DANUBE REGION Regional Water Security Assessment 1 Table of Contents Acknowledgements ................................................................................Error! Bookmark not defined. Disclaimer ...............................................................................................Error! Bookmark not defined. Executive Summary ....................................................................................................................... 9 1. Introduction ....................................................................................................................... 15 1.1 Objective and scope of the report.......................................................................................... 15 1.2 Methodology to perform the regional level assessment ........................................................... 15 1.2.1 The Water Security Diagnostic Framework ........................................................................... 15 1.2.2 The application of the ONE Water Methodology in the Danube Region ................................... 16 1.2.3 Advancing Water Security in the Danube region ................................................................... 18 2. Setting the scene: ............................................................................................................... 19 2.1 Historical context.................................................................................................................. 19 2.2 Key geographical and physical features ................................................................................. 19 2.3 Institutional boundaries ........................................................................................................ 23 2.4 Key socio-economic aspects .................................................................................................. 25 2.5 Key governance features ...................................................................................................... 29 3. Regional Diagnosis ............................................................................................................. 32 3.1 Endowment ..................................................................................................................... 32 3.1.1 Supply ............................................................................................................................... 32 3.1.2 Demand ............................................................................................................................. 37 3.2 Architecture..................................................................................................................... 40 3.2.1 Institutions ......................................................................................................................... 40 3.2.2 Infrastructure ..................................................................................................................... 53 3.3 Performance .................................................................................................................... 63 3.3.1 Water Resources Management ............................................................................................ 63 3.3.2 Water Service Delivery ........................................................................................................ 69 3.3.3 Mitigation of Risk ................................................................................................................ 72 3.4 Outcomes ........................................................................................................................ 75 3.4.1 Social Outcomes ................................................................................................................. 75 3.4.2 Environmental Outcomes .................................................................................................... 79 3.4.3 Economic Outcomes ........................................................................................................... 84 4. Future Trajectories ............................................................................................................. 90 4.1 Socio-economic trajectories................................................................................................... 90 4.2 Projections on water availability and demand ......................................................................... 92 4.3 Projections for water related risks ......................................................................................... 96 2 Recommendations to leverage water benefits and opportunities ...................................... 100 2 5. References ........................................................................................................................ 108 Annex I: Status of the implementation and adoption of the EU water acquis ......................... 118 Annex II: Transboundary Water Agreements in the Danube region ........................................ 118 Annex III: ECA Water Security Indicators ................................................................................ 118 Annex IV: List of core indicators used in the regional benchmarking ...................................... 118 Annex V: Country Data Sheets .................................................................................................. 118 3 List of figures Figure 1: Water Security Diagnostic Framework and its different dimensions. ........................................... 16 Figure 2: The 5-Steps-Process to assess water security in the Danube region ........................................... 17 Figure 3: The Danube Region and the boundaries of the Danube River Basin (DRB), countries and main cities ............................................................................................................................................................ 