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Asian Development Bank

TA № 4484 KAZ

Institutional Strengthening of the Committee for Water Resources

12 October 2005

prepared by

Fritz Schwaiger

Zhana Zaitseva Valery Torubara Gulnar Tulebayeva Igor Petrakov

Galina Blinova Dauren Kassabekov

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ADB – Republic of Kazakhstan Institutional Strengthening of the Committee for Water Resources

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Rate of Exchange (12.09.2005)

Currency unit = Tenge (Т)

Tenge 1,00 = $0,0074 $ 1,00 = 135,00 Tenge

List of Acronyms and Terms ADB Akim Akimat AMC AWC BR BWO BWCD CAEC CAR CEP CIS CWR EA EBRD ESEI FSU GDP GEF GIS GWC GWP ICSD ICWC IDB IFAS IWRM JSC Kolkhoz MA Maslikhat MEBP MEMR MEP MES MF MH MIT MM MPC MPD

- Asian Development Bank - Head of rural, regional government - Rural, regional government - Antimonopoly Committee - Association of Water Consumers - Building Regulations - Basin-water Organizations - Basin-water Control Departments - Central Asian Economic Community - Central Asian Region - Caspian Ecological program - Commonwealth of Independent States - Committee for Water Resources of the Ministry of Agriculture - Executive Agency - European Bank for Reconstruction and Development - Evaluation of Side Environmental Impact - Former Soviet Union - Gross domestic product - Global economic fund - Geo-information systems - Group of Water Consumers - Group water-pipe - Intergovernmental Commission for Sustainable Development - Intergovernmental Coordinating Waterworks Commission - Islam Development Bank - International Fund for Aral saving - International Water Resources Management - Joint-stock company - Cooperative farm (attached to FSU) - Ministry of Agriculture - Local legislative body - Ministry of Economy and Budget Planning - Ministry of Energy and Mineral Resources - Ministry of Environment Preservation - Ministry of Education and Sciences - Ministry of Finance - Ministry of Health - Ministry of Industry and Trade - Mass Media - Maximum permissible concentration - Maximum permissible discharge


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NGO NPEPA Oblast OECD Okrug OM OSCE PA PC PI RAPEP REC Region RF RIL RK RPE RS SAO SC SCDA Sovkhoz SPDW SPRZD STTA TA TEG UNDP UNO USA VAT Vodokanal WB WHO WR WSS

- Nongovernmental organization - National Program for Environment Preservation Activities - Regional Administrative Area (province) - Organisation for Economic Co-operation and Development - Group of Inhabited locality - Operation and Maintenance - Organization for Security and Cooperation in Europe - Public Association - Public Corporation - Planning Institute - Regional Action Plan for Environment Preservation - Regional Ecological Center - Region Administrative Area - Russian Federation - Rural inhabited locality - Republic of Kazakhstan - Republican Public Enterprise - Requirements specification - Society of apartments owners - Sanitation service of MH - Short-term consulting development assistance - Public farm (attached to FSU) - Sectoral Program “Drinking Water” - State program of rural zones development - Short-term Technical Assistance - Technical Assistance - Technical and Economic Grounds - United Nations Development Program - United Nations Organization - United States of America - Value added tax - Water Industry and Sewerage Enterprise - World Bank - World Health Organization - Water resources - Water supply and sanitation


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Table of Contents 0 EXECUTIVE SUMMARY............................................................................... 8 1 INTRODUCTION ......................................................................................... 21

1.1 BACKGROUND ........................................................................................ 21 1.2 OBJECTIVES........................................................................................... 22 1.3 SCOPE OF WORKS................................................................................... 22

1.3.1 Original .......................................................................................... 22 1.3.2 Agreed Revision ............................................................................ 23

1.4 PROJECT TEAM AND STTA ACTIVITIES..................................................... 23 1.5 DATA SOURCE ........................................................................................ 24 1.6 GRATITUDE ............................................................................................ 24

2 COUNTRY PROFILE AND SECTOR INFORMATION ............................... 26 2.1 COUNTRY PROFILE ................................................................................. 26

2.1.1 Geographical Location and Topography ....................................... 26 2.1.2 Climate and Vegetation ................................................................. 27 2.1.3 Social and Economic Development............................................... 28 2.1.4 State Governance and Institutions ................................................ 32

2.2 THE WATER SECTOR OF KAZAKHSTAN...................................................... 35 2.2.1 Historic Development .................................................................... 35 2.2.2 Water Resources........................................................................... 37 2.2.3 Problems in the Water Sector........................................................ 41

3 WATER RESOURCES MANAGEMENT IN KAZAKHSTAN ...................... 45 3.1 ORGANIZATIONS IN CHARGE.................................................................... 45

3.1.1 Legal Background.......................................................................... 45 3.1.2 Basic principles of public administration regarding use and protection of water resources (Article 34, Water Code of RK) ..................... 45 3.1.3 Main tasks of public administration regarding use and protection of water resources in accordance with the existing legislation (Article 35, Water Code of RK): ................................................................................................ 47 3.1.4 Responsibilities of the Government regarding use and protection of water resources (Article 36, Water Code of RK):......................................... 48 3.1.5 Responsibility of the authorized body (CWR of MoA) regarding use and protection of water resources (Article 37, Water Code of RK) .............. 49 3.1.6 Responsibilities of Basin Water Departments regarding use and protection of water resources (Article 40, Water Code of RK) ..................... 50 3.1.7 Local representative (maslikhats) and executive (akimats) bodies administration of water issues...................................................................... 52 3.1.8 Basin Council and Basin Agreement ............................................. 52


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3.1.9 Levels of Water Body Administration............................................. 53 3.2 PRINCIPLES OF WATER RESOURCES AND WATER USE MANAGEMENT ........ 54

3.2.1 Basic Principles ............................................................................. 54 3.2.2 Sustainability Criteria..................................................................... 55 3.2.3 Agenda 21 ..................................................................................... 56 3.2.4 Proposed Water Policy Objectives ................................................ 56 3.2.5 Requirements for Implementation ................................................. 61

3.3 APPLICATION OF IWRM AS A SHOW CASE ON IRTYSH RIVER.................... 61 3.3.1 Why the Irtysh River? .................................................................... 61 3.3.2 Multilevel Management Systems................................................... 61 3.3.3 Transboundary issues ................................................................... 63 3.3.4 Required Institutional and Organizational Arrangements .............. 65 3.3.5 Social aspects, stakeholder involvement, awareness building...... 66 3.3.6 Organizational issues .................................................................... 67

3.4 REVIEW OF CURRENT WATER TARIFFING POLICY ..................................... 67 3.4.1 Tariff setting procedure.................................................................. 67 3.4.2 Tariff Calculation Methodology ...................................................... 68 3.4.3 The Situation of Vodokanals.......................................................... 72 3.4.4 Shortcomings of Current Tariff Setting Methodology..................... 74 3.4.5 A Possible Mechanism for Setting Tariffs Right ............................ 74

3.5 INTERNATIONAL ASSISTANCE TO THE WATER SECTOR OF KAZAKHSTAN .... 75 4 INSTITUTIONAL CAPACITY OF THE CWR .............................................. 77

4.1 ORGANISATIONAL STRUCTURE OF CWR.................................................. 77 4.1.1 The Management .......................................................................... 77 4.1.2 Departments .................................................................................. 82

4.2 CWR FUNCTIONS................................................................................... 82 4.2.1 CWR Head Quarters ..................................................................... 82 4.2.2 CWR Subordinated Organizations ................................................ 86 4.2.3 Additional Workload for CWR Based on the Water Code ............. 86

4.3 LOW GOVERNMENTAL STATUS OF CWR ................................................. 91 4.4 CWR STAFF ........................................................................................... 92

4.4.1 Results of CWR Headquarter Staff Survey ................................... 92 4.4.2 Key Qualification of CWR Headquarter Staff............................... 103

