Alazani/Ganikh RiverBasin Water-Food-Energy -Ecosystems Nexus assessment Prepared by the Royal Insitute of Technology (KTH, Stockholm) under the supervision of the UNECE Water Convention secretariat First draft report for comments by the concerned authorities 19 June 2014 Contents 1 INTRODUCTION: THE NEXUS ASSESSMENT IN THE ALAZANI/GANIKH ................ 4 1.1 INTERSECTORAL CHALLENGES AND THE NEXUS APPROACH ........................ 4 1.2 THE NEXUS ASSESSMENT UNDER THE UNECE WATER CONVENTION .......... 4 1.3 WHY THE ALAZANI/GANIKH? ................................................................................... 5 1.4 ABOUT THIS DRAFT PILOT ASSESSMENT ............................................................... 6 2 Geography of Alazani/Ganikh River basin ............................................................................... 7 3 Institutional Assessment ......................................................................................................... 10 3.1 Mapping of actors ............................................................................................................ 10 3.1.1 Georgia ................................................................................................................................ 10 3.1.2 Azerbaijan ............................................................................................................................ 12 4.1 Brief overview of the sectors and resources of riparian countries .................................. 15 4.2 Economic relevance of the basin ..................................................................................... 15 4.3 National policies influencing the basin ........................................................................... 16 4.3.1 Georgia ................................................................................................................................ 16 4.3.2 Azerbaijan ............................................................................................................................ 18 6. Selected transboundary issues with intersectorAL impacts .................................................... 25 6.1 Small hydro development ................................................................................................ 26 6.1.1 Possible downstream effects .............................................................................................. 26 6.2 Threats to water quality ................................................................................................... 28 6.2.1 Untreated municipal wastewater ........................................................................................ 28 6.2.2 Agricultural discharges and practices affecting water quality. ........................................... 29 6.2.3 Other diffuse sources of pollution. ...................................................................................... 31 6.3 Forest cutting – alteration of hydrological flow downstream .......................................... 31 6.4 Increasing water demand ................................................................................................. 32 6.4.1 Downstream effects ............................................................................................................ 32 6.5 Groundwater use increase and groundwater pollution .................................................... 32 6.5.1 Downstream effect .............................................................................................................. 33 7 Possible inter-sector transboundary solutions ......................................................................... 33 7.1 Investing in water use rationalization and pollution reduction and treatment would significantly help economic development .................................................................................. 34 7.1.1 Energy and water - use and costs ........................................................................................ 34 7.1.2 Land and ecosystems – economic potential ....................................................................... 35 7.2 Hydropower development and Greenhouse gas (GHG) Mitigation and Funding ........... 35 7.3 Air quality improvement: wood and fossil fuel substitution ........................................... 37 7.4 Reforestation due to fuelwood substitution ..................................................................... 38 7.5 Climate change mitigation: reforestation and off-setting ................................................ 39 8 CONCLUSIONS AND RECOMMENDATIONS ............................................................................................ 40 8.1 Recommendations ........................................................................................................... 40 8.2 The way forward .............................................................................................................. 43 References ...................................................................................................................................... 44 5 Annex 1 Comparative Review of Countries based on World Development Indicators ......... 49 1 Annex 2 Basin Indicators ........................................................................................................ 60 1.1 General Basin Data .......................................................................................................... 60 1.2 Specific data (requested to the Countries Representatives after the Workshop) ............. 63 1 INTRODUCTION: THE NEXUS ASSESSMENT IN THE ALAZANI/GANIKH 1.1 INTERSECTORAL CHALLENGES AND THE NEXUS APPROACH Population growth, economic development and increased energy and food needs all exert increasing pressure on natural resources. Common development needs have to be met in a sustainable manner, without compromising the functioning of ecosystems. However, energy, land management for agricultural and other purposes and water resources planning commonly take place in isolation, without adequate consideration of what the planned developments require or assume about other sectors, and what implications – positive or negative – they have. Shortcomings in intersectoral coordination are a major challenge both on the national and transboundary levels, in developing countries, transition economies as well as in developed countries. With predicted increased demands for energy and food in the coming decades, environmental practitioners and policymakers are looking for ways to promote sustainable growth while also ensuring healthy ecosystems and adapting to a changing climate. These mean balancing multiple stakeholder needs. The “nexus approach” to managing resources aims to enhance water, energy and food security by increasing efficiency, reducing trade-offs, building synergies and improving governance across sectors. The nexus term in the context of water, food and energy refers to these sectors being inseparably linked, so that actions in one area can have impacts on the others, as well as on ecosystems. In a transboundary setting, friction and potential conflicts may result from tensions between sectoral and national objectives, unintended consequences of resource management and trade- offs between sectors. 1.2 THE NEXUS ASSESSMENT UNDER THE UNECE WATER CONVENTION The Meeting of the Parties to the United Nations Economic Commission for Europe (UNECE) Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Water Convention) wished to address the multiple challenges described above. The Parties therefore decided to undertake an assessment of the water-food-energy-ecosystems nexus in a representative set of transboundary basins in the pan-European (UNECE) region and beyond. At the same session of the Meeting of the Parties in 2012, a Task Force on the Water-Food-Energy- Ecosystems Nexus was established to oversee the assessment. By assessing the situation in transboundary basins jointly and improving the knowledge base, synergies can be achieved and potential solutions identified. The basin assessments to be carried out under the Convention are to support policy development and decision-making. More specifically, the nexus assessment (UNECE, 2014) has the following broad aims: • to identify intersectoral synergies that could be further explored and utilized in the different basins • to determine policy measures and actions that could alleviate negative consequences of the nexus and help to optimize the use of available resources (under future environmental and climate constraints). The components and the process of the nexus assessment are described in the document “Progress report on the thematic assessment of the water-food-energy-ecosystems nexus”1 In response to a call for expressions of interest, some 13 proposals were submitted by countries, joint bodies and other organizations for basins to be considered for assessment. The Nexus Task Force discussed the assessment approach and scope based on a discussion paper. An assessment methodology was then developed according to that guidance by the Royal Institute of Technology (KTH, Stockholm) in cooperation with the UNECE secretariat. 1.3 WHY THE ALAZANI/GANIKH? To test in practice the methodology, it was necessary to apply it to a pilot basin. Taking into account the complexity of the transboundary setting in the different basins, data availability, eligibility for available funding and possibilities for co-funding, the Alazani/Ganykh Basin, shared