ROEN

2021 Edition

Towards Green Transformation of the Republic of Moldova

Monitoring progress based on the OECD green growth indicators


Main findings

  • In recent years, the economy of the Republic of Moldova (hereafter “Moldova”) grew at a modest pace. However, this pace was not fast enough to significantly improve the standard of living of most people. The national economy is still affected by systemic problems such as low competition, corruption, and a limited labour force. These problems are accompanied, in turn, by an increasing number of shocks generated by extreme climate factors such as floods, drought or frosts. Frequent political unrest also affects the capacity of state institutions to respond to crises. In 2020, for example, the state provided only limited social and economic support in response to the COVID-19 pandemic.

  • Indicators that measured productivity of environmental resources were generally positive. Thus, carbon, energy and water productivity increased. Consequently, economic growth partially decoupled from carbon dioxide (CO2) emissions, and use of energy and water. This means the economy grew faster than use of natural resources. Despite this progress, the level of environmental resource productivity in Moldova is much lower than in European countries. Thus, the intensity of environmental resource use in Moldova is relatively high, which implies pressures on both natural capital and the sustainability of economic development.
  • The relative stability of CO2 emissions combined with growth in gross domestic product (GDP) resulted in higher carbon productivity, which grew from 7.3 to 9.5 MDL/kg. At the same time, the ratio between GDP and greenhouse gas (GHG) emissions increased from 10.7 to 14 MDL/kg CO2-equivalent (CO2-eq). The higher carbon productivity shows that economic growth decoupled from CO2 emissions. Despite this progress, Moldova remains at the bottom of European countries in terms of carbon productivity.
  • The supply of primary energy and final consumption of energy increased in Moldova after 2010. Since energy supply grew at a lower rate than GDP, energy productivity increased. Nonetheless, this growth did not allow Moldova to improve its position relative to other European countries. Energy productivity grew much faster in Moldova than in other European countries. For example, between 2010 and 2019, productivity in the European Union grew by 24.4% and was 2.7 percentage points lower than growth in Moldova. Despite this progress, among European countries, Moldova ranks almost at the bottom in terms of energy productivity.
  • The supply of renewable energy generally increased (decreasing only in 2019). As a result, the share of renewable energy in the supply of primary energy and in the final consumption of energy increased. Nonetheless, compared with other European countries, the share of biofuels and waste in the primary supply of renewable energy is extremely high in Moldova. Biofuels and waste account for 98-99% of the primary supply of renewable energy. Meanwhile, firewood represents more than 80% of biofuels and waste. This shows that renewable energy in Moldova is mostly obtained from cutting trees and that renewable energy production is at an early stage.
  • Production waste has decreased, particularly after 2015. Between 2010 and 2019, the quantity of production waste decreased by 34.3%. During the same period, GVA – an indicator that reflects the production process – increased by 42.1%. In this context, production process decoupled from the generation of production waste. At the same time, the volume of household waste is increasing. Between 2014 and 2020, the quantity of waste collected from the population grew by 20.9%, while household consumption increased by only 5.4%. Thus, the model of consumption continues to generate more and more waste. At the same time, there is no clear trend in Moldova on waste utilisation.
  • Use of mineral fertilisers is accelerating, but this was not accompanied by a rapid increase in vegetal production. Instead, it led to a rise in the amount of fertiliser introduced per hectare of soil. Between 2010 and 2020, this indicator increased from 24 kg/ha to 95.8 kg/ha for chemical fertilisers and from 20 kg/ha to 110 kg/ha for organic fertilisers.
  • Water productivity increased, but this growth did not allow Moldova to improve its position relative to other European countries. Between 2010 and 2020, water use was generally stable, while GDP increased by about 32%. As a result, water productivity increased and economic growth decoupled from water consumption. Despite this progress, the level of productivity in Moldova remains one of the lowest relative to other European countries.