5 ORGANIZATION OF THE WATER SECTOR IN DIFFERENT COUNTRIES 106

5.1 NEIGHBOURING COUNTRIES.................................................................. 106


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5.1.1 Kyrgyzstan................................................................................... 106 5.1.2 Tajikistan ..................................................................................... 109 5.1.3 Turkmenistan............................................................................... 111 5.1.4 Uzbekistan................................................................................... 111 5.1.5 Russian Federation ..................................................................... 113 5.1.6 China ........................................................................................... 113

5.2 OTHER SELECTED COUNTRIES.............................................................. 113 5.2.1 Germany...................................................................................... 113 5.2.2 Austria ......................................................................................... 115 5.2.3 England & Wales ......................................................................... 117 5.2.4 Jordan.......................................................................................... 118 5.2.5 Israel............................................................................................ 125 5.2.6 France ......................................................................................... 129 5.2.7 The Netherlands.......................................................................... 135 5.2.8 Spain ........................................................................................... 136

6 PROPOSED RAISING OF GOVERNMENTAL STATUS OF CWR AND IMPROVEMENT OF ITS CAPACITY ............................................................... 143

6.1 REQUIRED RAISING OF GOVERNMENTAL STATUS ................................... 143 6.1.1 The Main Shortcomings............................................................... 143 6.1.2 Guiding Principles........................................................................ 144 6.1.3 Possible Institutional Forms of the “Water Management Authority” 144 6.1.4 Recommended Institutional Form................................................ 145

6.2 REQUIRED CAPACITY IMPROVEMENT..................................................... 147 6.2.1 The Main Reasons for Capacity Increase ................................... 147 6.2.2 Proposed Capacity Increase ....................................................... 148

7 LITERATURE ............................................................................................ 153 8 ANNEXES.................................................................................................. 154

Annex 3-1: Tariff estimate for water supply and (or) sanitation services ... 154 Annex 3-2: List of Ongoing Respectively Recently Completed Projects with International Assistance in the Water Sector of Kazakhstan ..................... 155 Annex 4-1: Example of BWO Regulation................................................... 159 Annex 4-2: List of Budget Programs under Implementation by the Committee of Water Resource for 2002-2005 ........................................... 164 Annex 4-3: Institutional Strengthening Components of Water Resources Management in International and Domestic Projects in Kazakhstan......... 167 Annex 4-4: Volume of Correspondence of CWR MoA RK....................... 169


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Annex 4-5: Achievements of CWR to Develop Normative Bases for Tasks Falling under its Responsibility .................................................................. 170 Annex 4-6: Questionnaire Distributed Among CWR Headquarter Staff... 172


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0 EXECUTIVE SUMMARY Introduction The Republic of Kazakhstan is rich in everything but water – this has already become a widely known proverb. But logically this also has the consequence that good management of the limited resources is a must.

Several efforts were made in the past years to strengthen management of the water resources and management of water supply and sewerage systems in the country. This includes the elaboration of the «Concept of Water Economy and Policy Development of the RK» and the Sector Program «Drinking Water 2002–2010» as well as the enforcement of a new water code in 2003.

For implementation of above measures the country’s responsible water management authority, the Committee for Water Resources of the Ministry of Agriculture (CWR) was able to secure constantly increasing budgets since 2002, with the quadruple budget for 2005 in the amount of 26 billion Tenge (200 million USD.

However, the organisational and institutional capacity of the CWR has remained unchanged and very limited and needs to be strengthened. ADB has agreed to support the Government of Kazakhstan by financing this Short Term Technical Assistance project (STTA).

The main objectives of this STTA is to review the Governmental status and the organisational capacity of the CWR and to prose improvements. The project includes also a public awareness raising component as well as to provide comments on the current practise of tariffing.

This study has been prepared by a team of international and national experts in the period May to October 2005. A first press conference was organized in August 2005 for the CWR, in the presence of the ADB Country Director and the Ambassador of Japan to Kazakhstan. This STTA has been financed by the Government of Japan from the Special Japanese Fund, provided through ADB.

Country Profile and Sector Information The Republic of Kazakhstan is the ninth largest country in the world with an area of 2.72 million km² and has a population of 15.2 million.

Climatic conditions vary significantly over the country from the north to the south, but generally winters are cold and long, summers short and hot with rather high aridity. Precipitation in form of rain is not significant except in mountainous regions and is in average 300 mm in the semi-desert regions and reaches up to 1600 mm in the mountainous areas. An important feature of the river flows is the spring flood. A high amount of discharge occurs in this period lasting from March to May.

After the economic slump at the beginning of independence, the economy has experienced a strong growth primarily due to the rapid development of the oil sector and the high world oil prices. However, the per capita GDP growth has been rather uneven over the country.

The rural areas have been severely affected by the transition from the planned to the market economy. Rural poverty issues are intensified by the decline of


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infrastructure facilities in towns and villages and lack of job possibilities. In recognition of this situation, the Government has embarked on several programs for the rural areas, including the rehabilitation of drinking water supply, sanitation and irrigation programs.

Water sector management and water infrastructure in Kazakhstan is closely linked to agriculture and irrigation farming. Rather simple irrigation systems existed for long times but did not play a significant role. In the period from 1950 to 1965 massive construction of large scale water supply and irrigation systems was started and performed, reaching its peak period till 1975. The Irtysh-Karaganda canal was built then, the Nura-Ishim canal, group water supply systems in Shymkent province of 162 km length and numerous others. 2.3 million ha of land was irrigated then, yielding a high production. However, the ecological side of the initiative was not sufficiently taken into consideration by the decision makers at that time, causing a degradation of soils, pollution of waters and the extinction of the Aral Sea.

The total surface water reserves of the Republic of Kazakhstan are 539 km³. The renewable surface water resources are 100.5 km³ per year. However, the run-off in the rivers is very uneven, with close to 90% of the annual flow happening during the spring flood period, from March to May. Secondly, the run-off varies widely from one year to another. It reduces to 60-75% in dry years.

Another important fact is, that 44% of Kazakhstans water resources is transboundary inflow from neighbouring countries, including China, Uzbekistan, Russia and Kyrgyzstan, only 56.5 km³ originate from inland.

The annual water abstraction in the country is about 23 km³ per year. This is equivalent to 1500 m³ per capita and year and corresponds to 23% of the total renewable water resources and 41% of the internal renewable water resources.

The OECD has developed a “water stress indicator” which is the percentage of water abstracted compared to the water available. On the basis of total water resources, Kazakhstan falls under the category “medium-high water stress” and is in a similar situation like Japan, Germany, UK, USA, but better off than Spain, Italy, Belgium or Korea. On the basis of internal water resources, Kazakhstan falls in the category of “high water stress” and is in a worse situation than Portugal, Spain, Italy, Korea or Germany.

On the other side, the per capita water abstraction of 1500 m³ per year is high by international comparison. The typical value for EU countries is 300 to 700 and in most countries below 1000, only the USA have a higher abstraction rate than Kazakhstan.

Above figures clearly lead to the following conclusion: water resources of Kazakhstan are limited and special attention needs to be paid to the fact that the country depends to a significant amount from the inflow from neighbouring countries. Another fact is that the water abstractions are unusually high. All this clearly calls for enhanced water resources management. The resources need to be well protected against pollution and its use must be well managed.

This situation is in clear contradiction to the low Governmental status of the country’s “water management authority” i.e. the CWR and the little resources provided to it.

Another issue making efficient water resources management currently impossible is the fact that the different tasks are spread over a large number of Government


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institutions and organisations and CWR does not have sufficient high enough status to be able to co-ordinate and monitor all those activities.

Water Resources Management in Kazakhstan Besides the water code, approved in 2003, the most important policy documents in the water sector of the Republic of Kazakhstan are the «Concept of Water Economy and Policy Development of the RK» and the Sector Program «Drinking Water 2002–2010».

