EUROPE AND CENTRAL ASIA TAJIKISTAN World Bank Group i November 2024 Country Climate and Development Report: Tajikistan COUNTRY CLIMATE AND DEVELOPMENT REPORT: TAJIKISTAN November 2024 © 2024 The World Bank Group 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 International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), collectively known as The World Bank Group, with external contributors. The World Bank Group does not guarantee the accuracy, reliability or completeness of the content included in this work, or the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. 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All queries on rights and licenses should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org Table of contents Acknowledgments.....................................................................................................................................................viii Abbreviations................................................................................................................................................................x Executive Summary....................................................................................................................................................xi Chapter 1. Climate change and development in Tajikistan................................................................................... 1 1.1. Development context and reform priorities......................................................................................................... 2 1.2. Risks from climate change................................................................................................................................... 3 1.3. Low-carbon development opportunities and risks.............................................................................................. 8 Chapter 2. Institutional and policy assessment...................................................................................................11 2.1. Tajikistan’s climate change commitments and strategies................................................................................12 2.1.1. Adaptation strategies...............................................................................................................................12 2.1.2. Mitigation strategies................................................................................................................................13 2.2. Institutions, policies, and capacities ................................................................................................................14 2.3 Economic governance for climate action............................................................................................................ 16 Chapter 3. Pathways for adaptation and resilience..............................................................................................19 3.1. Water security at the center of climate adaptation ..........................................................................................20 3.2. Resilient landscapes to reverse degradation, support water and food security, and sequester carbon ......22 3.3. Achieving food security in Tajikistan with climate-smart agriculture................................................................25 3.4. Building resilient infrastructure and financial reserves to manage disaster risk and preserve connectivity ...... 26 3.5. Fostering cities’ climate resilience and reducing air pollution..........................................................................28 3.6. The likely effects of climate change on migration, fragility, and social inclusion............................................29 Chapter 4. Toward a resilient and innovative low-carbon economy ................................................................... 31 4.1. Pathways to a decarbonized energy sector.......................................................................................................33 4.2. Decarbonizing the energy supply.......................................................................................................................35 4.2.1. Scaling up clean power to improve energy security and fuel economic growth....................................36 4.2.2. The roles of gas and hydrogen in decarbonization................................................................................. 37 4.3. Decarbonizing energy demand: Buildings, transport, and industry..................................................................38 4.3.1. Sustainable heating.................................................................................................................................39 4.3.2. Sustainable transport.............................................................................................................................. 41 4.3.3. Sustainable industry................................................................................................................................ 42 4.4. Compact and sustainable urban growth............................................................................................................44 4.5. Waste and agriculture: Reduction of methane emissions ...............................................................................44 4.5.1. Methane emissions from the waste sector.............................................................................................44 4.5.2. Methane emissions from agriculture......................................................................................................45 Chapter 5. The macroeconomic implications of climate change and inclusive transition ............................. 47 5.1. The economic impact of damage from climate change ....................................................................................48 5.2. Low-carbon development and its effect on Tajikistan’s economic growth....................................................... 51 5.3. Poverty and distributional implications of climate change............................................................................... 52 5.4. Job implications of the green transition ............................................................................................................55 Chapter 6. Financing climate action and mobilizing the private sector ...........................................................59 6.1. Investment requirements...................................................................................................................................60 6.2. Opportunities presented by environmental and carbon taxation..................................................................... 61 6.3. Mobilizing private capital....................................................................................................................................63 6.4. Mitigating the fiscal and financial risks of climate change ..............................................................................65 6.5. Enhancing efficiency through digitalization.......................................................................................................68 Chapter 7. From assessment to action................................................................................................................... 71 Annex 1. Scenario Overview Table............................................................................................................................ 76 References................................................................................................................................................................. 77 v Country Climate and Development Report: Tajikistan LIST OF FIGURES Figure ES.1: Climate damage under a wet/warm scenario (percentage change from Reference Scenario).......... xiii Figure ES.2: Climate damage under a dry/hot scenario (percentage change from Reference Scenario).............. xiii Figure ES.3: Priority areas for resilient landscape restoration in Tajikistan.............................................................xv Figure ES.4: Historical and projected emissions in Tajikistan by sector (excluding agriculture), 1990–2050 (MtCO2eq)............................................................................................................................................. xvii Figure ES.5: Historical and projected agricultural emissions in Tajikistan, 1990–2050 (MtCO 2eq)..................... xvii Figure ES.6: Emission trajectories per sector with corresponding key milestones toward a net zero 2050 energy system, 2025–50 (MtCO2)........................................................................................................................... xviii Figure ES.7: Per capita GDP under Low-Carbon Development Scenario (percentage change from the Reference Scenario).................................................................................................. xix Figure 1.1: Risk of floods.............................................................................................................................................. 4 Figure 1.2: Risk of landslides....................................................................................................................................... 4 Figure 1.3: Average mean surface temperature by climate scenario up to 2100, Tajikistan (Reference period 1995-2014; Multi-Model Ensemble)............................................................................................. 6 Figure 1.4: Projected precipitation by climate scenario up to 2100, Tajikistan (Reference period 1995-2014; Multi-Model Ensemble) Figure 1.5: Change in the volume of glaciers in Tajikistan from 2020 to 2100 under different climate conditions........................................................................................................................................................ 6 Figure 1.6: Impact of climate change on rainfed crop production............................................................................. 7 Figure 1.7: Impact of climate change on livestock production................................................................................... 7 Figure 1.8: Emissions in Tajikistan by sector, 1990–2022 (MtCO 2eq) ..................................................................... 8 Figure 3.1: Status of priority adaptation efforts.......................................................................................................20 Figure 3.2: Reduction of average annual irrigation water demand under adaptation scenarios............................ 21 Figure 3.3: The productivity of irrigated agriculture increases with adaptation...................................................... 21 Figure 3.4: Spatial distribution of two key demands on water resources: Irrigated croplands and HPPs..............22 Figure 3.5: Selection of priority areas for land restoration......................................................................................23 Figure B3.1.1: Carbon density of biomass, 2004–24 (tons/hectare)...................................................................... 24 Figure 3.6: Economic viability of hard (physical) mitigation interventions on the main road network...................26 Figure 3.7: Urban heat island effect..........................................................................................................................28 Figure 3.8: Average PM2.5 concentration, 2021........................................................................................................28 Figure 3.9: Rural areas’ vulnerability to climate change will exacerbate in- and out-migration: 2030 hotspots.....29 Figure 3.10: A joint assessment of social and environmental sustainability...........................................................30 Figure 4.1: Historical and projected emissions by sector (excluding agriculture), 1990–2050 (MtCO 2eq)...........32 Figure 4.2: Historical and projected agricultural emissions, 1990–2050 (MtCO2eq).............................................32 Figure 4.3: Projected energy system emissions by sector under the World Bank’s Reference and Low-Carbon Development Scenarios, 2019–50 (MtCO2)..................................................................................33 Figure 4.4: Emission trajectories per sector with corresponding key milestones towards a Net Zero 2050, 2025–50 (MtCO2)..........................................................................................................................34 Figure 4.5: Projected final energy consumption by fuel under the World Bank’s Reference and Low-Carbon Development scenarios, by sector, 2019–50 (PJ).........................................................................35 Figure 4.6: Projected power generation, by technology, under the World Bank’s Reference and Low-Carbon Development Scenarios, 2019–50 (TWh) ....................................................................................36 Figure 4.7: Projected gas and electricity net imports (+) and net exports (−) under the Reference and Low-Carbon Development Scenarios, 2019–50 (PJ)......................................................................................... 37 Figure 4.8: Natural gas consumption by scenarios...................................................................................................38 Figure 4.9: Projected total final energy consumption in the building sector under the Reference and Low-Carbon Development scenarios, by fuel type, 2019–50...........................................................................39 Figure 4.10: Household heat pumps under the Reference and Low-Carbon Development scenarios, by number of households, 2019–50.........................................................................................................................39 vi Country Climate and Development Report: Tajikistan Figure B4.1.1: Comparison of levelized cost of heat and discounted cash flows for air- and ground-source heat pumps.................................................................................................................................40 Figure 4.11: Projected total final energy consumption in the transport sector under the Reference and Low-Carbon Development Scenarios, by fuel type, 2019–50........................................................................... 41 Figure 4.12: Projected share of electric vehicles, by number of vehicles, 2019–50.............................................. 42 Figure 4.13: Projected total final energy consumption in the industry sector under the Reference and Low-Carbon Development Scenarios, by fuel type, 2019–50...........................................................................43 Figure 4.14: Spatial distribution of GHG emissions..................................................................................................44 Figure 4.15: Methane emissions from livestock under different modeled scenarios, 2000–50 (panel A); and results of modeled scenarios on gram protein production per capita per day, 2050 (panel B)......................45 Figure 5.1: Climate damages under wet/warm scenario (percent change in GDP from Reference Scenario).......49 Figure 5.2: Climate damages under dry/hot scenario (percent change in GDP from Reference Scenario)...........49 Figure 5.3: Impact of wet/warm and adaptation scenarios on GDP (percentage change from Reference Scenario).....50 Figure 5.4: Impact of dry/hot and adaptation scenarios on GDP (percentage change from Reference Scenario)..........50 Figure 5.5: Impact of Low-Carbon Development Scenario on GDP (percentage change from Reference Scenario)....... 51 Figure 5.6: PV of reduced externalities, by type, by 2050 (in real 2023 $ billions) in the Low-Carbon Development Scenario............................................................................................................................................... 52 Figure 5.7: Impact of climate on poverty (national poverty line)—deviations from Reference Scenario (percentage point change).........................................................................................................................................53 Figure 5.8: Impact of climate on poverty (national poverty line)—deviations from Reference Scenario (percentage point change) by region.........................................................................................................................53 Figure 5.9: Population with more than half of their land affected by drought risk .................................................53 Figure 5.10: Green jobs by gender and age group....................................................................................................55 Figure 5.11: Job transition possibilities for crop farm laborers............................................................................... 57 Figure 6.1: Change in household consumption after recycling of revenue from electricity subsidy removal or carbon tax, 2030...................................................................................................................................................62 Figure 6.2: Distribution of loans by industry and region...........................................................................................66 Figure 6.3: Readiness to manage financial and macrofiscal issues........................................................................66 LIST OF TABLES Table ES.1: Tajikistan’s investment needs for climate adaptation and mitigation, by scenario and sector, 2025–50..... xx Table ES.2: Recommended policy packages of urgent actions by 2030 for building institutional capacity and managing public finances, mobilizing private capital, and coping with climate change................................. xxii Table 2.1: Key national laws and strategies as of June 2024..................................................................................12 Table 5.1: Job creation potential of the new rooftop solar regulation, by occupational category..........................56 Table 6.1: Tajikistan’s investment needs for climate adaptation and mitigation, by scenario and sector, 2025–50..................................................................................................................................................................... 61 Table 7.2: CCDR policy recommendations................................................................................................................. 72 LIST OF BOXES Box ES.1: The Rogun Hydropower Plant.....................................................................................................................xii Box 1.1: The estimated cost of land degradation in Tajikistan.................................................................................. 5 Box 1.2: Optimistic and pessimistic climate change scenarios................................................................................. 5 Box 3.1: Carbon stock in Tajikistan........................................................................................................................... 24 Box 3.2: Tajikistan’s digital public infrastructure ..................................................................................................... 27 Box 4.1: Scaling up the use of low-emission heat pumps is essential for ensuring secure and sustainable heating and cooling for Tajikistan’s vulnerable populations.........................................................40 Box 5.1: The Reference Scenario ..............................................................................................................................48 Box 5.2: Additional adaptation measures considered in the Adaptation Scenario.................................................50 Box 5.3: Job market and GHG implications of transitioning from fossil-based to GHP-based heating and cooling ... 56 Box 6.1: Three EU tools to enhance adaptation and mitigation...............................................................................68 vii Country Climate and Development Report: Tajikistan Acknowledgments This Country Climate and Development Report (CCDR) is a collaborative effort of the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). It was produced by a core World Bank team led by Elena Strukova Golub (Senior Environmental Economist), Bakhrom Ziyaev (Senior Economist), Manuel Berlengiero (Lead Energy Specialist), and Szilvia Doczi (Senior Energy Economist). The core team includes Alexander Haider, Megersa Abera Abate, Zarrina Abdulalieva, Muhammad Ahmed, Abdul Akhundzada, Arno Behrens, Saurav Bhatta, Damian Brett, Pietro Calice, Dimitrios Demekas, Alexandra Maite Campmas, Victor Mylonas, Gilang Hardadi, Weronika Celniak, Paulina Estela Schulz Antipa, Abdul Baes Akhundzada, Aleix Serrat Capdevila, Eduardo Espitia Echeverria, Tom Farole, Christopher Finch, Sinafikeh Gemessa, Pier Gerber, Hazem Hanbal, Benjamin Byron Henderson, Chyi-Yun Huang, William M. Hynes, Elarefbellah Kaal, Kai Kaizer, Amit Kanudia, Akos Losz, Serge Mandiefe Piabuo, Rocco de Miglio, Armin Mayer, Abdul Khalili Hameed, Amjad Khan, Irina Klytchnikova, Camilla Knudsen, Raimund A.V. Malischek, Farida Mamadaslamova, Florent McIsaac, Farzona Mukhitdinova, Zuhro Qurbonova, Alisher Rajabov, Solene Rougeaux, Sandjar Saidkhodjaev, Faridun Sanginov, Ilyas Sarsenov, Fabian Alexander Scheifele, Mathias Shabanaj Jankila, Ehsanullah Shamsi, Mirja Sjoblom, Anna Sukhova, Christopher Trimble, and Sana Zia from the World Bank; Zivanemoyo Chinzara, Kiryl Haiduk, Wim Heijman, Katarzyna Anna Kurek, Farukh Sultonov, and Sakshi Varma from International Finance Corporation (IFC); and Bexi Jimenez Mota from MIGA. The team benefitted greatly from detailed comments and suggestions from the following Peer Reviewers: Muthukumara S. Mani, Sameh I. Mobarek, Claire Nicolas, and Gregor Semieniuk. Additional comments were provided by Kevin Carey, Stephane Hallegatte, Craig Meisner, Ahmadou Moustapha Ndiaye, Grace Nakuya Musoke Munanura, Victor Bundi Mosoti, Nicolas Peltier, and Dena Ringold. The report was prepared under the leadership and guidance of Antonella Bassani (Regional Vice President), Tatiana Proskuryakova (Regional Director for Central Asia), Sameh Wahba (Planet Regional Director for Europe and Central Asia), Asad Alam (Prosperity Regional Director for Europe and Central Asia), Charles Joseph Cormier (Infrastructure Regional Director for Europe and Central Asia), and Sebastian-A Molineus (Director, Strategy and Operations). Invaluable guidance and support from the following Regional Managers for Europe and Central Asia are gratefully acknowledged: Sanjay Srivastava (Environment), Antonio Nucifora (Macroeconomics, Trade, and Investment), Simon B. Chirwa (Procurement), Stephanie Gil (Energy and Extractives), Nicole Klingen and Michel Rogy (Digital Development), Frauke Jungbluth (Agriculture and Food), Sebnem Erol Madan (Infrastructure, Finance, and PPPs), Shomik Raj Mehndiratta (Transport), Rekha Menon (Health, Nutrition, and Population), Christoph Pusch (Urban, Disaster Risk Management, Resilience, and Land), Fabian Seiderer (Governance and Institutions), Varalakshmi Vemuru (Social Sustainability and Inclusion), and Winston Yu (Water). The team is also grateful to the following Program Leaders: David Stephen Knight (Prosperity), Tazeen Fasih (People), Urvashi Narain (Planet), Antonio Nunez (Infrastructure), and Marc Sadler (Planet and Infrastructure) and to Ozan Sevimli (Country Manager for Tajikistan). The team also extends its appreciation to Wiebke Schloemer (Director for Türkiye and Central Asia), Ilhem Salamon (Regional Manager) at IFC, and Moritz Nikolaus Nebe (Sector Manager) at MIGA, for their invaluable guidance and support. Project management support was provided by Sukhrobjon Temirov, Linh Van Nguyen, and Yelena Yakovleva. Nigara Abate, Indira Chand, Zarina Nurmukhambetova, Dilafruz Zoirova, Steven Kennedy, and Vladimir Mirzoyev prepared this report for publication. The team is grateful to the Committee for Environmental Protection under the Government of the Republic of Tajikistan; Ministry of Economic Development and Trade; Ministry of Finance; Ministry of Energy and Water Resources; Ministry of Agriculture; Ministry of Industry and New Technologies; Ministry of Labor, Migration, and Employment; National Bank of Tajikistan; and numerous government agencies for their invaluable feedback and inputs during the preparation of the report. The team also extends its thanks to the country’s civil society organizations whose insights and comments helped shape the report. viii Country Climate and Development Report: Tajikistan Data on climate change impacts provided by the teams at Industrial Economics, Incorporated. and Stockholm Environment Institute greatly contributed to this report. This report was prepared with financial support from the Effective Governance for Economic Development in Central Asia Program (EGED), funded by the UK government, and by the Central Asia Water and Energy Program (CAWEP), funded by the World Bank, the European Union, Switzerland (through SECO), and the United Kingdom. However, the views expressed herein do not necessarily reflect the official policies of the European Union, Switzerland, and the United Kingdom. ix Country Climate and Development Report: Tajikistan Abbreviations BCM Billion Cubic Meters HPP Hydropower Plant BSP Benefit-Sharing Program Hydromet Agency for Hydrometeorology Carbon Border Adjustment IEA International Energy Agency CBAM Mechanism Industrial Economics, IEc Country Climate and Development Incorporated CCDR Report IFC International Finance Corporation Climate Change Institutional CCIA IMF International Monetary Fund Assessment MFMod Macroeconomic and Fiscal Model CCKP Climate Change Knowledge Portal Monitoring, Reporting, and CCS Carbon Capture and Storage MRV Verification CHP Combined Heat and Power Megatons of Carbon Dioxide MtCO2eq Committee on Emergency Situations Equivalent CoESCD and Civil Defense NBS Nature-Based Solution CSA Climate-Smart Agriculture NDC Nationally Determined Contribution DAC Direct Air Capture NDS National Development Strategy DALY Disability Adjusted Life Year National Meteorological and NMHS DCC Development Coordination Council Hydrological Services DPI Digital Public Infrastructure NPV Net Present Value DRM Disaster Risk Management National Strategy for Adaptation to NSACC Climate Change DRS Districts of Republic Subordination ODA Official Development Assistance DSA Debt Sustainability Assessment OEC Observatory of Economic Complexity Emissions Database for Global EDGAR Atmospheric Research PIP Public Investment Program EE Energy Efficiency Particulate Matter with particles 2.5 PM 2.5 microns (µm) or less in diameter Environmental, Social, and ESG Governance PV Present Value ETF Enhanced Transparency Framework RCP Representative Concentration Pathway ETS Emissions Trading System RRS Regions of Republican Subordination EU European Union SADCA Satellite Data for Central Asia European Organization for the Strengthening Financial Resilience SFRARR EUMETSAT exploitation of meteorological and Accelerating Risk Reduction satellites SLM Sustainable Land Management EV Electric Vehicle SOE State-Owned Enterprise Gorno-Badakhshan Autonomous GBAO SSP Shared Socioeconomic Pathway Oblast TALCO Tajik Aluminum Company GCM General Circulation Model UHI Urban Heat Island GDP Gross Domestic Product United Nations Development GEDS Green Economy Development Strategy UNDP Programme Global Facility for Disaster Reduction GFDRR United Nations Economic Commission and Recovery UNECE for Europe GHG Greenhouse Gas United Nations Framework Convention UNFCCC GHP Ground-Source Heat Pump on Climate Change x Country Climate and Development Report: Tajikistan Executive Summary Message 1 Tajikistan needs to take urgent actions to rejuvenate its growth model and diversify its economy as the current approach has depleted natural resources and failed to generate sufficient productive employment opportunities. Tajikistan has experienced robust economic growth and reduced poverty over the past two decades, but its growth model has reached its limits. The gross domestic product (GDP) growth rate averaged more than 7 percent per year between 2000 and 2023, and the poverty rate fell from 30.0 percent in 2003 to 10.7 percent in 2023. Yet, the current growth model lacks diversification and significant foreign investment outside of the mining sector. Domestic institutions are weak, and the private sector is underdeveloped. Growth is sustained by household consumption driven by remittances vulnerable to external shocks and by agriculture and industry dependent on natural resources. Together, these factors suggest that the current growth model has reached its limit. Without strong structural reforms, GDP growth is projected to slow to 4.0–4.5 percent over the medium and long term. As the poorest country in the World Bank’s Europe and Central Asia region, with a gross national income of US$1,440 per capita, Tajikistan’s aspirations to reach upper-middle-income status will be deferred indefinitely on the current trajectory. The existing growth model has failed to create enough jobs to absorb its growing labor force, driving out-migration. This mismatch has led to rising underemployment and informal labor, exacerbating income inequality and social instability. In terms of domestic employment opportunities, the gap between available jobs in Tajikistan and the working-age population, excluding students, has tripled from over 1 million in 2000 to almost 3 million in 2022. This has led to increased labor migration, especially to the Russian Federation, accounting for about 20–25 percent of the total labor force and feminization of the agriculture sector. The utilization of the labor force is low in Tajikistan (40 percent) compared to its regional peers, such as the Kyrgyz Republic (62 percent) and Uzbekistan (60 percent), and only one-third of Tajikistan’s working- age female population is working for pay. Jobs are mainly in low-productivity agriculture and non-tradable services with low quality and low wages. Growth has depleted natural capital, constraining future growth potential, negatively affecting quality of life, and damaging human capital. Tajikistan also faces deficits in physical infrastructure and human capital development. Over 50 percent of the country’s land area has been degraded by unsustainable agricultural practices, and the economic productivity of water is among the lowest in the world at US$1 per cubic meter (m3) of annual freshwater withdrawal in 2020 (in constant 2015 prices), against the Europe and Central Asia average of US$45. Degraded agricultural land, along with risks of increasing water scarcity, raises major risks to the productivity of crop and livestock sectors, critical to the livelihoods of the majority of Tajiks. Air pollution is rife, with Dushanbe’s measure of particulate matter far exceeding regional averages and other cities affected. Annual population growth of 2.1 percent from 1989 to 2022, linked to the highest fertility rate in the region, has put pressure on food supplies and services, with food expenses consuming 39 percent of household budgets. Additionally, 59 percent of Tajikistan’s population lacks access to proper water supply, particularly in rural areas. High rates of infant mortality, malnutrition, and limited access to quality education and basic services highlight the urgent need for comprehensive development plans that can bring solutions for human capital development. Tajikistan’s deteriorating infrastructure, which includes irrigation canals, roads, dams, bridges, and river embankments, contributes to high trade costs aggravated by its landlocked location and high energy and water intensity. The country has low scores on the World Bank’s Logistics Performance Index and Digital Adoption Index. xi Executive summary Message 2 The government of Tajikistan has set out a strong agenda to transform the country’s economy through a green transition, with the Rogun hydropower plant at its heart, but it can and should go further to ensure a resilient development path. Tajikistan’s strategy for sustainable development focuses on strengthening its ability to withstand environmental and economic challenges while moving towards a resilient, low-carbon economy. The strategy emphasizes climate change resilience, including improving infrastructure for hydropower development, clean energy, and water storage to address water variability and reduce climate-related vulnerabilities. The government of Tajikistan recognizes the context set out above and has committed to take action to transform the country’s economic model. This ambition is set out in the National Development Strategy (NDS) for 2016–30, which aims to improve the living standards of Tajikistan’s population by fostering sustainable economic development based on productive private investment and exports. This objective is underpinned by four strategic development goals: (a) ensuring energy security and efficiency of energy use, (b) improving digital and transport connectivity and utilizing Tajikistan’s transit potential, (c) ensuring food security and access to quality nutrition for the population, and (d) expanding productive employment. Complementing the NDS, the government has adopted the Green Economy Development Strategy (GEDS) for 2023–37 and is working toward a National Adaptation Plan aiming at water and energy security; creating more and better jobs; increasing productivity; adapting to climate change; and laying the foundations for a resilient, low-carbon power sector. BOX ES.1: The Rogun Hydropower Plant The Rogun HPP is a transformative project under construction since 2007, with significant domestic and regional welfare benefits, contributing to the decarbonization of regional power grids in Central Asia. The project is expected to have an installed generation capacity of 3.78 GW and about 70 percent of the energy generated would be exported, helping to replace fossil-fired generation in Kazakhstan and Uzbekistan. The financing package for the project is designed to contribute to a sustainable macroeconomic framework, freeing up space for expenditures in the social and other priority sectors, and to significant spillovers on energy and structural reforms in the broader economy. The Rogun HPP will become the main pillar of Tajikistan’s electricity system and an anchor for a regional electricity market in Central Asia. It will ensure reliable electricity supply to meet the growing domestic demand at an affordable cost, help address electricity shortages, and enhance energy security. At the regional level, the Rogun HPP will play a crucial role in underpinning the development of a regional electricity market and providing reserve and balancing services conducive to the integration of intermittent solar photovoltaic and wind capacity in Central Asia. The Rogun HPP reservoir will improve the resilience of the entire Vakhsh watershed and cascade of HPPs, through the mitigation of flooding risks and retention of sediments, providing significant economic benefits to the region in terms of energy supply, flood mitigation, and enhanced reliability of water supply for irrigation and domestic uses. Additionally, the project will finance priority social needs and augment the social safety nets in the country, with the government committing to allocate a portion of electricity sales to a Benefit-Sharing Program (BSP) during and after the construction period. BSP proceeds are expected to support various priority social needs and augment the country’s existing social safety net. The success of the Rogun HPP project will require enhanced governance and transparency, dedicated supervision support, and a sustainable macroeconomic framework. The financing package, consisting of a mix of domestic resources, project revenues from the sale of electricity, and concessional funds and grant resources, is designed to bridge the financing gap within the conditions of the debt sustainability analysis developed jointly between the World Bank and the International Monetary Fund (IMF). If the required complementary reform program and the investment plan are successfully implemented, the project is expected to contribute to significant economic benefits for the country and the broader region, adaptation to climate change, and decarbonization of the Central Asia electricity systems and increase the efficiency of communication with key stakeholders. These benefits justify the high construction costs. xii Country Climate and Development Report: Tajikistan Central to Tajikistan’s plans for a green, resilient, and productive transformation is the Rogun hydropower plant (HPP). Projected for completion by 2037, the improved plant will meet domestic energy needs, fuel economic growth, and boost export revenues. The plant promises substantial welfare benefits to Tajikistan and Central Asia, will support decarbonization and fortify regional power systems, and transform the Tajikistan economy. It is key for efficient water and energy management, which is vital for adapting to climate change. The Rogun plant aims to achieve its full 3.78-gigawatt capacity by 2034 and increase water storage by 13.3 billion cubic meters (bcm) by 2037. This will provide flood protection for the lower cascade and resilience for agricultural users during droughts and ensure a reliable and affordable power supply for the estimated 10 million people and industries facing winter shortages. In short, Rogun is good for development and adaptation. Message 3 The effects of climate change could cut GDP per capita by 5–6 percent by mid-century, compromising stated development goals in energy and food security and sustainable transport and pushing an additional 100,000 people into poverty. Climate change is already making it harder for Tajikistan to meet its development aspirations. Climate shocks already threaten energy and water security, which are central to development. Temperature changes and rapid glacier melting have increased the variability of river flows, causing prolonged droughts, intensifying natural disasters, and raising the requirements for water storage and reservoir operations. Shifts in the timing and seasonality of runoff and streamflow are affecting water availability for competing uses, especially during the summer months, when water is needed for irrigation. They have also made it more difficult to make international water deliveries mandated by transboundary agreements. In 2024, water levels at the Nurek HPP reached decade lows, prompting stricter rationing. FIGURE ES.1: Climate damage under a wet/warm scenario FIGURE ES.2: Climate damage under a dry/hot scenario (percentage change from Reference Scenario) (percentage change from Reference Scenario) 3.0 3.0 2.0 2.0 % GDP deviation from reference % GDP deviation from reference 1.0 1.0 0.0 0.0 -1.0 -1.0 -2.0 -2.0 -3.0 -3.0 -4.0 -4.0 -5.0 -5.0 -6.0 -6.0 2030 2040 2050 2030 2040 2050 Labor Heat Stress Human Health Labor Heat Stress Human Health Flooding Crop Production (Rainfed) Flooding Crop Production (Rainfed) Crop Production (Irrigation) Crop Production (Erosion) Crop Production (Irrigation) Crop Production (Erosion) Livestock Roads and Bridges Livestock Roads and Bridges Hydropower Total GDP Impact Hydropower Total GDP Impact Source: Macroeconomic and Fiscal Model (MFMod), Industrial Economics, Incorporated (IEc). Note: The wet/warm and dry/hot climate change scenarios incorporate climate impacts in the Reference Scenario and include impacts on land degradation, the erosion of fertile topsoil, the impacts on infrastructure due to extreme weather events such as mudflows, heat stress effects on labor productivity, human health impacts on labor supply due to changes in mortality and morbidity, flooding damages of the3,0 3,0livestock), capital stock damages and reductions in labor capital stock, productivity impacts on agriculture (crop production and supply2,0resulting from damaged roads and bridges infrastructure, and hydropower 2,0 productivity effects under the two climate scenarios: wet/warm and dry/hot. The pessimistic, or dry/hot, scenario is that in which the warming reaches 4°C by 2100 owing to lax climate % отклонения показателей ВВП % отклонения показателей ВВП 1,0 (ensemble average of Shared Socioeconomic Pathway 1,0 or a reduction in the ability of ecosystems and oceans to capture carbon policies от базисного сценария от базисного сценария [SSP]3-7.0 0,0 General Circulation Models [GCMs]). The optimistic, or wet/warm, 0,0 scenario is when global reductions in greenhouse gas (GHG) emissions are in line with 1.5°C of warming by 2100 (ensemble average of SSP1–1.9 GCMs). Climate scenarios were also selected -1,0 to capture -1,0 the broadest range of climate change effects across different GCMs. In doing so, the vulnerability of the economy and the performance -2,0 of adaptation options under possible wet/warm and dry/hot GCM -2,0 outcomes can be assessed. -3,0 -3,0 -4,0 -4,0 xiii -5,0 Executive summary -5,0 -6,0 -6,0 2030 2040 2050 2030 2040 2050 Looking ahead, climate change-related damages to infrastructure, livestock productivity, and irrigated agriculture could reduce real GDP by 5–6 percent by mid-century for two climate change futures compared with a scenario where climate change is not factored in. About half of this impact comes from intensifying natural disasters and another quarter from impacts on livestock. Climate change will affect the country’s transport infrastructure, reducing connectivity and, thereby, economic activity. These impacts are expected to be felt under different climate futures reflected by the dry/hot and the wet/warm climate scenarios.1 Anticipated damage from floods alone is expected to double by 2050, damaging transportation corridors and cities, also affected by landslides. Flooding and increased wait times on transport routes are also expected to slow economic activity and compound the effects of these disasters. These dangers are further compounded by land degradation in rural and mountainous areas. Land degradation in Tajikistan cost nearly US$325 million in 2023, a figure that could double by 2050. Climate change and degradation of pastures are expected to reduce livestock production and yields of rainfed agriculture by around 20 percent, with irrigation needs increasing by 5–8 percent, challenging the government’s goal of ensuring food security. On the other hand, the impact of climate change on the hydropower sector is uncertain. Hydropower generation could increase under the wet/warm scenario and decrease under the dry/hot scenario, particularly in 2050. Increased climate variability may lead to more intense and frequent floods and droughts in downstream areas and countries. See Annex 1 for details on the different scenarios used in this report. Climate change complicates the nation’s ability to reduce poverty, already limited by scarce economic resources and institutional capacity. The areas most affected by these limitations are glacier-dependent river basins, fragile mountain ecosystems, and isolated forests. Without adaptation, poverty is projected to be higher by 1 percentage point by 2030; this would push more than 100,000 more people into poverty. 