Attachments
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.
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.
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.
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, 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 (MtCO2eq) 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.
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, deemphasizing 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 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 MtCO2eq 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).
The Low-Carbon Development Scenario4 outlines a path for the entire energy system including all energy end uses to reduce emissions to near net zero by 2050 while significantly improving Tajikistan’s energy security and exports over current policies. In this ambitious pathway, energy security and exports are bolstered. Domestic renewables provide 93 percent of energy supply by 2050, compared with 53 percent in the Reference Scenario. This pathway involves significant steps, including the development of new hydropower and solar capacities, sustainable heating and transport, enhanced energy efficiency (EE), and adoption of low-carbon technologies. By 2035, investments in energy infrastructure would make Tajikistan a net energy exporter, generating US$16.7 billion in new electricity export revenues from 2025 to 2030. By 2050, these investments would make cities healthier and more livable by reducing air pollution, transport 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 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).
The low-carbon transition can be a catalyst for economic transformation in Tajikistan. If complemented by an enabling environment for the private sector, the transition could have a minimal negative effect on GDP by the 2030s and 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 a 6 percent positive deviation compared with the Reference Scenario by 2050 (Figure 5.5). The Low-Carbon Development pathway helps drive structural transformation in Tajikistan’s economy, with the share of industry growing sharply—supported by rapid expansion of hydro and solar power, along with growth in mining—and that of agriculture shrinking, relative to the Reference Scenario.
Investment in renewable energy (hydro, solar, and geothermal) and EE have the potential to generate new employment opportunities. The geothermal sector, with its labor-intensive installations, promises local economic growth and employment. At 34 jobs per installation, the geothermal sector’s job creation rate is almost triple the number needed for solar photovoltaics. Climate-smart mining could offer economic diversification as well, through the extraction of critical minerals needed for the global green transition and an expansion of existing gold, copper, lead, and zinc mining. Additionally, digitalization and trade in environmental goods could create new jobs and contribute to economic growth. Climate change may lead to labor reallocation across the economy, though some jobs in agriculture could be lost. It is difficult for agricultural workers to transition to nonagricultural jobs. Therefore, policies would need to focus on reskilling, training, and supporting workers in sectors with declining employment.
Implementation of a carbon tax would garner an additional fiscal revenue for the resilient low-carbon 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 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, sanitation, and water). 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.
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 LowCarbon 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.
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 tCO2 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.
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 lowcarbon 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 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.