Legislation and Organisations in charge

The basic principles of public administration of the sector are defined in the water code as follows:

(i) the State to regulate and control the use and protection of water resources,

(ii) sustainable water resources use – being a combination of careful, rational and complex use and protection of the resources,

(iii) create optimum conditions for sustainable resource management and safety of population,

(iv) administration by river basin approach,

(v) sharing the tasks of control and administration of water use and the tasks of economic use of resources;

The main tasks of public administration are do to policy making, to determine procedures, to approve rules and to cooperate with foreign countries. This includes: available resources and demand definition of measures to overcome shortages, assessment of quantity and quality of resources and user rights, improve technologies regarding consumption disposal and protection, measures to increase resource availability, limitations of use, control conditions of water bodies, observe environmental requirements, efficient administration of state-owned water bodies and facilities, development of the water service market and transboundary issues.

The responsibilities of the Government are to:

Develop the main directions of state policies with respect to water resources use and protection;

Establish the administration for state owned water facilities;

Determine procedures: for stock-taking of reserves, their use and the water cadastre; for development and approval of master plans and basin plans (complex use and protection of resources); for lease and asset management; for establishment and commissioning of enterprises affecting water bodies and constructions in water protection zones;

Approve: the list of water supply systems of special importance (group water supplies without alternatives); regulations regarding establishment of water protection zones; rules on water relations between oblasts;


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Cooperate with foreign states and international organisations regarding transboundary issues.

The responsibilities of the “authorised management body” (CWR) are to:

Participate: in the development and implementation of state policies regarding water use and protection; in giving permission for activities and commissioning of facilities influencing water bodies; in development of priorities regarding interstate co-operation of water use and protection;

Develop: programs for water sector development; plans for complex use and protection of resources; procedures for financial support (subsidies) of water supply of farmers and alternative-less group water supplies; investment projects including implementation; regulations for establishment of water protection zones; economic water balances;

Organise: design and research efforts aiming at careful use and resources protection; operation of state-owned water bodies and facilities; monitoring and evaluation of irrigated land condition through special authorised institutions;

Carry out: licensing for special water users; state control for resource protection and use; public record keeping including state water cadastre; creation of database with access by concerned parties;

Approve: specific water consumption rates; standard regulations for general water use; water use limits in context of basins and water users; procedures for use of state-owned water bodies and drinking water sources and for operation of water facilities located on water bodies;

Cooperate: with neighbouring countries regarding use and protection of water resources;

Responsibilities of the Basin Water Organisations (BWO) are to manage the protection and use of the resources, licensing, maintaining state records and water cadastre, control over reservoir operations, approval of schemes of complex use of water, interaction with local authorities, information dissemination and education of water users. An important instrument is the River Basin Board. This is a consulting and deliberative body made up of the key stakeholders i.e. heads of local executive bodies and representatives of water users and public associations.

Principles of IWRM and Current Practice in Kazakhstan

The principles of modern water resources management can be summarized under the expression Integrated Water Resources Management (IWRM). This is by international means best practice regarding the management of water resources and water use. Its methodology rests on the following 6 principles: (1) management on the basis of river basins, (2) water and soil to be managed together, (3) consider social, economic and ecological factors together, (4) include surface and groundwater resources in the planning, (5) public participation in the planning process is required and (6) Transparency and accountability in decision making.


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The new Kazakh water code actually follows those principles. The existing river basin organisations can take up the role assigned to them in the new water code, if they are empowered to do so. The establishment of river basin boards is to be done. One major problem is that the heads of the BWOs are not powerful enough compared to other administration levels in the regions, to take up the role of initiator and coordinator.

However, organised and planned water resources protection and water use management can not be performed in Kazakhstan at the moment, despite the fact that this would be urgently needed, considering the limited water resources and their bad quality status. This is a serious problem and will aggravate the longer it remains unsolved.

The main barrier for unsatisfactory performance in the water sector is the incomplete institutional reform. The urgently needed water sector reform needs to resolve the following shortcomings:

Low Governmental status of the water management authority (CWR). The CWR is a subordinate of the Ministry of Agriculture. In this position it does not have the necessary political and administrative power to carry out the tasks assigned by the water code. It requires

o Upgrading CWR to be empowered to do the coordination of all Ministries and state agencies which need to be involved in water resources management; - and to take the lead in solving transboundary issues;

o Strengthening the BWOs to be able to implement IWRM. Insufficient capacity of the CWR with respect to staff, office facilities and

financial means;

o The total staff at headquarters comprises 34; with this small team it is impossible to implement the tasks assigned to it by the water code, it must be at least doubled;

o The total staff in the 8 BWOs is 165, in average 21 per BWO. This capacity is by far insufficient to do organised and planned IWRM;

Several projects with international finance and expert involvement have been implemented in the past years which contained an element of institutional strengthening. However, till now CWR could not receive enough political attention to have this problem solved.

Required Steps for Application of IWRM

The short term requirements are: to finalise the reform of water sector management institutions i.e. to strengthen the CWR and the BWOs and to empower them to carry out the tasks and duties defined in the water code; to create the basin board; and then to start water resources planning according to IWRM.

The medium term requirements are: to finish the inventory of water facilities; to transfer state owned canals if they are not of national importance to the municipalities; to transform state water enterprises, if they have no assets of


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national importance to public enterprises; to finish the process in forming water user associations;

The long term requirements are: to create branch enterprises under the respective water management authority for operation of water facilities; to create management mechanisms for solving conflicting water users interests; to develop projects to direct investments to maximum use of resources; to develop mechanism for tariffing of water use and pollution.

The Irtysh river has its origin in China, so its river basin includes transboundary issues and would be suitable for becoming a show case for IWRM which could be copied later by other basins.

Review of the Current Water Tariffing Policy

The operation of water utility services requires a special water use license in the Republic of Kazakhstan. It also falls under the law “About natural monopolies”, so water supply and sanitation services are subject to state antimonopoly regulation.

Tariffs are calculated by the operators (Vodokanals) and need to be approved in the first instance by the local executive administration. In a next step, the proposed tariffs need to be also approved by the regulator (ARNM).

Tariffs have to be calculated according to a clearly defined method which is checked by the regulator. The method is based on the “cost plus profit” principle.

A study was done in 2004/05 for towns in the range of 10,000 to 100,000 inhabitants. The situation is such that 40% of the utilities recorded a profit and 60% a loss. Frequently Vodokanals have to declare bankruptcy, many are close to it.

The current system of water tariffing has the following disadvantages:

many Vodokanals are practically bankrupt and their facilities are in poor state, so financing of the sector obviously does not function;

the “cost plus” method does not give any incentives to the operators to improve operation efficiency;

tariffs do not consider the fact that systems are highly depreciated and the correct value for depreciation would be to use the “replacement value”;

maintenance costs are not considered sufficiently, they should be at least 1-2% for civil works and 3% for electro-mechanical works annually;

tariffs need to consider the true physical losses of the system as well as the revenue collection ratio;

Vodokanals should have the possibility to work on multi-annual tariff regimes;

ARNM actually takes unofficially the social affordability criterion of tariffs into consideration, so they tend to be too low.

The philosophy for tariff setting should be changed and the following principles be applied:

tariffs must be fully cost covering

the user / polluter pays up to the socially affordable limit (approx. 3% of available free household income per capita)


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a transparent and clearly defined subsidy regulation needs to be developed, which supports people where tariffs are beyond social affordability level.

A method which has been successful in other countries, to get the tariffs right could be the following:

there must be clear rules and regulations about service quality and environmental standards for water utility services; - they need to be developed by the CWR;

mayors (as owner of the assets) are made personally responsible to obey those regulations; so, they need to care for the investments;

utilities have access to national Government subsidy, if certain criteria are fulfilled, such as i) investment project is based on an acceptable design, ii) an acceptable business plan is submitted and iii) tariffs are set correctly (up);

Institutional Capacity of the CWR Internal Organisation

Organisation wise the CWR comprises of the following:

CWR headquarters in Astana with a total staff of 34;

and the following subordinated organisations:

o 8 Basin Water Organisations (BWO) with a total staff of 165; o 18 Republican State Enterprises (RSE) “Vodhoz companies” with

a total staff of 5246, for operation of state owned water facilities;

o 4 Government institutions (GI) with a total staff of 250 people, doing ameliorative land valuation and monitoring;

The total staff of CWR including all subordinate organisations is 5695.

