Abstract

Energy and water have emerged as critical issues for the CIS-7 countries—Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan, and Uzbekistan—and their neighbors for at least two reasons. The first is that energy and water constitute the region’s main natural resources, and the exploitation of both was and still is a key to these countries’ mode of production. The second is that the distribution of these resources is very unequal across countries. Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan benefit from rich energy reserves, while Armenia, Georgia, the Kyrgyz Republic, and Tajikistan have substantial water resources. This unequal distribution gives rise to potential gains from trade but it is also the source of recurrent conflict between neighboring states in the region. Energy and water issues are closely linked given that the latter can be used, inter alia, for hydropower generation and/or irrigation. Use of water in the municipal sector is not discussed in this chapter. Replenishment of the Aral Sea as an alternative to irrigation is consistent with increased winter hydro generation, discussed below under “Unlocking the Benefits from Trade.”

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