How Better Water-Energy Co-ordination Can Safeguard Central Asia’s Climate Future

The OECD report argues that climate change, rising demand and ageing infrastructure are making water and energy insecurity a growing risk in Central Asia, and that fragmented, short-term management is no longer sustainable. It concludes that stronger data sharing, institutional co-ordination and joint investment across countries are essential to turn shared water and energy systems into a foundation for climate-resilient growth and regional stability.

Produced by the OECD Secretariat together with the Scientific Information Center of the Interstate Commission for Water Coordination of Central Asia (SIC ICWC), and supported by partners such as UNECE, EBRD and FAO under Germany’s International Climate Initiative, a report examines how Central Asia can better manage the tight link between water and energy in a rapidly changing climate. Covering Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan, the study argues that water and energy security are now inseparable from economic growth, social stability and climate resilience in the region.

Central Asia’s economies and populations are growing, pushing up demand for irrigation water and electricity. At the same time, climate change is shrinking glaciers, reducing river flows in the Amu Darya and Syr Darya, and increasing the frequency of droughts and floods. These pressures are exposing the fragility of ageing infrastructure and governance systems that were designed for a more stable climate and lower demand.

From Soviet-Era Integration to Fragmented Co-operation

During the Soviet period, water and energy were managed as a single, integrated system. Upstream countries stored water in winter and released it in summer for downstream irrigation, while receiving fuel and electricity in return. This system prioritised regional optimisation, but it also caused severe environmental damage, most famously the collapse of the Aral Sea.

After independence, that centralised system disappeared. Water and energy became matters of interstate negotiation, and Central Asia built a complex network of institutions and agreements, including the International Fund for Saving the Aral Sea and the Interstate Commission for Water Coordination. These arrangements helped avoid open conflict, but the report finds they have struggled to adapt to climate change, national interests and rising demand. Decisions are often short-term, based on annual bargaining rather than long-term planning.

The High Cost of Weak Co-ordination

The OECD shows that poor coordination between water and energy already carries a high cost. Studies reviewed in the report estimate that Central Asia loses billions of dollars every year due to inefficient water releases, agricultural losses, electricity shortages and missed investment opportunities. Downstream countries suffer from summer water stress, while upstream countries face winter power shortages.

Stronger coordination could reverse many of these losses. Better alignment between water releases and hydropower generation could boost electricity supply, reduce disaster damage and increase agricultural productivity. Beyond economics, improved co-operation could strengthen political trust between countries, expand access to water and electricity in remote areas, and improve the region’s ability to cope with climate shocks.

Three Practical Ways to Improve the Water-Energy Nexus

The report highlights three connected areas where action can make a real difference. The first is better data and knowledge sharing. Reliable information on river flows, glaciers, climate risks and demand is essential for smart decisions, yet data gaps remain widespread. Investment in monitoring systems, open data platforms and analytical tools is relatively low-cost but highly impactful.

The second area is institutional coordination. Water and energy are still governed largely in isolation, even though decisions in one sector directly affect the other. The OECD calls for closer interaction between water and energy agencies, clearer roles for regional institutions, and more inclusive decision-making that reflects the water-energy link.

The third area is infrastructure and finance. Central Asia faces an estimated USD 90 billion investment gap in water and energy infrastructure by 2030. Most projects are still nationally driven, with limited regional planning. Joint investments, public-private partnerships and shared financing mechanisms could help mobilise funds and spread risks, but only if supported by strong rules, transparency and long-term planning.

A Path Toward Climate-Resilient Co-operation

Financing is a recurring challenge throughout the report. Water institutions struggle to cover basic costs, infrastructure maintenance is underfunded, and water tariffs rarely recover expenses. While international donors and development banks are crucial, the OECD stresses that domestic reforms, such as tariff adjustments, clearer regulations and better investment frameworks, are essential for long-term sustainability.

Drawing lessons from international examples like the Mekong River Commission and the Itaipu hydropower project, the report concludes that Central Asia does not need a single new institution, but rather stronger coordination, better planning and fairer sharing of benefits. With climate change accelerating, incremental improvements are no longer enough. Deeper water-energy co-operation is not just a technical option, but a strategic necessity for Central Asia’s future stability, prosperity and climate resilience.