CWR headquarters is managed by the Chairman and two Deputy Chairmen, one being responsible for the department of water resources use and protection and the second for the department of operation of water facilities and land amelioration and for the department of financing, administration and investments. Each of the departments is further divided into two divisions.

When analysing the organisation, it becomes evident that the sub-sectors (i) drinking water supply and sewerage services and (ii) irrigation is not included which coordination and control actually should be managed also by the CWR.

The insufficient capacity of the CWR headquarters is underlined by the fact that the number of budget programs has increased from 2002 to 2005 from 9 to 17 with a corresponding budget increase from 6 to 26 billion Tenge. The huge increase in correspondence from 3,985 to 11,640 letters at CWR headquarters is another indicator. Albeit, the capacity of the CWR has not increased.

With these limited resources, the CWR is not able to cope with the tasks, it should carry out. It merely is able to react and to solve emergencies, but there is no time left to do organised planning and policy work.


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Low Governmental Status

The CWR is a subordinate organisation to the Ministry of Agriculture which has the following consequences:

Ministry of Agriculture is one of the largest water consumers, so there is a conflict of interest when doing water resources management;

The Chairman of the CWR is not a Government member, so:

o CWR is not powerful enough to coordinate several Ministries and state agencies which is required for IWRM;

o CWR does not have a high enough status in transboundary negotiations, within the country organisations as well as in relation to the water management organisations in neighbouring countries.

Opinion Survey among CWR Headquarter Staff

A survey has been carried out among 23 employees, not including the management and some people who were unavailable at that time. The following are the main findings:

There is a rather even age distribution however, the age group 31-40 years is underrepresented. 48% of the employees have more than 10 years of work experience, so the professional seniority of the staff is fairly high.

70% of the staff states to have full knowledge of the sector. All people work 6 instead of 5 days a week and the daily working hours are 9 to 10. But all employees also expressed the wish for further professional education and training.

Only 52% of the staff performs planned work routine, 39% work on emergencies and short term activities – pointing at the fact that much resources are needed to cope with emergencies.

The main obstacles for performing the functions are (i) insufficient number of staff and (ii) bad office working conditions. Poor office conditions are mentioned several times with the main problems being small work area, lack of document storage space and storage facilities and no air conditioning.

All employees demanded a staff increase to be able to cope with the current work load.

96% of the staff members stated that the Governmental status of CWR is inadequate to cope with tasks assigned to it.

All employees stated dissatisfaction with the level of salary and 91% of them stated to have social problems, the predominant problem being problems with housing.

The survey fully confirms in all aspects the inadequate Governmental status and the insufficient capacity of the CWR.

Organisation of the Water Sector in Different Countries The organisation of the water sector has been studied in several countries for comparison purposes. In order to have a rough impression about the importance of the water sector in a country, some indicators have been selected.


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Table 0-1: Water Sector Key Data in Selected Countries. Country Irrigated

land (%)

Annual per capita freshwater resources

(m³/c,a)

Annual per capita water abstraction

Resources use (%) and

OECD water stress indicator Total Internal (m³/c,a) Total Internal Kazakhstan 0.4% 6600 3700 1500 23% =

medium high 41% high

Kyrgyzstan(*) 5.4% 4100 9100 2200 24% medium high

Tajikistan(*) 5.0% 10400 2100 20% moderate

Turkmenistan(*)

3.9% 5015 276 5801 116% high

Ubekistan (*) 9.6% 1968 638 2598 132% high

Russian Federation (*)

0.3% 31400 30000 519 2% low

China (*) 5.5% 2200 2200 439 20% moderate

20% moderate

Germany 1.4% 1300 460 20% moderate

35% medium high

Austria 0.5% 6800 450 4% low

7% low

England & Wales

0.4% 2400 220 21 medium high

20% moderate

Jordan 0.8% 131 255 151% high

195% high

Israel 9.0% 265 119 287 108% high

241% high

France 530 16% low

12% low

Netherlands 570 10% low

105% high

Spain 960 35% medium high

35% medium high

(*) Note: data are of the 1990-ies;

In Kyrhyzstan, Ministry of Agriculture, Water Management and Processing Industry is in charge of water management issues. But there is also a National Committee on Water Strategy Matters which reports directly to the President of the Republic and is an advisory body for rational use and protection of water resources and for providing the Government with options and basic directions in water policy issues.

In Tajikistan, water agenda are allocated to the Ministry of Reclamation and Water Resources. But an important role plays also the Ministry of Environment Protection and the Land and Land Planning Committee.

In Turkmenistan, Ministry of Water Resources is in charge of water management.

In Uzbekistan, water management is located with the Ministry of Agriculture and Water Management. However, several policy matters are the responsibility of the Government level (Cabinet of Ministers). An important role plays also the Organisation for State Inspection, Control and Supervision.

In Germany water management is to a large extend the responsibility of the federal states and the communes. On federal level, the Federal Ministry of Environment, Nature Conservation and Nuclear Safety deals with questions of water resources management.


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In Austria, the Federal Ministry of Agriculture, Forestry, Environment and Water Management is responsible for water management issues. But also here responsibilities are to a large extent delegated to the federal states.

In the UK, water services were organised locally until 1974 when 10 regional authorities were founded. In 1989 those authorities were privatised. Important functions are performed by the regulator, the Office of Water Services (OFWAT), the Drinking Water Inspectorate and the National Rivers Authority, now integrated in the Environmental Agency, who deals with water body monitoring and water resources management.

Jordan has a Ministry of Water and Irrigation being responsible for water resources management. Below this are the Water Authority of Jordan, being in charge of water and sewerage systems and the Jordan Valley Authority being responsible for the socio-economic development of the Jordan rift valley, including water infrastructure development and irrigation.

In Israel, the Water Commissioner, appointed by the Government, is responsible for overall water resources management. However, in 2001 the Water Commissioner became subordinate to the Ministry of Agriculture or the Ministry of Infrastructure, depending on the Government coalition. Since then, there are serious discussions about the fragmentation of competences and the subsequent weakness of the Water Commissioner.

In France, the competences of water resources are mainly with the Ministry of Environment. Also the Ministries of Industry, Agriculture and of Infrastructure have some authority, as well as the National Water Committee comprising of various stakeholders which have a consultative role on major projects with national importance and on general water related issues. The country has 6 river basin authorities which developed the water use schemes and regulate the water use and resources management. In addition there are Water Agencies and their roles is to fix tariffs and to provide subsidies for investments.

In the Netherlands, the national Government draws up the policy and the provincial government is responsible for implementing these measures and plans. Ministry of Housing, Spatial Planning and Environment monitors health and hygiene. Groundwater use has to be licensed by the provinces. Surface water is managed by the Department of Public Works and Water Management.

In Spain, Ministry of Environment is responsible for water policy issues and has prepared a general master plan. Water resources management is implemented on the river basin level by River Basin Institutions.

In summary it can be concluded that (i) the water resources and water use management agency may be located at quite different Government organisations, but is always situated as stand-alone or part of some top Government level, but not subordinated, (ii) water management does not function well, if the management unit is not placed clearly above water user units (organisations), (iii) the performance is poor, if management responsibilities are fragmented over several organisations, (iv) IWRM is typically implemented by river basin organisations, in some cases still by the state Governments, under coordination of a national unit.


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Proposed Raising of Governmental Status of CWR and Improvement of its Capacity Increase Governmental Status

Based on the analysis carried out and by considering the experience from other countries, it is evident that the Governmental status of the CWR needs to be upgraded.

The guiding principle for the change must be (i) to empower the “water management authority” sufficiently to be able to do IWRM, (ii) to avoid a conflict of interest between the biggest water consumer (Ministry of Agriculture) and the “water management authority” and (iii) to put the “water management authority” at least on equal Governmental level like it is in the neighbouring countries.