  • Moldova has limited water resources compared with most European countries. It depends on water from the Prut and Nistru rivers, which accumulate mainly outside the country. At the same time, the agricultural sector accounts for a large share of the Moldovan economy but is represented by a large number of small farmers with rudimentary businesses. Increasingly frequent droughts mean agriculture requires higher volumes of water and irrigation. This water is often delivered through inefficient systems, leading to large losses. Thus, besides a high volume of water intake per capita and a relatively high level of water stress, Moldova still experiences significant water losses due to transportation with no sign of improvement.
  • Despite the slight increase in afforestation, Moldova has limited forest resources. This is coupled with serious environmental issues and extreme weather events, which have become increasingly frequent. At the same time, the limited area covered by forests is accepted as a cause of climate change, which calls for prompt public policy actions.
  • Soil resources have not changed significantly in the last decade. Factors such as urbanisation, population density or infrastructure expansion have been unable to change the structure of the land fund. Thus, Moldova remains a territory with predominantly agricultural areas, with soil as the main natural resource. However, large areas of agricultural land are still parcelled out and some are affected by erosion, which reduces performance of the agricultural sector.
  • Organic agriculture offers only a modest contribution to the sector given that both land area and the number of operators involved remain small. The small scale of organic agriculture has multiple causes related to both consumer demand and producer supply. The state has released several strategic documents to promote organic agriculture but has offered limited financial support.
  • Biological diversity needs more protection in Moldova. Biodiversity, which underpins the proper functioning of ecosystems, can be measured by the number of endangered plant and animal species. The latest edition of the Red Book in 2015 contains twice as many species of plants and animals needing protection in Moldova as the 2001 edition. Given these conditions, Moldova needs clear policies and measures to restore natural habitats in order to protect rare and vulnerable species.
  • Moldova has added protected areas but still has a small number in relation to its territory. Moreover, it is difficult to conserve nature and associated cultural values ​​in these areas when the state can neither ensure laws are respected nor limit harmful human intervention.

  • Air pollutants have been rising in Moldova since 2010, a trend that augments risks to the environment and human health. This trend is caused by the rapid increase in emissions of pollutants from road transport. A comparative analysis of emissions of pollutants (nitrogen oxides and sulphur oxides) related to population shows a worrying trend. Moldova occupies one of the lowest positions among European states in terms of pollutant emissions per capita. However, it has registered a significant increase in recent years. Emissions per capita grew by almost 83% between 2014-19, which is the highest growth in the region.
  • Exposure of the population to fine particulate matter (PM2.5) has decreased. In addition, Moldova occupies an average position in relation to other European countries regarding this exposure.
  • The public water supply network is rapidly expanding. As a result, people’s access to safely managed drinking water services has increased. However, Moldova is ranked near the bottom regarding people’s access to safely managed drinking water services in relation to other European countries.
  • Moldova had some progress in expanding the public sewerage network. However, public supply networks have grown faster than the length of sewerage networks. This creates additional pressures on water resources, as water consumption reduces the amount of quality water returned to the natural water cycle. Even if people have greater access to basic sanitation services, Moldova ranks among the lowest for these services relative to other European countries.

  • Moldova ranks the lowest among European countries in terms of investment in environmental protection. Both the government and businesses spent too little for these purposes compared with most European countries. In recent years, Moldova allocated only 0.5% of GDP for environmental protection, while the EU average is 1.9%. There are multiple causes for the low investment, generally related to financial constraints and the state of the Moldovan economy. Environmental economic instruments (e.g. fees and environmental permits) are not able to improve the situation. Environmental protection is often sacrificed in favour of other political or economic priorities.
  • Energy subsidies largely take the form of tax relief on gas and electricity for households. This is due to total dependence on imported energy and the low standard of living for a large part of the population. Thus, tariffs for energy resources are debated constantly, with discussions often becoming political. Unless the country has significant economic progress, any elimination of subsidies, resulting in increase of tariffs, is immediately attacked by the population, businesses or political opponents.