Price of water should reflect full-cost recovery, researchers say

Researchers are recommending the introduction of full-cost recovery pricing for water services to cover the financial and environmental cost of supplying water as Malta faces unsustainable growth.

The recommendation is found in a policy brief produced under the EU-funded RETOUCH NEXUS project that examined Malta’s water-energy system. Researchers used computer simulations to assess how the country’s limited natural resources are likely to cope with continued economic and population growth over the next 50 years.

The simulations found that if current trends continue, economic growth could become unsustainable within around three decades, largely because resource consumption would outpace investment in sustainable alternatives.

The brief proposes integrating renewable energy subsidies with water policy, including greater use of solar-powered desalination, while encouraging reclaimed water for irrigation through targeted tariffs and subsidies.

The case study notes that Malta’s high population density (1670/km²) and a semi-arid climate result in the lowest per capita freshwater availability in the EU. This creates a dependency on energy intensive desalinisation.

It concludes that Malta’s heavy dependence on energy-intensive water production creates long-term vulnerabilities that existing policies do not fully address.

“Energy-intensive water supply can mask long-term depletion in water-scarce regions,” the researchers warn, arguing that water sustainability should become a binding consideration in economic and spatial planning rather than an environmental afterthought.

The policy brief doesn’t argue that desalination should be reduced—it treats it as structurally unavoidable, but increasingly problematic due to its coupling with energy production. Every expansion of water supply is tightly linked to increased electricity demand. Because of this coupling, increasing desalination capacity does not just solve a water problem—it transfers pressure onto the energy system, which in Malta is still partly reliant on non-renewable sources.

The policy brief argues that water and energy should no longer be treated as separate policy areas since decisions affecting one sector inevitably affect the other.

Researchers instead recommend adopting a broader Water-Energy-Food-Ecosystems (WEFE) approach, allowing policymakers to assess the trade-offs between water security, renewable energy, agriculture and environmental protection before major decisions are taken.

The Malta case study forms part of the RETOUCH NEXUS project, a Horizon Europe research programme examining water governance across Europe. The project is coordinated by the Technical University of Munich and brings together 17 partners from 10 countries. For the Malta case study, researchers developed a dynamic model of the country’s water-energy-economy system and ran Monte Carlo simulations over a 50-year period to test how different policy choices would affect sustainability.