Building Water Security: Investing in Sustainable Reform Across Eastern Europe

The report by the OECD, UNECE, and UNEP under the EU4Environment Programme evaluates how Eastern Partnership countries are strengthening policies, institutions, and financing to attract investment in water security. It highlights progress in governance and planning but warns that weak financing, outdated infrastructure, and limited regional cooperation still hinder sustainable water management.

The report Assessing the Enabling Environment for Investment in Water Security in the EU’s Eastern Partner Countries is a collaborative study led by the Organisation for Economic Co-operation and Development (OECD) under the EU4Environment Water and Data Programme, funded by the European Union and implemented in partnership with the United Nations Economic Commission for Europe (UNECE) and the United Nations Environment Programme (UNEP). It evaluates how six Eastern Partnership (EaP) countries, Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova, and Ukraine, are building the political, institutional, and financial conditions to attract sustainable investments in water security. Drawing on extensive policy analysis, stakeholder consultations, and international best practices, the report provides a candid picture of progress and challenges across the region.

Water Security as a Cornerstone of Development

Water is portrayed not merely as a natural resource but as a foundation of social stability, public health, and economic growth. The report highlights that the EaP region faces a convergence of pressures: water scarcity, aging infrastructure, industrial pollution, and weak governance. These challenges are aggravated by climate change and geopolitical instability, which strain public budgets and disrupt long-term planning. While the EU has offered sustained technical and policy support through its neighborhood initiatives, the OECD finds that many countries still struggle to turn water strategies into credible, financeable projects. The mismatch between policy ambition and investment readiness remains a defining bottleneck in achieving water resilience.

Building Institutions and Governance for Water Reform

The OECD assesses governance as a key determinant of investment readiness. Most EaP countries have modernized water laws inspired by the EU Water Framework Directive, but enforcement is inconsistent, and coordination across ministries remains weak. Georgia and Moldova have adopted basin-level management approaches, showing early institutional innovation, though overlapping mandates persist. Armenia and Azerbaijan have established national water councils, signaling political will but lacking sustained funding and technical capacity. Belarus exhibits strong central control with limited stakeholder engagement, while Ukraine’s progress has been slowed by the war’s impact on infrastructure and administration. The report concludes that effective governance will require clear accountability, interagency cooperation, and long-term institutional continuity.

Strategic Planning Meets Financial Reality

Strategic planning has improved, with most countries aligning national water strategies with climate adaptation and sustainable development goals. Yet these plans often lack binding financial frameworks. The OECD notes that conflicting sectoral priorities, particularly in agriculture, energy, and industry, undermine water sustainability. Many utilities remain underfunded, operating with outdated tariff systems that fail to cover even maintenance costs. Heavy reliance on donor support and state subsidies makes financial flows unpredictable. The report highlights early experiments in Moldova and Ukraine with public-private partnerships and blended finance, supported by the EU and international lenders, but stresses that legal clarity and stable regulation are prerequisites for scaling up such mechanisms.

Data, Information, and Regional Cooperation

Reliable data is identified as the backbone of effective water management and investment planning. Across the EaP region, however, monitoring networks are fragmented and outdated. The OECD advocates for modernization based on the Shared Environmental Information System (SEIS) principles to ensure transparency, data interoperability, and evidence-based decision-making. The report also highlights the importance of regional cooperation, especially in managing shared water basins such as the Dniester and Kura. While joint monitoring and data exchange initiatives under UNECE’s Water Convention have yielded promising results, broader cooperation remains constrained by political sensitivities and uneven technical capacity. Building trust and institutionalized dialogue, the report argues, is essential for long-term regional water stability.

Towards a Step-Change in Water Investment

The concluding chapters make a powerful case for a transformative approach to financing water security. The OECD calls for mobilizing domestic resources, improving tariff systems, and leveraging international climate and green finance to create a self-sustaining investment ecosystem. Water, the report emphasizes, must be mainstreamed into national economic planning, with clear links to energy transition, food security, and public health. Achieving this will require coherent policy frameworks, stable institutions, and financial innovation that attracts both public and private capital. The EU and its partners are urged to deepen their engagement, not only as donors but as catalysts for reform. In essence, the report frames water security as both a test of governance and an investment in regional resilience and stability, a challenge that the Eastern Partnership countries can meet only through coordinated vision, sustained reform, and international solidarity.