Italy’s well is running dry. The country’s water system is under severe pressure, made worse by climate change. The government is trying to address the crisis with big projects. But Italy also requires deeper reform of the entire sector in order to attract private capital.
Italians use a lot of water: 220 litres a day compared with 165 litres on average across Europe, says think-tank Ambrosetti. It is getting harder to find. Last year was the hottest on record. Rainfall was about 50mm lower than average. This year is looking little better.
The country experiences severe water stress. About 40 per cent of the population have suffered rationing. That is bad news for olive groves and vineyards. The agriculture sector lost €6bn of revenue last year.
Fast-tracking a few projects will help, particularly increasing reservoir capacity. But Italy’s main focus should be improving its infrastructure using European post-pandemic recovery funding. More than 40 per cent of water is lost en route, says Ambrosetti. Compare that with the much-maligned UK water system, which loses about 20 per cent.
Construction groups such as listed WeBuild could be in line for large contracts. There is talk of roping in energy companies so that new reservoirs can double up as pumped storage.
Plugging Italy’s leaks will require regulatory reform to attract investment. Tariffs are low at €2 for 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 almost 2,000 operators, mostly local municipalities. Some of the bigger ones, such as Rome’s Acea and Bologna’s Hera, are publicly traded. But most are small. France’s Veolia invested in some utilities in the south of the country but has put its holdings in Sicily, Campania and Lazio up for sale.
The sector is a political swamp. But unless it can attract private capital and enterprise, it is hard to see how Italy’s infrastructure will hold water.
