Study shows water prices need to rise 25% by 2030 to support urban consumption

The price of water is expected to rise by 25.7% by 2030 to keep urban consumption at 2022 levels, according to a study that analyzes the economic value of water in Portugal for the first time.

The study, “The Economic Value of Water in Portugal,” is presented this Wednesday at the Gulbenkian Foundation in Lisbon and is coordinated by economist and professor at the Catholic University of Lisbon, Miguel Gouveia. Both institutions sponsored the research, which they said aims to find sustainable solutions for water management.

According to the document, in 2015, households spent an average of 1.3% of their budget on water and related services (solid waste and wastewater), which is lower compared to other countries. The tariff increase will not be unaffordable for most families, the document says.

Cumulative data analysis shows that by 2030, urban water consumption is expected to increase by approximately 5.7%. 3.2 euros per cubic meter, which can be considered as the economic value of water for urban consumption,” the document says.

Miguel Gouveia, speaking to Lusa, said that to reduce consumption, numerous information and educational campaigns are needed, efforts that will have to be accompanied by price increases, which, although not “something nice,” will not have a serious impact.” in the vast majority of households.”

“I also understand that they demand more from those who have more,” he said, referring to what some municipalities are already doing, which is raising prices at the top end of consumption.

Agriculture, the sector that uses the most water, will also have to use water more efficiently. “Efforts need to be made on all fronts.”

Miguel Gouveia recalled that technological progress has led to improved water consumption, that washing machines today consume much less water or that agriculture is on the same path. “30 or 40 years ago 14 thousand cubic meters per hectare were used for irrigation; today it is four thousand cubic meters.”

In agriculture, he stressed, the value of water in most cases far exceeds its cost, explaining that the study helped establish the value of water, which was lacking in Portugal.

According to the study, the average economic value of water used in agriculture throughout the country and all crops in 2022 prices was estimated at €0.585.

The values ​​depend on the region of the country and the type of crop. For example, the estimated cost of water used in rice cultivation was €0.08, which is only positive due to the assistance of the Common Agricultural Policy (CAP), while in avocado cultivation the water cost was €2.65 per cubic meter.

The work, according to the person in charge, is based on the fact that in Portugal, average annual rainfall has decreased by 20% over the past 20 years and is expected to decrease by a further 10–25% by the end of the century.

Among other things, water shortages will have a direct impact on hydroelectricity production potential, making electricity more expensive, and “will have significant macroeconomic consequences, especially on GDP (in a more severe climate scenario, GDP could fall by 3.2 times.” %), in the growth of unemployment and inflation, as well as in the deterioration of the trade balance.”

“We will have less water, it will be a gradual process, despite the fact that Portugal has more rain than some European countries,” noted the person in charge, emphasizing that if we invest in ways not to lose water (more reservoirs) there could be more. Without investment, the desert will spread across the south of the country, he warned.

“Not all investments are profitable, and this is evident in the value of water,” he said, stressing the importance of having a “good cost-benefit analysis” of the public policies being discussed to prevent the risks of waste.

According to Miguel Gouveia, who cites expert opinion, reusing treated wastewater makes sense in the Algarve, but less so in other regions, since the height of these waters (wastewater treatment plants, located close to sea level) has a cost.

Likewise, improving networks to prevent leaks will also be very expensive. “That doesn’t mean it’s not worth investing in, it means we won’t make much profit,” he explained.

Transfer could be a solution, and building desalination plants could also be an option, albeit an expensive one, especially as it is insurance against extreme water shortages, “but it cannot be a blind strategy.”

Miguel Gouveia insists on “a systematic analysis of which of the various options is appropriate.” And he emphasizes: “This is the main message, the answers, which should be as rational as possible.”

The research will be presented this afternoon in a session that will also include discussions on topics such as a water strategy for the agricultural sector or rainfall inequalities.