UZBEKISTAN CLIMATE ADAPTATION AND RESILIENCE ASSESSMENT MINISTRY OF ECOLOGY, ENVIRONMENTAL PROTECTION AND CLIMATE CHANGE OF THE REPUBLIC OF UZBEKISTAN Uzbekistan Climate Adaptation and Resilience Assessment May 2024 © 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of the World Bank Group with external contributors. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information or liability concerning the use of or failure to use the information, methods, processes, or conclusions set forth. 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Contents Acknowledgments..................................................................................................................................................................................... iv 2.4 Help firms and people manage residual risks and natural disasters....................................................................................................................................................................42 Acronyms................................................................................................................................................................................................................................ v 2.4.1 Priority Action 3.1: Save lives (and money) Abstract.................................................................................................................................................................................................................................... vi with hydromet, early warning, and emergency Executive Summary............................................................................................................................................................................... 1 management systems..................................................................................................................................................................42 CHAPTER 1. Introduction................................................................................................................................................. 5 2.4.2 Priority Action 3.2: Provide all firms and households with risk management instruments............................................. 43 CHAPTER 2. The Adaptation Principles Approach...........................13 2.4.3 Priority Action 3.3: Develop the insurance sector, 2.1 Key findings and recommendations...............................................................................15 building on public-private partnerships....................................................................................44 2.1.1 Lay the foundations for adaptation through rapid, 2.4.4 Priority Action 3.4: Build a social protection robust, and inclusive development.........................................................................................................15 system that is responsive to shocks.................................................................................................. 45 2.1.2 Priority Action 1.1: Increase economic productivity 2.4.5 Priority Action 3.5: Help firms develop business and growth while keeping buffers for shocks...........................................................16 continuity plans and financial preparedness............................................................. 45 2.1.3 Priority Action 1.2: Ensure that economic 2.4.6 Priority Action 3.6: Be prepared to build back growth is inclusive....................................................................................................................................................................................18 better after disasters with contingency plans and financing..........................................................................................................................................................................................................46 2.2 Facilitate the adaptation of people and firms..................................22 2.5 Manage financial and macro fiscal issues...................................................47 2.2.1 Priority Action 2.1: Assess climate and disaster risks and make this information available...................................................................................................22 2.5.1 Priority Action 4.1: Include contingent liabilities from natural disasters and environmental shocks in the 2.2.2 Priority Action 2.2: Clarify responsibilities and align planning and budgeting process....................................................................................................................47 incentives with resilience and adaptation objectives.......................24 2.5.2 Priority Action 4.2: Develop a financial 2.2.3 Priority Action 2.3: Facilitate access to strategy to manage contingent liabilities, technical solutions for resilience through R&D combining multiple instruments....................................................................................................................48 and trade policies.....................................................................................................................................................................................24 2.5.3 Priority Action 4.3: Anticipate and plan 2.2.4 Priority Action 1.4: Ensure financing is available for long-term macroeconomic impacts.................................................................................... 49 to all and provide support to the poorest and most vulnerable people..................................................................................................................................................................................... 26 2.5.4 Priority Action 4.4: Communicate and mitigate the disaster and climate risk exposure of the financial sector 2.2.5 Priority Action 1.5: Facilitate structural change in the and pension systems..................................................................................................................................................................... 50 economic system....................................................................................................................................................................................... 27 2.6 Priority Action 6: Application prioritization, 2.3 Adapt urban and land use plans and protect critical implementation, and progress monitoring.................................................................51 public assets and services.......................................................................................................................................... 29 2.6.1 Priority Action 6.1: Create a strong institutional 2.3.1 Priority Action 3.1: Identify critical public and legal framework with appropriate stakeholder assets and services............................................................................................................................................................................ 29 involvement............................................................................................................................................................................................................... 52 2.3.2 Priority Action 3.2: Design and implement a 2.6.2 Priority Action 6.2: Design an adaptation and government-wide strategy to increase the resilience resilience strategy with prioritized actions.................................................................... 52 of infrastructure systems and public assets.................................................................31 2.6.3 Priority Action 6.3: Set concrete sector-level 2.3.3 Priority Action 2.3: Revise land use plans and urban targets to guide implementation by line ministries................................. 53 plans to make them risk-informed.............................................................................................................31 2.6.4 Priority Action 6.4: Screen all public policies and 2.3.4 Priority Action 2.4: Increase the resilience expenditures for climate and disaster risks and align them of the agriculture sector and ensure food security............. 33 with adaptation targets...........................................................................................................................................................54 2.3.5 Priority Action 2.5: Increase the resilience of water 2.6.5 Priority Action 6.5: Allocate appropriate funding infrastructure and water resources management..................................... 35 to the adaptation strategy..............................................................................................................................................54 2.3.6 Priority Action 2.6: Design and implement a 2.6.6 Priority Action 6.6: Track progress over time and government-wide strategy to increase the resilience review and revise the strategy............................................................................................................................55 of the health system.........................................................................................................................................................................38 2.3.7 Priority Action 2.7: Design and implement a CHAPTER 3. Conclusions and the Way Forward..................................... 57 government-wide strategy to increase the resilience References................................................................................................................................................................................................................ 60 of the educational system................................................................................................................................................ 39 Appendix 1: Summary Scores..............................................................................................................................64 2.3.8 Priority Action 2.8: Ensure the resilience of forests and other natural ecosystems............................................................................................................................. 39 Appendix 2: Definition of Key Terms...............................................................................................65 Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS i Contents List of Figures Figure 23: Uzbekistan: aggregated functional composition of agricultural public expenditure....................................................................................................... 25 Figure ES-1: Overview of Uzbekistan’s adaptation and resilience preparedness............................................................................................................................................ 1 Figure 24: Enterprise innovation indicators for Uzbekistan and other countries...................................................................................................................... 26 Figure ES-2: Summary scores, adaptation and resilience assessment of Uzbekistan.................................................................................................................................................... 2 Figure 25: Priority Action 1.4: Ensure financing is available to all and provide support to the poorest and most Figure 1: Share of natural capital in Uzbekistan relative to vulnerable people..................................................................................................................................................................................... 26 peer countries.......................................................................................................................................................................................................... 6 Figure 26: Account ownership at a financial institution Figure 2: Natural capital, per capita, Uzbekistan................................................... 6 or with a mobile money-service provider, poorest 40% (% of population ages 15+)............................................................................... 27 Figure 3: Key water indicators, Uzbekistan and Europe and Central Asian countries.................................................................................................................................................................. 7 Figure 27: Summary Priority Action 1.5: Facilitate structural change in the economic system..................................................................... 28 Figure 4: Evolution of renewable internal freshwater resources, per capita (m3), Uzbekistan............................................................................................ 7 Figure 28: Uzbekistan export composition..................................................................... 28 Figure 5: Rainfed Crop Production Shock, 2041–2050..................... 7 Figure 29: Overview of adaptation and resilience assessment for adapting land use plans and protecting Figure 6: Change in livestock productivity due critical public assets......................................................................................................................................................................... 29 to climate change compared to historical values (in kg/animal/year)....................................................................................................................................................................................... 8 Figure 30: Summary Priority Action 3.1: Identify critical public assets and services..............................................................................................................................................30 Figure 7: Probability of natural shocks in Uzbekistan........................... 9 Figure 31: The Energy Architecture Performance Index Figure 8: Population density and climate risks 2017, sustainability...............................................................................................................................................................................30 in Uzbekistan............................................................................................................................................................................................................. 11 Figure 32: The Logistics Performance Index 2017 ..................................31 Figure 9: The adaptation principles framework...................................................13 Figure 33: Priority Action 3.2: Design and implement a Figure 10: Traffic light rating system for adaptation and government-wide strategy to increase the resilience of resilience assessment for Uzbekistan............................................................................................ 14 infrastructure systems and public assets............................................................................31 Figure 11: Results lay the foundations for adaptation Figure 34: Summary Priority Action 2.3: Revise land use through rapid, robust, and inclusive development......................................16 plans and urban plans to make them risk-informed................................32 Figure 12: Overview of progress on indicators for Priority Figure 35: Summary Priority Action 2.4: Increase the Action 1.1 (Increase economic productivity and growth resilience of the agriculture sector and ensure food while keeping buffers for shocks)...............................................................................................................16 security.................................................................................................................................................................................................................................. 33 Figure 13: External debt stock (2009-2020)................................................................17 Figure 36: Uzbekistan’s food security index relative to selected countries................................................................................................................................................................................. 34 Figure 14: GDP growth (%) (2009-2020)..................................................................................17 Figure 37: Summary Priority Action 2.5: Increase Figure 15: GDP growth (%) (2009-2020).................................................................................17 resilience of water infrastructure and water resources Figure 16: Adjusted net savings (%GNI).......................................................................................17 management.......................................................................................................................................................................................................... 35 Figure 17: Fiscal deficit, public debt, and inflation in Figure 38: Annual freshwater withdrawals...................................................................... 36 Uzbekistan......................................................................................................................................................................................................................18 Figure 39: Water productivity............................................................................................................................... 36 Figure 18: Overview of indicators for inclusive economic Figure 40: Irrigation water productivity by oblast, 2020.........37 growth.........................................................................................................................................................................................................................................19 Figure 41: Priority Action 2.6: Summary design and Figure 19: Overview of adaptation and resilience implement a government-wide strategy to increase the assessment of people and firms....................................................................................................................22 resilience of the health system..........................................................................................................................38 Figure 20: Benchmark scores for Priority Action 2.1: Figure 42: Summary Priority Action 2.7: Design and Assess climate and disaster risks and make this implement a government wide strategy to increase the information available...................................................................................................................................................................... 23 resilience of the educational system................................................................................................ 39 Figure 21: Benchmark Priority Action 1.2: Clarify Figure 43: Summary Priority Action 2.8: Ensure responsibilities and align incentives with resilience resilience of forests and other natural ecosystems............................. 40 and adaptation objectives................................................................................................................................................24 Figure 44: Biodiversity and habitat rank............................................................................... 40 Figure 22: Summary Priority Action 2.3: Facilitate access to technical solutions for resilience through Figure 45: 10-year change in biodiversity and R&D and trade policies.............................................................................................................................................................. 25 habitat index........................................................................................................................................................................................................... 40 ii CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Contents Figure 46: Composite map highlighting hotspots of risk Figure 61: Summary Priority Action 6.1: Create a strong from climate change, land degradation, natural hazards, institutional and legal framework with appropriate and population pressures in Uzbekistan................................................................................... 41 stakeholder involvement.................................................................................................................................................... 52 Figure 47: Summary—help firms and people manage Figure 62: Summary Priority Action 6.2: Design an residual risks and natural disasters.......................................................................................................42 adaptation and resilience strategy with prioritized actions...................................................................................................................................................................................................................................... 52 Figure 48: Summary Priority Action 3.1: Save lives (and money) with hydromet, early warning, and emergency Figure 63: Summary Priority Action 6.3: Set concrete management systems................................................................................................................................................................. 43 sector-level targets to guide implementation by line ministries.......................................................................................................................................................................................................................... 53 Figure 49: Summary Priority Action 3.3: Develop the insurance sector, building on public-private partnerships.44 Figure 64: Summary Priority Action 6.4: Screen all public policies and expenditures for climate and disaster risks Figure 50: Summary Priority Action 3.4: Build a social and align them with adaptation targets....................................................................................54 protection system that is responsive to shocks............................................... 45 Figure 65: Summary Priority Action 6.5: Allocate Figure 51: Summary Priority Action 3.5: Help firms appropriate funding to the adaptation strategy .............................................54 develop business continuity plans and financial preparedness.......................................................................................................................................................................................................46 Figure 66: Summary Priority Action 6.6: Track progress over time and review and revise the strategy..........................................................55 Figure 52: Generator ownership (% firms) .......................................................................46 Figure 67: Summary scores: adaptation and resilience Figure 53: Revenue losses due to outages (% firms)..........................46 assessment Uzbekistan......................................................................................................................................................... 57 Figure 54: Priority Action 3.6: Be prepared to build back better after disasters with contingency plans List of Boxes and financing...........................................................................................................................................................................................................47 Box 1.2: Enhance environmental monitoring and access Figure 55: Adaptation and resilience assessment to information, public participation, and education overview for managing financial and macro-fiscal on the environment so that households and firms have issues............................................................................................................................................................................................................................................47 adequate instruments to adapt........................................................................................................................ 43 Figure 56: Summary Priority Action 4.1: Include Box 1.3: Enhance allocative and implementation efficiency contingent liabilities from natural disasters and of agricultural public expenditure and programs........................................... 49 environmental shocks in the planning and budgeting process...................................................................................................................................................................................................................................48 Figure 57: Summary Priority Action 4.2: Develop a List of Tables financial strategy to manage contingent liabilities, Table 1: Adaptation and Resilience principles and combining multiple instruments....................................................................................................................48 proposed actions to fill gaps............................................................................................................................................3 Figure 58: Priority Action 4.3: Anticipate and plan for Table 2: Summary sector nexus and climate change long-term macroeconomic impacts.................................................................................................... 49 adaptation impact pathways.......................................................................................................................................... 9 Figure 59: Summary Priority Action 4.4: Communicate Table 3: Uzbekistan’s critical environmental and mitigate the disaster and climate risk exposure sustainability indicators...........................................................................................................................................................10 of the financial sector and pension systems.............................................................. 50 Table 4: Criteria for selecting benchmark countries and Figure 60: Adaptation and Resilience assessment country groups for Uzbekistan ........................................................................................................................... 14 for application: prioritization, implementation,and monitoring progress...........................................................................................................................................................................51 Table 5: Uzbekistan’s water situation.............................................................................................. 36 Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS iii Acknowledgments This Adaptation and Resilience Assessment report was produced by a core World Bank team led by Paola Agostini (Lead Natural Resources Specialist) and Elena Strukova Golub (Senior Environmental Economist). The team included Serge Mandiefe Piabuo (Environmental Economist Consultant), Jia Li (Senior Economist), and Sandjar Babaev (Consultant). Nigara Abate (Senior Communications and Knowledge Management Specialist) prepared the report for publication. This assessment was produced under the overall guidance of Marco Mantovanelli (Country Manager for Uzbekistan), Sanjay Srivastava (Practice Manager for Environment, Natural Resources, and Blue Economy in the Europe and Central Asia Sustainable Development Department), and Sameh Naguib Wahba (Regional Director, Sustainable Development, Europe and Central Asia Region). The team also thanks Thomas Farole (Lead Economist) for support and guidance. The report was produced in collaboration with the Ministry of Economy and Finance, the Ministry of Ecology, Environmental Protection and Climate Change. The team would like to extend its deep gratitude to the technical staff of the State Committee on Forestry of the Republic of Uzbekistan, the Ministry of Economy and Finance, the Ministry of Ecology, Environmental Protection and Climate Change, the Ministry of Agriculture, and the Ministry of Water Management for their input and generous support. The team also thanks the peer reviewers from the World Bank: Jane Olga Ebinger (Sector Leader), Julie Rozenberg (Senior Economist), Julian Lee (Senior Climate Change Specialist), and Andrea Liverani (Lead Specialist) for their detailed comments and invaluable guidance. The team is grateful to Linh Van Nguyen (Senior Program Assistant) and Grace O. Aguilar (Program Assistant) for their project management support. This work was supported by PROGREEN, SDG Partnership Fund, and by UK International Development under EGED; however, the views expressed herein do not necessarily reflect the UK government’s official policies. iv CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Acronyms ALMPs Active Labor Market Policies DRM Disaster Risk Management ECA Europe and Central Asia ECI Economic Complexity Index ESC Employment Support Centers ESD Education for Sustainable Development HBS Household Budget Survey GDP Gross Domestic Product GHG Greenhouse Gas GSCHS Government System of Prevention and Activities in Emergency Situations GSS General Support Services HCI Human Capital Investment ICT Information and Communication Technology IWRM Integrated Water Resources Management L2CU Listening to the Citizens of Uzbekistan LIFA Low-Income Family Allowance LMICs Lower-Middle-Income countries MACs Maximum Allowable Concentrations MELR Ministry of Employment and Labor Relations MES Ministry of Emergency Situations MTEF Medium-Term Expenditure Framework NBSAP National Biodiversity Strategy and Action Plan NDC National Determined Contribution NGO Non-Governmental Organization NSSD National Strategy for Sustainable Development OECD Organization for Economic Cooperation and Development OOP Out of Pocket PAs Protected Areas PPPs Public-Private Partnerships R&D Research and Development RBMPs River Basin Management Plans RISE Regulatory Indicators for Sustainable Energy SEA Strategic Environmental Assessment SME Small and Medium-Sized Enterprises SOE State-Owned Enterprise SP Social Protection SR Social Registry STI Science, Technology, And Innovation SVR Social and Vocational Rehabilitation UMIC Upper-Middle-Income Countries UNFCCC United Nations Framework Convention on Climate Change TNC Third National Communication WSS Water Supply and Sanitation Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS v Abstract This report is part of the support package for Uzbekistan to realize an Inclusive Green Growth Transition. The recent Presidential Decree No. PP-436 02.12.2022 “On measures aimed at increasing the effectiveness of reforms with the goal of transition of the Republic of Uzbekistan to a ‘green’ economy until 2030” shows the country’s resolve to achieve sustainable growth. This report uses the adaptation principles to perform an economy-wide assessment of Uzbekistan’s adaptation and resilience. The report aims to identify key gaps and propose critical actions and policy recommendations that will facilitate the transition towards a ‘green’ economy by 2030. The report analyzes the foundation for inclusive economic growth, existing mechanisms to facilitate the adaptation of people and firms, and policies and actions to adapt land use and protect critical public assets and services. It also explores how the system helps firms and people manage residual risks and natural disasters and investigates how financial and macro-fiscal issues are managed. Lastly, this report explores Uzbekistan’s current prioritization, implementation, and progress monitoring system of adaptation and resilience. vi CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Executive Summary Uzbekistan’s geographic and socio-economic Significant progress has been made to ensure configuration makes it very vulnerable to climate economic growth even in the presence of multiple change. Uzbekistan is the most populous country in risks facing the country. However, Uzbekistan needs Central Asia. Landlocked and covering about 450,000 to do more to ensure that its economic growth is km2, it is dominated by large deserts. The country’s inclusive, which is the key to advancing on a resilient topographic and climatic profile causes its growing path. This includes ensuring increased access to finance population to suffer from the impacts of climate (account ownership at a financial institution or with change. By 2040, Uzbekistan is expected to be the 29 th a mobile money-service provider) for the bottom 40 most water-stressed country in the world. 