2 Inequality is anticipated to fall between 2021 and 2030 before starting to rise again, leading to increased disparities and resource competition. In fragile subregions such as Khatlon Province and the Rasht Valley, climate change amplifies vulnerabilities, disproportionately affecting women, youth, children, and people with disabilities in mountainous areas. Message 4 Adaptation and resilience can improve water and energy security, improve connectivity, and boost agricultural productivity, while restoring half a million hectares of landscapes with nature-based solutions (NBSs) and sequestering carbon. Climate-smart agriculture will transform the economy by increasing livestock productivity and reducing methane emissions. Stronger local governments are key to mitigating risks of climate change. Tajikistan is well positioned to address the negative impact of climate change and adopt a resilient growth model. The model would focus on adapting the nation’s water and hydropower systems, transport infrastructure, agriculture, and land conservation policies using NBSs to increase the resilience of infrastructure and ecosystems. The right investments in adaptation could cut GDP loss from climate change, from 5–6 percent to 2.0–3.8 percent, by reducing climate change-induced impact of floods on roads and bridges by about 60 percent, livestock by 40–50 percent, and labor productivity by 20–30 percent. The water sector could adapt to climate change with increased water variability while balancing competing demands from irrigated agriculture, hydropower, industry, and municipalities and improving water use efficiency. Drastic changes in glacier and snow melting patterns would change the timing and flow volumes of surface water in the medium run. As water demands from agriculture could increase by 7 percent, the operation of multipurpose storage reservoirs will need to be optimized across alternative water demands, 1 Climate scenario description is in the Note to Figures ES.1 and ES.2. 2 The adaptation scenario introduces channel-specific investments to reduce the impact of climate change on livestock, crop erosion, irrigated agriculture, labor heat stress, roads and bridges, and protection from flooding. The interventions are selected based on modeling feasibility, applicability to the specific country context, and the degree of projected climate change impacts. Adaptation costs are based on unit cost estimates for adaptation technologies obtained from international and, where available, local sources. Downscaled climate models were not available for Tajikistan at the time of this analysis and report. xiv Country Climate and Development Report: Tajikistan accounting for the needs for irrigation in summer and hydropower in winter. Enhancing water productivity requires rehabilitation and modernization of the existing water infrastructure and increasing capacity of the institutions that govern it. This includes building improved information systems to monitor and model waterflows and tackle the degradation of watersheds, groundwater recharge, reductions in soil moisture, and increasing sedimentation. Investments in water conveyance and storage infrastructure (building on the 13 bcm of new water storage at Rogun3), as well as improved hydrometeorological information and forecasting systems (in the short term) and climate-resilient infrastructure and climate-smart agriculture (CSA) (in the longer term) are essential for managing these changes (Chapter 3). Investments in resilient landscapes have high economic returns and are an essential aspect of managing natural resources for water, energy, and food security and mitigating the risks of disaster. NBSs for reversing degradation will increase the productivity of watersheds for rainfed agriculture and livestock. Among those solutions are conservation agriculture, rotational and zero grazing, and reforestation. Hotspots of land degradation (Figure ES.3 upper left) overlapped with hotspots with most benefits for restoration (Figure ES.3 lower left) to identify priority areas for NBSs and sustainable land management (SLM) projects (Figure ES.3 right). The area targeted for restoration comprises two-thirds of Tajikistan’s severely degraded landscapes (0.45 million ha), as reflected in the nation’s Green Economy Strategy to 2037. Every dollar invested in land restoration in Tajikistan yields nearly US$6 in returns. The restoration program will lower GHG emissions by an average of 0.36 megatons of carbon dioxide equivalent (MtCO 2eq) annually from 2025 to 2050 (Chapter 3). Zero grazing and manure management will also reduce methane emissions by about 30 percent compared to historical projections. FIGURE ES.3: Priority areas for resilient landscape restoration in Tajikistan Degradation Priority regions Hotspots for NBS and SLM Top 10% Low Top 20% Medium Top 30% High Provinces Opportunity Hotspots Top 20% Top 40% Top 60% Source: Original elaboration. Note: Hotspots of land degradation are presented in the upper left panel, with most degraded areas shown in red and less degraded areas in yellow. The lower left panel presents hotspots with the most benefits for restoration, ranging from the most beneficial areas in blue to less beneficial areas in light green. The right panel shows priority areas for NBSs and SLM projects, marked in green. Очаги Приоритетные регионы деградации для внедрения ПОР и УУЗР Топ 10% Низкий Топ 20% Средний Топ 30% Высокий 3 The Country Climate and Development Report (CCDR) implemented a water modeling based on Water Evaluation and Planning System (WEAP) Регионы under different climatic scenarios. Results showed relatively low risk of negative impact on the Rogun HPP performance before 2080. The modeling is subject to uncertainty and limitations of available climate models. СОГД xv РРП Executive summary ДУШАНБЕ Территории возможностей ГБАО Adapting to climate change and building climate resilience through CSA can support food security goals and create new economic opportunities for economic transformation and sustainable land and water use. Adaptation enables coping with potential adverse conditions while preventing overspending with low-regret strategies. CSA implies changes in farming practices to make them more productive, resilient, and reliable; mitigate risks for farmers under different climate futures; and promote carbon sequestration and methane emissions reduction. The impact of climate change on livestock production can be more than halved by substituting purchased haylage for grazing, implementing heat abatement measures, de- emphasizing the reliance on pasturelands, and reversing land degradation, which can reduce the risk of extreme weather events. Capacity building and access to knowledge and finance for smallholder farmers and rural communities will facilitate farmers’ integration and support development of resilient agribusiness value chains for domestic and export markets. Although private investments are critical for landscape restoration and CSA, these policies should be supported by resilient infrastructure, such as roads, storage, and agrologist centers, for better management and reduction of post-harvest losses. Resilient infrastructure investments in roads with green (or even grey) solutions should prioritize economically viable corridors with higher traffic densities. Priority sections include Labijar-Kalaikumb, Murghob-Karakul-Kizilart, Guliston-Pyanj, and Dehmoy-Konibodom, where construction of avalanche galleries and installation of snow barriers would be needed. Early warning systems are more suitable for other road sections with lower traffic densities or alternative routes. A larger budget for road maintenance, building on recent government efforts to establish a road asset management system, is needed to improve road conditions. Putting in place disaster risk finance mechanisms will help reduce overreliance on the public budget and can help mobilize private sector capital for financing costs of response, recovery, and reconstruction. Financial preparedness building on the implementation of the recently adopted Strategy for Financial Protection against Natural Disasters in the Republic of Tajikistan until 2037 should include measures to improve the use of existing resources, such as increasing targeting and transparency of spending, and overall public financial management of disasters and develop risk sharing mechanisms, such as insurance. Achieving climate-resilient infrastructure and CSA will require investments of US$2.0 billion through 2030 and US$5.4 billion through 2050 or about 1.7 percent of GDP. Public investments in resilient infrastructure in roads, water management, and irrigation constitute about 70 percent of the total. Part of the public investments could be financed through sovereign risk finance mechanisms, repurposing of subsidies, and carbon tax revenue recycling. The remaining investments could come from the private sector subject to better financial inclusion and an enabling institutional environment. Mobilizing rural communities (particularly women and youth) and local governments is essential to achieving Tajikistan’s ambitious climate adaptation, resilience goals, and addressing related fragility risks. Climate interventions in areas such as agriculture, water, irrigation, NBSs, disaster preparedness and prevention, and energy depend on the involvement of communities and local governments. Key actions include public awareness, last-mile investments, and fostering community buy-in and action on local solutions. Local governments (hukumats, jamoats, mahallas) need clearer responsibilities, capacity, and financing to support adaptation efforts. Efforts should focus on turning national targets into actionable plans, clarifying government roles, and strengthening local government capacity and financing, drawing on experience from ongoing community development programs. Message 5 Building a low-carbon development pathway promises to boost economic growth—reaching an additional 6 percent growth by 2050—and energy security, exports, and jobs while improving air quality and road safety among other benefits, but it will require additional investments. Power and buildings sectors can approach near net zero pathways by 2040, followed by net zero in 2045, only complementary robust institutional and regulatory reforms. The government aspires for a green economy in which the power sector can approach net zero emissions in the 2030s. While current policies, if supported by macro fiscal and governance reform, could lay solid xvi Country Climate and Development Report: Tajikistan foundations for a resilient power sector by 2040 (Figure ES.4), other sectors—especially district heating, industry, and transport—would continue to increase their emissions according to current policies. In total, emissions would rise 43 percent by 2050. In this Reference Scenario, growth in energy demand in industry and transport would be partially met through fossil fuels. Tajikistan will meet its 2030 Nationally Determined Contribution (NDC) targets, aiming for around 23 MtCO 2eq in 2030. However, the country remains vulnerable to the negative impacts of climate policies of its export markets, such as the Carbon Border Adjustment Mechanism (CBAM) of the European Union (EU). FIGURE ES.4: Historical and projected emissions in Tajikistan FIGURE ES.5: Historical and projected agricultural by sector (excluding agriculture), 1990–2050 (MtCO 2eq) emissions in Tajikistan, 1990–2050 (MtCO 2eq) 30 30 Historical Low-Emission Growth Historical Low-Emission Growth 25 25 20 20 15 15 10 10 5 5 0 0 1990 2010 2014 2020 2022 2025 2030 2035 2040 2045 2050 1990 2004 2010 2014 2020 2022 2025 2030 2035 2040 2045 Waste Industry (combustion and processes) Agriculture Excluding Livestock Livestock Transport Buildings (commercial and residential) Coal Mining Power and district heat Source: The Emissions Database for Global Atmospheric Research (EDGAR), United Nations, and International Energy Agency (IEA) for historical data and World Bank analysis for projections. Note: Industrial emissions (in Figure ES.3) include process emissions, which are not modeled for this CCDR. Transport emissions include non-specified emissions from the EDGAR database, because those cover largely ‘other transport-related’ emissions. Building emissions 30 are reported starting from 2020; 30 historical data before 2019 are statistical estimates. Power sector emissions include large-scale Исторические значения Рост с низким уровнем выбросов Исторические значения Рост с низким уровнем выбросов combined 25 heating and power for district heating. 25 20 20 The Low-Carbon Development Scenario 4 outlines a path for the entire energy system including all energy 15 15 end uses to reduce emissions to near net zero by 2050 while significantly improving Tajikistan’s energy security 10 and exports over current policies. In this ambitious 10 pathway, energy security and exports are bolstered. 5 Domestic renewables provide 93 percent of energy 5 supply by 2050, compared with 53 percent in 0 the Reference Scenario. This pathway involves significant 0 steps, including the development of new hydropower and solar capacities, sustainable 1990 2010 2014 2020 2022 2025 2030 2035 2040 2045 2050 heating and transport, enhanced energy efficiency (EE), and 1990 2004 2010 2014 2020 2022 2025 2030 2035 2040 2045 adoption Отходы of low-carbon technologies. By 2035, investments Промышленность (сжигание и технологические процессы) in energy infrastructure Сельское хозяйство, would make искл. животноводство Tajikistan Животноводство energy exporter, a netТранспорт generating Здания (коммерческие и US$16.7 жилые) billion in new electricity export revenues from 2025 to 2030. By 2050, угля investments these Добыча would Электроэнергетика healthier and more livable by reducing air pollution, transport make cities теплоснабжение и централизованное accidents, and road damage, co-benefits valued at US$3.5 billion. Even though emissions in agriculture will continue to rise under the Low-Carbon Development Scenario, climate-smart approaches to livestock production could minimize emissions while also improving productivity. Since livestock accounts for most methane emissions in Tajikistan (68 percent in 2021), improving productivity and creating resilient landscapes offer substantial opportunities for reducing emissions. When compared to the Reference Scenario, efficiency gains from modest strengthening of the 4 The Low-Carbon Development Scenario represents an ambitious least-cost path for the energy sector to achieve near carbon neutrality by 2050 while strengthening the country’s energy security. In this scenario, the waste sector also targets its most ambitious trajectory of achieving net zero emissions by 2050. The energy and waste sectorial analyses answer the question, “What does it take to decarbonize the sector?” However, the agricultural emission challenge is so significant, that according to current scientific evidence and assuming current food consumption patterns in Tajikistan, there is no net zero pathway available; hence, the agriculture pathway responds to the question” What is the most ambitious feasible pathway to manage agricultural emissions in Tajikistan?” This scenario not only meets the NDC but also allows for more ambitious NDC targets for 2030. Although this scenario is focused on mitigation, investment in hydropower with additional storage will reduce water variability and have adaptation and resilience co-benefits. xvii Executive summary sector (better feed, pasture, and animal management), combined with slowing cattle herd growth, manure management, and a transition to lower-emission species, could reduce methane emissions by 30 percent without the loss of farm income or protein production. The ambitious program of the government will require huge investments, although the additional costs of achieving low-carbon growth in most sectors are modest. The plan for growth laid out by the government — considered in the Reference Scenario—already implies investment needs of US$34 billion in 2025–30 (29 percent of GDP) and an additional US$45 billion in 2031–50 (14 percent). With an additional US$1.0 billion of investment by 2030 (0.9 percent of GDP) and US$8.7 billion between 2031 and 2050 (2.7 percent), Tajikistan could put most sectors on the resilient and low-carbon growth path, with substantial benefits in energy security and export revenues. A large share of investments could come from the private sector, provided the right policy signals are in place; however, most transport sector investments are expected to be publicly funded, including a shift to electric trucks for freight and public transport buses, alongside an additional US$1.3 billion for rail infrastructure to reduce road trucking. Agriculture is the exception, where emissions are expected to increase from their 2022 level of 40 percent with growing livestock production (Figure ES.5). FIGURE ES.6: Emission trajectories per sector with corresponding key milestones toward a net zero 2050 energy system, 2025–50 (MtCO 2) 9 Fuel economy standards 8 70,000 EVs by 2030 Green H 2 for long Full electrification distance transport of road transport: 7 from 2040 -45 1m personal, 90k light trucks 6 New building codes introduced Heat pump share in residential 5 EE/Renovations: Buildings reach near buildings: 60% MtCO 2 5% of (econ. viable) stock per year Net Zero in 2040 4 Ban on new coal boilers 2m households with heat pumps Coal to gas switching increases gas use in industry until 2040 3 63% increase in Waste use in cement Coal CHP phased new buildings till 2 out by 2035 2050 using new building codes No new coal plants 5GW new hydro by 2035 Green hydrogen 1 from 2040 More ambitious Solar capacity of 2 2030 NDC target GW in 2030 0 2025 2030 2035 2040 2045 2050 Power / Cross-Cutting Industry Buildings Transport Source: Original compilation. Note: Industrial emissions include emissions from fuel combustion and exclude process emissions. Power sector emissions include large- 9 combined heating and power for district heating. scale Стандарты CCS = Carbon and топлива экономии capture storage; CHP = Combined heat and power; DAC = Direct air capture; EV = Electric vehicle; H2 = Hydrogen. Полная электрификация 8 70,000 ЭМ к 2030 г. автомобильного Зеленый водород транспорта: The low-carbon transition can be a catalyst for economic transformation in Tajikistan. If complemented для дальних 1 млн. единиц 7 перевозок личных авто, by an enabling environment for the private sector, the transition could have a minimal с 2040-2045 гг. negative effect on GDP 90 тыс. легких Мт CO 2 -эквивалента грузовиков 6 2030s and move into positive territory by 2040–50. During the transition to the Low-Carbon Develop- by the Внедрение новых СНИП-ов ment Scenario, higher carbon taxes would disrupt carbon-intensive sectors and dampen labor Доляproductivity, использования тепловых насосов 5 ЭЭ/Реновация: В 2040 г. здания достигнут causing per capita GDP to dip 5% (экономически slightly пригодного) in вthe фонда год 2030s. GDP growth rates уровня start recovering in 2040в and выбросов, жилыхreach a6 домах: 60% близкого к чистому нулю percent 4 positive deviation compared with the Reference Scenario by 2050 (Figure 5.5). The Low-Carbon Запрет на новые угольные котельные 2 млн. De- ДХ с тепловыми velopment pathway helps drive structural transformation in Tajikistan’s economy, with the share of industry насосами Переход с угля на газ увеличивает использование газа в промышленности до 2040 г. growing 3 sharply—supported by rapid expansion of hydro and solar power, along with growth in mining—and Увеличение кол-ва Поэтапный вывод that of agriculture shrinking, Использование relative отходов цементной промышленности в to the Reference угольных ТЭЦ из Scenario. новых зданий на 63% до 2050 г. 2 эксплуатации к 2035 г. с использованием Никаких новых угольных ТЭЦ 5 ГВт новых ГЭС к 2035 г. новых СНИП-ов Зеленый водород 1 Более высокие Солнечная энергетика с 2040 г. целевые показатели мощностью по ОНУВ на 2030 г. 2 ГВт в 2030 г. 0 2025 2030 2035 2040 2045 2050 xviii Энергетика / смежные отрасли Промышленность Здания Country Climate and Development Транспорт Report: Tajikistan Investment in renewable energy (hydro, FIGURE ES.7: Per capita GDP under Low-Carbon Development solar, and geothermal) and EE have the Scenario (percentage change from the Reference Scenario) potential to generate new employment 6.0 opportunities. The geothermal sector, % GDP deviation from reference with its labor-intensive installations, promises local economic growth and 4.0 employment. At 34 jobs per installation, the geothermal sector’s job creation rate is 2.0 almost triple the number needed for solar photovoltaics. Climate-smart mining could 0.0 offer economic diversification as well, through the extraction of critical minerals needed for the global green transition and -2.0 an expansion of existing gold, copper, lead, 2025 2030 2035 2040 2045 2050 and zinc mining. Additionally, digitalization Low-Carbon Development and trade in environmental goods could create new jobs and contribute to economic Source: MFMod. growth. Climate change may lead to labor 6,0 reallocation across the economy, though some jobs in agriculture could be lost. It is difficult for agricultural % отклонения показателей ВВП workers to transition to nonagricultural jobs. Therefore, policies would need to focus on reskilling, training, 4,0 and supporting workers in sectors with declining employment. от базисного сценария Implementation of a carbon tax would garner an additional fiscal revenue for the resilient low-carbon 2,0 transition and compensate losses in net consumption gains to the poorest households from the higher costs of electricity, coal, and liquefied petroleum gas. Revenues could be recycled to fully offset consumption losses for households below the national 0,0 poverty line. Additionally, 5 percent of any remaining revenues would be allocated to the national disaster recovery fund, while the rest would be invested in household infrastructure access (electricity, information and communication technology, public transportation, -2,0 sanitation, and water). The poorest households could enjoy2025 net consumption 2030 2035gains after 2040 accounting 2045 for 2050 initial losses of around 6.3 (electricity subsidy removal), 2.7 (low carbon tax), and 7.7 (moderate carbon tax) percent Низкоуглеродное развитие of total household consumption. Message 6 Transformational development in Tajikistan will require substantial external support to supplement limited domestic public and private financial resources. Public finances alone are insufficient to meet the investment needs, making significant private investments and development finance crucial. The financing needed to achieve either the Adaptation Scenario or the Low-Carbon Development Scenario would come on top of the current NDC commitments. The required amount is estimated to be much higher than the current public investment program (PIP) spending. Medium-term projections from the IMF suggest that, consistent with public debt sustainability, the PIP has room to increase from about US$2 billion annually to around US$3.6 billion by the end of the decade. Even if the entire increase were dedicated to ‘green’ investments, it would still be insufficient to cover the investment needs of Tajikistan’s NDC commitments plus the cost of the Adaptation and Low- Carbon Development scenarios (Table ES.1). It is important to emphasize that the Rogun HPP has a pivotal role in facilitating future investment requirements for the transition to a green economy and climate adaptation. This is contingent upon the project being constructed in a macro-fiscally sustainable manner, adhering to robust corporate governance standards, and ensuring prudent management of the project’s revenue stream. xix Executive summary TABLE ES.1: Tajikistan’s investment needs for climate adaptation and mitigation, by scenario and sector, 2025–50 Total discounted Total discounted Estimated In % of PV In % of PV investment needs, investment needs, share of private Sector  total GDP, total GDP, 2025–30  2031–50 sector  2025–30 2031–50 (US$, billions) (US$, billions)  (range %) Cost of mitigation investments Reference Scenario  Residential and commercial buildings 9.6 18.6 8.4 5.7 80–95 Power sector 11.0 12.6 9.7 3.9 60–75 Industry and others 4.8 5.3 4.2 1.6 90–100 Transport sector 8.2 8.6 7.2 2.7 25 (excluding consumer vehicles) Total for Reference Scenario 33.6 45.2 29.4 13.9 — Low-Carbon Development Scenario Residential and commercial buildings 9.7 19.6 8.5 6.0 80–95 Power sector and hydrogen 11.9 19.7 10.4 6.1 60–75 Industry and others 4.8 5.8 4.2 1.8 90–100 Transport sector 8.3 8.8 7.3 2.7 25 (excluding consumer vehicles) Total for Low-Carbon Development 34.7 53.9 30.3 16.6 — Scenario Net increase in investment from Reference to Low-Carbon Development 1.0 8.7 0.9 2.7 — Scenario Cost of additional adaptation investments Adaptation Scenario Water sector (irrigation, water mana- 1.0 3.7 0.8 1.1 10–35 gement and water supply and sanitation) Agriculture 0.4 0.5 0.3 0.1 86 Resilient road transport network 0.4 0.9 0.4 0.3 0 Land restoration 0.2 0.4 0.2 0.1 84 Total investment for adaptation 2.0 5.4 1.7 1.7 — Total investment cost for mitigation 3.0 14.1 2.6 4.3 and adaptation Source: Original compilation. Note: Reference and Low-Carbon Development Scenario investments already include significant hydropower plant investments (including Rogun) and hence significant adaptation and mitigation investments (see annex 1 for Scenario overview details). Introducing a carbon tax can substantiate fiscal resources and create a price incentive for green transition in the private sector. Critical fiscal policies include the elimination of energy subsidies by 2027 (already endorsed by the government), modest carbon taxation (US$10–US$30 per tCO 2 by 2030), adjustment of the public budget to include strategic investments in adaptation and mitigation, protection of vulnerable population groups, and establishment of a dedicated post-disaster emergency fund. Carbon taxation, in particular, will limit the cost impact of the green transition on public debt. Fiscal instruments allow raising domestic resources to finance public investments in resilient and green infrastructure but simultaneously create price incentives for private sector to decarbonize. xx Country Climate and Development Report: Tajikistan Tajikistan’s private sector could play a crucial role in green investment in energy, industry, and agriculture, but significant institutional reforms are needed to unlock private capital. The share of private investments in these sectors has been envisaged at 80–100 percent of total investment needs. However, currently, Tajikistan’s private sector is hindered by low productivity, minimal integration with global markets, and slow growth. Mobilization of private investments is subject to structural reforms to improve the business regulatory environment, opening up the economy and leveling the playing field for better competition, and building trust in state institutions (Chapters 6 and 7). Additionally, developing uniform environmental, social, and governance (ESG) standards would replace the disparate approaches currently used by financial institutions to improve transparency and credibility in channeling green investments. Financial requirements for transformational development far exceed Tajikistan’s domestic financing capacity. To supplement domestic efforts, Tajikistan needs substantial technical and financial support from external sources, including grants and concessional loans from international finance organizations, global climate funds, and other development partners. The government and its partners should strive to strengthen the connections between international commitments and domestic priorities while avoiding the announcement of broad climate policy goals or piecemeal sectoral initiatives without first ensuring consistency with existing objectives and plans. Message 7 To enhance resilience to climate change, accelerate low-carbon development, and ensure an inclusive green transition, Tajikistan will need to implement both a broad spectrum of structural as well as climate reforms. Tajikistan needs to enhance its institutional capacity and strengthen the regulatory framework to achieve economic transformation stemming from clean energy potential and align more closely with the trajectory of a green economy. Although there are a few urgent actions, some of them have substantial co-benefits and synergies with other reforms. The recommendations are grouped into five areas with corresponding policy packages that separate urgent priorities with substantial co-benefits and synergies with other policies. Those policy priorities can mitigate immediate risks associated with climate change that affect lives through adaptation actions and jump start enabling climate actions along with economic transformation, creating a win-win situation (highlighted in pink in Table ES.2) and other urgent policies that are critical in their areas (highlighted in yellow in Table ES.2). Medium- and longer-term priorities are presented in Chapter 7. These policy packages include (a) stronger institutions and regulatory framework for better adaptation, resilience, and mitigation to build the capacity of key institutions and business environment for planning and implementation of climate actions with price incentives; (b) just and inclusive climate strategies for enhanced social assistance and adaptive social protection for vulnerable populations and green workforce reskilling; (c) mobilizing of climate finance and greening of financial sector with development of climate data infrastructure and green taxonomy, assessment of climate-related risks for commercial banks and non-financial disclosure mechanisms for private sector; (d) adaptation at the water-energy-food nexus, to support resilient landscape restoration, connectivity, and lower vulnerability for climate change; and (e) accelerating of resilient low- carbon development by scaling up renewables and creating opportunities for the green economy, innovations, and green jobs. The success of these measures will depend on carbon pricing and strategic use of fiscal resources, including safeguarding vulnerable population groups and ecosystems. The pursuit of a green transition hinges on implementing a broad spectrum of structural reforms to lay the foundation for general economic development. In particular, Tajikistan should focus on opening up its economy to better attract private investment and improve public service delivery, including through better governance in state-owned enterprises (SOEs). Upholding the rule of law, ensuring contract enforcement, and strengthening investor protection rights will increase investor confidence while improving regulations and competition in the telecommunications and aviation sectors and enhancing trade facilitation is crucial for international connectivity to global value chains and unlocking the country’s economic potential. Moreover, removing inefficient tax exemptions, enhancing the state aid framework, and enforcing competitive neutrality xxi Executive summary principles are vital for establishing a level playing field among the economic participants. Resolving structural issues in the energy system will help enhance energy supply reliability and expedite industrialization. Additionally, strengthening the education, health care, and social protection systems is vital for human capital development and equipping the workforce with the necessary skills. These transformative reforms should not be delayed, as they will breathe new life into Tajikistan’s growth trajectory and empower the nation to achieve its developmental and climate aspirations. Recommended policy packages for urgent climate actions are detailed in Table ES.2. TABLE ES.2: Recommended policy packages of urgent actions by 2030 for building institutional capacity and managing public finances, mobilizing private capital, and coping with climate change Policy Package A:​Stronger institutions for better adaptation, resilience, and mitigation Normalize the outlook on climate and the environment to influence the strategic and planning direction of the country as it builds the capacity of key institutions, including the Committee on Climate regulatory Environmental Protection and the Ministry of Economy. framework Develop climate change laws, bylaws, and regulatory standards to reduce GHG emissions and promote adaptation. Finalize the elimination of subsidies (cost-recovery tariffs for electricity and district heating by Price incentives 2027), introduce carbon pricing based on the intensity of GHG emissions in key sectors, and strengthen compliance with pollution standards and requirements in key sectors. Sovereign risk financing Establish a dedicated post-disaster emergency fund. mechanism Carbon accounting Set up a monitoring, reporting, and verification (MRV) system. Introduce climate change into budgeting procedures by developing and funding a climate risk Climate budgeting assessment framework. Policy Package B: Just and inclusive climate strategies Equitable benefit-sharing Reforms to operationalize a benefit-sharing mechanism for the equitable use of future hydro for renewable resources and renewable resources, particularly for the Rogun HPP project. Livelihood and Use place-based approach to enhance livelihood, employment, and economic inclusion employment support programs to increase the resilience of households vulnerable to or affected by natural disasters for disaster-affected and or the green transition in the most vulnerable sub-regions. Design livelihood support programs climate migrants especially targeting women and youth. Enhanced social Strengthen the Targeted Social Assistance Program and increase the adaptive capacities of assistance and adaptive the social protection system to better support vulnerable households affected by climatic and social protection for economic shocks (such as higher carbon prices and subsidies reforms). vulnerable populations Green workforce Scale up the size and scope of labor market programs to reskill adults and match them with reskilling expansion jobs in green professions. Prioritize involvement of women and youth. Local governments to build resilience and Expand local government mandates, capacity, budget, and incentives to engage rural and reduce the vulnerability urban communities in climate action and address pollution and green actions. of communities Policy Package C: Mobilizing climate finance Improve the capacity to collect and analyze climate-related data from government agencies Adequate climate data involved in climate policy and help private firms, notably financial institutions, strengthen their infrastructure capabilities. Strengthen the assessment of climate-related risks on bank balance sheets—and throughout the banking system.​ Greening of financial Introduce and enforce reporting requirements for banks aligned with the uniform green taxonomy. sector Encourage the issuance of green and sustainability-linked bonds, the development of mechanisms for risk sharing and mitigation, and the creation of natural disaster insurance products. xxii Country Climate and Development Report: Tajikistan Policy Package D:​Adaptation at the water-energy-food nexus, resilient landscapes, connectivity, and lower vulnerability Implement the National Water Strategy, upgrade water transport and storage infrastructure, Address water variability and manage the reservoir cascade with better data. Address water use Modernize the irrigation infrastructure to conserve water and improve agricultural productivity. efficiency Promote resilient restoration of degraded lands with nature-based solutions in priority areas, Resilient landscape enhance land use regulation, carbon sequestration and implement CSA, particularly in restoration livestock, enabling private investments with institutional and finance reforms. Increase capacity to Build capacity and enhance digital solutions for response and resilience through improved manage disaster risks climate data and financial preparedness for disaster risk. Scale up CSA practices and build capacity and knowledge for their implementation, promote Mainstream climate- drought and frost-tolerant varieties, improve rangelands management, combat overgrazing- smart agriculture for food induced land degradation and mitigate methane emissions from livestock. Catalyze finance security using crop insurance or forward pricing. Resilient Strengthen road asset management systems and increase budget allocations for maintenance connectivity in priority and rehabilitation. Improve network resilience incrementally, prioritizing strategic corridors and corridors managing landslide risks. Implement stricter air quality standards and monitoring systems and enforce regulations to Access to clean air reduce pollution from heating, industry, and transportation sectors in cities. Policy Package E: Accelerating resilient and low-carbon development Accelerate hydropower and solar generation investments from public and private sources. Scaling up renewables Complete the Rogun HPP and develop other hydropower facilities (5 GW) and solar facilities (1 GW) by 2030. Design EE and building refurbishment programs to renovate and upgrade heating sources in 5 Energy efficiency and percent of the building stock per year starting from 2025. Introduce and enforce new building sustainable heating codes requiring better insulation and sustainable efficient heating technologies such as solar, shallow-geothermal, and air-source heat pumps. Reduce pollution from heating. Improve public transport supply. Introduce stricter local pollutant emission standards for passenger cars by 2027 and expand later to commercial vehicles. Introduce emission standards Sustainable transport on CO 2 intensity covering also second-hand vehicle imports. Prioritize electrification of highly utilized vehicles and fleets. Transition to self-funding tax incentive mechanisms for EVs (for example, bonus/malus schemes). Improve energy security and reliability in the winter season, including gas supply security. To Secure energy for heating reduce pollution from industry, from 2025 gradual switch from coal to gas to lower emissions and industry from industrial activities (cement, fertilizer production). In the medium term, use city waste in industrial facilities (cement production). Source: Original compilation. Note: Short-term priorities with substantial co-benefits and synergies with other policies are highlighted in pink, and other short-term policies critical in their areas are highlighted in yellow. Chapter 1. Climate change and development in Tajikistan >> xxiii Executive summary Chapter 1 Climate change and development in Tajikistan 1.1. Development context and reform priorities Over the past 20 years, Tajikistan has achieved substantial economic growth, with an average annual increase in gross domestic product (GDP) of more than 7 percent from 2000 to 2023. It has also reduced poverty, with the poverty rate falling from 30.0 percent in 2003 to 10.7 percent in 2023. 5 The economy relies on agriculture; industries dependent on natural resources; and remittances, which constitute one-third of GDP and expose the country to external shocks. Diversification is low, and foreign direct investment is minimal in sectors other than mining. The country’s economic and climate vulnerabilities are heightened by its reliance on a narrow range of external income sources and weak domestic institutions. In the absence of strong structural reforms and climate change adaptation plans, the country’s GDP growth rate is projected to slow to 4–4.5 percent over the medium and long terms, while carbon emissions will continue their decade- long rise. Tajikistan, still the poorest country in the World Bank’s Europe and Central Asia region, has a per capita gross national income of US$1,440 (2023). Tajikistan’s population grew at 2.1 percent annually from 1989 to 2022, straining food supply and services. Food costs account for 39 percent of household spending, exceeding the amount spent on manufactured goods and energy combined. Currently, 59 percent of the population is not covered by either centralized or decentralized water supply services provided by water supply operators; most of those not covered live in rural areas. Air pollution plagues cities, with the annual average concentration of particulate matter with particles 2.5 microns (µm) or less in diameter 2.5 (PM 2.5) in Dushanbe at 39.6 micrograms per cubic meter (µg/m3), more than 10 µg/m3 above the average for Central Asia (State of Global Air 2024). Infant mortality, malnutrition, and limited access to services and education underscore the need for integrated development strategies resilient to multiple shocks. Tajikistan’s economic model was unable to generate sufficient jobs for its growing population, forcing many to seek low-skilled work abroad. The gap between available jobs in Tajikistan and the working-age population, excluding students, has tripled from over 1 million in 2000 to almost 3 million in 2022. As a result, there has been an increase in labor migration, especially to the Russian Federation, which now accounts for about 20–25 percent of the total labor force. Compared to its regional peers, the utilization of the labor force is low in Tajikistan at 40 percent, while the Kyrgyz Republic stands at 62 percent and Uzbekistan at 60 percent. The majority of jobs available are in low-productivity agriculture and non-tradable services with low quality and low wages. High vulnerability to remittance flows emphasizes the importance of structural reforms to make the economy more resilient to external shocks and mobilize private investments for better job creation. Although agriculture has been among the drivers of Tajikistan’s economic growth over the past two decades, food security remains elusive. Nearly 72 percent of Tajikistan’s population and about 80 percent of the poor reside in rural areas, which employ over 60 percent of the labor force but produce just 22 percent of GDP (Sevimli and Jungbluth 2022). Most of the poor rely on subsistence agriculture. Food security at the national level remains highly dependent on imports, which account for about 42 percent of all domestically consumed food (in caloric equivalent). Low-productivity agriculture is based on unsustainable land and water use practices. Soil erosion is widespread, pastures are overgrazed, and deforestation is rife. Already, more than 50 percent of the country’s land area is affected.6 The trend is the most notable in the mountain landscapes of the Khatlon region and in the areas surrounding Dushanbe, which are watersheds of the Vakhsh and Kofarnihon rivers (Amu Darya) that are critical for hydropower production. The annual average costs of land degradation in Tajikistan are estimated at nearly US$325 million in 2023, equivalent to nearly 2.7 percent of the country’s GDP (Box 1.1). 5 At the international poverty line of US$3.65 (2017 purchasing power parity). 