Four options have been compared i.e. (i) the CWR under the Ministry of Agriculture (status quo), (ii) a Ministry of Agriculture and Water Resources Management, (iii) State Agency for Water Resources Management and (iv) Ministry of Water Resources Management. An evaluation matrix was prepared, using as performance criteria the tasks assigned in the water code to the water management authority plus some other general criteria.


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Table 0-2: Selection of Best Status of “Water Management Authority” Option 1 Option 2 Option 3 Option 4

Criteria CWR under MoA

MoA & WRM

State Agency

for WRM

Mo WRM

Responsibilities per water code1 Development of water policy 2 2 3 32 Develop programs for sector improvement 1 1 3 33 Development of master plans (complex schemes) 1 1 3 34 Approve consumption rates and water use regulations 2 2 3 35 Licensing and permits for users on republican level 2 2 3 36 Develop mechanism for financial support for infrastructure 1 1 3 37 Control of water resource use and protection 1 2 3 38 Data base, state water cadastre 2 2 3 39 Water information centre; public relations 1 1 3 310 Coordinate state water institutions (GGME, etc) 2 2 3 311 intergovernmental cooperation, secure investment funds 1 2 2 312 develop & implement state program for feasible group WS 1 2 3 313 develop and realise private sector involvement 1 1 3 314 Secure & improve interregional/intern. facilities 1 1 2 315 Data collection for certification of water facilities 1 1 3 316 Participate in commissioning of complex facilities 2 2 3 3

Others17 Ability to focus on water issues only 1 2 3 318 Independence 1 1 2 319 Transboundary negotiations and agreements 1 1 2 320 Minimal political influence 1 1 2 321 Flexibility 1 1 3 322 Status of employees 1 1 2 323 Monitor & control drinking water supply and sanitation 1 1 3 324 Support development of irrigation systems 3 3 3 3

Total 32 36 66 72Average (max = 3, min = 1) 1,33 1,50 2,75 3,00Note:3 = very good2 = good1 = weak

The same points can be given to more than one options;

The latter two solutions have comparatively equal merits, the first two solutions clearly fall behind. Finally, it is recommended to establish a separate Ministry of Water Resources Management plus to establish also a National Water Strategy Commission (similar to Kyrgyzstan), reporting to the Deputy Prime Minister. In this form, MoWRM should be sufficient empowered to carry out IWRM with their subordinated BWOs and water agenda would get the urgently deserved attention in the policy making by the Government.

Capacity Increase

Considering the current understaffing of the CWR headquarters and taking into consideration the additional tasks which the “water management authority” needs to carry out under the new water code, it is recommended to increase the capacity of the headquarter staff from currently 34 to 70. The proposal is to split the department of investing, financing and administration into two and to double


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the number of divisions from 6 to 12. The proposal foresees new divisions for strengthening IWRM management, a new division for information dissemination and innovation support, a division for support of public water supply and sanitation systems and one for State support for rural water supply and irrigation.

Further more it must be clear that the staff of the BWOs will need to be increased significantly, in order for them to carry out IWRM.

All staff increase obviously needs to go in parallel with increase of office facilities, equipment and appropriate financial means.


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1 INTRODUCTION

1.1 BACKGROUND Several activities have been undertaken in the past years to strengthen management of water resources and the management of water supply and sanitation systems in Kazakhstan.

On 21st January 2002, the «Concept of Water Economy and Policy Development of the RK» came into force with Government Regulation № 71. On 23rd January 2002, the Sector Program «Drinking Water 2002–2010» was approved by Government Regulation No. 93. Law № 404 «On Rural Water Consumer Cooperatives» was issued on 08.04.2003. The new water code of the RK was approved on 09.07.2003.

These documents greatly strengthen the legal base of the water sector in the RK. At the same time, approval of these regulations charges the CWR with many additional functions and tasks. Its main functions can be summarized as follows: licensing different types of water use permissions, approving norms and normative values for water use, state support (financing) of the water sector and preparation and implementation of investment projects including international funded ones, establishment of an innovation and information database regarding use and protection of the water fund (resources), and implementation of basic principles for integrated water resources management of the RK.

For implementation of above measures the CWR received the following funds from the Republican budget:

in 2002 (9 budget programs) – 6.08 billion Tenge (46.4 mill $),



for 2005 (17 budget prog.) the draft budget is - 26 billion Tenge (198.5 mill $).

The annual increase in funding for the CWR ranges between 50 to 60% but is still insufficient to overcome certain difficulties in implementation, quality of works and timeliness.

Considering the foregoing, the Government of the RK approached the ADB in 2004 with a request for a STTA to increase the organizational capacity of the CWR.

In 2001, the Asian Development Bank (ADB) outlined its vision for integrated water management in the region in its "Water for All” policy paper1. The principal goals outlined in the water policy are as follows:

Promote a focus on national water sector reform

Foster an integrated management of water resources

Improve and expand the delivery of water services

Foster conservation of water and increase system efficiencies

1 WATER FOR EVERYBODY. The water policy of the Asian Development Bank. Oct. 16, 2001.


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Promote regional cooperation and expand mutually beneficial use of common water resources between riparian countries

Promote partnerships and facilitate the exchange of water sector information

Improve governance and capacity building

In Kazakhstan, institutional strengthening of the CWR primarily aims at solving governance and capacity building issues for which ABD kindly agreed to provide funds to field the STTA for implementation of the project “Institutional Strengthening of the Committee for Water Resources”.

1.2 OBJECTIVES The main objective of this TA is, to strengthen the organizational capacity of the Committee for Water Resources, taking into account the increased volume of work during the past years, connected to implementation of budget programs and many new normative regulations with regard to water management.

To achieve the main objectives of the project it is necessary to:

analyze the current organisational structure and the institutional set up of the CWR, taking into consideration the increasing number of State programs in the field of water resources;

review current policies on water tariff setting, sector planning, and budgeting;

propose measures to strengthen CWR’s capacity to oversee water sector reforms;

propose capacity building programs tailored to the needs of CWR staff at central and regional levels;

design an implementation plan for capacity building, including training programs and provision of equipment as needed;

propose possible strategies aimed to increase the effectiveness of inter-agency and inter-ministry cooperation;

propose appropriate measures to improve planning, budgeting, and financial management.

1.3 SCOPE OF WORKS 1.3.1 Original Initially the project was to include an institutional analysis of the ’WR's administrative potential at the national and at regional levels, including more exact differentiation of responsibilities and powers at central and local levels of water resources management. It was further planned to develop recommendations and proposals for improving the organization for management of the water sector.

The main tasks for the STTA are:

review of sectoral policies and legislation, existing and agreed for implementation in the Republic of Kazakhstan, regarding questions of management and rational water resources use;


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review of the water sector abroad and with focus on adjacent CIS countries;

assess the internal and the external organizational structure of the CWR in the Republic of Kazakhstan;

close cooperation with representatives of CWR and its subdivisions, as well as other state bodies, including such as the Ministry of Finance (MF) and the Ministry of Environment (MEnv) for an appreciation of the current situation and conditions;

institutional analysis of CWR management capacity at national and regional levels;

development of proposal and recommendations to meet the project objectives.

1.3.2 Agreed Revision The project budget was considerably reduced compared to the original proposed one. This, as well as the fact that training of staff would require a time period exceeding the project duration, practically resulted in omission of staff training activities. Consequently it is suggested to limit the TA input to proposing training programs for CWR staff.

A survey to assess customer satisfaction as required by the TOR with regard to quality of water services and acceptance of tariffs can not be carried out under the limited budget of this STTA.

As suggested in the inception report it was agreed to concentrate on key issues of concern of the CWR, are the following:

The low status of the CWR (external organization) – in relation to other Government organizations; and which strongly determines the future work load of the CWR;

Required capacity increase of the CWR (internal organization) to be able to cope with the increasing tasks and work load assigned;

During discussion of the inception report it was agreed to include into the project a public awareness component which comprises workshops and press conferences for information dissemination, to inform the public about the role and functions of the CWR.

