Islamic Development Bank Invests $1.15 Billion in Kazakhstan Water Sector

At the recent UN Climate Change Conference (COP29) held in Baku, Kazakhstan’s Deputy Prime Minister and Minister of National Economy, Nurlan Baybazarov, celebrated the signing of a landmark agreement with the Islamic Development Bank (IDB). This $1.15 billion investment—the largest project ever financed by the IDB—marks a pivotal step in fortifying Kazakhstan water sector in the face of climate change.

Kazakhstan, with its vast landscapes and varied climate, faces pressing water-related challenges. The country’s economic growth, combined with climate-driven water scarcity, has intensified the need for robust, adaptive infrastructure. This new project, focused on climate-resilient water management, reflects Kazakhstan’s commitment to long-term sustainability and the IDB’s dedication to supporting green growth in member nations. Here, we unpack the ambitious project, its goals, and the promising impact it holds for Kazakhstan water sector and beyond.

Kazakhstan Water Sector

Kazakhstan is the world’s largest landlocked country and has one of the most diverse climates in Central Asia. This diversity, however, also brings vulnerability. The country relies on a delicate balance of snowmelt, river inflows, and groundwater, all of which are under threat due to rising temperatures, decreased rainfall, and increasing demand from industrial, agricultural, and urban sectors.

Kazakhstan’s water usage primarily serves the agriculture sector, which consumes an estimated [X]% of total water resources. The nation’s agricultural productivity, food security, and rural livelihoods are directly tied to the reliability of these water supplies. However, aging infrastructure and inefficient water management have compounded the scarcity issue. The government has been working toward sustainable water use, yet climate-related stresses make this goal increasingly challenging.

A 2023 study by the World Bank warned that Central Asia, including Kazakhstan, could face a 30% reduction in water availability by 2050 due to climate change. With urban growth rates accelerating, the water demand in cities like Astana and Almaty is rising, increasing strain on outdated water management systems.

In response, Kazakhstan has developed a 2050 Development Strategy that prioritizes water conservation, infrastructure renewal, and sustainable growth. With a clear aim to reduce water losses, promote efficient irrigation, and support resilience in rural and urban areas, the government has been seeking international partnerships to bring these goals to life. This is where IDB’s involvement brings valuable support.

The Islamic Development Bank’s (IDB) record-breaking $1.15 billion investment is a testament to Kazakhstan’s strategic importance and the IDB’s confidence in the nation’s economic direction. This funding will support the ‘Development of Climate-Resilient Water Resources’ project, crafted by Kazakhstan’s Ministry of Water Resources and Irrigation. IDB’s additional $3.5 million grant, dedicated to research and development, will further Kazakhstan’s capacity to build climate-smart water systems.

This partnership reflects IDB’s dedication to sustainable development in its member countries. In recent years, IDB has aligned its strategy with the United Nations Sustainable Development Goals (SDGs), emphasizing projects that promote water security, climate adaptation, and green infrastructure.

IDB’s work in climate-resilient projects spans various regions, from Africa to Southeast Asia. For instance, in Morocco, IDB invested in solar-powered water pumping systems to help farmers irrigate fields without relying on erratic rainfall. In Bangladesh, it supported flood protection initiatives that safeguarded crops and homes from monsoon-induced waterlogging. IDB’s mission has become increasingly climate-focused, with a major of its annual portfolio dedicated to projects that enhance resilience against environmental changes. 

Related: Islamic Development Bank Signs Strategic Agreement with Kazakhstan

What the Project Entails

The Kazakhstan water sector project is divided into multiple stages, with each phase designed to tackle a specific set of challenges. The first phase focuses on strengthening water storage, distribution, and irrigation across key agricultural and urban areas. The scale of this initiative reflects Kazakhstan’s commitment to transforming its water infrastructure.

Key Project Goals Include:

1. Building New Reservoirs
   The construction of four new reservoirs and the restoration of four existing ones aim to bolster the nation’s capacity for water storage. With a modernized reservoir system, Kazakhstan can regulate water availability, minimizing the impact of seasonal variations and droughts.

2. Rehabilitation of 115 Canals
   This ambitious canal overhaul includes the Astana Reservoir Recharge Project, a critical step toward efficient water distribution. By reducing water losses due to leaks and evaporation, the canal upgrades are expected to improve irrigation for farming communities and sustain urban water supplies.

3. Analytical Capacity-Building
   Alongside physical infrastructure, the project includes partnerships with institutions like the Kazakh Research Institute of Water Management. These collaborations will focus on river basin studies, water demand forecasting, and the implementation of early warning systems for water scarcity.