1 The country percent, access to safe sanitation, universal health care, is equally prone to earthquakes, droughts, and floods, information and communication technology (ICT), and which affect about 1.4 million people yearly and cause social protections. the economy to lose about 5 percent of GDP. Poorer 2 Progress has been made in helping firms and households are disproportionately affected by climate people adapt by providing climate and disaster risk impacts as their livelihood depends on sensitive information and facilitating access to resilience sectors—such as agriculture, which suffers from solutions through trade policies. However, climate change risk and price volatility. investments in research and development are low, Uzbekistan is undergoing reforms to transition from and communication of disaster and climate risk is not a state-planned economy to a market economy. Since readily available to the general public nor tailored for 2016, Uzbekistan has embarked on various reforms adequate adaptation planning. to move towards a low-carbon economy with greater private-sector participation. This transition requires FIG U R E ES-1: >> incorporating climate change considerations into development plans, thus the need for a comprehensive Overview of Uzbekistan’s adaptation and resilience preparedness evaluation of the country’s adaptation and resilience capacity. Uzbekistan Adaptation and Resilience Assessment Foundations for rapid, robust and inclusive growth These reforms have also coincided with increased 3 economic growth, characterized by high dependence on natural resources and high intensity of carbon 2 Priority Area 1: emissions. The sustainability of economic growth Application: Prioritization, Facilitate the adaptation of can be jeopardized by the fluctuation of prices and implementation and monitoring progress people and firms availability of natural resources. Uzbekistan’s overall 1 economic stability is low due to its over-dependence on natural resources. Climate change can pose further Priority Area 2: challenges to natural resources. Priority Area 4: Adapt land use plans Manage financial and and protect critical macro-fiscal issues public assets and To adequately support Uzbekistan in realizing an services inclusive and resilient green-growth transition, a whole-of-economy adaptation and resilience Priority Area 3: Help firms and assessment was carried out; this report summarizes people manage residual risks and natural disasters its findings. The assessment provides an economy- wide evaluation of progress and gaps in adaptation and Sources: Based on a combination of quantitative data provided by resilience (Figure ES-1). The overall assessment shows the government of Uzbekistan review, World Bank CCIA report, the country is emerging for most indicators, as initial Uzbekistan TNC, WDI (2021), WGI (2021), UNECE (2020) Environmental Performance Reviews: Uzbekistan, and expert interviews . steps have been taken as part of reforms and actions towards a market economy and green transition. The assessment also proposes key recommendations for A traffic light rating system was applied to 150 filling existing gaps in order to enhance inclusive, qualitative and quantitative indicators to comp- resilient green-growth transition. rehensively assess Uzbekistan’s adaptation and 1 https://www.wri.org/insights/ranking-worlds-most-water-stressed-countries-2040. 2 https://www.gfdrr.org/en/publication/disaster-risk-profile-uzbekistan. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 1 resilience capacity, gaps, and progress in six from reviewing policy documents, published reports, priority areas (Figure ES-2). The assessment and consultation with government officials. Quantitative employed the conceptual framework of Adaptation indicators were rated using a benchmarking approach Principles (Hallegatte, Rentschler, and Rozenberg 2020), against a set of peer countries. Upper-middle-income which is an effective framework for designing national countries were chosen as the peer group for Uzbekistan climate adaptation and resilience policies and strategies. because the country aspires to be upper-middle-income The assessment and rating of qualitative indicators stem by 2030. FIG U R E ES-2: >> Summary scores, adaptation and resilience assessment of Uzbekistan Application: Prioritization, implementation, and monitoring progress 4 15 5 Manage financial and macro-fiscal issues 4 6 3 Help firms and people manage residual risks and natural disasters 4 13 7 Adapt land use plans and protect critical public assets and services 9 28 6 Facilitate the adaptation of people and firms 6 8 11 Foundations for rapid, robust and inclusive growth 5 6 10 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicator Nascent Emerging Established Sources: Based on World Bank CCIA report, 3 Uzbekistan TNC , UNECE Environmental Performance Reviews: Uzbekistan , and expert interviews. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). To adapt land use plans and protect public assets and financial sector and pension systems nor adequately services, progress has been made in increasing the anticipate and plan for long-term macroeconomic resilience of the agricultural sector, but significant impacts. gaps exist in other critical systems. Gaps exist around Adaptation and resilience prioritization, implemen- revising land use plans and urban plans to make risk- tation, and progress monitoring are ongoing in informed decisions, ensuring the resilience of forest and different sectors. Yet, no overarching climate policy, natural ecosystems, and increasing the resilience of water infrastructure and water resource management. adaptation, and resilience plan at the national level reflect sectoral and decentralized priorities and actions. Cross- Significant progress has been made in saving lives sectoral coordination of adaptation and resilience actions and money through hydrometeorology (hydromet), is ineffective, funding for adaptation and resilience is early warning, and emergency management systems limited, and there is no centralized system for tracking to help people and firms manage residual risks and progress on adaptation and resilience over time with natural disasters. Yet, significant gaps exist in helping progress review for improvement. firms design business continuity plans and financial preparedness, developing the insurance sector, building Uzbekistan understands the need for adaptation and on public-private partnerships, and providing firms and resilience as part of its growth strategy; this is evident people with adequate instruments for risk management. from the country’s policy actions and initiatives to Uzbekistan is implementing a strategy to manage enhance adaptation and resilience. Table 1 summarizes contingent liabilities by combining different a list of recommendations per the Adaptation Principle instruments for managing financial and macro-fiscal for Uzbekistan in the short-, medium- and long-term issues. Nonetheless, they do not adequately communicate to improve its adaptation and resilience and facilitate its and mitigate disaster and climate risk exposure in the transition to a green economy. World Bank 2022a. Uzbekistan Climate Change Institutional Assessment. Internal document. 3 2 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment TA B LE 1: >> Adaptation and Resilience principles and proposed actions to fill gaps Adaptation Proposed actions and Resilience principles Short- to mid-term • Prioritize stability of macroeconomic fundamentals such as inflation, external debt, and current account balance to enhance financial stability for adequate adaptation and resilience preparedness. Adaptation Principle 1: • Accelerate action on improving good governance, especially on the following Lay the foundations for aspects—the rule of law, voice and accountability, and political stability— adaptation through rapid, to facilitate implementation and social inclusion for socio-economic and robust, and inclusive environmental resilience. development. Long-term • Accelerate investment in human capital development and create training programs to install new skill sets required for a market economy to help the population adapt to green transition. • Invest in extending universal health coverage to predominantly rural parts of the country to reduce the population’s vulnerability to climate risks. Short- to mid-term • Develop and implement a package of incentives to investors targeting new sectors, with regulated environmental safeguards incorporated into company environmental safeguards systems, enabling green investments that also improve the way of living. Adaptation Principle 2: Facilitate the adaptation of people • Facilitate access to finance to the poorest 40% of the population because they are and firms. the most vulnerable and often depend on climate-sensitive sectors (agriculture). Long-term • Increase investment in R&D, develop strategies for integrating research outcomes into policy, and create an enabling environment for foreign research think tanks and innovation hubs to develop evidence-based research and technology for climate change adaptation and resilience. Short- to mid-term • Develop a framework for institutional coordination and define mandates for leveraging sustainable land-use plans and to protect critical assets. • Develop incentives to attract the private sector to invest in innovative water- saving technologies because Uzbekistan’s water productivity is among the lowest in the world. • Expand agricultural extension services and build capacity for farmers by Adaptation Principle 3: promoting organic agriculture. Adapt land use plans and protect critical public assets. • Adopt the strategic environmental assessment (SEA) tool to evaluate the environmental impacts of future sectoral strategic documents and ensure climate-smart development and private sector investment. Long-term • Enhancestakeholder involvement in land-use planning and define linkages between land-use planning and water management for efficient water management and land restoration. • Expand the scope of biodiversity hotspots and develop nationwide animal and plant biodiversity data. Biodiversity preservation is an essential element in adapting to climate change. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 3 Adaptation Proposed actions and Resilience principles Short- to mid-term • Scale-up non-life insurance coverage of the vulnerable population segment— it currently is low, and should be promoted for greater resilience; promoting registration of a larger population in the social registry can also support adaptation and resilience efforts. Adaptation Principle 4: • Build private sector capacity and institutionalize its business continuity planning Help firms and people manage to further support private investments in adaptation. residual risks and natural disasters. • Build sub-national capacity on disaster risk management response to emergencies and enhance and decentralize information sharing. • Modernizeearly warning systems and increase data available to the public to better communicate climate risks. Long-term • Increase the number of qualified planners and develop sustainable financing mechanisms for implementing urban plans. Short- to mid-term • Aggregate disaster impact analysis at the national level (ascertaining the severity and frequency of events) to adequately prioritize disaster financing at the national and local levels. Adaptation Principle 5: • Employ contingent credits, risk transfer, and planning based on severity, rehabilitation, and reconstruction needs to prevent needing to hold large reserves Manage financial and for disaster risk management. macro-fiscal issues. • Enhance allocative and implementation efficiency of agricultural public expenditure and programs. Long-term • Implement policy reforms so that large firms and banks can identify, quantify and communicate their exposure to climate risk and hazards for better adaptation and resilience preparedness, thus preventing economic crisis in case of disaster. Short- to mid-term • Build the capacity of different ministerial agencies and subnational units to monitor adaptation and resilience initiatives and integrate research into policy. • Develop, monitor and track a national adaptation fund that captures Adaptation Adaptation Principle 6: and resilience efforts across sectors to contribute to the financial gap and Application, prioritization, coordinate with development partners to achieve climate commitments. implementation, and monitoring progress • Develop a cross-sectoral implementation, monitoring, evaluation, and coordination mechanism that reduces overlaps and maximizes the impacts of adaptation and resilience efforts. Long-term • Develop an overarching climate policy that anchors different sectoral policies and actions in adaptation, mitigation, and resilience building. Source: Original to this publication. 4 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment CHAPTER 1 >> 1 Introduction Uzbekistan is expected to face severe stress from While Uzbekistan has significantly improved nutrition climate change, with average temperatures anticipated and food security over the past decade, projected climate to increase further this century. Uzbekistan is dominated changes and the country’s dependence on irrigated by vast desert plains, including desert areas in the far agriculture could threaten food security. Households west formed by the drying of the Aral Sea. The country spend a relatively high proportion of their income on has an arid climate, is expected to be severely stressed by food—in 2016, 47.3 percent of their income on average— further temperature rises, and has already experienced leaving poorer groups more exposed to rising food significant changes in temperature and rainfall.4 After a prices.8 At the household and business levels, risk transfer 2.9°C temperature increase between 1950 and 2020, the instruments are limited in Uzbekistan. For example, only average temperature is projected to increase another 10 percent of households are covered by catastrophe 1.21°C to 1.94°C this century. In a pessimistic climate risk insurance. While this is a significant number for a scenario, the highest temperature increases are expected voluntary insurance market without any government to occur in the northwestern Aral Sea region and the enforcement mechanisms, it means the remaining southeastern provinces, which is worrisome as these uninsured homeowners will require financial support areas pose the risk of melting glaciers, exacerbating from the government in the case of a major disaster. drinking water shortages, and threatening landslides. A high dependence on natural resources and focus Precipitation changes are less certain, but with a higher on emission-intensive sectors put the country at frequency of heavy downpours comes increased flood risk of price fluctuations and additional climate risk. risk. Climate warming is also likely to shift the timelines Uzbekistan is the most greenhouse gas (GHG) intensive of spring frosts, with potential adverse impacts on the economy in Europe and Central Asia (ECA) and the 5th agriculture sector . Droughts are predicted to become 5 most intensive globally.9 Energy is the most intensive more frequent due to reduced river runoff, specifically GHG emission sector; fossil fuels dominate Uzbekistan’s from the Amu Darya and Syr Darya Rivers that feed the energy composition, and natural gas accounts for 83 surrounding fertile valleys, including the Ferghana percent of energy consumption. Figure 1 shows that the valley. Those rivers also significantly contribute to water 6 share of natural capital is high in carbon-emitting sectors. availability and storage in the Aral Sea. Furthermore, In contrast, carbon-absorbing natural capital, such as prolonged drought, in turn, is projected to worsen the forest and forest ecosystem services, are lower than the potential for forest fires and shortened growing seasons.7 ECA average. Figure 2 further shows that contributions The increasing climate changes adversely impact per capita of fossil fuel and minerals fluctuate due to the economy and the population’s most vulnerable changes to market prices, thus exposing the country to segments. Without support to adapt to climate change exogenous shocks. The economy’s high dependence on and reduce disaster risks, Uzbekistan’s poor and these sectors puts the economy at risk because market marginalized communities will likely be the ones most price fluctuations significantly affect government affected, with projected impacts on agricultural yields revenue, trade, and budget balance, putting the country’s likely to disproportionately affect their living standards. overall macro-fiscal situation at risk. 4 For instance, southeast areas of Uzbekistan, including the largest cities of Tashkent and Samarkand, received nearly 10 times more rainfall (800-900 mm per year) than western areas (100 mm per year). 5 Climate Risk Country Profile: Uzbekistan (2021): The World Bank Group and the Asian Development Bank. https://www.adb.org/publications/climate-risk-country-profile-uzbekistan. 6 Uzbekistan–Vulnerability Climate Change Knowledge Portal https://climateknowledgeportal.worldbank.org/country/uzbekistan/vulnerability#:~:text=Impacts%20 from%20climate%20change%20make,Darya%20and%20Syr%20Darya%20Rivers. 7 Climate Risk Country Profile: Uzbekistan 2021. 8 Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan, The World Bank, and The Regional Environmental Center for Central Asia, 2022. Green Growth and Climate Change in Uzbekistan Policy Dialogue Series: A Compendium of Proceedings. The World Bank: Washington DC. 9 Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan, The World Bank, and the United Nations. Development Programme, 2022. Uzbekistan: Choosing an Innovative and Green Future. Note. © World Bank. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 5 FIG U R E 1: >> Share of natural capital in Uzbekistan relative to peer countries Share of natural capital 100% 3% 13% 8% 15% 14% 1% 1% 13% 80% 6% 24% 25% 25% 60% 5% 49% 11% 62% 41% 40% 29% 15% 20% 25% 22% 7% 5% 0% Uzbekistan Kazakhstan Tajikistan Kyrgyz Republic Europe & Central Asia Forests, timber Forests, ecosystem services Protected areas Cropland Pastureland Oil Natural gas Coal Metals and minerals Source: World Bank 2021a. The Changing Wealth of Nations 2021: Managing Assets for the Future . FIG U R E 2: >> Natural capital, per capita, Uzbekistan 8.000 Constant 2018 $ per capita 6.000 3.020 4.000 2.576 1.939 1.502 1.372 2.000 553 1.079 1.317 1.457 450 627 402 1.430 1.053 1.227 1.063 1.125 731 0 1995 2000 2005 2010 2015 2018 Forests. timber Forests. ecosystem services Protected areas Mangroves Fisheries Cropland Pastureland Fossil fuel energy Minerals Source: World Bank. 2021a. The Changing Wealth of Nations 2021: Managing Assets for the Future . Climate change further worsens the country’s water Darya and Syr Darya rivers will decrease by 5 percent situation, increasing Uzbekistan’s already high and 15 percent by 2050, with increased frequency of dry water stress and water quality issues. Uzbekistan is and low-water years and predicted flow losses of up one of the most water-stressed countries in the world; to 25 percent. Meanwhile, heat stress will increase the key indicators (Figure 3) of the water sector compared water demand. Thus, the total annual amount of water to the peer country group in ECA show the country has scarcity will increase to 7 billion cubic meters by 2030 only 13.44 percent of freshwater key biodiversity areas and 15 billion cubic meters by 2050. Consequences of this compared to 66.98 percent in ECA. The country also has lower water quality (-5.90) compared to the ECA average scenario would include reduced agricultural and livestock (-3.95). Over the last ten years, the wetland loss score production, which could threaten food security across for Uzbekistan has been more than five times the ECA the country and which, in turn, could have far-reaching average. Climate projections show that flows of the Amu social impacts, including increased migration. 6 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 3: >> Key water indicators, Uzbekistan and Europe and Central Asian countries 100.00 66.98 57.00 56.70 50.00 13.44 0 -5.90 -3.95 -7.56 -50.0 -43.00 Freshwater key biodiversity Water quality Wetland Wetland loss score areas under protection % - nutrients loss score 10-year change Uzbekistan Europe and Central Asia Source: Wolf et al. 2022: Environmental Performance Index . FIG U R E 4: >> Evolution of renewable internal freshwater resources, per capita (m3), Uzbekistan 800 Cubic Meters 400 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: World Bank Development Indicators 2022 . Climate change and its resulting water stress second most important crop, shocks are expected to affect the productivity of rainfed crops differently. be negative, between -8 and -35 percent for the Wet/ By 2050, climate change is anticipated to have both Warm mean and Dry/Hot, respectively. Across General positive and negative production shocks on most crops Circulation Models (GCMs), most crops are generally (Figure 5). Certain crops, such as maize, potatoes, rice, expected to experience a worst-case negative production watermelons, and wheat, could see positive impacts. shock that ranges from -13 percent to 77 percent. Other Among high-production crops such as wheat, the wet/ high-revenue fruit crops, such as apples, cherries, or warm and dry/hot mean are expected to result in a +17 apricots, are expected to experience largely adverse and -12 percent shock, respectively. For cotton, the effects.10 FIG U R E 5: >> Rainfed Crop Production Shock, 2041–2050 100% 97% GCM Range 74% Dry/Hot mean 50% Wet/Cool mean 26% 20% 17% 0% -5% -7% -10% -7% -8% -13% -15% -13% -34% -34% -29% -50% -39% -38% -42% -44% -60% -78% Apple Apricot Cherry Grape Maize Potato Rice Seed Cotton Walnut Watermelon Wheat Source: Industrial Economics Incorporated 2023 “Estimating the Economic Damages of Climate Change in Uzbekistan.” 10 Industrial Economics Incorporated 2023 “Estimating the Economic Damages of Climate Change in Uzbekistan.” Internal working document. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 7 Climate change also adversely impacts the country’s Hot scenario producing higher losses than a Wet/Warm livestock productivity: The impacts of climate scenario. This is primarily due to the high vulnerability change on livestock vary by animal and product. of all products to increases in temperatures. Cattle, Figure 6 presents Uzbekistan’s productivity shocks to which is the country’s main herd in terms of revenue, meat (cattle, sheep, chickens, and swine), milk (cattle), may experience significant impacts in both meat and and eggs. The bar indicates the range of values across milk production, with meat dropping from about 180 to General Circulation Models (GCMs), while the diamonds about 130 kg/head (-30 percent). Milk would drop from show the mean results under Wet/Warm and Dry/Hot 2,575 to 2,515 kg per head (-2 percent) by the 2040s under scenarios. Overall, by mid-century, all products will a Hot/Dry scenario. Sheep meat is also heavily impacted, be negatively affected by climate change, with a Dry/ in the same order of magnitude as cattle. FIG U R E 6: >> Change in livestock productivity due to climate change compared to historical values (in kg/animal/year) Cattle-Meat Cattle-Milk Chickens-Eggs 12.700 2 580 2 562.2 12.7 175 2560 2 555.2 12.6 12.650 155.8 2 545.6 12.6 152.9 151.9 150 2 540 2 538.6 12.6 12.600 2 529.1 12.6 2 520 125 2 500 12.550 118.2 118.1 118.8 2 500.7 12.5 Chickens-Meat Sheep-Meat Swine-Meat 20.0 2.4 131.40 2.350100 2.4 2.4 17.5 16.3 16.5 131.20 131.1 131.1 131.1 16.0 2.350000 2.4 2.3 15.0 131.00 2.349900 12.5 12.6 130.80 130.8 12.3 130.8 130.8 2.3 12.1 2.349800 2021-30 2031-40 2041-50 2021-30 2031-40 2041-50 2021-30 2031-40 2041-50 Historical Value Dry/Hot mean Wet/Cool mean Source: Industrial Economics Incorporated 2023 “Estimating the Economic Damages of Climate Change in Uzbekistan.“ Uzbekistan is highly exposed to natural disasters, its contribution to GDP and employment and because with climate change further exacerbating the risk. it is climate-sensitive. This is reflected in the country’s Uzbekistan is ranked 83 out of 182 in the ND-gain macroeconomic stability, characterized by increasing index 11 for 2020, up from 96 out of 181 in 2019; however, national debts and a negative external balance. Exposure the country still falls among the first 20 drought-prone of the population, particularly of low-income households, countries with high probabilities for both wildfires and to natural disasters is high, while exposure of transport river and urban floods (see Figure 7). Think Hazard (2022) networks to natural hazards, coupled with low food also rates earthquakes, landslides, and water scarcity productivity and climate change, further exacerbates probability to be generally high. Figure 6 also shows that Uzbekistan’s high climate risk profile. the severity varies within different parts of the country. In addition to the sector climate adaptation challenges These risks are exacerbated by increasing climate already mentioned, these impacts further cut across change. Between 1950 and 2013, the average temperature different sectors and are interlinked. A summary of the increased by 0.27°C per decade. Uzbekistan’s levels impacts across sectors shows the relationship between of flood and drought risks are higher than the global them. Increasing temperatures reduce water availability, average. The country also registers an above-average which affects agricultural productivity and threatens lack of coping capacity; thus, coping and adaptation potential hydropower energy generation. Table 2 potentials could be bolstered with the right actions. summarizes the main climate change adaptation impact The agricultural sector’s exposure is high because of pathways across the nexus of different sectors. 11 The Notre Dame-Global Adaptation Index (ND-GAIN) Country Index is a free, open-source tool that assesses a country’s current vulnerability to climate disruptions. 8 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 7: >> Probability of natural shocks in Uzbekistan River Flood HIGH Urban Flood HIGH Earthquake HIGH Landslide HIGH Water scarcity HIGH Extreme heat HIGH Wildfire HIGH Cyclone VERY LOW High Medium Low Very Low Flood Tropical Cyclone Drought Vulnerability Lack Of Coping Capacity Overall Inform Risk Level Rank (0-10) (0-10) (0-10) (0-10) (0-10) (0-10) (1-191) 6.3 [4.5] 0.0 [1.7] 6.6 [3.2] 1.9 [3.6] 3.9 [4.5] 3.1 [3.8] 112 Sources: Think Hazard 2022 and INFORM Index 2022 . Note: In the sub-categories of risk (e.g., “flood”), higher scores represent greater risks. Conversely, the most at-risk country is ranked 1st. Global average scores are shown in brackets. TA B LE 2: >> Summary sector nexus and climate change adaptation impact pathways Sector nexus Climate change adaptation impacts pathways • Water scarcity impacts agriculture, affecting food production and security. Water-Energy-Food • Energy demand increases due to water pumping, treatment, and distribution, contributing to GHG emissions. Nexus • Agriculture requires water and energy inputs for irrigation, while energy production relies on water resources. • Water scarcity and changing water quality affect access to clean drinking water, increasing health risks. Water-Health Nexus • Water-related diseases, such as waterborne illnesses and vector-borne diseases, impact public health. • Climate change-induced extreme weather events can contaminate water sources, compromising health. • Inadequate urban planning and infrastructure increase vulnerability to climate-related hazards, affecting public health. Infrastructure-Urban Areas-Health Nexus • Urban heat island effect in densely populated areas exacerbates heat stress and heat-related illnesses. • Climate-related disasters can damage critical infrastructure, disrupting essential services and healthcare facilities. • Climate change affects biodiversity and ecosystems, leading to ecological imbalances Biodiversity- and loss of ecosystem services. Ecosystems-Climate • Changes in ecosystems impact water availability, pollination, soil fertility, and carbon sequestration. Nexus • Biodiversity loss and habitat degradation reduce resilience and adaptive capacity to climate change impacts. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 9 Sector nexus Climate change adaptation impacts pathways Disaster Risk • Inadequate infrastructure planning and design increase vulnerability to climate-related disasters. Reduction- • Climate-related disasters damage critical infrastructure, affecting communities and their livelihoods. Infrastructure- • Strengthening disaster risk reduction measures enhances community resilience, protects Communities Nexus infrastructure, and reduces human and economic losses. • Water scarcity affects irrigation for agriculture, impacting crop yields and agricultural productivity. Water-Agriculture- • Inefficient irrigation practices and infrastructure lead to water wastage and reduce water availability for other sectors. Infrastructure Nexus • Climate-resilient agricultural practices and efficient water management contribute to sustainable water use and protect infrastructure. Source: Original to this publication. Uzbekistan still lacks key sector-specific sustaina- desertification.13 The Aral Sea’s ecological disaster is bility indicators critical for meeting SDG goals. Air attributed to intensive resource use and poor land-use pollution is a growing problem. The annual costs of the practices. Uzbekistan has room to improve environmental damage to health from ambient PM2.5 pollution have reached sustainability, but its land degradation rate is above the 6.5 percent of GDP.12 Air pollution in Uzbekistan is primarily upper-middle-income countries’ (UMIC) average. The caused by residential heating, transport, industry, power per capita rate of solid waste management is low, and the generation, agriculture, dust, land degradation, and population is exposed to harmful air pollution. TA B LE 3: >> Uzbekistan’s critical environmental sustainability indicators Indicator Key sources and main issues UZB Benchmark Percentage of the population exposed to PM2.5 above the World Health Organization (WHO) guideline (25 ug/m3), defined as the portion of a country’s Air pollution: PM2.5 72.2 14 56.6 UMIC population living in places where mean annual concentrations of PM2.5 are greater than 25 ug/m3  Municipal waste Waste generation rates (kg per capita per day)15 0.4 1.18 ECA Water quality, nutrients, salts, chemicals (SDG 6.3.2) −5.9 −2.8 UMIC Water scarcity and quality  Mortality rate attributable to inadequate water supply, sanitation, and hygiene 0.4 2.6 UMIC (per 100,000)16 Land degradation (degraded land as % of total land area)17 29.0 20.4 LIC Land 21.2 UMIC Population exposure from disasters (% of total population exposed) 0.7 1.3 UMIC Natural hazards Population exposure from dry shocks (% of total population exposed) 14.4 14.9 LIC and disaster risks 16.8 UMIC Fugitive emissions (tCO2e per million dollar GDP) 1,054 42 ECA Electricity CO2 emissions in electricity (tCO2e per million dollar GDP) 1,050 114 ECA Source: World Bank 2022a. Uzbekistan Climate Change Institutional Assessment. Note: ECA = Europe and Central Asia countries; UZB = Uzbekistan. 12 World Bank 2022b. The Global Health Cost of PM2.5 Air Pollution: A Case for Action Beyond 2021. International Development in Focus © Washington, DC: World Bank. https://openknowledge.worldbank.org/entities/publication/c96ee144-4a4b-5164-ad79-74c051179eee. 13 https://unece.org/DAM/env/epr/epr_studies/ECE.CEP.188.Eng.pdf. 14 World Bank, Open Data portal, indicator: PM 2.5 pollution, population exposed to levels exceeding WHO Interim Target-2 value (percentage of total). 15 Kaza, Silpa; L. Yao, P. Bhada-Tata, F. Van Woerden. 2018. What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050. Urban Development. © Washington, DC: World Bank. http://hdl.handle.net/10986/30317. Uzbekistan data are reported for 2012. 16 Institute for Health Metrics and Evaluation (IHME), Global Burden of Disease. 2019. https://www.healthdata.org/research-analysis/gbd. 17 UN SDG Database. SDG 15.3.1- Proportion of land that is degraded over total land area. 10 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Climate change adaptation is essential for Uzbekistan and higher migration in the future due to drought, water because a large part of the country’s population lives stress, and other factors. The smaller irrigated arable in a high climate risk zone. A large proportion of the lands in southern Uzbekistan along the Amu Darya River population in rural and urban areas—more than a fifth are also thought to be hotspots of climate migration for of Uzbekistan’s projected population by 2030 (8 million similar reasons. Estimates of the migration size may people)—will live in very high climate-risk areas. The vary, but it is clear that a systematic approach is needed most at-risk population densities reside in the Ferghana to support alternative livelihoods and/or facilitate Valley, Khorezm, Bukhara, and Surkhandarya Valley migration to other areas.18 Figure 8 shows Uzbekistan’s areas. People living in these high-risk areas, especially population density and climate risk scores associated those in the lower Amu Darya basin and facing water with high population densities. stress and land degradation, are likely to face pressure FIG U R E 8: >> Population density and climate risks in Uzbekistan Population density (people Population per sq.km. density in 2030) (people per sq. km)19 a Climate change risk scores Climate (percentile) Change Risk 20 scores (percentile)b Cities Population Dens., Cities Climate Change Risk Score Provinces year 2030, Hab / sqkm Provinces Low - 20 th percentile Districts <=10 Districts 40 th percentile 10 - 50 60 th percentile 50 - 150 80 th percentile 150 - 500 Maximum >500 I. R. of Iran I. R. of Iran Source: World Bank 2023. “Tackling Climate Change and Land Degradation Risks: Opportunities for Landscape Restoration to Scale up Climate Resilience and Adaptation.” Плотность населения (чел. на кв. км.)а Показатели риска изменения климата (процентиль)b With Uzbekistan’s high vulnerability to natural Cognizant of these risks, the government of Города Плотность населения Показатели риска financial disasters, there is an increasing need forРайоны and Uzbekistan, with support fromОбласти multilateral (чел. на кв. км.)