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A new water culture: climate change, efficiency, infrastructure and innovation

  • Milan
  • 25 November 2024

        The events of the past four years, from global epidemics to armed conflicts, have highlighted how rapidly the sociopolitical conditions under which water is supplied, managed and used are changing. Moreover, the development and maintenance of water resources and equal access to services are essential to ensuring peace, in addition to building and maintaining a prosperous and stable society. Water management must therefore factor into new economic and social realities that include geopolitical shifts. To these factors, which could be defined as “human”, are added the effects of global warming, which in the Mediterranean region is more than 50% above the planetary average, with significant consequences on both the availability and distribution of water.

        Increasingly frequent extreme precipitation phenomena are exacerbating a hydro-geological risk that alternates with periods of drought, such as that experienced by Italy in 2022. At global levels, flooding from 2002 to 2021 caused nearly 100,000 deaths, with an additional 8,000 in 2022, affecting 1.6 billion people (57 million in 2022 alone) and resulting in economic losses of more than 800 billion dollars (45 billion in 2022). During the same period, drought affected over 1.4 million people, killing 21,000 and resulting in economic losses of 170 billion dollars in 2023.

        Continuous global warming will intensify the water cycle and further increase the incidence and gravity of drought, since the two are parallel phenomena. Extreme weather events in Spain and Italy, for example, show that their most important aspect is frequency.

        Despite recent major water crises, Italy has an abundance of available water, with 325 million cubic meters falling on the country every year. Naturally, distribution varies: more than 50% of resources are located in the north, 40% between central and southern Italy, and only 7% on the larger islands. The problem lies in resource management, which must become more dynamic in order to confront variations in availability by optimizing reserve capacity, for example. That capacity, which is pivotal to the primary water supply, is the result of the construction of major infrastructure such as dams and reservoirs completed over the course of the twentieth century. Nevertheless, today that sophisticated system of infrastructures – and the institutions that oversee it – are failing. This is principally due to a design based on the statistics of the past.

        It has been calculated that from 4 to 5 billion euros a year need to be invested, which would necessarily require a mix of public and private capital. In particular, banks and institutional investors can play an important role in supporting the sector and facilitating synergetic adaptation by supplying capital, strategic skills and innovative financial instruments. This would make it possible to contribute to the enhancement of water resources within the broader framework of the green transition. For instance: project finance, green bonds and public/private partnerships could usefully combine different forms of financial support, along with the 4.5 billion euros the PNRR allots for the protection of water resources. Furthermore, institutions have the important task of guiding the strategic economic planning that goes into identifying the country’s features and needs as of 2050 and the planning of new water infrastructures; these latter, in fact, are closely linked with economic development and, in turn, need an economy capable of financing, building and maintaining them.

        Agriculture and industry, after all, cannot do without water: compared with 23% domestic   consumption, Italian farming uses much more (61% of total available resources), with an irrigation propensity among the highest in Europe. Italian industry uses water (16%) both in production and in the cooling of machinery or plant cleaning. In addition to countering water waste, a truly dynamic management of resources must perforce include the reuse of waste water, collection of rain water and integrated civilian, agricultural and industrial management. It is also worth recalling another application of water resources: the production of energy. Hydroelectric is still the main source of renewable energy today, accounting for 42% of production, yet it is heavily dependent on precipitation: in 2022, the year of the drought, production dropped by 40%.

        As for the civilian use of water, it should be pointed out that over recent years, with the assignment of authority to ARERA, investments in the sector have grown from approximately 30-35 euro per capita to 70, which is much closer to the European average of approximately 80. This acceleration is owed mainly to the stability of regulation, which has guaranteed greater serenity to investors, who view water as an economic value as well as a common good. The current phase has the authority working on the rationalization of water governance in a context that counts several thousand active operators. This includes a large number of towns that administer water autonomously. This fragmentation – by sector but also by local area – risks slowing investments in the industrial management of water services, an essential prerequisite for sustaining the investments needed for adaptation and growth. The measurement and assessment of the resource – which underpin the authority’s efforts in the civilian sphere – could also be highly useful in rethinking how water is consumed for agriculture, not least by also assigning authority in this sector to ARERA.