Central Asian Central Asian Regional Risk Regional Risk AssessmentAssessment

United Nations Development United Nations Development ProgrammeProgramme

Regional Bureau for Europe and CISRegional Bureau for Europe and CIS(on behalf of the international (on behalf of the international

community)community)

(November 2008)(November 2008)

Central Asia’s Central Asia’s development development challengeschallenges

Sustainable water, Sustainable water, energy, land use issuesenergy, land use issues

Poverty reduction, Poverty reduction, improving welfare of improving welfare of millions of vulnerable millions of vulnerable individualsindividuals

Energy, water, food Energy, water, food insecurities insecurities underscored, especially underscored, especially in Tajikistan, by:in Tajikistan, by:– Harsh winter of 2007-08Harsh winter of 2007-08– Spring, summer drought, Spring, summer drought,

global food price global food price increasesincreases

““Compound crisis” Compound crisis”

Why the assessment? Why the assessment? Lessons from winter Lessons from winter

20082008

Government, international community:Government, international community:– Were not prepared to respond quicklyWere not prepared to respond quickly– Did not have the right mix of humanitarian, Did not have the right mix of humanitarian,

development programmingdevelopment programming Needed—better: Needed—better:

– Preparedness (early warning)Preparedness (early warning)– CoordinationCoordination– Approach to humanitarian/development Approach to humanitarian/development

programming nexusprogramming nexus

Risk factors do not Risk factors do not bode well for winter bode well for winter

2008-092008-09 Drought in spring/summer 2008, especially in: Drought in spring/summer 2008, especially in:

– Southern eastern regions of Central AsiaSouthern eastern regions of Central Asia– Ferghana ValleyFerghana Valley– Aral Sea deltaAral Sea delta

Potential regional links:Potential regional links:– Kyrgyzstan: “Compound crisis” now apparentKyrgyzstan: “Compound crisis” now apparent– Kazakhstan: Kazakhstan:

Global financial crisis hits remittancesGlobal financial crisis hits remittances Drought in South KazakhstanDrought in South Kazakhstan

– Uzbekistan: Energy sales/trans-shipments?Uzbekistan: Energy sales/trans-shipments? Rising world energy, food prices, boost Rising world energy, food prices, boost

inflationinflation Concerns about socio-economic vulnerabilitiesConcerns about socio-economic vulnerabilities

International International community’s responsecommunity’s response

Representatives of international Representatives of international community met in Almaty, 21-22 Julycommunity met in Almaty, 21-22 July

Decisions to:Decisions to:– Develop an integrated assessment of Develop an integrated assessment of

possible regional “compound crisis”possible regional “compound crisis”– Improve international agency Improve international agency

communication and coordinationcommunication and coordination– Support governments in developing Support governments in developing

appropriate responses (short-, long-appropriate responses (short-, long-term)term)

Bad news: Water levels Bad news: Water levels in Syr-Darya basin . . .in Syr-Darya basin . . .

Source: “Situation Analysis” (World Bank, Almaty, July 2008)

. . . Are well below . . . Are well below normalnormal

-41%

-5%

9%

-41%

-13%

5%

-37%

-19%

-1%

-38%

-22%

-6%

-39%

-19%

-10%

-39%

-4%

-24%

-39%

8%

-28%

-50%

-40%

-30%

-20%

-10%

0%

10%

April May June July Aug. Sept. Oct.

Toktogul (KYR)Chardara (KAZ)Kayrakum (TAJ)

2008 data, relative to monthly averages from 1991-2007. Source: SIC-ICWC, provided by Water Agency of Japan; UNDP calculations

And at Nurek in the And at Nurek in the Amu-Darya basin . . .Amu-Darya basin . . .

Source: Source: www.unece.org/env/water/publications/assessment/aral.pdfwww.unece.org/env/water/publications/assessment/aral.pdf

. . . It’s the same story. . . It’s the same story

-4%

-9%-8%

-12%

-9% -8% -8%

-15%

-12%

-9%

-6%

-3%

0%

Apr. May June July Aug. Sept. Oct.

