Assessment of the Contribution of Freshwater Ecosystem Services to the Hydropower Sector in the Kura–Araz Basin

Abstract

This study focuses on the ecosystem services (ES) in the Kura–Araz basin. The study assesses the hydropower plant (HPP) dams’ sector and reviews additional sectors including nature-based tourism, irrigated agriculture, and drinkable water supply. In addition, the study briefly discusses the role and value of ecosystem services that help to mitigate natural hazards related to poor ecosystem management. The study used a basic Targeted Scenario Analysis (TSA) approach. The TSA assesses current “business as usual (BAU)” ecosystems management practices and the current value of ecosystem services under BAU. It uses sector output indicators and compares them with potential “sustainable ecosystems management (SEM)” outputs to assess losses and potential gains (or losses) of shifting from BAU to SEM. The BAU approach is characterized by a focus on short-term gains (e.g., <10 years), externalization of impacts and their costs, and little or no recognition of the economic value of ES, which is typically depleted or degraded. Under SEM, the focus is on long-term gains (>10 years); also under SEM, the costs of impacts are internalized. BAU practices in freshwater ecosystem management have a high cost to the economy of Azerbaijan. Part of this high cost can be avoided by shifting to low-cost SEM practices. Despite the availability of several laws and regulations governing the administration and management of HPP and Dams in Azerbaijan, enforcement is weak. The legal framework is also incomplete, there is no means for law enforcement, and no measurable indicators or means to collect and evaluate it. Therefore, no results of the evaluation are fed into policy-making or to improve HPP/Dams management.