The World Bank Agriculture Modernization Project (P158372)
Page 8 of 70
the medium term.
4. Many transition challenges remain, with reforms in some areas being complex and politically sensitive, drawing attention to agriculture as a sector with potentially quick wins. The more visible benefits of market-oriented reforms
tend to take time to materialize and require a strong sequence of complementary reforms. Many of these reforms, such
as the restructuring of state-owned enterprises and the banking sector, creation of a more level playing field between
state-owned and private enterprises, urban and agricultural land reforms, and the development of more accountable
public institutions are also likely to be more complex to tackle. As a result, job creation has been slow, Uzbekistan’s
participation in global value chains remains weak, and the private sector has a limited presence. In fact, the same survey
(2019 LCU) that yielded support for the reforms, also revealed households’ concerns around the slow pace of job creation
and elevated inflation. In this context, attention has shifted to agriculture, the sector with more opportunities compared
to other sectors to generate quick and inclusive growth and other benefits. Uzbekistan’s transition starting point favors
its export competitiveness (given low wages, potential for high productivity, and seasonality advantage) that could help
overcome high costs associated with its ‘double-locked’ location and weak connective infrastructure to markets
7
.
5. Uzbekistan is vulnerable to the impacts of climate change, particularly in the sectors of agriculture, energy, and water resource management. Anticipated climate impacts include increases in monthly maximum temperatures across
Uzbekistan, high variability of rainfall across different agroecological zones, and increased glacier melting with
implications for water availability and river flow. For agriculture, an increase in extreme temperatures and rainfall events
due to climate change is increasing the risk with regard to water availability, but also increased incidence of pests, insects,
and diseases. Droughts may become more frequent due to decreases of runoffs of Amu and Syr Darya Rivers. Climate
change is also expected to adversely affect soil fertility and productivity, as a consequence of droughts, and exacerbated
soil salinity due to water scarcity and other factors. The majority of the rural population that depends on agriculture for
their livelihood is set to be disproportionately affected by climate change risks through their livelihood’s dependence on
agriculture, relatively lower ability to adapt, and high share of income spent on food, on average 50 percent. Climate
impacts could reverse progress made in poverty reduction, and negatively affect food security and economic growth in
vulnerable rural areas, as changes in the seasonal distribution of temperature and precipitation undermine predictable
agriculture production
8
.