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The water industry

  • Milan
  • 20 March 2023

        The water industry is strategic to the future of Italy from the point of view not only of the economy but also of the country’s resilience to the increasingly complex challenges posed by the climate crisis.

        The first problem to confront is understanding to what extent the national water system has all the requisites of a valid industry, one capable of confronting the highly diversified needs of users (private consumers, industry, agriculture, the energy sector) and of the territory. This presupposes, first and foremost, the existence and administration of a chain of infrastructures and services analogous to those of the utilities of other sectors. Fundamental then is continuous and substantial investment in the construction, and more importantly the maintenance, of those infrastructures. All this needs to be flanked by research, development and innovation, along with the training of the required human capital. Finally, to complete the picture, an adequate regulatory system mindful of the rights and obligations of all concerned.

        Nevertheless, to be considered a true industry, a certain ambiguity that has long characterized the sector needs clarification: considering water a public asset does not mean that managing it comes without a price tag. Indeed, all the aforementioned factors carry costs that have to be offset by tariffs or general taxation and remain a key element in economic sustainability. Italy, instead, seems still to be suffering from a vicious cycle distinguished by tariffs much lower than the European average, very high consumption associated with low perceived value and often inadequate infrastructure, with losses amounting to 40% of the resources flowing through the system.

        Change must come in the form of both improved efficiency and effectiveness as well as increased productivity. The Italian water industry’s transition to accommodating the new scenarios associated with the climate crisis calls for assessing all contiguous sectors and implementing adequate territorial governance. That involves a dynamic allocation system capable of maintaining the productivity of resources even in the case of shortages: an element in need of infrastructure but also, and more importantly, of institutional planning. Truly key at this juncture is technology. For an important sector like water, burdened by uncertainty regarding data – starting with those on the resources available – the creation of intelligent networks capable of best handling drought events is pivotal to confronting future threats. 

        Technology and innovation are key to agriculture as well, which is the principal consumer of water. Introducing new irrigation methods and improving traditional ones can have a significant impact on water consumption and the resilience of farming businesses, overcoming the initial strain experienced in the summer of 2022 by private consumers, hydroelectric electricity production and the needs of the primary sector.

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