20 Figure 4: Topography of the Danube Region. Source: own elaboration ..................................................... 21 Figure 5: Average annual precipitation in the Danube Region. ................................................................. 21 Figure 6: The Danube River Basin and its main sub-basins ...................................................................... 23 Figure 7 Historical population trends (top) and current shares of population in the urban, rural population and large cities (bottom) in Daube region. The bottom figure also depicts the growth rate of the urban share of population for the year 2022. ................................................................................................................ 26 Figure 8 Future population in Danube and surrounding ECA region by 2050 under different SSPs. ............. 27 Figure 9: GDP per capita (constant 2015 US$ prices) of the Danube countries. ......................................... 28 Figure 10: Share of the GDP across sectors in the Danube countries and overall economic water productivity (measured as the country GDP to total water withdrawals). ..................................................................... 28 Figure 11: European Union water policy framework. ................................................................................ 29 Figure 12. Total renewable availability per capita across major regions in the world for the year 2020 ....... 33 Figure 13: Total Renewable Water Resources in m³ per capita per year. .................................................. 33 Figure 14. Total renewable water resources by country for the year 2020. ............................................... 34 Figure 15: Interannual and Seasonal Variability. Variability measures the average between-year (interannual) or within-year (seasonal) variability of available water supply, including both renewable surface and groundwater supplies. Higher values indicate wider variations of available supply. .................................... 35 Figure 16. Per capita dam storage capacity vs Interannual variability. ...................................................... 36 Figure 17: Transboundary dependence ratio (in %). ............................................................................... 37 Figure 18: Water withdrawal in m³ per capita per year. ........................................................................... 38 Figure 19: Average annual water demands per sector. ............................................................................ 39 Figure 20 Main challenges candidate states in the Danube experience when implementing EU water acquis. Note: this assessment is based on the analysis of selected Danube countries: Austria, Serbia, Bosnia Herzegovina, Montenegro, Albania and Croatia. ..................................................................................... 42 Figure 21 Transboundary area covered by an operational agreement for water cooperation. S .................. 46 Figure 22 Risks of the transboundary basin legal framework across the Danube region. Note: low risks means that basin legal frameworks gather all key principles of international water law and countries have signed the Convention on the Protection and Use of Transboundary Watercourses and International Lakes (UNW Convention) ......................................................................................................................................... 47 Figure 23: Water services providers market distribution in the Danube region (top) and population served type of service provider by country (below). .................................................................................................. 52 Figure 24: Continuity of service in average hours per day. Source: IBNET (2020). Note: Due to lack of data in the IBNET database, the data for Austria and Slovenia is taken from the State of Sector Report 2018 for the Danube Region ( ................................................................................................................................... 54 Figure 25: Non-revenue water. Source: IBNET (2020). Note: Due to lack of data in the IBNET database, the data for Austria and Slovenia is taken from the State of Sector Report 2018 for the Danube Region .......... 55 Figure 26: Non-revenue water (source: IBNET, 2020) and average water bill ........................................... 56 Figure 27: Total sanitation coverage by sewer facilities. .......................................................................... 56 4 Figure 28: Share of Wastewater safely treated (in %). ............................................................................ 57 Figure 29: Urban wastewater collection and treatment facilities in the Danube basin. ................................ 58 Figure 30: Per capita dam storage capacity in m³ per capita. Source: FAO (2022). Note: Due to lack of data in the FAO-Aquastat database, the value for Kosovo is taken from the Water Security Outlook for Kosovo . 59 Figure 31:Main reservoir purposes in the Danube region.. ....................................................................... 60 Figure 32: Share of cultivated land under irrigation (in %). ...................................................................... 61 Figure 33: Comparison of the ecological status of the surface water bodies in Danube EU member states between the first (2009–2015) and second planning cycle (2016–2021). .................................................. 65 Figure 34: Barriers affecting the implementation of the program of measures in River Basin Management Plans to achieve the river basin planning goals in EU Member States of the Danube. ......................................... 