а Города Области изменения климата <=10 Районы Низкий - 20й процентиль resilience of 50people, fiscal systems that ensure theКазахстан development partners, is making significant strides 10 - 50 40 процентиль й - 150 Казахстан 60 процентиль й 150 - 500 firms, and assets. Disasters slow down businesses and inclusive in reforms and development activities forМаксимальный 80 й процентиль >500 thus the government’s ability to raise funds for disaster and resilient growth. The country is actively enacting risk management. With the fiscal constraints and reduced Нукус accelerate towards a market economy reforms to Нукус capacities of businesses it is and households to recover,Кыргызская and striving towards 2021, a low-carbon economy. In Кыргызская Узбекистан Узбекистан Ургенч Ургенч Республика Республика Ташкент Ташкент increasingly important to focus on financial protection Наманган Андижан Uzbekistan submitted a revised nationally determined Наманган Андижан Гулистан Гулистан Навои impacts that addresses potential disaster and makes an contribution (NDC), increasing its carbon reduction Фергана Фергана Джиззак Навои Джиззак Бухара Бухара effort to close the protection gap. This is because such a targets, and in November 2022, issued a presidential Самарканд Самарканд Туркменистан Туркменистан gap will likely affect disaster recovery, increase impacts Таджикистан Карши decree on green economy transition. Карши 21 underscore Both Таджикистан on citizens’ well-being and the economy, and can result the government’s ambitious goal of economy-wide in adverse Иран fiscal outcomes from growing Термез expenditures, Афганистан sustainable Иран development. Other policy Термез Афганистан documents decreasing revenues, and impacts on government assets. adopted in the past five years include the “Concept Пакистан Пакистан It is, therefore, critical to understand the macro-fiscal of Environmental Protection Until 2030” and the environment, constraints, and gaps for adaptation and “Strategy for the Transition of the Republic to a Green resilience preparedness. Economy for 2019-2030.” The country has also developed 18 World Bank. 2021b. Groundswell. Acting on Internal Climate Migration. Part II. Washington, DC: World Bank. https://openknowledge.worldbank.org/entities/ publication/2c9150df-52c3-58ed-9075-d78ea56c3267. 19 Population data projected to 2030, used in this analysis of climate risk mapping and the mapping of potential beneficiaries of sustainable agricultural practices and as an indicator of pressure on natural resources in chapter 4 of this report (i.e. in the calculation of Population Risk Score for the year 2030). 20 The aggregate climate change risk score is a unitless, multi-criteria district risk score. Higher values correspond with higher risk from potential climate change impacts. The score averages four indicators: anomalies in the standardized precipitation evapotranspiration index anomalies, maximum 1-day rainfall depth, average annual rainfall depth, and the growing season length anomaly. https://lex.uz/ru/pdfs/6303233. 21 Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 11 medium-term strategies in water, energy, agriculture, coupled with guiding policies, continues to need environment, and other economic sectors through 2030. improvement. The main area for improvement of the Adaptation measures and decarbonization indicators are sectoral documents is generic messaging on climate reflected in the sectoral strategies on the transition to a change issues without concrete measures and targets green economy, with water and agricultural development or clearly defined enforcement mechanisms. Adaptation and the introduction of renewable energy technologies and resilience remain a significant part of Uzbekistan’s through 2030. These include the reduction of carbon climate agenda; however, an economy-wide emissions to 10 percent by 2030 from the 2010 level, understanding of adaptation and resilience capacity as indicated in the “Strategy for the Transition of the has been lacking. This study seeks to identify gaps in Republic to a Green Economy for 2019-2030” and NDC. adaptation and resilience efforts across different sectors While climate concerns are being considered, and will also suggest possible options to fill these gaps. adaptation and resilience are the more vital aspects of This study uses the adaptation principles developed by current policies governing the transition to a market Hallegatte, Rentschler, and Rozenberg (2020), a design- economy. They also define long-term development effective national climate and disaster adaptation and priorities in the country, yet solid knowledge of the resilience framework that permits identifying gaps and current state of adaptation and resilience capacity, proposing adaptation and resilience actions. 12 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment CHAPTER 2 >> 2 The Adaptation Principles Approach This report provides a whole-of-economy assess- The assessment reviews Uzbekistan’s performance ment of Uzbekistan’s adaptation and resilience against a series of priority actions organized around preparedness and identifies priority gaps for action. six adaptation principles that become priority areas The assessment builds on the conceptual framework for action. These principles are centered around actors proposed by Hallegatte et al. (2020). It is a flexible and responsibilities within governments, grouping guidance framework which allows for designing effective actions under “foundations” for rapid and inclusive national climate and disaster adaptation and resilience development, which offers protection against shocks, policies and strategies. It aims to help central ministries and include five priority areas to build resilience and that oversee the broader economic system—for example, adapt to shocks (Figure 9). The assessment permits ministries of finance or economy—address adaptation central governments to have a general overview of their and resilience challenges. The approach is not meant adaptation and resilience situation and focuses on critical to provide detailed sectoral assessments or roadmaps; macroeconomic actions that reflect global principles for instead, it focuses on concrete macroeconomic-level effective climate change adaptation. It does not dwell on actions that reflect universal principles for effective strategies at the sector level. This framework is designed climate change adaptation. If prioritized according to a to support government actions for building adaptation country’s objectives, needs, and risks, such actions can and resilience; thus, it will be prioritized based on country help reduce and manage climate and disaster risks and objectives, risks, and needs. Aligning these strategies to accelerate development and poverty reduction. manage climate-related risks adequately can accelerate poverty reduction efforts and development. FIG U R E 9: >> The adaptation principles framework 1. Foundations: Rapid, robust, and inclusive development Policies to reduce poverty and ensure that high-vulnerable populations have the necessary financial, technical, and institutional resources to adapt. 2. Facilitate the 3. Adapt land use plans 4. Help firms and people 5. Manage fiscal and adaptation of people and protect critical public manage residual risks macro-fiscal issues. and firms. assets and services. and natural disasters. Information, policy, and Actions to protect and Actions to ensure people Actions to protect regulatory environment, strengthen the resilience and firms can cope with macroeconomic stability, households and businesses of critical infrastructure, and rapidly recover from public finances and debt need to adapt. natural resources, and public disasters without devastating sustainability, and the investments to climate impacts. long-term consequences. broader financial sector from climate impacts. 6. Application: Prioritization, implementation, and monitoring progress Actions to establish a whole-of-economy approach to mainstreaming adaptation in decision-making and actions to ensure the continuous and iterative monitoring, evaluation, learning, and adjustment of interventions. Source: Hallegatte et al. 2020. The adaptation principles and indicators are tailored based on Uzbekistan’s six principles and development to reflect the country’s specific climate change priorities (See Appendix 1 for detailed scores). Strategic risks and vulnerabilities. Under each principle of documents such as the revised NDC submitted in 2021 Figure 9, several indicators are used to capture and and the “Strategy for the Transition of the Republic monitor progress toward implementing actions. A total to a Green Economy for 2019-2030” are essential of 150 indicators were selected to monitor progress documents that guided the choice of indicators. Five Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 13 to seven indicators capture key aspects of adaptation biodiversity, community engagement, capacity building, and resilience attributes for each priority action to data, and information. ensure a balanced evaluation. The indicator selection Data was extracted from three key sources and builds from the suggested indicators in The Adaptation cross-checked for robustness (see Table 4). Sources Principles (Hallegatte et al. 2020), and recent resilience included: (i) global publicly available data—such as the assessments carried out in other countries using the World Development Indicators, the World Governance same approach. The framework was further tailored to Indicators, and country data statistics—all used for include priority actions for the country’s specific climate quantitative benchmarking; (ii) policy documents, change risks and vulnerabilities, water management, reports, websites, and consultations with the agriculture, urban resilience, health protection, government, World Bank, and others; (iii) a qualitative infrastructure resilience, ecosystem conservation, assessment based on expert judgment (see Table 1). TA B LE 4: >> Criteria for selecting benchmark countries and country groups for Uzbekistan Number of Code Description Indicators Quantitative benchmarking assessment supported by global data or statistics (e.g. World I 44 Development Indicators, World Governance Indicators data, etc.) or country data statistics Qualitative assessment based on a review of policy documents and reports, websites, and literature II 74 from different sources, including government, World Bank, and OECD, among others III Qualitative assessment based on technical/country expert judgement 32   Total number of indicators 150 Source: Original to this publication. This report’s traffic light system (TLS) assesses and emerging (yellow), and 2.34–3 for established (blue). rates Uzbekistan’s progress in each adaptation and Using an equal weight for each indicator, the rating resilience preparedness indicator. The TLS (Figure 10) scores are aggregated for each underlying indicator to rates progress against each indicator based on available provide an average score for each priority action. This data and information, with indicators then aggregated to system offers a simple way to identify gaps and areas for provide a scorecard with a rating for each priority action improvement, prioritize actions, facilitate target setting, and adaptation principle (Appendix B). Specifically, and monitor progress across key aspects of adaptation scores of 1, 2, or 3 are assigned to each category, with and resilience. See Appendix C for detailed descriptions average ratings of 1–1.67 for nascent (red), 1.68–2.33 for of the indicators, sources, and rating criteria. FIG U R E 10: >> Traffic light rating system for adaptation and resilience assessment for Uzbekistan Nascent (red) 1 Emerging (yellow) 2 Established (green) 3 i. In the case of qualitative i. In the case of qualitative i. In the case of qualitative indicators, the country indicators, the indicators, the country does not meet the countrypartly meets meets; standard or includes areas the standard and has ii. In the case of quantitative that are only starting to or progressed beyond the indicators, the value do not meet the standard initiation point but has not sits in the upper tercile at all; reached the final point; compared to the ii. In the case of quantitative ii. In the case of quantitative benchmark group. indicators, the value indicators, the value sits in the lowest sits in the middle tercile compared to the tercile compared to the benchmark group. benchmark group. Source: Original to this publication. 14 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Upper-middle-income (UMIC) countries were chosen A number of caveats and limitations should be considered as benchmarks to reflect Uzbekistan’s ambition to when interpreting the assessment results. First, while be UMIC and show gaps that need filling to meet this the assessment aims to capture the critical elements objective. The indicator ratings are intended to serve of adaptation and resilience from an economy-wide as a starting point for discussion and highlight gaps perspective based on an adaptation principles framework, in Uzbekistan’s adaptation and resilience compared to it does not provide a complete list of actions a country aspiring countries. Within the framework of this study, may consider or take. Detailed industry assessments and UMIC is considered aspiring because the government of roadmaps are needed to further guide adaptation actions Uzbekistan seeks to be a UMIC by 2030. The rating of the in priority sectors and complement this work. Second, different quantitative indicators will be based on UMIC the assessment uses a range of indicators to cover all values, allowing the country to see adaptation gaps that adaptation principles and priority actions. Although need filling to achieve this objective. This is also done every effort has been made to include indicators suitable to align the report with other long-term development for assessment purposes based on previous applications objectives of the Uzbekistan government. To understand of the principles of adaptation and in consultation with the current context, values for indicators related to the national and specialized experts, the results remain ECA countries, excluding high-income countries, are closely related to the selection of indicators, the used. The indicators and ratings can be modified based availability of data, and expert judgment. Third, although on additional country-level information. The next the assessment uses the most current data available, sections provide the assessment’s key findings and uncertainties remain regarding information sources recommendations. that can quickly become outdated and must be updated based on ongoing research, and emerging initiatives can Based on the results obtained in each priority action, a produce up-to-date or more complete data, information, series of gaps and proposed actions are developed for and insights that may be available through iterations and each adaptation principle aimed at informing policy, consultations. This is particularly relevant for climate strategy, and investment-related decision-making change data based on global sources and modelling for strengthening adaptation and resilience within efforts, such as the “Climate Change Knowledge Portal” short (2022–2030), medium (2030–2040) and long- (CCKP).22 These may not capture the gravity of the data term (2040–2050) time horizons. Given potential weaknesses of Uzbekistan-specific risks and future relationships and dependencies between priority actions extremes as indicated in local assessments. Fourth, the within the adaptation principles—for example, where one assessment must be viewed in the context of other global action is the basis of or reinforces another action—each risks that could exacerbate existing vulnerabilities when recommendation is linked to the main priority action it combined with the impacts of climate change. Given supports while also highlighting links with other priority these caveats and limitations, the results should not be actions that may lead to synergistic impacts on adaptation construed as an absolute and accurate assessment of and resilience. Detailed sector-specific analysis of each Uzbekistan’s adaptation and resilience readiness. Rather, proposed action’s potential effects and cost-benefits, it is intended to serve as a starting point for identifying coupled with stakeholder dialogue, is required to further priority areas of action that can be considered in national phrase policy recommendations. climate change-related strategies and plans. 2.1 Key findings and recommendations This principle seeks to explore “Policies to reduce poverty and catalyze robust economic development is most effective for reducing vulnerability to climate change. Poverty and the lack of access to basic services—including critical infrastructure, financial services, health care, and social protection—are strong predictors of vulnerability to climate change. No targeted adaptation strategy can be successful without eradicating extreme poverty and ensuring high-vulnerability populations have the financial, technical, and institutional resources they need to adapt.”—The Adaptation Principles.23 2.1.1 Lay the foundations for adaptation through rapid, Uzbekistan. The assessment includes 21 indicators robust, and inclusive development. corresponding to two priority actions. This section reviews the progress toward achieving The overall results indicate emerging progress toward increased economic productivity and growth while achieving this adaptation principle, with both priority keeping buffers for shocks and ensuring that economic actions also emerging. Assessment of the foundations growth is an inclusive foundation for resilience in for adaptation through rapid, robust, and inclusive 22 https://climateknowledgeportal.worldbank.org/#:~:text=In%20an%20effort%20to%20serve,to%20climate%20change%20and%20development. 23 Hallegatte, S., J. Rentschler, and J. Rozenberg. 2020. Adaptation Principles: A Guide for Designing Strategies for Climate Change Adaptation and Resilience https://openknowledge.worldbank.org/entities/publication/2dc19238-096a-5907-89c2-d4b99e6cb4d3. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 15 development for Uzbekistan (Figure 11) reveals that the growth has not been inclusive; access to ICT, universal country enjoyed sustained economic growth despite health coverage, and safe sanitation are far below the external shocks such as the COVID-19 pandemic and standards of UMIC countries. The following paragraphs the recent Russia-Ukraine war. However, its overall highlight key messages on the evaluation and ensuing macroeconomic stability is lower than that of its peers. options to enhance inclusive economic growth. Also, although there has been economic growth, this FIG U R E 11: >> Results lay the foundations for adaptation through rapid, robust, and inclusive development Foundations for rapid, robust, and inclusive growth Inclusive economic growth 4 4 9 Increase economic productivity and growth, while buffers for shocks 1 2 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicators Nascent Emerging Established 24 25 26 27 Source: Based on WDI, WGI, IMF WEO, UNDP. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). Countries are rated using a benchmark approach: countries in red (high risk) are in the upper tercile; those in yellow (medium risk) are in the middle tercile; and those in green (low risk) are in the lowest tercile, UMIC are used as benchmark countries for Uzbekistan since it aspires to attain that by 2030. 2.1.2 Priority Action 1.1: Increase economic productivity current growth at risk. Uzbekistan’s macroeconomic and growth while keeping buffers for shocks stability29 indexes are currently lower than that of other Uzbekistan enjoyed stable pre-pandemic growth of ECA countries, indicating the instability in the country’s 6.6 percent and recovered to pre-pandemic rates with macroeconomic fundamentals. Inflation levels remain high a growth rate of 5.7 percent in 2022; however, the at 13.8 percent in 2022,30 reflecting a broad-based increase pandemic and current inflation rates underscore the in general price levels; this was expected to continue at that potential for external shocks to affect national adaptation rate until the end of 2022. Just like Peru, Uzbekistan was and resilience-building capacity. 28 The country’s evaluated to be emerging on both inclusive economic growth macroeconomic instability puts the sustainability of its and increased economic productivity and growth (Figure 12). FIG U R E 12: >> Overview of progress on indicators for Priority Action 1.1 (Increase economic productivity and growth while keeping buffers for shocks) Economic growth Macroeconomic stability Adjusted net savings Investment Nascent Emerging Established Average score Source: Based on World Development Indicators 2021. 31 24 The World Bank. World Development Indicators. 25 The World Bank. Worldwide Governance Indicators (www.govindicators.org). 26 International Monetary Fund. 2022a. World Economic Outlook: Countering the Cost-of-Living Crisis. Washington, DC. October. 27 Human Development Index.” http://hdr.undp.org/en/composite/HDI. 28 Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan, The World Bank, and the United Nations Development Programme, 2022. Uzbekistan: Choosing an Innovative and Green Future. Note. © World Bank. 29 Composite index of inflation, fiscal deficit-to-GDP, external debt-to-GDP and current account deficit-to-GDP, using averages over 2015-2019 for each variable. After normalizing each variable between 0 and 1 using all countries in the world as reference groups, all variables are added up. The higher the index, the lower a country’s macroeconomic stability. 30 https://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG?locations=UZ. 31 Ratings are based on quantitative indicators extracted from WDI and compared to UMICs. 16 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment The COVID-19 pandemic increased government The country’s adjusted net savings, like its GDP growth, expenditure on vaccines and imports, thus resulting were growing steadily before the pandemic, fluctuating in a fiscal GDP deficit of 6.1 percent. 32 This also led with a stable increase between 2016-2017, with rates to an increase in external debt to 55.7 percent33 in increasing from 14 percent in 2016 to a maximum of 17.7 2022, which is close to the 60 percent ceiling set by the percent in 2019, which then reduced to 12.8 percent in government. The country’s external debt has increased 2020. This can be attributed to the COVID-19 pandemic steadily over the past 10 years and has gone above the that created an emergency surge in government average for ECA and upper-middle-income countries. expenditures. FIG U R E 13: >> FIGURE 14: >> External debt stock (2009-2020) GDP growth (%) (2009-2020) External debt stocks (% of GNI) GDP growth (%) 60 10 50 8 40 6 External debt stocks (% of GNI) GDP growth (%) 30 4 60 10 20 50 2 8 10 40 0 6 0 30 -2 4 2005 2010 2015 2020 2025 2005 2010 2015 2020 2025 20 Europe & Central Asia (excluding high income) 2 GDP growth (%) Europe & Central Asia 10 Upper middle income (excluding high income) 0 GDP growth (%) Upper middle income 0 Uzbekistan -2 GDP growth (%) Uzbekistan 2005 2010 2015 2020 2025 2005 2010 2015 2020 2025 Europe Source: World & Central DevelopmentAsia (excluding Indicators Macrostability 2021 index high income) (2021) Source: World Development Indicators Adjusted 2021 net savings (%GNI) GDP growth (%) Europe & Central Asia Upper middle income (excluding high income) 20 Uzbekistan 0,63 GDP growth (%) Upper middle income FIGURE Uzbekistan 15: >> FIGURE 16: >> United Kingdom 1,32 15 GDP growth (%) Uzbekistan GDP growth (%) (2009-2020) Adjusted net savings (% GNI) Turkey 1,01 Macrostability index (2021) 10 Adjusted net savings (%GNI) Tajikistan 0,78 20 Uzbekistan Russian Federation 0,63 0,75 5 United Kingdom Netherlands 0,78 1,32 15 0 Turkey Kazakhstan 1,01 2005 2010 2015 2020 2025 10 Tajikistan Italy 0,78 1,33 Europe & Central Asia (excluding high income) Russian Federation 0,00 0,50 0,75 1,00 1,50 5 Upper middle income Netherlands 0,78 Uzbekistan 0 Kazakhstan 1,01 2005 2010 2015 2020 2025 Italy 1,33 Europe & Central Asia (excluding high income) 0,00 0,50 1,00 1,50 Upper middle income Uzbekistan Source: World Development Indicators 2021 Source: World Development Indicators 2021 https://www.imf.org/en/News/Articles/2022/11/15/pr22385-imf-staff-concludes-visit-to-uzbekistan. 32 33 https://www.imf.org/en/News/Articles/2022/06/22/pr22206-imf-executive-board-concludes-2022-article-iv-consultation-with-the-republic-of-uzbekistan. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 17 Macro-financial stability and structural reforms are reserves, and long maturities of foreign debt currencies crucial for sustaining economic growth in a challenging mitigate external stability risks. Uzbekistan’s external global context. In 2022, the economy experienced a surge balance sheet provides substantial reserves to protect in migrants and remittances, leading to a 5.7 percent real the country from external shocks. However, the rapid GDP growth. 34 Even though since then, remittances have expansion of foreign loans by the government, state- fallen, fiscal expansion and high wage and export growth owned enterprises (SOEs), and state banks is increasing are expected to sustain this growth at 5.7 percent in 2023. medium-term risks (Figure 17). As a commodity exporter, Strong imports and declining remittances will contribute Uzbekistan may experience shocks related to a drop in its to a higher external current account deficit. International main exports. These risks are partially mitigated by the reserves are expected to remain ample, and the 12-month fact that the price of gold tends to provide a hedge against inflation rate has declined by over 3 percentage points to falling prices of other commodities. This effect is amplified 9 percent by end-2023, thanks to a high real policy rate, a because about half of the international reserves are in gold. value-added tax rate cut, and lower international food and As the price of gold rises during a global recession, reserve energy prices. Flexible exchange rates, large international revaluations provide additional resilience to shocks. FIG U R E 17: >> Fiscal deficit, public debt, and inflation in Uzbekistan35 External sector (% of GDP) of Uzbekistan Consumer Price Inflation (End of Period) 80 12.3 11.2 56.8 57.8 53.1 53.3 51.4 11 60 10 9 40 20 0 -0.8 2020 2021 2022 2023 2024 -5 -7 -4.7 -5.2 Projection -20 2020 2021 2022 2023 2024 Current account balance (Percent of GDP) External debt (Percent of GDP) Fiscal balance and public dept (% of GDP) Government Budget 36.9 35.9 36.1 37.1 33.2 35.8 32.1 35.3 30.8 33.9 34.8 31.4 40 32 26.4 27.7 20 0 2023 -4 -4.4 -6 -4.1 -5.8 -4.2 -4.4 -3.9 -5.5 -5.5 Projection -20 2020 2021 2022 2023 2024 2020 2021 2022 2024 Projection Current account balance (Percent of GDP) Consolidated budget revenues (Percent of GDP) External debt (Percent of GDP) Consolidated budget expenditures (Percent of GDP) Consolidated budget balance (Percent of GDP) Source: IMF 2023. 2.1.3 Priority Action 1.2: Ensure that economic growth is inclusive Progress has been made to ensure that economic capture inclusive economic growth in Uzbekistan, growth is inclusive; however, significant impro- the country is established for nine and emerging and vement is required to enhance access to safe nascent for four, respectively. Figure 18 shows an sanitation, universal coverage, ICT, and social overview of Uzbekistan on these key indicators. protection coverage (SP). Of the 17 indicators that 34 https://www.imf.org/en/News/Articles/2022/11/15/pr22385-imf-staff-concludes-visit-to-uzbekistan. 35 https://www.adb.org/publications/key-indicators-asia-and-pacific-2022. 18 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 18: >> Overview of indicators for inclusive economic growth Access to primary and secondary education Access to electricity Access to basic water Women empowerment Socioeconomic resilience Access to safe sanitation Human development Poverty rate Access to universal health coverage Overall governance Poverty headcount change Access to financial Access to ICT Shared prosperity services Social protection coverage Social spending Unemployment rate Nascent Emerging Established Average score 3 Source: Based on World Development Indicators 2021. Major reforms have been recently adopted to modernize been increased to be above the poverty line,40 while the the social protection delivery system, expand the benefit amounts of LIFA have been defined on a per child coverage of poverty-targeted social assistance, and basis (with a higher amount for children aged zero to two vocational skills training, which proved to be key in and decreasing amounts for subsequent children). supporting vulnerable groups during the COVID-19 However, the expansion of the LIFA coverage came pandemic, and improving the adequacy of social with inefficiencies due to the fragmented provision benefits. Uzbekistan has already a comprehensive social of social protection benefits and services (sometimes protection system in place that includes social assistance, resulting in duplications) and outdated targeting rules. social insurance, labor market interventions, and social The provision of social protection benefits and services care services, although there is still scope to improve the (LIFA, non-contributory social pensions, social services, system’s inclusiveness, efficiency, and quality. Progress and locally managed benefits) is very fragmented in has been made in several areas during the past five Uzbekistan, sometimes resulting in duplications, higher years: the coverage of means-tested low-income family burden for applicants to enroll in different programs allowances (LIFA)36 more than tripled from 0.4 million with different application and assessment processes, families in 2017 to 2.2 million in 2023 (around 26 percent hence leading to inefficiencies for both beneficiaries and of households)37 in part also in response to the COVID-19 program administrators. Social work for the integrated pandemic. The provision of short-term vocational skill assessment of vulnerabilities and integrated referral training was enhanced and expanded, increasing its to services is nascent; a draft law is under preparation. coverage from 20,000 unemployed in 2018 to 110,000 Finally, while LIFA is one of the poverty targeted in 2022 (MEPR).38 The transparency of operational programs with the largest coverage of the poorest procedures and accountability of the LIFA improved quintile (38 percent)41 in ECA—in part because its total through the nationwide implementation of an electronic coverage of 21 percent of people is twice as large as the on-demand Social Registry (SR)39 and the increased average last-resort social assistance program in other digitalization of payment and eligibility verification comparator ECA countries, which on average covers 10 processes. The SR mostly serves the LIFA and, since 2023, percent of the population—there is scope to improve it has served as a beneficiary registry for the maternity its efficiency by improving targeting rules. Based on the benefits introduced in 2022. As of the end of 2023, the 2022 Household Budget Survey (HBS), less than half SR is interconnected with 16 administrative databases (38 percent) of the total LIFA budget went to people and includes data for 36 percent of the population. in the poorest quintile, compared to 67 percent of the Finally, the benefit amounts of social pensions have Targeted Social Assistance budget in Georgia, 59 percent 36 The LIFA program aims at supporting vulnerable households through monthly cash benefits over a period of 12 months renewable after assessment. It is the largest social benefits system in the country. 37 And 21 percent of people based on HBS 2022. 38 Including graduates from both the regional monocenter and the district-level vocational training centers. 39 The SR was piloted in Syrdarya in 2019 and rolled out nationally in 2020. The SR provides for the management of the application, eligibility verification, and beneficiary selection processes automatically leveraging the inter-operability with other relevant government databases (State Tax Committee, cadaster, civil registry, the Ministry of Employment and Poverty Reduction (MEPR), the Ministry of Health (MOH), and the Ministry of Higher Education (MHE) systems, among others). 40 A new poverty line equal to 498,000 UZS (Uzbekistan som) per person per month was developed by the State Statistics Committee following a basic-needs approach as recommended and supported by the World Bank. Based on 2022 HBS. This compares with the 37 percent of people in the poorest quintile receiving the Family Benefit Program in Armenia, 34 percent of people 41 in the poorest quintile receiving the Targeted Social Assistance in Georgia in 2021, and 20 percent of people in the poorest quintile receiving Ndima Economike in Albania based on World Bank Speed /ASPIRE database and country teams’ estimates based on the same methodology. Quintiles refer to adult equivalized consumption net of all social assistance transfers. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 19 of the Family Benefit Program budget in Armenia, and Strong (mandatory) insurance programs for indivi- 53 percent of Ndhime Economike budget in Albania. duals, businesses, and the self-employed in high-risk Between 2021 and 2023, almost 90 percent of the total areas will help to protect against the loss of property beneficiaries had to apply between 2 and 4 times to be and livelihoods. Convenient and comprehensive salary eligible, which indicates inefficiencies in the system. support can mitigate the impacts of disasters through various means. Predefined response components and Social and vocational rehabilitation (SVR) and operational strategies of social security programs should activation services in Uzbekistan are nearly be implemented during and after climate-related disasters. nonexistent. The country’s 12 regional rehabilitation Social annuities can be planned to advance recovery centers provide only medical and occupational therapy, efforts using the Pension Fund’s electronic database with few involving non-specialized psychologists. and cash dispensing capabilities. The social protection Employment Support Centers provide job search frameworks can be used to create more versatility among assistance, intermediation, and job matching services to individuals through long-term risk relief. Solid protection registered unemployed individuals, but lack the capacity programs for people, businesses, and the self-employed to provide tailored, individualized activation services for in high-risk areas can help protect against property and vulnerable groups. Persons with disabilities and hard-to- job loss. Compelling arrangements of these programs can hire groups require more intensive support to prepare, accelerate recovery from and resilience to disasters. search, and maintain suitable job opportunities. State agencies and NGOs provide limited specialized services, Uzbekistan has progressed over the past decade in such as supported employment. The private employment improving the quality and access of internet connectivity. agency market is emerging, but few providers focus on With the “Digital Uzbekistan 2030 Strategy,”43 the hard-to-place individuals. Additionally, four specialized government has set challenging targets, including vocational education and training (VET) residential deploying more than 220,000 km of fiber-optic cables schools host about 1,500 secondary students with across the country by 2025. By the end of 2021, Uzbekistan disabilities. However, these schools offer few courses had deployed 122,000 km of cable and increased its for professions not matching occupational demand international internet bandwidth to 3200 Gbps (93 kbps and based on outdated curricula. Graduates from these per person).44 Uzbekistan’s fixed broadband household schools have poor labor market prospects. In 2019, of penetration reached 25 percent as of December 2022 346,000 people of working age and with a disability (up from 9.6 percent in 2016).45 The telecom market has experienced continuing price decreases for international certificate, only 5 percent were employed.42 internet access (around $2.7/Mbps in September 2022 The new Unified Social Protection Platform can be compared to $91.5 in 2016), in retail prices for the data- enhanced for adaptation by defining specific climate only mobile-broadband basket ($1.42 in 2021 compared to events and indicators that trigger social protection $30 in 2016). Uzbekistan was among four new countries response. This system aims to integrate existing social that met the UN’s two percent affordability target.46 Most protection databases, beneficiary registries, and other 35,000 social facilities (schools, preschools, healthcare modules, including medical and social assessments for facilities, and mahalla citizens’ assemblies) have been individuals with disabilities, assistive tools and devices connected to high-speed internet. In November 2021, the administration, social service application, e-case government updated key targets for telecom infrastructure management, child protection, gender-based violence development.47 Specifically, it set the target of raising the survivors, complaint mechanism management, and capacity of the international data transmission channel financial and administrative management of social by 3.5 times and building an extra 150,000 km of national protection services. The platform is expected to: enable fiber-optic lines by 2023. The eventual aim is reaching all a more human-centric approach, support social case settlements, 80 percent of which should be able to connect management by social workers, reduce duplications, and to fixed broadband, with 100 percent of settlements provide services based on the needs of poor or vulnerable having mobile broadband connectivity by 2024. With this families. The platform’s ‘adaptation’ potential can be better in mind, the government introduced further incentives for utilized by defining specific climate events and indicators telecom operators (e.g., tax, customs), especially for those triggering social protection response and integrating with deploying infrastructure in rural areas, and also made other disaster risk management information systems. efforts to simplify the issuance of permits. 42 Of those working, only 7 percent were in full-time employment, compared to 31 percent among persons without disabilities. United Nations Uzbekistan. 2019. “Situation Analysis on Children and Adults with Disabilities in Uzbekistan.” Tashkent: United Nations. 43 Presidential decree of the Republic of Uzbekistan “About approval of Strategy “Digital Uzbekistan-2030” and measures for its effective realization” https://cis-legislation.com/document.fwx?rgn=130974. 44 https://mitc.uz/ru/news/4272. 45 TeleGeography data, December 2022. 46 In 2018, the UN Broadband Commission for Sustainable Development set its updated affordability target: to bring prices for entry-level broadband services below 2% of monthly GNI per capita by 2025. https://lex.uz/uz/docs/5735282. 47 20 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Despite this progress, Uzbekistan’s internet adoption countries and above the rates for both lower-middle- remains low, with internet connectivity insufficiently income and upper-middle-income countries. diversified due to its reliance on terrestrial transit Good governance should be promoted as the country bandwidth and dependence on neighboring countries. transitions towards a market economy and develops Internet adoption also remains low in part due to market strategies for inclusive development with increased constraints affecting affordability. Uzbekistan’s fixed capacity for adaptation and resilience. Uzbekistan broadband household penetration was more than triple records lower scores (-1.05) for all indicators of the World the average for countries with a similar GDP per capita. Governance Index compared to ECA (0.55) and upper- Compared to its Central Asia neighbors, Uzbekistan is middle-income countries (-0.15). This places Uzbekistan behind Kazakhstan (37 percent), narrowly surpasses the in the bottom tercile of its peers for the following Kyrgyz Republic and Turkmenistan (20.2 percent and dimensions of good governance: voice and accountability, 20.8 percent, respectively), and far outpaces Tajikistan political stability and absence of violence, government, (5.5 percent).25 Uzbekistan is considered one of the lower- regulatory quality, the rule of law, and control of level mobile penetration countries in the ECA region after corruption. Enhancing sound governance principles— Tajikistan (80.2 percent).48 In January 2023, Uzbekistan particularly the rule of law, voice and accountability, and ranked 122nd (out of 138) globally for mobile broadband political stability—will go a long way toward facilitating speed and number 92 (of 179) for fixed broadband speed.49 the transition and improve the economy’s adaptation and While there has been notable progress in key health resilience to shocks. outcomes, room remains for improvement. Life Although progress has been made to improve human expectancy at birth increased from 66.5 years in 1990 capital in Uzbekistan, the current policy changes to 71.6 years in 2018, while neonatal mortality dropped and reforms to transition the country to a market from 30.9 deaths per 1,000 live births to 9.9 the same economy with a vibrant private sector in the context year. Despite these improvements, there are still of climate change will require higher levels of human considerable gaps in health outcomes compared to many capital investment (HCI). Levels of HCI in Uzbekistan well-performing health systems in the ECA region. For by 2020 were 62 percent,50 lower than the average for example, life expectancy remains below the ECA regional ECA countries. The average HCI score for girls is higher average, and the neonatal mortality rate is nine times than that for boys. However, Uzbekistan registers higher that reported in Estonia and 3.5 times the rate in Poland. human development index scores for males than females; Multiple reasons may explain why Uzbekistan is behind the same phenomenon is reflected among ECA countries. other ECA countries in health outcomes and existing Uzbekistan is improving in human development, but challenges, including (i) low and inefficient public health scores for males (0.744) and females (0.700) remain financing, (ii) poor quality of care as a result of outdated lower than those of Central Asia countries, where scores clinical practices and human resource planning and are 0.810 and 0.778 for males and females, respectively.51 distribution; and (iii) lack of strong stewardship and However, Uzbekistan’s gender development index is high governance to effectively harness a rapid private sector (0.94), falling just under the ECA average (0.96). growth towards health system goals. The government of Uzbekistan has made rapid Uzbekistan’s health sector faces challenges in progress on its path toward social and economic increasing public spending, improving financial transformation. On September 5, 2017, the official protections for private health spending, improving exchange rate depreciated by 50 percent and existing service quality, and increasing efficiency. Key issues surrender requirements on exports were abolished. There include low public health spending efficiency, high have also been important steps to reduce the state’s large government spending on wages, lack of hospital financing presence in the economy by liberalizing prices, removing mechanisms, large out-of-pocket expenditures to trading controls and utility subsidies, and opening the private sector providers, a fragmented hospital network, economy to greater foreign and domestic private sector lack of access to health services for lower-income participation in job growth and investment. Further populations, and lack of medicine coverage. Unmet reforms are expected to be undertaken in the near future, needs are high, particularly among poorer communities, including those related to the restructuring of the SOEs. with malnutrition still prevalent (10.8 percent in 2017). Mortality from cardiovascular diseases, cancer, diabetes, However, attention must be paid to assisting groups or chronic respiratory diseases between ages 30 and 70 adversely affected by the short- and medium-term was 25.3 percent in 2019, twice the average for OECD reforms. During the transition process, some population 48 TeleGeography data December 2022. 49 Speedtest Global Index January 2023. https://www.speedtest.net/global-index . 50 https://thedocs.worldbank.org/en/doc/64e578cbeaa522631f08f0cafba8960e-0140062023/related/HCI-AM23-UZB.pdf https://hdr.undp.org/gender-development-index#/indicies/GDI. 51 Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 21 groups are being adversely affected. While the reform capacity (because of reforms like price liberalization, agenda is very popular (98 percent of citizens support exchange rate liberalization, utility tariff increases, and the reform agenda and are optimistic about the future, removal of subsidies). While recent initial measures according to the L2CU survey 2024). International related to rising electricity and gas tariffs or removing experience with relatively similar reforms shows the poor subsidies for bread and flour have had a manageable and those close to the poverty line are less resilient to impact on poor households,52 it is urgent to implement price changes and may be affected by lower purchasing mitigation measures that will support further reforms. 2.2 Facilitate the adaptation of people and firms “Private actors—households and firms—have an incentive to increase their resilience and adapt to climate change. However, they face a range of obstacles, from the lack of information and behavioral biases to imperfect markets and financial constraints. Governments need to minimize these obstacles to maximize the economy’s adaptive capacity and prevent (as much as possible and desirable) climate change impacts and natural disasters.” — The Adaptation Principles. This section assesses progress in creating an corresponding to five priority actions. The results environment that enables people and businesses to (Figure 19) show initial progress towards achieving this adapt in Uzbekistan. Evaluation includes 24 indicators adaptation principle and three priority actions.  FIG U R E 19: >> Overview of adaptation and resilience assessment of people and firms Facilitate the adaptation of people and firms Facilitate structural change in the economic system 0 1 2 Ensure financing is available to all, and provide support to the poorest and most vulnerable people 4 1 0 Facilitate access to technical solutions for resilience through R&D and trade policies 1 1 2 Clarify responsibilities and align incentives with resilience and adaptation objectives 1 3 0 Assess disaster and climate change risks, and make this information available 0 2 7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicators Nascent Emerging Established Sources: Based on Uzbekistan TNC, Uzbekistan Center for Hydrometeorological Services (Uzhydromet), WB climate change portal, UNDP, WDI, WB Enterprise Survey, UNHCR. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). Assessment of Uzbekistan’s overall progress in these findings and options for enhancing the adaptation facilitating the adaptation of people and firms shows of people and firms are summarized below. that significant gaps exist in ensuring financing is available to all and in providing support to the poorest 2.2.1 Priority Action 2.1: Assess climate and disaster risks and make this information available. and most vulnerable people. Figure 19 shows that gaps are also significant in the country’s ability to clarify The overall assessment for Priority Action 2.1 shows responsibilities and align incentives with resilience that the country is established for seven of the nine and adaptation objectives. Progress has been made in indicators (see Figure 20) and emerging for the facilitating structural change in the economy and the availability and completeness of hydromet data and country’s ability to assess disasters and climate change the availability and coverage of high-resolution risk; however, challenges remain in the country’s ability digital terrain model data. The key gaps identified are to make this information readily available to all. Details of summarized below. 52 World Bank 2018a. “Tariff and Subsidy Reform: Assessing Impacts from Selected Elements of the Roadmap for Uzbekistan.” Presentation. 22 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 20: >> Benchmark scores for Priority Action 2.1: Assess climate and disaster risks and make this information available Number of weather or hydrological observation stations operational in the country National-scale hazard map (covering the entire country) availability and completeness Local-scale hazard maps (1:10.000 or larger) availability and completeness     Local-scale climate change scenarios Data platform providing easy access to hazard     and climate change scenario data and historical disaster information Hydromet data availability and completeness Community awareness of hazard and vulnerability levels High-resolution Digital Terrain Model (DTM) Climate and disaster risk assessment data coverage and availability for main economic sectors Emerging Established Average score Sources: Original to this publication based on data from Uzbekistan TNC, Uzbekistan Hydromet, WB climate change portal, UNDP, WDI, WB Enterprise Survey, and UNHCR. Although tremendous efforts have been made by the reduction compared to post-disaster response processes. Uzbekistan Center for Hydrometeorology Services While work with Karakalpakstan communities has (Uzhydromet) to ensure data availability, significant focused on hydrological constraints and earthquakes, challenges remain. Some Uzhydromet challenges there has been limited interaction with them on include inefficient data collection channels for real-time interpreting and responding to climate-related hazard monitoring, risk assessment, mapping, and forecasting warnings in eastern areas. impacts based on population, asset, and infrastructure Challenges in managing transboundary hazards distributions. The surface monitoring device is manually and employment of GIS technology adversely affect operated and not suitable for relaying real-time the MES’s ability to provide adequate disaster observations of precipitation, temperature, snowfall, information. Despite 80 percent of floods and landslides river flow, and dam levels. Coverage of eastern alpine occurring outside the country, Uzbekistan faces areas is limited.53 Advanced remote sensing technologies insufficient information on transboundary hazards and and methods for monitoring and assessing risks beyond risks. Legal and institutional arrangements exist for current observation sites are not widely used. Another disaster data sharing and warnings between neighboring obstacle is the capacity of national institutions to use Central Asia countries. However, Uzhydromet faces and apply complex risk models and assessment tools. capacity limitations in remote sensing, GIS technology, Technical support has helped overcome some obstacles, and data-specific hazard modeling and treatment tools. such as investments in automatic weather stations Additionally, Uzhydromet participates in the Regional (AWS), but remains lacking due to a dearth of public Climate Outlook Forum, but has infrequent national and funds to upgrade equipment. local climate outlook forums. Uzhydromet’s centralized generation and There is a need to build capacity for air quality mana- dissemination of hydrometeorological data hinders gement in manpower and financing for adequate access to other ministries and limits creative use. implementation of Article 6 of the Law on Atmospheric The effectiveness of a multi-disaster early warning Air Protection. Uzhydromet monitors and forecasts and prediction system depends on Uzhydromet’s weather and climate and operates air quality monitoring ability to transform hydrometeorological information stations across the country; however, these stations into hazard-related information and the ability of the are not automatic and only conduct observations three Ministry of Emergency Situations (MES) to coordinate times a day using the aspiration method. Increasing the dissemination and cross-sectoral early warning and manpower is needed for air quality management, and multi-hazard forecasting responses using national and there is a need to increase the number of automatic regional communication channels. Also, the lack of site- observation and analysis centers. Currently, sanitary specific hazard and forecast information hinders MES’s norms and regulations have been outlined for maximum proactive approach to damage and loss prevention/ allowable concentrations (MACs) of 485 pollutants; 53 https://www.greenclimate.fund/document/enhancing-multi-hazard-early-warning-system-increase-resilience-uzbekistan-communities. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 23 however, the country lacks the capacity to monitor all 2.2.2 Priority Action 2.2: Clarify responsibilities of these pollutants, so it will be important to prioritize and align incentives with resilience and adaptation them to a reasonable number/capacity for monitoring objectives. and application of the law on atmospheric air protection. Overall, Uzbekistan is actively working on clarifying responsibilities and aligning incentives with resi- High-resolution Digital Terrain Model (DTM) data lience and adaptation objectives; Figure 21 shows that is only available for some sectors; it does not cover the national territory and is not readily available for the country still lags behind in integrating adaptation public use. Government agencies have developed high- and mitigation risk measures in sustainability risk resolution DTM data for agricultural lands/irrigation/ reporting by private firms. The country has made drainage networks in Ferghana and Samarkand regions progress in assigning institutional responsibilities for and some cities. This data is mainly available for official disaster risk management and climate change, residual use and not to the general public. Also, other public risk target levels, and instituting private sector climate and private organizations have DTM data for different change action plans; however, gaps still need to be filled regions that are accessible only to government officials to ensure clarity around responsibilities within the public or through paid access. sector institutions and private sector organizations. FIG U R E 21: >> Benchmark Priority Action 1.2: Clarify responsibilities and align incentives with resilience and adaptation objectives Institutional responsibilities for disaster risk management and climate change Residual risk target level Sustainability risk reporting integrates adaptation Private sector climate change risks and risk mitigation measures action plans (CCAPs) Nascent Emerging Average Score Sources: Author compilation from Uzbekistan TNC, Uzbekistan Hydromet, WB climate change portal, UNDP, WDI, WB, World Bank Enterprise Survey. Disaster risk management responsibilities have included in private sector climate action plans; small been assigned; however, climate change aspects and medium enterprises do not integrate adaptation are assigned to different sectors. Due to the absence measures. Policy documents on industrial sector of a national climate change policy, the national- development lack environmental protection measures, level climate governance system is unclear. Climate compromising the sector’s contribution to community change is incorporated into sectoral legislation and welfare. Water pollution from chemical, petroleum, strategic documents, but Uzbekistan lacks legislation manufacturing, and metal industries is a major concern, specifically addressing the issue. The 2019 “Concept on with many companies lacking wastewater treatment Environmental Protection until 2030” outlines long- plants or pretreatment. Industrial wastewater is often term goals and priorities for environmental protection. discharged into rivers or municipal sewage systems. Opportunities for further development include climate While leading companies are working on upgrading to change, low carbon development, environmental reduce air emissions, technological progress for small compliance, forest protection, soil protection, and and medium enterprises (SMEs) remains lagging. environmental noise. Local authorities have adopted 2.2.3 Priority Action 2.3: Facilitate access to technical a few strategic environmental protection documents, solutions for resilience through R&D and trade policies. indicating potential for further development. Also, residual risk levels are identified for selected hazards This priority action indicates that Uzbekistan significantly lags behind (Figure 22) in public such as floods and earthquakes; however, the documents spending on research and development (R&D); the on residual risk levels are not always published. innovativeness of the private sector also partially Environmental safeguards are not systematically meets the standard. 24 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 2 2: >> Summary Priority Action 2.3: Facilitate access to technical solutions for resilience through R&D and trade policies Resilience tariff Public R&D spending Innovativeness of the private sector Private sector R&D spending Nascent Emerging Established Average score Sources: Original to this publication based on data from Uzbekistan TNC, Uzbekistan Hydromet, WB climate change portal, UNDP, WDI, and WB enterprise Survey. More investment in R&D related to the environment the enhancement of science, technology, and innovation for science-informed decision-making is needed to (STI) to place the country among the top 50 economies enhance the resilience of people and firms. Public in the Global Innovation Index by 2030. To achieve this expenditure on R&D has been fluctuating and is relatively objective, an intermediate target was set to quadruple low compared to UMIC; thus, more research is required the government expenditure on R&D from the current 0.2 to provide evidence for adaptation and resilience action. percent of GDP to 0.8 percent of GDP by 2021; however, The government has set an ambitious target following this target has not been met. Current levels of innovation the approval of the “Strategy for Innovative Development by the private sector are low (23 percent of firms), thus of the Republic of Uzbekistan for 2019–2021”54 adopted making it difficult for firms to adapt to a changing climate; in September 2018. The strategy sets ambitious goals for incentives for firm innovations should be prioritized. FIG U R E 2 3: >> Uzbekistan: aggregated functional composition of agricultural public expenditure 100% Miscellaneous 90% 80% 100% Cost of public stockholding Miscellaneous 90% 70% Development and maintenance of infrastucture 80% Cost of public stockholding 60% Inspections control and and Development maintenance of infrastucture 70% 50% 60% Agricultural knowledge Inspections and innovations and control 40% 50% Agricultural knowledge and innovations Payments based on non-commodity criteria 30% 40% Payments based on non-commodity criteria 30% Payments per hectare or animal (coupled) 20% Payments per hectare or animal (coupled) 20% Payments for fixed capital formation 10% Payments for fixed capital formation 10% 0% Payments based Payments on based variable on input variable input use use 0% 2016 2017 2016 2018 2017 2018 2018 2018 2018 2018 Source: Izvorski et al. 2019. Uzbekistan Public Expenditure Review. Research and development expenditure (% of GDP) Constraints on innovation activity, 2019 esearch and development expenditure (% of GDP) Constraints on innovation activity, 2019 25 23.1 2.5 who percieve as risk 25 23.1 % of respondents 20 2020 who percieve as risk 2 14.7 % of respondents 20 15 12.9 11 1.5 10 14.7 9.3 8 15 12.9 7.2 7.2 6.5 1 5 11 10 9.3 8 7.2 7.2 0 6.5 0.5 5 Lack No need innovation personnel High economic risk Lack of information on sales markets of Finance High cost of innovation Lack of qualified newfor new and services Lack of information on new technologies Undeveloped innovation infrastructure 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 No need for innovation Lack of information on sales markets Lack of Finance cost economic risk Lack of information on new technologies infrastructure of innovation Lack of qualified personnel High services Undeveloped innovation demand for Low for High products Europe & Central Asia (excluding high income) 2010 2011 2012 2013 2014 2020 2015 2016 2017 2018 2019 Low demand products and Upper middle income Uzbekistan Europe & Central Asia (excluding high income) Source: World Bank 2021. Source: World Bank 2021. Upper middle income Uzbekistan https://lex.uz/docs/3913186. 54 Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 25 Accelerating investments and creating an enabling agricultural expenditure is dedicated to generating and investment climate for R&D is critical to improving innovating agricultural knowledge. scientific excellence. Strengthening the links between education, science, and industry and placing Lack of finance remains the major obstacle to the universities among the top 1,000 universities in innovation by firms in Uzbekistan. Figure 23 shows international rankings remain key objectives for the that firms in Uzbekistan mention lack of finance as a country. Uzbekistan has placed innovation at the heart major obstacle to innovation. Figure 24 confirms this by of its economic development strategy. Nevertheless, noting that only 4.5 percent of firms spend on research domestic R&D expenditures corresponded to 0.2 percent of and development. This makes it difficult for firms to GDP in 2017 compared with a global average of 1.7 percent develop innovative climate-smart technologies to help in 2014 and an Organization for Economic Cooperation them adapt to climate change. It is also difficult to adopt and Development (OECD) average of 2.37 percent in 2017, innovative technologies easily within the local economy deferring Uzbekistan’s progress on Target 9.5 of the 2030 due to poor access to finance. Therefore, privatizing the Agenda. Figure 23 shows aggregated public expenditure banking sector and promoting credit facilities to firms in the agricultural sector. Although this sector is very and small businesses are critical to enhancing innovation vulnerable to climate change, only a small proportion of and climate change adaptation. FIG U R E 24: >> Enterprise innovation indicators for Uzbekistan and other countries 90.7 77.8 72.6 71.2 67.2 66.2 64.6 57.2 56.4 50.4 45.3 41.7 28.2 26.2 26.2 23.2 22.9 20.8 20.9 18.6 18.7 14.4 14.4 10.5 10.3 10.2 10.2 11.1 8.9 8.7 10 7.3 6.5 4.5 2.3 2.1 Percent of firms using Percent of firms having Percent of firms that Percent of firms whose new Percent of firms that Percent of firms that spend technology licensed from their own website introduced a new product/service is also new to introduced a process on R&D foreign companies* product/service the main market innovation Azerbaijan Kazakhstan Kyrgyz Republic Tajkistan Türkiye Uzbekistan Source: World Bank Enterprise Survey 2021 . 2.2.4 Priority Action 1.4: Ensure financing is available to all and provide support to the poorest and most vulnerable people The benchmark for this priority action (Figure 25) percent. Also, providing public services to refugees and indicates that Uzbekistan still has a lot to do in integrating refugees through sustainable and decent jobs. enhancing social protection coverage for the poorest Efforts have been made to identify the most vulnerable quintile access to financial services for the bottom 40 populations and communities, but gaps still exist. FIG U R E 25: >> Priority Action 1.4: Ensure financing is available to all and provide support to the poorest and most vulnerable people SP coverage for the poorest quintile Access to financial services for the bottom 40% Access to public services for refugees Sustainable and decent job Most vulnerable populations and opportunities for refugees communities identified Nascent Emerging Average score Sources: Original to this publication based on data from Uzbekistan TNC, Uzbekistan Hydromet, WB Climate Change Portal, UNDP, WDI, and WB Enterprise Survey. 26 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Although efforts to improve access to financing for the burden of climate change as they have fewer and all, including providing support to the poorest and more vulnerable assets and are less able to adapt and most vulnerable people, have been made, significant recover after climate shocks. Uzbekistan has a relatively gaps remain. Access to finance by the bottom 40 well-articulated and inclusive SP system composed of percent increased in Uzbekistan between 2011 and 2021, social assistance, social insurance, social care services, however, relative to its peers, it is still low (41.5 percent) and labor market interventions. The coverage across all and could be improved for better adoption of adaptation contingencies and population groups must be improved options (Figure 26). As of 2021, access to financial to protect all households in need. Also, the current SP services by the bottom 40 percent was relatively low (41.5 system is managed by different ministries through percent); enhancing access to finance to this segment different programs, with little coordination between of the population is critical in the promotion of the them resulting in high lapses and expenditures; the resilience of people because many low-income families development of a comprehensive SP strategy and live in rural areas and rely directly and indirectly on consolidated SP functions under one dedicated entity irrigated agriculture. These families are prone to bear will significantly improve the current situation. FIG U R E 26: >> Account ownership at a financial institution or with a mobile money-service provider, poorest 40% (% of population ages 15+) 78.75 100 71.64 63.81 62.29 80 56.23 51.1 60 41.14 41.5 34.86 35.66 30.92 40 19.28 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Europe & Central Asia (excluding high income) Upper middle income Uzbekistan Source: WDI 2022. It is crucial to link SP and disaster risk management systems enable faster safety net expansion and timely to build adaptive, responsive social protection. responses, while flexibility in SP elements enables This involves developing a framework for systems tailored adjustments during shocks. It is crucial to that can scale up and down quickly, requiring specific implement mechanisms for uninterrupted enrollment instruments, institutional arrangements, and and delivery of benefits and services in case of disasters, government leadership. Adaptive instruments usually ensuring the provision of social protection benefits to comprise three types, namely, (i) adaptive programs the population. (both in program design, delivery mechanisms: flexibility to scale up and down to better respond 2.2.5 Priority Action 1.5: Facilitate structural change in the economic system to disasters), (ii) adaptive finance to ensure that SP programs can quickly respond to disasters and (iii) In recent years, the government of Uzbekistan adaptive information.55 Adaptive information enhances has made significant efforts in clearly defining its understanding of risks and vulnerabilities, enabling strategy towards structural transformation; the interventions to be tailored to different types and scales. country has indicated its intentions to develop new For example, information on household compositions, sectors and pathways to manage the transition to risks, vulnerabilities, early warning information, and a green economy. However, efforts to diversify the pre-positioned risk financing based on pre-defined economy remain below those of benchmark countries; triggers can support the development and provision of this justifies the rating of this indicator as emerging, as rapid responses appropriate to the disaster impact. 56 IT shown in Figure 27. Grosh 2019. Presentation on Strengthening Social Protection for Disaster Resilience in Latin America and the Caribbean. 55 56 World Bank. 2018b. The State of Social Safety Nets 2018. Washington, DC: World Bank. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 27 FIG U R E 27: >> Summary Priority Action 1.5: Facilitate structural change in the economic system Strategy to manage the decline of negatively affected (sunset) sectors published Strategy to support the development Diversification of the economy of positively affected (sunrise) sectors Emerging Established Average score Sources: Original to this publication based on data from Uzbekistan TNC, Uzbekistan Hydromet, WB Climate Change Portal, UNDP, WDI, and WB Enterprise Survey. Accelerate economy-wide diversification efforts can be done by Uzbekistan by improving the business while ensuring sustainable systems are in place. Over climate, streamlining regulations, and improving the last 25 years, Uzbekistan’s economic complexity access to finance. The government can offer targeted index (ECI) has increased by only 9 points, showing how export promotion programs, such as trade missions and low diversification has been; however, there has been matchmaking events. Trade facilitation can be achieved a good dynamic over the last 10 years with a 7-point by simplifying customs procedures and reducing increase contrary to the 2-point change between 1995 trade costs. Uzbekistan can also focus on high-value and 2000. Figure 28 shows the dominance of natural exports by investing in research and development, and resources as the main exports; diversification to other adding value to existing exports through processing products reduces the economy’s exposure to shocks. or manufacturing. Current policy reforms for the Current reforms towards a market economy should development of the industrial sector do not capture also provide incentives for the development of other environmental safeguards. This potentially reduces sectors and acceleration of manufacturing and industry the sector’s contribution to the well-being of the local while at the same time enhancing the efficiency and communities and increases the risk to the ambitious competitiveness of current dominant sectors. This plan of a low-carbon economy.57 FIG U R E 28: >> Uzbekistan export composition Source: OEC 2021. 57 https://unece.org/DAM/env/epr/epr_studies/Synopsis/ECE.CEP.188_Uzbekistan_Eng_Synopsiss.pdf . 28 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment 2.3 Adapt urban and land use plans and protect critical public assets and services “Beyond direct support to households and businesses, governments have a transformative role to play in ensuring their country, their economy and their citizens can adapt to climate change. This is particularly the case to ensure the adaptation of important public assets and infrastructure systems such as power systems, roads, water, and sanitation, and essential services such as health care, education, safety, and security. Urban and land use plans also influence massive private investments in housing and productive assets, so these must adapt to evolving long-term climate risks to avoid locking people into high-risk areas.”—The Adaptation Principles. This section examines progress in adapting critical resilience of the water infrastructure and water public assets and services in Uzbekistan. The management, and the resilience of the agricultural assessment contains 43 indicators corresponding to sector. Gaps also exist in the country’s ability to 8 priority actions. Overall results suggest progress revise land-use and urban plans for risk-informed is being made, but because of this adaptive principle, decision-making, in designing and implementing a more emphasis should be placed on system design and government-wide strategy to increase the resilience of implementation. Assessment of Uzbekistan’s capacity infrastructure and public assets. Figure 29 summarizes to adapt land use plans and protect critical public findings from the capacity of Uzbekistan to adapt land- infrastructure reveals that initiatives are ongoing use plans and protect critical assets. It shows that the for most of the indicators; however, very few are up capacity in this area still does not meet the country’s to the standard for upper-middle-income countries. required standards. Propositions on these dimensions Significant gaps exist in ensuring the resilience of and others listed in Figure 29 are highlighted in the the forest sector and other natural ecosystems, the text below. FIG U R E 29: >> Overview of adaptation and resilience assessment for adapting land use plans and protecting critical public assets Facilitate the adaptation of people and firms Facilitate structural change in the economic system 0 1 2 Ensure financing is available to all, and provide support to the poorest and most vulnerable people 4 1 0 Facilitate access to technical solutions for resilience through R&D and trade policies 1 1 2 Clarify responsibilities and align incentives with resilience and adaptation objectives 1 3 0 Assess disaster and climate change risks, and make this information available 0 2 7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicators Nascent Emerging Established Sources: Original to this publication based on data from the World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). 2.3.1 Priority Action 3.1: Identify critical public assets and services Uzbekistan has done well in identifying its critical Also, the logistics performance index of the country infrastructures and services; however, the inventory is relatively low compared to benchmark countries; of these critical infrastructures is at the district levels however, in terms of the energy architecture and in ministries; national coordination is lacking. performance index, the country is much further behind. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 29 FIG U R E 30: >> Summary Priority Action 3.1: Identify critical public assets and services Critical infrastructure inventory Energy Architecture Critical infrastructure Logistics Performance Index Performance Index and services identified Nascent Emerging Established Average score Sources: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, WHO, UNICEF, and expert interviews. The energy sector still suffers from many ineffi- only 33 percent. Figure 31 supports this by highlighting ciencies and infrastructure issues in Uzbekistan and Uzbekistan’s low energy architecture performance index requires investments in its modernization. Uzbekistan’s relative to other Central Asian countries. The deficiencies outdated transmission and distribution system results in require modernization and development programs for 18 percent transmission losses and 14 percent distribution efficient generation capacity and improved transmission losses. This mismatch between power supply and demand, and distribution systems. In 2015, the Presidential Decree particularly during winter months, leads to power adopted the “Program of Measures to Ensure Structural outages lasting two to six hours a day, affecting economic Reform, Modernization and Diversification of Production activity and social services. The thermal power plants for the Period 2015-2019,” focusing on modernizing built in the 1960s and 1970s are inefficient due to steam existing plants and creating more diversified ones like turbine technology, with an average weight efficiency of Integrated Solar Combined Cycle Power Plants (ISCCs). FIG U R E 31: >> The Energy Architecture Performance Index 2017, sustainability 1 0.75 0.78 0.79 0.77 0.66 0.67 0.69 0.66 0.63 0.62 0.65 0.62 0 55 0.54 0.54 0.57 0.57 0.55 0.43 0.5 0.23 0 2017 EAPI score Economic growth and development Environmental sustainability Energy access and security Uzbekistan Kyrgyz Republic Türkiye Azerbaijan Kazakhstan Source: Global Energy Architecture Performance Index Report 2017. Modernization and more investments are required as improving transport policies, increasing passenger to improve Uzbekistan’s logistics performance, and freight traffic quality and quantity, reducing costs, and innovations are critical to ensure resilience to increasing traffic through Uzbekistan, and improving disasters and climate change. Government policies have transport and logistics services. Institutional changes are emphasized the importance of building a transportation needed to create competitive markets and make transport network to meet economic and transportation needs safer, greener, and more innovative. Uzbekistan can across all regions. Communications and structural enhance its logistics performance by improve marketing, reforms in passenger, cargo, and air transport have been integrate government and private agencies, simplify ensured, promoting effective integration into global transit processes, increase coordination, improve transport spaces. Figure 32 shows that Uzbekistan still customs administration efficiency through training lags behind upper middle-income countries and does and full digitalization, attract investors, reconstruct not fully harness the opportunities presented to the infrastructure, and reduce transportation and monopoly country due to its strategic position connecting Asia and power. These actions can lead to faster delivery times, Europe. However, the country needs to address serious reduced costs, and increased global competitiveness. problems affecting its transportation systems, such 30 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 3 2: >> The Logistics Performance Index 2017 3 performance index Logistics 2.5 2 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe & Central Asia (excluding high income) Upper middle income Uzbekistan Source: World Bank, LPI 2023. Uzbekistan’s logistics performance58 in 2023 improved logistics performance index. Exporters cited persistent on its bureaucracy, border inefficiencies, and limited bureaucratic tariffs and border delays as significant logistics infrastructure, yet is still lower than that obstacles, making Uzbekistan’s logistical performance of upper-middle-income countries. This illustrates inferior to its competitors. that there is room for improvement in the country’s 2.3.2 Priority Action 3.2: Design and implement a government-wide strategy to increase the resilience of infrastructure systems and public assets Strengthening public asset management and main- Uzbekistan will adopt a proactive approach to infrast- tenance is crucial for a smooth transition to resilient ructure maintenance, maintaining an inventory of critical infrastructure. Administrative budgets and effective infrastructure, vulnerabilities, and evidence-based plans. enforcement mechanisms are needed to prevent deferred An asset management system must be developed to ensure maintenance, premature decline, and costly interventions. a comprehensive approach to infrastructure resilience. FIG U R E 3 3: >> Priority Action 3.2: Design and implement a government-wide strategy to increase the resilience of infrastructure systems and public assets Resilient infrastructure investment needs Long-term resilient infrastructure plan Resilient infrastructure agency Asset management Construction standards for Infrastructure maintenance budget system infrastructure and buildings Nascent Emerging Established Average score Sources: Original to this publication based on data from the World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. Although efforts have been made to improve account for 4 percent of planned and under-construction infrastructure and make it more resilient, more still capital projects, while the upstream oil and gas industry must be done. Uzbekistan faces significant infrastructure accounts for almost half (45 percent). Oil and gas challenges to maintain network performance, with a pipelines account for 9 percent of the investment, while deferred maintenance backlog of $1 billion annually. To power transmission and distribution projects account meet the anticipated freight traffic through Uzbekistan, for 6 percent. The industrial sector is dominated by the road infrastructure capacity needs to increase 486 manufacturing, accounting for more than 98 percent of percent by 2030 and 1,365 percent by 2050. Road transport projects, and mining and quarrying for just 1 percent. is expected to increase by 50 percent by 2050, while rail traffic is expected to increase by 2030 but decline by 2.3.3 Priority Action 2.3: Revise land use plans and urban plans to make them risk-informed 2050. The energy sector faces inefficiencies, costing the economy about $1.5 billion annually. Poorly performing Overall, the use of land use planning and urban planning infrastructure puts a heavy strain on the economy. still have significant gaps, and the number of qualified Between 2000 and 2018, energy projects accounted for planners, quality of urban plans, and available financing more than 64 percent of Uzbekistan’s total investment, for implementation of urban plans remain a major with manufacturing and transport accounting for 23 issues. Figure 34 shows the ratings for this priority action; percent and 13 percent, respectively. Water and sanitation overall, Uzbekistan is nascent on this priority action. 58 https://lpi.worldbank.org/international/scorecard/column/C/UZB/2023/I+UMC+2023 Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 31 FIG U R E 3 4: >> Summary Priority Action 2.3: Revise land use plans and urban plans to make them risk-informed Number of qualified planners per capita Quality of urban plans Identification of areas at risk Financing for the implementation of Institutional and regulatory framework for urban urban plans planning Nascent Emerging Average score Sources: Original to this publication based on data from the World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. Coordinated strategic planning and investment, to match current density levels with these building codes. particularly in secondary cities, are required for Current urban plans still reflect the urbanization spirit sustainable urban planning in Uzbekistan. The of the former Soviet Union. Urbanization plans need to government’s goal of achieving a 60 percent urbanization be revised to meet current challenges and development rate in Uzbekistan by 2030 is unlikely to be reached if objectives. The Soviet Union’s high-rise housing plans current trends are not maintained. The plan aims to were based on the actions of the state, and policymakers promote an integrated system of regional clusters and failed to recognize the benefits of urban densification, city networks, strengthen economic diversification, particularly in urban centers. Despite the drive to and increase competitiveness among Tashkent and update general plans initiated by Decree of the Cabinet secondary cities. It also focuses on tackling urban sprawl of Ministers No 3, dated January 5, 2016, and Decree of by fostering compact development and on promoting a the President of the Republic of Uzbekistan No. УП-2595, green buffer and environmentally sensitive areas. Smart dated April 26, 2000, there are still cities, like Mulgan in growth is encouraged through urban rezoning, compact the Kashkadarya region, with general plans dating back development, and an enforced Urban Growth Boundary. to the 1980s. Planners defined the number of new high- Inclusive zoning is mandatory, and the plan supports public rise developments, leading to high-rise residential areas transportation systems. The plan also focuses on building a emerging in green areas on the outskirts of cities. This network of green and blue infrastructure, adopting a “City can be seen as land misallocation without price signals Garden Approach” to regenerate urban areas and enrich or incentives. Although some are being replaced, general ecosystem services, well-being, and human health. The plans are still dominant in new city planning documents, plan also includes establishing a network of green spaces which further limits compression options. based on city area and population size, providing policies for new flat surfaces on government buildings and private Although progress has been made in Uzbekistan’s dwellings, and using windbreak buffer areas to improve urban planning, systemic reforms are required to building microclimate. Strategic coordination between ensure sustainable urban development financing. national and subnational governments in implementing Urban infrastructure development is a significant issue these approaches is required. due to an inefficient national financing system, cost recovery, and management. Government agencies set Urban plans are outdated and do not adequately integrate utility rates below the break-even point, leading to disaster risk management guidelines for resilient insufficient revenues and collection inefficiencies. This infrastructures. Insufficient building codes in Uzbekistan system results in systematic deficits and under-spending hinder urban density growth. The ShNK59 and SanPiN60 on maintenance and modernization, causing further regulations contain outdated standards for residential and losses to utilities through leaks and outages. Investment commercial areas, limiting compaction. These documents in urban infrastructure is urgent. Sustainable solutions to include minimum Floor Area Ratio (FAR) requirements these problems require more systematic reform of care for residential buildings, reserving land for playgrounds, management and cost recovery. minimum building separation distances for sunlight exposure, free ventilation, privacy screens, emergency Centralized planning and poor institutional coordi- vehicle accessibility, and increasing spacing between nation with regulatory gaps make implementation of high-rise buildings in seismic zones. These regulations urban plans challenging. The complex and resource- and guidelines were based on outdated construction and intensive formulation process hinders local governments ventilation techniques, making it difficult for modern from expanding their planning capacity, resulting in urban centers, including those in seismic zones like Japan, weak or inadequate urban spatial planning at the local In Uzbekistan, ShNK stands for Urban Development Regulations.  KMK stands for Building Regulations Available at: https://mc.uz/gradostroitelnye-normy/ (in 59 Russian and Uzbek). 60 SanPiN is a set of sanitary rules and norms in Uzbekistan. 32 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment level. Lack of participatory involvement in urban planning economic instruments coupled with adequate land often disconnects it from the needs of the public and use planning with water management principles is private sectors, resulting in decoupled urban planning and necessary. This can further be promoted by accelerating regulation. These disconnects leave room for unplanned work on developing river basin management plans growth and conflicts with rapidly changing economic (RBMPs). This will equally require the adoption of the needs, making unplanned rural development inevitable. principles of integrated water resources management Factors such as lack of transparency in land allocation (IWRM) and greater stakeholder involvement for better and numerous illegal decisions at the local level further coordination of activities and data harmonization. exacerbate this issue. Data collection and analysis are also crucial for evidence-based urban planning decisions. 2.3.4 Priority Action 2.4: Increase the resilience of the agriculture sector and ensure food security Additionally, capacity building can be provided to local government officials to improve their planning and All the indicators for this priority action (Figure 35) implementation skills, such as participatory planning, show that Uzbekistan has started different initiatives project management, and financial planning. to enhance the adaptation and resilience of the agricultural sector and ensure food security. However, Linkages between land use planning and water significant gaps still remain before the country can meet management in the policy framework must be clearly the standard of its benchmark countries. Some of these defined. For efficient use and management of ground gaps are discussed below. and surface water, focusing on cost recovery and FIG U R E 35: >> Summary Priority Action 2.4: Increase the resilience of the agriculture sector and ensure food security Climate change adaptation strategy for the agriculture sector Public agricultural research expenditure Agriculture early warning system Ex post assessment of drought impacts Agriculture insurance Food security index Agriculture irrigated land Emerging Average score Sources: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, WHO, UNICEF, and expert interviews. Although tremendous efforts have been made to adaptation and resilience; systematically providing increase the agriculture sector’s resilience and agricultural extension services is critical to filling ensure food security, institutional coordination and current capacity gaps. The law on organic agriculture definition of mandates are required to ensure that and good agricultural practices, coupled with Presidential current commitments remain adequate. The country Decree No. 6159, dated February 3, 2021, “On further has medium-term strategies in place for the water, improvement of the knowledge and innovation system,” energy, agriculture, environment, and economy sectors as well as the provision of modern agricultural services, until 2030. Adaptation and decarbonization indicators offer key directions for modernization of the agricultural are highlighted in the sectoral plans to transition to a sector. Considering the large number of farmers who green economy, water and agricultural development, depend on agriculture and need these skills, expanding and introduce renewable energy technologies until 2030. agricultural extension services, facilitation of knowledge However, the resilience of this sector and its ability to generation institutions and cooperation are required to ensure food security is threatened by a lack of clearly meet the adaptation needs. Also, regulations on genetically defined institutional mandates, functional capabilities, modified organisms should be defined by the law. and coordination mechanisms between climate change Food security in Uzbekistan can be improved through actors and stakeholders. Poor monitoring and evaluation policies aimed at enhancing food productivity of the effectiveness of adopted legislation, strategies, and availability. Uzbekistan has demonstrated a plans, and policies do not permit adequate tracking commitment overall to tackling issues related to food of progress toward enhancing the resilience of the security through political reforms, agricultural changes, agricultural sector and food security. and social safety net activities. To maintain sustainable The recent law on organic agriculture and good and long-term food security in the nation, additional agricultural practices significantly boost Uzbekistan’s efforts are needed to boost agricultural output, provide Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 33 access to a variety of nutrient-dense foods, and build 36 indicates that Uzbekistan is still behind its peers the system’s resilience. The key to continuing growth in with regard to the overall food security index and its sub- this area will be sustaining investment in agricultural, indicators. Therefore, additional efforts are required to rural development, and social welfare initiatives. Figure enhance food affordability, availability, quality, and safety. FIG U R E 36: >> Uzbekistan’s food security index relative to selected countries 85.5 100 83.7 79.0 78.3 75.9 72.5 70.8 67.9 67.2 66.0 80 65.3 65.7 63.3 62.3 62.1 60.9 58.8 52.7 53.1 52.4 50.9 50.9 50.6 49.4 60 47.4 47.5 47.4 47.1 37.0 37.1 40 20 0 Overall Affordability Availability Quality Natural resources food security and safety and resilience Uzbekistan Kazakhstan Malaysia Türkiye Azerbaijan Tajikistan Source: WDI 2022. Important reforms are underway in the agricultural to estimate, but most reports indicate that they are well sector, but they need to be accelerated with a focus on below optimal. The pump infrastructure is relatively old attracting private-sector investments. Uzbekistan’s and less energy-efficient than newer versions. Farmers agricultural sector has undergone significant reforms believe there is no direct cost to water supply; instead, since 2017, focusing on improving administrative general property taxes cover water costs and are not systems, strengthening legal frameworks, and fostering tied to input use, and water user associations are well cooperation between companies. These reforms aim to established. Thus, there is little incentive to use water- improve the use and sustainable management of land, saving technology. water, and agricultural resources, introduce resource- Crop insurance coverage is low, and complex saving technologies, and introduce market relations to procedures constrain extensive coverage of attract investment. The most recent institutional changes agricultural insurance. Uzbekistan has 32 organizations aim to strengthen agricultural producers’ production in the insurance market, including three brokers, capacity, support reform and transformation, and promote one professional insurance agency, and 28 insurance market relations for increased investment. A recent companies. The State Joint Stock Insurance Company assessment concluded that the changes are useful but was established in 1997 to create favorable conditions incomplete61. For example, price restrictions are crucial for agricultural producers and support the effective to strengthening markets reducing the need for subsidies, development of insurance services in rural areas. and the private sector improved almost immediately. Uzagrosgurta, Agroinvest, and Haluk Sugurta are the only But fiscal consolidation will take even longer. Efforts three insurance companies offering drought insurance to support corporate privatization, restructuring, and in Uzbekistan. Insurance companies now play an investment frameworks that create opportunities for increasingly important role in insuring their customers new private enterprises are further delayed. Continued against natural disasters. In 2019, Uzagrosgurta collected liberalizing efforts could create further avenues for about $27.8 million in agricultural insurance premiums farmer-led coordination and rural prosperity. and paid around $10.7 million to cover policyholder losses Irrigation infrastructure is extensive, but overall due to damage from natural catastrophes. However, only water efficiency and farm-wide water efficiency 30 percent of crops are covered by insurance against can be improved. Uzbekistan’s irrigation network hazards such as drought, high winds, and hail. Existing is extensive, but has outdated infrastructure, and crop insurance policies are coverage-based and require public investment in modernization is limited. Overall a lengthy validation process before payments can begin. system efficiency and on-farm water use are difficult Farmers must follow the Ministry of Agriculture’s 61 Zorya, S., S. Babaev, A. Guitchounts, M. Ruiz, L. Mayra, P. Vats. Policy Dialogue on Agriculture Modernization in Uzbekistan: Cotton Pricing After 2020 Cotton Sector Reform. (English). Washington, D.C.: World Bank Group. 34 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment strict agronomic and agrotechnical recommendations, research and Uzhydromet and further investments which can lead to arbitrary interpretations and a lack in the automation of stations. The National Disaster of transparency. Financing agricultural production Risk Reduction Monitoring Center, operated by MoES is considered high-risk, so most banks mandate and Uzhydromet, aims to provide early warning and crop insurance to protect against natural disasters. recommend measures to reduce disaster impact. Key Guaranteed insurance is the most important condition early warning information comes from Uzhydromet for for a farmer to obtain a loan, promoting financial stability weather-related hazards, State Quarantine Inspectors and increasing investment. Agricultural projects are for diseases and pests, and the Ministry of Agriculture for attracted by systematically monitoring crop conditions, crop forecasts. However, no comprehensive EWS currently stopping financing when there is a threat of crop failure, guides water allocation, crop and pasture planning, and and ensuring the efficiency of funds spent on agricultural management. Tailor-made forecasting products are production. unavailable, and most observation stations are operated manually. Other problems include inadequate linkages Innovative insurance approaches coupled with between research, education, farmers, and stakeholders; collaboration between insurance companies and weak infrastructure development; and insufficient early Uzhydromet are required to reduce existing insurance warning experts to respond to outbreaks. To strengthen risks. Several recommendations can be made to support the existing EWS, it is recommended to undertake agricultural insurance development in the country, regular disaster risk assessments of plant and animal including smart insurance services, civil liability insurance, diseases, pest outbreaks, frost, and earthquakes; a state mechanism supporting insurance premiums, and raise community awareness; and organize capacity- digital insurance approaches. Index-based insurance could development activities in EWS, particularly in price/ offer new opportunities by reducing transaction costs market information systems. and making payment activation processes transparent. However, close cooperation between Uzhydromet, research 2.3.5 Priority Action 2.5: Increase the resilience institutes, and insurance companies is needed for a well- of water infrastructure and water resources functioning system. Additionally, opening the insurance management market to new entrants and increasing the privatization The government of Uzbekistan did well in estab- of public insurers can stimulate consumer-oriented and lishing dedicated water resources management need-based agricultural insurance approaches. Crop agencies and has made progress in setting up insurance systems can be developed based on Earth the national water information system and observation data and agro-meteorological information, mainstreaming climate change in the water sector; supported by integrating this model into national special however, gaps still remain. The country’s freshwater agricultural products. and overall water productivity (Figure 37) remain low. Enhancing the agricultural early warning system (EWS) The ratings of the four indicators for this priority action will require more collaboration between agriculture are summarized below. FIG U R E 37: >> Summary Priority Action 2.5: Increase resilience of water infrastructure and water resources management National Water Information System (NWIS) Freshwater Climate change mainstreaming in Dedicated water resources productivity the water sector management (WRM) agencies Nascent Emerging Established Average score Sources: Original to this publication based on data from the World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. Uzbekistan is very water-stressed, coupled with high countries (UMIC). This high withdrawal rate is also due annual freshwater withdrawal rates, low productivity, to freshwater productivity being significantly lower and below-peer group access to safely managed than in peer countries. UMIC and ECA countries have drinking water resources. Uzbekistan is more than freshwater productivity that is more than 13 and 44 six times more water stressed than the average of ECA times higher than Uzbekistan, respectively. With these countries and more than four times water stressed water challenges, only 58.8 percent of the population can than UMIC (Table 5). Uzbekistan also suffers from access safely managed drinking water services compared significantly higher freshwater withdrawal rates, 60 to more than 75 percent of peer groups. times higher than ECA and upper-middle-income Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 35 TA B LE 5: >> Uzbekistan’s water situation ECA (excluding Indicator UMIC Uzbekistan high-income) Water stress 37.69 25.08 168.92 Annual freshwater withdrawals, total (% of internal resources) 5.91 5.88 360.46 Access to safely managed drinking water services (% of the population) 75.64 77.89 58.83 Freshwater productivity (% GDP) 55.94 17.50 1.26 Source: WDI 2021. Uzbekistan is highly water-stressed, and its water-use 38). However, information showing relatively low water efficiency is relatively low compared to peer countries. use efficiency shows the country could be doing more to Annual freshwater withdrawals (percent of internal maximize the use of its limited water resources (Figure 39). resources) in Uzbekistan are 60 times higher than that of The global average water productivity is over $15 per m3, ECA countries, while water use efficiency in Uzbekistan is with Uzbekistan having the lowest price62 of $0.6 per m3. seven times higher than in ECA countries. The country’s Inefficient and unproductive water use is becoming a key high annual freshwater withdrawals are due to its constraint to economic growth, and Uzbekistan is among relatively high water stress and high water demand (Figure the 20 lowest countries in terms of water productivity. FIG U R E 38: >> FIG U R E 39: >> Annual freshwater withdrawals Water productivity 400.0 360.5 20.0 18.2 2015 $ GDP per cubic meter of total Water productivity. total (constant % of internal water 14.5 300.0 15.0 freshwater withdrawal) resources 10.9 11.3 10.1 200.0 10.0 9.1 100.0 5.0 5.9 5.9 0.9 1.3 1.5 0 0 Europe & Central Upper middle Uzbekistan Europe & Central Upper middle Uzbekistan Asia (excluding income country Asia (excluding high income country high income) income) 2007 2012 2017 Source: WDI 2022 . Current reforms and actions aimed at reducing water and drainage. Without adequate measures to improve loss are in place; however, proper coordination between water-use efficiency, crop yields are projected to decline different actors and stakeholders with a centralized by 10 percent by 2050. Modernization of irrigation monitoring and evaluation system is critical for infrastructure and water management practices can meeting objectives outlined in the sector strategy. increase crop yields by 62 percent. Current irrigation Under the water-saving technology use scenario, efficiency is around 40 percent (See Figure 40), with only appropriate irrigation water pricing and penalties for 2.6 million hectares irrigated in 2019. Factors preventing over-irrigating above a crop’s water requirement could irrigation and drainage infrastructure use include be established, as well as a provision of subsidies for the infrastructure damage, lack of power, soil salinity, and purchase of water-saving technologies. underutilization due to competing uses. Uzbekistan’s investment in irrigation and drainage is lower than that Agriculture’s high reliance on irrigation is a risk to of neighboring countries, with Kazakhstan’s average the economy due to drought and water shortages, and capital expenditure being four times higher between so necessitates more efficient water use for irrigation 2015 and 2019. 