Integrated Urban Water Management: the right time for investment

Read the report’s key messages and download the document for further information.

• The Integrated urban water management (IUWM) sector has been undergoing transformation for years and is marked by significant investment needs, a now surmountable critical issue thanks to the prospects for the development of sustainable finance and the opportunities of the NRRP.
• The condition of the infrastructure is particularly critical. Leaks in distribution plants amount to 42% (in France 20%, in Germany 8%) and almost 1,000 towns and cities are subject to European infringement procedures for inadequate purification plants.
• This is the result of the sector's historically low levels of investment, which, despite growth in recent years, are still inadequate. The replacement rate of the obsolete network is 0.42% per year (a satisfactory rate would be at least 2%) and investment expenditure is lower than in other similar economies.
• The sector’s investment capacity is marred by two main critical issues:
  1. the proliferation of operators. There are more than 2,500 operators, 83% of which are local authority run with a lower propensity for investment spending; the remaining 17% are industrial operators of which more than half are small-scale operators.
  2. an unfinished governance reorganisation process. Launched in the mid-1990s with the aim of fostering the transformation of the sector in an industrial sense - including through the identification of single, integrated operators along the entire water cycle - the process is apparently unfinished, especially in some areas of southern Italy.  
• However, now is a particularly favourable moment for the sector to make the necessary investments and finally overcome the obstacles that still limit its potential. It currently has two opportunities:
  1. effectively using the resources made available by the NRRP for the sector (€3.5 billion), including through the provision of two supporting structural reforms;
  2. taking advantage of the expansion of green finance, leveraging the “intrinsically” sustainable nature of the sector, promoting the green transformation of operators' business models and facilitating the opening of capital to new investors.