Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Central Asia's Most Precious Resource is Water, Not Oil

Commodities / Water Sector Jan 12, 2010 - 05:48 PM GMT

By: OilPrice_Com

Commodities

Best Financial Markets Analysis ArticleIn every drop of water there is a grain of gold." - Aral proverb

Since the 1991 collapse of the USSR, foreign investors have looked at the former Soviet space as a land rich in underdeveloped resources waiting for Western technology and finance to bring to the world market. Gold from Kyrgyzstan, uranium and oil from Kazakhstan, oil and natural gas from Azerbaijan - all have begun to make their way to the global market, generating rich profits for both their owners and developers.


In the five former Soviet countries stretching eastwards from the Caspian to the western Chinese border - Turkmenistan, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan there is a resource both more limited and valuable than even the region's fabled hydrocarbon resources, water. The arid region has a surfeit of it, what there is is unevenly distributed, and more than 70 years of Soviet industrialization have left an ecological wasteland facing increased demands on its limited hydrological resources.

Water inextricably links agrarian and energy production and industrialization. While during the last 18 years most foreign investors have focused on extractive industries (energy and minerals), water is an issue of rising concern throughout the "Stans," and concerns ranging from energy companies with expertise to renovate decrepit Soviet-era hydroelectric facilities to business concerns specializing in advanced water purification and conservation techniques or high-yield, drought and pest resistant crops have business opportunities undreamed of elsewhere.

To be sure the Central Asian market is rife with its own peculiarities, but faced with a static resource and rising populations, Western investors with the requisite technology and capital are virtually guaranteed a red carpet welcome, as the region struggles to overcome its onerous Soviet industrial legacy. For those "thinking outside the box," it represents an opportunity like few others. As things stand, water and its equitable distribution are the number one issue of contention between the Stans, as Allah, who distributed the bulk of the region's hydrocarbons around the Caspian in the west, did the exact opposite with the region's water, which is largely locked up in the east, in glaciers in Kyrgyzstan and Tajikistan.

Glacier melt is carried by Central Asia's 1,500-mile Amu Darya and 1,380-mile Syr Darya, which originate in the in the Pamir and Tien Shan mountain ranges at the confluence of the border between Tajikistan, Kyrgyzstan and China before meandering westwards through Uzbekistan, Kazakhstan and Turkmenistan before emptying into the Aral Sea. The Amu Darya's headwaters in the form of the Panj River arise in Tajikistan, while the Syr Darya originates in Kyrgyzstan. Besides river water, Tajikistan also contains many glaciers, of which the 270-square-mile Fedenko glacier is the largest in the world outside the Polar Regions.

The desiccated Aral Sea, which has now lost more than 75 percent of is volume, has become a global poster child for water mismanagement. Soviet efforts to divert Central Asian water toward agriculture began in 1918 to gain a market share in the global cotton trade and massive network of irrigation projects began in the 1940s, intensified in the early 1960s, when Moscow's engineers began diverting ever increasing amounts of the Amu Darya's and Syr Darya's water to feed Central Asia's massive cotton plantations beyond the rivers' abilities to replenish the Aral, a policy dating back to Stalin's time when the Genius of All Mankind decided that Central Asia was to become the USSR's source of "white gold."

The Amu Darya and Syr Darya water flows, whose combined flow before massive Soviet agricultural projects were implemented equaled the Nile, are unique in that, until 1991, they were part of a single country, the Soviet Union, with water management policy directed by Moscow. The amount of water taken from the Amu Darya and Syr Darya doubled between 1960 and 2000, allowing cotton production to nearly double in the same period, paralleling the Aral's decline. By the 1980s nearly 90 percent of water use in Central Asia was directed toward agriculture, primarily cotton production, with the Amu Darya and the Syr Darya supplied nearly 75 percent of the water flow.

Simply put, the region's scarce water resources were misused to satisfy the autarchic needs of the entire USSR, whose breakup in 1991 completely disrupted inter-republic trade patterns, leaving the Stans with the remnants of a centrally planned economy on which to attempt to build national post-Soviet economies amidst raging inflation. In 1992 the five countries established the Interstate Coordinating Water Commission (ICWC) to formulate a regional solution to the problem, but despite numerous meetings, 18 years of complex negotiations have yet definitively to resolve the complex hydrological issues surrounding the Amu Darya and Syr Darya rivers, leaving each country to pursue its own interests or bilateral relations.

