Italy’s well is running out. The country’s water system is under severe pressure, exacerbated by climate change. The government is trying to tackle the crisis with big projects. But Italy also requires a more profound reform of the entire sector to attract private capital.
Italians consume a lot of water: 220 liters a day against the 165 European average, says the Ambrosetti think-tank. It’s getting harder to find. Last year was the hottest on record. Rainfall was about 50mm below average. This year looks a little better.
The country experiences severe water stress. About 40% of the population suffered rationing. This is bad news for olive groves and vineyards. The agricultural sector lost 6 billion euros in revenue last year.
Quick tracking of some projects will help, especially increasing tank capacity. But Italy’s main goal should be to improve its infrastructure using European funding for post-pandemic recovery. More than 40 percent of the water is lost along the way, says Ambrosetti. He compares that to the much maligned UK water system, which leaks around 20%.
Building groups like WeBuild may be on the line for big contracts. There is talk of roped-in energy companies so that new tanks can double as pumped storage.
Plugging the leaks in Italy will require regulatory reform to attract investment. Rates are low at €2 per 1,000 litres. This is about half the level of France and Germany. Unpaid bills are also high.
Meanwhile, Italy’s fragmented water sector needs to consolidate. It has nearly 2,000 operators, mostly local municipalities. Some of the largest, such as Acea di Roma and Hera di Bologna, are listed on the Stock Exchange. But most are small. The French Veolia has invested in some utilities in the south of the country but has put its stakes in Sicily, Campania and Lazio up for sale.
The sector is a political swamp. But unless it can attract private capital and businesses, it’s hard to see how Italy’s infrastructure will hold up.
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