Over the coming decades, Spain will face several challenges in maintaining the viability of its natural resources. Climatic pressures will likely stretch regional water supplies. A lack of future investment will cause infrastructure to deteriorate. Public sentiment that water is a common good rather than a commodity will limit the government's ability to raise water prices and will contribute to overuse. However, as water throughout the world becomes scarcer, demand for Spanish businesses' expertise in desalination technology will rise.
In the 15th and 16th centuries, Spain was able to use the sea to establish an empire and pioneer global exploration and trade. Although Spain's colonies eventually gained their independence and Madrid's role in the global economy diminished, the Spanish continue to harness the hydrological aspects of nature within their borders. However, disjointed management, climatic changes and a lack of investment in infrastructure threaten the long-term viability of Madrid's natural resources. But Spain is not alone in this problem, and as global water stress rises, the country is poised to leverage its position as a world leader in desalination technology.
Spain's Water Resources
Although the climate varies within Spain's borders, the country as a whole is one of the driest in Europe. By the 1920s, Madrid sought to strategically use its somewhat limited water resources by building infrastructure for electricity production and to support agriculture. After continued development throughout the 20th century, Spain boasts roughly 1,300 dams — the world's highest number of reservoirs per million inhabitants.
Hydropower remains a priority for Spain's water resources and for cross-border agreements on shared rivers with Portugal. However, irrigation consumes more water than any other endeavor. Agriculture accounts for roughly 64 percent of all freshwater withdrawals. Irrigation is vital for Madrid's farming sector, since irrigated acreage accounts for a disproportionate amount of total production: it accounts for only 20 percent of the cultivated area equipped for irrigation, but for more than half of total production volume and revenue. That ratio likely will increase in the coming years; for example, olive production, a traditionally rain-fed crop, now accounts for more than 15 percent of total irrigation.
Changing Climate and Increasing Stress
In drought years, access to irrigation can provide a buffer for agricultural production. Climate experts indicate that this safety net will become more necessary over the coming decades if predictions of a hotter, drier Spain prove correct. The nation's average water exploitation index, a measure of water resources used compared with long-term renewable resources, indicates moderate levels of stress. (A measure of 20 percent indicates stress, while 40 percent is severe stress that is clearly unsustainable; Spain's index is 34 percent.) However, the regions of Andalusia and Segura have water exploitation indices of 164 percent and 127 percent respectively, meaning that these regions abstract more water each year than is replenished. Declining groundwater in southern Spain's Guadiana Basin has dried out peat land, and over-abstraction in some coastal aquifers has resulted in saltwater intrusion, decreasing the quality of aquifer water. Under these conditions, continued and increased reliance on irrigation, in addition to industrial and urban demands, will only increase the stress on these resources, especially in areas where stress and overuse already exist.
Encouraging Future Efficiencies
Continued investment in water infrastructure is necessary to maintain existing infrastructure and prevent water loss due to leakage. Spain experienced an infrastructure boom before the economic crisis hit, but afterward spending on infrastructure decreased dramatically. As a whole, Spain has a moderate rate of loss due to leakage (roughly 16 percent) but water infrastructure improvement is still necessary in many regions of the country. Some communities, including Cantabria, Extremadura and Castilla-La Mancha lose 20-25 percent of their water to leaks.
With infrastructure investment unlikely to pick up in the next several years, strategies to encourage conservation will be necessary to ensure the sustainable use of water resources, especially in the already-stressed areas of the country. Higher prices for water could encourage lower use, but since the prices currently paid by some irrigators in Spain do not even cover the cost of transporting water to the crops, a hike that would encourage conservation — especially in the agricultural sector — seems unlikely.
Additionally, the EU Water Framework specifically defines water as "not a commercial product like any other but, rather, a heritage which must be protected, defended and treated as such." Although increased prices could protect the resource, the perceived commercialization of water would likely inspire significant backlash, especially given the negative public sentiment about the privatization of water management and distribution.
After the economic crisis, the European Commission began promoting the privatization of water companies as a way to draw down debt. However, significant public opposition to the private ownership of water infrastructure has limited the implementation of such measures. Although some water management in Spain falls to private companies, municipal supplies are likely to remain under public ownership. This is not to say that private companies would necessarily ensure the resource is used more efficiently than under government supervision, but that the view of water as a right and not a good to be sold for profit favors public ownership. Thus, raising prices substantially to promote conservation will have limited applications in the future.
The Boon of Desalination
Although climate change and financial and social limits to simple coping mechanisms make it likely that Spain will continue suffering water stress and localized scarcity, there is a bright side. Spain is not the only country trying to do more with less water. Virtually every country will be touched in some way by water stress or scarcity in the coming decades. Conservation and infrastructure improvement remain vital strategies, but alternative water sources, especially for urban consumption, will become increasingly necessary. Desalination is poised to play a large role in supplementing the world's natural fresh water supply, and Spain is home to many of the world's leaders of this technology.
Spain is the largest user of desalination in the Western world, possessing roughly 700 plants that produce enough water each day for 8 million people. More important, Spanish companies make up the largest percentage of competitors in the global market, covering the life cycle of the technology from research, to design and engineering, to construction and operation. More than 50 companies are members of the Spanish Desalination and Reutilization Association. As global demand rises, from the Middle East to California, Spain's desalination companies are poised to benefit, both in Spain and abroad.
This is the 11th installment of an occasional series on water scarcity issues around the world that Stratfor will be building upon periodically.