1.4 PROJECT TEAM AND STTA ACTIVITIES The project team consists of the following experts:

International Expert Mr. Friedrich Schwaiger Team Leader / Management Specialist

Local Consultants: Ms. Zhana Zaitseva Deputy TL / Water Supply and Sanitation

Specialist Mr. Dauren Kassabekov Financial Expert Mr. Gulnar Tulebayeva Water Supply and Sanitation Specialist Mr. Igor Petrakov Legal Expert Ms. Galina Blinova Capacity Building Expert


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Ms. Valery Torubara Capacity Building Expert

Project work began 2nd May 2005 and originally the project was scheduled for 4 months. However, as a result of delay in data collection and the fact that the public awareness building component was added to the project, the duration of the project was extended up to end of October 2005.

Office room is provided by the CWR. The office could be taken over at project start and is located in the building which is also used by the Republican State Enterprise “Astana Su” of the Committee for Water Resources.

In accordance with the STTA work schedule, the inception report was submitted to CWR and ADB on 30th June 2005. CWR positively concluded on the report and jointly with ADB and CWR the team revised the time schedule for the STTA.

A press conference was organized on 10.08.2005 at which both Deputy Chairmen presented the STTA project and other projects supported by ADB, in the presence of the ADB Country Director and the Ambassador of Japan.

1.5 DATA SOURCE The main data sources for the STTA are:

• Legislative and normative documents of the water sector of the RK;

• Documents and information provided by CWR and its subordinate organizations;

• Documents and information made available by other Ministries and institutions with responsibilities in the water sector;

• Publications in periodicals (public science journal “Water management of Kazakhstan” and monthly technical journal “Water resources and water use”, newspapers) and other mass media;

• Reports of international financing institutions (IFI) and non-governmental organizations involved in the water sector.

Then the project team independently assessed the efficiency of CWR head quarter staff using a questionnaire composed of 30 questions.

Finally, to have more reliable up-to-date data about the activities of CWR dependent organizations, the project team sent out a questionnaire to Basin-Water Organizations (BWOs) with the request to submit proposals and recommendations for the increase of effectiveness of BWO activities and the whole water sector.

1.6 GRATITUDE The project team expresses its gratitude to all specialists of the Committee for Water Resources of the Ministry of Agriculture (CWR MoA) who rendered assistance for collection of data and for their constructive comments and recommendations.


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Important assistance and support was extended to the project team by Mr. A. Ryabtsev, Chairman of the CWR, Mr. A. Kenshimov, Deputy Chairman of the CWR and responsible for project implementation on behalf of the CWR.

The appreciation is also extended to all specialists of concerned Ministries and authorities that took an role in workshops for their observations and constructive comments.

Mr. Yuri Blinov, Senior Sector Supply Specialist deserves a really great thank you from all team for the permanent support, the editorial works and his specialist advise on all aspects of the project.

The team thanks also Headquarter of the Asian Development Bank (ADB) in the person of Ms. Eri Honda – specialist for Urban Development , as well as the ADB Resident Mission in Kazakhstan in the person of Mr. Kazuhiko Higuchi – Country Director of the ADB Representative Mission and Ms. Tatiana Simonova – Project Implementation Officer.

The project could be realized thanks to the grant financing provided by the Government of Japan through the Special Japanese Fund, administered by ADB.


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2 COUNTRY PROFILE AND SECTOR INFORMATION

2.1 COUNTRY PROFILE 2.1.1 Geographical Location and Topography The Republic of Kazakhstan is situated in Central Asia in the middle of the Eurasian continent. It occupies 2.72 million sq. km of land, ranking as the ninth largest country in the world2. The western state border runs along the Caspian shore, with the Volga steppes ascending northward to the southern flanks of the Ural and further eastward along the southern edge of the Siberian Plain to the Altai Ridge. The eastern border runs along the Tarbagatai and Jungar ridges, and the southern border runs along the Tien Shan Ridge and the Turan Lowlands to the Caspian coast. The highest point in Kazakhstan is Khan-Tengri (6,995 m above sea level), and the lowest point is the Karagiye Depression (132 m below sea level).

In accordance with the data of the Statistics Agency of the Republic of Kazakhstan the number of population of the country is 15,146,800 on 1st July 2005 and it increased by 0.5 % during the first six months of 2005. Thus, the density of the population is on average 5.7 people/km2.

Kazakhstan borders five countries. The total length of the state border is 12,187 km, including: 6,467 km with the Russian Federation; 2,300 km with the Republic of Uzbekistan; 1,460 km with the People's Republic of China; 980 km with the Kyrgyz Republic; 380 km with Turkmenistan. The land border amounts to 11,400 km. The Kazakhstani part of the Aral coastline comprises 1,015 km and of the Caspian coastline, 2,340 km. Kazakhstan borders Uzbekistan along the middle line of the Aral Sea.

A specific feature of the territory of Kazakhstan is that its greater part forms the internal-drainage basins of the Caspian Sea, the Aral Sea, Lake Balkash, Lake Tengiz, Lake Alakol, etc., none of which have an outflow into an ocean. As a result, a significant portion of pollutants accumulate in the lower reaches of the country's transboundary rivers such as the deltas of the Syrdarya River, Ili River, Ural River, etc. These pollutants are either carried by river flows, fall as atmospheric precipitation, occur as a result of the disposal of industrial waste and pollutant discharges or come from other sources. Thus the issue of water resource management and water quality in water facilities is becoming a critical issue in Kazakhstan.

The landscapes of Kazakhstan are extremely diverse. The southern part of Obschiy Syrt and Pre-Ural Plateau (354 m above sea level) occupy the northwest area of the Republic. The vast flat Pre-Caspian Lowlands are to the south. The Mangyshlak Peninsula (saline lowlands and deep internal-drainage depressions down to -132 m) is situated in the southwest of the Republic. The steep Ustyurt Plateau (up to 340 m above sea level) is located to the east. The pre-Caspian Lowlands are confined to the southern flanks of Ural and Mugodzhary (657 m above sea level). The Turgai Plateau (200-400 m above sea level) is situated northeast of Mugodzhary and in the south becomes the Turan Lowlands, occupied by the Kyzylkum Desert. Sand massifs Bolshiye and Maliye Barsuki and Pre-Ural Karakums are located north of the Aral Sea.

2 Review “Water Resources of Kazakhstan in the new millennium”, UNDP, 2004


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The central part of the country is occupied by the Kazakh rolling hills. The most arid desert Betpak-Dala is located to the south; it borders the Moyinkum sands to the south and the Balkash Depression and sand massif Sary-Ishikotrau to the east. The Ili Depression is situated to the south of Balkash and the Sasykol-Alakol Depression is situated to the east.

Deserts and semi-deserts occupy 58 % of the territory of the Republic. Approximately 10 % of Kazakhstan's territory is occupied by mountains: the Altai Mountains in the northeast (Mount Belukha, 4,506 m above sea level) and the West. The North Tien Shan Mountains in the south, and in the southeast, including the Talas (4,488 m above sea level), Trans-Ili (4973 m above sea level), and the Jungar Alatau. New tectonic shifts and resulting earthquakes are observed in many mountainous regions of Kazakhstan.

2.1.2 Climate and Vegetation The vastness of the territory, its openness in the north and southwest, remoteness from oceans and high radiation form a peculiar climate of Kazakhstan, which significantly differs from the climate of adjacent territories and from the climate of countries situated at approximately the same latitudes. At the same time, certain specific features of the country's climate can be observed in some remote parts of the world. For example, the number of sunny days that the southern regions of Kazakhstan experience, reminds one of Egypt and California; by annual evaporation they correspond to the central parts of South and North America; Kazakhstan's arid summers are similar to the inland areas of Iran, Arabia, Egypt and Sudan. Comparison of certain regions of the country to regions on the same latitudes on the Russian Plain shows that the climate of Kazakhstan differs in having lengthy and severe winters, short hot summers, and a greater number of clear days and by having higher aridity and more variable temperatures.