62 World Bank 2022c: Towards a Prosperous and Inclusive Future: Uzbekistan, the Second Systematic Country Diagnostic https://documents1.worldbank.org/ curated/en/933471650320792872/pdf/Toward-a-Prosperous-and-Inclusive-Future-The-Second-Systematic-Country-Diagnostic-for-Uzbekistan.pdf. 36 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 4 0: >> Irrigation Irrigation water water productivity, productivity by oblast,2020 2020 Irrigation efficiency, 2016–2020 IWP, Year 2020 [kg/m3] 2016 2017 2018 2019 2020 80% 0.15 - 0.2 0.4 - 0.45 70% Irrigation Efficiency 0.2 - 0.25 0.45 - 0.5 Karakalpakstan 0.25 - 0.3 0.5 - 0.55 60% 0.3 - 0.35 0.55 - 0.59 0.35 - 0.4 50% 40% 30% 0 100 200 km Khorezm Navoiy 20% Tashkent 10% Namangan Bukhara Jizzakh Syrdarya Andijan Ferghana 0% Andijan Bukhara Ferghana Jizzakh Karakalpakstan Kashkadarya Khorezm Namangan Navoiy Samarkand Syrdarya Surkhandarya Tashkent UZBEKISTAN Samarkand Kashkadarya Surkhandarya Source: World Bank analysis of irrigation performance based on remote sensing. The Water Sector Development Производительность Concept оросительной of Uzbekistan воды (ПОВ), 2020 water availability. seasonal Эффективность орошения,However, 2016–2020 transboundary for 2020-2030 underscores the use of ICT and smart allocation concerns and a lack of regional collaboration water; however, institutional collaboration ПОВ, 2020 г. (кг/м3) is required 80,0% 0.15 - 0.2 hinder infrastructure 2016 2017 development 2018 2019 and 2020 operations Эффективность орошения to coordinate actions to enhance water use efficiency 70,0% coordination. Since 2017, the government has focused 0.2 - 0.25 0.25 - 0.3 0.3 - 0.35 60,0% between different ministries. The reorganization of 0.35 - 0.4 on improving healthcare personnel’s competencies and Каракалпакстан 0.4 - 0.45 50,0% 0.45 - 0.5 ministries63 in January 2023 gives the Ministry of Water 0.5 - 0.55 working conditions. In 2020, a financial incentive plan 40,0% 0.55 - 0.59 Management the duty to ensure water-use 0 100 200 km efficiency and 30,0% was implemented to promote English proficiency among implement Хорезм sector development concept for 2020- the water Навои 20,0% medical graduates, addressing the shortage of indigenous 10,0% 2030.64 This strategy emphasizesТашкент a water information materials and increasing access to medical literature. 0,0% system characterized by the use of ICT and smart-water Наманган A new program was also launched to attract and retain Джиззак Андижан Бухара Фергана Каракалпакстан Кашкадарья Хорезм Наманган Навои Самарканд Сырдарья Сурхандарья Ташкент УЗБЕКИСТАН Бухара Джиззак Андижан Сырдарья Фергана technologies. Close institutional collaboration between Самарканд foreign-trained academics at medical schools. Uzhydromet, the Ministry of Natural Resources, and other Кашкадарья sectors is required to ensure sustainable management of Сурхандарья Poor and unequal access to and the quality of water supply water resources. However, institutional frameworks for and sanitation (WSS) services remain a significant these collaborations are not well defined and are necessary challenge in Uzbekistan and require significant for Uzbekistan to implement the Water Sector Development investment and capacity building in managing water Concept of Uzbekistan effectively for 2020-2030. resources. WSS infrastructure, built during the Soviet era, is in poor condition and requires extensive rehabilitation. Water management practices monitoring systems Sewage infrastructure, built in the 1970s and 1980s, is coupled with improved dams and reservoirs are deteriorating and in poor condition, causing pollution of required to enhance water use efficiency and surface water resources. In 2016, a centralized sewerage productivity. Improving water management methods system served 3.7 million people (12 percent), with only and monitoring systems is crucial for addressing water 5 percent of the population connected. Rural sanitation scarcity hazards. This includes tracking crop water is poorly documented and relies on self-built, on-site footprints, implementing water-efficient technologies systems. These infrastructure issues and institutional like drip irrigation, and implementing digitization and capacity constraints have led to stagnation in water water accounting systems to monitor water consumption service quality, particularly in rural areas and district and provide dynamic feedback for irrigation and drainage towns. Large-scale investments in modern water and system adaptation. Dams and reservoir storage are sanitation equipment are crucial for building resilience crucial for drought and flood resistance in Uzbekistan, and extending outreach to rural areas. with 55 reservoirs containing 20.0 billion m3. Investment in sedimentation and dam safety is needed to ensure Water supply, sanitation, and access to safely managed electricity production and agricultural water supply. The water are considerably lower (70.73 percent)65 in rural Aral Sea basin offers significant potential for water storage parts of the country. Outdated and oversized pumps lead and hydroelectric infrastructure, benefiting all countries to high operational costs, and power outages are often through increased energy output and better control of cited as causes of intermittent services. Intermittent https://kun.uz/en/news/2023/01/26/list-of-ministries-and-state-agencies-updated. 63 64 https://aral.uz/en/blog/2020/07/23/decree-of-the-president-no-up-6024-on-approval-the-water-sector-development-concept-of-uzbekistan- for-2020-2030/. 65 WDI. 2022. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 37 supply, in turn, leads to more common breakages and only able to supply water for less than 12 hours per day. results in leaks. Water quality varies widely within the country; in Tashkent and other large cities, water quality 2.3.6 Priority Action 2.6: Design and implement a government-wide strategy to increase the resilience is generally compliant with national standards. However, of the health system in several district towns, water quality has become an issue, with up to 30 percent of water quality samples Since 2017, the government has made efforts to improve not compliant, with the highest failure rates observed healthcare workers’ capabilities and work conditions in Karakalpakstan. Coverage rates for piped water and, in 2020, implemented a financial incentive systems are much lower in rural villages, where existing system to increase English proficiency among medical systems reach around 52 percent of the population. 66 graduates. This could improve Uzbekistan physicians’ In rural areas and district towns, higher-than-average access to medical literature and address the scarcity of population growth rates exacerbate water supply access local medical materials. Additionally, the government has issues. Furthermore, continuity of service is a common launched a new program to attract and retain foreign- and serious issue across the country, with many systems trained professors at medical education institutes. FIG U R E 41: >> Priority Action 2.6: Summary design and implement a government-wide strategy to increase the resilience of the health system Global Health Security Index Health risk communication Surge demand health capacity Medical countermeasures stockpiles Heath sector response plan Emerging Established Source: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. Although efforts have been made to enhance the health lacks clear data on the private sector’s performance, resilience of households, high out-of-pocket (OOP) service quality, and volume of services. This is because payments still put households in a very vulnerable the private sector is not part of the government’s health position. Uzbekistan has made significant improvements information reporting system, so it does not report to in health outcomes over the past 20 years, but still faces it. The government-private-sector health information high burdens from non-communicable diseases and system is expected to report to the private sector, but nutrition deficiencies. Health expenditure remained there is no clear understanding of the private sector’s stable at around 5.2-5.6 percent of GDP in 2000–19, role in the system. National regulations lack clear higher than the average for lower-middle-income guidelines for private facilities to report on, including countries and on par with ECA countries.67 However, categories, reporting methods, and penalties. To ensure public health expenditure was just 2.3 percent of GDP in excellent care, comprehensive rules and regulations 2019, outperforming lower-middle-income countries but on the private sector’s role in healthcare should be lower than in ECA and upper-middle-income countries. tightened. The main challenges for Uzbekistan’s health sector Clear rules by the health sector for influencing the include improving financial protection, efficiency of access, quality, and efficiency of health services service delivery, and quality of services. The country are lacking. Ex-ante regulation is limited, with ex- has made little progress toward modernizing its health post intervention as punishment. This stifles market financing system, with no relevant and efficient financial development and denies the Ministry of Health (MoH) protection system, line-item budgets, and 58 percent of a mechanism to influence daily activities. The primary total health spending being out-of-pocket by households. means for MoH influence is facility licensing. The Policy options include modernizing financing systems, licensing process is managed by a small MoH team at updating service delivery models, and strengthening the the national and regional levels, with 13 staff members. regulatory environment and management. Licenses are granted based on simplified procedures, The lack of private sector data in the health sector making them easily manipulated. Additionally, an prevents data-driven decision-making to enhance ongoing moratorium on monitoring and inspections the resilience of the health sector. The government results in no effective government monitoring. 66 https://documents1.worldbank.org/curated/en/802111584324088462/pdf/Uzbekistan-Water-Services-and-Institutional-Support-Project.pdf. 67 World Bank. 2022. “Uzbekistan Public Expenditure Review. Better Value for Money in Human Capital and Water Infrastructure.” 38 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment 2.3.7 Priority Action 2.7: Design and implement a risk reduction is evident in its large-scale retrofitting and government-wide strategy to increase the resilience rebuilding projects, serving as a model for future school of the educational system maintenance. The program’s success was largely due to Uzbekistan has made significant efforts to disaster- collaboration among government agencies, schools, and proof schools. Since 2004, Uzbekistan’s National local governments. Construction monitoring mechanisms Education Development Program has focused on ensured seismically safe designs, and the national renovating and reconstructing structurally deficient government quickly completed the National Program for primary and secondary school buildings for seismic Education Development mandate. The government saw safety. In 2011, the government established a new fund school seismic safety as an urgent project on the national to maintain and develop these facilities. To ensure policy agenda. Uzbekistan ensured steady funding for efficient maintenance, effective planning and execution ongoing school maintenance, protecting gains made during processes are necessary for retrofits and repairs. its rehabilitation and reconstruction program. This ensures Uzbekistan’s commitment to child safety and disaster education and development for future generations. FIG U R E 42: >> Summary Priority Action 2.7: Design and implement a government wide strategy to increase the resilience of the educational system Plans to enable a safe and continued A&R included in education learning environment in place curriculum Operational standards for use Resources to enable Disaster-proof schools of schools as shelters remote learning Nascent Emerging Established Source: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. “Concept on Environmental Protection until 2030” the national concept for digital higher education and emphasizes continuous improvement of environmental improve the overall online learning experience. education by incorporating sustainable development Education for Sustainable Development (ESD) is subjects across all education levels. Environmental not fully nationalized in the educational system. education is integrated into elementary school curricula Uzbekistan’s ESD was authorized in May 2019 to for children in grades 5-11, covering conservation, promote an environmental culture and ensure ongoing respect for the environment, and climate change education. However, ESD is not fully implemented or concerns. Topics covered include Botany, Zoology, incorporated into the educational system. Despite being Biology, Geography, Chemistry, Physics, and “Man endorsed in 2011, ESD is mostly implemented as project- and Human Health.” Students in the 11th grade take 20 based activities by NGOs and institutions. The complete hours of ecology instruction. Environmental concerns nationalization of ESD has not yet been achieved, but it are addressed in history, literature, Russian, and foreign is crucial for achieving the 2030 Agenda for Sustainable language classes. Climate change and human impact Development’s goals and targets. are also examined through extracurricular activities, excursions, and treks in the natural environment. 2.3.8 Priority Action 2.8: Ensure the resilience of forests and other natural ecosystems Rural higher education institutions face challenges due to the digital gap, which has increased due to Overall, Uzbekistan still lags behind in its adoption inadequate equipment, accessibility, and internet of natural capital accounts following the System access. This has led to a loss of learning materials and of Environmental-Economic Accounting (SEEA) opportunities for students. Institutional autonomy is framework68 and the biodiversity and habitat index. crucial for the gradual growth of digitization, enabling Significant work is required to enhance the country’s institutions to adapt quickly to rapidly changing resilience with respect to these two aspects. Actions conditions. National institutions must provide quality are underway to reduce land degradation, improve control in remote and online study procedures and adapt ecosystem services, and implement climate change to rapidly changing conditions. To improve online learning adaptation strategies for forests and other ecosystems quality, factors like institutional policies, digitization and strategies for nature-based solutions. However, this strategies, monitoring tools, course design, curriculum progress still lags behind in some respects, which will development, digital evaluation techniques, and data be discussed below, the figure below shows that while a protection must be considered. These factors help ensure majority of indicators are emerging none is established. 68 The System of Environmental-Economic Accounting (SEEA) is a framework that combines economic and environmental data. It provides a comprehensive view of the relationship between the economy and the environment. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 39 FIG U R E 4 3: >> Summary Priority Action 2.8: Ensure resilience of forests and other natural ecosystems Degraded land Ecosystem services index Climate change adaptation strategy for forests and other natural ecosystems Adoption of natural capital accounts Blue Economy Strategy following the SEAA framework Strategy or specific regulations regarding Biodiversity and Habitat Index the use of nature-based solutions Nascent Emerging Average score Source: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, WHO, and expert interviews. With ongoing policy reforms to integrate climate (NBSAP) as a step forward in protecting biodiversity and consideration in strategic development documents, implementing the country’s international commitments adopting the strategic environmental assessment (SEA) to biodiversity; however, only a few species of threatened tool to evaluate the environmental impacts of future fauna are covered, with no flora species included in sectoral strategic documents is essential. Effective conservation plans.69 The 10-year change (Figure 45) planning and management of land assets and services shows that the country improved by 6.6 percent over require a well-developed monitoring and accounting the last 10 years, which is a positive step, but adequately system. The SEA system was officially published in 2014 adapting to climate change will require policy changes and and is widely applied in developed countries to capture coordinated efforts. Also, the lack of policies on wetlands progress on the policy application. However, Uzbekistan coupled with data on biodiversity makes biodiversity is not yet using the strategic environmental assessment conservation difficult. Monitoring biodiversity is (SEA) tool to evaluate the environmental impacts of future conducted primarily in protected areas (PAs), especially sectoral strategic documents. Raising awareness of the legal ones. Since 2018, red-book species have been SEA tool in the country and putting in place human and monitored outside of PAs; however, long-term research is financial resources for applying this tool will significantly complex because no current inventory has been done since enhance policy coordination toward sustainable 1987. Positive examples of ecological connectivity in local development objectives. PAs exist, but Uzbekistan’s national PA system lacks the common meaning of ecological networks and ecological Uzbekistan’s biodiversity is currently low, at 138/180. corridors, as these concepts are not included in the 2004 Accelerating the development of biodiversity hotspots Law on Protected Natural Territories. Uzbekistan’s PA and data is, therefore, critical for building resilience. distribution varies significantly, with a lack of biological Figure 44 indicates that Uzbekistan lags behind UMIC representativeness, excluding habitats for rare, endemic, in biodiversity and habitat index. In 2019, Uzbekistan and vulnerable species and not covering all major regions adopted the National Biodiversity Strategy and Action Plan and ecosystems. FIG U R E 4 4: >> FIG U R E 4 5: >> Biodiversity and habitat rank 10-year change in biodiversity and habitat index 6.6 6.6 147 138 113 118 4.4 93 2.7 49 31 0.6 0.7 0.2 Uzbekistan Kazakhstan Tajikistan Azerbaijan Armenia Netherlands Republic Uzbekistan Kazakhstan Tajikistan Azerbaijan Armenia Netherlands Republic Kyrgyz Kyrgyz Source: Yale Center for Environmental Law & Policy 2022. 69 https://pdf.usaid.gov/pdf_docs/PNACN475.pdf. 40 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment To effectively draft national policies, action plans for protecting ecosystems and species, management FIGURE 46: >> plans for PAs, and establishing hunting quotas, access Composite map highlighting hotspots of risk from to trustworthy, thorough, and current information on climate change, land degradation, natural hazards, biodiversity is required. As of 2019, Uzbekistan lacks an and population pressures in Uzbekistan integrated biodiversity monitoring system, there hasn’t been a forest inventory since 1987, and the national Red Cities Aggregated Risk Score Provinces Low - 20 th percentile Districts 40 th percentile Book from 2009, which should list the top priorities for Kazakhstan 60 th percentile 80 th percentile species conservation, is out-of-date and incompatible Maximum with the IUCN global assessment methodology and criteria. Furthermore, the integrated biodiversity Nukus monitoring system won’t be able to fulfil its intended Urgench Uzbekistan Kyrgyz role as a policy support tool once it’s in operation unless Tashkent Namangan Republic Andizhan it’s always given access to high-quality and consistently Jizzakh Gulistan Ferghana Navoiy updated information collected from biodiversity Bukhara Samarkand monitoring. To fulfil its role as a policy support tool, Turkmenistan Karshi Tajikistan the integrated biodiversity monitoring system must have regular access to high-quality, updated data from I. R. of Iran Termez Afghanistan biodiversity monitoring, field inventory, and scientific Pakistan research. Targets 15.1, 15.2, and 15.5 of the Sustainable Source: World Bank. “Climate Adaptation in Uzbekistan: Landscape Development Goals require trustworthy and current Restoration Opportunities” forthcoming. Города Совокупная оценка риска information on biodiversity. Области Районы Низкий - 20й процентиль 40й процентиль 60й процентиль Казахстан land with other uses (Tashkent, Namangan, and around 80й процентиль In Uzbekistan, the rates of land degradation and Максимальный causes vary widely by biome and province. Over the Ferghana), and in the western areas, a combination last 20 years, 33 percent of all agricultural landscapes of water access Нукус limitations, desertification and have shown constant productivity decline. Ferghana dust storms might be responsible for the decline in Узбекистан Кыргызская Ургенч Valley, Gulistan-Jizzakh corridor and north of Nukus, vegetation productivity of croplands, and natural desert Республика Ташкент Наманган north Namangan, and around Tashkent are hotspots of shrublands, and riparian/flooded vegetation.  Андижан Гулистан Фергана Джиззак degradation of agricultural landscapes. However, the Навои Бухара Strategic documents exist on the blue economy; Самарканд most affected natural ecosystem in terms of the total area Туркменистан sectors is however, coordination between different Таджикистан Карши is the desert shrublands in the steppes north of Navoiy required. Uzbekistan’s water management aspirations in Navoiy province, west of Aydar Lake in the center of require Иран and integrated coordination between sectors Афганистан Термез the country. This arid ecosystem is losing an average of Пакистан water resource management (IWRM). Addressing long- 17.5 kg of biomass per hectare yearly, totaling 350 kg term water availability, demand, land use, and economic of biomass per hectare in the last 20 years. Meanwhile, growth policies is crucial. A cross-ministerial policy natural ecosystems with the greatest net loss (4.8 times discussion with corporate, academia, civil society, and higher than other biomes) of biomass are the Riparian development partners can address policy coherence Woodlands north of Nukus; in central Karakalpakstan, an difficulties. Experts like the European Commission and average of 48 kg of biomass per hectare is lost every year, OECD can facilitate similar platforms in Eastern Europe, which has amounted to 960 kg of biomass per hectare the Caucasus, and Central Asia. National policy dialogues lost over the past two decades.  on IWRM often produce evidence-based policy packages Different causes are likely responsible for the high for practical implementation. A national policy dialogue levels of land degradation in these hotspots since on IWRM in Uzbekistan could support the government’s they are in different and distant regions in the water sector objectives and strategic direction. This country. In the intensive cropland hotspots (Ferghana dialogue would provide an evidence foundation for Valley, Gulistan-Jizzakh corridor),70 the causes could policy choices and a platform for topic engagement. be a combination of water stress and soil degradation/ Coordinating data management is crucial for achieving salinity processes. In agricultural areas that surround this goal. densely inhabited areas, land use change due to urban sprawl might be the driving factor of a decrease in vegetation productivity and even replacing productive 70 Areas at high risk are likely to experience declining agricultural productivity, water availability issues, and heightened landslide risk that will impact more people. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 41 2.4 Help firms and people manage residual risks and natural disasters “While effective risk mitigation can significantly reduce losses and damages, some natural shocks are too extreme and intense to be prevented. Governments must develop strategies to ensure that when disasters do occur, people and firms can cope without devastating long-term consequences and can recover quickly.”—The Adaptation Principles This section examines the progress achieved in adaptation principle, more work has to be done to provide assisting individuals and organizations in managing businesses and households with risk management lingering risks and natural catastrophes in Uzbekistan. tools. Businesses need support in developing business Six of the 25 indicators in the evaluation relate to six continuity plans and financial preparedness, the prioritized activities. Despite the fact that the overall insurance sector needs to be further developed, and findings show some progress in implementing this public-private partnerships need to be established. FIG U R E 47: >> Summary—help firms and people manage residual risks and natural disasters Help firms and people manage residual risks and natural disasters Be prepared to build back better after disasters, with contingency plans and financing 0 1 1 Help firms develop business continuity plans and financial preparedness 1 3 0 Build a social protection system that is responsive to shocks 0 3 2 Develop the insurance sector, building on Public-Private Partnerships 1 2 0 Provide all firms and households with risk management instruments 1 2 0 Save lives (and money) with hydromet, early warning and emergency management systems 1 2 4 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicator Nascent Emerging Established Source: Original to this publication based on data from WDI, Uzbekistan TNC, UNICEF, WB Enterprise Survey, and expert interviews. Notes: The number in each bar shows the number of indicators per category (established/emerging/nascent). Managing residual risks is an important component sustainable financing mechanisms for implementing of the adaptation strategy that allows for providing urban plans is limited. Options to help firms and people resources to rebuild after natural disasters. This manage residual risks and natural disasters have been assessment reveals, as presented in Figure 47 that summarized below. Uzbekistan needs to modernize early warning systems, increase data availability to the public, and scale up 2.4.1 Priority Action 3.1: Save lives (and money) with hydromet, early warning, and emergency non-life insurance coverage of the vulnerable segment management systems of the population. Promoting the registration of a larger segment of the population in the social registry Early warning and emergency management are will enhance the vulnerable population’s resilience to critical in helping firms and people adapt to climate the impacts of climate change. The assessment also change, Uzhydromet has made tremendous progress highlights low disaster risk management response to in providing daily weather forecasts, early warning emergencies and decentralized information sharing. Also, systems for natural hazards and community the private sector’s capacity to develop and implement emergency response plans. Gaps still exist in the business continuity planning is low, and no institutional capacity for emergency shelters (Figure 48), impact- obligations exist. The number of qualified planners and based forecasting, and formal EP&R training programs. 42 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 4 8: >> Summary Priority Action 3.1: Save lives (and money) with hydromet, early warning, and emergency management systems Community emergency response plans Early warning systems for natural hazards Impact based Emergency preparedness and response forecasting (IBF) (EP&R) management system Capacity of emergency Formal EP&R training Daily weather forecasts system in place services and shelters program Nascent Emerging Established Average score Source: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, WHO, UNICEF, WB Enterprise Survey, and expert interviews. The lack of site-specific forecasts and limited not location-specific, do not indicate specific danger manpower undermines the effectiveness of the current levels, and do not provide detailed information on possible impact-based forecasting system in helping firms and repercussions. Unlike the current reactive method, MES households adapt to climate change. The Ministry of struggles to adopt a proactive approach to preventing and Emergency Situations (MES) requires regional offices mitigating damage and losses. This is due to the lack of to obtain central office clearance before responding site-specific predictions and risk information. While some to concerns, resulting in longer response times. The work has been done with communities in Karakalpakstan organization’s limited number of employees reduces its to use hydrological drought forecasts and understand ability to guarantee comprehensive emergency response earthquakes, there is a lack of interaction regarding and preventative measures. Warnings and advisories are climate-related hazards in eastern regions. B OX 1.2: >> Enhance environmental monitoring and access to information, public participation, and education on the environment so that households and firms have adequate instruments to adapt Uzbekistan does not have an integrated environmental information system, and most analytical laboratories under ministries and agencies involved in environmental monitoring lack the capacity for water and soil pollution analysis. Current environmental monitoring activities still operate according to a five-year program, and automation and digitalization of the system are not widely used. Automation and digitization, coupled with the introduction of PM10 and PM2.5 monitoring, will enhance the system. Although analytical laboratories are not accredited, regional laboratories under the Centre of Hydrometeorological Service (Uzhydromet) have the capacity to analyze air pollution but lack the capacity to analyze water and soil pollution samples. The establishment of an integrated environmental monitoring system and accreditation of laboratories is critical to enhancing environmental monitoring. Enhance the legal framework for public access to environmental information and make available environmental information accessible online to the general public. Printed information containing environmental information is easily accessible within government agencies; however, public awareness and accessibility to this information is limited. Systematic digitalization and free access to environmental information guided by a legal framework will significantly provide instruments for firms and households to adequately employ adaptation options. Integrate education for sustainable development into the educational system and engage NGOs in environmental matters. Uzbekistan adopted the concept of education for sustainable development in 2011; however, significant changes in the educational system have not yet been made. Education for sustainable development is currently championed by universities and NGOs; integrating these concepts at the lower levels and greater engagement of NGOs in environmental matters will significantly enhance the adaptive capacity of firms and households and permit the country to meet the 2030 agenda. 2.4.2 Priority Action 3.2: Provide all firms and households with risk management instruments Uzbekistan lacks a national residual risk manage- set residual risk objectives, leaving households and ment plan and social protection coverage, limiting businesses with speculative knowledge about protective family resilience to shocks. The government has measures for disasters and harsh weather. increased disaster insurance penetration but has not Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 43 EP&R coordination mechanism Comprehensive national strategy for managing Financial instruments uptake to residual climate and natural risks cope with shocks Nascent Emerging Average score Source: Original to this publication based on data from WDI, Uzbekistan TNC, WHO, UNICEF, WB Enterprise Survey, and expert interviews. Financial instruments exist but do not actually cover all of the financial system. The insurance penetration ratio segments of the population. The insurance market has was 0.52 percent in 2021. Important insurance products a large number of providers, but insurance penetration include property, credit risk, mandatory employer liability, is low. Less than 20 percent of total premiums are paid mandatory motor, and mandatory employer liability by two businesses with majority government ownership insurance. The insurance industry is still in its infancy, with among the 42 life and non-life insurance companies.71 In life insurance being only 10 percent of written premiums. 