The Energy-Water Nexus in the Caucasus and Central Asia

1. The Energy-Water Nexus in the Caucasus and Central Asia Norman A. Graham Center for European, Russian and Eurasian Studies Michigan State University

5. http://www.theoildrum.com/node/6068

6. Turkmen Gas Exports Source: Pirani, Simon. Russian and CIS Gas Markets and Their Impact on Europe. Oxford University Press, New York, New York, 2009

7. Neither of the two countries have large amounts of forests. Nagorno-Karabakh has a large portions of forest out of the two states.

9. The region has a high amount of pollution. The region has water shortages, but a bigger problem is finding clean water. Nagorno-Karabakh is a relatively pollution free region that has the ability to control much of the water flowing into Azerbaijan. Its close relationship to Armenia means that its water also is important for Armenia.

11. Georgia’s Hydroelectric and Pipeline Strategies • Baku Tbilisi Ceyhan Pipeline • New pipeline plans and controversies • Hydroelectric modernization with Chinese assistance- move to an energy export strategy • Plans for hydroelectric projects on as many as 50 rivers • Environmental impact?

12. Hydroelectric Modernization and Expansion • Enguri dam – Revitalization of Soviet era plant with World Bank 12 million project • SinoHydroproject (China) to help build it and perhaps others • Still using less than a fifth of its hydroelectric power potential • Seek 15 new hydro plants • Seek to export energy

13. Issues and Questions • Will the Energy-Water Nexus in Central Eurasia lead to inter-state conflict; dire warnings in ICG 2002 Report – worse now? • How bad can it get, given the existing tensions and the impact of climate change • Is there a role for regional and global institutions to ameliorate the worsening environmental conditions and the increased prospect for conflict • Are there other key areas of potential energy-water conflict in post-Soviet Eurasia?

14. Herman E. Daly inBeyond Growth (1996): • exponential growth has taken us in a short time from a relatively empty world to a relatively full world; • since the earth itself is developing without growing, it follows that a subsystem [e.g., its economy] of the earth must eventually conform itself to the same behavioral mode of development without growth. • we should strive for sustainability/sufficiency/equity/efficiency • we should strive for sufficient per capita wealth • efficiently maintained and allocated, and equitably distributed • for the maximum number of people that can be sustained over time under these conditions.

15. Daly’s Prescriptions • 1. Stop counting the consumption of natural capital as income • 2. Tax labor and income less, and tax resource throughput more • 3. Maximize the productivity of natural capital in the short run, and invest in increasing its supply in the long run [Structural adjustment lending must incorporate this concept and it should be pioneered in the North. “Indeed, sustainable development itself must be achieved in the North first.” (Ch. 5 Daly)] • 4. There is need for renationalization of capital and the community rooting of capital for the development of national and local economies. [compare to Kenichi Ohmae’s The End of the Nation State – with his focus on attracting private FDI] [But how will Kenya get Income in this framework? How different is this from bald neomercantilism?] • 5. Focus on Net national income (cf. John Hicks—Ch. 6 of Daly) Get an indication of what one can consume without impoverishing oneself.

16. Daly’s Prescriptions (cont.) • 6. We must address the explosion of the populations of human bodies, of artifacts of all kinds, and of the populations of plants and animals exploited for human use that has happened in the past fifty years; -this might better be called an implosion, since it has occurred in a finite environment. • 7. Depletion of natural capital is entirely analogous to the depreciation of man-made capital. • 8. We must address the concept of overdevelopment? --There must be effort to measure not only the benefits of growth but also its costs, in a manner that might permit comparison at the margin and thereby help in finding the optimal scale of the macroeconomy. • 9. We must not destroy the earth’s carrying capacity. • 10. Sustainable development is not hard to do technically, but it will be hard to overcome our addiction to growth