EBRD backs Kazakhstan’s irrigation system upgrade

The European Bank for Reconstruction and Development has just approved a $180 million financing package that will help Kazakhstan upgrade its ailing irrigation system in the regions of Aktobe, Zhambyl and South Kazakhstan.

According to the development bank, which made the announcement during its annual meeting in Cyprus on Wednesday, Kazakhstan’s water and irrigation systems are highly inefficient due to old canals that lead to high levels of water loss. Furthermore, only 55 percent of the country’s developed areas have access to the water network.

Kazakhstan’s arid climate and geography, which is mainly steppe and desert, as well as the desertification of areas that were previously suitable for agriculture but are not any longer, make upgrading the irrigation system critically important.

The loan facility, along with government funds, will finance new water connections and water meters and will facilitate the use of modern-drip technologies.

“These improvements will result in huge water-efficiency savings – at least 180 million cubic meters of water saved per year – which will make water supplies and irrigation systems more able to cope with changing climate conditions and increasing water stress,” the bank said in a statement.

The EBRD is also collaborating with Kazakhstan’s authorities on tariff reform to help Kazvodkhoz, the country’s water operator and loan recipient, make the new irrigation systems financially sustainable in the long term.

“Green and resilient are two of the qualities of a modern economy, according to the EBRD’s new transition concept,” said EBRD first vice president Phil Bennett, referring to the bank’s Green Economy Transition strategy, which aims to increase EBRD’s share of green financing up to 40 percent of total annual investment volume by 2020.

“Providing sustainable and climate-resilient irrigation to rural areas in Kazakhstan will allow some of these places quite literally to blossom and create tens of thousands of jobs, including in small and medium-sized businesses,” he added. According to the bank, improved water access could help create up to 40,000 rural jobs across the country.

The Islamic Development Bank and the World Bank have also provided loans – $160 million in 2016 and $103 million in 2013, respectively – for a number of irrigation projects in the Almaty and Kyzylorda regions.

Kazakhstan grows a number of crops, such as barley, oats, corn and rice. However, its main commodity is wheat with the USDA’s Foreign Agricultural Service estimating production for 2017/18 at 13 million metric tons (MMT), 2MMT less than the previous year due to a decrease in the sown area.

According to the USDA’s FAS, “weather plays a significant role in quantity and quality of Kazakhstani wheat production.”

Citing data from the Kazakhstan Statistics Service and Kazakhstani Ministry of Agriculture, FAS notes that the country’s wheat and grain production exhibits a cyclical pattern particularly from 2004 to 2009 and then again from 2012 to 2016.

“Grain experts note, that the dramatic volatility of the wheat yields is mainly happening due to the sharply continental climate in the North of Kazakhstan,” FAS stated in its Kazakhstan grain and feed annual report last month.