Taking action: Strategic opportunities in France’s Water Plan

Mathieu De Kervenoael and Chloe Wen Hu

After a historically dry winter, France is in the midst of another dry summer. But now, the country is acting; implementing measures outlined in a Water Plan announced in March by President Macron to conserve, share, and reuse dwindling water resources. In this article, we highlight the steps that are underway – and explain how some measures might offer faster relief – while also ushering in long-term changes.

They’re the type of records no country wants to break; France suffered its worst drought on record last summer and this winter was its driest in nearly 65 years. Water restrictions – typically saved for the drier summer months – were implemented in 87 municipalities in the south over the winter. While above-average rainfall in March and April improved groundwater levels, more than-two thirds remained below average. At the current rate, further drought conditions are imminent.

France’s battle against water scarcity is being waged on several fronts. First, climate change is destabilizing weather patterns, and thus, impacting water availability. Groundwater currently represents more than 60% of the country’s drinking water resources but the last two hydrological years witnessed significant deficits in rainfall, which is critical to recharging aquifers.

According to the French Geological Survey, groundwater recharge is expected to decrease by 10 to 25% by 2070 compared to the period of 1961-1990. In the Southwest, where conditions have been toughest, the reduction could be between 30 and 50%. Meanwhile, the Alps – critical for supplying Europe’s rivers – have seen a 5.6% reduction in snow cover duration per decade over the last 50 years.

Aging infrastructure also prevents the country from maximizing its existing resources. France is home to the longest drinking water pipe network in Europe. But 40% of those pipelines are over 50 years old, and quickly approaching the end of their lifespan. Annual leakage losses amount to nearly one billion cubic meters, equivalent to the annual consumption of about 18.5 million people.

Combined with a growing population and water-intensive industrial activities such as irrigation and power generation, water consumption needs to be optimized in the country to avoid any future risk of crippling water shortages.

Changing course

France’s Water Plan is an effort to tackle water challenges on these – and many other – fronts. Consisting of more than 50 measures with an overall goal of realizing a 10% reduction in water withdrawals by 2030, the plan can be summarized into three focus objectives:

  • Reducing water consumption (water sobriety)
  • Optimizing water availability
  • Preserving water quality and restoring ecosystems

Initiatives that fall within these objectives include supporting the reduction of water usage in agriculture (the country’s most water-intensive industry), reducing leaks, investing in non-conventional water sources, developing agricultural hydropower, preventing the pollution of aquatic environments, the development of nature-based solutions and more.

Other initiatives are designed to ensure authorities have the means to achieve these goals and better respond to drought and other water crises, such as incentivizing water sobriety practices, streamlining governance, and supporting research and innovation efforts.

In all, the plan is a summary of best practice efforts to improve water availability, quality, and resiliency. To explore the plan in more detail, we are highlighting four areas we believe will drive the most significant improvements – both in the short and long term, and generate exciting, new strategic opportunities for businesses.

1. Industrializing water reuse

Today, only 0.1 percent of treated wastewater is currently reused in France, compared to Italy and Spain, where the proportion rises to around 10% and 15%, respectively. Much of the water is discharged to the sea. The Water Plan calls for wastewater to be reused at a rate of 10 percent by 2030, meaning there are significant opportunities to industrialize and scale the practice across the country in the near term.

The plan highlights the need to support more than 50 industrial sites with the highest potential to reduce consumption and includes plans to develop 1,000 reuse projects to increase the use of non-conventional water (including reuse, rainwater, and grey water) by 2027. It also eases some of the administrative hurdles associated with some reuse procedures. These efforts will further encourage industrials to invest in and implement water reuse solutions to ensure an adequate water supply for their operations. For example, Veolia has recently announced its plan to triple the production volume of water reuse to three billion cubic meters by 2030.

Adopting water reuse strategies will have the added benefit of better insulating corporates from potential brand risks that come with being associated with the overconsumption of water. In April, hundreds of protestors hit the picket lines outside of the STMicroelectronics semiconductor production plant in Isère to oppose the company increasing the company increasing its water intake. That same month, the town of Grigny asked the local bottling factory of Coca Cola to stop drawing water from the groundwater to produce its drinks.

This added pressure may make the adoption of water reuse measures a strategic necessity for industrials, particularly in water-intensive industries.

