Green Finance Instruments for Sustainable Infrastructure in Transition Economies
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Abstract
This study examines the impact of sustainable financing mechanisms on infrastructure renewal in transition economies, particularly the Shuatsevi Hydropower Plant in Georgia. The project was implemented using a complex multi-level financing model, supported by leading international financial institutions such as the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), and the Asian Development Bank (ADB). Shuatsevi Hydropower Plant is a pioneer in climate-friendly infrastructure investments in the South Caucasus, contributing to the development of the scientific literature on financing sustainable projects in post-Soviet countries. The study is methodologically based on a qualitative case study, using primary data as well as a wide range of secondary sources, including environmental and social impact assessments, financial contracts, and project participants’ reports. A SWOT analysis was used to comprehensively assess the project implementation, identifying both strengths and weaknesses, as well as potential opportunities and threats. The results demonstrate significant environmental benefits, including significant reductions in CO₂ emissions and job creation, which will contribute to the country’s energy independence. However, several challenges have been identified, including technical challenges related to geotechnical issues and a lack of local community engagement, which have negatively affected social support for the project. This study highlights the need for institutional alignment, regulatory coherence, and active stakeholder engagement for effective implementation of green infrastructure in the context of transition economies. The findings provide practical recommendations for policy development aimed at scaling up sustainable finance in Georgia and other post-Soviet countries with similar economic challenges, which will have a significant impact on enhancing environmental and economic sustainability in the region.
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