Valencia floods prompt race for funds to boost Spain's climate resilience
06/02/2025 08:00
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Spain seeks EU approval to redirect funds
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Flood and drought push water investment up political
agenda
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Water companies expect growth as they tackle erratic
weather
By Corina Pons and Pietro Lombardi
MADRID, Feb 6 (Reuters) - Spain is seeking European
approval to repurpose more than a billion euros of post-pandemic
recovery funds to make Valencia more resilient against climate
change after the Mediterranean region suffered catastrophic
heavy rains last year.
The talks started a few weeks after torrential rains caused
floods in October that killed over 220 people in commuter towns
to the east of Valencia. Experts say the disaster was worsened
by patchy flood defences, many of which had been earmarked for
improvement works decades earlier.
Reallocated EU funds would be a small part of what companies
such as Spain's Acciona ANA.MC , Sacyr SCYR.MC and Cox Group
COXGA.MC expect to be a new wave of investment in the water
business in Spain.
Such companies have largely been active in countries facing
water stress such as Saudi Arabia and Morocco, but now finding
solutions for the problems at home presents opportunities for
growth - as well alleviating some of the misery wrought on
communities.
Water investments have moved up the political agenda at a
local and national level, industry insiders, corporate officials
and experts told Reuters.
Prime Minister Pedro Sanchez said in December that "Spain is
one of the countries most vulnerable to climate change".
The European Commission has determined that extreme weather
events in Spain have cost it 7.7% of GDP over the last 40 years
- three times the European average - with risks to critical
sectors such as agriculture and tourism.
Economy Minister Carlos Cuerpo said the EU funds Spain was
seeking permission to repurpose would be used partly to repair
damaged water systems in the Valencia region, as well as
developing desalination plants in the face of prolonged droughts
that damage its large agricultural sector.
Negotiations with the European Commission on the allocation
of 1.5 billion euros ($1.56 billion) previously assigned to
other projects are still ongoing with no set end date, the
Economy Ministry said.
Spain has already allocated around 3 billion euros for water
works out of the roughly 77 billion euros in European recovery
funds disbursed by the bloc in the past four years, according to
industry sources.
Environment and Ecological Transition Minister Sara Aagesen
told a congressional committee last month that the government
was committed to funding the rebuilding of Valencia's water
systems and completion of urgent hydrology works in the area.
She also announced that her ministry would create a water
consumption observatory and planned to double the budget for
works to increase water supplies through reuse and desalination
plants in the country.
Aagesen's ministry declined to provide Reuters with further
details of the projects, how they will be funded or their
timeline for completion.
COMPANIES EXPECT MORE INVESTMENT
A PwC report in 2024 focused on Spain's investment in urban
water systems found it had underspent by 5 billion euros a year
due in part to limited state budgets, trailing other European
countries such as Portugal, Italy, France and Germany. The urban
water cycle is mainly related to the purification, supply,
sewerage, treatment and reuse of water in urban environments.
Eduardo Campos, who leads Sacyr's water business, said he
expected the Valencia flood to be a turning point, adding of
hydraulic and flood mitigation works like clearing riverbeds of
debris: "These are necessary projects, (even if) they're
expensive and not pretty."
Sacyr is already evaluating works to restore sewage and
water treatment networks damaged in the Valencia flood, Campos
said, estimating that just the most urgent repairs will cost
more than 350 million euros.
Campos also said there was a lot of growth potential in
Spain amid the growing need for reuse of wastewater and the
digitalisation of water management.
Manuel Manjon Vilda, chief of Acciona's water business, said
there were plenty of potential water infrastructure projects in
Spain. "What there hasn't been is the money or the political
will to undertake an investment plan of 15 to 30 billion euros,"
he said, adding he expected these to become "a key concern ...
executed as a priority".
Even with heightened political will, new projects will still
take time to come to fruition.
Water projects generally take an average of at least three
years to be approved, dragged out by slow coordination between
national, regional and local administrations, according to the
Spanish water company executives Reuters spoke to.
While Valencia was hit by floods, the Mediterranean Coast
from Catalonia to Gibraltar is suffering from deepening water
shortages.
In tourist hotspot Barcelona, authorities earmarked half a
billion dollars last year for two desalination plants near the
city's coast.
In the southern Andalusia region, the world's olive oil
capital, the regional government launched a 400-million-euro
plan in November to more than double the water the region
recycles by the end of 2027.
($1 = 0.9591 euros)
(Reporting by Corina Pons and Pietro Lombardi;
Editing by Aislinn Laing, Frances Kerry and Alison Williams)
((corina.pons@thomsonreuters.com; 0034 690725854; Reuters
Messaging: corina.pons.thomsonreuters.com@reuters.net))