66 Figure 35: Chemical (top) and quantitative status (below) of groundwater bodies in Danube. .................... 67 Figure 36: Biological chemical and hydro-morphological parameters monitored to assess the ecological status of water bodies in the EU Member States of the Danube countries. .......................................................... 68 Figure 37: Operating cost coverage. Source: IBNET (2020). .................................................................... 70 Figure 38: Operating cost coverage (source: IBNET, 2020) and average water bill (source: Global Water Intelligence) ......................................................................................................................................... 71 Figure 39: Share of GDP exposure to riverine floods (%) in the Danube region countries under current conditions. ............................................................................................................................................ 72 Figure 40 Share of population exposed to riverine floods (%) in the Danube region countries under current conditions. ............................................................................................................................................ 73 Figure 41 Annual average losses of maize yield in the Danube region at a NUTS2 spatial resolution. .......... 74 Figure 42: Basic and safely managed drinking water coverage and sanitation coverage. ............................ 76 Figure 43: Number of DALYs due to unsafe water, sanitation and handwashing. ...................................... 77 Figure 44: Safely managed sanitation coverage (source: WHO/UNICEF, 2022) and vulnerability of children under five ............................................................................................................................................. 78 Figure 45: Water stress ratio. Defined as ratio between total freshwater withdrawn by major economic sectors and total renewable freshwater resources, after considering environmental water requirements. ............... 79 Figure 46: Share of water bodies with good ambient water quality. .......................................................... 81 Figure 47: Surface water bodies: Ecological status or potential (2nd and 1st RBMP), by country. ............... 81 Figure 48: Wetland Loss score (0-100) with averages weighted with a proxy for size. ............................... 84 Figure 49: Share of Sector in overall Gross Domestic Product in the Danube region compared to the sectoral economic water productivity. ................................................................................................................ 85 Figure 50: Economic Water productivity in USD/m³ (overall). .................................................................. 86 Figure 51: Share of electricity production from hydropower and share of economically-feasible hydropower potential not developed in ECA region. ................................................................................................... 87 Figure 52: Agricultural gross value by irrigated agriculture (as % share of total agricultural GVA). ............. 89 Figure 53: Changes in GDP growth across the Danube countries. ............................................................. 92 Figure 54: Comparison of surface water availability between the baseline in 2010 and RCP4.5, and RCP 6.0 scenarios in 2050. ................................................................................................................................. 93 Figure 55: Maps of the long-term mean seasonal mean-discharge (MQ) change [%] in the Danube River Basin. ............................................................................................................................................................ 94 Figure 56: Comparison of total water demand between the baseline in 2010 and SSP1 RCP4.5, SSP2 RCP 6.0 and SSP3 RCP 6.0 scenarios in 2050. ..................................................................................................... 95 5 Figure 57: Comparison of water stress ratio (ratio of total demands to total available surface water) between the baseline (year 2010) and SSP1 RCP4.5, SSP2 RCP6.0, and SSP3 RCP 6.0 scenarios in 2050. Projections for water related risks ................................................................................................................................ 96 Figure 58 Change in GDP flood exposure between 2010-2080 in RCP 4.5 and RCP 8.5.. ............................ 97 Figure 59: Change in floods economic risk (left) and population risk (right) between 2010 and 2050 at a subnational level in RCP 8.5.. ................................................................................................................. 98 Figure 60: CMIP5 ensemble projected absolute change in annual average SPEI relative to the 1995 –2014 baseline under RCP8.5. ......................................................................................................................... 99 Figure 61 Action Areas for Water Secure Development Pathways in the Danube region ........................... 100 6 List of tables Table 1: Countries assessed under Danube regional water security assessment. ....................................... 18 Table 2: Main transboundary sub-basins shared between the countries of the Danube region .................... 22 Table 3: Countries of the region and their membership status in the DWP, ICPDR and EU ......................... 24 Table 4: The EU water acquis and its main goals .................................................................................... 30 Table 5 Degree of IWRM implementation with country scores. Source: UNEP (2023) ................................. 