The Hidden Cost of Pollution: How Lake Sevan’s Decline Threatens Armenia’s Economy

Lake Sevan generates nearly $400 million a year for Armenia through tourism, agriculture, energy, fisheries, and cultural value, but pollution, untreated wastewater, and climate change are pushing the lake toward serious ecological decline. The report warns that investing now in effective wastewater treatment and better water management is far cheaper than losing one of the country’s most vital natural and economic assets.

High in Armenia’s mountains, Lake Sevan is more than a beautiful landscape. It is the country’s largest freshwater lake, a source of drinking water, food, energy, jobs, and national pride. A new report by the Asian Development Bank, prepared with research led by MB Consulting CJSC and supported by Armenian institutions such as Armhydromet and the Water Committee of Armenia, shows just how much the country depends on the lake, and how much it stands to lose if its decline continues.

The study estimates that Lake Sevan generates close to $400 million every year, equivalent to about 1.5% of Armenia’s economy. This value comes from tourism, agriculture, hydropower, fisheries, and cultural heritage. Yet decades of pollution, overuse, and now climate change are pushing the lake toward a dangerous tipping point.

Pollution Is the Biggest Immediate Threat

The most urgent problem facing Lake Sevan is wastewater. More than 70% of sewage produced in the basin is discharged untreated or only partially treated. Many rural communities have no sewer systems at all. The three existing wastewater treatment plants in Gavar, Martuni, and Vardenis use only basic mechanical treatment and do not remove phosphorus or nitrogen, the nutrients that cause harmful algal blooms.

These nutrients enter the lake from household wastewater, agricultural fertilizers, and fish farms. The result is eutrophication: murky water, oxygen loss, dying fish, and rising risks for endemic species such as the famous Sevan trout. As water quality declines, so do fisheries, tourism, and the lake’s ability to clean itself naturally.

Climate Change Is Making Things Worse

Climate change is intensifying every existing problem. Temperatures in the Lake Sevan basin have already risen by about 1.5°C since the 1960s. Warmer air increases evaporation, while reduced snowfall means less meltwater flowing into the lake.

Climate models suggest that by the end of the century, river inflows could drop by more than one-third, while evaporation rises sharply. Even if water released from the lake is carefully controlled, Sevan’s level could still fall further. Lower water levels make pollution more concentrated, increase the risk of algal blooms, and reduce the lake’s resilience.

What Lake Sevan Is Really Worth

The report puts numbers on what Lake Sevan provides. Tourism and recreation make up the largest share, worth about $222 million a year, reflecting the benefits Armenians gain from swimming and leisure at the lake. Agriculture comes next, with irrigation water from Sevan supporting around $104 million annually in farm production in the Ararat Valley.

Hydropower from the Sevan–Hrazdan cascade adds about $18 million a year by replacing more expensive gas-based electricity. Fisheries and aquaculture contribute roughly $22 million. Cultural heritage, how much Armenians, including the diaspora, value the lake simply for existing, adds another $31 million annually.

Many values are not even included, such as international tourism, biodiversity, and Lake Sevan’s role as an emergency reserve of water, food, and energy during crises. This means the real value of the lake is likely even higher.

Fixing Wastewater Is Affordable, and Essential

Stopping Lake Sevan’s decline does not require impossible spending. The report compares three wastewater investment options, ranging from decentralized systems to large centralized and hybrid solutions. While upfront costs range from about $146 million to $235 million, the long-term annual cost of each option is similar, around $13–15 million per year.

That is a small amount compared with the hundreds of millions of dollars in benefits Lake Sevan provides every year. The key difference is effectiveness: systems that remove more phosphorus and nitrogen are far better at stopping eutrophication. In a lake as sensitive as Sevan, strong pollution control matters more than saving money upfront.

A Choice That Cannot Be Delayed

The report’s message is clear. Wastewater treatment is the first and most urgent step, but it must be paired with better irrigation efficiency, cleaner agriculture, stronger fisheries management, and more effective institutions. Lake Sevan’s future depends on acting now, not later.

Without action, Armenia risks losing one of its greatest natural assets. With smart investment and better governance, Lake Sevan can remain a source of life, livelihoods, and resilience in a warming world, rather than a symbol of missed opportunity.