal – SDG 6.
In Central Asia (‘CA’), the challenges of access to and treatment of drinking water are even greater, with 10 million people, or 14% of the population, having no access to safe drinking water. Water withdrawals for drinking and domestic uses increased twofold to reach 8.6 km3 between 1994 and 2020, while investments in drinking water supply infrastructure failed to match that consumption growth. As a result, water and sanitation equipment wear and tear is extremely high, reaching 80% in CA according to some estimates. Physical and commercial water losses in distribution networks can be as high as 55%. In all CA countries, the poor state of repair of water and sanitation infrastructure facilities impedes their proper operation, making it more difficult to produce high-quality drinking water.
The scope of financial support for water and sanitation sector development plans and programmes adopted in CA is clearly insufficient to ensure the achievement of SDG 6 by 2030. A comparison of planned (anticipated) and projected 2025–2030 financing commitments leads to the conclusion that the region is facing a deficit of more than $12 billion over the period, or about $2 billion per year. The largest financing shortfall among the countries of the region is expected to occur in Uzbekistan: $826 million per year, or almost $5 billion in 2025–2030. A large financing shortfall is also projected for Kazakhstan at $700 million per year, or $4.2 billion in 2025–2030. In Tajikistan, the financing shortfall will also be significant given the size of the country’s economy, reaching $209 million per year, or more than $1.2 billion in 2025–2030.
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Figure A. Water Intake by the Utility and Household Sector in Central Asia, km3/year, 1994–2020
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Figure B. Estimated CA Financing Shortfall, $ million and %, 2025–2030
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Source: compiled by EDB experts using data provided by 
Source: compiled by EDB experts based on data published by the UN and government agencies.
The CA countries are facing a major challenge: they need to raise financing for their water and sanitation sector. Among the numerous solutions described in the paper, three could help to raise the required investment capital.
First, the funding gap can be reduced by actively attracting financing from international financial organisations, multilateral development banks, development agencies, etc. (“IFIs”). These institutions wield a significant potential for the financing of the water and sanitation sector in CA. At this time, the sector accounts for only 6% of total IFI-approved sovereign funding provided to the CA countries, with 147 projects valued at $4 billion (out of a total of $67.5 billion) completed in 2008–2023. However, as the sector’s investment appeal improves, IFIs may resolve to become more actively involved in its financing. The potential of the corporate financing segment can also become significant with the emergence of a new favourable institutional environment and the arrival of private players.
Second, the CA water and sanitation sector needs private investments and large players. To attract them, it will be necessary not only to modify the ownership and governance structure, but also to create conditions conducive to effective development of market relations in that area. In the opinion of Evgeny Vinokurov, EDB Chief Economist, “the strengthening of public-private partnership institutions can be of great help. With PPPs active in the water sector, state and private structures will be able to cooperate in a more productive fashion. Expansion of the water sector services market will boost competitiveness and improve the operating efficiency of individual companies. The presence of strong PPP institutions is likely to encourage private operators to join water sector projects. The advent of private players will help the CA countries to attract investments and gain access to innovations, technologies, and experience required to modernise the sector.”
Third, the case to improve the tariff system is becoming increasingly compelling. With current water tariffs in the region being extremely low, the CA countries can partially hike them to improve the financial sustainability of water and sanitation companies. This will stimulate investments in the development of infrastructure and improve the quality of services. The CA countries can also delegate their tariff approval and review functions to the companies operating in the sector, with control functions vested in local government bodies or independent regulatory bodies. International best practices indicate that it is important for water and sanitation companies to retain state support in the form of subsidies and soft loans, as well as to preserve targeted subsidies for low-income and socially disadvantaged groups of the population.
The implementation of investment projects in the water and sanitation sector can have a significant economic impact. These projects are vital for public health, education, and social well-being. Investments in drinking water supply and treatment infrastructure produce a considerable multiplier effect for the economy. Each dollar invested in CA projects designed to upgrade that infrastructure will, on average, generate three additional dollars.
The proposed financial solutions must be accompanied by institutional and technical measures. Such measures, as a whole, constitute a major component of the integrated approach formulated in the EDB paper.
The full text of the paper “Drinking Water Supply and Sanitation in Central Asia” is available on the Bank’s website. The link also provides access to supplementary materials: an in-depth presentation, videos, summary, and key conclusions. The paper continues the series of EDB research publications dedicated to the development of the water and energy complex of Central Asia. Some of the previous publications include the following:
Additional Information:
Eurasian Development Bank is an international financial organisation investing in the Eurasian space. For more than 17 years, the EDB has worked to strengthen and expand economic ties and foster comprehensive development in its member countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. The EDB's charter capital totals $7 billion. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing, and mechanical engineering. In its operations, the Bank adheres to the UN Sustainable Development Goals and ESG principles.
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