41 Table 6 Key features of the institutional arrangement of water resources management in ECA. ................. 43 Table 7 Focus of the main transboundary water agreements in place in the Danube region. ...................... 48 Table 8: Key features of the Institutional arrangement of the water supply and sanitation sector in the Danube. ............................................................................................................................................................ 51 Table 9: Overview of adoption of RBMPs and FRMPs in the countries of the Danube region by January 2024. ............................................................................................................................................................ 64 Table 10 Top five flood events in terms of the share of affected population relative to total population ...... 73 7 List of abbreviations DWD Drinking Water Directive DWP Danube Water Programme ECA Europe and Central Asia EU European Union EUR Euro FD Floods Directive FRMP Flood Risk Management Plan GDP Gross Domestic Product GWD Groundwater Directive ICPDR International Commission Protection for the Danube River IWRM Integrated Water Resources Management JMP Joint Monitoring Programme NRW Non-Revenue Water O-WM One Water Methodology RBMP River Basin Management Plan RCP Representative Concentration Pathways RBD River Basin District SSP Shared Socioeconomic Pathways SWMI Significant Water Management Issue USD United States Dollar UWWTD Urban Wastewater Treatment Directive WFD Water Framework Directive WSDF Water Security Diagnostic Framework WSS Water Supply and Sanitation WWTP Wastewater Treatment Plant 8 Regional Water Security Assessment DANUBE REGION Executive Summary The Danube region is an area marked by its varied geopolitical and physical landscape. It encompasses 16 countries that are part of the Danube River Basin, including countries in eastern Europe and the Balkan. Half of these countries are members of the European Union, while the remaining states are either candidate or potential candidate members. From a geographical perspective, the Danube region is highly diverse. It features high mountain chains, expansive plains, wetlands, karst formations, and the unique Danube Delta ecosystem. Despite its rich natural heritage and political stability, the region confronts significant water security challenges. This assessment encapsulates findings relevant to the region’s unique conditions, stressing the urgency of adopting sustainable water management practices to meet present and future development needs. This assessment aims to achieve three primary objectives: (i) elevate the prioritization of water issues among policymakers, highlighting its significance for societal well-being, environmental health, and economic development; (ii) promote a proactive dialogue and action at national and regional levels to optimize the socio-economic and environmental benefits of effective water management; and (iii) to provide actionable strategies that guide stakeholders towards securing a sustainable and resilient water future for the Danube region. These steps are critical in advancing a coordinated approach to water security, ensuring that it remains a central element of policy and planning across the region. Central to the Danube region's water security is its rich water endowment but its significant reliance on transboundary waters, which necessitates enhanced regional cooperation. With over 42% of its water resources shared across national boundaries, the region's high water dependency ratio highlights the necessity for robust mechanisms to manage these resources cooperatively. This cooperation is essential not only to prevent potential conflicts, but also to ensure equitable and efficient water allocation among the countries. Adding to this transboundary complexity is the seasonal and interannual variability in water availability, which is yet moderate but expected to intensify due to climate change. These fluctuations will pose substantial risks to agricultural productivity, energy generation, and the overall reliability of water supply systems, underscoring the need for adaptive management strategies that can respond to changing hydrological conditions. ES1: Transboundary water dependence ratio of Danube region and other regions in the world 9 Regional Water Security Assessment DANUBE REGION Water storage in the Danube region is crucial for addressing water security amidst climate change and variability. The region’s average storage capacity of 650 m³ per capita is nearly half the one of South Caucasus region and one third of the one of Central Asia region, making it highly vulnerable to precipitation changes and droughts. Sedimentation has caused dam storage losses of 12-27%, necessitating improved sediment management strategies. Green storage such as glaciers and snow, key sources of water storage in the Danube, are also experiencing a progressive reduction due to global warming. Integrating gray and green storage solutions, such as utilizing groundwater, wetlands, and soil moisture reserves, is essential for enhancing resilience and ensuring sustainable water management. Groundwater, an important natural water store, remains inadequately regulated and under threat of pollution and overexploitation. The region’s water management infrastructure, including dams and irrigation systems, often reflects aging and inefficient infrastructure systems that lead to significant water losses and reduced operational efficacy. The urgency of rehabilitating and modernizing this infrastructure cannot be overstated, as these steps are critical to improving efficiency and resilience to climate variability. Moreover, institutional capacities across the region vary widely, with some areas lacking the robust governance frameworks necessary for effective water