2. Reducing leakages

Countries cannot afford to waste water, especially during periods of drought or water insecurity. But reports estimate that one-in-five liters (20%) of distributed water in France is now lost due to leaking pipes. That’s equivalent to the cumulative consumption of Paris, Lyon, Marseille, Lille, Toulouse, Bordeaux, and Nice – resulting in an economic loss of €4 billion per year.

To halt the losses, the Water Plan includes €180 million per year to support actions to reduce leakages and secure drinking water supplies, including identifying the 170 local authorities with leakage rates in excess of 50% and 2,000 communities that experienced drinking water tensions in 2022. From there, authorities will move to ‘plug’ water leaks at the most sensitive points and continue the minimum replacement of water distribution networks at both the utility and irrigation water levels.

For businesses seeking to capitalize on these opportunities, we anticipate further implementation of leakage detection solutions (including both hardware and software solutions), especially for non-visible leaks, which account for the biggest portion of leakages in volume. Non-invasive, “no dig” solutions for repairing leaking pipes should also be receiving increased attention.

View of a  dried-up river bed near Roussillon in Provence, France.

3. Changes to water tariff structure

Improving drinking water network performance will require additional resources in asset management, the search for leaks, and the ability to make repairs and/or renew pipes. Although the Water Plan includes additional financial resources for water agencies dedicated to networks, we see water pricing as a potential strategic lever for the country to maintain high-quality water services.

Water tariff setting depends on multiple local parameters including the tax level, existing water sources (as groundwater typically requires less treatment compared to surface water or desalination), the length of network per inhabitant, receiving water (sensitive areas which require a higher level of treatment for wastewater) and more.

In France, the price of the water service must cover all operating and investment costs associated with the urban water cycle, from the withdrawal of ground or surface water for treatment to its return to the receiving waters as treated effluent. Private operators receive only a part of the tariff paid by households, with the rest being used to fund investments for network extensions and upgrades.

The price for a private operator is correlated with tariffs, as the operator’s share of tariffs is expected to remain stable or decrease slightly to compensate investments from municipalities.

At the end of 2022, several French local authorities including Clermont-Ferrand and Roubaix voted for a tariff increase of around 10% for 2023. The price per cubic meter of water has risen by 7 to 11% in several French agglomerations such as Paris, due to high costs in energy supply and water treatment chemicals. Water tariffs are expected to grow at ~1% per annually until 2030 to finance the infrastructure upgrades required to maintain service continuity.

Efforts to reduce overall water consumption will impact the revenues of local municipalities. The Economic, Social & Environmental Council is expected to make a recommendation on progressive water pricing measures before the year’s end.

A dozen municipalities in France have already adopted a progressive scale based on the quantity of water consumed by households. Dunkerque is one of the pioneers in progressive tariff structures.

For the past eleven years, the price scale for water consumption has been divided into three brackets: “essential”, “useful” and “comfort”. As the tariff is calculated on the consumption of an average household equivalent to four people, larger families are penalized. In Montpellier, the first 15 cubic meters are free for consumption.

Meanwhile, leaders are planning to release a new economic model by 2025, with a pricing strategy that compensates for the decrease in the consumption volumes and finance renewal CAPEX. Benchmark studies have been conducted on other countries to determine best practices.

The calculation of a pricing scale adapted to each region’s water needs and economic situations, combined with a full deployment of individual water meters at households, will be key to a successful implementation of progressive tariff systems nationwide. This should open up new opportunities for providers of modern smart metering solutions, including meter data management and analytics.

4. Evolving water governance

Water is governed by several stakeholders at various levels of the French administration, depending on how it’s being used. For industrial and agricultural uses, there are regional and local representatives and local authorities for utility water. This disparate governance makes it more difficult to effectively develop and implement collaborative initiatives related to water withdrawals. The Water Plan acknowledges these challenges and seeks to build a more open, clearer governance framework.

From a regulatory perspective, the law on the New Territorial Organization of the Republic (NOTRe) entrusts new competencies to the regions and redefines the competencies attributed to each territorial authority. The law aims to simplify and mutualize water competencies among communities. It announced the deadline for transferring water and wastewater competencies of small communities to large inter-municipalities by 2026.

France’s water game plan is set and now it’s time to execute. For now, questions remain as to whether the financial resources announced to date will be adequate to help the country achieve its ambitious water management goals and whether the governance structure can be adapted to support quick, decisive action.


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