The Soviet centrally planned economy left Central Asian nations with a number of mega-projects, most notably Tajikistan's massive Nurek hydroelectric facility on the Vakhsh River. Nurek, which still supplies 70 percent of Tajikistan's power, was constructed in the 1970s and 1980s. Alarmingly, many Soviet-era facilities throughout the post-Soviet space have had minimal maintenance. The 17 August Sayano-Shushenskaya power station turbine flooding accident at Russia's largest hydroelectric power plant, which killed 12 and left 64 missing and presumed dead dramatically proved that the risk of system failure is rising, as antiquated infrastructure was blamed for the accident. To give a Central Asian example, aside from potential dam failure, Kyrgyzstan's Soviet-era equipment and graft mean that an estimated 45 percent of the country's electricity is either illegally diverted or leaks from the transmission system.

Tajikistan's and Kyrgyzstan's position athwart the headwaters of the two largest rivers in Central Asia, exacerbated its relationship with downstream Uzbekistan, Kazakhstan and Turkmenistan, who depend on regular spring and summer water discharges for their agriculture. Over the last few years, Kyrgyzstan and Tajikistan have increasingly hoarded water in their alpine reservoirs to generate electricity in the winter, flooding their downstream neighbors.

In the immediate post-Soviet era both Tajikistan and Kyrgyzstan scrambled to meet their energy needs by arranging barter deals with their western neighbors, trading summer water releases and hydropower for coal and gas for fall and winter use. But as downstream nations began to charge for oil and natural gas imports, the two countries began to alter their hydroelectric facilities' water flows, increasingly hoarding it in the growing months for winter release to generate electricity rather than pay ever rising energy import bills, raising political tensions with their downstream neighbors.

Tajikistan has few immediate options but to attempt to develop its hydropower assets. Only 7 percent of Tajikistan's land is arable, and the U.S. government estimated that the country's 2007 oil production was a paltry 280 barrels per day, and in 2006 Tajikistan produced only one billion cubic feet (bcf) of natural gas, forcing it to import 44 bcf to meet demand. The energy situation is equally dire in neighboring Kyrgyzstan, whose 15 hydroelectric stations generate 92.5 percent of domestically consumed electricity.

Farther west, downstream Uzbekistan overall consumes more than 50 percent of the two rivers' flow for its cotton production, which currently produces more than 60% of the country's foreign currency earnings, inhibiting the country's ability to diversify its economy.

In Turkmenistan, the Amu Darya's waters are used exclusively for agriculture as it flows onward through Uzbekistan to the Aral Sea, but rising natural gas revenues are ameliorating somewhat the country's dependence on its agrarian sector.

The equitable division of these waters remains at the heart of the regional contentions, with the downstream agrarian states both seeking regular water discharges for irrigation even as in the brave new post-Soviet capitalist world they maintain that water is not a resource for which they should be charged even as they charge Kyrgyzstan and Tajikistan for oil and natural gas deliveries, whose prices are slowly drifting to world levels.

In turn, Tajikistan and Kyrgyzstan maintain that if fiscal or energy assistance is not received to tide them over through the bitter winter months, they will continue to release the water during the autumn and winter to generate electricity as they have no other power options, whatever the agrarian concerns of their downstream neighbors.

These policies have broader regional political consequences, to which even Washington is not immune. Many Russian and European analysts believe the Kyrgyz government's January decision month to expel the United States from its Manas airbase was heavily influenced by Moscow's decision to grant Kyrgyzstan more than $2 billion in loans, nearly 75 percent of which was earmarked for completing the Karambara-1 hydroelectric cascade, for which Kyrgyzstan for years unsuccessfully sought funding on the international market. As things currently stand, Tajikistan and Kyrgyzstan want to at the very least maintain their aging Soviet hydroelectric facilities, while their downstream neighbors want to improve their agriculture and if possible, lessen their water dependency.

Despite fervent necon denunciations of global warming "fuzzy science," it seems unlikely that Allah will see fit to increase the snowmass of the Tien Shan and Pamir glaciers. Accordingly, in the cornucopia of Central Asian water needs, there is something for everyone, from energy companies skilled in renovating hydroelectric cascades (Kyrgyzstan, Tajikistan) through water purification (all), conservation and plant genetic engineering (Uzbekistan, Kazakhstan and Turkmenistan) to saltwater distillation (Turkmenistan) and erosion control (Uzbekistan, Kazakhstan and Turkmenistan.)

Given the rising population's increasing demands on a finite resource, any and all propositions will receive a most careful hearing along the Silk Road.

Originally published at: http://oilprice.com/article-central-asias-most-precious-resource-water-not-oil.html

This article was written by Dr. John C.K. Daly for OilPrice.com - who offer free information and analysis on Energy and Commodities. The site has sections devoted to Fossil Fuels, Alternative Energy, Metals, Oil prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

© 2010 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules