Using A Value Chain Approach For Economic And Environmental Impact Assessment Of Cotton Production In Uzbekistan

Abstract

Cotton in Central Asia has a reputation for causing the twentieth-century ecological catastrophe known as the Aral Sea crisis. The cotton industry was blamed for political repression, economic stagnation, widespread poverty and environmental degradation in the region.(1) The cotton mono-culture practices imposed during the former Soviet era not only diverted massive amounts of water from the Amu Darya, one of the two main feeders of the Aral Sea, but also caused ecological problems, such as desertification, water and soil salinization, and air and water pollution due to the run-off of pesticides and fertilizers. The consequences and environmental costs proved to be drastic: dying of the sea, deterioration of the environment for more than five million people living in the region of the sea, high rates of disease incidents, as well as even farther-reaching ecological problems. However, cotton is of paramount importance to Uzbekistan, a backbone of its economy. Not only it does account for a considerable share in foreign exchange revenues and GDP, but it also provides employment and income security for a large share of the rural population. Concurrently, affected by fluctuations in prices on the world cotton market, the export of cotton fiber caused the government of Uzbekistan a loss of about US$1.5 billion between 1998 and 2001.(2) Hence a continuation of the cotton monoculture and export of low value fiber can no longer be regarded as the vehicle for permanent, broad-based, and environmentally sustainable growth. A shift from the primary commodity exports to the export of value added cotton products and the removal of trade barriers became a key aspect of recent reforms. There is definitely scope for maintaining and even increasing the returns from cotton without an increase in cotton areas. Decreasing cotton areas, shifting land unsuitable for cotton to other crops, or establishing alternative uses such as tree plantations or pastures can contribute greatly to ongoing attempts to prevent or mitigate further aggravation of the ecological situation in the region. Value Chain Analysis was applied in the study region Khorezm to get a comprehensive picture of the entire cotton sector by describing the cotton flows, actors involved and their interrelationships, costs of production, and income distribution along the cotton chain. This approach allowed the assessment of some scenarios aimed at reducing the dependence on cotton while maintaining income both to the state and the farmers, as well as the estimation of ecological impacts of reforms in the cotton sector. For example, export revenue of the baseline scenario could be maintained with a simultaneous reduction in raw cotton areas of 3.5 times, in the Khorezm region alone. Under this scenario, about 80,000 ha could be released from state orders and diversified for alternative crops or land uses (tree plantations or forage crops), thus making agriculture more environmentally friendly while maintaining its economic importance.