Azerbaijan's partnership with Islamic Development Bank at COP29 Karabakh Region and water initiatives

The global trend of desertification, leading to a shortage of freshwater, has become a pressing issue for Azerbaijan in recent years. Approximately 70% of the country’s water resources are used in agriculture, where there are significant losses due to outdated irrigation canals. To address these challenges, new projects are being implemented in the Karabakh region of the country for the construction of reservoirs and main irrigation canals.

The Islamic Development Bank (IsDB) is ready to support Azerbaijan in these important initiatives. As part of the ongoing UN climate conference in Baku (COP29), a framework agreement was signed with the IsDB to provide Azerbaijan with $97 million for the construction of a main irrigation canal from the "Giz Galasi" reservoir.

Global climate change over the past decade has accelerated the process of desertification in the countries of the South Caucasus, where currently 62% of the total water resources are allocated to Georgia, 28% to Armenia, and only 10% to Azerbaijan. Specifically, in Azerbaijan, water balance indicators have decreased by 15-20% over the past 20 years.

In the driest years, the water volume in the Mingachevir Reservoir has been reduced by half, and the water inflow to the Takhtakorpu Reservoir, fed by the border river Samur, has significantly decreased. This situation is not surprising, as about three-quarters of Azerbaijan’s water resources are formed outside the country. In recent years, neighbouring countries have been increasing water withdrawals from transboundary rivers to meet the needs of their agricultural sectors.

Water usage for irrigation is also increasing in Azerbaijan. In 2010, around 1 million hectares of land were irrigated for various crops, but by 2020, this figure had risen to 1.7 million hectares, marking an increase of more than 70%. This trend continues to grow. The situation is further exacerbated by the deterioration of irrigation infrastructure, with significant water losses occurring in outdated main irrigation canals and earthen ditches. Additionally, inefficient irrigation practices result in substantial losses in the fields, ultimately contributing to soil salinization.

To minimize the impact of climate and human-induced negative factors on the water balance, several programs have been implemented in Azerbaijan in recent years, aiming at the efficient use of freshwater resources. Irrigation systems are being modernized in dozens of agricultural parks and major grain farms, which account for about 80% of the pilot, aerosol, micro-spray, and other water-efficient irrigation systems. Plans also include the introduction of electronic systems to monitor water resource usage.

Additionally, large-scale works are underway to seal irrigation canals by concreting them and covering them with polymer materials. Construction has also begun on the Yengija Reservoir in the Gabala region, which, once operational, will provide irrigation for 10,000 hectares of arable land. Overall, more than ten reservoirs are planned to be built in Azerbaijan in the coming years, which will enable the irrigation of at least 500,000 hectares of cultivated land.

In April 2024, work began on the reconstruction of the 122-kilometer Upper Shirvan Irrigation Canal. After modernization, the canal’s length will increase by an additional 200 kilometres, preventing the loss of around 346 million cubic meters of water, improving the ecological condition of the dried-up Hajigabul Lake, and ultimately providing irrigation water to 230,000 hectares of land. Another major project will be the construction of the Karabakh Canal. According to the president’s decree, a technical and economic feasibility study for the project is being developed, and construction of the irrigation canal is set to begin in 2025. The canal will cover 115,000 hectares of irrigated land across nine regions of the country.

At the ongoing COP29 conference in Baku, representatives from international financial organizations (IFOs) paid considerable attention to addressing the most pressing climate issue—freshwater scarcity. During a ministerial meeting on "Climate Change and Regional Cooperation to Prevent Glacial Melt in Central and Western Asia," the President of the Asian Development Bank (ADB), Masatsugu Asakawa, announced that over the next seven years, the ADB will allocate $3.5 billion to projects focused on sustainable water management and resource protection in Central and Western Asia.

Similarly, the Islamic Development Bank (IsDB) is implementing large-scale initiatives on climate issues, particularly in the water sector. At a roundtable at COP29 on "Transformational Climate Action," IDB President Muhammad Sulaiman Al-Jasser reminded attendees that since 2022, the bank has approved loans and technical assistance worth $5.5 billion under its climate finance program. Overall, the IsDB is funding 20 projects in 17 member countries, including the largest initiative for developing climate-resilient water resources in Kazakhstan, valued at over $1.153 billion.

During the COP29 conference in Baku, a meeting took place between Azerbaijani President Ilham Aliyev and the President of the Islamic Development Bank (IsDB), Muhammad Al-Jasser. During the meeting, an agency agreement, grant, and framework agreements were signed for the construction of a main irrigation canal from the "Giz Galasi" reservoir. These agreements include provisions for providing Azerbaijan with technical assistance and opening a credit line of $96.73 million for the construction of a 52-kilometre main irrigation canal in East Zangezur.

“We at the Islamic Development Bank are very proud to be the first to provide a loan in Karabakh - for the project of creating a main irrigation canal that will serve about 1.6 million people,” said Muhammad Al-Jasser. “This project will transform Karabakh, and I look forward to visiting this region," he emphasized. The IsDB President emphasized his eagerness to expand the bank’s financial involvement in implementing projects in Azerbaijan.

President Ilham Aliyev highlighted the importance of expanding Azerbaijan’s cooperation with the IDB in promising infrastructure and economic sectors, noting that the agreements signed with the bank are the first large-scale agreements with an international financial organization (IFO) for the implementation of projects in the territories liberated from occupation.

It seems that Azerbaijan's cooperation with international financial organizations (IFOs) in implementing infrastructure projects, particularly in the water sector, will continue to expand. The victory in the 2020 war and the subsequent establishment of control over the entire resource base of the previously occupied territories provided Azerbaijan with a unique opportunity to mitigate the country's water scarcity issues. This includes, among other things, the construction of new reservoirs, the installation of pipelines, and the creation of other water infrastructure to fully utilize the potential of the water-abundant Lesser Caucasus region, which accounts for about 20% of the country's water resources. This includes dozens of large mountain rivers and around 25 medium and small reservoirs and natural lakes.

The water resources of the region are fed by the powerful Araz River, which supports the Khudaferin Reservoir with a capacity of over 1.6 billion cubic meters, as well as water reservoirs such as Sarsang (560 million cubic meters) and Sugovushan (6 million cubic meters). In the future, other major irrigation projects are planned for Karabakh and East Zangezur, including the construction of the Hakarichay and Bergushadchay reservoirs and canals.

Recently, the Khachinchay Reservoir was inaugurated in the Aghdam region, while the Kondelenchay Reservoir in the Fuzuli region will be opened in the near future, and the construction of the Zabukhchay Reservoir is currently underway. Such initiatives are capital-intensive, and Azerbaijan is keen to attract loans from international donor organizations, as well as to implement advanced technologies and technical solutions in the development of the water infrastructure of the Karabakh region.