6 Degraded lands within each ecosystem and land cover type are areas with low vegetation productivity. Areas expected to become degraded by 2045 were modeled by projecting the yearly rate of productivity loss for the next 20 years, assuming no actions to reverse or reduce degradation trends. 2 Country Climate and Development Report: Tajikistan The economic productivity of water in Tajikistan is among the lowest in the world. Freshwater productivity, a measure of water security, is low at US$1 per cubic meter of annual freshwater withdrawal in 2020 (in constant 2015 prices), compared to the US$45 average in Europe and Central Asia.7 That figure, which places the country in the lowest decile of its peers, reflects high water withdrawals for irrigated agriculture, accompanied by losses during conveyance and application. Irrigation efficiency has been estimated to be as low as 30 percent, whereas well-designed and well-maintained open canal networks can deliver efficiencies of 60 to 70 percent. Two other major factors contribute to the higher water requirements of agriculture. First, crop yields on irrigated land are two to three times higher on irrigated lands than on rainfed land, despite the low efficiency; second, widely planted cotton, one of the most water-intensive crops, accounts for 17 percent of export revenues and 24–37 percent of irrigation water. Low labor productivity, high resource intensity, and limited integration into global value chains make it difficult to attract investment, both domestic and foreign. These weaknesses are reflected in the country’s low rankings on the Economic Complexity Index. Tajikistan ranked 189 for competitive advantage in technologically sophisticated products and 175 for green competitiveness (Green Transition Navigator, n.d). Tajikistan is poorly positioned to take advantage of opportunities to diversify its production using existing know-how. The country’s export basket, dominated by minerals, metals, and agricultural products (about 72 percent) (OEC World 2024), not only exposes the economy to global price fluctuations but also creates risks from reliance on the extraction of natural resources for economic development, highlighting the need for diversification. Moreover, the country’s mountainous terrain is prone to natural disasters, which add to trade costs, whereas agricultural productivity and industrialization are undermined by seasonal water shortages and unreliable electricity supplies. Tajikistan’s public finances are strained by inefficient tax incentives, stranded assets, and borrowing for development projects that are prone to climate-related natural disasters. While the public debt is deemed sustainable over the projection horizon of this report, it remains sensitive to export shocks and contingent liabilities of state-owned enterprises (SOEs). The electricity sector has the largest quasi-fiscal deficits, estimated at around 4 percent of GDP in 2020, owing to end user tariffs that are well below cost- recovery levels (World Bank 2023b). Climate change poses growing risks of premature depreciation of public assets held by SOEs. Without measures to address these challenges, the sustainability of the country’s debt, as well as its economic development prospects, are at risk. To tackle structural inefficiencies, in 2016, Tajikistan embarked on its National Development Strategy (NDS) 2030. The objectives of the strategy were to (a) ensure energy security and efficient use of electricity, (b) exit from communication dead end and turn Tajikistan into a transit country, (c) ensure food security and people’s access to quality nutrition, and (d) expand productive employment. Progress has been limited. High unemployment persists, compounded by the pressing need to foster a diversified, private sector-led, and export-oriented economic framework. These challenges underscore the urgency of leveling the playing field for public and private enterprises, safeguarding property rights and upholding the rule of law, enhancing public service delivery, combating corruption and red tape, and transitioning the state’s role from producer to facilitator and regulator. Crucially, the strategy recognizes the need to embrace climate-conscious strategies to foster sustainable economic growth. 1.2. Risks from climate change With a large rural population dependent on irrigated agriculture and a mountainous terrain, Tajikistan is vulnerable to climate change and risks from natural disasters. Tajikistan ranked 98 out of 185 countries on the 2021 ND-GAIN Index, indicating high vulnerability to climate change. 8 With rising temperatures, the country’s lowland and cropland regions, like those elsewhere in Central Asia, are losing their ‘greenness’, a 7 World Bank. 2024. “World Development Indicators.” https://databank.worldbank.org/source/world-development-indicators. 8 The Notre Dame Global Adaptation Initiative produces the ND-GAIN Country Index. https://gain.nd.edu/our-work/country-index/rankings/. 3 Chapter 1. Climate change and development in Tajikistan trend that is expected to worsen under various climate scenarios. Rising temperatures and seasonal shifts in precipitation threaten water sources and agricultural land, raising the specter of competition for shared resources, fragility, and cross-border conflict. According to Think Hazard, Tajikistan is at high risk of floods, earthquakes, landslides, and wildfires (GFDRR, n.d.). A recent regional risk assessment of Central Asia conducted by the World Bank revealed that natural disasters could wipe out up to 18 percent of the country’s GDP.9 A large part of Tajikistan is already affected by landslides. The fact that the country is experiencing temperatures much higher than the global average10 could further intensify the risks of natural disasters. The expected annual damages from floods alone are expected to double by 2050 (World Bank 2024c). Figures 1.1 and 1.2 illustrate the risks of floods and landslides in the country. FIGURE 1.1: Risk of floods FIGURE 1.2: Risk of landslides TJLE 0,5(0,5) TJRR 2,2(2,2) TJDU 0,6(0,7) TJBK 6,8(6,8) TJKL 12,9(13,0) Tajikistan Flood Risk Unstable from Land Degradation Landslide Risk Total AAL (per mille) No Change Unstable Slopes 0-3 3-6 6-9 9-12 12+ New Unstable Slopes 2045 Slopes Regional Boundaries Tajikistan administrative Stable boundaries lvl.2 Source: Original elaboration. Note: AAL = annual average loss in US dollars per mile. (1 mile = 1.6 km). The hotspots of land degradation in Tajikistan can be found in the mountains surrounding the cities. Degraded landscapes around Dushanbe, Bokhtar, and Kulob increase these cities’ exposure to natural disasters and extreme events. This degradation also worsens the problem of urban heat, which is exacerbated Согдийская область 0,5(0,5) due to the loss of ecosystem services provided by natural vegetation that has fallen victim to by air pollution industrial pollution. Nearly the entire population of Dushanbe resides in an earthquake-prone area, and 2.5 Районы республиканского percent is at risk of pluvial flooding. In Khujand, the corresponding figures are 60 percent and 3.6 percent. подчинения (РРП) 2,2(2,2) Душанбе In both cities, 2.5 percent of the population is exposed to landslides, as they reside on unstable slopes. 0,6(0,7) Горно-Бадахшанская These cities also have insufficient urban автономная green areas. Dushanbe fares better, with around 12 m2 of green область Хатлонская область 6,8(6,8) 12,9(13,0) while Khujand has only 2 m per capita—both figures are below the European average of area per capita, 2 18.2 m per capita. 2 Риск наводнений в Таджикистане Неустойчивость земель Риск оползней Средние годовые потери (в промилле) в результате деградации Неустойчивые склоны 0-3 3-6 6-9 9-12 12+ Без изменений Склоны Региональные границы Новые неустойчивые Стабильно склоны в 2045 г. Административные границы Таджикистана, уровень 2 9 There is a 1 percent annual probability that earthquakes could cause damages up to 18 percent of the GDP, according to the Regional Disaster Risk Assessment under the EU-funded Strengthening Financial Resilience and Accelerating Risk Reduction Program 2023. https://datacatalog.worldbank.org/int/search?q=SFRARR&start=0&sort=. 10 World Bank. 2021a. “Climate Risk Country Profile.” https://climateknowledgeportal.worldbank.org/country-profiles . 4 Country Climate and Development Report: Tajikistan BOX 1.1: The estimated cost of land degradation in Tajikistan The undiscounted costs of land degradation were over US$325 million in 2023 and will rise to exceed US$782 million in 2050 if the expanse and severity of degradation continue in line with current trends. Land degradation in Tajikistan exacts costs through forgone crop and livestock production, greenhouse gas (GHG) emissions, and forgone ecosystem services, as well as through damage to infrastructure in irrigation, hydropower, and transportation. Interference with the delivery of essential public services, such as schools and medical facilities, imposes additional costs. The highest quantifiable land degradation costs are found in agriculture (croplands and pastures combined). Through foregone crop and livestock production and GHG emissions, agriculture is estimated to contribute—on average—nearly US$181 million (present value [PV] terms) in land degradation costs each year over 2024–50, accounting for 73 percent of total land degradation costs. Source: Original analysis for this publication. Figures 1.3 and 1.4 present the projected mean temperature and precipitation through 2100 across a range of combinations of Shared Socioeconomic Pathways and Representative Concentration Pathways (SSPs-RCPs). The bold lines are averages across General Circulation Model (GCM) projections for each of the four SSP-RCPs. The shaded zones surrounding those lines are the full range of GCM projections within an RCP. While GCM ensemble averages for precipitation (the bold lines in the right panel) do not change significantly relative to baseline precipitation, the precipitation projected across the full range of GCMs (the shaded zones in Figure 1.4) varies widely. This variation emphasizes the importance of selecting a set of climate scenarios that capture a wide range of possible future conditions. BOX 1.2: Optimistic and pessimistic climate change scenarios Two aggregates of the climate change scenarios included in this study were selected. These are referred to as pessimistic and optimistic global mitigation scenarios. The pessimistic, or dry/hot, scenario is that in which warming reaches 4°C by 2100, due to lax climate policies or a reduction in the ability of ecosystems and oceans to capture carbon (ensemble average of SSP3-7.0 GCMs). The optimistic, or wet/warm, scenario is when global reductions in GHG emissions are in line with 1.5°C of warming by 2100 (ensemble average of SSP1-1.9 GCMs). Both the wet/warm and dry/hot scenarios represent average conditions for their respective climate settings. Individual dry/hot scenarios may, however, exert stronger effects than the average. Climate scenarios were also selected in such a way as to capture the broadest range of climate change effects across different Global Climate Models (GCMs). In doing so, the vulnerability of the economy and the performance of adaptation options under possible wet/warm and dry/hot GCM outcomes can be assessed. Source: Original analysis for this publication. These risks are particularly threatening for the country’s poorly maintained infrastructure, including the transport network, upon which exports depend. Annual road repair and maintenance costs between 2041 and 2050 are projected to be US$145–US$165 million higher for wet/warm and dry/hot climate scenarios, compared to the historical baseline, driven mostly by flooding. The damage is expected to be concentrated in the northwest and west of the country—in the Sughd region; the Districts under Central Government Jurisdiction; and especially Dushanbe, where damage may reach US$4,000 per km. In addition, climate change is anticipated to cause incremental damages of US$6 million to bridges by 2050 under the pessimistic climate scenario laid out in Chapter 5. 5 Chapter 1. Climate change and development in Tajikistan FIGURE 1.3: Average mean surface temperature by FIGURE 1.4: Projected precipitation by climate scenario climate scenario up to 2100, Tajikistan up to 2100, Tajikistan (Reference period 1995-2014; (Reference period 1995-2014; Multi-Model Ensemble) Multi-Model Ensemble) 12 1400 10 1200 8 1000 6 4 800 2 600 0 400 -2 -4 200 1960 1980 2000 2020 2040 2060 2080 2100 1960 1980 2000 2020 2040 2060 2080 2100 Hist. Ref. Per., 1950-2014 SSP1-2.6 SSP5-8.5 Hist. Ref. Per., 1950-2014 SSP1-2.6 SSP5-8.5 SSP2-4.5 SSP3-7.0 SSP2-4.5 SSP3-7.0 Source: CCKP 2024.11 Average water availability from glaciers and snowmelt is likely to decrease. Estimates suggest a complete loss of up to 1,000 glaciers since the 1960s in Tajikistan. Figure 1.5 shows the steady decline projected in glacier volume over the next 75 years under alternate 12 1400 climate projections. In addition to reducing the country’s river network, the depletion is also projected to reduce water storage in the form of seasonal snow 10 1200 cover. A reduction of snow cover and snow permanence will in turn reduce reflectance (albedo) and increase 8 evaporation from exposed land cover. 1000 6 Shifts 4 in the timing and seasonality of runoff and streamflow 800 will affect the availability of water for competing 2 uses, especially during the summer months when fields are irrigated. The shifts will also 600 influence 0 water storage needs and the operation of reservoirs to meet various sectoral demands throughout the -2 year and international water deliveries to fulfill transboundary400 agreements. While precipitation projections remain uncertain, estimates suggest an increase in the variability of rainfall patterns, with more frequent -4 200 1960 events extreme 1980 and2000 larger 2020 deviations 2040 2060 from2080 2100 1960 1980 2000 2020 2040 2060 2080 2100 the norm. Such increased climate variability FIGURE 1.5: Change in the volume of glaciers in Tajikistan from Исторический базисный период 1950-2014 гг. 2020 to 2100 under climate период different базисный Исторический conditions 1950-2014 гг. also lead toВСЭС3-7.0 may ВСЭС2-4.5 more intense and frequent ВСЭС5-8.5 ВСЭС1-2.6 ВСЭС2-4.5 ВСЭС3-7.0 ВСЭС5-8.5 ВСЭС1-2.6 floods and droughts in downstream areas 60 0 and countries, adding to storage needs. 50 0 The electricity sector in Tajikistan, which is based on hydropower, is well 40 0 positioned to benefit from changes in the hydrological regime—and particularly km3 30 0 with the dramatic extension of storage capacity in the Reference Scenario. The 20 0 Rogun hydropower plant (HPP) is expected to become the country’s main water 10 0 reservoir upon its completion in 2033.12 Even with climate change, average annual 0 hydropower generation remains relatively 2020 2030 2040 2050 2060 2070 2080 2090 2100 stable between 2021 and 2040, hovering around 48 percent of the country’s installed Historical Dry/Hot Mean Wet/Warm Mean capacity. However, from 2041 to 2060, Source: Original compilation. 11 https://climateknowledgeportal.worldbank.org. 60 0 12 After the completion of construction, the Rogun HPP will need about 7–8 years to fill up its reservoir (capacity of 13.3 km3). 50 0 6 40 Country Climate and 0 Development Report: Tajikistan км3 30 0 distinct shifts emerge. Under the wet/warm climate scenarios with increasing precipitation or glacier melt dynamics, the model projects an 11 percent rise in average annual hydropower generation over historical levels, reaching 63 percent. Meanwhile, the projections of the dry/hot climate scenario maintain a relatively stable hydrological outlook compared to the historical picture. Because hydropower generation is sensitive to climate variability, different climate scenarios should be considered in long-term energy planning and infrastructure development, especially when glacier volumes will have dropped dramatically by the last decade of the century. Under a dry/hot climate scenario, future climate change is expected to reduce rainfed crop yields and livestock production. It could also lower labor productivity in agriculture by 1 percent by mid-century while raising mortality and morbidity rates. These impacts are significant for the dry/hot scenarios and for rainfed crops (Figure 1.6); they are smaller for irrigated crops (World Bank 2024a). Climate effects can also cause changes in pest profiles (Khakimov et al. 2020). Beef and lamb are projected to be the livestock products most vulnerable to the effects of climate change, with reductions of around 20 percent by mid-century under dry/hot conditions (Figure 1.7). These risks are likely to fall most heavily on vulnerable groups such as rural communities in mountainous areas lacking access to irrigation, as well as on women and women-headed households and persons with disabilities. FIGURE 1.6: Impact of climate change on rainfed crop FIGURE 1.7: Impact of climate change on livestock production production 50% 0% 40% -2% 30% -4% -6% 20% -8% 10% -10% 0% -12% -10% -14% -20% -16% -30% -18% -40% -20% Melons Oil crops Other cereals Potato Vegetables Wheat Beef Cow’s milk Chickens Eggs Goat’s milk Lamb Dry/Hot Climate Scenario Wet/Warm Climate Scenario Dry/Hot Climate Scenario Wet/Warm Climate Scenario Source: Original compilation. The output of irrigated agriculture, too, is likely to fall with climate change. In both optimistic and pessimistic 50% climate scenarios (see Chapter 5), irrigation requirements 0% increase by 5–8 percent over historical levels 40% by 2050 owing to higher temperatures. Rising demands -2% for crop water, coupled with changes in streamflow, 30% account for the increase. In some cases, the projections suggest that the value of total annual -4% -6% 20% production could be 8 percent lower than under historical climate conditions. crop -8% 10% -10% In0%hotspots of vulnerability in Tajikistan, climate change increases the risk of fragility and is likely -12% to trigger climate migration. The country’s border areas, -10% -14% in particular, are predicted to become climate hotspots by 2050 (Clement et al. 2021). In these hotspots, -20% communities -16% are at risk of land degradation and -30% may lose essential ecosystem services provided by natural -18% ecosystems.13 Climate change thus becomes -40% -20% than 50,000 Tajiks were internally displaced. a driver of ecological migration. From 2008 to 2022, more Бахчевые Масличные Другие Картофель Овощи Пшеница Говядина Коровье Куриные Козье Баранина Internal external and культуры культуры migration rates are likely to increase, particularly зерновые молоко яйца areas, in border exacerbating молоко культуры existing inequalities and fueling fragility. Ecological migration is likely to fuel fragility, often centered on Сценарий сухого/жаркого климата water access and land use rights Сценарий влажного/теплого климата along the Ferghana Valley border, which is prone to both climate stressors and population shifts. 13 The land degradation trend is also detected in Uzbekistan and the Kyrgyz Republic but not with the same intensity as in the mountain regions of the upper Amu Darya river basin in Tajikistan. For this report, the impacts of land degradation were evaluated using biophysical models, in which sparser vegetation cover has an effect on the infiltration dynamics of precipitation runoff, soil cohesion and tear resistance, and soil erosion. 7 Chapter 1. Climate change and development in Tajikistan The impact of climate change is affecting local rural communities. According to the World Bank’s 2021 community-level surveys, 80 percent “We see it with our eyes. We feel it. of respondents in rural areas reported irregular temperatures, 66 percent Every summer it gets warmer and warmer. As you go through the summer, reported irregular rainfall, and 47 percent had experienced a natural I feel the only thing you want to do, is to disaster in the last two years. Furthermore, 59 percent of respondents also go to the swimming pool. It is getting really hot in Tajikistan” reported that climate change had a negative effect on their household’s Youth Representative at CCDR Youth Dialogue, 16 years old economic well-being and that they rely on savings to cope. These effects are felt most keenly by women, women-headed households, and youth, who have limited capacity and resources for adaptation. The need for social security nets to help rural communities adapt to the effects of natural disasters on labor, income, and housing in rural areas is rapidly increasing. 1.3. Low-carbon development opportunities and risks Despite experiencing carbon-intensive economic growth over the past decade, Tajikistan accounts for only 0.04 percent of global GHG emissions (UNDP 2023a). The per capita emissions in the country are also relatively low, at 2.32 t, which is less than half the global average of 4.7 t per capita. The majority of Tajikistan’s GHG emissions are concentrated in the energy sector (including energy use in transport, industry, and buildings), which accounts for 50 percent of the total emissions. Agriculture follows closely, accounting for 40 percent of total emissions, while waste accounts for the remaining 10 percent (European Commission 2023a). GHG emissions in Tajikistan decreased after the fall of the Soviet Union, owing to the collapse of economic activity. But since the 2010 low point of 12.2 Mt, emissions have almost doubled, reaching 22.8 Mt in 2022, driven by economic growth; a gas-to-coal switch in heating, industry, and, to a lesser extent, power; and the expansion of oil use in transport (Figure 1.8). In 2022, 52 percent of energy-related emissions in Tajikistan came from domestic coal, over 42 percent from oil, and the rest from natural gas (IEA 2024). FIGURE 1.8: Emissions in Tajikistan by sector, 1990–2022 (MtCO 2eq) 40 35 30 25 20 15 10 5 0 1990 2010 2014 2020 2022 Agriculture Industry Buildings Coal Mining Waste (Combustion and Processes) Power and district heat Transport Source: The Emissions Database for Global Atmospheric Research (EDGAR), United Nations, and International Energy Agency (IEA) for historical data. Note: Industrial emissions include process emissions, not modeled for this CCDR. Transport emissions include non-specified emissions 40 the EDGAR database because these are largely transport related. Building emissions are reported only from 2020; historical data from before 2019 cover statistical estimates. Power sector emissions include large-scale combined heating and power units for district heating. 35 30 The unconditional Nationally Determined Contribution (NDC) target for 2030 is modest : “(N)ot to exceed 60–70 25 percent of the 1990 GHG emissions, the conditional target being 50–60 percent.” This allows for an increase 20 in emissions from 22.8 Mt in 2022 to 24 Mt in 2030 (details are provided in Chapter 4.) 15 10 5 0 8 1990 2010 2014 Report: Tajikistan Country Climate and Development 2020 2022 Сельское хозяйство Здания Отходы Добыча угля Транспорт Промышленность (сжигание и технологические процессы) Электроэнергия и централизованное теплоснабжение Tajikistan has the potential to transition to a greener economy by increasing the production of clean energy sources such as hydropower, solar, and wind. With appropriate reforms, Tajikistan could capitalize on the opportunities that the green energy transition offers, such as increasing the export of green goods, reducing fuel-import dependencies, and creating employment opportunities in new industries. Remittances are expected to gradually decline in line with economic development and job creation. With abundant water potential from its rivers, natural lakes, and glaciers, Tajikistan could increase its reliance on hydropower, particularly through the completion of the Rogun HPP. According to the International Energy Agency (IEA), Tajikistan’s hydropower potential, estimated at 527 TWh, ranks eighth in the world, and yet only 4 percent of the country’s current hydro potential is being exploited (IEA 2022a). In this context, completing the Rogun HPP project is of great importance, as it will increase the domestic clean energy supply and reduce the need for imported energy, primarily fossil fuel. This will not only reduce emissions associated with the transportation of imported fuel but also enhance energy security and support the country’s clean industrialization objectives. Moreover, the Rogun HPP project is also essential to the region’s decarbonization process. The project is expected to export 60–70 percent of its generated electricity to neighboring countries, thereby helping them reduce their reliance on fossil fuels and further decreasing regional carbon emissions. HPPs usually have long life-spans, suggesting that the benefits of reduced carbon emissions can be realized for many decades. The country’s dependence on foreign oil could be significantly reduced by electrifying the transport sector, leading to improved energy security and greater economic independence.14 Investment in workforce training and reinforcement will be essential to maximizing the benefits of the energy transition. The climate of Tajikistan favors the use of solar energy. The estimated solar energy potential in Tajikistan is about 25 billion kWh per year, though it is largely untapped, except for some use in water heating. The country enjoys 280–330 sunny days per year, with solar radiation intensity ranging from 280 to 925 megajoules per square meter (MJ/m2) in the foothills and 360 to 1,120 MJ/m2 in the highlands. If used, available solar energy could meet 10–20 percent of the country’s energy demand. Though there is limited wind energy potential, it could still be used to complement hydropower in some regions. The highest wind speeds are observed in the mountains as well as in the Sughd region and the Rasht Valley. The average wind speed in these regions is around 5–6 m per second (Asia Wind Association, n.d.). Increased global demand for minerals and metals needed for the energy transition could provide export growth and economic diversification opportunities for Tajikistan, but limited investments in exploration and high transport costs currently dampen the prospects of strong growth. There is substantial potential for climate-smart mining in lithium, graphite, rare earth elements for renewable energy, and platinum group metals, which could aid economic diversification and the green transition (Mihalasky et al. 2017). Exploration budgets in Tajikistan, however, have averaged less than US$3 million per year over the past 10 years (0.02 percent of global exploration investments), which is less than one-fourth of what would be expected based on the country’s global market share. The lack of new exploration suggests that an expansion of mining over the coming decades is most likely to happen in existing products such as gold, silver, zinc, antimony, or copper. Tajikistan currently processes aluminum and lead domestically, whereas gold and zinc are exported for refining. While additional in-country processing is technically feasible, it would require more foreign investment and an improved transport infrastructure to make such investments economically feasible. Additionally, low-carbon aluminum production ensures that Tajikistan can continue to meet the green standards required by the Turkish and European Union (EU) markets, maintaining its competitiveness in selling aluminum to vehicle and machinery manufacturing plants in these markets. The building renovation wave, supported by government initiatives, could stimulate new business opportunities that leverage domestic labor and raw materials, fostering economic growth. The green transition also provides an opportunity to enable the efficient use of imported natural gas to revitalize domestic fertilizer production, which could reduce dependency on imports and improve the resilience and productivity of the agricultural 14 Tajikistan presently relies heavily on imports of fossil fuels, the majority of which originate from Russia. 9 Chapter 1. Climate change and development in Tajikistan sector. By increasing domestic fertilizer production, farmers could access more affordable fertilizers, leading to higher yields and improved food security. Digitalization can play a pivotal role in supporting low-carbon development in Tajikistan by enhancing EE, integrating renewable energy sources, and optimizing resource management across sectors. Implementing smart-grid technologies and advanced monitoring systems could improve the efficiency of electricity distribution, reduce waste, and facilitate the integration of renewable energy sources such as hydropower. In agriculture, precision farming technologies could optimize the use of water and fertilizers, reducing emissions and enhancing productivity. Digital tools can also support the development of sustainable transportation systems by improving traffic management and promoting the use of EVs. Additionally, smart building technologies can optimize energy consumption in residential and commercial buildings, contributing to lower emissions. By leveraging digital solutions for efficient resource management and decision-making, Tajikistan could significantly advance its low-carbon development goals, ensuring a more sustainable and resilient future. Tajikistan needs to make greater use of climate-smart technologies to continue exporting to major partners in Europe and other countries. The mitigation policies practiced by trading partners—such as the EU’s Carbon Border Adjustment Mechanism (CBAM)—will affect Tajikistan’s industries and products that have high GHG emissions and rely on coal and other fossil fuels for energy-intensive production (European Commission 2023b).15 Tajikistan ranks 13 out of 57 countries on the World Bank’s CBAM exposure index, which combines the share of CBAM-covered exports to the EU per country with the associated carbon payment based on the emission intensity of production. The primary product affected by CBAM is aluminum, where Tajikistan has the 10th highest carbon intensity worldwide (despite hydro-powered electricity) and exports of aluminum to the EU make up only 4.2 percent of Tajikistan’s exports. Despite the low share of aluminum exports to the EU, annual CBAM payments could range from EUR 2 to EUR 5.8 million (0.08–0.23 percent of total exports in 2022) or EUR 230 to EUR 350 per ton, once emissions are fully priced and free allowances phased out.16 Other risks of continuing to rely on older, less-efficient, and carbon-intensive technologies include stranded assets, exposure to regulatory fines, poor market competitiveness, reputational damage, technological lock-in, and higher health and environmental costs to companies that are not compliant with the environmental, social, and governance (ESG) standards of trading partners around the world. Targeted support may be needed to transition these sectors to lower-emission production, different products, or alternative markets. Chapter 2. Institutional and policy assessment >> 15 The highest share of CBAM payments in exports to the EU is estimated to be for Uzbekistan, Georgia, Tajikistan, and Belarus. Most of the payments relate to metals, fertilizers, electricity, and oil (Sudakov 2023). Similarly, studies by the French development agency have found that in socioeconomic terms, Tajikistan is among the economies most exposed to CBAM (Magacho et al. 2023). The World Bank’s CBAM exposure index (https://www.worldbank.org/en/data/interactive/2023/06/15/relative-cbam-exposure-index#4) suggests that global aluminum exports, 4.2 percent of which go to the EU, are the most exposed. 16 These estimates are based on the default emission factor published by the EU for unwrought aluminum (2.36 t of CO 2 per ton of aluminum, direct emissions only). The lower-bound estimate assumes a carbon price of EUR 100 per ton and 15 percent of Tajikistan’s aluminum export to the EU (8.25/55 kt, based on 2022 data) and upper estimates assumes a carbon price of EUR 150 per ton and that 30 percent of Tajikistan’s aluminum export to the EU. The value could be higher if Tajikistan reaches pre-2020 levels of production (approximately 90–100 kt per year). 10 Country Climate and Development Report: Tajikistan Chapter 2 Institutional and policy assessment 2.1. Tajikistan’s climate change commitments and strategies Tajikistan’s climate change commitments continue to emerge, and its policy framework, while in the initial stages, is evolving. The focus of the country’s effort to combat climate change is on building a green economy to minimize GHG emissions by the 2030s. Achieving this objective relies on leveraging the country’s hydropower resources, developing alternative renewable energy capacity using solar and wind, and promoting carbon sequestration through the National Greening Program for the country until 2040. Central to the government’s plan is the construction of the Rogun HPP, one of the main solutions for reducing GHG emissions, achieving energy security in Tajikistan, and contributing to a regional green electricity market. However, no long-term decarbonization or climate change mitigation strategies are yet in place. The regulatory framework for climate change mitigation and adaptation is nascent, with no laws for action enacted. Although the National Strategy for Adaptation to Climate Change (NSACC) through 2030 was approved in October 2019, it still lacks a monitoring and evaluation framework and an action plan for implementation. Table 2.1 outlines the status of key national laws and strategies for climate action. TABLE 2.1: Key national laws and strategies as of June 2024 Paris Agreement Strategies Laws Entry Green Economy National Energy Law on Law on Law on NDC last Adaptation Water Law on Air into LT-LEDS NECP Development Adaptation Strat- Climate Energy Renewa- update Strategy strategy Quality force Strategy (GEDS) Plan egy Action Efficiency ble Energy April October September October December September January Status 2017 2021 2022 2019 2012 2013 2010 Source: World Bank Climate Legislation and Action Database (CLAD). Note: Green: document approved and valid; Blue: draft document has not yet been approved; Red: document does not exist or has expired. NDC = Nationally Determined Contribution; LT-LEDS = Long-term low-emissions development strategy in accordance with Article 4 of the Paris Agreement; NECP = National energy and climate plan; GEDS = Green Economy Development Strategy for 2023–37; Adaptation Strategy = National Strategy for Adaptation to Climate Change (NSACC 2030). 2.1.1. Adaptation strategies The planning framework for climate change adaptation is largely provided by NSACC 2030. Though the strategy was approved in the fall of 2019, work on its action plan did not begin until four years later (October 2023). As of May 2024, a draft of a first action plan, for 2024–26, was pending approval by the Committee on Environmental Protection. The strategy outlines adaptive measures and suggests mechanisms and sources of financing for adaptation and resilience. In addition to the strategy’s action plan, the government intends to develop separate national plans to facilitate implementation for agriculture, water, energy, and transport, the sectors most vulnerable to climate change as identified in the strategy. Adaptation measures are also reflected to some extent in the Medium-Term Development Program for 2021–25 and in sectoral programs (agriculture, forestry, water, and disaster risk). The NDS 2030 and the GEDS for 2023–37, adopted in 2022, identify adaptation as a key area of focus, though they lack specific details. The GEDS 2023–37 also mandates the creation of a special fund for glacier protection for 2024–25. Furthermore, the government has recently approved a Glacier Protection Law17 and adopted the State Program on Glacier Research and Conservation for 2010–30 to mitigate the adverse impacts of climate warming. Adaptation programs in agriculture, water, transport, and forestry have not moved beyond the early stages. The Forest Sector Development Program for 2022–26, for example, sets indicative quantitative targets to restore more than 15,000 ha of forests in a manner adapted to local conditions and resilient to the effects of climate change. The National Greening Program until 2040, announced in the summer of 2024, aims to plant 2 billion seedlings in 2025–40. However, existing policy documents lack details on 17 Approved by the President of Republic of Tajikistan on January 3, 2024 (No. 2026). 12 Country Climate and Development Report: Tajikistan climate actions—they lack scenarios and systematic vulnerability assessments, and it is not clear how the measures planned under these policy documents fit into a broader climate action program and are financed.18 Adaptation-related actions are not clearly defined. Currently, there is no inventory of critical infrastructure. Importantly, the existing sector-specific regulations have not been integrated. This is problematic because the impact of climate hazards compound and cascade across sectors. Therefore, it is crucial to consider multi-hazard risks—as well as synergies and trade-offs with other sectors—when making policy decisions about adaptation. Tajikistan’s adaptation commitments, particularly the updated NDC, highlight the need to integrate gender in the key areas of adaptive “Local communities need to be involved in local level decision social protection, agriculture, health, education, and energy efficiency meetings. At present, they are poorly (EE), among others. They also highlight the need for sector-specific engaged in decision making processes, but we can change this looking ahead” gender monitoring. Tajikistan now needs to follow through on this vision (CSO Representative at CCDR CSO Roundtable) and ensure strong gender integration across follow-up programming and institutional developments, including the use of accompanying costed Gender Action Plans for all key strategy documents.  Because of the country’s limited institutional capacity (and a lack of local expertise), data collection and information management are inadequate and fragmented. In addition, the vulnerability of current digital data hosting practices to climate shocks raises concerns about potential data loss during extreme weather events. Climate-related legal, policy, strategic, and technical documents are dispersed across websites of various public entities. The website of the Committee on Environmental Protection (http://www. tajnature.tj/ru) has no systematic repository of publicly available documents. This is a barrier for climate impact assessment, vulnerability assessment, and the identification of potential adaptation measures crucial for decision-making on adaptation. The digital public infrastructure (DPI) is not yet fit to integrate climate- resilient data management practices and enhance the interoperability of digital systems for adaptation and mitigation. The provision of independent expert advice on climate-related activities is unregulated. Implementation of adaptation commitments relies heavily on actions by local governments (hukumats , jamoats , and mahallas) and the ability to mobilize communities. Although jamoats and mahallas are clos- est to local communities, they have limited authority, capacity, and resources to address climate challenges. For example, jamoats are tasked with collecting climate-related data, allocating land plots, managing local water resources, and resolving disputes. However, the final decision-making authority—and the funding of allocations—rests with the district hukumat.19 Although mahallas are responsible for collecting data on var- ious climate change dynamics in their assigned areas, and hukumats are responsible for interpreting and reporting climate data to provincial and national governments. Local data collection and analytical capac- ities are weak. As a result, local governments are currently unable to play an effective, cross-sectoral role on climate action. 2.1.2. Mitigation strategies Tajikistan lacks a long-term planning framework for climate change mitigation; medium-term objectives are mainly stated in the GEDS 2023–37. The country ratified the United Nations Framework Convention on Climate Change (UNFCCC) Paris Climate Change Agreement in 2015 and submitted its intended NDCs in 2021. Its most recent NDC establishes an unconditional target of reducing net GHG emissions by 60–70 percent compared to 1990 levels by 2030, and a conditional target of 50–60 percent by 2030. The 2030 unconditional and conditional per capita targets are 1.7–2.0 and 1.4–1.7 tCO 2eq, respectively. An NDC im- plementation plan was approved in 2022. The following year, an NDC climate finance plan was introduced. 18 The documents include the National Strategy on Disaster Risk Reduction for 2019–30, Program of Agro-Food System Development and Sustainable Agriculture through 2030, the Forest Sector Development Program for 2022–26, National Greening Program by 2040, and the Program for Reforming the Water Sector of the Republic of Tajikistan for 2016–25. 19 From an assessment of local governance performed by International Alert in March 2024. World Bank. 2024. Role of Tajikistan’s Sub-National Government in Implementing the National Strategy for Adaptation to Climate Change of the Republic of Tajikistan. Unpublished manuscript. 13 Chapter 2. Institutional and policy assessment Mitigation co-benefits from adaptation have been identified by key sectors (energy, industry and construc- tion, water resources, agriculture, forestry, transport, and waste). The plan identifies women, youth, and other vulnerable groups as key stakeholders in implementing NDC actions. It also includes targets to increase the participation of women and several climate change actions with gender mainstreaming components. Medium-term decarbonization measures are broadly outlined in the GEDS, which therefore can be recognized as a medium-term mitigation strategy. The strategy’s first implementation action plan (for 2023–25) defines policies and measures for EE, GHG emissions reduction, and development of renewable energy. GHG and air pollutant emissions have been among the indicative targets identified to monitor progress toward a green economy. The country commits to reducing GHG emissions from 1 tCO 2eq per person (baseline level) in 2021 to 0.95 tCO 2eq in 2025. The strategy includes measures aimed at moving toward a ‘green economy’, including some relevant for mitigation, such as EE initiatives and the planned expansion of renewable energy sources, especially hydropower. On a sectoral level, as a solution for lowering carbon emissions and improving energy security, the transport sector’s transition to electrification was mandated under the program for the development of EVs (2023–28). A draft of the Transport Sector Development Program through 2040 also mainstreams measures to reduce carbon emissions by increasing the share of environmentally friendly and energy-efficient transportation and creating infrastructure for electric car battery storage. In January 2024, Tajikistan became a member of the Global Methane Pledge. Although it aspires to become carbon neutral by 2037, upon completion of the Rogun HPP, the country has not yet adopted an official net zero target. A monitoring, reporting, and verification (MRV) system is being planned. The country’s latest NDC includes a commitment to establish a regulatory framework for such a system in 2025–30. The Agency for Hydrometeorology (Hydromet) of the Committee for Environmental Protection is responsible for preparing GHG inventories. Institutional capacities are not yet available, and the climate agenda is strongly dependent on international donor support. 