Italy Water & Wastewater Municipal Market: Trends, Drivers, and Forecasts

Over 59 million people receive water services in Italy, where 84% of the population is served by integrated water service (SII) operators designated by regional authorities known as ATOs. These services are primarily delivered by publicly owned or mixed-ownership utilities, often with local municipalities as majority shareholders. The sector operates under a highly decentralized governance model, with national regulatory oversight provided by the Regulatory Authority for Energy, Networks, and Environment (ARERA), while planning and permitting are coordinated by regional and river basin authorities.

Italy ranks as one of the most water-stressed nations in Europe, with an average yearly rainfall of just 470 mm. Additionally, it faces significant challenges with over 40% of its distributed water lost to leakage, largely due to more than 60% of its pipe network infrastructure is over three decades old. The severe Millennium Drought (2001–2010) triggered a wave of national investments in desalination, water reuse, and leakage control, laying the foundation for today’s shift toward climate resilience. As part of its long-term strategy, Italy has earmarked more than €4 billion in National Recovery and Resilience Plan (PNRR) funds for upgrading water infrastructure, particularly in non-compliant regions and small municipalities.

Today, Italy’s water sector is shifting from capital-intensive upgrades to operational modernization, with a focus on smart metering, pressure control, and energy efficiency in wastewater treatment. EU directives and enforcement continue to drive compliance in lagging regions. Italy’s mix of local service delivery, public governance, and EU regulation makes it a leading example of how to modernize water systems under climate and demographic stress.