resource management. Enhancing these capacities is crucial for implementing integrated water resource management practices that can effectively address future climatic and socio-economic changes. There exists significant variation in the performance of water sector institutions across different countries in the Danube. Countries that are EU members generally achieved higher levels of water quality and better management of water resources and services compared to non-EU countries, driven by their need to comply with the EU water management directives s including the Water Framework Directive However, non-EU member countries often struggle with limited financial and technical resources, which impedes their ability to meet similar standards. Service delivery in terms of water supply and sanitation varies widely across the region. Urban areas generally enjoy higher service coverage and better infrastructure compared to rural areas where access to safe drinking water and adequate sanitation facilities can be limited. The disparity in service delivery often reflects the economic disparities within and between countries in the Danube region. Water quality remains a pressing issue across the region, with pollution from agricultural runoff, industrial discharges, and insufficiently treated wastewater posing significant threats to the river basin's ecological and human health. This assessment notes that efforts to improve water quality are ongoing, with some countries investing in advanced wastewater treatment facilities and pollution control measures. Water plays a pivotal role in the Danube region's economy, driving productivity across various sectors. The average water productivity in the Danube region stands at $49 per cubic meter, significantly higher compared to global and regional peers, driven mostly by efficient use of water by the industrial and services sector in EU member states. Hydropower contributes 28% of the region's electricity, with potential for further expansion. Diversifying energy sources can mitigate drought risks in many Danube countries (e.g., Albania, Austria, Croatia), which rely more than 50% on hydropower. Irrigation, currently underutilized, represents only 3% of agricultural Gross Value Added (GVA), but could significantly boost crop yields and resilience to droughts. Tourism, generating 20% of GDP in countries like Croatia, along with inland navigation, underscores water's economic significance. Water-dependent exports contribute substantially to foreign earnings, with figures ranging from 17% in the Czech Republic to 66% in Montenegro. However, disparities in water productivity between EU and non-EU countries highlight the need for targeted investments in water- saving technologies and high-value activities as well as improved regulatory frameworks to enhance efficiency and sustainability across the region. 10 Regional Water Security Assessment DANUBE REGION ES 2: Share of sector in the overall GDP in the Danube region compared to the sectoral economic water productivity. Source: FAO (2023). The region's overall better water quality, compared to other regions of the world, is largely attributed to better regulatory frameworks and investments in wastewater treatment facilities. EU member states within the Danube region have shown particular progress in this area, achieving higher compliance rates with EU water quality standards. Currently, about 66% of wastewater is collected, and 49% is treated. While countries like Austria and Slovakia have high compliance, treating over 93% of wastewater, others, especially downstream nations like Serbia, lag behind, with only 2% treated. These improvements are linked to significant investments in advanced treatment technologies and stricter enforcement of pollution control measures. However, challenges persist, particularly in non-EU countries where financial and technical constraints hinder similar advancements. Issues such as non-revenue water, inefficient water use in agriculture, and uneven access to safe drinking water and sanitation services remain prevalent. Despite €42.5 billion in investments, an additional €57 billion is needed to achieve full compliance by 2040. Downstream countries face significant challenges, with more than 50% of surface water emissions from urban wastewater coming from areas with sewers but lacking treatment facilities. This contributes to environmental issues like eutrophication in the Black Sea, particularly affecting Romania. These issues not only affect the ecological status of the Danube River but also pose health risks to the populations and limit economic opportunities in less developed regions. Irrigation in the Danube region is characterized by underdeveloped and underutilized infrastructure, leading to significant inefficiencies in water use and agricultural productivity . Despite the relatively high availability of precipitation, only about 10.5% of cultivated land is irrigated, and much of the existing infrastructure is outdated and poorly maintained. For example, Romania uses a considerable amount of fresh surface water for irrigation, yet maize yields are significantly lower than in neighboring Hungary due to these inefficiencies. Modernizing irrigation infrastructure could improve water use efficiency, reduce water losses, and enhance crop yields, particularly in areas where irrigation systems from communist times are still in use. The agricultural sector in the Danube region faces dual challenges of adapting to climate change impacts on water availability and enhancing economic productivity. The droughts of 2017 and 2022 highlighted the vulnerability of agriculture to climate variability, resulting in substantial economic losses. There is significant potential for modernizing irrigation systems to better manage water resources and increase resilience