2.2. Institutions, policies, and capacities The country’s lack of institutional readiness and climate-related administrative capacity hinders the achievement of its goals. According to the World Bank’s Climate Change Institutional Assessment, which examines the capacity of countries to plan, implement, and sustain climate change policies over multiple political cycles, Tajikistan demonstrates no more than a nascent institutional maturity for addressing climate change. 20 Organizational structures for climate-related matters in the relevant ministries are only partially established and have insufficient capacities. There is no climate law, integration of climate change-related issues into national policy is just beginning, and administrative capacities for climate action are low. The lead role for climate change is assigned to Hydromet, under the Committee for Environmental Protection, but overall responsibilities for climate change are fragmented, with no clear lead for climate policy. Hydromet is responsible for preparing national communications to the UNFCCC, in coordination with key ministries and agencies, and preparing GHG inventories. The agency’s role is to provide technical advice, while the Committee on Environmental Protection has a coordinating function to align ministries and agencies. Together, they are responsible for implementation of the NSACC. The Committee on Emergency Situations and Civil Defense (CoESCD) also has responsibilities for planning climate change adaptation and is engaged in early warning, disaster prevention, and recovery. The Ministry of Energy and Water Resources, which oversees a significant part of Tajikistan’s economy, is responsible for energy policy, including development of renewable energy sources and EE. 20 The Climate Change Institutional Assessment framework captures maturity across the five pillars of organization, planning, public finance, subnational government and SOEs, and accountability (see footnote 10). A set of 74 indicators is used to gain an indicative sense of where a country stands on these pillars (nascent, emerging, or established). Because the Climate Change Institutional Assessment is a point-in- time analysis, the findings may not fully capture recent developments. Nevertheless, it serves as a useful empirical starting point to highlight achievements and gaps, helping to inform peer learning and innovation on climate action. The assessment of maturities is intended to inform a more nuanced discussion of how institutional strengthening should be prioritized and sequenced to meet development and climate action goals. 14 Country Climate and Development Report: Tajikistan There is no specific coordination mechanism for climate change, and the capacities and responsibilities for climate action are fragmented and underdeveloped. Several ministries, working groups, and state agencies play roles in coordinating aspects of climate-relevant action and public policy. The Accounts Chamber, the chief audit institution, has not conducted any climate-related audits. Although the Ecological Commission oversees environment-related laws, there is no specialized parliamentary committee for climate change issues. Violations of environmental laws fall under the jurisdiction of the courts, but there are no specialized judges or courts for environmental or climate change issues. The National Platform for Disaster Risk Reduction is well established but meets infrequently. A new interministerial working group overseeing implementation of the GEDS 2023–37 is the coordinating body for the green economy transition. Its first meeting, held in February 2024, was open to all stakeholders. Though the body is not dedicated to coordinating climate change actions specifically, its responsibilities include key aspects of the climate policy agenda. The government plans to establish a platform for climate change-related activities under an ongoing United Nations Development Programme project (‘Enabling an Effective National Adaptation Plan Process for Tajikistan’) (UNDP 2023b). Once established, the platform would act as a national climate coordination committee. The donor-backed Development Coordination Council Environment and Climate Change Working Group is responsible for policy discussions and the coordination of donor-financed activities on climate change mitigation and disaster risk reduction. Effective climate adaptation depends on a combination of top-down policies and investments and engagement between local authorities and communities. Because climate change impacts and risks manifest at the local level, solutions to address them must be multisectoral and context specific. As noted earlier, mobilizing local governments and communities is crucial for effective adaptation and mitigation. Climate impacts are inherently local, depending on multiple factors including local climate variations and the readiness of a given locality. This in turn depends on awareness; previous and current investments; and actions by the government, communities, households, and businesses. Local action is essential for adaptation efforts such as improving water storage and management, controlling erosion, implementing drip irrigation, planting trees, and constructing local dwellings to improve passive cooling and ventilation. Subnational governments, particularly local governments, have not been assigned clear responsibilities for climate action. They also lack incentives, capacity, and financial resources. While the president’s administration can direct subnational governments to take measures, there is no mechanism to promote multisectoral approaches for formalized horizontal or vertical planning coordination. The failure so far to integrate subnational governments into national climate-relevant planning hampers expansion and replication of successful adaptation activities by local self-governments. Subnational governments are not mandated by law to develop adaptation plans, and there are no designated staff positions for climate change responsibilities. However, spending on environmental protection, landscaping and greening, and processing of household waste is financed from local budgets. In addition, the national budget can allocate funds to finance some measures relevant for climate adaptation—for instance, riverbank protection works. If local resources are insufficient for post-disaster financing, support can be provided from the government’s contingency fund. However, the magnitude of financial assistance provided to people affected by natural disasters is low and has not been revised since 2011. 21 A reserve fund used for emergency relief operations at the local level is small and limited to 0.5 percent of local budget revenues. The expanding capital city, Dushanbe, has a Green City Action Plan aimed at addressing environmental and urban challenges (Government of the Republic of Tajikistan, n.d.). The Program of Socio-Economic Development of Dushanbe City through 2025 includes some actions on green development and decarbonization. 21 According to the Government Resolution, “On the procedure and amount of providing one-time financial assistance payment to the population affected by natural disasters in the Republic Tajikistan” (December 3, 2010, No. 632), the affected population is eligible to receive a one- time payment in the amount of (a) TJS 1,000 (US$91) for each family of the deceased; (b) TJS 100 (US$9) for the head of the family; and TJS 50 (US$4.5) for each family member. Financial assistance is also provided in cash to the affected population for reconstruction of housing: (a) TJS 1,500 (US$137) for each family for housing reconstruction in the same place in cases of a completely destroyed dwelling and (b) TJS 600 (US$55) for each family for the repair of partially destroyed housing. A soft loan for resettlement is available in the amount of TJS 3,000 (US$274) to each family for five years for construction of a completely destroyed dwelling when relocating to a safe area, considering the impossibility of building in the same place, except for cases when reconstruction of a completely destroyed building will be carried out by the Government of Tajikistan, companies, or individuals. 15 Chapter 2. Institutional and policy assessment The government has a clear role in prioritizing policies and investments (public and private) that increase the ability of rural inhabitants to mitigate climate impacts. These include measures to enhance electricity reliability and water conservation; support adoption of climate-smart agriculture (CSA); and provide protection from natural disasters that are becoming more severe and frequent because of climate change, Tajikistan’s geography, and local vulnerabilities. The government needs to improve public awareness of the causes and impacts of climate change and encourage climate action at the community level. Recently, it launched the mobile app ‘SOS’, providing educational materials, safety tips, and real-time emergency notifications, a promising step toward enhancing public awareness and preparedness for climate-related emergencies. Tajikistan’s Fourth National Communication under the UNFCCC confirms that public awareness about the causes and impacts of climate change is low and more effort is needed to bring scientific information to the general population. 2.3. Economic governance for climate action Climate risks have not been reflected in public financial management, and sources of sustainable climate finance have yet to be developed. Tajikistan’s macro-fiscal framework and budget planning do not currently support forward-looking climate-related risk prevention. Climate change is not included in the current national budget as a budget line item, and there is currently no accounting of climate change expenditures. A rulebook on reporting climate risks has yet to be fully developed. According to the World Bank Infrastructure Governance Assessment Report (2023), climate change mitigation and adaptation measures have not been incorporated into the infrastructure life cycle, particularly in the planning stage. The new Law on Public Procurement (2023) makes some provision for sustainable procurement practices, including ecological principles, but application of the law has not begun. There is an urgent need to develop sustainable financing mechanisms for adaptation, resilience, and mitigation. The government estimates that US$1 billion per year will be needed to meet its climate targets. The country has received almost half a billion dollars from international climate funds, including co-financing over the 10-year period from 2010 to 2020 (Bubenko et al. 2020). Multilateral banks have provided a similar amount for hydropower modernization, greening agriculture, and other climate-relevant measures; an additional US$75 million was allocated to disaster risk reduction and modernization of climate observations. Tapping into climate finance from national and international sources will be essential to reach NDC targets. To that end, the government developed the Climate Finance Plan 2023, which was discussed with international donors at COP28 (Republic of Tajikistan 2023). The plan aims to identify, mobilize, assess, and scale up international climate finance to assist in achieving targets and supporting NDC implementation. The NDC plan identifies nearly 100 mitigation and adaptation actions across numerous sectors, including energy, land use and waste, industrial processes, agriculture, and forestry. The tax code does not include environmental or green taxes. There are state duties for environmental pollution and excise duties and value added tax on imported fuel and gasoline, but these are not proportionate to carbon content differences across fuels and therefore do not convey a decarbonization and pollution reduction signal. Revenues are not earmarked to support green investments or vulnerable businesses or populations. However, the country has introduced some green investment incentives through value added tax and import exemptions for EVs (trolleybuses, electric cars) and for equipment and technologies used to support strategic renewable energy projects such as the Rogun HPP. SOEs are not currently obliged to prepare for or respond to climate change and are not subject to any climate-related reporting requirements. The state electricity utility, Barki Tojik, and the state aluminum company plan to introduce a rulebook for reporting on climate risk for SOEs. The government is designing national ESG standards that would require all companies to disclose GHG emissions in line with GHG protocol standards. Under the plan, SOEs of a certain size would be mandated to report emission coefficients. However, for now, these standards do not apply, and while regulators can enforce SOE compliance with environmental 16 Country Climate and Development Report: Tajikistan standards and norms to prevent and avoid pollution and enhance environmental quality, they have no power to enforce climate-related obligations on SOEs. Enhancing governance in Tajikistan’s telecom and digital sector is also crucial for GHG reduction. The newly established Agency on Innovation and Digital Technologies can play a crucial role in addressing governance bottlenecks, streamlining decision-making processes, improving collaboration among stakeholders, and promoting efficient resource use by digitalizing public services. This agency can lead the establishment of digital public infrastructure (DPI), promote shared infrastructure, and enable data- driven insights, all of which are crucial for climate change governance and adaptation. Additionally, stronger governance mechanisms such as tax breaks for energy-efficient data centers and e-waste recycling standards can incentivize ecofriendly practices, enforce climate-related regulations, and contribute to a greener digital future. Improved state capacity, along with institutions that support economic entrepreneurship and incentivize green innovation, would help market forces discover opportunities for green growth. Public investment processes need to target longer-term transitions using a whole-of-economy approach. Unlocking private sector potential to facilitate the growth of nonagricultural sectors—such as clean energy, climate-smart mining, and telecoms—may also require only limited government support. Chapter 3. Pathways for Adaptation and Resilience >> 17 Chapter 2. Institutional and policy assessment Chapter 3 Pathways for adaptation and resilience Tajikistan’s water-energy-agriculture nexus and connectivity are under threat from intense climate shocks (Chapter 1). Climate change has a direct impact on natural ecosystems, as it intensifies natural disasters and diminishes the availability of water. It also threatens the integrity of infrastructure. At this juncture, it is critical to focus on managing natural disaster risks and restoring landscapes and their ecosystem services while implementing climate-smart policies in agriculture, transport, telecommunications, and urban planning. Maintaining water tables, in particular, is necessary for green growth and renewable energy (particularly hydropower, further discussed in Chapter 4). The required investments in food security, hydropower, sustainable connectivity, and digitalization will support economic growth, reduce social vulnerabilities, and empower local communities. This multiprong approach, guided by the National Development Strategy through 2030 and aligned with the National Water Sector Strategy up to 2040, provides a foundation for the future National Adaptation Action Plan. According to an adaptation and resilience assessment conducted by the World Bank (Hallegatte, Rentschler, and Rozenberg 2020), Tajikistan is lagging behind other countries of Europe and Central Asia. While Tajikistan is working to make its land and water use sectors more resilient and secure water and energy critical for adaptation, only 3 priorities out of 57 analyzed have seen sufficient action to date to be deemed established (Figure 3.1). This Chapter describes adaptation priorities and investment needs in the sectors most affected by climate change. In particular, it considers the water sector (Section 3.1); landscape restoration and climate-smart agriculture (Sections 3.2 and 3.3); disaster management, sustainable connectivity, and resilient urbanization (Sections 3.4 and 3.5); and, finally, ecological migration, fragility, and vulnerable groups (Section 3.6). FIGURE 3.1: Status of priority adaptation efforts Avoid depletion of natural capital and increase resilience of forests and other natural ecosystems 1 3 Coastal Zone Management 4 Enable a safe and continued learning environment that 3 1 1 equips children with skills for resilience Prepare the healthcare system for shocks 4 1 from disasters and pandemics Increase resilience of the water sector 3 and ensure water security Increase resilience of the agriculture sector 4 and ensure food security Make land use plans and urban development 2 5 strategies risk-informed Design and implement a government wide strategy to increase 4 1 the resilience of infrastructure systems and public assets Identify critical public assets and services 1 0% 20% 40% 60% 80% 100% Share of indicators Nascent Emerging Established Source: Original compilation, based on findings from Hallegatte, Rentschler, and Rozenberg (2020). Note: The numbers in each bar signify the number of indicators per category (nascent/emerging/established). Предотвращение истощения природного капитала и повышение устойчивости лесов и других природных экосистем 1 3 3.1. Water security at the center of climate adaptation Управление прибрежной зоной 4 The water Создание sector безопасной is at the и непрерывной frontline среды обучения, of economic которая development and climate adaptation in Tajikistan, as прививает детям навыки устойчивости к внешним воздействиям 3 1 1 policy makers must address competing Подготовка системы здравоохранения к потрясениям, demands from irrigated agriculture, hydropower, industry, and стихийнымиThe 4 1 municipalities. вызванным challenges бедствиями of meeting these demands will only increase. In the medium term, drastic и пандемиями Повышение устойчивости водного сектора и обеспечение changes in glacial водной безопасности and snowmelt patterns will alter the timing and volume of surface 3 water flows, and water use norms will need to adapt. Adaptation also requires rehabilitating and modernizing Повышение устойчивости сельскохозяйственного сектора и 4 the vast network of existing обеспечение продовольственной безопасности water infrastructure (including storage) and Разработка планов землепользования и стратегий городского the institutions that govern it. Pricing mechanisms will need to be 2 5 improved, развития ensure cost recovery, technologies will have to be cost-effective and energy-efficient, and water to рисков с учетом Разработка и реализация государственной стратегии повышения quality will устойчивости have to be maintained инфраструктурных to minimize систем и общественных активов environmental and health impacts. As part of its water security 4 1 strategy, Выявление Tajikistan критически prioritizes важных investing in and improving the management общественных 1 of water storage reservoirs. These активов и услуг reservoirs support core activities, such as hydropower generation, irrigated agriculture, flood protection, and 0% 20% 40% 60% 80% 100% municipal water supply. In the long run, planners would also need to consider the possibility of reaching tipping Доля индикаторов Зарождающиеся Развивающиеся Сформировавшиеся 20 Country Climate and Development Report: Tajikistan points as, for instance, rising temperatures FIGURE 3.2: Reduction of average annual irrigation water cause deglaciation and water stored as ice demand under adaptation scenarios and snow runs out, triggering severe water 11,000 scarcity. Adaptation scenarios for each sector have been analyzed in this CCDR. 22 10,500 million cubic meters Amid rising temperatures, water demand 10,000 for irrigated agriculture will also increase. Higher temperatures will trigger greater 9,500 evapotranspiration in watersheds, from both the soil surface and vegetation, diminishing 9,000 runoff and streamflow. This will have significant implications for the management of irrigation 8,500 systems. In the absence of adaptation measures, water demand for crops is estimated 8,000 to grow 3–7 percent at the national level under Dry/Hot Climate Scenario varying climate projections. The availability of Adaptation to Dry/Hot Scenario irrigation will dictate the types of crops that can Historical Scenario Adaptation to Historical Scenario be grown in different river basins. Source: Original compilation. Wet/Warm Climate Scenario Adaptation to Wet/Warm Better water resource management and strategic investments in modernizing the water sector’s infrastructure and institutions will be critical in the face of rising economic, demographic, and climate pressures. The country’s deteriorating water 11 000 infrastructure will further compound demand pressures. Water security challenges across different basins 10 500and less so in Syr Darya basin) will in turn amplify. (water scarcity is particularly acute in Amy-Darya basin Water management practices, importantly, will affect countries downstream (Uzbekistan, Turkmenistan, and Kazakhstan). 10 000 млн. куб. м FIGURE 3.3: The productivity of irrigated agriculture increases An important investment is the with adaptation 9 500 modernization of irrigation networks to 0.18 improve the efficiency of conveyance 9 000 canals. The aging irrigation network has deteriorated and is prone to losses. Crop Productivity (USD/m3) 8 500 0.16 Investment in the network’s modernization could reduce canal loss rates by 25 percent. 8 000 Improved water management practices Сценарий сухого/жаркого климата on farms, including the adoption of, for 0.14 Адаптация к сухому/жаркому климату example, Исторические smart metering and laser land значения leveling, Адаптация better к историческим crop choice, and less water- значениям Сценарий влажного/теплого климата intensive crop mixes, would also increase Адаптация к влажному/теплому климата 0.12 efficiency. Digital tools such as Internet 2020 2025 2030 2035 2040 2045 2050 2055 2060 of Things–based smart irrigation systems Adaptation to Dry/Hot Scenario Adaptation to Wet/Warm Scenario and remote sensing technologies can help Dry/Hot Climate Scenario Wet/Warm Climate Scenario monitor real-time conditions, enabling Source: Original compilation. precise water application. Figure 3.2 shows how such adaptation investments would 0,18 сельскохозяйственных культур ( долл./м 3) significantly reduce crop water requirements across all climate scenarios. Modernization would also help reduce the high energy consumption associated with pumped irrigation, which consumes up to 20 percent of electricity during summer and has a high carbon footprint. Производительность 0,16 22 The adaptation scenario introduces channel-specific investments to reduce the impact of climate change on livestock, crop erosion, irrigated 0,14 agriculture, labor heat stress, roads and bridges, and protections against flooding. 0,12 21 2020 2025 2030 2035 2040 2045 3. Chapter Pathways 2050 for Adaptation 2055 2060 and Resilience Адаптация к Сценарий сухому/жаркому климату сухого/жаркого климата FIGURE 3.4: Spatial distribution of two key demands on water Adaptation investments in irrigated agri- resources: Irrigated croplands and HPPs culture can more than reverse the losses Total arising from climate change impacts. Crop Irrigated Area productivity stands at the nexus of efficient Square Kilometers water management and agricultural output, 0-10 representing the measure of crop production per 11-20 unit of water delivered output. It encapsulates 21-50 51-100 the interplay between crop water requirements, 101-150 water delivery, and total crop production, serving 151-200 201-250 as a comprehensive indicator of agricultural 251-350 sustainability and resource efficiency. While Hydropower adaptation in the irrigation sector would require Plants an additional investment worth US$1.6 billion until 2050 in present value, almost all to be Source: Original compilation. provided by the public sector, the returns are high. Figure 3.3 shows the projected improvements in irrigated crop productivity that adaptation investments could help achieve. In most cases, such investments could more than compensate for the projected Общаяcrop losses. площадь орошаемых земель As water demand increases, the operation of multipurpose storage reservoirs will also need to be в кв.км optimized, balancing the need for irrigation0-10 in summer and hydropower in winter. Figure 3.4 shows the 11-20 spatial distribution of two key demands on water resources: from irrigated croplands and HPPs. The seasonality 21-50 of these demands leads to a potential trade-off in the operation of multipurpose storage infrastructure—while 51-100 downstream agriculture requires reservoirs to 101-150 release water in the summer, energy demands for electric 151-200 heating in the winter would require them to release 201-250it in the winter. Climate adaptation requires optimizing the operation and management of storage infrastructure, besides investments in additional storage infrastructure 251-350 Гидро- demands. Effective water resource management on a to better balance water allocation across competing электростанции broader scale would also require improved institutional capacity, better Hydromet information systems, and greater modeling capacities for robust decision-making. These adaptation investments would represent an additional US$2 billion until 2050 — a substantial amount that will be especially necessary as storage needs shift with climate adaptation. These investments would also help tackle the degradation of watersheds and help foster groundwater recharge and mitigate evapotranspiration, with significant implications for runoff patterns and water storage. Adaptation investments would help address the risks associated with water stress and downstream flooding. Adapting to climate change in Tajikistan could help reduce the risk of compromising access to safely managed water supply and sanitation. Ensuring access to these services will be crucial for sustaining resilient and healthy populations in the face of diminished water availability and the compounding risks of poor water quality due to anthropogenic activity. This is especially true for the country’s poorest residents, who live in rural areas, where access to even basic water supply and sanitation services is limited. Climate- sensitive expansion of water supply, sanitation, and hygiene services across the population will require investments exceeding US$1 billion in present value until 2050. The private sector could contribute about 30 percent of this amount, based on experience of the International Finance Corporation (IFC) with public-private partnerships in Tajikistan’s energy sector (Khemka, Lopez, and Jensen 2023). The resulting improvements in access to water services would reduce infant mortality and child stunting and generate the compounding benefits of improved human capital and labor force productivity. 3.2. Resilient landscapes to reverse degradation, support water and food security, and sequester carbon Restoring landscapes to increase their resilience to climate change would ensure more reliable water supply for various uses and reduce the impacts of both drought and flooding. Over 50 percent 22 Country Climate and Development Report: Tajikistan of Tajikistan’s land area is currently degraded — particularly in the southwest, in Khatlon Province, and in the east, in the Murghob high mountain landscapes. Under the reference scenario, with no restoration actions, the total degraded area increases from 2.1 million to more than 2.5 million ha by 2050. The most vulnerable areas are the Vakhsh and Kofarnihon watersheds because of their high population densities and intensive agricultural activities (Figure 3.5, upper left panel). Both forest cover and pastureland are declining in Tajikistan — forest cover is currently only 3 percent, and pastureland constitutes about 80 percent of Tajikistan’s agricultural area, especially in Khatlon. Significant degradation trends also adversely affect the country’s stock of carbon (Box 3.1) Greater watershed productivity, alongside efforts to boost climate resilience and mitigate GHG emissions, requires sustainable land management (SLM) and the reversal of degradation trends. Areas presenting the highest investment opportunities for nature-based solutions (NBSs), including soil conservation in agriculture, diversification of orchards, reducing pressure from grazing, and reforestation, could be selected to accomplish the following priorities: ■ Maximize ecosystem services, including through efforts to reduce soil erosion, normalize runoff, expand vegetation cover, reduce risk of natural disasters, and enhance carbon sequestration. ■ Maximize socioeconomic benefits, at both the national and community levels, through increased efficiency of livestock and crop production supporting rural livelihoods in agriculture-intensive areas. ■ Protect health of key watersheds to secure both hydropower and water supply under a changing climate. ■ Mitigate GHG emissions (methane) from livestock with gradual introduction of zero grazing. Priority areas for restoration (Figure 3.5, right panel) are selected by overlaying areas at high risk of land degradation with areas that can expect the highest ecosystem benefits from restoration (Figure 3.5, lower left panel). The area targeted for land restoration represents two-thirds of all degraded areas, or 0.45 million ha, as reflected in Tajikistan’s Green Economy Strategy up to 2030. FIGURE 3.5: Selection of priority areas for land restoration Degradation Priority regions Hotspots for NBS and SLM Top 10% Low Top 20% Medium Top 30% High Provinces Opportunity Hotspots Top 20% Top 40% Top 60% Source: Original compilation. Note: Land degradation hotspots are shown in the upper left panel, ranging from highly degraded (in red) to less degraded (in yellow). Hotspots that could expect the most benefits from restoration are shown in the lower left panel, ranging from the most benefits (in blue) to less (in light green). Priority areas for NBSs and SLM projects are shown in the right panel, denoted by the areas in green. Очаги Приоритетные регионы деградации для внедрения ПОР и УУЗР Топ 10% Низкий Топ 20% Средний Топ 30% Высокий Регионы 23 Chapter 3. Pathways for Adaptation and Resilience СОГД BOX 3.1: Carbon stock in Tajikistan FIGURE B3.1.1: Carbon density of biomass, 2004–24 (tons/hectare) While most dense carbon ecosystems, such as Biomass Carbon Density - Tons/Ha forests, are less affected by degradation trends, 0.0 0.1 1.0 the risks are higher for mountain grasslands and 2.0 >10.0 shrublands. Natural shrublands have a carbon density of 2–10 t per ha. Grasslands have low carbon stock densities (Spawn et al. 2020), at 1–2 t per ha, and they are more affected by degradation. Degradation is particularly severe in Khatlon Province, which has the largest remnants of natural shrublands. Figure B3.1.1 presents the carbon density of biomass for 2004–24 as the variation in yearly vegetation productivity and photosynthetic activity. Tajikistan’s total carbon stock was estimated at 35.5 Mt in 2024, or 119.3 MtCO2. Source: Original compilation. Note: Pink and yellow shades indicate a decline in vegetation health. Плотность углерода биомассы - тонн/га 0.0 0.1 1.0 From 2025 to 2050, every dollar invested2.0 in land restoration would yield a return of nearly US$6 with >10.0 GHG emission reduction benefits (and nearly US$5 without such benefits), making it attractive to the private sector. 23 Land could be restored using several NBSs appropriate for Tajikistan’s biophysical, environmental, climatic, and socioeconomic conditions: conservation of agriculture and crop diversification (croplands), rotational grazing and the silvopastoral system (pastures), forest conservation and vegetation management, and reforestation (forests and shrublands). The investments prioritized for the restoration of 0.45 million ha of Tajikistan’s degraded land (US$22.6 million in PV terms) would reduce crop production costs, boost crop and livestock production (that is, milk, meat, and wool), reduce infrastructure damage, enhance ecosystem services, and curtail GHG emissions (0.36 MtCO 2eq annually in 2035–50), thus building resilience to climate change. The GHG emissions reduction potential increases over time as restoration improves the productivity of once-degraded land, with peak reduction potential expected to be more than 0.62 MtCO 2eq by 2045. 24 The average annual benefits of degraded land restoration are nearly US$133 million in PV terms over 2025–50. The net present value (NPV) of the benefits (that is, discounted benefits net of corresponding costs) for the period is over US$2.9 billion when considering GHG emissions reduction. 25 The benefit-cost ratio is highest for the restoration of pastures because of their direct contribution to producing meat, milk, and wool in Tajikistan. In addition to this priority, combining NBSs with zero grazing and manure management in other areas would mitigate methane emissions by about 30 percent. NBSs for croplands have the second-highest benefit-cost ratio. Among these, restoration of irrigated croplands yields greater benefits than rainfed croplands due to their higher yield and productivity. While economically beneficial, Tajikistan’s efforts to restore landscapes are hindered by several institutional and policy challenges. These include a disjointed land management approach, outdated planning methods, and inconsistent regulations. Tajikistan has no national policy anchoring the landscape 23 Relevant private sector actors include private farming enterprises, dekhan farms, and individual farmers. The public sector actors include state-owned farming enterprises and government agencies. The private sector could finance 84 percent of the investments, while the remaining 16 percent would be financed by the public sector. 24 The GHG emission reduction potential is adjusted for risks. One likely risk is that the rate of restoration falls behind targets, and that requisite buffer zones leave less land available for productive uses. It is assumed that the maximum attainable GHG emission reduction is reached in only 2045, 20 years after actions commence in 2025. It is also assumed that the GHG emission reduction realized each year through land restoration is 3 percent less than the maximum attainable reduction in that year. As a result, over 2025–50, the total risk-adjusted GHG emission reduction will only be 68 percent of the total reduction potential technically possible. 25 The NPV without GHG emission reduction is US$2.3 billion. 24 Country Climate and Development Report: Tajikistan restoration portfolio within a broader adaptation plan. A national strategy could help integrate landscape management and CSA across national, regional, and local levels, with private sector involvement. Sharing knowledge and successful strategies via networking platforms could be beneficial in advancing restoration technologies. Financial constraints could be mitigated by lowering the cost of capital and monetizing ecosystem benefits through payments for ecosystem services. This could be achieved by enabling mechanisms for initial investments, including a carbon credit system for restoration and conservation, coupled with a robust monitoring and evaluation system. 3.3. Achieving food security in Tajikistan with climate-smart agriculture Considering the significant uncertainty and variability of climate change projections, the precise magnitude and timing of potential future climate impacts on agriculture are difficult to anticipate, and low-regret responses are essential. While Tajikistan’s warming trend is consistent across climate scenarios, projected precipitation levels vary widely—from −4 percent under the dry/hot scenario to +19 percent under the wet/warm scenario by 2041–50. Of the 55 climate scenarios analyzed for Tajikistan, 85 percent suggest wetter conditions by the 2050s. Adaptation strategies should therefore enable coping with potential adverse conditions but be flexible to prevent overspending. Possible low-regret strategies could include changes in farming practices for conservation agriculture, use of pistachio for NBS and in silvopastoral systems, and introduction of modern irrigation practices that make agricultural production more resilient and reliable, along with financial or market-based strategies such as crop insurance or forward pricing, all of which would help mitigate risks to farmers and the overall sector under a wide range of possible climate futures. These resilient strategies could reduce the crop damage projected under future climate scenarios for both irrigated and rainfed agriculture, and GHG emissions in agriculture as well. There is also an untapped potential for using geothermal energy in agriculture for heating greenhouses during the off-season. Geothermal energy can also be harnessed to support vegetable production and space heating for poultry farming (UCA’s Mountain Societies Research Institute 2020). Replacing lost pastures with imported haylage can more than halve the impact of climate change on the most vulnerable parts of cattle and sheep production. While this de-emphasizes reliance on pasturelands, residual negative impacts on production are projected even after feed substitution. Feed substitution does not provide added resilience for milk production, which remains vulnerable to increasing temperatures. While the effects of climate shocks can be reduced with additional adaptation investments, such as the installation of heat abatement measures (for example, fans and sprinklers for dairy production), such measures would have an overall minimal impact and reduce shocks by no more than 1 percent by 2050. Interventions under the climate adaptation scenario are estimated to cost US$0.8 billion during 2024–50. At the same time, zero grazing systems could increase the efficiency of livestock and reduce overgrazing while reducing methane emissions (Section 4.5.2). CSA practices are rare in smallholder agriculture in Tajikistan. For example, farmers do not widely use drought-resilient seeds, crop production rarely utilizes practices such as water management, and measures to reduce tillage and soil disturbance are uncommon. Regarding livestock, there is limited use of improved breeding practices, feeding programs, zero grazing systems, and veterinary services. Most herds are kept by smallholder dekhan farmers, and even the few large-scale commercial farms heavily engaged in livestock farming would find it difficult to implement CSA at the farm level. These practices might prove impossible for small-scale farmers. Clustering of farmers and aggregation of commodities could lead to the development of solid and viable agribusiness value chains for domestic and export markets. Tajikistan needs to exploit CSA’s potential and mobilize the private sector to realize it. The government could invest in key public goods such as research, advisory services, infrastructure, or capacity development besides making farmers and other value chain actors aware of CSA technologies that help build resilience while simultaneously boosting productivity based on community-driven knowledge of the best traditional and innovative CSA practices. 25 Chapter 3. Pathways for Adaptation and Resilience 3.4. Building resilient infrastructure and financial reserves to manage disaster risk and preserve connectivity Over the past decade, Tajikistan has made significant efforts to support cross-sectoral and comprehensive natural disaster and emergency management. In particular, these efforts included (a) the establishment of the State Commission for Emergency Situations to lead and implement a unified state policy on the protection of the population and territories during emergencies; (b) the establishment of the National Platform for Disaster Risk Reduction, as part of the Commission, to serve as a consultative and advisory body for coordinating the activities of organizations working on disaster risk management in Tajikistan; and (c) the adoption of a resolution on establishing responsibilities under the Unified State Emergency Situations’ Prevention and Management System of the Republic of Tajikistan (that is, Unified System), with an aim of harmonizing sector-specific disaster response initiatives and actions. The government has also adopted the National Disaster Risk Reduction Strategy for 2019–34 based on the Sendai Framework. In the strategy, the government focuses on mitigating existing risks and preventing new risks through building capacity in national disaster risk management. FIGURE 3.6: Economic viability of hard (physical) Despite its efforts, the government continues mitigation interventions on the main road network to struggle with capacity constraints to adequately manage disaster risks. For instance, Asht the CoESCD is officially mandated to manage and coordinate both pre-disaster risk reduction IR19 Khudjand Konibodom Dehmoy IR14 and post-disaster response, including within RR69 Isfara Istaravshan Panjakent IR01 the framework of the Unified System. However, Ayni Karamik increasingly frequent natural disasters deplete IR13 Kizilart IR07 IR01 the scarce technical and financial resources at Karakul Labidjar the CoESCD’s disposal, limiting its utilization IR03 Dushanbe IR07 Obigarm Vakhdat Kalaikhumb IR05 Khovaling Savnob RR32 IR04 IR04 Murgab for longer-term disaster risk preparedness and RR085 Basid Vose Gulistan Kulob Rushon reduction, as resources are diverted to support Farkhor IR08 Khorog immediate emergency response needs. The most Pyanj IR06 recent such events occurred in April–May 2024. 