Winters are long and cold in the northern part of the country, mild in the central part and warm in the south. The average temperature in January varies from -18°Ñ in the north to -3°Ñ in the extreme south of the Kazakhstani plains. Summer is long and arid on the plains. It is warm in the north, very warm in the central part and hot in the south. The average temperature in July varies from 19°C in the north to 28-30°C in the south. In the mountains, summer is short and moderate and winter is relatively warm.

Precipitation in the form of rain is insignificant, except for mountainous regions. In the zone of forest steppe precipitation is 300-400 mm per annum, decreasing to 250 mm in the steppe zone; in the territory of the Kazakh rolling hills annual precipitation increases to 300-400 mm and in semi-deserts and deserts decreases to 200-100 mm. The lowest precipitation (less than 100 mm/year) falls in Pre-Balkhash, on the southeast of Pre-Aral Kyzylkums and South Ustyurt. In the foothills and mountains precipitation varies from 400 mm to 1600 mm per annum. Maximum precipitation in central areas and in the north falls during summer months, and in the south during early spring.

In the north of Kazakhstan southwesterly winds prevail in winter, with northeast winds prevailing in the south; northerly winds prevail on the entire territory in summer. Strong winds are characteristic for the entire territory, while in a number of regions hurricanes (over 40 m/sec), and dry and frigid winds prevail. In summer dry periods can last 40-60 days, with air humidity decreasing to just 5-12 %, causing evaporation of water bodies, burning of vegetation (surface drought)


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and extinction of wildlife. In winter alternation of severe frosts (down to -40-47°C) and thaws, instability and blowing away of snow cover result in the freezing of trees, grass roots, formation of multilayer ice crust on the snow cover and complete freezing of water bodies causing constant lack of food, death of animals and mass deaths of fish in lakes.

Its landlocked location, uniform flat topography, vastness of the territory extending in latitudinal and longitudinal directions, plus various natural and climatic conditions, all determine the diversity of landscape and ecosystems of Kazakhstan.

The flora of Kazakhstan includes 68 species of trees, 266 species of bushes, 433 species of shrubs, semi-shrubs and semi-grasses, 2,598 species of perennial grasses and 849 annual grasses. According to the State Registration, the area of the forest reserve and specially protected territories - as of 1 January 2002 - comprised 26.08 million ha, including 11.47 million ha of forest.

Forests, including saksaul woods and bushes, cover 4.2 % of the territory of Kazakhstan (without bushes, 1.2 %). Forests are distributed unevenly across the country. In some regions the area of forests varies from 0.1 % to 16 %. The largest areas covered with forests (including saksaul trees and bushes) are in the south (69.3 %), in the southeast (15.5 %) and in the north (12.1 %) of the country.

Forests of Kazakhstan include birch massifs (woods) in the northern regions and insular pine tree forests in the northwestern regions; pine tree forests on the Kazakh rolling hills; strip pine tree forests on the right bank of the Irtysh River, by piedmont forests in Altai and Saur, Trans-Ili Alatau and other Tien Shan ridges; desert saksaul woods and flood-plain forests which occupy insignificant areas along the rivers.

Flood-plain forests are located mostly along the Irtysh, Ishim and Tobol rivers in the north and along the Ural River in the west of the country. Willows, aspens, poplars, Russian elms, birches, bird-cherries and alders prevail; oaks prevail along the Ural River. These forests have exclusive water protection and water regulation significance.

It should be noted that the majority of natural systems have been disturbed during land development for agricultural, industrial and civil construction purposes. The beds of the main rivers have been altered; inter-mountain and steppe areas ploughed; piedmont and flood-plain forests cut; unique and relic biological communities have disappeared or are on the verge of extinction.

2.1.3 Social and Economic Development а) Development of the Economy Having moved through the successive stages of decline, stagnation and macroeconomic stabilization during twelve years of independence, Kazakhstan's economy has been experiencing economic growth for the last four years.3 It should be emphasized that Kazakhstan's recent rates of GDP increase have been the highest among all CIS counries. This economic is growth conditioned by rapid development of the oil sector and high world oil prices, providing better living standards for the population.

3 «Kazakhstan: Human Development Report», UNDP, 2003.


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At the same time, however, neglect of regional difficulties during the economic reform process has resulted in increasing polarization whereby mining areas have developed quickly while other province - primarily agrarian provinces with relatively low urbanization levels, population mobility and standards of living - have lagged behind in overall development. Thus, during 1991-1999, the ratio of per capita GDP between the richest and poorest oblasts ranged from 2.9 and 7.6. This ratio climbed above 10 during 2000-2002. It is notable that the majority of CIS states experience similar regional disparities in economic development.

Differing levels of regional economic development are responsible for differing levels of human development by region. Despite higher rates of industrial production, mining areas suffer from higher poverty levels, poorer social infrastructure, higher unemployment rates and substantial income disparities. Such regions are also notorious for imbalances in development and the degradation of previously accumulated social achievements in education and health.

b) Problems of the Rural Areas Having experienced a crisis caused by disruption of the old and introduction of new production mechanisms, the agricultural sector has stabilized over recent years. However, the share of agricultural production in GDP remains small. About a half of the population resides in rural areas. One-third of these have incomes below the subsistence minimum. Rural poverty issues are intensified by the degradation of social safety nets, the decline of manufacturing and engineering infrastructure in towns and villages, the lack of access to statutory education, health care, and potable water supply. These problems have not got overcome in part due to the lack of community-based initiatives that target poverty alleviation. Environmental issues also have an unhealthy effect on rural communities.

Recognizing the importance of enhancing agricultural production, developing rural areas and alleviating rural poverty, the Government has launched the State Agriculture and Food Program and the State Program of Rural Territories Development,4" which require an analysis of rural settlements for future prospects in order to assess the potential for optimal rural settlement. The newly-established settlement model will be based on developing or creating employment opportunities, social infrastructure, etc. in order to promote human development.

In accordance with the goals set forth in the Program, a viable "life support" system will be set up to ensure the equal access of rural communities to social goods based on real economic growth. The program hopes to reduce unemployment in rural areas in part through reviving idle rural farms by strengthening the system for agricultural marketing and rehabilitating water infrastructure in selected rural settlements. Over time, productively gains in the agricultural sector and higher wage levels in the industrial sector will tend to draw labour from one sector to the other.

In general, economic growth, which depends on exploitation of natural resources and fluctuations in world prices can result in unsustainable development and

4 Decree of the President of RK «About the State Agriculture and Food program of the Republic of Kazakhstan for 2003-2005» dated 05.06.2002 № 889 and Decree of the President of RK «About the State Program of rural territories development for 2004-2010» dated 10.07.2003 № 1149.


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increased environmental degradation. Indeed, the quality of growth is as important for poverty eradication, human development and sustainability as its quantity.

c) Unemployment and Gender Relations The dynamics of employment rates, average wage levels and income distribution indicators are important factors in the linkages between economic growth and human development. Since the beginning of the reform period, the Kazakhstani labour market has experienced profound structural changes brought on by demographic processes and fluctuations in the ratio of people reaching working age to those reaching retirement age. During this period, the decline in the number of labour force actually exceeded the decline in the overall population. Moreover, while in 1991 the proportion of hired employees among the labour force was 95.8 %, by 2004 that figure had dropped to 57 %. In the same time, during this period the proportion of self-employed people grew from 1.5 % to 34.6 %, more than half of these were women.

According to official statistics the number of unemployed has been steadily declining since 2000. However, the overall situation on the labour market has been improving more slowly than it may appear because official statistics do not take into full account the number of illegal workers coming from neighbouring countries. However the level of unemployment of young people (population of 15-24 years old) keeps high, so-called "long-term unemployment" is widespread.

Regional variations in unemployment are still observed. Unemployment rates above the national average in 2003 (8.8 %) were recorded in Zhambyl (11.1 %), Kyzylorda (11.4 %) and Manghistau (9.7 %) oblasts.

In accordance with the RK Statistics Agency data, the number of Kazakhstani unemployed in the second quarter of 2005 decreased in comparison with period 2004 for 3 % and is 634.1 thousand people. In the mentioned period the number of economically active population of 15 years old and more is 7.9 million people that is 0.3 % more than in the second quarter 2004. 7.3 million people (0.6 % more than 2004) were involved in the economy of the country. As work-had there were 4.6 million people (63.6 % of total number) were occupied. The share of registered unemployed of the economically active population is 1.4 %.

The nominal average monthly salary of one employee increased (14.4 %). In June 2005 it was 32,152 Tenge (about 240 US$). The most high-paid employees are the work-hand of the tobacco industry (the salary is more than 113 thousand Tenge) and gas-and-oil industry (from 54 to 104 thousand Tenge). Actually the average salary of male population of Kazakhstan is 37,300 Tenge, and female population – 22,881 Tenge.

The proportion of female employees increased from 45.8 % to 48.2 % during 1999-2004. Although the country adopted the principle of "equal pay for equal work", the ratio of average female to male wages rate fell from 75.8 % in 1999 to 61.7 % in 2004. This is because women hold predominantly low-paid posts in education and health care. Women also represent a majority among the self-employed population who do not have access to social security benefits. Gender data from 2004 reflect the kept prevalence of female unemployment at 57.3% of the overall unemployed population. Women of over 40-45 years old with higher or vocational secondary education have almost zero chances of getting a job in their area of specialization. Moreover, reduced numbers of kindergartens and their


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increased costs, along with a lack of affordable alternative services have affected women's freedom of choice because they have few alternatives to a "house-wife" career, just as expected according to traditional stereotypes.

Despite growing employment in small and medium enterprises (SMEs), their share of overall GDP remains quite low.

d) Poverty The problem of poverty is considered not only from the income standpoint but also in terms of limited choices and capabilities to have a decent life. The proportion of people living below the poverty line in Kazakhstan fell to 16.1% in 2004, with a maximum of 39% observed in 1998. Since 1999 there has been a clear and steady decline in the numbers of poor people due to strong economic growth over the last four years and therefore better employment and higher incomes. There has been a decline in the percentage of the poorest population whose incomes are considerably lower than the food basket level. Thus, between 1999-2004, while the ratio of population with incomes below the subsistence minimum decreased by 18.4%, the proportion of the poorest population only fell by 10.2%.

Regional disparities in the incidence of poverty levels are significant. The highest proportion of population with income below the subsistence minimum was observed in Zhambyl (30%), Mangistau (26%), Atyrau (32.7%), Kyzylorda (27.1%), and South Kazakhstan (26.1%) oblasts in 2003. In contrast, the lowest proportions of poor population were recorded in Astana (2.1%) and Almaty City (3.9%). Highest poverty indicators are observed in Atyrau and Zhambyl oblasts. Atyrau oblast, the leader in per capita gross regional product (GRP), also has the "leading" (i.e. worst) poverty indicators.

Income disparities are linked mostly with low wage levels in certain areas of economic activity - particularly in Government-funded institutions and the agricultural sector - as well as lack of means-testing and access to state social assistance. The proportion of poor in rural areas is almost twice as high as in urban areas. Monetary income in urban communities is 2-2.4 times higher than in the countryside.

Recognizing poverty as one of the country's most prominent problems, the Government implemented the Programme on Fighting Poverty and Unemployment for 2000-2002 aimed at providing social assistance to the poor population and reducing the level of unemployment. However, the programme focused primarily on income poverty and did not take into account other dimensions of poverty such as increasing access to health and educational services, addressing environmental problems, gender equality, etc.5

One of the main challenges in tackling poverty throughout the country is to enhance poor people's access to public services such as education, medical care and social infrastructure, which remains a priority in the Government's mid-term policies. The Poverty Reduction Programme for 2003-2005 seeks to alleviate poverty through: generating productive employment and increases in real

5 UN Millennium Development Goals in Kazakhstan, 2002.


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income; improving access to health and educational services for the poor; and targeting social protection and improving management of the state's pro-poor services with the involvement of social institutions in decision-making.6

2.1.4 State Governance and Institutions Democracy building has been ongoing for over a decade. Fundamental linkages between political changes, drastic market reforms and state building all illustrate democratization processes in Kazakhstan. The severe socio-economic crisis of the early 1990s, as well as the lack of market economy mechanisms, democratic traditions and institutions, made the early stages of structural change all the more complicated. Economic transition was to serve as a prerequisite to political reform aimed at democratization of the political system.

Democratic institutions, the rule of law, equal opportunities and a decent standard of living for all have been paramount for Kazakhstan since gaining independence. These values are enshrined in the Constitution in which "The Republic of Kazakhstan proclaims itself a democratic, secular, lawful and social state whose supreme values are people, their lives, rights and freedoms".7 In general the state appears to have been successful in performing its social functions, ensuring social and political stability of Kazakhstani society, and using Government controls to create a competitive market environment and incentives for self-fulfilment through a wide range of rights and freedoms.

Yet rapid economic development is impossible to sustain without improving and further developing public administration, which has been clearly illustrated in the experiences of industrialized countries. Long-term sustainable development requires ongoing enhancement of various forms of governance, with growing involvement of public and civic institutions as well as individual citizens becoming a mainstream tendency. Achieving this aim involves making the establishment of administrative authorities and electoral processes transparent and enhancing the roles of representative bodies. In the future, the development of representative democracy must be accompanied by participatory democracy, which implies enhancement of civil society and NGOs.

All these aspects are of particular relevance for those states that have launched economic, social and political reforms. In Kazakhstan the situation is more complicated due to the continuation of the previous state system, which inhibited public participation in the political process and necessitated democratization in order to adequately adjust to the changing situation. Kazakhstan still needs to "accelerate" this process in order to complete the cycle, which took western countries some 200 years to accomplish. It should also be borne in mind that western countries still continue to enhance the efficiency of governance and improve mechanisms of transparency, supervision and accountability.

From the very beginning of the comprehensive structural changes it became clear that the goal of sustainable development could only be achieved if effective governance systems were in place at all levels of Government. Global practice shows that the prerequisites for effective governance are:

6 Government's Decree #296 On Approval of the Poverty Reduction Program for 2003-2005 (26.03.2003)

7 Constitution of the Republic of Kazakhstan dated 30 August 1995 (amended 7 October 1998)


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• Decentralization, which means the transfer of non-core functions from Government Ministries and agencies to regional and local bodies;

• Development of local self-governance, which includes the transfer of a number of functions from the state to the private and non-profit sectors.

Kazakhstan's model of efficient governance is remarkable for its continued concentration on top-down, vertical authority. The fundamentals of such public governance were enshrined in the Constitution of 1995, which is still in force. According to the Constitution, Kazakhstan is a unitary state. The "unitary principle" determines the organizational structure of the country, which is outlined below in Fig. 2-1.

The distribution of functions among different levels of Government and enhancement of inter-budgetary relations are particularly important in addressing many of the development issues prevalent in Kazakhstan, including the use and conservation of water resources. In addition, the importance of community involvement is increasing as only people themselves can meet the daily needs of their communities most effectively. In this context, self-governance is becoming of particular significance.

The introduction and comprehensive development of local self-governance has been on the agenda for a long time in Kazakhstan, due to the following factors:

• Lack of a unified definition of "local self-governance", its status and role in the social and political systems of the state.

• Unclear legal framework for accountability of local self-governance bodies.

• Lack of an effective financial framework for local self-governance, namely lack of local budgets at village (aul) levels.

• Deficit of qualified staff to work in institutions of local governance.

• Formation of local self-governance is also hindered by the population's low incomes and small numbers of property owners having a stake in self-organization issues.


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Fig. 2-1: Layout of Governance in the Republic of Kazakhstan

The above factors are significant barriers to the development of local governance and self-governance systems in Kazakhstan, requiring careful consideration and well thought-out solutions. Some amend

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