Water pricing in Italy: beyond full-cost recovery

This paper provides an overview of the Italian water management system, which is segmented by sectors and characterized by a wide plurality of management systems, operators and financing patterns. In the last 20 years, Italy has introduced far-reaching reforms of water management, which concerned in the first place urban water supply and sanitation. The most important aim was to create the basis for an autonomous and self-sufficient water industry, driving the sector out of the public budget. Financial equilibrium of water undertakings and access to market-based finance have thence dominated over other possible aims of water pricing. Other sectors, and notably irrigation, continue to follow more traditional schemes. The paper also discusses further reform opportunities in the search of using water prices as economic incentives for a more sustainable use of water resources.