26 Ishkashim Critical areas for improvement include investment in CoESCD’s capabilities, such as building its crises Physical resilience investments economically viable Physical resilience investments potentially economically viable management centers’ network and systems across Physical resilience investments not economically viable, alternatives such as early warning systems to be explored the country, developing information/analytical units, and continually strengthening CoESCD’s Source: Kull et al. 2021. search and rescue capacities. Tajikistan needs better analytical services for weather, climate, water, and landscape degradation Ашт data to achieve sustainable and risk-informed development, including through regional cooperation. IR19 Худжанд Канибадам Дехмой IR14 RR69 Regional cooperation is needed because hydrometeorological hazards are inherently transboundary by Истаравшан Исфара nature. Tajikistan urgently needs superior meteorological, hydrological, and climatological data to augment Пенджикент IR01 IR13 Айни Карамык early warning systems, disaster risk management, and climate change adaptation strategies, notably in IR01 IR07 Кызыларт sectors such as energy, agriculture, and water. Каракуль Лабиджар IR03 Душанбе IR07 Обигарм Вахдат Калайхумб IR05 A more resilient road network, and, thus, better regional connectivity, can be achieved by combining Ховалинг IR04 Сангвор IR04 Мургаб adequate maintenance practices and early warning systems, and prioritizing hard infrastructure RR32 RR085 Басид Восе Рушан Куляб investments in economically viable sections. According to a World Bank 2021 assessment covering 2,000 Гулистан Фархор IR08 Хорог Пяндж IR06 Ишкашим 26 Heavy rainfall triggered floods, mudflows, landslides, and rockfalls in several districts in Dushanbe, Districts of Republican Subordination, Инвестиции Khatlon, в повышение Sughd, and the физической устойчивости Gorno-Badakhshan экономически Autonomous Oblast (GBAO) provinces, damaging public infrastructure (that is, roads, bridges, целесообразны river embankments, public buildings) as well as private houses, land plots, and livestock. Five people lost their lives, while approximately Инвестиции 1,000 в повышение families to устойчивости физической were evacuated потенциально safe locations in May 2024. Situation Report: Heavy Rainfall, Flooding, Mudflows, and Landslides in экономически Tajikistan. May целесообразны 2024. REACT reports and data; Notes from Ad-Hoc Meeting of REACT. Инвестиции в повышение физической устойчивости экономически нецелесообразны, необходимо изучить альтернативные варианты, такие как системы раннего предупреждения 26 Country Climate and Development Report: Tajikistan km of the nation’s roads, making sections vulnerable to disruption (within the roads covered) more resilient would require investments of about US$400 million in the short term (within five years). Yet, according to that study, implementing the full program envisioned within that investment would not yield the economic returns to justify all the short-term investments to be undertaken. Instead, the focus should initially be on strategic corridors with high traffic volumes or greater relevance for connectivity, such as Labijar-Kalaikumb, Murghob–Karakul-Kizilart, Guliston–Pyanj, and Dehmoy-Konibodom (Figure 3.6). However, some of these roads are under high landslide risk (red areas in Figure 1.4), requiring additional investments in soil stability. For other road sections where full-scale physical interventions may not be economically viable, enhanced early warning systems can help reduce the risks posed to road users (preventing the use of sections at risk during specific periods, ideally through re-routing where possible), complemented by the establishment of an effective, rapid response and maintenance support system for the entire road network. Moreover, adequate budget will have to be allocated toward road infrastructure maintenance to prevent further deterioration of road assets, building on the Ministry of Transport’s recent efforts in establishing a road asset management system. According to an Asian Development Bank analysis (ADB 2021), just maintaining current road conditions would require about four times the current budget. Climate proofing of infrastructure also involves digital infrastructure. Climate hazards—such as extreme temperature and precipitation, floods, droughts, desertification, sea level rise, and storm surges—can severely damage digital infrastructure. For example, a flood could inundate digital equipment, server rooms, or data centers. Also, power outages due to extreme weather events could impede network connectivity and disrupt services. Climate proofing digital infrastructure means (a) investing in fiber-optic cables, which are less likely to be damaged by climate disasters than aerial cables or over-the-ground microwave links; (b) building geographical redundancy by deploying multiple terrestrial cable routes connecting two regions, in case one route is damaged during a climate event; and (c) implementing affordable satellite internet data solutions, especially for emergency response and coordination, as may be applicable. BOX 3.2: Tajikistan’s digital public infrastructure As part of its efforts to address climate-related challenges, the Tajikistan government is working toward establishing DPI, 27 which will serve as a core set of foundational digital systems and enhance the interoperability of digital systems. The DPI will be designed to interlink with crucial systems such as the Regional Crisis Management Center, health care platforms, and social protection systems. This integration can significantly improve disaster preparedness, early warning systems, and crisis communication, eventually boosting resilience to climate shocks. The DPI can also significantly reduce carbon emissions. For instance, using the DPI for common MRV systems and for interlinking carbon registries can help lower CO 2 emissions 3–4 percent below low- and middle-income countries’ average reduction targets. Source: ITU 2023. Last, but not least, investments in physical infrastructure across all sectors must go hand in hand with building the fiscal capacity and preparedness of the government and population to face growing disaster risks. The government’s fiscal space falls short of adequate resource allocation to respond to disasters and support reconstruction. With an annual funding gap of over US$400 million on average (due to earthquakes and floods), the government will have to rely on budget reallocation, borrowing, and donor aid, with some necessary post-disaster actions remaining unfunded. Implementation of the recently adopted Strategy for Financial Protection against Natural Disasters in the Republic of Tajikistan until 2037 includes establishing prearranged disaster risk finance mechanisms that will help reduce reliance on the public 27 The Government of Tajikistan is planning to create a whole-of-government framework for the digitalization of public services and deploying the underlying ‘DPI blocks’ (including an e-signature platform, payment gateway, and interoperability framework, and authentication platforms), which will lay the groundwork for making crisis management, social protection, and health care systems more resilient, while also fostering a digitally connected government. 27 Chapter 3. Pathways for Adaptation and Resilience budget and mobilize private sector capital. Financial preparedness should include better targeting and greater transparency of spending and overall public financial management for disasters. It can also focus on developing risk-sharing mechanisms, such as insurance. 3.5. Fostering cities’ climate resilience and reducing air pollution Investing in green infrastructure and air pollution reduction can boost cities’ resilience in the face of climate and environmental challenges. Effective urban planning, including green infrastructure, can reduce flood and landslide exposure. Key steps are to limit development in hazard-prone areas and utilize suitable construction techniques. Increasing greenery and public spaces can shrink urban heat islands and improve air quality. Co-benefits include reducing the prevalence of respiratory diseases and other health issues related to poor air quality (Figure 3.8), besides reducing heat stroke and heat exhaustion (Figure 3.7). Efforts to reduce GHG emissions (Chapters 4 and 5) complement steps to foster sustainable transportation and reduce fossil fuel use. Dushanbe, home to 12 percent of Tajikistan’s population, is an air pollution hotspot, especially in winter, when coal is burned for heat. Major contributors to PM2.528 pollution include windblown dust (33 percent), residential heating, power, waste, industry, and transport. Transport makes a 3–13 percent contribution as shown by different studies (World Bank 2023c). A resilient, low-carbon future for Tajikistan’s cities is possible without substantial additional financial resources, but that would require robust policy interventions and strategic investments toward greener infrastructure and services. Dushanbe’s population is projected to grow at an average annual rate of 1.13 KHUJAND percent by 2050, resulting in a total population increase of about 40 percent. Robust efforts will be needed to reduce the city’s carbon footprint and facilitate strategic densification. Efforts toward efficient resource consumption and sustainable development also boost social well-being by adding recreational spaces, fostering community interactions, and encouraging physical activity. FIGURE 3.7: Urban heat island effect FIGURE 3.8: Average PM2.5 concentration, 2021 KHUJAND DUSHANBE Tashkent DUSHANBE Dushanbe KHUJAND Land Surface Temperature (oC) Annual Average PM 2.5 µg/m3 >35 15-25 (IT-2) 5-10 (IT-4) 4 52 25-35 (IT-1) 10-15 (IT-3) <5 (AQG) Source: CARL-cities 2024. Source: Map created by Jay Turner based on data from Aaron van Donkelaar et al. (2021) (surface PM 2.5 global model V5.GL.03). In Dushanbe, NBS and strategic urban planning could significantly reduce climate-related hazards. The ��Д���Д DUSHANBE resilient cost-efficient urban pathway, which includes measures such as restricting development in hazard- prone areas and creating green buffer zones, is projected to lower floodТашкент exposure by 7.4 percent relative to no intervention. Another aim under the cost-efficient urban pathway is to reduce the population living in Д������ 28 Particulate matter that is 2.5 micrometers or smaller in diameter. Душанбе 28 Country Climate and Development Report: Tajikistan o 3 landslide-prone areas from 20 percent to 12 percent and reduce exposure to urban heat islands from 22.7 percent to 16.0 percent with urban green spaces and reflective roofs. Investment in NBSs, such as green corridors, rain gardens, and ecosystem restoration, would not only mitigate hazards but also make the city more livable. The resilient pathway for Dushanbe would leverage savings generated by compact urban development to finance the implementation of the proposed policies and investments. The incremental cost would be only US$0.1 million. Consequently, this approach helps make buildings more energy efficient, improves public transportation, aids in the progressive decarbonization of the transport and energy sectors, and promotes sustainable and resilient urban development paradigms. Tajikistan faces challenges in establishing an institutional framework that effectively integrates national urban planning guidelines into subnational programs. The Green Economy Development Strategy of the Republic of Tajikistan 2023–37 places significant emphasis on urban densification and the regulation of ‘ecosystems’ within cities and urban-type settlements through the development of affordable multistory apartment blocks. More ambitious targets for improving sustainability could include, among others, the provision of urban green areas and a transport-oriented densification strategy. The challenge lies in adequately implementing the strategy, because subnational authorities have limited authority and capacity to inform national policy makers and enact the relevant initiatives. 3.6. The likely effects of climate change on migration, fragility, and social inclusion FIGURE 3.9: Rural areas’ vulnerability to climate change will Climate change could significantly increase exacerbate in- and out-migration: 2030 hotspots ecological in-migration to Dushanbe, Kulob, and Istaravshan (bordering Uzbekistan) and out-migration from Ferghana Valley by 2030, Number of scenarios agree on population density change (2030) with significant implications for livelihoods KHUJAND KONIBODOM (CIDR, CIESIN, and World Bank 2022). In- -3 -2 -1 0 1 2 3 UROTEPPA LENNOBOD Out-Migration In-Migration and out-migration trends are due to projected changes in population, water availability, and crop productivity in rural areas. High-density DUSHANBE population centers, which are expected to KULOB experience in-migration (around Dushanbe, QURGHONTEPPA KHORUGH Kulob, and Istaravshan, on the border with Uzbekistan) and already facing food stress, could witness a surge in new residents. Out- migration is expected in rural areas (the Ferghana Valley and the areas around Bokhtar) (Figure 3.9). The simultaneous pressures from Source: Original compilation based on Clement et al. (2021). Note: Green/blue shades represent projected in-migration hotspots. in- and out-migration from agriculture hotspots Red/orange shades represent projected out-migration hotspots. Количество сценариев изменения will likely dramatically worsen food security климата, согласующихся с изменением плотности населения (2030 г.) amid the slow onset of climate change effects. ХУДЖАНД КАНИБАДАМ -3 -2 -1 0 1 2 3 Local communities in border Отток ИСТАРАВШАН districts населения are becoming increasingly Приток населения ХУДЖАНД vulnerable to climate impacts, given the lack of effective agreements regulating common resources. In turn, livelihoods are being suppressed, “We have to fight together. fueling in- and out-migration, besides the risk of tensions escalating. ДУШАНБЕ Our future is our responsibility!” In 2021, the Internal Displacement Monitoring Centre registered КУЛЯБ Youth participant, БОХТАР Climate Consultations with Youth, approximately 15,000 internal displacements due to a long-standing ХОРОГ Dushanbe, April 2024 water-related conflict between the Kyrgyz Republic and Tajikistan border communities. Similarly, anticipated in-migration into water-stressed border 29 Chapter 3. Pathways for Adaptation and Resilience areas with Uzbekistan, if left unaddressed, risks rekindling old border tensions between the two neighbors. World Bank community surveys highlight an insufficient awareness of climate threats among rural Tajiks in border districts; these residents are also the most likely to suffer the consequences (World Bank 2021b). Efforts to bridge the rural–urban divide in climate change awareness are crucial for preparing populations to address the climate risks ahead, including through CSA and ecosystem preservation (Woods, Baker, and Atkinson 2022). Adaptation policies and investments at the subnational level should target Khatlon (particularly bordering districts) and Districts of Republican Subordination given the high level of degradation and low social sustainability and inclusion seen there. The World Bank created a Social Sustainability Index to systematically capture social inclusion, social cohesion, and resilience at the national and regional levels. The index indicates that social sustainability varies geographically and intersects with climate change, particularly land degradation, and is best addressed jointly (Figure 3.10). It also confirms that communities reported higher levels of climate threat in the areas identified as priorities for landscape restoration. The analysis also suggests that Districts of Republican Subordination (including Dushanbe) and Khatlon regions include areas facing both degradation and social sustainability challenges. Investments in landscape restoration could be challenged by issues of low social sustainability if these are not adequately—and simultaneously—addressed. FIGURE 3.10: A joint assessment of social and environmental sustainability SSI Aggregated Priorities for Actions from Index Social (SSI) and Environmental Low 0.6 (NBS&SLM) Perspectives Medium 0.65 Low High 0.68 Medium Provinces High Provinces Priority Regions for NBS and SLM Low Medium High Provinces Source: Original compilation. Note: Left panel - lighter shades of blue indicate a higher Social Sustainability Index and lighter shades of red indicate greater land degradation. Right panel - lighter shades of the colors indicate the areas where a low Social Sustainability Index and land degradation overlap. Агрегированный Приоритеты действий с социальной (ИСУ) индекс ИУРО и экологической (ПОР и УУЗР) Низкий 0.6 Chapter 4. Toward a resilient and innovative low-carbon зрения >> economy точек Средний 0.65 Низкий Высокий 0.68 Средний Регионы Высокий Регионы СОГД РРП ДУШАНБЕ Приоритетные регионы для ПОР и УУЗР ГБАО Низкий ХАТЛОН Средний Высокий Регионы 30 Country Climate and Development Report: Tajikistan Chapter 4 Toward a resilient and innovative low-carbon economy Low-carbon development presents Tajikistan with an opportunity to fuel its economic growth, if supported by robust institutional and regulatory reforms. Induced green investment will boost energy security, competitiveness, innovation, and productivity, and open doors for electricity export revenues. Newly developed green industries and sectors will meanwhile create new jobs. As discussed in Chapter 2, the government has announced a new focus on a green economy to minimize GHG emissions29 by 2037. This Chapter examines the country’s decarbonization efforts overall and provides sector-specific assessments. The Low-Carbon Development Scenario outlines an ambitious, least-cost path for the energy system to achieve carbon neutrality by 2050 while making the country more energy secure. What does it take to decarbonize key sectors? Sector analyses show net zero pathways by 2050 for most sectors except agriculture and industrial process emissions (Figures 4.1 and 4.2). Decarbonization pathways are presented for energy supply and the power sector (Section 4.2), buildings, transport and industry (Section 4.3), urban areas (Section 4.4), waste (Section 4.5), and the role of digitalization in this process (Section 4.6). The Low-Carbon Development Scenario meets the NDC target by 2030 with 22 MtCO 2 eq for the entire economy, driven mostly by reductions in the energy and waste sectors. 30 Energy and waste emissions, which constituted 50 percent and 10 percent of total emissions in 2022, respectively, could reach net zero by 2050. Waste emissions are projected to decrease by 30 percent between 2020 and 2030, in line with the Global Methane Pledge. This reduction will rest on transformed waste management processes, often at a negative abatement cost. For instance, communal waste could be utilized for cement production, a major industrial emitter. In 2019, coal-fueled cement production accounted for more than half of all industrial emissions in the country. FIGURE 4.1: Historical and projected emissions by sector FIGURE 4.2: Historical and projected agricultural (excluding agriculture), 1990–2050 (MtCO 2 eq) emissions, 1990–2050 (MtCO 2 eq) 30 30 Historical Low-Emission Growth Historical Low-Emission Growth 25 25 20 20 15 15 10 10 5 5 0 0 1990 2010 2014 2020 2022 2025 2030 2035 2040 2045 2050 1990 2004 2010 2014 2020 2022 2025 2030 2035 2040 2045 Waste Industry (combustion and processes) Agriculture Excluding Livestock Livestock Transport Buildings (commercial and residential) Coal Mining Power and district heat Source: EDGAR, United Nations, and IEA for historical data; and World Bank analysis for projections. Note: Industrial emissions (in Figure 4.1) include process emissions, which are not modeled for this CCDR. Transport emissions include non-specified emissions from the EDGAR database, because those cover largely ‘other transport-related’ emissions. Building emissions are 30 30 reported starting from 2020; historical data before 2019 are statistical estimates. Power sector emissions include large-scale combined Исторические значения Рост с низким уровнем выбросов Исторические значения Рост с низким уровнем выбросов heating 25 and power systems used for district heating. 25 20 20 Over the next decades, the waste sector should show significant reductions in CO 2 and methane 15 emissions. These are offset, however, by rises in methane15emissions associated with livestock in agriculture. Agriculture sector emissions (40 percent of emissions in 2022) 10 10 are expected to increase with livestock levels, which 5 are driven by economic and population growth. 5 0 0 1990 2010 2014 2020 2022 2025 2030 2035 2040 2045 2050 1990 2004 2010 2014 2020 2022 2025 2030 2035 2040 2045 Отходы Промышленность (сжигание и технологические процессы) Сельское хозяйство, искл. животноводство Животноводство Транспорт Здания (коммерческие и жилые) 29 This Chapter Добыча covers угля CO 2 emissions inи Электроэнергетика Sections 4.2, 4.3, and централизованное 4.4 and methane emissions are addressed in Section 4.5. теплоснабжение 30 Tajikistan’s NDC targets for 2030 aim to limit GHG emissions to 60–70 percent of the 1990 levels, with a conditional target of 50–60 percent. This allows for an increase in emissions from 22.8 Mt in 2022 to 24 Mt in 2030. 32 Country Climate and Development Report: Tajikistan 4.1. Pathways to a decarbonized energy sector The Low-Carbon Development Scenario identifies a least-cost pathway for decarbonizing the country’s energy system 31 by 2050, as opposed to the least-cost Reference Scenario 32 based on existing policies and trends with no national-level emission constraints (Figure 4.3). The World Bank’s TIMES-based whole energy system modeling undertaken for this CCDR assumes cost-reflective pricing for both scenarios, which implies removing energy subsidies, 33 and both pathways meet the 2030 NDC targets. FIGURE 4.3: Projected energy system emissions by sector under the World Bank’s Reference and Low-Carbon Development Scenarios, 2019–50 (MtCO2) 11 11 10 10 9 9 8 8 7 7 MtCO 2/year MtCO 2/year 6 6 5 5 4 4 3 3 2 2 1 1 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Agriculture Power-auto Industry Energy Residential Commercial Power-utility Transport Source: Original compilation. Note: ‘Agriculture’ represents emissions related to agricultural pumping and machinery. ‘Power-utility’ represents emissions from electricity generation and ‘Power-auto’ represents own emissions of power producers not reflected in the electricity generation emissions. 11 11 10 10 Under 9 the Reference Scenario, current climate policies produce 9 a 62 percent rise in emissions by 2050 despite 8 growth in clean power. The spike is driven by industrial 8 emissions that will double, in line with growth described in Section 4.2.3, and higher emissions in 7the transport sector. Tajikistan can still meet its Млн. т CO 2/год Млн. т CO 2/год 7 20306 NDC target as emissions rise. Nevertheless, even if it6meets its NDC, the country could be harmed by climate 5 policies affecting its export markets, such as the CBAM 5 of the EU. In this scenario, growth in energy demand is met partially through fossil fuels in the industry and heating sectors, while improved emission 4 4 3 efficiency is achieved through the cost-competitive uptake of3 renewable energy (mainly hydropower), a shift 2 toward energy-efficient heating technologies (such as heat 2 pumps for heating and cooling, and natural gas), 1 1 and a limited, cost-effective uptake of EVs. 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 In the Low-Carbon Development Scenario, the country strengthens energy security and leverages its export potential through Базисный сценарий renewables providing 93 percent domestic Сценарий supply in развития низкоуглеродного of energy 2050 (as opposed to 53 percent in the Reference Сельское хозяйство Scenario). Собственные Decarbonization выбросы энергии Промышленностьfollows the milestones described in Figure 4.4, Энергетика Жилищный сектор Коммерческая including new hydro and solar capacities,Выбросы greater при выработки энергии EE, and more low-carbon Транспорт technologies. The power sector drives most reductions in the first two decades and approaches total decarbonization by 2040, except for residual emissions from combined heating and power systems and district heating. Residential buildings are expected to reach net zero by 2045. By 2050, 1 million EVs will be on the road (up from 390,000 conventional vehicles 31 The energy system includes energy carrier extraction; energy supply (including direct use of coal, oil, gas, bioenergy, and all sources of electricity); energy transformation; and energy end uses such as transport, residential and commercial buildings, and industry. 32 The Reference Scenario already involves limited structural reforms, following governance reform with institutional and regulatory changes to kick start private investments and diversify economy, making possible a new model of economic growth. Completion of the Rogun HPP complemented by reforms in macro-fiscal space and corporate governance will drive higher public investments and increased regional electricity exports. The government continues to implement electricity tariff reforms and the NDC 2030 commitments. However, this scenario has significant deficiencies in the climate risk resilience framework. 33 As part of the energy sector turnaround plan, the government has committed to achieve average cost-recovery tariff in the electricity sector by 2027. 33 Chapter 4. Toward a resilient and innovative low-carbon economy in 2019) and over 2 million households have heat pumps providing low-carbon electricity, reflecting a highly ambitious uptake of these technologies. Building renovations provide more insulation, lowering household energy consumption. The hard-to-abate industry (cement and aluminum) and freight transport and aviation are the last to decarbonize by 2050 with support from electricity, biomass and waste, hydrogen, carbon capture and storage (CCS), and other forms of carbon removal, assuming 0.3 Mt of nature-based offsets. 34 Achieving net zero energy by 2050 in the Low-Carbon Development Scenario requires the implementation of an ambitious roadmap (Figure 4.4). Targeted policies and measures (including market and regulatory measures) point private capital toward investments in low-carbon technologies, ensuring that households, services, and industries benefit from the transition. Decarbonization of industry, transport, and buildings is the most challenging. For example, EV numbers would need to reach 70,000 by 2030, requiring most new car registrations to be for EVs, which is a challenging trajectory but possible, given that Tajikistan has seen a significant increase in EV penetration in 2024, with more than 25 percent of imported vehicles being electric in the first half of 2024 (NIAT 2024). Additionally, about 5 percent of the old residential building stock would need to be renovated, insulated, and equipped with sustainable heating sources each year, starting in 2025. FIGURE 4.4: Emission trajectories per sector with corresponding key milestones towards a Net Zero 2050, 2025–50 (MtCO 2) 9 Fuel economy standards 8 70,000 EVs by 2030 Green H 2 for long Full electrification distance transport of road transport: 7 from 2040 -45 1m personal, 90k light trucks 6 New building codes introduced Heat pump share in 5 residential EE/Renovations: Buildings reach near buildings: 60% MtCO 2 5% of (econ. viable) stock per year Net Zero in 2040 4 Ban on new coal boilers 2m households with heat pumps Coal to gas switching increases gas use in industry until 2040 3 63% increase in Waste use in cement Coal CHP phased new buildings till 2 out by 2035 2050 using new building codes No new coal plants 5GW new hydro by 2035 Green hydrogen 1 from 2040 More ambitious Solar capacity of 2 2030 NDC target GW in 2030 0 2025 2030 2035 2040 2045 2050 Power / Cross-Cutting Industry Buildings Transport Source: Original compilation. Note: Industrial emissions include emissions from fuel combustion and exclude process emissions. Power sector emissions include large- scale9 combined heating and power for district heating. CCS = Carbon capture and storage; CHP = Combined heat and power; DAC = Direct Стандарты экономии топлива air capture; EV = Electric vehicle; H2 = Hydrogen. Полная электрификация 8 70,000 ЭМ к 2030 г. автомобильного Зеленый водород транспорта: Costs 7 and benefits associated with Low-Carbon Development. The для scenario’s дальних net zero 2050 energy 1 млн. единиц перевозок личных авто, pathway carries a US$1 billion additional investment price tag (0.9 percent by 2030 and 90 of GDP) гг. с 2040-2045 an additional тыс. легких Мт CO 2 -эквивалента грузовиков US$8.7 6 billion between 2031 and 2050 (2.7 percent of GDP), in contrast with the Reference case (see Table Внедрение новых СНИП-ов Доля использования 6.1). These investments come with benefits, including improved energy security (reducing seasonal winter тепловых насосов 5 ЭЭ/Реновация: В 2040 г. здания достигнут в жилых домах: 60% outages and positive energy trade balance) 5% (экономически пригодного) фонда в год and new electricity exports of уровня выбросов, around US$16.7 billion (discounted) близкого к чистому нулю between 4 2030 and 2050. Запрет на новые угольные котельные 2 млн. ДХ с тепловыми насосами The3total discounted Переход investment с угля на газ увеличивает need газа использование in the Low-Carbon в промышленности Development до 2040 г. Scenario is US$88.6 billion. The Поэтапный вывод Увеличение кол-ва majority of investments needs Использование are отходов в in the power and hydrogen sector (36 percent) for new hydro, угольных ТЭЦ из новых solar, and зданий на 2 цементной промышленности 63% до 2050 г. gas-powered combined heating and power, as кwell эксплуатации as battery storage and transmission. The 2035 г. renovation of с использованием Никаких новых угольных ТЭЦ 5 ГВт новых ГЭС к 2035 г. новых СНИП-ов Зеленый водород 1 Более высокие Солнечная энергетика с 2040 г. целевые показатели мощностью по ОНУВ на 2030 г. 2 ГВт в 2030 г. 34 0 instead of zero, the emissions target is 0.3 Mt in 2050. So 2025 2030 2035 2040 2045 2050 Энергетика / смежные отрасли Промышленность Здания Транспорт 34 Country Climate and Development Report: Tajikistan residential and commercial buildings would make up another 36 percent, including appliance upgrades, low- pollution boilers, solar heat, and heat pumps. Investments in the transport sector (19 percent) would include a shift to buses for public transport and a shift to electric trucks for freight. An additional US$1.3 billion investment in rail (undiscounted, not modeled) is required to shift more road trucking to railroads. The majority of the needed investments in power, buildings, and industry can come from the private sector, assuming the right policy signals are in place. However, in the transport sector most of the investments are expected to be publicly funded. Consumer vehicles (new cars) are not included in investments (as they are counted as consumption in national accounts) and represent an additional US$11 billion in consumer spending between 2025 and 2050, which could be largely funded by the private sector apart from any purchase incentives introduced by the government. 4.2. Decarbonizing the energy supply Electrification is key to decarbonization, as the share of clean electricity in final energy consumption (especially for heating, transport, and some processes) rises to 64 percent in 2050, up from 30 percent in 2022 (Figure 4.5). The phase-down of coal is critical to the decarbonization pathway. In 2022, domestic coal accounted for more than half (52 percent) of Tajikistan’s energy-related CO 2 emissions (IEA 2024). Coal is mainly used in industry and heating. While coal is phased out in the Low-Carbon Development Scenario, it more than doubles in the least-cost Reference Scenario, where emission constraints do not limit coal consumption. High transport costs hinder both regional and global demand for coal. A scale-up for coal mining is therefore unlikely. Although a country proposal adopted in 2019 aimed to increase coal production, the United Nations Economic Commission for Europe responded with a study advising against this (‘In-Depth Analysis of Coal Demand Dynamics in Tajikistan until 2050’ [UNECE 2022]). Countries in the region produce and export their own coal, as does Xinjiang, the closest Chinese province. Uzbekistan and Pakistan are two nearby potential buyers. Still, the costs of transporting Tajik coal are much higher than for seaborne coal (to Pakistan) or by railway from Kazakhstan to Uzbekistan. During previous energy crises, Tajikistan exported coal mostly because of extraordinarily high prices (UNECE 2022). But prices on the world market need to be exceedingly high for the industry to be profitable. With much of the world reducing the use of coal, there is limited scope for high coal prices in most global and regional decarbonization scenarios. FIGURE 4.5: Projected final energy consumption by fuel under the World Bank’s Reference and Low-Carbon Development scenarios, by sector, 2019–50 (PJ) 300 300 250 250 200 200 150 150 PJ PJ 100 100 50 50 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Biomass Coal Gas Electricity District heat Hydrogen Oil Solar Source: Original analysis. Note: Renewables for power (hydro, solar) are included in grid electricity. 300 300 250 250 35 Chapter 4. Toward a resilient and innovative low-carbon economy 200 200 Дж Дж 150 150 In 2022, oil comprised more than 40 percent of energy-related CO 2 emissions, mainly in transport. With economic growth, oil-fueled transport has doubled in less than a decade and is expected to accelerate. Sustainable transport options and low-carbon sector growth must become a priority. This trend continues in the Reference Scenarios, but oil use falls in a Low-Carbon Development pathway. Biomass, a carbon-neutral source of energy, supplies much of the country’s energy for rural heating and cooking. However, the low-efficiency fuel is harvested with unsustainable practices and produces high particulate matter when burned. High-efficiency sustainable heating solutions envisioned in both the Reference and Low-Carbon Development Scenarios are enabled by GDP growth. The Low-Carbon Development pathway reserves some efficient and sustainable use of biomass in rural heating and in industry with CCS, even by 2050. Natural gas represented about 6 percent of CO 2 emissions in 2022—a percentage projected to rise in both scenarios—providing an important source of industrial growth, as Tajikistan could regain access to competitive natural gas imports via Uzbekistan (see Section 4.2.1). 4.2.1. Scaling up clean power to improve energy security and fuel economic growth The Low-Carbon Development Scenario brings major new demand for electricity. For example, electricity generation will grow fivefold between 2019 and 2050 as transport, heating, and industry electrify. Electricity demand more than doubles in the Reference Scenario as growth (economic and population) amplifies demand among the main users: buildings (58 percent in 2022), industry (27 percent), and agriculture (15 percent). Tajikistan’s electricity is clean. Its hydro resources generated 90 percent of its electricity in 2022. But 9 percent of Tajikistan’s power generation was fueled by highly polluting coal through Dushanbe’s combined heating and power; only 1 percent of power is fueled by natural gas. In both scenarios, hydro meets most of the rising demand by 2035, with all capacity additions of around 11.5 GW in the Low-Carbon Development case and 5.5 GW in the Reference Scenario. The Reference Scenario relies on the expected completion of the Rogun HPP and modernization of existing HPPs, with an addition/modernization of natural gas-powered combined heating and power systems (less than 1 GW) and about 1–2 GW solar by 2030. In the Low-Carbon Development pathway, the extra demand requires new and additional hydro development (an extra 0.8 GW by 2035) and solar-based power generation (additional 1 GW by 2030), in the absence of cost-effective wind and biomass resources for power generation (Figure 4.6). Beyond flexible hydro generation, natural gas plays an important seasonal balancing role in power and heating as natural gas volumes increase by 2030–35. FIGURE 4.6: Projected power generation, by technology, under the World Bank’s Reference and Low-Carbon Development Scenarios, 2019–50 (TWh) 90 90 80 80 70 70 60 60 50 50 TWh TWh 40 40 30 30 20 20 10 10 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Biomass Coal Gas Hydro Solar Source: Original analysis. 90 its dilapidated grid, Tajikistan requires investment With 90 in its transmission and distribution networks prevent winter shortages for an estimated 1 million people to 80 80 who lack stable power supply (IEA 2022a). 70 70 60 60 50 36 50 ТВтч ТВтч Country Climate and Development Report: Tajikistan 40 40 30 30 In view of looming water shortages associated with climate change, the country will want to strengthen operations for reservoirs, improve management strategies, and bolster efficiency across sectors. Frequent droughts and variable precipitation have recently constrained hydropower generation. The Nurek reservoir generates electricity and regulates water flows for agricultural use in Tajikistan, Uzbekistan, and Turkmenistan, irrigating 70,000 ha in Dangara and the Vakhsh valleys. Water levels at the Nurek HPP hit new lows, causing stringent power rationing from September 2023 to April 2024. Adaptive water allocations and reservoir operations are essential for balancing the demands for energy, agriculture, and water supply. More efficient downstream irrigation should conserve water and help balance the needs of agriculture with power generation. However, these require investments in conveyance, storage infrastructure, and hydrometeorological systems. The rehabilitation of the Nurek HPP, now under way, will not only expand capacity but also extend its economic life by over 30 years. Because climate change brings higher temperatures, water availability from glacier melt will rise through 2060–80. Meanwhile, snowfall will shift to rainfall, meaning there will be less snow storage and more runoff from rainfall. The Rogun HPP will therefore seek to offset the loss of snowpack by capturing runoff from rainfall and early snowmelt, supporting clean energy production despite these changes in hydrology. Aligning with regional water-sharing agreements signed by the International Centre for Water Cooperation, the Rogun HPP reservoir is expected to reach a full capacity of 3.78 GW by 2034. With a storage capacity of 13.3 billion cubic meters (bcm), the reservoir should boost clean energy exports and provide resilience for agricultural users against drought and climate variability. Between 2030 and 2050, decarbonization should bring electricity export revenues of US$16.7 billion (discounted) and lower gas imports, in comparison with the Reference Scenario (Figure 4.7). Higher electricity trade is enabled by additional hydro and/or solar development in the Low-Carbon Development pathway, from 2035 onward. The development of market platforms and further interconnectivity to trade electricity are essential steps to reap the potential benefits of such exports. FIGURE 4.7: Projected gas and electricity net imports (+) and net exports (−) under the Reference and Low-Carbon Development Scenarios, 2019–50 (PJ) 40 40 20 20 0 0 -20 -20 -40 -40 PJ PJ -60 -60 -80 -80 -100 -100 -120 -120 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Gas Electricity Central Asia Electricity Other Source: Original compilation. Note: ‘Electricity Central Asia’ is the electricity traded among countries in Central Asia: Uzbekistan, Kazakhstan, and the Kyrgyz Republic. ‘Electricity Other’ is the electricity traded with Afghanistan (for example, through CASA 1000). Gas is sourced via Uzbekistan. 40 40 20 20 4.2.2. 0 The roles of gas and hydrogen in decarbonization 0 Scaling -20 up natural gas supply is essential for energy -20security during seasonal shortfalls in the short term. Historically, usage peaked at 1.7 bcm and is expected to exceed 1 bcm in the next decade (Figure 4.8). ПДж ПДж -40 -40 Demand in the country is met by gas imports from Uzbekistan, made possible by Uzbeki interest in offsetting -60 -60 a tightening gas balance and becoming a regional trade hub for gas. Total imports remain within the existing -80 -80 regional gas cross-border interconnection capacity throughout the forecast period. This means that even in -100 -100 the Reference Scenario, no additional new import infrastructure is needed to meet projected demand. -120 -120 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 37 Базисный сценарий Сценарий низкоуглеродного развития Chapter 4. Toward a resilient and innovative low-carbon economy Газ Электроэнергия – Центральная Азии Электроэнергия – Прочее FIGURE 4.8: Natural gas consumption by scenarios Under the Low-Carbon Development Scenario, 1.8 natural gas use tops out at 0.9 bcm in 2040; 1.6 by 2050 consumption falls to 0.2 bcm. 1.4 Natural gas almost vanishes from the power system by 2045. Industry becomes the 1.2 biggest gas-consuming sector throughout 1.0 Bcm the 2030–50 period under the Low-Carbon 0.8 Development Scenario, driven in part by 0.6 coal-to-gas substitution in energy-intensive 0.4 industries (see Figure 4.13 under Section 4.3.3 0.2 Sustainable industry). Industrial users account 0 for more than 95 percent of the country’s 1990 2000 2005 2020 2025 2030 2035 2040 2045 2050 1995 2010 2015 remaining gas demand by 2045. With the uptake of green hydrogen and electrification Historical Reference Low-Carbon Development in the industrial sector, demand could drop to Source: Original compilation. near zero between 2045 and 2050. Under the Low-Carbon Development Scenario, green hydrogen comes online for Tajikistan’s energy system 1.8 in 2035. It will play a meaningful role in the decarbonization of hard-to-abate industrial sectors by 2050, 1.6 when total low-carbon hydrogen supply is projected to reach 320,000 t. This material volume will sufficient to boost the share of green hydrogen to around 17 percent in total final energy consumption be 1.4 Млрд. куб. м. 2050 (and to 45 percent in final consumption in industry). All green hydrogen production is expected to by 1.2 consumed locally, leaving no surplus for exports in the 2050 time frame. Additional hydrogen demand be 1.0 could 0.8 come from transport decarbonization, including aviation and public transport (for example, buses) and trucking, but would most likely require major public support (such as with the EU’s emissions trading 0.6 system, aviation, and rural hydrogen bus incentives). The government has a strong ambition to develop green 0.4 hydrogen, 35 but this has yet to translate into projects, plans, and policies. As of 2024, low-carbon hydrogen 0.2 is absent from the energy sector. In the Reference Scenario, low-carbon hydrogen is not cost-effective, as 0 there are no economic signals such as carbon prices. 1990 2000 2005 2020 2025 2030 2035 2040 1995 2045 2050 2010 2015 Исторические значенияenergy 4.3. Decarbonizing demand: Базисный сценарий Buildings, transport, and industry Низкоуглеродное развитие Total final energy consumption grew 58 percent over the past decade, while energy intensity is about 10 percent higher than the world average. 36 The country could improve its EE. Between 2019 and 2050, final energy demand is projected to grow by 48 percent in the Reference Scenario, driven by strong population and GDP figures. But demand grows only by 26 percent in the Low- Carbon Development pathway as EE and technology switching result in energy savings. EE measures and technology shifts, including electrification (particularly in buildings and transport), enable a 15 percent reduction of demand by 2050 in the Low-Carbon Development Scenario versus the Reference Scenario. This demonstrates the significant potential of sustainable practices to curb energy consumption while still supporting economic growth. The reduction or phasing out of electricity and district heating subsidies is a prerequisite for a least- cost energy transition and is especially important for the sustainable heating transition. Customers will be deterred from switching to more sustainable appliances and heating options if energy prices are artificially low and prices do not reflect the real cost of energy. Instead of blanket subsidies, vulnerable consumers should be able to access targeted support, while the building renovation and upgrade program (Sections 4.3.1 and 4.3.2) could further reduce heating and cooling energy needs by up to 50 percent for some households. The government has committed to achieving a cost-recovery tariff in the electricity sector by 2027. 35 The government’s ambition is to produce 1 Mt of low-carbon hydrogen by 2040 and 500,000 t of green hydrogen by 2030. 36 Tajikistan’s energy intensity of GDP has fallen 63 percent since 2000 (IEA 2024). 38 Country Climate and Development Report: Tajikistan 4.3.1. Sustainable heating Building sector decarbonization in the Low-Carbon Development Scenario accelerates after 2035 as electricity displaces gas and coal (Figure 4.9). Commercial and residential buildings reach zero emissions by 2040 and 2050, respectively. The share of grid electricity reaches 72 percent by 2050 in the Low-Carbon Development Scenario, while biomass maintains just over 16 percent of the share in the residential buildings sector through the use of more efficient biomass heating and cooking systems. In the Reference Scenario, by contrast, commercial and residential building emissions climb by 69 percent and 52 percent, respectively, by 2050 compared to 2019. The contribution of district heating, discussed below, remains relatively limited in both scenarios, reaching 8 percent of total final consumption in 2050 in the Low-Carbon Development Scenario and 6 percent in the Reference Scenario. FIGURE 4.9: Projected total final energy consumption in the building sector under the Reference and Low-Carbon Development scenarios, by fuel type, 2019–50 120 120 100 100 80 80 60 60 PJ 40 PJ 40 20 20 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Biomass Coal Gas Electricity District heat Solar Source: Original compilation. The 120 Low-Carbon Development Scenario calls for annual 120 renovation rates to triple by 2050, providing better insulation and 2 million heat pumps for nearly 60 percent of households. Compare this to less 100 100 than 1 million heat pumps in the Reference Scenario (Figure 4.10). Poor building quality is compounded 80 by 80 reliance on biomass and coal for residential heating, particularly in rural areas. As a result, the country ПДж ПДж has60high underheating rates and major health impacts. Decarbonizing 60 this sector will be difficult, as energy intensity 40 in Tajik buildings ranges from 180–250 kWh per m² 40 in urban, multiapartment buildings to over 300 kWh20 per m² in rural, single-family homes, where 70 percent 20 of households rely on biomass (54 percent) and coal (9 percent) as of 2019. Urban district heating offers limited coverage, poor quality, and low tariffs 0 0 that discourage 2019 efficiency 2025 2030 improvements. 2035 2040 2045With a paltry 3,000 2050 connections, 2019 2025 the sector 2030 2035 has been 2040 2045plagued 2050 by chronic underinvestment since the Базисный сценарий Soviet era. Сценарий низкоуглеродного развития Investments in grid electricity, heat pumps, and FIGURE 4.10: Household heat pumps under the Биомасса Уголь Газ Электроэнергия Централизованное теплоснабжение Солнечная энергия geothermal are crucial for reducing emissions, Reference and Low-Carbon Development scenarios, as district heating plays a marginal role in the by number of households, 2019–50 decarbonization of heating (Box 4.1). 4.0 3.5 In addition to building renovation, the country 3.0 will have to implement stringent codes to 2.5 Millions achieve net or nearly net zero and climate 2.0 resilience in new buildings. Given strong 1.5 forecasts for population, GDP, and housing growth, the new building codes and standards 1.0 should limit energy demand and emissions in the 0.5 sector. Given the country’s vulnerability to natural 0 2019 2025 2030 2035 2040 2045 2050 disasters (principally earthquakes and drought), Households Heat Pumps - Reference Scenario codes and standards that make new buildings Heat Pumps - Low-Carbon Development Scenario more resilient are important in the Low-Carbon Development Scenario. Source: Original compilation. 4,0 39 3,5 Chapter 4. Toward a resilient and innovative low-carbon economy 3,0 2,5 BOX 4.1: Scaling up the use of low-emission heat pumps is essential for ensuring secure and sustainable heating and cooling for Tajikistan’s vulnerable populations Despite Tajikistan’s geothermal potential, the technology is yet to be applied. It is estimated that the annual capacity of geothermal resources is 151 million kWh, which corresponds to a total capacity of 17.2 MW (Ilolov et al. 2020) . In 2021, the National Academy of Sciences of Tajikistan’s Center for Innovative Development of Science and New Technologies partnered with Hokkaido University and Akita University to advance geothermal technology by installing high-efficiency ground-source heat pump (GHP) systems, starting with pilot school or hospital projects in Dushanbe.37 Higher up-front costs for more efficient heat pumps are offset by energy savings and lower heating costs (Figure B4.1.1). The pumps can extract heat from the air or ground. The Low-Carbon Development Scenario features both ground and air technologies. Selecting the right technology requires careful consideration for each building, as performance and return on investment vary by climate, site-specific conditions, building specifics, operation, and electricity costs. Geothermal/ground-source heat pumps have a high-capacity factor, lower environmental footprint, require less maintenance, and are generally quieter and longer lasting than air-source systems. They also perform better in extreme climates as they are not directly affected by air temperature. Unlike other renewables-based energy sources, geothermal heating and cooling are not intermittent, so households can plan their energy costs over the long term. Barriers to the widespread adoption of GHPs are high initial costs and space requirements for installing heat exchangers. However, these technologies are developing fast, following a rapid rise in demand, with Europe seeing a 40 percent growth in heat pump installations through 2022 (versus 11 percent globally) (IEA 2023). New approaches are enabling heat pumps to reach higher temperatures, helping de-carbonize manufacturing by supplying power to generate steam used in food processing. In total, heat pumps have the potential to cut global emissions by 500 Mt in 2030. This would require the total number of heat pumps installed to reach about 600 million by the end of the decade (IEA 2022a). FIGURE B4.1.1: Comparison of levelized cost of heat and discounted cash flows for air- and ground-source heat pumps 140 60000 120 50000 100 40000 USD/MWh 80 USD 30000 60 20000 40 20 10000 0 0 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 2061 2063 2065 2067 2069 Geothermal Heat Pump Air Source Heat Pump Levelized cost of heat Discounted cash flows CAPEX OPEX Geothermal Heat Pump Air Source Heat Pump Source: Original analysis. Note: 140The cash flow calculation assumes the replacement of60000the entire heating system at the end of its lifetime, except for GHPs. For GHPs, only the compressor unit is replaced, while the underground heat exchanger remains operational, reflecting 120 50000 only 60 percent of the total investment cost per compressor lifecycle. The cost of the compressor is assumed to be 40 Долл. США/МВтч 100 of the total initial investment for GHPs. The levelized cost of hydrogen is calculated as the ratio of the cumulative percent 40000 Долл. США discounted 80 cash flow over the lifetime of the technology to the total amount of heat supplied by the system over its lifetime. 30000 60 Compared with deep geothermal, shallow GHPs have lower 20000 up-front costs and pose fewer environmental risks 40 (such as seismic disturbances). With incentives that cover up-front costs, these heat pumps replace biomass or 20 10000 coal-based heating for rural Tajik households whose electricity and natural gas access is limited in the winter. They also 0 aid cooling during summer months, curbing both particulate 0 matter pollution and CO 2 levels. Preliminary World 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 2061 2063 2065 2067 2069 Геотермальный Воздушный Bank estimates насос that thousands suggest тепловой of housing units could be connected to GHPs in the near term. Because тепловой насос installations are labor intensive, the geothermal sector promises creation of new small and medium enterprises (SMEs) Нормированная стоимость тепла Дисконтированные потоки денежных средств and jobs locally. The estimates show that each megawatt installed translates into 34 jobs—much higher than the 19 Капитальные расходы Операционные расходы Геотермальный тепловой насос Воздушный тепловой насос jobs created for wind power and 12 for solar photovoltaics. Economy-wide effects are also promising. According to a US Department of Energy (Liu et al. 2023) analysis, combining GHPs with energy-efficient building improvements can help decarbonize heating and cooling in US buildings and avoid 24,500 miles of new US transmission lines by 2050. 37 https://asiaplustj.info/en/news/tajikistan/society/20220622/japan-contributes-to-use-of-geothermal-heat-in-tajikistan. 40 Country Climate and Development Report: Tajikistan 4.3.2. Sustainable transport Oil used for transport accounts for more than 40 percent of energy-related emissions. But a multipronged approach envisioned in the Low-Carbon Development Scenario could help decarbonize the transport sector. First is a focus on demand management and more sustainable transport modes to complement medium- and long-term plans for more energy-efficient vehicles running on cleaner fuels. Altogether, these yield a 90 percent reduction in transport-related GHG emissions by 2050 compared to 2019. By building on the presently high share of public transport (mostly minibuses), Tajikistan could pursue demand management measures and investments in collective and active mobility (walking and cycling) to curb the use of private vehicles. Rising income levels will drive continued growth in private vehicle ownership and use, but a range of policy measures could consolidate the country’s gains in sustainable transport and constrain the growth of the private vehicle fleet. Such measures may include (a) extending and improving the quality of public transport services, shifting from minibuses to higher-capacity vehicles with lower carbon intensity per passenger transported along high-demand corridors; (b) developing safe and attractive infrastructure for active mobility (walking and cycling); and (c) introducing parking management strategies (including pricing) and, eventually, congestion charging that could help fund the measures above. Capturing a share of freight transport on railways can yield environmental benefits, but only when strategic investments are supported by institutional and corporate reforms in the sector. Tajikistan’s terrain is dominated by mountains (93 percent), and its railway network is fragmented, covering only the western portions of the country. So, road transport (trucking) is the dominant mode for moving domestic freight. Moreover, the rail network is mostly single track, not electrified, and in poor condition owing to lack of maintenance, severely affecting safety and limiting operational speeds. Freight volumes on roads grew by 40 percent between 2014 and 2018, while rail saw a 21 percent decline during the same period and now accounts for only around 7 percent of freight traffic (in ton-kilometer). Reversing this trend will require not only infrastructure investments but also reforms in institutional and corporate governance toward a higher commercial orientation, increasing efficiency to attract and retain customers. The Low-Carbon Development Scenario assumes that rail could gradually reach a 15 percent modal share for freight transport by 2050, which is close to the market share observed in 2012. Emissions plunge with the electrification of transport—see the Low-Carbon Development Scenario— although oil maintains a toehold in the sector’s total final consumption in 2050, with residual emissions. By 2040, grid electricity accounts for almost half the transport sector’s total final consumption, reaching nearly 80 percent by 2050, while shrinking the share of oil (Figure 4.11). FIGURE 4.11: Projected total final energy consumption in the transport sector under the Reference and Low-Carbon Development Scenarios, by fuel type, 2019–50 70 70 60 60 50 50 40 40 PJ PJ 30 30 20 20 10 10 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Coal Electricity Oil Coal Gas Electricity Hydrogen Oil Source: Original analysis. In the Low-Carbon Development Scenario, EVs see strong growth in both scenarios but achieve saturation of the vehicle fleet, reaching 70 percent of the fleet by 2040 and close to 100 percent by 2050 (Figure 4.12). In the Low-Carbon Development Scenario, better urban planning, improved public transport, 70 70 60 60 50 41 50 Chapter 4. Toward a resilient and innovative low-carbon economy 40 40 ПДж ПДж 30 30 and rail infrastructure reforms, in addition to modal shifts, should cause the total number of vehicles to fall by nearly 10 percent by 2050. Ensuring a greater uptake of EVs requires multiple motorization management policies . The import ban on vehicles produced before 2005 should progress toward stricter regulatory requirements based on emission standards, covering both passenger cars and commercial vehicles. Such regulatory requirements should aim to cover not only local pollutants (for example, minimum EURO 6 standards) but also GHG emissions by establishing standards of CO 2 emissions intensity (also for second-hand vehicle imports). 38 Scrappage programs can incentivize fleetwide transformations, but programs should seek to avoid excessive draws on public funds and pair programs with, for example, differentiated tax schemes for vehicle registration (or bonus/malus schemes) and expanded road pricing (tolling). Moreover, cities have a critical role in incentivizing the early electrification of highly utilized vehicles and public fleets (for which the lower operational costs of EVs compared with internal combustion engines more easily offset the EVs’ higher up-front costs), building on ongoing initiatives such as the electric taxi trials in Dushanbe or the program to accelerate the transition to electric buses in Tajikistan supported by the United Nations Economic and Social Commission for Asia and the Pacific. FIGURE 4.12: Projected share of electric vehicles, by number of vehicles, 2019–50 1.2 1.2 1.0 1.0 0.8 0.8 Million cars Million cars 0.6 0.6 0.4 0.4 0.2 0.2 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Total Cars Total EV Source: Original analysis. 4.3.3. Sustainable industry 1,2 The industrial sector is responsible for one-quarter of1,2Tajikistan’s emissions and 20 percent of total energy 1,0 use, and its energy demand is expected to grow on average by 2.4 percent per year until 2050, 1,0 fueled by future economic growth. The decarbonization of the sector will require investments in carbon Миллион автомобилей Миллион автомобилей capture 0,8 and hydrogen, as well as a temporary expansion of gas as a transition fuel. Due to limits in the 0,8 electrification of certain processes in heavy industry, the industrial sector will continue to emit up to 1.5 0,6 0,6 MtCO 2 per year by 2045 (73 percent of energy-related emissions) even in the Low-Carbon Development Scenario, 0,4 before reducing its emissions to near zero by 2050. 0,4 Coal and oil, which comprise half of industrial energy use, will need to be phased out by 2040. First, both fossil fuels can be replaced by an increasing 0,2 of natural gas, which grows from 11 percent of total share final energy consumption to 39 percent by 2040. 0,2 Between 2040 and 2050, electricity and hydrogen grow from 36 percent and 1 percent of total final energy 0 consumption to 44 percent and 45 percent, respectively. 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Базисный сценарий Сценарий низкоуглеродного развития 38 CO2 emission standards should Всего автомобилей aimЭМ Всего for the gradual phaseout of internal combustion engine vehicles for new vehicles and should also cover second-hand vehicle imports by applying specific targets on the average of CO2 emissions per km of second-hand vehicles imported on a given year and complemented with a charges and credits scheme. Alternatively, this can take the form of upper energy use or CO2 emission thresholds per km, differentiated based on weight or footprint. Implementing upper energy use or CO2 emission thresholds per km requires a simpler accounting and enforcement process compared to introducing specific targets on the average of CO2 emissions per km for second-hand vehicles, as it avoids the need to develop their own accounting of averages by the regulated importers and the absence of a charge and/or credit scheme. 42 Country Climate and Development Report: Tajikistan Coal use remains strong in the Reference Scenario, where its share of total final energy consumption increases from 32 percent in 2019 to 40 percent in 2050. In absolute terms, coal usage almost triples in the Reference Scenario between 2019 and 2050 (Figure 4.13). FIGURE 4.13: Projected total final energy consumption in the industry sector under the Reference and Low-Carbon Development Scenarios, by fuel type, 2019–50 80 80 70 70 60 60 50 50 40 40 PJ PJ 30 30 20 20 10 10 0 0 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 Reference Scenario Low-Carbon Development Scenario Biomass Coal Gas Electricity District heat Hydrogen Oil Source: Original analysis. Shifts in technology and fuel source enable decarbonization while providing greater energy security, efficiency, 80 and productivity for Tajik industry. Decarbonization 80 pathways are diverse across key industries, including cement (54 percent of industrial emissions in 2019), aluminum (13 percent), and chemicals (7 70 70 percent). 60 60 ■ The cement industry, which remains coal dependent and lacks best practices, is expected to grow 50 50 to 13 Mt per year by 2050, from 4.5–5.0 Mt per year in 2022. The 15–20 active cement plants and ПДж ПДж 40 40 EU, which uses 33 percent alternative fuels. In the four major companies rely entirely on coal, unlike the 30the Low-Carbon Development Scenario, gas and biomass 30 will replace coal in this sector, growing to 58 20 percent and 16 percent of (total energy consumption) 20 by 2040, and eventually by green hydrogen (or rely on carbon capture) after 2040. Biomass sources are limited in Tajikistan because of deforestation 10 10 and competition with other uses, making them costly (US$6–US$8 per gigajoule). Resources such as 0tires, municipal solid waste, and chemical waste will increase 0 with GDP growth, offering a lower-cost 2019 2025 2030 2035 2040 2045 2050 2019 2025 2030 2035 2040 2045 2050 alternative for cement manufacturing. Базисный сценарий Сценарий низкоуглеродного развития ■ Aluminum, a highly energy-intensive industry, is expected to grow due to global demand and would Биомасса Уголь Газ Электроэнергия Централизованное теплоснабжение Водород Нефть benefit from full decarbonization. Currently, 72 percent of the sector’s total energy consumption is from clean electricity, and in the Low-Carbon Development Scenario gas can be replaced by hydrogen starting in 2045. Tajik aluminum has a low-carbon footprint, giving it a competitive edge in the EU market starting in 2027 with the CBAM. But high transport costs to major markets such as China and the EU could make it less competitive. ■ Production of the chemical sector, primarily the fertilizer industry, is expected to grow driven by agricultural demand but the fertilizer industry is reliant on natural gas imports through Uzbekistan (natural gas is a key input for fertilizer production). The Tajik Azot urea plant reopened in April 2023. Local production of nitrogen fertilizer would require 0.04–0.1 bcm of natural gas per year, with a possible transition to green ammonia after 2035 in the Low-Carbon Development Scenario. In the medium term, a secure supply of natural gas from Uzbekistan is crucial. Wintertime industrial activities are harmed by seasonal shortages of hydropower and gas, serious enough to suspend production facilities, including fertilizer factories. 43 Chapter 4. Toward a resilient and innovative low-carbon economy KHUJ 4.4. Compact and sustainable urban growth Cities are pivotal for the climate response. They can achieve up to 40 percent of emission reductions needed to limit global warming to 1.5°C. In Tajikistan, urban areas account for approximately 62 percent of direct CO2 emissions, primarily from energy use in buildings, mining, and waste (Figure 4.14). As urban populations are projected to increase from 25 percent in 2020 to 43 percent of total country populations by 2050, the share and quantity of urban emissions will rise, making urban areas central to national climate change mitigation efforts. DU Urgent action is needed to shift urban growth FIGURE 4.14: Spatial distribution of GHG emissions to a low-carbon trajectory before carbon- intensive patterns are locked in for generations. KHUJAND Between 1990 and 2020, Dushanbe and Khujand expanded by 25.6 percent. Khujand showed unsustainable sprawl and lower density, while Dushanbe expanded in sustainable ways with DUSHANBE greater density. Compact and coordinated urban growth reduces transport-related emissions and promotes land use efficiency. Tajikistan’s cities in KHUJ 2050 should emulate compact, transit-oriented cities such as Copenhagen, which emit far less CO 2 from transport, and not the sprawling, car- dependent megalopolises such as Houston. Urban areas must lead in climate change GHG Emissions Released in 2015 (Tonnes of CO 2 eq) mitigation, reducing emissions and carbon footprints; scenario modeling for Dushanbe 14,850 16,388 suggests potential GHG emission reductions of around 65 percent by 2050. Compact urban Source: Original compilation. growth preserves agricultural and forest land, improves building EE, and offers major local co-benefits, enhancing DU livability, economic efficiency, and equity. Strategic green investments and efficient resource use are essential to achieving these reductions, making cities more resilient and sustainable regardless of climate change. KHUJAND 4.5. Waste and agriculture: Reduction of methane emissions 4.5.1. Methane emissions from the waste sector Tajikistan’s methane emissions from waste have risen sharply from 902 ktCO 2 eq in 2001 to 1,537 ktCO 2 eq DUSHANBE in 2021. 39 These emissions could almost double until 2050 if current trends prevail. Key drivers of methane emissions include population growth, urbanization, and inadequate waste management infrastructure, including limited resources for implementing methane capture technologies. Moderate emissions reduction efforts could stabilize current emissions at about 1,400 ktCO 2 eq by 2050, while ambitious action would push emissions to zero by 2050. In the ambitious scenario, emissions are expected to fall by 30 percent between 2020 and 2030 (to some 1,000 ktCO 2eq)—in line with the Global Methane Pledge. By 2040, methane emissions from waste will fall to 500 ktCO 2eq, and further down to zero ВыбросыCompared by 2050, reflecting a potential net zero emissions target. CO 2reference to the ПГ в 2015 г. (тонн -экв.) (business-as-usual) scenario, the moderate scenario helps avoid some 17,000 ktCO 2eq of methane emissions by 2050, while 14850in the ambitious scenario. some 42,000 ktCO 2eq of methane emissions are avoided 16388 Discounted costs amount to around US$10 million until 2030 and around US$12 million between 2031 and 2050 under an ambitious scenario. These moderate total costs can be explained by the negative abatement costs incurred by many methane mitigation measures in solid waste management (Malec et al. 39 FAO. 2024. “FAOSTAT.” https://www.fao.org/faostat/en/#home. 44 Country Climate and Development Report: Tajikistan 2024). Avoided costs are most pronounced in recycling and waste-to-energy conversion, followed by direct use and electricity generation from landfill gas. These negative-cost options should result in major cost avoidance over the long term. A priority in the short term should be remediation and methane capture at the Dushanbe landfill. In the short term, captured gas could be used for flaring. In the medium term, the infrastructure could be developed to create enough supply for different uses, including in the grid (Akkermans et al. 2021; Malec et al. 2024). 4.5.2. Methane emissions from agriculture Reducing emissions of the energy and waste sectors is almost offset over the next decades by the rise of methane emissions from livestock  (68 percent of methane emissions in 2021), assuming that beef consumption will increase with economic and population growth. Agriculture sector emissions (40 percent of emissions in 2022) are expected to rise with demand for animal protein among an expanding and urbanizing population. There are three mitigation scenarios for reducing methane emissions from livestock (Figure 4.15). Under the Reference Scenario, where livestock production expands through herd growth, Methane emissions and total protein production in 2050 were projected to rise by 79 percent. Three mitigation scenarios focus on increase in efficiency of production (Eff) complemented by herd control and feed additives (efficiency, herd control, and additives [EffHC]) and partial shift to broiler production (EffBP) are compared to the Reference Scenario, all of which include sector-wide improvements, and advancements in herd and manure management. Additionally, to mitigate overgrazing, 25 percent of pastoralists were estimated to transition to zero grazing systems in each scenario, accompanied by better practices in herd and manure management, improved feed quality, and the use of dietary additives to further reduce enteric emissions. FIGURE 4.15: Methane emissions from livestock under different modeled scenarios, 2000–50 (panel A); and results of modeled scenarios on gram protein production per capita per day, 2050 (panel B) A. Methane emissions in Tajikistan's cattle sector under B. Results of modeled scenarios on gram protein different modeled scenarios from 2000 to 2050 production per capita per day in 2050 12.5 Methane emissions (mil tCO 2 -eq) Gram protein / capita / day 10.0 30 7.5 20 5.0 10 2.5 0 2000 2010 2020 2030 2040 2050 Reference Eff EffHC EffBP Source:  Original compilation. Note 1:  Reference = Business-as-usual, Eff = Increase in efficiency, EffHC = Increase in efficiency, herd control, and additives; EffBP = Same as EFFHC plus a shift to broiler production, dotted line = Reference in 2023. Note 2: А. Выбросы метана от животноводства согласно В. Результаты моделирования сценариев по выработке Protein различным смоделированным production сценариям, 2000-2050 гг. Methane белка на emissions душу населения в граммах в день, 2050 г. 12.5 Kt g/cap/d Kt kgCH4/kg protein Protein production/methane Грамм белка / человек / день 78.9 21.7 6.7 0.1 emissions in 2023 Выбросы метана (млн. т CO 2 -экв) 30 Protein production in 2050 Methane emissions in 2050 10.0 Kt g/cap/d Kt kgCH4/kg protein Reference Scenario 141.2 20 25.5 12.0 0.1 In % difference compared to Reference 7.5 Increase in efficiency (Eff) 42.7 42.7 10 2.3 –28.3 Eff + herd control –0.1 –0.1 –28.4 –28.3 Eff + shift to broiler production –7.1 –7.1 –37.6 –32.9 5.0 0 Базисный Eff EffHC EffBP показатель Eff - Увеличение производительности 2.5 45 EffHC - Увеличение производительности, контроль поголовья 2000 2010 2020 2030 4. Toward Chapter 2040a resilient and innovativeи low-carbon 2050 применение добавок economy EffBP - Увеличение производительности, контроль поголовья, применение добавок и переход на производство бройлеров In the short and medium terms, Tajikistan can reduce emissions intensity by boosting feed quality, improving animal health, optimizing manure management, and implementing breeding programs to boost livestock productivity.  Over the longer term, the use of feed additives and systemwide efficiency gains provide the opportunity to limit growth of the cattle herd to reduce methane  emissions by 28 percent compared to the Reference Scenario  without loss of farm income or protein production.  This could be facilitated with better genetics and herd management practices and by focusing on herd replacement rather than expansion. By combining efficiency improvements with the use of feed additives and herd control while shifting toward species with lower emissions, such as poultry, emissions could fall 38 percent compared to the Reference Scenario.  Dietary  shifts to protein sources such as broiler meat and legumes are another way to lower emissions. National consumption patterns appear to be trending in this direction—beef consumption dipped between 2010 and 2021, while consumption of poultry and eggs rose. The government could promote dietary shifts by promoting health-conscious recipes that highlight the nutritional value of poultry and emphasize food safety practices, including cold chain storage and poultry feed free of antibiotics and hormones. These efforts can help lower methane emissions and promote healthier diets. Chapter 5. The macroeconomic implications of climate change and inclusive transition >> 46 Country Climate and Development Report: Tajikistan Chapter 5 The macroeconomic implications of climate change and inclusive transition According to the World Bank’s Macroeconomic and Fiscal Model (MFMod) tool, Tajikistan has a modest economic outlook under the Reference Scenario (Burns et al. 2019; Burns, Jooste, and Schwerhoff 2021). Even without climate change, the Reference Scenario (see Box 5.1) highlights strong yet moderating economic growth that will not deliver significant prosperity in the long term. The real GDP per capita is forecast to grow at 4.1 percent by 2030 and weaken further to 3.0 percent by 2050. These figures are supported by a labor force participation rate rising from 45.6 percent in 2020 to 48.4 percent by 2050. Yet, unemployment rates remain at 20 percent in 2040 and 2050. Uneven structural reforms, limited human capital development, and underinvestments are expected to constrain the country’s GDP potential. The economy is expected to grow, but structural transformation remains stagnant. Real GDP per capita is projected to increase by 2.7 times in real terms from US$1,197 in 2020 to US$3,218 by 2050, based on 2015 constant US dollars. Industry will expand modestly in its share of GDP to 32.8 percent, at the expense of agriculture (16.9 percent), and services will stagnate at a persistent share of about 50 percent through mid-century. Box 5.1 describes the underlying assumptions used for the Reference Scenario. BOX 5.1: The Reference Scenario Despite high rates historically, total factor productivity growth in Tajikistan is expected to gradually align to lower levels observed in other low- and middle-income countries. Several factors are at work, including structural reforms of institutional weaknesses and capacity constraints, limited investment in research and development and technology adoption, and major deficiencies in the framework for climate risk resilience. The Reference Scenario projects slower population growth from 2 percent in 2023 to 1.12 percent by 2050 UN median population forecast40. However, inadequate funding for education and health care services, along with a lack of robust social inclusion programs targeting the poor and women, will impede human capital development. The completion of the Rogun HPP in the early 2030s and other critical infrastructure will drive higher public investments, leading to increased regional electricity exports. The government continues to implement electricity tariff reforms to achieve cost recovery by 2027 and strengthen the financial sustainability of the energy sector and the reliability of energy supply for domestic firms and households. The completion of the Rogun HPP dam enables better adaptation to climate change from the water management perspective. Despite these efforts, weak financial intermediation will dampen domestic savings, while challenges to the business environment will constrain domestic and foreign private capital mobilization, with most foreign direct investments expected to remain concentrated in natural resource extraction. Additionally, the government will pursue the implementation of the NDC 2030 commitments. The Reference Scenario assumes no further climate change beyond today. 5.1. The economic impact of damage from climate change Tajikistan faces a heterogeneous array of impacts from climate change. The most common effects include land degradation, erosion of fertile topsoil, and damages to infrastructure caused by extreme weather events such as mudflows. Climate change is also affecting public health (GIZ 2020). The impacts include heat stress (which affects labor productivity), ill health and early death from higher rates of infectious and other disease (which affect labor supply), flood-damaged capital stock, less-productive farmland (crop production and livestock pasture), capital stock damages and declines in labor supply caused by damaged roads and bridges, and variable hydropower productivity under the two climate scenarios: wet/warm and dry/hot. In the wet/warm scenario, flooding detracts from economic growth by damaging roads and bridges. The health of humans and livestock would also be affected. In contrast, hydropower benefits economic growth, especially after the Rogun HPP becomes operational in the 2030s. The wet/warm scenario also benefits rainfed and irrigated crop production with additional water availability. Under this scenario, GDP falls to 3 40 United Nations. 2022. “World Population Prospects.” Population Division, United Nations. https://population.un.org/wpp/?. 48 Country Climate and Development Report: Tajikistan percent by 2040 compared to the Reference Scenario and, despite some recovery, remains 1 percent below the Reference Scenario by 2050 (Figure 5.1). The dry/hot scenario would reduce GDP growth through agricultural and infrastructure effects. In the dry/hot scenario, flooding is eased, but hydropower’s potential is lessened. Livestock (principally sheep and cattle raised for meat), roads and bridges, and crop production (both irrigated and rainfed) are negatively affected. Heat stress on labor also increases over time (Figure 5.2). The impact of climate change under this scenario is more severe than under the wet/warm scenario. The decline in GDP reaches up to 5.6 percent by 2040 and remains above 5 percent below the Reference Scenario by 2050.41 FIGURE 5.1: Climate damages under wet/warm scenario FIGURE 5.2: Climate damages under dry/hot scenario (percentage change from Reference Scenario) (percentage change from Reference Scenario) 3.0 3.0 2.0 2.0 % GDP deviation from reference % GDP deviation from reference 1.0 1.0 0.0 0.0 -1.0 -1.0 -2.0 -2.0 -3.0 -3.0 -4.0 -4.0 -5.0 -5.0 -6.0 -6.0 2030 2040 2050 2030 2040 2050 Labor Heat Stress Human Health Labor Heat Stress Human Health Flooding Crop Production (Rainfed) Flooding Crop Production (Rainfed) Crop Production (Irrigation) Crop Production (Erosion) Crop Production (Irrigation) Crop Production (Erosion) Livestock Roads and Bridges Livestock Roads and Bridges Hydropower Total GDP Impact Hydropower Total GDP Impact Source: MFMod, Industrial Economics, Incorporated (IEc). Investing 3,0 in adaptation measures is crucial to mitigate 3,0the adverse impact of climate change on Tajikistan’s growth trajectory. The model simulation shows that adaptation investments in the wet/warm 42 2,0 2,0 scenario limit harm to a 1.6 percent variation from the Reference Scenario, and in the dry/hot scenario the % отклонения показателей ВВП % отклонения показателей ВВП 1,0 1,0 variation is 3.3 percent (Figures 5.3 and 5.4). For instance, infrastructure built to climate-resilient standards от базисного сценария от базисного сценария reduces 0,0 damage to roads and bridges from flooding and other 0,0 adverse weather. With adaptation measures, damage -1,0 is contained to about 1 percent of GDP, half of what -1,0it would be without adaptation. Similarly, CSA can reduce but not eliminate damage to livestock and crops. Investment needs for adaptation are listed in -2,0 -2,0 Chapter 6 (Table 6.1). They represent about 3.4 percent of PV total GDP in 2025-50. -3,0 -3,0 -4,0 -4,0 -5,0 -5,0 -6,0 -6,0 2030 2040 2050 2030 2040 2050 Трудовой тепловой стресс Здоровье человека Трудовой тепловой стресс Здоровье человека Паводки Растениеводство (богарное) Паводки Растениеводство (богарное) 41 The wet/warm and dry/hot scenarios discussed in the text represent average conditions for their respective climate settings. Individual Растениеводство (орошаемое) Растениеводство (эрозия) Растениеводство (орошаемое) Растениеводство (эрозия) dry/hot scenarios may, however, exert stronger effects than the average. For instance, the most extreme dry/hot scenario (based on the Животноводство Дороги и мосты Животноводство Дороги и мосты Institute for Numerical Mathematics [INM] INM-CM5-0 model output for SSP3-7.0) indicates a greater negative impact of climate damage on Гидроэнергетика Общее влияние Гидроэнергетика Общее влияние на GDP by 2030 before converging to the average dry/hot scenario by 2040–50. This additional GDP loss is attributed to increased damages на показатели ВВП показатели ВВП in agriculture (livestock and crops). In addition, while the scenarios analyzed in this section account for the interaction of distinct climate shocks, they do not capture compounded risks over a multi-year time horizon (a ‘worst-case scenario’). Such a ‘worst-case scenario’ could potentially have a more severe negative impact on the Tajik economy. 42 The interventions considered under the adaptation scenario are channel specific and selected for their modeling feasibility, country context, and projected climate change impacts. Adaptation costs are based on unit cost estimates for adaptation technologies obtained from international and, where available, local sources. 49 Chapter 5. The macroeconomic implications of climate change and inclusive transition FIGURE 5.3: Impact of wet/warm and adaptation scenarios FIGURE 5.4: Impact of dry/hot and adaptation scenarios on GDP (percentage change from Reference Scenario) on GDP (percentage change from Reference Scenario) 0.5 1 0.0 0 % GDP deviation from reference % GDP deviation from reference -0.5 -1 -1.0 -2 -1.5 -3 -2.0 -4 -2.5 -5 -3.0 -6 -3.5 -7 2020 2030 2040 2050 2020 2030 2040 2050 No Adaptation With Adaptation No Adaptation With Adaptation Source: MFMod. 0,5 1 % отклонения показателей ВВП от базисного сценария % отклонения показателей ВВП от базисного сценария BOX 5.2: Additional adaptation measures considered in the Adaptation Scenario 0,0 0 -0,5 -1 1. Livestock. Install heat abatement measures for up to 50 percent of dairy cattle using fans, forced ventilation, -1,0 and gradual introduction of zero grazing. -2 2. Crop erosion. Introduce conservation agriculture practices to limit erosion and topsoil loss. The adoption rate -1,5 -3 is assumed to be 5 percent by 2050. -2,0 3. -4 conveyance network, (b) on-farm investment to Irrigated agriculture investments. (a) Investments in main improve water management practices and efficiency, and (c) other investments in water use efficiency. -2,5 -5 4. Labor heat stress. Increase mechanization of agricultural workers from 4.4 percent (the current rate) to 25 -3,0 percent by 2050. Make additional investments in cooling -6 technologies (that is, air conditioning) for indoor workers (now covering 5.5 percent of workers) so 25 percent of workers have coverage by 2050. -3,5 Roads and bridges. Upgrade bridges to withstand the next-7 level flood event (for example, an improvement in the 5. design of the 2020 bridge to withstand 2030 the 50-year event 2040 2050instead of the 25-year event). 2020 2030 It is assumed that 2 percent 2050 2040 of the bridge inventory is upgraded annually between 2021 and 2050 ; proactive climate resilience measures for Без адаптации С адаптацией Без адаптации С адаптацией Tajikistan’s road network. 6. Flooding. New capital is built according to design standards using the historical 20-year flood by catchment data. The adaptation measure is assumed to be cost-neutral. Note: Adaptation investments in hydropower are already captured in the Reference Scenario and in all other main scenarios (See Scenario Overview annex for details); adaptation investments in the areas not mentioned were not priced. In addition to adaptations in key sectors, structural reforms can move the country away from agriculture toward industry. By mechanizing more agricultural tasks, Tajikistan can limit the exposure of its outdoor labor to heat. Project-based adaptation measures must be supported by a policy framework (an enabling environment) that adapts to climate change. Higher GDP levels seen for 2050 can be explained by the higher output gaps (Figures 5.3 and 5.4). Hydropower in the 2040s causes GDP to rise in both scenarios, while agriculture provides a boost under the wet/warm scenario. The impact of adaptation to climate change varies across economic sectors. Agriculture is particularly vulnerable to climate change; without adaptation, it is expected to see its GDP share fall 1.4 percentage 50 Country Climate and Development Report: Tajikistan points. Investments in adaptation, however, limit this decline to 0.8 percentage points. Industry and services get less of a boost. In a no-adaptation scenario, the industry’s GDP share could fall by up to 0.9 percentage points, but with adaptation, it rises perhaps by 1.5 percentage points. The services sector could see its GDP share fluctuate by as much as –1.7 percentage points to +2.3 percentage points across different climate change scenarios. 