2008 data, relative to monthly averages from 1991-2007. Source: SIC-ICWC, provided by Water Agency of Japan; UNDP calculations

““Electric shock” stops Electric shock” stops industrial growthindustrial growth

12%

0%

10%

-3%-5%

0%

5%

10%

15%

KYR* TAJ

20072008**

-17%

-24%

-30%

-20%

-10%

0%

KYR TAJSource: National statistical officesSource: National statistical offices

Electric power generation, Electric power generation, January-September 2008January-September 2008

Volume of industrial outputVolume of industrial output

* Kumtor production not included* Kumtor production not included

** January – September 2008 data** January – September 2008 data

Bad news: Inflation Bad news: Inflation acceleratesaccelerates

12%

22%

31%

6%

10%

27%

9%11%

19%

0%

5%

10%

15%

20%

25%

30%

35%

Tajikistan Kyrgyzstan Kazakhstan

200620072008

Average annual consumer price inflation rates (2008 data are Average annual consumer price inflation rates (2008 data are for first three quarters). Source: CIS Statistical Officefor first three quarters). Source: CIS Statistical Office

Bad news: Kazakhstan’s Bad news: Kazakhstan’s outgoing remittances outgoing remittances

downdown

$250

$400

$689

$507

$0

$100

$200

$300

$400

$500

$600

$700

2005 2006 2007 2008

Wages and transfers paid out to other CIS countries, in millions, first-half data. Sources: National Bank of Kazakhstan, UNDP estimates.

Bad news: Food Bad news: Food insecurity is growinginsecurity is growing

Tajikistan: 2.2 million food insecureTajikistan: 2.2 million food insecure– 34% of rural population34% of rural population– 37% of urban population37% of urban population– 800,000 severely food insecure, 800,000 severely food insecure,

requiring immediate supportrequiring immediate support Kyrgyzstan: Nearly 1 million Kyrgyzstan: Nearly 1 million

vulnerablevulnerable Sources:Sources:

– Tajikistan: WFP, FAO, UNICEF Tajikistan: WFP, FAO, UNICEF Joint Food Joint Food Security Assessment Security Assessment (May, July 2008)(May, July 2008)

– Kyrgyzstan: UN Kyrgyzstan: UN Winter Preparedness Winter Preparedness Response Plan Response Plan (October 2008)(October 2008)

. . . With declines in . . . With declines in 2008-09 wheat crop 2008-09 wheat crop

predictedpredicted

-25% -25%

-3%

-30%

-20%

-10%

0%

TUK TAJ UZ

Tajikistan is Tajikistan is particularly vulnerableparticularly vulnerable

Global food prices may Global food prices may now be falling . . . now be falling . . . – . . . But they are still . . . But they are still

high in Central Asiahigh in Central Asia What happens if the What happens if the

drought continues?drought continues?– Low reservoir water Low reservoir water

levels today can affect levels today can affect irrigated agriculture in irrigated agriculture in futurefuture

USDA forecasts for 2008-09 wheat USDA forecasts for 2008-09 wheat crops, over 2007-2008. Source: crops, over 2007-2008. Source: http://www.pecad.fas.usda.govhttp://www.pecad.fas.usda.gov

Food prices may be Food prices may be falling globally . . .falling globally . . .

FAO food price index

150

170

190

210

230

250

X-07 XI-07 XII-07 I-08 II-08 III-08 IV-08 V-08 VI-08 VII-08 VIII-08 IX-08 X-07

Source: http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/Source: http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/

. . . But not in . . . But not in TajikistanTajikistan

Source: UNDP-TajikistanSource: UNDP-Tajikistan

Rising Food Prices in Tajikistan

0

2

4

6

8

10

12

14

16

18

Sep. Dec. Jan. March May June July Aug. Sep.

Pri

ce (

So

mo

ni

per

un

it)

Beef

Milk

Eggs

Rice

2007 2008

(Data from (Data from UNDP-Tajikistan)UNDP-Tajikistan)

Fortunately, there’s Fortunately, there’s also some good newsalso some good news

GDP, agriculture GDP, agriculture growth continuegrowth continue– Remittance inflows Remittance inflows

from Russia continuefrom Russia continue Governments are Governments are

respondingresponding– Fuel procurement, Fuel procurement,

stockpilingstockpiling– Energy sector Energy sector

rehabilitationrehabilitation– Focus on vulnerable Focus on vulnerable

groupsgroups

Good news: Remittances Good news: Remittances from Russia still strong . . from Russia still strong . .

..

$1,886

$3,706

$5,147

$10,226

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2005 2006 2007 2008

Wages and transfers paid out to other CIS countries, in millions, first-half data. Source: Central Bank of Russia.