4. Equipping Kazvodkhoz for Water Management
   Kazakhstan’s state-owned water agency, Kazvodkhoz, will receive advanced equipment and automation systems to streamline operations. This will empower local water authorities to monitor water levels, quality, and flow rates more accurately, paving the way for sustainable resource management.

This comprehensive project spans various regions within Kazakhstan: Akmola, Almaty, Zhambyl, Kyzylorda, Turkestan, West Kazakhstan, Zhetisu, and the capital city, Astana. These areas were selected due to their agricultural significance and vulnerability to water-related challenges. By focusing on regions with high water demand, the project will directly impact farmers, residents, and industries relying on consistent water supplies.

Why This Investment Matters

Water security is fundamental to Kazakhstan’s socio-economic future. For a country that heavily depends on agriculture, inadequate water supplies pose a risk not only to food production but also to economic stability. Moreover, water shortages can lead to rural migration, which places additional pressures on urban infrastructure and services.

The IDB-funded project is more than just an infrastructure initiative; it represents a vision for a climate-resilient Kazakhstan. The introduction of automated water management systems, for instance, will allow Kazakhstan to monitor resources with precision, ensuring that water use is optimized based on real-time needs and availability. With climate change affecting the region’s hydrology, these innovations could be a game-changer in mitigating the impact of droughts and floods.

Climate change is a global challenge, but its effects are highly localized. For Kazakhstan, climate-driven changes such as altered river flows and erratic precipitation patterns directly threaten water resources. This project incorporates climate-smart water management practices aimed at adapting to these shifts.

The Development of Climate-Resilient Water Resources project will serve as a blueprint for other Central Asian countries grappling with similar issues. From adopting water-saving technologies to diversifying irrigation methods, Kazakhstan’s efforts could inform climate adaptation across the region.

Baybazarov remarked at COP29, “This investment is not just about building infrastructure; it’s about preparing Kazakhstan for the future. By modernizing our water systems, we are investing in the resilience of our communities and ensuring that our development is sustainable for generations to come.”

Climate-Resilient Infrastructure

IDB’s involvement in Kazakhstan water sector highlights its broader focus on climate resilience. With a portfolio of over $X billion in climate-focused projects, IDB has established itself as a leading financier for sustainable infrastructure in emerging markets. Its projects aim to provide long-term solutions, whether through clean energy, water conservation, or sustainable agriculture.

In addition to this investment, IDB has supported water initiatives in countries like Sudan, where it financed water purification plants, and in Jordan, where it funded the construction of water reservoirs to tackle urban shortages. For Kazakhstan, IDB’s investment not only offers financial support but also brings in technical expertise and strategic insights that will help shape the country’s water policies for years to come.

This water sector project is expected to create numerous job opportunities, particularly in construction, engineering, and environmental management. By hiring local workers and contracting regional companies, the initiative will boost Kazakhstan’s economy and provide valuable skills training in fields like infrastructure maintenance and hydrology.

The social impact, however, extends beyond economic growth. Improved water infrastructure will help rural communities thrive, reduce health risks associated with water scarcity, and ensure reliable access to water for drinking and sanitation. Additionally, these improvements align with the government’s Sustainable Development Goals (SDGs), particularly those related to water access, health, and economic growth.

In the long term, modernizing water infrastructure could significantly enhance Kazakhstan’s agricultural sector. With efficient irrigation and water storage systems, farmers can expand crop production, diversify agricultural exports, and build resilience to climate-induced challenges. The impact on food security and rural livelihoods could transform Kazakhstan into a model for water management in arid and semi-arid regions. 

Building a Sustainable Future

The IDB-funded project represents a critical milestone in Kazakhstan’s journey toward sustainable water management. As the country gears up for an uncertain climate future, it recognizes the importance of proactive planning and international collaboration. The Islamic Development Bank’s support is an endorsement of Kazakhstan’s vision, demonstrating that large-scale, impactful projects can be achieved through partnerships focused on long-term sustainability.

Kazakhstan’s commitment to water sector reforms is only the beginning. With new infrastructure in place, the next steps will involve policy improvements, capacity-building for local agencies, and continuous adaptation to environmental changes. As Kazakhstan continues on its path toward climate resilience, the lessons learned from this project will serve as a guiding light for other nations facing similar challenges.

Kazakhstan water sector stands at the cusp of transformation, thanks to the Islamic Development Bank’s historic $1.15 billion investment. This project embodies a vision for a resilient, climate-adaptive future where water resources are managed sustainably to support both urban and rural communities. As Kazakhstan embraces the future, this partnership serves as a reminder that tackling climate change requires bold initiatives, cross-border cooperation, and a commitment to the well-being of future generations.