5.2. Low-carbon development and its effect on Tajikistan’s economic growth The low-carbon transition can be a catalyst for economic transformation in Tajikistan. If complemented by an enabling environment for the private sector, favorable economic conditions will facilitate the expansion of various economic sectors, support GDP growth, and help diversify economy and exports. The transition could have a minimal effect on GDP by the 2030s but move into positive territory by 2040–50. During the transition to the Low-Carbon Development Scenario, higher carbon taxes would disrupt carbon-intensive sectors and dampen labor productivity, causing per capita GDP to dip slightly in the 2030s. GDP growth rates start recovering in 2040 and reach up to a 6 percent positive deviation compared with the Reference Scenario by 2050 (Figure 5.5). Meeting the clean energy demand for capacity expansions, particularly in industry, transport, and heating, could be achieved by accelerating hydro (for example, with the Rogun HPP) and solar energy. Tajikistan needs substantial public and private sector investments, as outlined in Section 6.1. During the net zero transition period, the aggregate demand and national savings will likely rise with the increased investments, lower fuel imports, higher electricity exports,43 and the support for clean energy-based goods and services for export, giving Tajikistan a competitive advantage. The environmental and health co-benefits of emissions reduction would amplify the economic benefits of the Low-Carbon Development pathway. Under the Low-Carbon Development FIGURE 5.5: Impact of Low-Carbon Development Scenario on GDP Scenario, a gradual structural trans- (percentage change from Reference Scenario) formation takes place in Tajikistan’s 6.0 economy. While all sectors experience % GDP deviation from reference output growth, the proportional share 4.0 of industry expands in GDP (in 2015 constant prices), whereas the share of agriculture and, to a lesser extent, 2.0 services contracts. Electricity production through hydro and solar, in addition to 0.0 more mining, is expected to expand the industry to above 45 percent of GDP by -2.0 2050 (compared to 25 percent now), 2025 2030 2035 2040 2045 2050 while the share of agriculture is set to Low-Carbon Development shrink to about 8–10 percent (compared to 25 percent now). Despite a slight Source: MFMod. decline, enhanced communication 6,0 co-benefits suggest that services retain more than 45 infrastructure (both physical and digital) and health percent of the sectoral share of the economy (compared with almost 50 percent now). % отклонения показателей ВВП 4,0 road accidents, and road damage under the country’s от базисного сценария The co-benefits from reductions in air pollution, Low-Carbon Development Scenario have been estimated to exceed US$3.5 billion by 2050 (Figure 5.6). Tajikistan faces major health and economic losses—the 2,0 mortality rate due to high particulate matter is estimated at 84 deaths per 100,000, the second highest in Central Asia (IHME 2024). If implemented, the 0,0 43 The Resilient Low-Carbon Scenario unlocks much higher electricity export revenues than current policies, with electricity export revenues reaching 4 percent of GDP (US$13.8 billion) between 2030 and 2050. -2,0 2025 2030 2035 2040 2045 2050 51 Низкоуглеродное развитие Chapter 5. The macroeconomic implications of climate change and inclusive transition FIGURE 5.6: PV of reduced externalities, by type, Low-Carbon Development Scenario is projected to cut by 2050 (in real 2023 $ billions) in the Low-Carbon these deaths by 9 percent in 2030, and by 75 percent Development Scenario by 2050, compared to the Reference Scenario. Residential The value of averted deaths is estimated at US$42 million (0.16 percent of GDP) in 2030 and US$778 million (1.24 percent of GDP) in 2050. The present Industry economic value of lower mortality is US$2.68 billion.44 This includes the PV of averted mortality attributable Transport to air pollution, amounting to US$0.11 billion during 2025–30 and US$2.57 billion for 2030–50 (2023 0.0 0.5 1.0 1.5 2.0 2.5 3.0 US dollars). On the one hand, these benefits seem Air pollution Road accidents Road damage minor because the Reference Scenario shows reduced mortality from fossil fuel combustion in the residential Source: Original compilation based on the Climate Policy sector (a major air pollution source). Mortality Assessment Tool and Energy model (Chapter 4). declines from 9.4 per 100,000 people in 2019 to 3.6 Note: Calculations assume absence of advancements in implementing emission standards. Flows modeled until 2050 at a per 100,000 in 2050 because biomass and coal have discount rate of 6 percent. been phased out. Additional co-benefits are expected Жилищный from lowering emissions in the transport sector (see сектор Figure 5.6), where energy consumption by oil-powered vehicles is slashed and the use of EVs rises. Major improvements are evident in the industry sector, where coal is eliminated by 2050. Co-benefits are also observed in the residential sector. Furthermore, the transport sector will have reduced mortality from road Промышленность accidents, valued at US$0.03 billion during 2030–50, while lower road maintenance costs are estimated at US$0.87 billion (US$0.12 billion for 2025–30 and US$0.75 billion for 2030–50). Транспорт The government has a vital role in leading the transition by providing the enabling conditions, regulations, 0,0 standards, 0,5 1,0 and1,5 incentives 2,0 3,0more environmentally friendly economy. This involves 2,5for a right price sending the Загрязнение and policy signals through carbon taxation and electricity subsidy reform, targeted воздуха Дорожно-транспортные public investments, and social происшествия support while setting climate-friendly regulatory standards. Fiscal policy can Повреждение дорог reenforce the transition to a green economy through (a) recycling carbon tax revenues through transfers to protect vulnerable groups from higher carbon prices and (b) boosting investments in climate friendly projects and establishing emergency funds for post-disaster situations. While these measures will help support the transition, significant structural changes will also be necessary to unlock the economy’s potential. In the private sector, these reforms mainly involve improving the competition framework, enhancing the business and investment regulatory environment, eliminating trade barriers and high trade and transportation costs, and embracing digital transformation for increased efficiency (see Section 6.5). Public sector challenges extend from the judicial system and the rule of law to inefficiencies in SOEs and nontransparent public resource management. Improvements in public service delivery for social protection, health care, and education would be welcome. Human capital is crucial, as the right skills must be available for the transition to a more sustainable green economy. Expanded domestic output would provide more job opportunities for the growing Tajik labor force and help reduce labor out-migration. 5.3. Poverty and distributional implications of climate change Climate change slows poverty reduction. Although poverty is expected to continue to decline beyond 2030, it does so at a slower rate. In the dry/hot scenario with no adaptation measures, for example, poverty is expected to decline to only 11 percent by 2030.45 This is about 1 percentage point higher than in the Reference Scenario for 2030 and 2040 (Figure 5.7), putting close to 102,800 additional individuals in 44 The PV considers the period 2025–50 and a discount rate of 6 percent. The Value of Statistical Life for Tajikistan was adjusted based on information from countries of the Organisation for Economic Co-operation and Development. 45 The poverty analysis discussed is based on the national poverty line of about TJS 450 per person per month. 52 Country Climate and Development Report: Tajikistan poverty. Furthermore, in the dry/hot scenario with no adaptation, the poverty rate is expected to fall below the 5 percent threshold two years later than in the Reference Scenario. With adaptation, the delay would be about half that. For the Low-Carbon Development Scenario, the poverty rates in 2030 and 2040 are expected to be 1 percentage point higher than in the Reference Scenario. Poorer households spend a larger share of their budget on energy sources such as electricity, coal, and liquefied petroleum gas, which become more expensive in this scenario. However, targeted cash transfers to the poor and investments in public infrastructure could help mitigate the potential adverse impacts. The impacts of climate change are expected to be relatively concentrated in three of the five regions in Tajikistan: Khatlon Oblast, Regions of Republican Subordination (RRS), and GBAO. The Dushanbe and Sughd regions are more industrialized than the other three regions. Khatlon relies, to a large extent, on low-paid and climate-sensitive agriculture, while GBAO’s mountainous terrain makes access difficult. By 2040, under the dry/hot scenario with no adaptation, the national poverty rate is projected to increase by 2.1 percentage points in the Khatlon Oblast and 1.4 percentage points in the RRS region compared to the Reference Scenario (Figure 5.8). Also, a dry and hot climate (with or without adaptation) is expected to delay the poverty threshold falling below 5 percent in Khatlon by three years compared to the Reference Scenario. FIGURE 5.7: Impact of climate on poverty FIGURE 5.8: Impact of climate on poverty (national poverty line)—deviations from Reference Scenario (national poverty line)—deviations from Reference Scenario (percentage point change) (percentage point change) by region 1.20 2.0 1.05 0.99 1.00 Percentage points Percentage points 1.5 0.80 0.76 1.0 0.57 0.58 0.60 0.49 0.45 0.5 0.40 0.33 0.0 0.20 2030 2040 2030 2040 2030 2040 2030 2040 2030 2040 Dushanbe Sughd Khatlon RRS GBAO 0 city region region 2030 2040 Wet/warm with no adaptation Dry/hot with no adaptation Wet/warm with no adaptation Dry/hot with no adaptation Wet/warm with adaptation Dry/hot with adaptation Wet/warm with adaptation Dry/hot with adaptation Source: Microsimulations using HBS (2021) data and MFMod projections. FIGURE 5.9: Population with more than half of their land Inequality in Tajikistan is expected to decline over affected by drought risk 2021–30 before starting to rise again, regaining 1,20 1,05 2,0 levels in 2054, regardless of the climate 2030 Процентные пункты 0,99 Процентные пункты 1,00 change scenario. This trajectory will likely be driven 1,5 0,80 0,76 by structural transformation toward industrial growth 1,0 0,60 0,57 0,49 0,58 under all the climate scenarios analyzed. Growth in 0,45 0,5 industrial value added is expected to be stronger 0,40 0,33 0,0less variable than in the agriculture and service and 0,20 2030 2040 2030 2040 2030 2040 2030 2040 2030 2040 sectors. The industrial sector is expected to hire Город Согдийская Хатлонская РРП ГБАО 0 2030 2040 relatively more skilled Душанбе область laborers, область who are already Влажный/теплый климат Сухой и жаркий климат earning more than workers in Влажный/теплый климат other sectors. Сухой и жаркий климат без адаптации без адаптации без адаптации без адаптации Влажный/теплый климат Сухой и жаркий климат Although климатestimates poverty Влажный/теплый at the Сухой и жаркий климат national с адаптацией с адаптацией с адаптацией с адаптацией and regional levels are important indicators, highlighting countrywide variations, poverty Source: Original compilation based on data from FAO 2023.46 estimates at the district level are particularly useful in informing policy and helping target Very low Quality 46 Food and Agriculture Organization of the United Nations. 2023. “Agricultural Stress Index.” FAO, Rome. https://www.fao.org/giews/earthobservation/asis/index_1.jsp?lang=en. 53 Chapter 5. The macroeconomic implications of climate change and inclusive transition investments. In this analysis, a poverty mapping modeling framework47 has been applied to generate district- level poverty estimates and map these with key hazard indicators. While flooding is not considered a major threat to the welfare of Tajikistan’s poor, drought poses a significant threat to agricultural livelihoods. In a 1-in-40-year drought scenario, approximately one-third of districts could experience severe impacts, with more than 34 percent of their populations affected. This suggests that weather could severely compromise at least half of the populations’ agricultural land. Figure 5.9 illustrates a threshold, defined as 50 percent of land affected, for assessing exposure to agricultural drought.48 The spatial distribution under this threshold reveals that districts at high risk of drought are often those also suffering from high poverty rates. These high-risk districts are found in the low-density GBAO region and the high-density RRS and Khatlon Province, as depicted in Figure 5.9. Many of the highly vulnerable districts overlap with those facing significant drought risk, with the addition of Hisor, as part of the RRS. For the RRS and Khatlon Province, mitigating the effects of drought will be challenging given the considerable size of their rural populations. In GBAO, the primary challenge is to develop effective strategies for managing extensive land areas under severe drought conditions. Poverty and hazard map modeling reveals that the most vulnerable districts are also the ones where the risk of land degradation is high and where social sustainability and inclusion are low (as captured by the Social Sustainability Index and described in Chapter 3). Investments in landscape restoration and SLM, alongside a social assistance system for the protection of the most vulnerable population segments, must therefore be available and targeted effectively, with particular focus on the high-density RRS and Khatlon regions. Mitigating the impacts of an uncertain climate and the related risks to people’s income, consumption, and human capital investments requires greater coverage of social protection schemes. While Tajikistan’s social protection system is mature and provides protection against a range of income shocks and life cycle vulnerabilities, there are gaps. Critical gaps exist in coverage for those employed in the informal sectors and for workers in job transitions. For example, only 27 percent of the registered unemployed receive unemployment benefits, because of strict eligibility criteria and the need to stay within the available budget.49 The limited coverage of targeted social assistance (approximately 15 percent of the total population) leaves most impoverished households to face job loss or income shocks on their own. The social protection system is not being utilized to support households affected by climate-related challenges, specifically acute shocks. An assessment of the system’s capacity to respond to climate shocks was conducted in 2022 (World Bank internal report) with a focus on (a) programs and delivery systems, (b) data and information, (c) financing, and (d) institutional arrangements. The assessment concluded that the main social protection programs lack the capacity and legal frameworks to be adaptive, but delivery systems (for example, electronic payments and advances in information systems) can help build scalability. The policy framework and delivery infrastructure are adequate to deliver emergency cash assistance, but the social registry is nascent and must be strengthened in scope and interoperability. Tajikistan lacks a program specifically designed to address idiosyncratic shocks such as those induced by climate change. The national government needs to do more to plan for emergency response financing. The government regularly contributes to the disaster fund, but it has not contracted any catastrophe insurance. Also, climate adaptation budgets require adequate fund allocation, with the corresponding eligibility criteria, duration, and amounts determined 47 The Fay-Herriot method is used to estimate poverty rates and the mean per capita daily consumption level in all districts. The national poverty line of TJS 14.9 per day has been adopted. The Fay-Herriot method exploits both direct estimates from survey data and model-based estimates (Fay and Herriot 1979) and yields weighted-average results. The weights are selected to reflect sample size and data quality. 48 The indicator uses historic agricultural drought frequency data from the United Nations Food and Agriculture Organization. The data depict the annual frequency of severe drought events, defined using the Agricultural Stress Index (FAO 2023). Unlike other hazard data used for this indicator, these drought maps are not based on a probabilistic modeling approach. The historical frequency of severe droughts is calculated using the entire 39-year time series, from 1984 to 2022. 49 In 2023, only 12,899 individuals received unemployment benefits among 48,300 officially registered as unemployed and compared with an estimated unemployed population of over 2 million (data from the Ministry of Labor, Migration, and Employment of the Population of the Republic of Tajikistan). 54 Country Climate and Development Report: Tajikistan based on analyses of individual- and household-level impacts of climate shocks. Given the high number of female-headed households in Tajikistan, the social protection mechanisms should actively target women as recipients and mobilize them as leaders to identify needs for climate-smart social infrastructure. Additionally, expanding women’s access to finance through microfinance programs and entrepreneurial support through adaptive social protection tools will drive business development and economic independence. 5.4. Job implications of the green transition Currently women and youth are less likely to be working in green jobs. As defined by Granata and Posadas (2024), green jobs employ only 7 percent of Tajikistan’s workers. While about half of the workers in occupations with low green task content (no more than 25 percent) are women, fewer than one in four workers in occupations with high green task content (more than 75 percent) are women (Figure 5.10). This implies that women may be less able to leverage the increased demand for these occupations. The analysis also shows evidence of age differences, with younger generations holding a smaller share of green occupations. FIGURE 5.10: Green jobs by gender and age group 3% 18% 17% 24% 38% 48% 65% 29% 76% 37% 90% 32% 63% 49% 52% 40% 35% 27% 24% 10% 3% 5% 5% 9% 0-25% 26-50% 51-75% 76-100% 0-25% 26-50% 51-75% 76-100% Green Task Content of Occupations Green Task Content of Occupations Male Female Age Group <25 26-40 41-64 >64 Source: Original compilation based on data from Europe and Central Asia Team for Statistical Development (2024). Women should be actively engaged in Tajikistan’s green transition through stronger leadership roles in local decision-making bodies, vocational training, and microfinance. Capacity building, enabling mechanisms, and resources are needed to enhance women’s representation in bodies such as Water User 3% Associations and Pasture User Associations, as outlined in Tajikistan’s updated NDC. Strengthening 17% women’s 18% participation in local natural resource management sustainably 38% is crucial. Additionally, targeted vocational 24% 48% training in green sectors will equip women with skills for emerging green jobs and livelihoods, 29% accessible to 65% microfinance, business development services, and market access those with lower education levels. Providing76% 37% 90% support will encourage women’s entrepreneurship in sustainable 32% agriculture and renewable energy sectors. 63% The energy transition could create many jobs, but workers previously trained in49% other trades may 52% 40% not be able to take35% advantage of these new opportunities.27%Investment in renewable energy and EE has 24% the potential to create substantial 10% employment. An example is the recently introduced mandatory use 9% of 3% 5% 5% rooftop 0-25% solar for all new and 26-50% reconstructed 51-75% buildings, announced 76-100% 0-25% by the Committee 51-75% 26-50% on Architecture and 76-100% Construction. It is estimated that more than 65,000 workers (around 2.5 percent of the current workforce) Объем зеленых задач в профессиях Объем зеленых задач в профессиях will be needed by 2025 to implement this ambitious regulation (see Table 5.1). A large share of these jobs will Возрастная группа beМужчины Женщины in installation, <25 including in occupations such as solar energy installation managers, 26-40 41-64 solar energy >64 systems engineers, solar photovoltaic installers, and solar sales representatives and assessors. But as analysis performed for this study shows, very few workers are in occupations involving similar tasks. Therefore, it will likely be challenging to find workers who can transition easily into the solar installation jobs being created. Analysis of the heating and cooling sector suggests that transitioning from fossils-based heating to GHP- based heating could generate 2.3 in direct and indirect jobs per each brown job lost (Box 5.3). 55 Chapter 5. The macroeconomic implications of climate change and inclusive transition BOX 5.3: Job market and GHG implications of transitioning from fossil-based to GHP-based heating and cooling A simple growth model integrates climate change and labor market outcomes to examine the implications of transitioning from fossil-based heating to GHP-based heating. The study utilized data from the 2016 Input-Output (IO) Table (Maxudova 2022) and sectoral employment data from the official Tajikistan labor market reports. The IO Table was modified by disaggregating the mining sector into fossil and non-fossil components and introducing geothermal energy as a separate sector. Results from this analysis suggest that the transition from coal-based heating to GHP will result in a net job gain of 2.3 direct and indirect GHP-related jobs per ‘brown’ job lost. Moreover, the results show a significant reduction in GHG emissions. For example, a 10 percent replacement of coal-based heating with GHP will result in reduction of GHG emissions by 1.5 Mt per year. Source: IFC 2024. TABLE 5.1: Job creation potential of the new rooftop solar regulation, by occupational category 2025 2026 2027 2028 2029 2030 Installation and project development 28,754 28,585 23,376 23,294 17,681 17,750 Production and manufacturing 1,337 1,330 1,087 1,083 822 826 Administrative 12,705 12,630 10,329 10,293 7,813 7,843 Management/professional 10,699 10,636 8,698 8,667 6,579 6,605 Sales 10,699 10,636 8,698 8,667 6,579 6,605 Other 2,675 2,659 2,174 2,167 1,645 1,651 Total workers 66,870 66,476 54,362 54,171 41,119 41,279 Source: Original compilation based on World Bank DataBank’s Health Nutrition and Population Statistics Database. https://databank.worldbank.org/source/health-nutrition-and-population-statistics. Notes: Estimates assume that about 1,800 MW of solar panels are added each year. Labor intensity is expected to decline from 36 workers per MW to 23 workers per MW between 2025 and 2030. For reference, the labor intensity of small-scale solar in the United States declined from about 36 to 18 workers per MW between 2018 and 2022. Climate change could lead to workers’ reallocation across economic activities, yet this process may face barriers. Tajikistan’s agricultural sectors employ a substantial portion of the labor force but could face job losses owing to adverse climate impacts. Meanwhile, task similarity between agricultural and nonagricultural occupations is low (Figure 5.11), implying that it is difficult for agricultural workers (blue bubbles) to transition to nonagricultural jobs (other bubbles). Nonagricultural occupations with the greatest similarity to crop farm laborers include cleaners and sweepers, although transitioning to these occupations would generally result in a wage decline. Preferable transition possibilities could be taxi and van drivers, or bakers and pastry cooks, but the retraining requirements would be high. Climate-induced structural changes are thus likely to require targeted policy efforts toward the reskilling of workers in sectors with declining employment. Adequate training, active labor market programs, and job placements will help workers leverage the opportunities offered by the green transition and digitalization. Tajikistan’s labor market programs include (a) employment promotion advisory services and job matching, including job fairs; (b) training; (c) self-employment promotion (through interest-free loans); and (d) public works. All programs are limited in scale and scope and will need to be improved and expanded for the green transition. Helping adults transition to green jobs might require considerable additional resources. A challenge in this regard could be developing training curricula relevant for green jobs and digitalization, as most on-the-job training focuses on skills directly related to current job-related tasks. 56 Country Climate and Development Report: Tajikistan FIGURE 5.11: Job transition possibilities for crop farm laborers Median monthly wage (with 40-hour work week) TJS per month, log scale 5,000 Mineral and stone processing plant operators Drivers of animal-drawn vehicles and machinery 2,000 Construction laborers Taxi and van drivers Mobile farm and forestry Forestry and Bakers and pastry related workers plant operators cooks Food and beverage tasters and graders Forestry laborers 1,000 Civil engineering Gardeners, horticultural laborers and nursery growers Crop and livestock farm laborers Crop farm Window cleaners laborers 500 Cleaners and helpers in offices, hotels etc. Stock clerks Sweepers and Subsistence farmers Subsistence related laborers (crop and livestock) farmers (crop) Shelf fillers No wage Fishery Horticultural data workers laborers 0.0 0.2 0.4 0.6 0.8 1.0 Task similarity Industry Number of workers Agriculture, forestry, and fishing Education 100 100,000 Manufacturing Wholesale and retail trade 1,000 445,000 Construction Human health and social work activities 10,000 Other Source: Original compilation. Note: Bubbles are sized by total employment in 2016 and colored according to the industry that employs the most workers. Task similarity is calculated following Mealy, del Rio-Chanona, and Farmer (2018) and normalized to a value between 0 (no task overlap with crop farm laborers) and 1 (full task overlap with crop farm laborers). 5 000 Job matching by government programs and labor market agencies will require a shift in approach during the green transition. Tajikistan’s Public Employment Services (a branch of the Agency for Labor and Операторы установок Водители транспортных средств Employment) has so far found по обработке it difficult to placeи unemployed individuals in private firms. While the scarcity механизмов, запряженных минералов и камня животными Средняя месячная заработная плата of wage employment is difficult to address, service providers could do more to develop relationships with (при 40-часовой рабочей неделе) Работники 2 000 at private firms. employers For individuals Строительные with low education рабочие лесного levels, active labor market programs can support такси и фургонов хозяйства Операторы передвижных skill adaptation, facilitating Водители the transition to green jobs and occupations и смежных short ofи labor. Agile research and сельскохозяйственных Пекари и кондитеры отраслей лесозаготовительных установок diagnostic tools can help assess the cognitive and noncognitive characteristics Рабочие of the local population and provide critical information to firms interested Дегустаторы in investing in an area. As an example, a diagnostic of three и оценщики лесного хозяйства продуктов питания и напитков transforming 1 000 regions in Poland (forthcoming World Bank report) Садоводы, shows that agile research yields valuable огородники Рабочие-строители и работники insights. Beyond formal employment, self-employed individuals may promote green products and practices лесопитомников Рабочие (for example, eco-friendly cleaning products Мойщики окон products, sustainable and beauty waste management practices, сельскохозяйственных и животноводческих Рабочие на фермах and occupational safety under hazardous climate conditions). ферм по выращиванию сельскохозяйственных 500 Уборщики и помощники культур Tajikistan’s tertiary education in tackling the impacts of climate change system plays в офисах, и т.д. role a critical гостиницах and environmental degradation, equipping the workforce with the skills and knowledge required to adapt to climate change and advance the green economy. The country has a wide variety of green-related Наполнители Подметальщики Фермеры, ведущие Фермеры, ведущие Кладовщики полок и другие рабочие Работники натуральное хозяйство натуральное хозяйство Нет данных рыбного (растениеводство (растениеводство) хозяйства и животноводство) о заработной Работники садоводства плате 57 0.0 0.2 Chapter 5. 0.4 The macroeconomic implications of climate change0.6 and inclusive transition 0.8 1.0 Схожие задачи university programs, and several industry, regional, and international partnerships have been established by Tajik universities, but many graduates are not adequately prepared for work in the green economy (Dev Bhatta et al. 2024). A review of the existing programs, expansion of the green-related programs on offer, integration of environmental challenges and solutions as cross-cutting elements in curricula, and training of faculty in modern pedagogical approaches could guarantee an interdisciplinary approach that encompasses environmental, social, and economic aspects. Also, frontline civil servants (for example, teachers and health care workers) must be trained in preparing for climate hazards and related health risks so that service disruption can be managed. Transition patterns for different professions should be well understood before offering training. For example, highly educated individuals may master additional tasks essential in green professions where they could apply their existing skill set. Chapter 6. Financing climate action and mobilizing the private sector >> 58 Country Climate and Development Report: Tajikistan Chapter 6 Financing climate action and mobilizing the private sector 6.1. Investment requirements The total investment required to support Tajikistan’s 2023–30 NDC commitments is about US$8 billion, according to official estimates. Adaptation and mitigation costs for 2019–30 would rise from US$600 million annually (2019) to US$1,030 million (2030), totaling US$8.9 billion (Tajikistan’s Fourth National Communication under the United Nations Framework Convention on Climate Change estimates). The Climate Finance Plan estimates suggest that the NDC commitments would require investments of US$8.1 billion for this period. About US$5 billion is accounted for in the costs of building the Rogun dam. The plan distinguishes between the country’s unconditional commitments and its conditional commitments under the NDC (US$2.4 billion and US$5.7 billion, respectively). Most of the conditional commitments reflect the Rogun HPP project. 50 Energy and agriculture dominate the country’s investment needs. The Fourth National Communication shows that energy, transport, and agriculture each account for 20 percent of cumulative investment needs, irrigation 15 percent, and water supply and sanitation 10 percent. The Climate Finance Plan suggests, however, that without Rogun, agriculture accounts for 61 percent of the total, followed by energy (24 percent) and EE and waste emission mitigation (each about 5 percent of the total). Estimates produced for the CCDR show much higher investment requirements, but these estimates reflect a more ambitious climate goal than the NDC and over a longer time horizon. First, they refer to the period until 2050. Second, the mitigation component incorporates the more ambitious target of complete decarbonization of the power sector and residential buildings by 2040 and the rest of the economy by 2050. The total investment needed under the Low-Carbon Development Scenario is US$88.6 billion, compared with US$78.9 billion in the Reference Scenario. 51 The estimates suggest the additional investment needed for the Low-Carbon Development Scenario amounts to US$9.7 billion. Mitigation investments are backloaded, requiring US$1 billion in 2025–30 and US$8.7 billion in 2031–50 (Table 6.1). While this extra investment cost may not look big from a financing perspective, representing only about 0.9 percent of annual GDP in 2025–30 and 2.7 percent of annual GDP in 2031–50, it is worth noting that it comes on top of the Reference Scenario, which includes the completion of the Rogun HPP’s construction, estimated at US$6.4 billion,52 in a macro-fiscally sustainable manner and with sound management of the revenue stream generated by the project. Except for the power and transport sectors, most of the financing has to mobilize private capital in sectors devoted to residential and commercial buildings and industry. Estimated investment needs for adaptation are slightly lower. Total adaptation investments are US$7.4 billion, with a breakdown of US$2 billion in 2025–30 (1.7 percent of annual GDP) and US$5.4 billion in 2031–50 (1.7 percent of annual GDP). While the water sector and the road transport network require major public investments, the private sector will provide the bulk of financing for agriculture and restoration of land. The total investment requirement for the country’s NDC commitments and Low-Carbon Development by 2050 exceeds the capacity of the domestic economy to finance it. The NDC commitments amount to about 80 percent of 2023 GDP, more than twice the level of public debt, and over five times the stock of total bank credit to the public and private sectors. The public investment program (PIP) averaged about US$2 billion per year in 2021–23 and was focused on the objectives of the NDS. Some of the goals—notably energy security via the Rogun HPP—also achieve the NDCs, but most of the NDC commitments require investments on top of the current PIP. The financing required for the Low-Carbon Development and the adaptation scenarios would be additional to the NDC commitments and is estimated to be much higher than the current PIP spending. Medium- term projections by the International Monetary Fund (IMF) suggest that PIP could expand from approximately US$2 billion annually to US$3.6 billion by the end of the decade, consistent with public debt sustainability. Even if the entire increment were dedicated to green investments, the amounts would still not cover the country’s investment needs set out in the NDC commitments and the Low-Carbon Development Scenario. 50 According to the Paris Agreement, countries submit unconditional commitments for emissions reduction and adaptation in their NDCs and then additional commitments conditional on the availability of finance and technology. 51 Investment costs for nominal amounts and shares in GDP are provided in PV terms, using a discount rate of 6 percent. 52 The government updated the investment cost estimates for completing the Rogun HPP’s construction in early 2024. 60 Country Climate and Development Report: Tajikistan TABLE 6.1: Tajikistan’s investment needs for climate adaptation and mitigation, by scenario and sector, 2025–50 Total discounted Total discounted In % of PV In % of PV Estimated investment needs, investment needs, Sector  total GDP, total GDP, share of private 2025–30  2031–50 2025–30 2031–50 sector (range %) (US$, billions) (US$, billions) Cost of mitigation investments Reference Scenario Residential and commercial buildings 9.6 18.6 8.4 5.7 80–95 Power sector 11.0 12.6 9.7 3.9 60–75 Industry and others 4.8 5.3 4.2 1.6 90–100 Transport sector (excluding consumer 8.2 8.6 7.2 2.7 25 vehicles) Total for Reference Scenario 33.6 45.2 29.4 13.9 Low-Carbon Development Scenario Residential and commercial buildings 9.7 19.6 8.5 6.0 80–95 Power sector and hydrogen 11.9 19.7 10.4 6.1 60–75 Industry and others 4.8 5.8 4.2 1.8 90–100 Transport sector (excluding consumer vehicles) 8.3 8.8 7.3 2.7 25 Total for Low-Carbon Development Scenario 34.7 53.9 30.3 16.6 Net increase in investment from Reference to 1.0 8.7 0.9 2.7 Low-Carbon Development Scenario Cost of additional adaptation investments Adaptation Scenario Water sector (irrigation, water management 1.0 3.7 0.8 1.1 10–35 and water supply and sanitation) Agriculture 0.4 0.5 0.3 0.1 86 Resilient road transport network 0.4 0.9 0.4 0.3 0 Land restoration 0.2 0.4 0.2 0.1 84 Total investment for adaptation 2.0 5.4 1.7 1.7 Total investment cost for mitigation 3.0 14.1 2.6 4.3 and adaptation Source: Original compilation. Note: Reference and Low-Carbon Development Scenario investments already include significant hydropower plant investments (including Rogun) and hence significant adaptation and mitigation investments (see annex 1 for Scenario overview details). 6.2. Opportunities presented by environmental and carbon taxation A low-carbon economy brings major benefits, according to fiscal indicators. On the revenue side, carbon tax collections and the elimination of electricity subsidies strengthen the government’s fiscal position. The price incentive for the shift to Low-Carbon Development—including regulations, standards, and investments— is estimated using a shadow price of climate action of US$83 per tCO2 by 2025, US$217 by 2035, and US$521 by 2050, at constant $2015 per tCO 2. A low-carbon economy involves shifts that require major public investments in infrastructure, including renewable energy, public transportation, and energy-efficient buildings. The country may also need to spend more on social assistance, so the poor are shielded from higher prices. Although decarbonization is crucial for mitigating climate change and ensuring sustainable economic growth, it will create a financial strain on the state budget and contribute to increases in public debt by about 13 percentage points, up to 43.9 percent by 2040 and 45.6 percent by 2050, if no carbon taxes are implemented and subsidies removed. This level of public debt is still within the 70 percent threshold of the PV ratio of public 61 Chapter 6. Financing climate action and mobilizing the private sector debt-to-GDP used under the framework for assessing debt sustainability in low-income countries. Moreover, the impact on public debt could be mitigated by adopting measures as outlined in the following paragraphs. Carbon pricing is a keystone policy for the green transition. Despite its short-term costs, the new pricing will boost growth over the longer term. A carbon tax can spur the investments needed for low-carbon development. Carbon pricing alone would not be sufficient, however, to induce the required behavior changes and technology shifts needed. A combination of policies from subsidies’ elimination, emissions regulations, and public low- carbon investments would complement a modest carbon tax to achieve the required shadow carbon price more efficiently. Such a policy mix is particularly relevant in Tajikistan, where the carbon pricing system is still in its infancy, although the country is now considering an Emissions Trading System or green certificates (UNFCCC 2021). These policies could dampen growth as the economy adjusts to new prices. But more efficient and modern, low-carbon capital stock combined with the opportunities provided by green markets could improve prospects for growth. The country might then be able to see more rapid, medium-term growth. At the same time, price impacts on the poorest can be offset with revenue derived from carbon taxes used to offset losses. A carbon tax can lower emissions and raise revenues. Analysis using the Climate Policy Assessment Tool compared two carbon tax scenarios to explore the impact on Tajikistan: a low rate (US$10 per tCO2) and a moderate rate (US$30 per tCO 2) starting from year 2025, after which they rise in equal annual increments to reach their target rates in 2030. The revenue generated from the subsidies removal and carbon tax is then earmarked to compensate the lowest 40 percent of Tajik households via cash transfers. Although the elimination of electricity subsidies does not cause emissions to plunge (–1.4 percent of GHG emissions), it does provide US$170 million of fiscal space, or 1 percent of GDP. The imposition of a low- carbon tax could cause GHG emissions to drop by 4.7 percent, bringing emissions down to an estimated 26.5 MtCO 2 by 2030 (compared to a reference of 27.8 MtCO 2 in 2030). A moderate tax rate would push GHG emissions down to 25.2 MtCO 2, further reducing GHG emissions by 9.4 percent. It is estimated that the implementation of a low-carbon tax rate would garner an additional US$250 million revenue in 2030, or around 1.5 percent of GDP. A moderate carbon tax rate would bring additional revenue of about US$400 million, or 2.4 percent of GDP. FIGURE 6.1: Change in household consumption after recycling of revenue from electricity subsidy removal or carbon tax, 2030 14.0 12.0 10.0 % Household Consumption 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Decile 1 (poorest) Decile 10 (wealthiest) Decile 1 (poorest) Decile 10 (wealthiest) Decile 1 (poorest) Decile 10 (wealthiest) Electricity Subsidy Removal Low (US$ 10) Carbon Tax Moderate (US$ 30) Carbon Tax Indirect Direct Cash Transfers (Below National Poverty Line) Public Investment Net Change Source: Original compilation based on the Climate Policy Assessment Tool. Note: Figure presents mean household incidence after revenue recycling by incidence effect and welfare decile, 2030 (in percentage of household consumption by scenario). Positive (negative) incidence effects represent gains (losses) in percentage of total household consumption. Households are grouped into population weighted, per capita consumption deciles. Consumption losses are net of 14,0 behavioral responses (incorporated via decile/consumption item-specific price elasticities of demand). Revenues generated from each policy 12,0scenario are assumed to be used (‘recycled’) into fully offsetting consumption losses for households below the national poverty (% потребления домохозяйств) line; 5 percent of any remaining revenues is allocated to the national disaster recovery fund, while the rest is invested in household 10,0 Эффект воздействия infrastructure 8,0 access. 6,0 4,0 2,0 62 0,0 Country Climate and Development Report: Tajikistan -2,0 -4,0 With revenue recycling, consumption for poorer households is not harmed by subsidy reform and carbon taxes. Tajik households are estimated to lose approximately 0.7 percent of their total consumption in 2030 with electricity subsidy removal (Figure 6.1). The figures are 1.7 percent with the imposition of a low carbon tax and 3.3 percent with a moderate carbon tax. These losses can be attributed to the higher costs of electricity, coal, and liquefied petroleum gas. These losses are regressively distributed across households. The bottom 20 percent experiences mean consumption losses that are roughly 2.2 times more than the top 20 percent from an electricity subsidy removal, 1.6 times greater with a low carbon tax, and 1.4 times greater with a moderate carbon tax. Perhaps the larger share of energy consumption (direct coal, electricity, and liquefied petroleum gas) among poorer households is an explanation. Revenue generated from carbon taxes could be recycled to compensate households living below the poverty line by 2030. Afterward it could be allocated to providing poor households with infrastructure access (electricity, information and communication technology, public transportation, sanitation, and water). Access to infrastructure might help offset losses and improve redistribution. Specifically, the poorest households could enjoy net consumption gains after accounting for initial losses of around 6.3 (electricity subsidy removal), 2.7 (low carbon tax), and 7.7 (moderate carbon tax) percent of total household consumption. 