. . . As are remittance . . . As are remittance inflows in Central Asiainflows in Central Asia

$273$365 $389

$590 $604

$1,060

$0

$200

$400

$600

$800

$1,000

$1,200

2006 2007 2008

KyrgyzstanTajikistan

Wages and transfers received, in millions, first-half data. Sources: National Bank of Kyrgyzstan; IMF.

Good news: Output Good news: Output growth holds in 2008growth holds in 2008

GDP grows through first GDP grows through first three quartersthree quarters– Expansion of acreage Expansion of acreage

planted boosts agricultural planted boosts agricultural productionproduction

Shift away from cottonShift away from cotton

– Increasing remittances raise Increasing remittances raise incomes, spending, incomes, spending, constructionconstruction

Will this continue?Will this continue?– Do Russian, Kazakhstani Do Russian, Kazakhstani

financial crises threaten financial crises threaten remittances?remittances?

– Will drought affect 2009 Will drought affect 2009 harvest?harvest?

9.2%

7.2%

2.2%

6.6%

0%

5%

10%

TAJ KYR

Farm output

GDP

Sources: National Statistical OfficesSources: National Statistical Offices

Good news from Good news from Bishkek Summit (10 Bishkek Summit (10

October)October)

Central Asian heads of state meet Central Asian heads of state meet at CIS October summit:at CIS October summit:

““Parties reach consensus on all Parties reach consensus on all issues raised at the meeting, which issues raised at the meeting, which covered hydro-energy support, fuel covered hydro-energy support, fuel resources supply, water resources supply, water accumulation in the Toktogul and accumulation in the Toktogul and Nurek reservoir"Nurek reservoir"

— — Kyrgyzstani Foreign Minister KarabaevKyrgyzstani Foreign Minister Karabaev

Initial conclusions: Initial conclusions: ThreatThreat

““Compound crisis” phenomena:Compound crisis” phenomena:– Have spread from Tajikistan to KyrgyzstanHave spread from Tajikistan to Kyrgyzstan– Are in both the Syr-Darya, Amu-Darya basinsAre in both the Syr-Darya, Amu-Darya basins

Macroeconomic stability, growth in Macroeconomic stability, growth in Kyrgyzstan, Tajikistan largely supported by Kyrgyzstan, Tajikistan largely supported by remittances remittances – Remittances from Kazakhstan have already Remittances from Kazakhstan have already

droppeddropped– What will happen with remittances from Russia?What will happen with remittances from Russia?

Coordinated, effective responses needed Coordinated, effective responses needed from governments, international communityfrom governments, international community

Country responses: Country responses: Energy sectorEnergy sector

TajikistanTajikistan KyrgyzstanKyrgyzstan

SupplySupply

• Sangtuda 1 comes on Sangtuda 1 comes on line;line;• Coal, mazut stockpiled;Coal, mazut stockpiled;• Electricity, gas imports Electricity, gas imports increase;increase;•More generators, fuel in More generators, fuel in schools, hospitalsschools, hospitals

• Coal imports increase;Coal imports increase;• Additional gas imports Additional gas imports promised;promised;• Additional mazut Additional mazut procuredprocured

DemanDemandd

• Electricity deliveries Electricity deliveries reduced to rural areas;reduced to rural areas;• Tariff increases 2008-Tariff increases 2008-20102010

• Electricity deliveries Electricity deliveries reduced;reduced;• Load shedding;Load shedding;• Winter closures of Winter closures of schools heating with schools heating with electricityelectricity

Country responses: Country responses: Other areasOther areas

TajikistanTajikistan KyrgyzstanKyrgyzstan

Food, Food, other other areasareas

• Seed stocks (for spring Seed stocks (for spring 2009) increased2009) increased• Multi-cluster survey Multi-cluster survey tracks vulnerability in tracks vulnerability in schools, clinics, water schools, clinics, water providersproviders

• FAO-led assessment FAO-led assessment identifies 1 million food identifies 1 million food insecure individualsinsecure individuals• Universal monthly Universal monthly benefit increasedbenefit increased

AppealAppealss

• February-August 2008 February-August 2008 UN flash appeal brings in UN flash appeal brings in $14 million$14 million• September 2008 $34 September 2008 $34 million food security million food security appeal (for 800,000 most appeal (for 800,000 most vulnerable)—$9 million vulnerable)—$9 million raised thus farraised thus far

• Response Programme Response Programme launched October-launched October-NovemberNovember

• Follows FAO-led food Follows FAO-led food security assessmentsecurity assessment• $11 million in needs $11 million in needs identifiedidentified• Focus on 1 million food Focus on 1 million food insecure individualsinsecure individuals

Central Asia seems Central Asia seems ready for winter, ready for winter,

assuming:assuming:

Aid needs in appeals are metAid needs in appeals are met An “average” winterAn “average” winter The CIS presidents’ Bishkek The CIS presidents’ Bishkek

summit renewed commitment to summit renewed commitment to regional cooperation holdsregional cooperation holds

No significant macroeconomic No significant macroeconomic shocksshocks

Are we ready for Are we ready for surprises? Probably not . surprises? Probably not .