2020, the industry’s return on equity (RoE) and return on In 2020, the Ministry of Economy and Finance Insurance asset (RoA) were 9.7 percent and 4.8 percent, respectively. Market Development Agency (IMDA) began regulating the The product market is tiny, accounting for a small portion sector, and a new plan is being developed. 2.4.3 Priority Action 3.3: Develop the insurance sector, building on public-private partnerships Domestic insurers offer insurance coverage for modest policies, despite 60 percent of earthquake policies being incomes (UZM 40,000 or less daily), but these products in high-risk locations. Only 9 companies collect data on have limited adoption and are often less expensive, insured amounts for homes and contents, and 11 collect lower-quality replicas.72 The insurance industry it on insured catastrophe risks in areas and occupancy faces gender disparity and lacks accessible gender- classes. Only one organization uses an automated disaggregated data. 73 Insurance penetration in rural approach to manage risk accumulations. Figure 49 shows and regional areas is low, with Tashkent City having significant gaps in building stock insurance and gaps the highest penetration. Less than half of 24 businesses in non-life insurance and private sector disaster risk obtain risk accumulation data for catastrophe insurance insurance. FIG U R E 49: >> Summary Priority Action 3.3: Develop the insurance sector, building on public-private partnerships Non-life insurance penetration Building stock insurance Private sector disaster risk insurance Nascent Emerging Average score Source: Original to this publication based on data from WDI. Non-life insurance for the vulnerable should be scaled- at local levels, enhancing risk information systems, and up to cover a large segment of the poor; current levels are adequate monitoring and reporting of catastrophe risk. low and put these populations in a vulnerable situation. Disaster insurance can reduce the fiscal impact of natural The insurance industry could play a more significant disasters, accelerate post-disaster recovery, and reduce role in climate risk management. The government the adverse economic effects on the population. Private is responsible for most disaster-related losses, but insurers offer disaster insurance without local regulation the private insurance sector is not very active. The but with a general local framework. Current insurance government, corporations, and people are limited in penetration levels are 10 percent of households;74 covering the expenses of calamities caused by climate although this is substantial for voluntary insurance, poor change. Despite having numerous insurance providers, households will suffer in the event of disasters. Expanding Less than 10 percent of residential dwellings are insured insurance to cover all segments through a central against natural perils, fire, lighting, explosion, and national disaster insurance pool using public-private aircraft damage risks, with a 0.7 percent premiums to partnerships can greatly improve the situation. This can GDP ratio in 2022, compared to a global average of 7.0 be complemented by improving the regulatory framework percent and 3.7 percent for Emerging Asia.75 71 The ADB, under its TA Grant approved in September 2021, will support the IMDA in divesting the government’s stake in state insurance companies. 72 “Шавкат Мирзиёев — о бедности в Узбекистане” (“Shavkat Mirziyoyev – on poverty in Uzbekistan”), Gazeta.uz. 73 Insurance Market Development Agency, Показатели за I квартал 2022 года (Indicators for the first quarter of 2022) (Tashkent, 2022). Available at https://imda.uz/ru/2022-1-kvartal/. 74 https://documents1.worldbank.org/curated/en/617231591599422910/pdf/Disaster-Property-Insurance-in-Uzbekistan-Overview-and-Recommendations.pdf. 75 World Bank. 2023. Uzbekistan Country Climate and Development Report. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099111423124532881/p1790680f452f10ba0a34c06922a1df0003. 44 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment 2.4.4 Priority Action 3.4: Build a social protection system that is responsive to shocks The lack of aggregated information on social care further disaggregation is not available. Shelters and services constraints the ability of the government rehabilitation centers for domestic violence survivors are to enhance its targeting of the most vulnerable. The not centrally collected. To efficiently allocate resources on Government of Uzbekistan reinforced its commitment SP, performance analysis, including targeting efficiency, to social protection by establishing on June 1, 2023, should be regularly evaluated using national household Uzbekistan National Social Protection Agency to offer budget surveys. Large inclusion and exclusion errors can high-quality social services and assistance, in line with undermine the effectiveness of SP programs in poverty the country’s constitutional Article 1, defining it as a social reduction. To improve targeting, existing analytical work state. Services provided by this agency target specific and policy notes should be used, such as easing mandatory segments of the population, such as vulnerable children, requirements, improving agricultural income imputation, elderly living alone, and domestic violence survivors. and adopting a hybrid method combining means76 While spending information is collected on residential testing with a control instrument. In the short term, the institutions for children without parents, those with performance of low-income family allowances can be disabilities, and the elderly living alone or with disabilities, assessed using household budget surveys 2021 data. FIG U R E 5 0: >> Summary Priority Action 3.4: Build a social protection system that is responsive to shocks Interoperable social protection and disaster risk management information systems Social protection contingent plan Multiple delivery mechanisms Complementary social protection measures for resilience Share of population in the social registry Emerging Established Average score Source: Original to this publication based on data from the World Bank, UNDP, WDI, and expert interviews. A systemic response system of climate shock 2.4.5 Priority Action 3.5: Help firms develop business and social protection is required in Uzbekistan. continuity plans and financial preparedness Uzbekistan’s social protection system, which covers Overall, Uzbekistan is emerging in progress in helping 55 percent of the population, could benefit from more firms develop business continuity plans and financial flexibility. With over 50 programs, most focus on societal preparedness. However, as shown in Figure 51, revenue dangers rather than crises. Public Works and the Low- lost due to outages remains a major problem, but progress Income Family Allowance are crucial for human capital has been made in helping firms with business continuity development, promoting education, and sustainable plans, enhancing access to finance for adaptation and labor market participation. However, the government generation of ownership. reacts to crises with ad hoc support through case-by- case financing procedures, lacking automatic scaling up Revenue lost by enterprises remains high, making for climate-related shocks. the business environment unfavorable for small businesses. In Uzbekistan, a sizeable portion of power Various strategies can be employed to mitigate the impacts of shocks, including implementing predefined generating capacity is now outdated and has to be replaced. reaction mechanisms and operational processes Nearly 40 percent of Uzbekistan’s available generating for social protection programs. The Pension Fund’s capacity has reached the end of its useful life.77 This has computerized database and cash distribution capabilities worsened the dependability of the electrical supply, which can enhance reaction and recovery efforts for social has remained a major barrier to business performance in pensions, enabling post-hazard assistance. SP systems Uzbekistan. As a result, the percentage of income lost to can help individuals become more resilient by reducing power outages increased from 8.9 percent to 16 percent in risks over time. In high-risk locations, strong insurance 2015. As of 2013, Uzbekistan saw nearly six times as many schemes can prevent property loss for individuals, power outages as the OECD (0.6 per month on average) or corporations, and the self-employed. the Russian Federation (0.3 per month on average).78 76 A means test determines if a person or household is eligible to receive some sort of benefit or payment. 77 World Bank 2016. Systematic Country Diagnostic for Uzbekistan Washington DC: World Bank. https://openknowledge.worldbank.org/bitstream/handle/10986/24588/Uzbekistan000S0c0country0diagnostic.pdf?sequence=1&isAllowed=y. 78 World Bank 2019. World Development Indicators (database). https://datacatalog.worldbank.org/dataset/world-development-indicators. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 45 FIG U R E 51: >> Summary Priority Action 3.5: Help firms develop business continuity plans and financial preparedness Firms with business continuity plans Access to finance for adaptation for firms Revenue lost due to outages Generator ownership Nascent Emerging Average score Source: Original to this publication based on data from World Development Indicators, 2022 Develop a capacity-building and financing framework do not take adaptation options by owning generators, to promote business continuity planning in the private which results in high losses to firms due to a lack of sector. With the modernization of hydrometeorological alternative energy sources. In the most recent Enterprise services and current efforts to move towards a market Survey conducted in Uzbekistan, firms ranked access economy with an increasing influence of the private to dependable energy as their third most significant sector, it is essential to provide capacity building limitation, behind tax rates and informal sector and financing needs on service delivery and business practices. Power fluctuations and frequent blackouts continuity planning and assess national early warning increase operating costs and have an impact on company and emergency response capacities. Also, integrating activities. Making the switch to a new, environmentally business continuity planning in emergencies as part of friendly energy system will facilitate company operations regulatory compliance by the private sector will improve in Uzbekistan. While eliminating energy subsidies would firms’ adaptive capacity and resilience. aid in overhauling service delivery, this is likely to take some time, along with better sector administration. A few firms in Uzbekistan own generators, while a large Businesses may experience greater expenses and yet percentage suffer from revenue losses due to outages. subpar service up to that point, necessitating cautious Figures 52 and 53 below show that firms in Uzbekistan control on the part of electrical service providers. FIG U R E 52: >> FIG U R E 5 3: >> Generator ownership (% firms) Revenue losses due to outages (% firms) 43.5 3.0 1.7 1.8 19.3 20.6 19.6 1.5 14.5 9.2 0.6 0.3 Turkiye Turkiye Azerbaijan Azerbaijan Tajikistan Uzbekistan Tajikistan Uzbekistan Russia Russia Kazakhstan Kazakhstan Source: WDI 2019. 2.4.6 Priority Action 3.6: Be prepared to build back harm the economy, the government’s finances, and the better after disasters with contingency plans population’s welfare (especially for those most vulnerable). and financing More investment is required in human resources Enhancing financial resilience to disasters will and public policy related to public procurement. The ensure adequate money is available for fast and 2018 Law on Public Procurement aims to improve public effective disaster response and recovery (Figure procurement processes and comply with international 54). Governments bear a large portion of the expenses norms, requiring it to preserve favorable environmental associated with disaster relief, such as those associated conditions. However, the government has not yet with the restoration of (public and occasionally private) established an effective policy framework or allocated assets, emergency response, welfare programs, support enough human resources for public procurement. for small businesses, and fiscal transfers to subnational Public procurement can contribute to the 2030 Agenda governments. Without adequate financial planning, for Sustainable Development by achieving’ value for disasters may have more severe effects, which could money’ and advancing greening. 46 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment FIG U R E 5 4: >> Priority Action 3.6: Be prepared to build back better after disasters with contingency plans and financing Resilient recovery and reconstruction plans Emergency procurement planning and procedures Emerging Established Source: Original to this publication based on data from World Bank, UNDP, WDI, and expert interviews. 2.5 Manage financial and macro fiscal issues “The impact of climate change on the economy will affect activity and tax revenues, and strong impacts on major sectors (especially exporting ones) can affect a country’s trade balance and capital flows. The combination of these factors may result in new risks for macroeconomic stability, public finances, debt sustainability, and the broader financial sector. Governments will need to manage these risks, considering the many channels involved. However, the macro-level impacts of climate change are extremely uncertain, and all quantified assessments should be considered as a partial approximation and used in a way that considers both this uncertainty and the possibility of surprises.”—The Adaptation Principles This section reviews Uzbekistan’s management of reconstruction needs to prevent the holding of large climate change and catastrophes, focusing on priority reserves for disaster risk management. The state’s ability activities. Overall, managing financial and macro-fiscal to anticipate and plan for long-term economic impact risks is critical for adaptation and resilience. Figure 55 remains below that of benchmark countries. The country shows that the there are no legal obligations for large still needs to improve in developing a financial strategy to firms and banks to identify, quantify, and communicate manage contingent liabilities while effectively combining their exposure to climate risk and hazards. Uzbekistan does not sufficiently use financial risk management them with different instruments. Different pathways instruments such as contingent credits, risk transfer, to help Uzbekistan improve these scores and achieve its and planning based on severity, rehabilitation, and objectives are highlighted below. FIG U R E 55: >> Adaptation and resilience assessment overview for managing financial and macro-fiscal issues Manage financial and macro-fiscal issues Communicate and mitigate the disaster and climate risk exposure of the financial sector and pension systems 2 1 0 Anticipate and plan for long-term macroeconomic impacts 2 1 0 Develop a financial strategy to manage contingent liabilities, combining multiple instruments 0 3 1 Include contingent liabilities from natural disasters and environmental shocks in the planning and budgeting process 0 1 2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicator Nascent Emerging Established Source: Original to this publication based on data from the World Bank, UNDP, WDI, and expert interviews. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). 2.5.1 Priority Action 4.1: Include contingent liabilities assessment of climate and disaster risks, and the from natural disasters and environmental shocks in the government has centralized the management of planning and budgeting process emerging climate and disaster risks (Figure 56). This Climate risk is not yet fully integrated into fiscal has resulted in low funding for climate and disaster policies and not fully considered by the private risk. Integrating climate and disaster risks into sector. Uzbekistan has made efforts to enhance the fiscal policy permits improving market efficiency by Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 47 adjusting prices to reflect environmental costs. For that facilitate imports of climate-smart equipment. example, replacing unfair taxation with upstream taxes Although these policies integrate climate and disaster on energy and fuels, covering unorganized sectors risks, they do not adequately consider fiscal risks and with minimal administration and compliance costs, potential long-term impacts. Private sector companies increasing domestic resource mobilization and tax do not integrate climate and disaster risk in their base, and reducing traffic congestion, GHG emissions, statements, and taxation policies do not integrate and pollution. However, Uzbekistan has tax policies climate and disaster risk. FIG U R E 5 6: >> Summary Priority Action 4.1: Include contingent liabilities from natural disasters and environmental shocks in the planning and budgeting process Contingent liabilities are quantified and included in budget documents Climate and disaster risks are incorporated Institutional arrangements for public financial in fiscal policies and risk statements management during emergencies Emerging Established Average score Sources: Original to this publication based on data from the World Bank, UNDP, WDI, and expert interviews. Over the past two years, Uzbekistan’s fiscal policy in Uzbekistan. These events can negatively impact has improved significantly, with tax reform, better people’s well-being and fiscal space, affecting planning, accountability to the legislative body, individuals, businesses, public assets, and services. increased transparency, and a strategy to reduce Increased spending on disaster assistance and recovery deficits until 2022. However, risks of policy deviations, will result in lower tax income. Delayed climate change such as directed lending to SOEs and financing social consequences, such as sea level rise, long-term health programs, remain. While the privatization program and problems, and labor productivity, will also negatively preferential lending reductions may partially mitigate impact public finances. Addressing these contingent these risks, policy deviations still exist. liabilities in public policy is crucial to mitigating these risks. Although some estimates support this process, 2.5.2 Priority Action 4.2: Develop a financial Uzbekistan has not assessed the fiscal risks of climate strategy to manage contingent liabilities, change and disasters nor included contingent liabilities combining multiple instruments in national budgets. These challenges justify the scores Disasters and climate change pose significant allocated in Figure 57. risks and contingent liabilities to public finances FIG U R E 5 7: >> Summary Priority Action 4.2: Develop a financial strategy to manage contingent liabilities, combining multiple instruments Adoption of different climate and disaster risk financial instruments Emergency budget allocation Process to manage ex-post financial National climate and disaster risk assistance inflow financing strategy Emerging Established Average score Sources: Original to this publication based on data from the World Bank, UNDP, WDI, and expert interviews. Although institutional arrangements exist for and frequencies of natural disasters. Also, fiscal risks public financial management in emergencies, the caused by natural disasters are not accounted for in measures of risk and financial resources remain the budget; this has implications for budgets for past unequal and limit appropriate action. Several disaster impacts. Therefore, enhancing the collection of agencies assess disaster impact, but it is unclear disaster and accounting-related information for fiscal whether such information is aggregated and analyzed risks, including probable risks for significant disasters, further to be used for financial planning by the disaster impact, and post-disaster expenditures, and government. Consequently, it is difficult to understand accounting for fiscal risks in budget planning, is critical what resources were adequate for different severities for adaptation preparedness. 48 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment B OX 1.3: >> Enhance allocative and implementation efficiency of agricultural public expenditure and programs Improve agricultural sector coordination and integrate donor-financed projects in agricultural sector financial planning and implementation. Agricultural public institutions are still fragmented and characterized by weak coordination, especially at the central and local levels. Using the Medium-Term Expenditure Framework (MTEF) for monitoring the implementation at the central level can enhance coordination, and the consolidation of efforts between local agricultural public institutions around regional Agricultural Knowledge and Innovations System (AKIS) can significantly enhance coordination. Uzbekistan has been receiving donor-financed agricultural expenditures which do not fall into agricultural financial planning; this leads to poor coordination and financial planning for the future. Integrating donor-financed agriculture expenditures into agricultural financial planning will enhance this planning and facilitate tracking and evaluation. Much of the agricultural expenditure is spent on high costs of electricity for irrigation. Investment in modernizing irrigation systems and transitioning to cost-effective energy systems for irrigation is necessary. As part of the agricultural sector reforms, irrigation modernization is a priority action of the government; also, exploring options to reduce electricity expenditure, and accelerating current ongoing efforts is critical. This will also include supporting farmers in addressing constraints to maximize the benefits of drip irrigation and to explore opportunities for renewable energy use for irrigation and the operationalization of the solar energy roadmap for Uzbekistan 2030. Increase allocative efficiency of livestock support. General support services (GSS) are critical in enhancing farmers’ capacity and reducing carbon emissions. Increasing investments in GSS, such as animal nutrition, veterinary services, livestock breeding, and artificial insemination, can significantly increase output and allocative efficiency. Considering contingent credits, risk transfer, and 2.5.3 Priority Action 4.3: Anticipate and plan planning for different situations is critical for for long-term macroeconomic impacts Uzbekistan’s adaptation and resilience readiness. State revenues are at risk due to the government’s heavy The government has adopted several instruments, reliance on industries sensitive to climate change. These including national and local funds, Government System industries include agriculture, manufacturing, tourism, of Prevention of and Activities in Emergency Situations infrastructure, and services. Debt sustainability and (GSCHS) reserves, material reserves, and road funds. financial sector evaluations are crucial for understanding Other resources include the reserve fund of the Cabinet the potential macroeconomic effects of climate change of Ministers. However, contingent credit lines providing and improving macro-fiscal readiness. Increased debt to alternatives to holding large amounts of money for cover climate change costs can negatively impact foreign disasters and enabling the government to access investment, interest rates, and credit scores. Analyzing prearranged funds in case of disaster are not used in the climate change scenarios can help decision-makers plan country. This planning should also be done for different and implement appropriate policies and regulatory and disaster needs depending on the severity of natural strategic actions to minimize long-term impacts on disasters for emergency response, rehabilitation/recovery, macroeconomic variables like GDP, debt levels, and trade and reconstruction. Also, implementing risk transfer balance. Figure 58 shows this, highlighting that Uzbekistan mechanisms as part of the overall strategy will allow for needs to improve long-term planning in diversifying tax revenues and debt sustainability of the financial sector. better financial risk management. FIG U R E 5 8: >> Priority Action 4.3: Anticipate and plan for long-term macroeconomic impacts Long-term plan to diversify tax revenues Debt sustainability or financial sector assessment Proportion of tax revenues from program considers climate and disaster impacts high-vulnerability sectors Nascent Emerging Average cost Source: Original to this publication based on data from World Bank, UNDP, WDI, and expert interviews. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 49 Diversifying the tax base away from climate and outlined in target 17.17 of the 2030 agenda. However, disaster-vulnerable sectors should be promoted the country currently lacks experience in using PPPs, for adaptation and disaster resilience. Uzbekistan and there is a lack of data on enforcement and activities currently does not have an officially issued tax base by public environmental inspectors. enhancement strategy, including diversification of tax revenues away from climate and disaster-vulnerable 2.5.4 Priority Action 4.4: Communicate and mitigate the disaster and climate risk exposure of the financial sectors. The government is currently promoting options sector and pension systems to diversify the economy and, thus, the tax base, including value chain intensification, industrial development, and To effectively communicate and mitigate the disaster services sector enhancement. Despite this, more than and climate risk exposure of the financial sector, 50 percent of revenues come from 3-4 critical taxpayers quantified estimates of exposure to natural hazards from the extractives sector and large SOE monopolies. are required for banks, large firms and insurers (Figure Additionally, many taxpayers depend on the agriculture 59). Also, Uzbekistan is lagging behind in developing sector (they provide inputs or process agricultural specific disaster and climate risk requirements in output), which is most vulnerable to climate change. regulations for banks, insurers, and large investors. Policy requirements for large firms and banks to Uzbekistan doesn’t have an officially issued tax base identify, quantify, and communicate their exposure enhancement strategy, including diversification to climate risk and hazards are critical for adaptation of tax revenues away from climate and disaster- and resilience preparedness. There are currently no vulnerable sectors. Tax revenues / policy / administ- requirements for banks and large enterprises to assess ration planning have no more than a two-year horizon. their exposure to disasters and climate risks; also, a Uzbekistan has taken actions to enhance its revenue quantified exposure to hazards is absent as a requirement. basis, including value chain intensification, industrial This puts the whole economy at risk if there is a major development, and services sector enhancement. Despite disaster, and these banks and large enterprises are heavily this, more than 50 percent of revenues come from 3-4 affected. Therefore, a regulatory requirement for large key taxpayers from the extractives sector and large SOE firms and banks to identify and quantify climate change monopolies. Additionally, many taxpayers depend on risks and hazards is critical for appropriate adaptation agriculture (they provide inputs or process agricultural options and mitigation, thus ensuring the resilience of output), the sector most vulnerable to climate change. these firms and banks in case of a major disaster. We can differentiate debt sustainability for the public administration and financial sectors: i) For the public Uzbekistan is making considerable efforts to administration sector, ADB delivered technical incentivize the use of energy-saving technologies assistance in installing Debt Management and Financial by applying tax credits and reduced import taxes. In Analysis System (DMFAS-6 software) along with a locally 2019, the country also started developing Uzbekistan’s developed Debt Management application. The Ministry eco-labelling system. Other initiatives include of Economy and Finance regularly conducts stress tests liberalizing the process for citizens to become public and approves debt management strategies. However, the environmental inspectors. The country also started stress test does not include climate and disaster impact. developing institutional and legal frameworks for The financial sector’s debt sustainability assessment is establishing public-private partnerships (PPPs) as based on climate and disaster risks. FIG U R E 59: >> Summary Priority Action 4.4: Communicate and mitigate the disaster and climate risk exposure of the financial sector and pension systems Quantified estimates of exposure to natural hazards required for banks, insurers and large investors Specific disaster and climate risk requirements in Climate and disaster risk stress tests regulations for banks, insurers, and large investors for banks, insurers and large investors Nascent Emerging Average score Source: Original to this publication based on data from World Bank, UNDP, WDI, Uzbekistan TNC, and expert interviews. Regulatory specification of disaster and climate risk financial system is improving its climate and requirements is required for banks, insurers and environmental sustainability disclosure. Currently, no large investors by the government of Uzbekistan. regulations require financial institutions to recognize, Despite a lack of legal obligations for banks, insurers, quantify, and disclose risks in their investment portfolios, and investors to handle catastrophic risks, Uzbekistan’s and national regulatory bodies have not yet assessed the 50 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment sector’s exposure to climate change and natural disaster supervisory authority understands insurers’ earthquake risks. The country needs to improve insurance oversight risk accumulations, it is crucial to mandate disclosures of catastrophe insurance markets and implement by Catastrophe Risk Evaluation and Standardizing Target effective reporting of catastrophe risk accumulations. Accumulations (CRESTA) zone and type of earthquake A survey shows that multiple businesses could go on a regular basis. This will help protect businesses and bankrupt in a catastrophic event. To ensure that the mortgage lenders from potential bankruptcies. 2.6 Priority Action 6: Application prioritization, implementation, and progress monitoring “To effectively implement adaptation and resilience actions, governments must first establish the right institutional and legal framework for robust implementation (Action A.1 [6.1]) and then design a concrete multisectoral adaptation and resilience strategy that clearly identifies and prioritizes actions in line with available resources (Action A.2 [6.2]). A concrete set of intermediate targets and milestones is essential to implement the strategy in each sector (Action A.3 [6.3]). Governments should actively mainstream and integrate resilience in all public policies rather than limit their consideration of resilience to climate- related actions (Action A.4 [6.4]). With priority actions defined, they need to raise, allocate and track adequate financial resources to implement the strategy (Action A.5 [6.5]). Finally, once implementation is underway and new information and challenges emerge, they will need to make regular strategy adjustments and course corrections to strengthen the approach (Action A.6 [6.6]). Overall, the key to successful implementation is ensuring that all government departments adopt and mainstream the strategy in all their decisions and that governments continuously monitor and evaluate the impact of their decisions and actions so they can address any challenges and adjust their actions accordingly.” —The Adaptation Principles. The process of adaptation and resilience requires in monitoring adaptation and resilience initiatives. adequate prioritization, implementation, and Integrating research into policy should be bolstered progress monitoring. Figure 60 shows that to ensure compliance with the policy requirements. Uzbekistan lacks an overarching climate policy that Also, there is no clear framework for developing, anchors different sectoral policies and actions in monitoring, and tracking a national adaptation adaptation, mitigation, and resilience building. Cross- fund that captures adaptation and resilience efforts sectoral implementation, monitoring, evaluation, across sectors to determine progress and financial and coordination are required to reduce overlaps and gaps to help achieve climate commitments through maximize the impact as Uzbekistan starts implementing subsequent coordination with development partners. its green growth action plan to move towards a low- Options for enhancing the application, prioritization, carbon economy. The assessment also highlights implementation, and monitoring of adaptation and that Uzbekistan needs to enhance capacity building resilience efforts are summarized below. FIG U R E 60: >> Adaptation and Resilience assessment for application: prioritization, implementation,and monitoring progress Application: Prioritization, implementation and monitoring progress Track progress over time, and review and revise the strategy 2 1 0 Allocate appropriate funding to the adaptation strategy 2 2 0 Screen all public policies and expenditures for climate and disaster risks and align them with adaptation targets 0 4 0 Set concrete sector-level targets to guide implementation by line ministries and local governments 0 3 1 Design an adaptation and resilience strategy with prioritized actions 0 1 3 Create strong institutional and legal framework, with appropriate stakeholder involvement 0 4 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicator Nascent Emerging Established Sources: Original to this publication based on World Bank CCIA Report, Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, and expert interviews. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 51 2.6.1 Priority Action 6.1: Create a strong institutional and legal framework with appropriate stakeholder involvement The government of Uzbekistan understands the involvement has been part of these policy reforms and importance of considering climate change in its engagement. However, although initiatives are ongoing, development ambitions and has made progress in some gaps persist; some of these are shown on the creating institutional and legal frameworks that ratings of indicators below and further explained in the reflect this ambition (Figure 61). Also, stakeholder paragraphs that follow. FIG U R E 61: >> Summary Priority Action 6.1: Create a strong institutional and legal framework with appropriate stakeholder involvement Climate change law/policy Government framework for A&R Government coordination mechanism for A&R policies and actions Effective stakeholder involvement Environmental enforcement Emerging Established Average Score Sources: Original to this publication based on World Bank CCIA Report, Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, expert interviews. An overarching climate change policy framework being implemented and planned in national and sectoral is required to anchor sectoral policies and actions. plans, Uzbekistan has yet to develop a unique national Sectoral policies and laws exist on water, efficient energy program for adaptation to climate change. Therefore, use, emissions, and forests; however, they have not Uzbekistan’s National Adaptation Plan (NAP) will need to been developed within an overarching climate change be underpinned by the National Strategy for Sustainable policy framework. Climate change is currently addressed Development (NSSD) and closely aligned with the to a degree in various policy documents, such as the development strategy. Most measures have a sectoral “Water Saving and Rational Water Use in Irrigated Land emphasis and are integrated with sector-specific economic Tenure Strategy,” the “National Strategy for Agriculture development strategies. Different ministries and agencies Development,” the “National Strategy for Adaptation focus on other aspects of climate change without a formal of Public Health Care System to Climate Change,” and structure to incorporate climate change-related concerns strategies for adaptation of forestry to climate change, into national development programs and policies. No single including the Forest Code and National Forest Program. institution is responsible for coordinating adaptation Yet climate-related participatory decision-making measures or an Uzbekistan national adaptation strategy. and stakeholder input processes for managers and Some environmental policies and programs cover a range policymakers are unclear, and there is no inter-ministerial of sectoral activities, though the policies and programs platform for the discussion of adaptation issues. are fragmented and uncoordinated. Uzbekistan is progressing in including adaptation 2.6.2 Priority Action 6.2: Design an adaptation and resilience strategy with prioritized actions and resilience strategies in ongoing policy reforms to move the country towards a market economy. However, Uzbekistan has made progress in establishing a robust better cross-sectoral implementation, monitoring, climate governance framework, but improvements are evaluation, and coordination are needed. According to the needed (Figure 62). Legal instruments are needed to country’s Third National Communication to the UNFCCC integrate adaptation and resilience into decision-making (TNC), although adaptation measures and actions are and operational planning across government agencies. FIG U R E 62: >> Summary Priority Action 6.2: Design an adaptation and resilience strategy with prioritized actions The long-term strategy for Adaptation & Resilience (A&R) Updated nationally determined contributions (NDC) National climate change adaptation plan National communication and biennial reports Emerging Established Source: Original to this publication based on World Bank CCIA Report, Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, expert interviews. 52 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Long-term strategies for adaptation and resilience 2.6.3 Priority Action 6.3: Set concrete sector-level are not available for all sectors. Medium-term sector targets to guide implementation by line ministries strategies aim to meet climate-related targets in the Uzbekistan is still developing sectoral adaptation and water, energy, agriculture, and environment sectors. resilience implementation, with sectoral ministries However, other sectors still require GHG limits, leading planning, funding, and implementation in industry-specific energy efficiency targets, water use collaboration with local governments (Figure 63). A efficiency improvements, renewable energy capacity, strategy should set priorities and targets, with clear roles forest cover, and waste service coverage. Enforcement and responsibilities for targets. Parliamentary approval and mechanisms need to be established. oversight from central ministries can improve the strategy’s authority, reaffirm national interest, and strengthen Work on the national climate change adaptation plan ownership and accountability among the actors involved. needs to be accelerated so that national adaptation priorities are integrated across all sectors. The Important climate-related implementation, coor- governance of climate change impacts consists of dination, and regulatory responsibilities are under the a patchwork of presidential decrees, government purview of the Ministry of Economy and Finance. The resolutions, and sectoral strategies in the absence of a ministry is in charge of coordinating efforts to advance comprehensive law on the response to climate change. a green economy and put green growth principles into Climate change-related laws and decrees have been practice, which includes lowering GHG emissions, approved by the president, government agencies, and managing GHG trade at the international and national the Oliy Majlis (Senate and Legislative Chamber) in the levels, and coordinating efforts to carry out Article 6 of range of 30 and 100, respectively. A NAP to support the the Paris Agreement. The ministry also creates financial NDC and a national climate change strategy are both in systems and keeps track of how money is spent on the works. programs and initiatives related to climate change. FIG U R E 6 3: >> Summary Priority Action 6.3: Set concrete sector-level targets to guide implementation by line ministries Sectoral priority setting and implementation Tasking of Ministries of Economy, Energy, Finance, and Planning to tackle climate change issues Clear functional adaptation and resilience actions assigned National development plan incorporates between national and local administration adaptation and resilience targets Emerging Established Average score Source: Original to this publication based on Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, and expert interviews. Although regulatory frameworks exist for setting resources for basic infrastructure, and introduced sectoral priorities and implementation, capacities measures to enable mahallas to raise revenues and at local levels are low. Uzbekistan’s government execute local development projects. Although the Law structure remains centralized, and municipal on Self-Government Bodies of Citizens allows mahallas governments have limited resources for local economic to create commissions on ecology and environmental development initiatives. Their primary resources are protection, these commissions do not function in land distribution and access to existing infrastructure practice. networks. Despite recent changes, local governments still lack the power to manage their income and capital Subnational governance mechanisms can be investments independently. To foster more territorially strengthened by implementing territorial hydromet responsive climate action, it is crucial to clearly define programs, climate adaptation actions, and social the duties, responsibilities, and accountabilities infrastructure development. However, these of subnational administrations across territorial governments are not directly involved in national climate administration levels. Municipalities are increasingly objectives. Cross-sectoral methods across urban, rural, critical to fostering local climate action through and peri-urban regions are necessary for climate policy urban planning. Uzbekistan’s over 9,000 mahallas aim implementation. Coordinating planning and funding to strengthen their role in service delivery, poverty with provisions for effective participation in territorial reduction, and citizen engagement. Recent reforms administration mechanisms is crucial for achieving have strengthened the human resource base, increased climate action goals. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 53 2.6.4 Priority Action 6.4: Screen all public policies and change concerns. Incorporating climate change policy expenditures for climate and disaster risks and align objectives into public financial management tools, them with adaptation targets investment cycles, and infrastructure governance Public investment cycles often overlook adaptation in Uzbekistan requires no legislative or regulatory and resilience policy objectives. To build resilience, requirements. Green taxonomies and budgeting can help cost-effective adaptation and risk reduction strategies decompose green and nongreen investments. Figure 64 must be integrated into public investment management shows that Uzbekistan is emerging in all indicators for across institutions and projects, addressing climate this priority action due to the gaps discussed below. FIG U R E 6 4: >> Summary Priority Action 6.4: Screen all public policies and expenditures for climate and disaster risks and align them with adaptation targets Disaster and climate-informed public investment Climate change strategies and plans integrated into existing national planning instruments SOEs identify and consider climate-related risks Green taxonomy considering adaptation and resilience Emerging Average score Source: Original to this publication based on Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, and expert interviews. Disaster insurance in Uzbekistan is unlikely to provide verification of impacts is crucial for financing a green significant funding for disaster response due to low transition. Uzbekistan should create a green taxonomy, uptake and per-capita usage. The market’s product has establish sustainable reporting standards, and establish flaws, potentially leading to underpricing. Insurance an independent impact verification sector to promote firms may go insolvent after a disaster due to the inability transparency and accountability for environmental to buy appropriate reinsurance coverage. Due to increased impacts. These strategies will reassure financiers and coverage, the government may be ethically obligated investors about positive environmental impacts and to assist insurance firms in times of financial crisis. prevent greenwashing and green bubbles. Agricultural insurance is also offered, but its usage is unknown. The government recognizes the importance 2.6.5 Priority Action 6.5: Allocate appropriate funding of catastrophe insurance and is working on mandating to the adaptation strategy property disaster insurance. Budget reallocation may Adaptation and resilience investments face be expensive due to market conditions and debt load. challenges due to centralized funding for adaptation, It may also involve removing funds from development risk reduction, and resilience development in initiatives, resulting in lost opportunities. environmental budgets (Figure 65). Specialized jobs A green taxonomy system that integrates climate like monitoring and evaluation (M&E) require separate change adaptation and resilience is required to reform funding, while sectoral initiatives like infrastructure fiscal policy. Climate change adaptation action plans are upgrades and social protection require that extra essential in most nations. Public disclosure requirements adaptation and resilience costs be included. Budget on green and brown investments can increase competition for other investments may prevent funds transparency and accelerate green economic activity. A designated for adaptation and catastrophe resilience clear definition of green investments and independent construction from being used widely. FIG U R E 65: >> Summary Priority Action 6.5: Allocate appropriate funding to the adaptation strategy Environmental protection spending Adaptation policy actions are financed in the national budget Private sector financing for Requirements for sub-national governments to allocate adaptation and resilience budget adaptation and resilience actions Nascent Emerging Average score 2 Source: Original to this publication based on Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, and expert interviews. 54 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment There is no clear regulatory framework for private papers, and implementation reports are created but sector financing of adaptation and resilience. While not published on public websites. The newly approved private sector funding for adaptation and resilience “Concept on Environmental Protection Until 2030” and remains scarce, it is more common for mitigation policy papers on biodiversity and solid waste management measures, such as investments in clean, renewable are undergoing dynamic development at the national energy. This is a result of obstacles like a lack of climate level. One challenge is ensuring proper consideration of knowledge for decision-making, a lack of a regulatory subnational issues that are not adequately represented framework and a green taxonomy to direct the private in policy documents, such as climate change, low sector, and a lack of market and governmental incentives carbon development, environmental compliance, forest to represent the actual risks of climate change and protection, soil protection, and environmental noise. catastrophes. 2.6.6 Priority Action 6.6: Track progress over time and Systemic mainstreaming of subnational adaptation and review and revise the strategy resilience priorities is not well aligned with national action plans. Strategic planning is effective in Uzbekistan, Uzbekistan has tools for monitoring and evaluating with detailed timelines, execution roles, and funding adaptation and resilience efforts at sectoral levels as sources laid out in strategic papers. The state budget part of different strategies to combat climate change; provides funding for implementing these documents, however, independent monitoring of adaptation and with quantitative implementation indicators being resilience progress, disaster-related expenditure increasingly used. However, there is limited information tracking and review are absent, which explains the available to the public about the application of strategy overall nascent rating as summarized in Figure 66. FIG U R E 6 6: >> Summary Priority Action 6.6: Track progress over time and review and revise the strategy Independent monitoring of adaptation and resilience progress Disaster-related expenditure Monitoring and evaluation plan for tracking and review adaptation and resilience Nascent Emerging Average score Source: Original to this publication based on Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, and expert interviews. Capacity building on monitoring adaptation and and radiation monitoring networks. However, a lack of resilience initiatives, integrating research into policy, automatic monitoring, data quality control, processing, and enhancing awareness of adaptation planning and transfer results in insufficient continuous monitoring and implementation are required at all levels. There and timely data delivery. The 2019 Cabinet of Ministers is a need to strengthen climate-related monitoring Resolution No. 737 addresses these inadequacies to systems for sectoral implementation activities. The improve data gathering, sharing, and transfer practices. limited connection between research results, policy The absence of PM10 and PM2.5 monitoring in atmospheric formulation, and proposed actions to establish an air pollution is a significant issue, and measures evidence-based approach to address climate change under Resolution No. 737 aim to address this. Despite challenges does not create an appropriate environment biodiversity monitoring being included in the five-year for innovation. Insufficient awareness about climate environmental monitoring programs since 2011, noise change impacts, adaptation, and linkages with existing monitoring operations are excluded. Open access to programs and activities do not produce the required environmental data concepts is not fully implemented urgency for action. Also, a lack of understanding of in Uzbekistan, with few publicly available data and current capacities and climate change adaptation needs online resources. The operationalization of the national in individual communities, industries, and territories Sustainable Development Goals webpage and the makes adaptation and resilience initiatives challenging. definition of 206 national indicators faced challenges due to the limitations of data and internet resources. Available data for different adaptation and resilience indicators do not permit a comprehensive independent Uzbekistan is progressing in including adaptation and monitoring of progress. The SCEEP-coordinated resilience strategies in ongoing policy reforms to move Program of Environmental Monitoring in Uzbekistan the country towards a market economy. However, more focuses on air quality, surface water quality, soil pollution, excellent cross-sectoral implementation, monitoring, Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 55 evaluation, and coordination are required. According economic development strategies. Different ministries to the country’s Third National Communication to and agencies focus on other aspects of climate change the UNFCCC (TNC), although adaptation measures without a formal structure to incorporate climate and actions are being implemented and planned in change-related concerns into national development national and sectoral plans, a unique national program programs and policies. A single institution in Uzbekistan for adaptation to climate change in Uzbekistan has yet is not responsible for either coordinating adaptation to be developed. Therefore, Uzbekistan’s NAP must be measures or a national adaptation strategy. Some underpinned by the NSSD and closely aligned with the environmental policies and programs cover a range of development strategy. Most measures have a sectoral sectoral activities, though the policies and programs are emphasis and are integrated with sector-specific fragmented and uncoordinated. 56 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment CHAPTER 3 >> 3 Conclusions and the Way Forward As outlined in its vision to become a middle-income More than 45 percent of the scores for all indicators country by 2030, Uzbekistan recognizes the need are emerging, thus suggesting actions are underway for adaptation and resilience building by opting towards a more resilient economy. Figure 21, organized for a sustainable growth pathway. Over the last by priority area for adaptation, illustrates that Uzbekistan decade, the country has made considerable progress in is progressing in some areas but lagging in helping to adapt introducing reforms towards a more sustainable future. land use plans and protect critical assets and services; A good example is the recent Presidential Resolution “On 86 percent of the indicators for this principle are either measures to improve the efficiency of reforms aimed at nascent (21 percent) or emerging (65 percent). The country the transition of the Republic of Uzbekistan to a ‘green’ also lags in helping firms and people manage residual risks economy by 2030” (December 2, 2022, No. PP-436). This and natural disasters; 71 percent of indicators are either progress is reflected in the summary figure of the six emerging or nascent. The assessment also shows that more principles used to assess the adaptation and resilience than 75 percent of scores for managing financial and fiscal of Uzbekistan; as shown in figure 21, Uzbekistan is issues, application—prioritization, implementation and emerging on most of the indicators. monitoring progress—are either emerging or nascent. FIG U R E 67: >> Summary scores: adaptation and resilience assessment Uzbekistan Application: Prioritization, implementation and monitoring progress 4 15 5 Manage financial and macro-fiscal issues 4 6 3 Help firms and people manage residual risks and natural disasters 4 13 7 Adapt land use plans and protect critical public assets and services 9 28 6 Facilitate the adaptation of people and firms 6 8 11 Foundations for rapid, robust and inclusive growth 5 6 10 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of indicator Nascent Emerging Established Source: Original to this publication based on Uzbekistan TNC, UNECE Environmental Performance Reviews: Uzbekistan, and expert interviews. Note: The number in each bar shows the number of indicators per category (established/emerging/nascent). Coordinated actions for national adaptation and including this in the planning is imperative. It will also resilience funding, monitoring, and evaluation are permit the government to adequately estimate required absent and should be considered for proper action and funding for the adaptation and resilience needs and prioritization. As adaptation and resilience actions and develop strategies for mobilizing funds based on national strategies are lodged in different ministries, so is the flow priorities as stipulated in various policy documents. of adaptation funding. A national coordination system A list of priority actions for Uzbekistan per priority or information platform must aggregate, monitor, and area to improve its standing on adaptation readiness is designate adaptation funding and activities to align with summarized below. national priorities. As the country is developing its NAP, Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 57 Priority Area 1: Lay the foundations for adaptation through rapid, robust, and inclusive development >> • Prioritize stability of macroeconomic fundamentals • Accelerate investment in human capital development such as inflation, external debt, and current account and review training to match new skill sets required balance to enhance financial stability for adequate for a market economy to help the population adapt to adaptation and resilience preparedness. green transition. • Accelerate action on improving good governance, • Also, invest in extending universal health coverage to especially on the following aspects, the rule of law, predominantly rural parts of the country to reduce the voice and accountability, and political stability to population’s vulnerability to climate risks. facilitate implementation and inclusion for socio- economic and environmental resilience. Priority Area 2: Facilitate adaptation of people and firms >> • Increase investment in R&D, develop strategies for in improving financial resilience because they are integrating research outcomes into policy, and create the most vulnerable and often depend on climate- an enabling environment for foreign research think sensitive sectors (agriculture). tanks and innovation hubs to develop evidence- based research and technology for climate change • Diversify the economy through special incentives to investors targeting new sectors, with regulated adaptation and resilience. environmental safeguards incorporated into company • Increase access to finance by the poorest (bottom environmental safeguard systems, enabling green 40 percent)—this population segment is critical investments that also improve the standard of living. Priority Area 3: Adapt land use plans and protect critical public assets >> • Establish institutional coordination framework and capacity of extension workers on organic agriculture define mandates to leverage current efforts to develop and good agricultural practices. Significant expansion sustainable land-use plans and protect critical assets. of agricultural extension services is required to bridge existing capacity gaps. • Develop incentives to attract the private sector to invest in innovative water-saving technologies • Expand the scope of biodiversity hotspots and develop because water productivity in Uzbekistan is one of the nationwide animal and plant biodiversity data. lowest in the world. Biodiversity preservation is an important element in adapting to climate change. • Establish and implement stakeholder involvement in the land-use planning framework and define linkages • Adopt the strategic environmental assessment (SEA) between land-use planning and water management tool to evaluate the environmental impacts of future for efficient water management and land restoration. sectoral strategic documents to ensure climate-smart development and private sector investment. • Expand agricultural extension services and build the Priority Area 4: Help firms and people manage residual risks and natural disasters >> • Modernize early warning systems and increase data • Build sub-national capacity on disaster risk availability to the public to better communicate management response to emergencies and enhance climate risks. information sharing to decentralized units. • Scale-up non-life insurance coverage of the • Build the private sector’s capacity and institutionalize vulnerable population is low in this segment and business continuity planning for the private sector to should be promoted for greater resilience; promote further support private investments in adaptation. the registration of a larger population in the social registry to better support adaptation and resilience • Increase the number of qualified planners and develop sustainable financing mechanisms for implementing efforts. urban plans. 58 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Priority Area 5: Manage financial and macro-fiscal issues >> • Put policy reforms in place for large firms and banks prioritization of disaster financing at national and to identify, quantify, and communicate their exposure local levels. to climate risk and hazards for better adaptation and resilience preparedness, which would prevent • Employ contingent credits, risk transfer, and planning based on severity, rehabilitation, and reconstruction economic crisis in the event of a disaster. need to prevent the holding of large reserves for • Aggregate disaster impact analysis at the national level disaster risk management. to ascertain the severity and frequency for adequate Priority Area 6: Application: prioritization, implementation, and monitoring progress >> • Develop an overarching climate policy that anchors resilience initiatives and integrate research into different sectoral policies and actions in building policy. 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Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 63 Appendix 1: Summary Scores Foundations for rapid, robust, and inclusive growth Nascent Emerging Established Increase economic productivity and growth, while keeping buffers for shocks 1 2 1 Inclusive economic growth 4 4 9 Priority area 1: Facilitate the adaptation of people and firms Nascent Emerging Established Assess disaster and climate change risks, and make this information available 0 2 7 Clarify responsibilities and align incentives with resilience and adaptation objectives 1 3 0 Facilitate access to technical solutions for resilience through R&D and trade policies 1 1 2 Ensure financing is available to all, and provide support to the poorest and most 4 1 0 vulnerable people Facilitate structural change in the economic system 0 1 2 Priority area 2: Adapt land use plans and protect critical public assets and services Nascent Emerging Established Identify critical public assets and services 1 2 1 Design and implement a government-wide strategy to increase the resilience of 1 4 1 infrastructure systems and public assets Revise land use plans and urban plans to make them risk-informed 3 2 0 Increase resilience of the agriculture sector and ensure food security 0 7 0 Increase resilience of water infrastructure and water resources management 1 2 1 Design and implement a governmentwide strategy to increase the resilience of the 0 4 1 health system Design and implement a governmentwide strategy to increase the resilience of the 1 2 2 education system Ensure resilience of forests and other natural ecosystems 2 5 0 Priority area 3: Help firms and people manage residual risks and natural disasters Nascent Emerging Established Save lives (and money) with hydromet, early warning and emergency management systems 1 2 4 Provide all firms and households with risk management instruments 1 2 0 Develop the insurance sector, building on Public-Private Partnerships 1 2 0 Build a social protection system that is responsive to shocks 0 3 2 Help firms develop business continuity plans and financial preparedness 1 3 0 Be prepared to build back better after disasters, with contingency plans and financing 0 1 1 Priority area 4: Manage financial and macro-fiscal issues Nascent Emerging Established Include contingent liabilities from natural disasters and environmental shocks in the 0 1 2 planning and budgeting process Develop a financial strategy to manage contingent liabilities, combining multiple instruments 0 3 1 Anticipate and plan for long-term macroeconomic impacts 2 1 0 Communicate and mitigate the disaster and climate risk exposure of the financial sector 2 1 0 and pension systems Application: Prioritization, implementation and monitoring progress Nascent Emerging Established Create strong institutional and legal framework, with appropriate stakeholder involvement 0 4 1 Design an adaptation and resilience strategy with prioritized actions 0 1 3 Set concrete sector-level targets to guide implementation by line ministries and local 0 3 1 governments Screen all public policies and expenditures for climate and disaster risks and align them 0 4 0 with adaptation targets Allocate appropriate funding to the adaptation strategy 2 2 0 Track progress over time, and review and revise the strategy 2 1 0 64 CONTENTS Uzbekistan Climate Adaptation and Resilience Assessment Appendix 2: Definition of Key Terms Adaptation principles:   A guide to effective climate change adaptation, containing hands-on guidance to the design, implementation and monitoring of national adaptation strategies. Priority areas: These are areas of action that ensure a broad, productive, and inclusive development pathway through implementation of an effective climate change adaptation strategy. They include: the adaptation of people and firms (Priority Area 1); land use plans, public assets and services (Priority Area 2); residual risk management (Priority Area 3); and macro fiscal, risk management (Priority Area 4). Priority actions: are common policy domains and cover key aspects of the enabling environment required for effective adaptation, these priority actions organized around six adaptation principles. Adaptation: is the process of adjusting to actual or expected climate and its effects. In human systems, adaptation seeks to moderate or avoid harm or exploit beneficial opportunities. In some natural systems, human intervention may facilitate adjustment to expected climate and its effects. Resilience: is the capacity of social, economic, and environmental systems to cope with a hazardous event or trend or disturbance, responding or reorganizing in ways that maintain their essential function, identity, and structure, while also maintaining the capacity for adaptation, learning, and transformation. Socioeconomic resilience (SER): is the capacity to mitigate the impact of disaster-related asset well-being losses, including people’s ability to maintain consumption for the duration of recovery, their ability to save or borrow to rebuild their asset stock, and decreasing returns in consumption (a $1 reduction in consumption affects poorer people more than richer ones). Hazard: is the potential occurrence of a natural or human-induced physical event or trend that may cause loss of life, injury, or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems, and environmental resources. Risk: is the potential for adverse consequences for human or ecological systems, recognizing the diversity of values and objectives associated with such systems. Physical risks: refer to the direct effects of a changing climate and include slow-onset hazards, such as increased temperature and changes in rainfall, and more sudden hazards, such as those caused by extreme weather events. Transition risks: are primarily driven by the global transition to a low-carbon future, such as shifts in technology, fuel availability, and changes in trade dynamics—for example, due to consumer preferences or tariffs on emissions-intensive goods. Residual risk: is the disaster risk that remains unmanaged, even when effective disaster risk reduction measures are in place, and for which emergency response and recovery capacities must be maintained. Vulnerability: is the propensity or predisposition to be adversely affected, including sensitivity or susceptibility to harm and lack of capacity to cope and adapt. Uzbekistan Climate Adaptation and Resilience Assessment CONTENTS 65 Uzbekistan Climate Adaptation and Resilience Assessment May 2024 MINISTRY OF ECOLOGY, ENVIRONMENTAL PROTECTION AND CLIMATE CHANGE OF THE REPUBLIC OF UZBEKISTAN