An approach to the financial stakes of water security faced by water and sanitation services in France

Maria Salvetti

ECONOMIA PUBBLICA, 2023, vol. 2023/3, issue 3, 329-365

Abstract: Water supply and sanitation (WSS) utilities in many countries are increasingly faced with pressing water risks which include the risk of ?water shortages (includ- ing droughts), water excess (including floods), inadequate water quality mainly due to pollution, as well as the risk of undermining the resilience of freshwater systems (rivers, lakes, aquifers)? (OECD, 2013). These risks are exacerbated by climate change which increases the magnitude and frequency of extreme events. These developments, as well as the financial constraints on the services (limited capacity to increase the price of water/sanitation in an inflationary context and strong constraints on post-covid public finances) are all elements that must be ad- dressed to ensure the sustainability and resilience of the services in an environment now marked by threatened water security. This paper firstly presents an inventory of drinking water and collective sanitation assets in France. It identifies renewal needs as well as investment gaps thus underlining the magnitude of the infrastruc- ture related challenges that the sector needs to address to ensure the sustainability and quality of water and sanitation services. In addition, this paper includes ele- ments for evaluating the broader cost of water security. Indeed, in a context where climate change exacerbates water risks and encourages improving the resilience of water and sanitation services, the financial issues related to the proper management of assets cannot be limited to the sole issue of grey infrastructure renewal. It is also necessary to assess the financial challenges of water security through the manage- ment of water-related risks such as droughts, floods, and the preservation of aquatic environments. Thus, an assessment of environmental costs and damages generated by water and sanitation services is also provided to complete the analysis.

JEL-codes: L95 Q25 (search for similar items in EconPapers)
Date: 2023
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