. .. . Memories of last winter may promote Memories of last winter may promote

cooperation and alertness . . .cooperation and alertness . . . . . . True systems are not in place, in such . . . True systems are not in place, in such

areas as:areas as:– Early warning systemsEarly warning systems– Incorporating “compound crisis” risks into Incorporating “compound crisis” risks into

disaster risk management mechanismsdisaster risk management mechanisms– Adapting humanitarian response procedures Adapting humanitarian response procedures

to “compound crisis” specificsto “compound crisis” specifics Better management of the humanitarian-Better management of the humanitarian-

development programme nexus would development programme nexus would helphelp

Toward an early Toward an early warning system that warning system that

worksworks

Many early warning systems are Many early warning systems are used in Central Asia, but none used in Central Asia, but none integrate entirety of integrate entirety of issues/institutionsissues/institutions

Water levels Water levels Energy production Energy production

Agricultural production, prices Agricultural production, prices Macroeconomic, fiscal,Macroeconomic, fiscal,balance-of-payments balance-of-payments constraintsconstraints

Vulnerable population Vulnerable population conditions conditions

RESPONSERESPONSE

Better disaster risk Better disaster risk management management mechanismsmechanisms

Probabilities of a natural disaster Probabilities of a natural disaster need to be calculated, updatedneed to be calculated, updated

Doing so and preparing Doing so and preparing appropriate responses requires appropriate responses requires complex information outside usual complex information outside usual DRM mechanisms domainDRM mechanisms domain

Fuel as an emergency good Fuel as an emergency good complicates procedural issuescomplicates procedural issues

Revisiting the Revisiting the development-development-

humanitarian nexushumanitarian nexus

HumanitariaHumanitarian problemn problem

Development Development programming programming

responseresponse

Development, Development, humanitarian humanitarian

outcomesoutcomes

Drought Drought reduces reduces energy energy securitysecurity

Energy efficiency, Energy efficiency, renewable energy renewable energy

(not only (not only distributing distributing generators)generators)

• Development: Development: Environmental Environmental sustainability increasessustainability increases• Humanitarian: Energy Humanitarian: Energy security improvessecurity improves

Drought Drought reduces food reduces food securitysecurity

Increasing rural Increasing rural household assets household assets

(not only (not only emergency food emergency food

relief)relief)

• Development: Income Development: Income generation opportunities generation opportunities increaseincrease• Humanitarian: Food Humanitarian: Food security improvessecurity improves

Way forwardWay forward

Bridging gaps, building synergies along:Bridging gaps, building synergies along:– Development/humanitarian nexusDevelopment/humanitarian nexus– Short-term/long-term continuumShort-term/long-term continuum

More specifically:More specifically:– Enhanced inter-agency communicationsEnhanced inter-agency communications– Toward a common early warning system?Toward a common early warning system?– Agency expert collocation in AlmatyAgency expert collocation in Almaty

UNDP will outpost economist, disaster risk UNDP will outpost economist, disaster risk specialist in coming monthsspecialist in coming months

– Revisit JCSS, UNDAF processes in terfms of Revisit JCSS, UNDAF processes in terfms of development/humanitarian nexusdevelopment/humanitarian nexus

Timetable, next stepsTimetable, next steps

First draft available for First draft available for consultations next consultations next weekweek– 3 December: UN, 3 December: UN,

partner agency meeting partner agency meeting (Geneva)(Geneva)

Mid- /late-December: Mid- /late-December: Report finalisationReport finalisation

January—Launches to:January—Launches to:– Raise awarenessRaise awareness– Mobilise resources for:Mobilise resources for:

UN appeals in Tajikistan, UN appeals in Tajikistan, KyrgyzstanKyrgyzstan

Other, related initiativesOther, related initiatives

Thank you very much!Thank you very much!

ББooльшльшoe oe

CCппacacибибo!o!

Rakhmat!Rakhmat!