LocationsKazakhstan advances new financing tools to mobilize investment in the water sector
September 11, 2026
As part of Astana Finance Days 2026, the United Nations Development Programme (UNDP) in Kazakhstan, the Partnership for Action on Green Economy (PAGE) and the Astana International Financial Centre (AIFC) Green Finance Centre convened a panel session Advancing Blue Finance in Kazakhstan: Blue Taxonomy and Blue Bonds for Sustainable Water Management.
The session brought together three key components needed to develop Kazakhstan’s blue finance market: UN-supported work on blue finance and sustainable water management; the development of National Blue Bond Issuance Guidelines and Blue Bond Eligibility Criteria, which could provide a methodological foundation for a future national Blue Taxonomy; and the practical role of development banks and commercial financial institutions in originating, financing and refinancing blue assets through lending and capital market instruments.
Amid growing water scarcity and climate risks, Kazakhstan requires significant investment to modernize water infrastructure, improve water-use efficiency and protect aquatic ecosystems. Preliminary estimates indicate annual investment needs of US$1–1.5 billion, while the country’s potential water deficit could reach 12–15 billion cubic metres by 2040. At the same time, around 44 percent of the country’s river runoff originates outside its borders.
In this context, blue finance can provide an additional avenue for mobilizing private capital for projects related to water supply and sanitation, irrigation modernization, wastewater treatment and reuse, sustainable approaches to aquaculture and fisheries, digital water management, pollution prevention, ecosystem restoration and climate change adaptation.
“For Kazakhstan, blue finance is first and foremost an opportunity to mobilize additional investment to address concrete challenges in the water sector. But building such a market requires more than defining which projects qualify as ‘blue’. It requires well-prepared projects, reliable data, clear criteria and appropriate financial instruments. Our role is to help bring these elements together and translate the country’s water priorities into tangible investment opportunities,”said Oleg Khmelev, Chief Technical Advisor at UNDP.
The panel brought together representatives of UNDP, the AIFC Green Finance Centre, the European Bank for Reconstruction and Development and the Eurasian Development Bank. Participants discussed the institutional, methodological and financial conditions needed to develop Kazakhstan’s domestic blue finance market, as well as the role of development banks and international financial institutions in preparing and financing potential projects.
Kazakhstan has partnered with PAGE since 2018. During the first phase, the partnership supported systemic green economy reforms, including work on the Strategy on Achieving Carbon Neutrality by 2060, the Environmental Code, the Concept for Transition to a Green Economy, sustainable public procurement and other areas. In 2025, the partnership entered its second phase, with blue finance becoming a central area of focus.
The new phase includes assessing the potential for blue finance in Kazakhstan, developing a national Blue Taxonomy, preparing guidelines for blue bond issuance, including requirements for monitoring, reporting and verification, piloting the country’s first blue bond issuance, and strengthening the capacity of market participants.
“Kazakhstan can build on its existing sustainable finance infrastructure, but the immediate challenge is to apply robust criteria to real assets, improve baseline data and develop the first high-quality pipeline,”said Nagima Ayubayeva, Deputy CEO of the AIFC Green Finance Centre.
One of the key questions is determining which projects could qualify for blue finance in Kazakhstan. Unlike in countries where the blue economy has traditionally been associated primarily with oceans, Kazakhstan’s priorities centre on freshwater resources, land-based water flows and transboundary river basins, as well as the Caspian Sea. International experience shows that the scope of blue finance is gradually expanding and now includes areas such as water supply, wastewater treatment, water infrastructure modernization, aquatic ecosystem conservation and the prevention of river pollution.
Potential areas for Kazakhstan include the modernization of irrigation canals and systems; the construction and rehabilitation of wastewater treatment facilities; the reuse of treated wastewater; digitalization of water accounting and distribution; aquaculture development; flood protection infrastructure; the restoration of wetlands and coastal ecosystems; and projects aimed at preventing pollution of the Caspian Sea.
Participants emphasized that financial instruments alone are not sufficient to attract investment. Developing the market requires an infrastructure of trust, including transparent project eligibility criteria, disclosure standards, independent external reviews, measurable impact indicators and reporting on the use of proceeds. Projects that deliver significant environmental and social benefits but offer insufficient commercial returns may also require blended finance and de-risking instruments.
The next phase of work will focus on identifying a priority pipeline of potential projects and issuers, integrating recommendations from participating UN agencies, consulting stakeholders and assessing social considerations. Work will also continue on the development of Kazakhstan’s national Blue Taxonomy and on creating the conditions for a pilot blue bond issuance through the AIFC, with a view to subsequently scaling up the approach.
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