6.3. Mobilizing private capital The private sector makes up 60 percent of GDP and over 70 percent of employment. It is hindered by a lack of dynamism marked by low productivity, limited integration into global markets, and slow firm growth. This stagnation derives from an investment climate that fails to reward efficiency and is hampered by barriers to competition, trade, and foreign direct investment (World Bank 2023a). The sector is dominated by SMEs and informality, lacking large corporations capable of significant climate investments. Although SMEs and households can contribute to the green transition through investments in EVs, solar panels, agriculture, and EE, the country’s low average income means that initiatives will have to be supported through fiscal incentives and financing. While liquid and profitable, the banking system faces major challenges in scaling up climate-related lending because of obstacles on both the supply and demand sides. The banking system is small, having an asset-to-GDP ratio of only about 30 percent, heavily reliant on customer deposits. These constraints limit the long-term lending capacity, despite initiatives such as the issuance of green bonds. On the demand side, the lack of creditworthy customers for long-term loans stems from structural issues such as small enterprise size, informality, poor financial transparency, and high lending costs. Additionally, both supply and demand are hampered by a lack of knowledge and data to properly assess the environmental impact of investments, leading to risks of perceived greenwashing, which undermines credibility in green lending efforts. The Tajik capital market remains embryonic. The few domestic institutional investors include the state pension fund, the deposit insurance fund, and insurance companies, which are small (about 2 percent of financial sector assets). The state pension and deposit insurance funds are limited to investing 100 percent of their reserves in government bonds. Climate financing will require Tajikistan to undertake a comprehensive, sustained, whole-of-government effort to mitigate or remove the constraints, in cooperation with its development partners. Given the level of economic and institutional development and the state of its financial sector, the country cannot unlock private finance for climate mitigation and adaptation with a few targeted interventions: it requires a broad effort across several policy areas, investments in knowledge and capacity building in both the public and the private sectors, and changes in private sector business models and practices. Tajikistan’s development partners would play a crucial role. At the same time, enabling climate financing will not be possible without external financial assistance. Given the nature of the required reforms and changes and the time needed for them to bear fruit, it is unlikely that (domestic or foreign) private finance will become available in sufficient quantities to close the climate financing gap in Tajikistan. Additional external financial resources will be necessary, especially in the short 63 Chapter 6. Financing climate action and mobilizing the private sector and medium term. Given the co-financing requirements of foreign loans—typically around 20 percent—and the available fiscal space, these resources should ideally be in grant form or on highly concessional terms. Tajikistan and its development partners and donors should tackle this challenge together in a phased approach. Through 2030, the emphasis should be on mobilizing additional external financial assistance that will enable Tajikistan to meet its NDC while laying policy foundations and changing business practices to unlock private climate finance. During 2031–50, if these reforms are successful, Tajikistan should be able to mobilize sufficient amounts of private finance to advance the green transition. The government should identify and prioritize high-impact adaptation and mitigation projects, renewing its emphasis on adaptation. Addressing climate challenges requires investments across a broad front, but the government needs to concentrate on projects with the greatest impact. Given its tiny share in global GHG emissions on the one hand and its massive vulnerability to the impacts of climate change on the other, budgetary resources should focus on adaptation and resilience (particularly in infrastructure, energy, and agriculture), which are projects less likely to be funded by private sources. Donors and development partners have an important role to play here: donor-funded climate-related projects should be driven less by donor priorities and more by the need to maximize the economic benefit for the country. An adequate climate data infrastructure is a critical foundation for channeling both public and private finance to the right projects. The ability to measure GHG emissions and, more broadly, the environmental impact of economic activities and investment projects, will enable financial intermediaries and private investors to allocate credit and investment in a climate-efficient way. At present, some banks are trying to ‘green’ their loan book by using classifications or standards handed to them by international financial institutions or crude ‘exclusion lists’ of polluting activities. This approach does not encourage the financing of investments that are GHG intensive but could reduce emissions over time. 53 Second, absent GHG emission data preclude independent audit and verification of the climate impact of the loan allocation, creating an incentive for greenwashing. Developing a uniform ESG standard or green taxonomy would level the playing field for financial firms and investors, allowing them to assess the climate-related risks on their balance sheet and, eventually, start measuring Scope 3 (financed) emissions. A single taxonomy would replace the disparate approaches currently used by banks and improve transparency and credibility. The Ministry of Trade and Economic Development is preparing one with support from IFC. A uniform reporting standard, initially applicable to the largest companies and financial firms, would be another good step. To ensure effectiveness and credibility, appropriate enforcement should support a reporting standard, along with independent audit and verification arrangements, to prevent performative exercises that are prone to greenwashing. Development partners will be essential in closing the financing gap and implementing the agenda for climate change with their money and technical support. Official development assistance (ODA) has been a major funding source, averaging US$560 million annually from 2019 to 2021, largely from multilateral institutions. ODA levels are expected to fall, however, to US$300–US$400 million annually as the economy develops. Only a portion of ODA goes to climate-related investments, as most funds are historically allocated to infrastructure and social sectors, focusing on poverty and inequality. The development partner contributions are crucial in knowledge transfer, capacity building, developing ESG and green principles suited to Tajikistan, and creating innovative instruments for climate finance. Development partners should also prepare the country for international carbon markets, easing access to foreign direct investment while ensuring that such investments are climate resilient. Improved donor coordination is necessary to align efforts with government priorities, avoid project overlaps, and ensure effective implementation. A collaborative approach is vital if Tajikistan is to tackle climate challenges and mobilize the resources it needs. 53 Even where adequate data are available, this is a pitfall affecting most ESG and ‘green’ taxonomies, which are static. For example, placing coal-fired plants on an ‘exclusion list’ for bank loans does not allow the financing of carbon capture technologies in these plants, which could make a major contribution to decarbonization. 64 Country Climate and Development Report: Tajikistan Tajikistan should also prioritize access to new external sources to bridge the financing gap. Potential sources include climate funds such as the Green Climate Fund, Global Environmental Facility, and Climate Investment Funds, which, though individually small, could collectively have a substantial impact. Other potential sources to explore include the European Fund for Sustainable Development, the Nordic Environment Finance Corporation, and Denmark’s Investment Fund for Developing Countries. Additionally, Tajikistan could explore international carbon markets, particularly under Article 6 of the Paris Agreement, and voluntary carbon markets, which could support domestic climate investment and aid vulnerable populations. Lastly, the Loss and Damage Fund, established at COP28 to help countries affected by climate change, could be a vital resource. 54 Raising awareness of climate change and achieving government climate goals is critical across all social segments, particularly among SMEs and the general population. Fiscal incentives alone are insufficient to ensure widespread support for the climate agenda, especially as measures with economic and social costs, such as carbon taxes, are implemented. Improving the capacity to collect and analyze climate-related data in both the public and private sectors is essential, although progress so far has been uneven. Key public agencies and some commercial banks are advancing green practices, but significant gaps remain. Effective capacity building must be accompanied by improvements in data availability, with the responsibility for building analytical skills decentralized to individual agencies and firms. Regulatory agencies and industry associations can provide crucial guidance and resources. 6.4. Mitigating the fiscal and financial risks of climate change The fiscal impacts of climate change damages are becoming increasingly apparent. Each year, the dam­ages to specific sectors caused by climate change and the resulting loss in GDP lead to a decline in fiscal revenues and increase in post-disaster emergency spending. In the outlook, the fiscal deficit is projected to increase up to 3.7 percent of GDP in 2050 compared with an average of 1.3 percent in 2021–23. Consequently, public debt levels will rise by 0.6 percent to 32.4 percent of GDP in wet/warm conditions and as much as 3.3 per­ c entage points, to 35.1 percent, in dry/hot conditions. The impact of additional adaptation investments is expected to be limited, increasing public debt to 36 percent of GDP by 2050 compared to the Reference Scenario. The long-term benefits of such investments include limiting climate damage within sectors, strengthening GDP growth, and raising revenue. Carbon taxation can create additional fiscal space to fi­ nance investments and reduce the public debt burden. Climate-related risks can potentially translate into financial risks for financial institutions, with microcredit deposit institutions particularly exposed. At 30 percent of GDP (end of 2023), total financial sector assets are the lowest in Central Asia. Nearly 63 credit institutions, mainly banks and microfinance institutions, account for more than 90 percent of these assets, with limited contributions from institutional investors (the state social security fund and insurance companies). The sector is highly concentrated, with three banks holding two-thirds of assets. Asset quality issues persist despite improvements. Credit to the private sector is low, partly reflecting low confidence and high interest spreads—even by regional standards. Financial inclusion is limited, especially for small businesses. Agriculture, industry, construction, and transport are highly exposed to climate risks, particularly transition risk, and represent 32.6 percent of loan exposure. While the largest banks have significant exposure in the capital Dushanbe, microcredit deposit institutions have the largest exposure to climate-sensitive agriculture in Khatlon and Sughd (regions with a high risk of river floods) (Figure 6.2). 54 A landmark decision at the 2023 UN Climate Change Conference (COP28) was to operationalize a fund for responding to loss and damage. The World Bank was invited, on an interim basis and subject to conditions, to act as the host for the fund secretariat and to act as trustee. Following approval by its Board of Executive Directors, the World Bank confirmed to the COP28 Presidency in June 2024 that it was willing and able to meet the stipulated conditions. In August 2024, it submitted relevant documentation, including a hosting agreement, to the Fund’s Board. The Board held its second meeting in July 2024. It will further develop the operational and implementation parameters of the fund (such as eligibility and activities) in line with the governing instrument contained in the COP28 Decision. 65 Chapter 6. Financing climate action and mobilizing the private sector FIGURE 6.2: Distribution of loans by industry and region 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Dushanbe Sughd region Khatlon region Districts under Gorno-Badakhshan Republic Subordination Autonomous region Other industries Consumption Financial intermediation Foreign Trade Services Transportation Construction Industry Agriculture Source: Original compilation using National Bank of Tajikistan data as of December 31, 2023. Tajikistan is not properly managing its climate-related financial and macrofiscal risks. Nearly 60 percent of 100% the indicators are nascent, 25 percent are emerging, and only 17 percent are established, suggesting that the 90% country lags behind its peers in financial and macrofiscal matters (Figure 6.3). There are gaps in communicating 80% and mitigating the disaster and climate exposure of the financial sector and pension systems, as well as 70% planning for long-term macroeconomic impacts. Climate-related fiscal risks are not reflected in the macrofiscal 60% framework and budget planning to support forward-looking risk prevention. But the Government of Tajikistan 50% working to develop a methodology or manual for reporting climate risks and climate-related liabilities. is40% 30% FIGURE 6.3: Readiness to manage financial and macrofiscal issues 20% 10% Communicate and mitigate the disaster and climate risk exposure of the financial sector and pension systems 3 0% Anticipate and planДушанбе Согдийская for long-term macroeconomic impacts Хатлонская Районы 2 Горно-Бадахшанская область область республиканского автономная Develop a financial strategy to manage contingent подчинения область 1 3 liabilities, combining multiple instruments Другие отрасли Потребление Финансовое посредничество Внешняя торговля Услуги Include contingent liabilities from natural disasters and Транспорт environmental Строительство shocks in the Промышленность planning and budgeting process 1 хозяйство Сельское 2 0% 20% 40% 60% 80% 100% Share of indicators Nascent Emerging Established Source: Original analysis based on the Adaptation and Resilience Diagnostic Assessment Framework. The country has no comprehensive strategy to deal with contingent liabilities. Government liabilities include disaster response, costs of recovery, and reconstruction of both public and occasionally private assets—these Информировать costs are финансовый both сектор immediate and longer term. For immediate financing, the government relies и пенсионные системы о рисках, связанных с бедствиями и климатом, 3 mainly on a single и смягчать их последствияsource of prearranged funding—the Government Reserve Fund. A shortage of prearranged Предвидеть financing, however, долгосрочные и планировать will result in the need to reallocate the budget, borrow, 2 or rely on donor aid. Financial макроэкономические воздействия shocks caused Разработать natural управления by стратегию финансовую disasters and other shocks, including those from climate change, can negatively условными обязательствами, сочетающую в себе 1 3 affect economic множество инструментовgrowth and development progress if Tajikistan cannot mobilize funds in a timely manner to Включить условные обязательства, связанные finance со adequate стихийными emergency бедствиями response и экологическими and early recovery/reconstruction потрясениями, 1 or must reallocate 2 resources from в процесс планирования и составления бюджета other development priorities. 0% 20% 40% 60% 80% 100% Tajikistan must proactively manage post-disaster contingent the amount of liabilities and increase Доля индикаторов finance that is available in a timely manner after disasters. The Зарождающиеся Ministry of Finance Развивающиеся prepared a National Сформировавшиеся Disaster Risk Finance Strategy to address the country’s financial preparedness for disasters. This work is supported by the World Bank’s Strengthening Critical Infrastructure against Natural Hazards Project. The 66 Country Climate and Development Report: Tajikistan strategy identifies priorities in financial preparedness for disasters and a series of measures, including risk financing instruments, to address these priorities as part of a comprehensive approach to layering risk. The introduction of comprehensive risk layering can match financing mechanisms—budget reserves, contingent credit, and risk transfer instruments—to the severity and probability of disaster events. Tajikistan is making strides toward integrating climate risks into public investment planning and management. Government budget allocation processes factor in potential climate risks and disaster preparedness needs. Public infrastructure projects are designed and built with greater resilience to climate change impacts and extreme weather events. However, challenges include data gaps, capacity building, and resource mobilization. Tajikistan is making progress, but continuous efforts are needed to address these gaps, strengthen capacity, and secure sufficient resources for long-term effectiveness. Financial firms are beginning to integrate climate-related considerations into their business decisions, but approaches vary widely. Banks are increasingly aware of the potential impact of climate-related risks on their business models. Some banks are relatively advanced in assessing the environmental impact of their lending and have developed guidelines to limit exposure to polluting sectors. These efforts are mainly driven by international financial institutions or development partners involved as shareholders or funding providers. Consequently, banks apply different standards with varying rigor. Due to a lack of necessary data, methodologies, and expertise, these standards are qualitative, applied arbitrarily, and not independently audited. Importantly, there are no official estimates of climate-related risks on banks’ balance sheets. Climate change is imposing additional pressures on Tajikistan’s private sector. A 2019 World Bank Green Survey for Tajikistan found that 4 percent of nonagricultural private firms had suffered monetary losses due to extreme weather events. 55 Medium-size firms were four times more likely to experience monetary loss from extreme weather events compared to large firms and three times more likely than small firms (Acevedo et al. 2020). Khatlon Province reported the highest proportion of firms with losses. Climate awareness is rising in the Tajik private sector, especially among exporting firms and those with foreign ownership. On average, 8 percent of the private sector firms had climate sector goals embedded in their strategic objectives, and 5 percent had a manager responsible for climate change or environmental issues. Firms with foreign ownership are four times more likely to have a climate adaptation objective than firms without foreign ownership. Exporting firms were almost five times more likely than non-exporting firms to have a manager for climate change issues, while firms with foreign ownership were three times as likely to have such a manager. Climate managers were twice as likely to be found in manufacturing firms compared to those in other services, and nine times more likely than in retail firms. On average, 34 percent of the firms noted their adoption of climate change-related measures, while those that had not claimed competing investment priorities, limited financial resources, profitability concerns, and uncertainty regarding future prices. Among those who approved measures, 11 percent adopted upgrades to machinery and equipment, 7 percent implemented heating and cooling fixes, 5 percent improved lighting systems, 4 percent adopted waste minimization processes, 3 percent adopted energy management measures, and 2 percent adopted procedures to reduce air pollution. A large proportion of firms are monitoring their energy use and promoting energy efficiency. 56 Nearly 58 percent of firms monitor their energy consumption. Firms in manufacturing and other services are just as likely as those in retail to monitor energy consumption. Firms located in Sughd (where manufacturing firms are dominant) are more likely to monitor energy consumption (74 percent) than firms in any other region. There is only a minor difference in the proportion of firms monitoring energy consumption across dimensions such as firm size, ownership, and exporting status. Despite more than half of firms monitoring 55 World Bank, EBRD (European Bank for Reconstruction and Development), and EIB (European Investment Bank). 2019. “Tajikistan Enterprise Survey 2019.” World Bank MicroData. https://microdata.worldbank.org/index.php/catalog/3722. 56 A caveat of this survey is that it is not clear whether decarbonization measures have been implemented to tackle climate change or to contain production costs. 67 Chapter 6. Financing climate action and mobilizing the private sector energy consumption, just over one-quarter have consumption targets, and only 21 percent have conducted external energy consumption audits. Efforts to adopt off-grid renewable energy solutions are gradually under way, but just over one-tenth of the firms have adopted such measures. Adaptation measures include the monitoring of water use. On average, 18 percent of private firms monitored their water use, while 6 percent had completed external water audits. Those mostly include large firms, manufacturing firms, exporting firms, and firms with foreign ownership. The manufacturing sector has the highest proportion (39 percent) of firms that monitor their water use. 6.5. Enhancing efficiency through digitalization Digitalization in Tajikistan could bolster public and private capacities to spur green investment, monitor and utilize resources more efficiently, and enhance climate change adaptation and mitigation initiatives. Digitalization will enable Tajikistan to better track weather patterns, climate change risks, and emissions, for example, by integrating international best practices and tools, including those from the EU (see Box 6.1). BOX 6.1: Three EU tools to enhance adaptation and mitigation ■ The European Organization for the Exploitation of Meteorological Satellites (EUMETSAT). One of the most important sources of monitoring data on climate change is EUMETSAT, the European operational satellite agency for monitoring climate, weather, and the environment from space. This information is also critical to the safety of air travel, shipping, and road traffic, and to the daily business of farming, construction, and many other industries. ■ EUMETSAT cooperates with Central Asian countries in part by maintaining contact with the National Meteorological and Hydrological Services (NMHS), which serves as Central Asia’s public authorities for climate-related forecasting. To further assist the region, EUMESTAT has initiated a Satellite Data for Central Asia (SADCA) project and is committed to individual National Meteorological Services in Central Asia. EUMESTAT provides users with access to its data and products and supplies regular information on EUMETSAT’s activities and plans as part of its strategy to promote operational access to its data. ■ The European Commission Initiative on Digital Connectivity: A Team Europe Initiative on Digital Connectivity, launched in November 2022, provides expertise on connectivity, cybersecurity, and green data centers to Tajikistan along with Kazakhstan, the Kyrgyz Republic, and Uzbekistan. Intended to improve internet access among businesses and citizens, the initiative offers safe satellite connectivity through earth stations with integrated internet exchange points and green data centers positioned in each participating country, linking to existing broadband infrastructure. Telecommunication operators can reduce emissions and improve EE by shifting from legacy to newer technologies, such as 5G. Digital technologies have the potential to reduce emissions in energy, mobility, and manufacturing by up to 20 percent by 2050 (World Economic Forum 2024). STL Partners, an international telecoms research and consulting firm, says rollouts of 5G networks will lower carbon emissions. A limited 5G rollout will have little impact on reducing carbon emissions, which are expected to remain around 500,000 tCO 2 from 2020 to 2030. A slow rollout causes emissions to drop to 400,000 tCO 2 for the same period, while a moderate-to-fast rollout causes emissions to fall further to 300,000 tCO 2. ■ Digital public services: In-person visits or transactions could be digitized with e-government services, telework, and remote education, lowering travel-related GHG emissions. Yet e-services consume energy in the form of software, hardware, and connectivity to collect, store, and process data. The climate impact of e-services could therefore measure GHG emissions using data centers as a proxy. ■ E-waste management: Prospects for a circular economy were discussed in a 2022 article (Tleuken et al. 2022) on the country’s e-waste management. The country disposes of 700–800 tons of garbage 68 Country Climate and Development Report: Tajikistan every day in more than 70 landfill sites. These highly flammable sites pose a threat to nearby inhabitants and to surrounding flora and fauna. Unauthorized landfills pose another problem with their substandard practices and policies and present an even greater health threat to communities. A de-mercurization unit was installed at the Dushanbe landfill but it has never been used and is no longer even functioning. Waste has not been sorted at the household level—plastic, glass, e-waste, and so on—because houses have no sorting containers. As a result, about 97 percent of recyclables cannot be sorted into their proper streams or recovered for reuse. ■ Development of green digital infrastructure: With sensors, controls, and real-data analytics, operators can assess energy usage, identify peak hours, and monitor network performance. Data-driven results will help operators with energy optimization and distribution. Operators of any buildings—not just data centers—can optimize energy usage and control air conditioning, heating, ventilation, and lighting. The energy system can adjust use based on occupancy, weather, and other factors to improve efficiency and will allow remote monitoring and control of energy use in buildings. Chapter 7. From assessment to action >> 69 Chapter 6. Financing climate action and mobilizing the private sector Chapter 7 From assessment to action This CCDR on Tajikistan presents actionable strategies and policy recommendations to help the country achieve its development objectives in a sustainable manner. Its recommendations focus on mitigating the adverse impacts of climate change while promoting a green, resilient, and inclusive development pathway. The report shows how climate change is already exerting significant pressure on Tajikistan’s economy, particularly at the water-energy-food nexus. A decline in water availability has already affected priorities for hydropower development and investment and exposed the vulnerability of the private sector and lower- income groups to energy and water shocks. Climate change will also narrow existing bottlenecks related to capacity, knowledge, the political economy, and the rule of law. Efforts toward resilience and low-carbon development offer opportunities to address these concerns in a manner that supports the goals of economic transformation and benefits from the regional electricity market. Navigating the transition will depend on prioritizing interventions. While many measures are important, some are relatively more urgent because inaction in the short term will increase vulnerability and lock in resource and carbon-intensive development patterns that increase subsequent costs and financial risks. Regarding impact, some measures are expected to contribute to both climate and development goals in multiple sectors, creating a win-win situation. Thus, strengthening institutions for climate actions, inclusion, adaptation, and resilience should be prioritized, The recommendations are grouped into five areas with corresponding policy packages that separate urgent priorities with substantial co-benefits and synergies with other policie s: A. Stronger institutions for better adaptation, resilience, and mitigation B. Just and inclusive climate strategies C. Mobilizing climate finance D. Adaptation at the water-energy-food nexus, resilient landscapes, connectivity, and lower vulnerability E. Accelerating resilient and low-carbon development The policy recommendations — presented in Table 7.1 — are organized to outline high-level objectives (and the suggested time frame for meeting them) and various types of policy instruments. They are categorized by sector and type of climate policy—considering the adequacy of current policy and institutional frameworks, fiscal capacities, and the private investment environment. Because the green transition is a comprehensive and far-reaching process, the recommendations are not exhaustive—but they highlight the most important policy priorities. By integrating climate considerations linked to investment needs into development plans, these recommendations aspire to support Tajikistan in realizing the World Bank’s overarching vision of ‘A world free from poverty on a livable planet’. TABLE 7.2: CCDR policy recommendations High-level objective Policy recommendation Prioritization Sector Policy type Policy Package A: Stronger institutions for better adaptation, resilience, and mitigation Normalize the outlook on climate and the environment to influence the strategic and Urgent with planning direction of the country as it builds Adaptation co-benefits Economy-wide the capacity of key institutions, including the and mitigation Climate regulatory and synergies Committee on Environmental Protection and the framework Ministry of Economy. Develop climate change laws, bylaws, and Urgent with Adaptation regulatory standards to reduce GHG emissions co-benefits Economy-wide and mitigation and promote adaptation. and synergies Finalize the elimination of subsidies (cost- recovery tariffs for electricity and district heating Urgent with by 2027), introduce carbon pricing based on the Price incentives co-benefits Economy-wide Mitigation intensity of GHG emissions in key sectors, and and synergies strengthen compliance with pollution standards and requirements in key sectors. 72 Country Climate and Development Report: Tajikistan High-level objective Policy recommendation Prioritization Sector Policy type Sovereign Urgent with Establish a dedicated post-disaster emergency risk financing co-benefits Public finance Adaptation fund. mechanism and synergies Set up a monitoring, reporting, and verification Carbon accounting Urgent Multisectoral Mitigation (MRV) system. Progressively improve the quality of pragmatic indicators for climate action, including for subnational levels, and identify opportunities Strategic planning to mainstream these indicators in the annual and budgeting for and medium-term budgeting processes in line Adaptation Urgent Public finance climate mitigation with prevailing public financial management and mitigation and adaptation capabilities. The adoption of Public Investment Management Assessment (C-PIMA) principles will help prioritize low-carbon and climate- resilient infrastructure. Introduce emission trading schemes and Medium and Carbon market crediting mechanisms for domestic and Economy-wide Mitigation long term international carbon trade. Develop uniform ESG standards and a green Medium and Adaptation ESG standards Multisectoral taxonomy for public and private enterprises. long term and mitigation Policy Package B: Just and inclusive climate strategies Implement reforms to operationalize a benefit- Equitable Benefit- sharing mechanism for the equitable use of Urgent with Sharing for Households Mitigation future hydro and other renewable resources, co-benefits renewable resources particularly for the Rogun HPP project. Use place-based approach to enhance livelihood, Livelihood and employment, and economic inclusion programs employment to increase the resilience of households the Urgent with Adaptation support for disaster- vulnerable to or affected by natural disasters Households co-benefits and mitigation affected and climate or the green transition in most vulnerable sub- migrants regions. Design livelihood support programs especially targeting women and youth. Enhanced social Strengthen the Targeted Social Assistance assistance and Program and increase the adaptive capacities adaptive social of the social protection system to better support Adaptation Urgent Households protection for vulnerable households affected by climatic and and mitigation vulnerable economic shocks (such as higher carbon prices populations and subsidies reforms). Scale up the size and scope of labor market Green workforce programs to reskill adults and match them with Urgent Households Adaptation reskilling expansion jobs in green professions. Prioritize involvement of women and youth. Local governments Expand local government mandates, capacity, to build resilience budget, and incentives to engage rural and urban Adaptation and reduce the Urgent Economy-wide communities in climate action and to address and mitigation vulnerability of pollution and green actions. communities Policy Package C: Mobilizing climate finance Improve the capacity to collect and analyze climate-related data in the government agencies Urgent with Adequate climate involved in climate policy, and help private firms, co-benefits Multisectoral Adaptation data infrastructure notably financial institutions, to strengthen their and synergies own capacity. 73 Chapter 7. From assessment to action High-level objective Policy recommendation Prioritization Sector Policy type Strengthen the assessment of climate-related risks on bank balance sheets—and in the banking Urgent Economy-wide Adaptation Greening of the system as a whole. financial sector Introduce and enforce reporting requirements for Adaptation Urgent Economy-wide banks in line with the uniform green taxonomy. and mitigation Create an enabling environment for capital markets development which encourages the issuance of ‘green’ and sustainability-linked Greening of capital Adaptation bonds, in line with the development of risk- Urgent Economy-wide markets and mitigation sharing and risk mitigation mechanisms, climate- related equity finance, and develop natural disaster insurance products. Explore certain types of microlending, which could facilitate climate-related investments in Microfinance for a the informal sector and encourage insurance Medium to Adaptation Multisectoral green transition companies to develop innovative climate- long term and mitigation related products, such as natural disaster microinsurance. Climate investment Revisit the investment policies of the State by the State Pension Pension Fund and the Individual Deposit Medium to Adaptation Fund and the Insurance Fund to assess whether they could Public finance long term and mitigation Individual Deposit allocate part of their assets to climate-related Insurance Fund projects. Enhance the insolvency legislation to address Climate-related Medium to climate-related debtor insolvencies more Economy-wide Adaptation insolvency long term efficiently and fairly. Policy Package D: Adaptation at the water-energy-food nexus, resilient landscapes, connectivity, and lower vulnerability Implement the National Water Strategy, upgrade Urgent with Address water water transport and storage infrastructure, and co-benefits Water Adaptation variability manage the reservoir cascade with better data. and synergies Modernize the irrigation infrastructure to Urgent with Address water use conserve water and improve agricultural co-benefits Agriculture Adaptation efficiency productivity. and synergies Promote resilient restoration of degraded lands with NBSs in priority areas, enhance Urgent with Resilient landscape land use regulation and carbon sequestration, Natural Adaptation co-benefits restoration and implement CSA, particularly in livestock, resources and mitigation and synergies enabling private investments with institutional and finance reforms. Build capacity and enhance digital solutions Increase capacity Urgent with for response and resilience through improved to manage disaster co-benefits Economy-wide Adaptation climate data and financial preparedness for risks and synergies disaster risk. Scale up CSA practices and build capacity and knowledge for their implementation, promote Mainstream climate- drought- and frost-tolerant varieties, improve Urgent with Adaptation smart agriculture for rangelands management, combat overgrazing- co-benefits Agriculture and mitigation food security induced land degradation, and mitigate methane and synergies emissions from livestock. Catalyze finance using crop insurance or forward pricing. Strengthen road asset management systems Resilient and increase budget allocations for maintenance Urgent with Adaptation connectivity in and rehabilitation. Improve network resilience co-benefits Transport and mitigation priority corridors incrementally, prioritizing strategic corridors and and synergies managing landslide risks. 74 Country Climate and Development Report: Tajikistan High-level objective Policy recommendation Prioritization Sector Policy type Implement stricter air quality standards and monitoring systems and enforce regulations to Adaptation Access to clean air Urgent Economy-wide reduce pollution from the heating, industrial, and and mitigation transportation sectors in cities. Water resource In areas prone to climate risks, prioritize universal Urgent Water Adaptation management water, sanitation, and hygiene coverage. Develop a nationwide strategy for resilient Promote compact urbanization and improve the urban planning Medium and Adaptation and resilient urban code, master plans, and relevant regulations. Economy-wide long term and mitigation development Encourage urban planning that integrates green spaces and enhances public transportation. Policy Package E: Accelerating low-carbon development Accelerate hydropower and solar generation investments from public and private sources. Urgent with Scaling up Adaptation Complete the Rogun HPP and develop other co-benefits Power renewables and Mitigation hydropower facilities (5 GW) and solar facilities and synergies (1 GW) by 2030. Design EE and building renovation programs to renovate and upgrade heating sources in 5 percent of the building stock annually by 2030. Energy efficiency Urgent with Introduce and enforce new building codes and sustainable co-benefits Buildings Mitigation that require better insulation and sustainable heating and synergies efficient heating technologies (for example, solar heat and shallow geothermal and air-source heat pumps). Reduce pollution from heating. Set cost-reflective district heating and electricity Electricity, Urgent with Subsidy removal and tariffs by 2027 for all users, including large district Mitigation and co-benefits tariff reforms industrial consumers, for the development of heating, adaptation and synergies competitive sectors. industry Improve energy security and reliability in the winter season, including gas supply security. To reduce pollution from industry, from 2025 Secure energy for gradual switch from coal to gas to lower emissions Urgent Industry Mitigation heating and industry from industrial activities (cement, fertilizer production). In the medium term, use city waste in industrial facilities (cement production). Introduce stricter local pollutant emission standards for passenger cars by 2027 and expand later to commercial vehicles. Introduce emission standards on CO 2 intensity covering Urgent Transport Mitigation also second-hand vehicle imports. Prioritize Sustainable electrification of highly utilized vehicles and transport fleets. Improve public transport supply. Transition to self-funding tax incentive mechanisms for EVs (for example, bonus/malus Medium term Transport Mitigation schemes). Improve the competitiveness and costumer-orientation of railways. Integrate national pasture and livestock development programs into the climate strategy to Methane emission improve cattle herd and animal productivity, while Medium to Agriculture Mitigation reduction also setting limits on cattle herd expansion and long term transitioning to lower-emission livestock, such as poultry, or alternative proteins such as legumes. Expand exploration and low-carbon production of Climate-smart available critical minerals and improve transport Medium to Industry Mitigation mining infrastructure to enhance global market access long term of mining sector Annex 1. Scenario Overview Table >> 75 Chapter 7. From assessment to action Annex 1. Scenario Overview Table Scenario Type Scenario Name Where Is It Used? Climate Aspect Adaptation/Mitigation Chapters 3, 4, and 5 Rogun project and for Macro, Energy/ No further climate its adaptation and Main Scenario Reference Scenario Transport and impact beyond today’s mitigation impacts Adaptation models included Additional mitigation Chapters 4 and 5 Climate impact Low-Carbon measures beyond the Main Scenario for Macro, Energy/ reflected though water Development Scenario Rogun power plant/ Transport models model inputs Reference Scenario Chapter 5 for Optimistic 1° climate Wet/warm Climate Macroanalysis for Optimistic 1.5° climate change scenario used Main Scenario Change scenario adaptation, referred to change scenario as the reference for as ‘climate scenario’ adaptation scenario. Chapter 5 for Pessimistic 4° climate Dry/hot Climate Change Macroanalysis for Pessimistic 4° climate change scenario used Main Scenario scenario adaptation, referred to change scenario as the reference for as ‘climate scenario’ adaptation scenario. Adaptation for Additional adaptation Chapters 3 and 5 for Optimistic 1.5° and measures on top of Main Scenario Adaptation Scenario Macro, Adaptation pessimistic 4°climate optimistic 1.5°and models change scenarios pessimistic 4°scenarios Reflects historical Chapters 1 and 3 to climate and Additional adaptation define the Historical Sub-Scenario Baseline scenario corresponding impacts measures in the Climate in the sectoral on natural resource (no relevant sectors analysis climate change impact) Chapter 4 for Waste Mitigation: In line with Sub-Scenario Ambitious scenario Decarbonization n.a. the Global Methane analysis Pledge Mitigation: Middle- Chapter 4 for Waste of-the road scenario Sub-Scenario Moderate scenario Decarbonization n.a. between ambitious and analysis reference scenarios Chapter 4 for Agriculture Mitigation: Increase in Sub-Scenario Eff n.a. 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