- Chronically underpriced water is leaving Europe dangerously underprepared — and the fix may be more affordable than decision-makers assume.
Europe has long taken clean, reliable water for granted. A new report published this week argues that this confidence is not only misplaced, but is actively preventing the investment Europe's water systems urgently need.
The analysis, produced by engineering consultancy Sweco and drawing on European-wide publicly available data, makes a pointed case: flooding, water scarcity and pollution are converging simultaneously, yet water tariffs in most European countries still do not reflect the true long-term cost of managing them.
The conversation about water must shift from cost to risk
A continent undercharging for a crisis
Across the continent, the average household pays around €3.60 per cubic metre, ranging from free of charge for domestic users in Ireland to €9.30 in Denmark — prices that rarely account for climate adaptation, infrastructure renewal or advanced treatment. Around 20% of treated water is already lost to leakage before it reaches the tap, a direct consequence of decades of deferred maintenance that underpriced tariffs have enabled.
The consequences of that gap are compounding. In 2024, flooding caused approximately €18 billion in damages and affected 413,000 people across Europe. Water stress affects around 20% of the continent's territory and 30% of its population annually. PFAS “forever chemicals” and pharmaceutical residues have now been detected in most European water bodies. Remediating all PFAS contamination across Europe over the next 20 years is estimated to cost close to €2 trillion.
The barrier is not affordability but the absence of pricing structures and long-term planning frameworks that make the investment case visible
The 6% fix nobody is making
What makes the analysis particularly striking is its finding on the cost of closing the treatment gap. Upgrading wastewater systems to remove micropollutants — increasingly required under the updated EU Urban Wastewater Treatment Directive that entered into force in January 2025 — would raise average water costs by around 6%, pushing the European average from roughly €3.60 to €3.80 per cubic metre. The investment needed is, in financial terms, modest. The barrier is not affordability but the absence of pricing structures and long-term planning frameworks that make the investment case visible.
As Mattias Salomonsson, water expert and one of the report's authors, puts it: "The true cost of water extends far beyond the water bill. Failure to consider future flood damage, supply disruptions, stricter regulation and environmental degradation at an early stage means that risks and costs increase over time."
Scarcity where you least expect it
The report also challenges comfortable assumptions about where water problems fall. Sweden, despite its vast lakes, is experiencing localised groundwater shortages driven by warmer winters and higher evaporation rates. Belgium, with rain on around 200 days per year, ranks among Europe's most water-stressed nations — a product of drainage infrastructure designed to remove water quickly rather than retain it. These are not outliers. They are symptoms of water management decisions made for a different climate, now colliding with new realities that current tariffs and governance structures were never designed to handle.
From cost to risk
Sweco's six recommendations target policymakers, municipalities, utilities and — notably — the financial sector. The inclusion of banks and insurers is deliberate: until lenders begin factoring deferred maintenance, underpriced tariffs and climate exposure into risk assessments, the investment gap will persist.
The report's underlying argument may be its most important: the conversation about water must shift from cost to risk. The true price of underinvestment does not appear on today's water bill — it accumulates in ageing pipes, degraded ecosystems and future treatment burdens that will ultimately cost far more to address.
