The situation in Italy and CDP's commitment to the water sector
Each year on 22 March we celebrate World Water Day, established by the United Nations in 1992. This year the focus is on accelerating change to solve the water and sanitation crisis: we have to change the way we use, consume and manage water in our lives.
World Water Day aims to draw attention to the critical issue of water in our era, with an emphasis on access to fresh water and the sustainability of aquatic habitats. All this is in line with the UN 2030 Agenda for Sustainable Development; its 19 goals include "Clean water and sanitation (goal 6): ensure availability and sustainable management of water and sanitation for all”. It is a goal that remains a long way off.
The situation in Italy
In Italy, the water crisis this year is already as severe as 2022. Sporadic rain, much lower snowfall than the seasonal average and significantly higher temperatures than normal are drying up rivers, especially in the North. The difficulties arising from climatic factors are increasingly affecting the hydrogeological cycle. But that’s not all – our country’s water management is also unsustainable (with the highest per capita water consumption in Europe) and the water system has serious criticalities.
A study by CDP's Sector Strategies and Impact Department reveals that the state of Italy’s water infrastructure is particularly worrying: losses from distribution plants amount to 42% (compared to 20% in France and 6% in Germany), with almost half the water dispersed. 60% of the aqueduct network is more than 30 years old.
This state of affairs is the result of the low levels of investment in the sector: investment expenditure in the Italian water sector is historically around half that of the average for European countries. There are two main factors that exacerbate the difficulty of making the necessary investments: the fragmented nature of operators, with over 2,300 across the country, and the still-to-be completed governance reorganisation. 84% of operators are still managed by local authorities (i.e. directly managed by municipalities rather than through a company).
The same CDP study, however, also underlines that the 3.5 billion made available by the NRRP and the expansion of sustainable finance mean that the current environment is more favourable to investments, while technological innovation has the potential to play a key role in meeting the challenges related to climate change and safeguarding water resources. CDP is already doing much to contribute to the sector’s development, and will continue to do so.
The role of CDP
Since 2016, CDP has mobilised more than €560 million for investments in the water sector.
In particular, as regards the Public Administration, more than 224 million has gone into approximately 360 loans to public entities for the construction of aqueducts and water networks, dams, reclamation works of various kinds, sewerage networks and other infrastructure.
Over €26 million were granted in support of the Reclamation Consortia, which are the reference bodies for managing the protection of water resources across the country. As part of this framework, CDP provided financing of €7.7 million for the Associazione Irrigazione Est Sesia for safety works on the Cavour Canal, an essential project to support agriculture in the provinces of Vercelli and Novara.
Also noteworthy, among others, was the support given to the Carnia Industrial Park consortium, which comprises 160 companies, with over 3,700 employees: CDP provided €6.5 million of financing for the construction of a hydroelectric plant producing 3 million kWh per year. The turbine is powered by water from the A2A power station in Cavazzo and therefore has no impact on new watercourses.
In terms of infrastructure, Cassa has deployed more than 350 million to support enterprises with investments that total over one billion. The resources were mobilised through issuing guarantees and structuring securitisations, as well as through structured finance transactions. Cassa has also backed a number of corporate-project bonds aimed at constructing water infrastructure.
Considering 2022 alone, CDP committed over 70 million. Its latest major transactions include pool loans with, among others, the EIB, for the Viveracqua Consortium (Viveracqua Hydrobond) in Veneto, which serves 3.5 million people.
The Protection of the Territory and Water Resources is among the 10 action areas identified by the 2022-2024 Strategic Plan; these are areas where the CDP Group concentrates its actions as a priority, in order to generate maximum impact on the economy. With regard to water resources, the aim is to promote a more efficient and sustainable management of the water sector through the modernisation and upgrading of infrastructures, greater reuse of purified wastewater and the implementation of efficiency measures in the agricultural sector.