to droughts. For instance, in Bulgaria and Hungary, extensive but often inoperative irrigation systems present opportunities for improvement. Ensuring the availability of water for agriculture while maintaining ecological flows and meeting other demands is critical for the sustainability of the sector. Future climate change impacts are expected to alter hydrological regimes, affecting water availability, quality, and demand across the region. Climate projections for the Danube region indicate a significant increase in temperatures and changes in precipitation patterns , which will have profound effects on the region's hydrology. The average annual temperature is expected to rise, with more pronounced warming during the summer months. This temperature increase will lead to a reduction in snow cover and earlier snowmelt, altering the timing and magnitude of runoff into the Danube River. Additionally, overall precipitation is projected to decrease during the summer and increase during the winter, further complicating water management in a region already facing seasonal variability in water availability. By 2050, the Upper Danube 11 Regional Water Security Assessment DANUBE REGION may experience increased water availability, while the Middle and Lower Danube face significant declines, raising concerns about water scarcity. ES 3: Comparison of surface water availability between the baseline in 2010 and RCP4.5, and RCP 6.0 scenarios in the Danube region. Source: Satoh et al., 2017 By 2050, water demand in the Danube region is expected to rise significantly, with total demand increasing by 24-52%. This surge is driven primarily by the industrial and domestic sectors, where demand could increase by 50-90% and 36-72%, respectively. Countries like Hungary and Romania are projected to see the most substantial increases, with demand rising by 62% and 59%, respectively. This growing demand highlights the region's increasing pressure on water resources. ES 4: Relative change in water demand by 2050 compared to 2010 across three SSP-RCP scenarios. Source: Satoh et al., 2017 The anticipated changes in climate will exacerbate water stress in the Danube region , particularly during the critical summer months when demand is highest. Reduced summer precipitation and higher temperatures will likely decrease river flows, reducing the availability of surface water when it is most needed. This scenario is particularly concerning for agricultural irrigation, energy production, and domestic water supply, which are heavily dependent on reliable water availability. Water demand is projected to rise 12 Regional Water Security Assessment DANUBE REGION substantially, especially in the industrial and domestic sectors, further straining resources. Water stress is expected to escalate, particularly in Bulgaria and Romania. Furthermore, higher temperatures and altered flow regimes may lead to increased water pollution by concentrating pollutants and encouraging algal blooms, which degrade water quality and affect aquatic ecosystems. The region is expected to experience an increase in the frequency and intensity of extreme hydro-climatic events, such as floods and droughts. Enhanced precipitation variability will likely lead to more severe and frequent flooding during the winter and spring, posing risks to infrastructure, human safety, and economic activities. Conversely, prolonged periods of low rainfall and higher temperatures during the summer months are expected to increase the occurrence and severity of droughts, impacting water supplies, agriculture, and energy production in areas like Balkans and eastern Ukraine. Addressing the above raised issues and taking advantage of the region’s strength requires a strategic approach focusing on four key action areas: enhancing water and sanitation services, strengthening institutional and management capacities, adapting to climate change, and transforming regional relations. This assessment identifies four priority areas that need to be implemented at a national level and regional level. The four priority action areas include: ACTION AREA I: Enhancing Water Supply and Sanitation Services To ensure human well-being and support socioeconomic development, it is crucial to improve water and sanitation services across the Danube region. This involves addressing the significant gaps in service coverage, particularly in rural and non-EU member areas, and expanding wastewater treatment to reduce pollution and promote climate-neutral business models. Key measures include: • Adopt a mixed delivery model prioritizing centralized solutions in urban areas and decentralized and cost-effective options in rural regions recognizing the varying needs and capacities of different areas • Expand wastewater treatment coverage to meet EU policy targets and promote climate-neutral business models through investing in both centralized wastewater treatment plants for large agglomerations and cost-effective, decentralized technologies like nature-based solutions in peri- urban and rural areas. • Mobilize investments through a combination of taxes, tariffs, state budgets, and private investments to bridge the WASH gaps and meet SDG6 goals. • Develop targeted investment programs recognizing diverse service models and financial needs designed in close cooperation with the local governments and communities for effective solutions. ACTION AREA II: Strengthening Institutional and Management Capacities Effective implementation of Integrated Water Resources Management (IWRM) requires robust legislative and institutional frameworks. Strengthening these frameworks, particularly in non-EU member states, is essential for improving water management and ensuring sustainable use of water resources. Key reforms involve: • Reinforce legislative and institutional frameworks to support IWRM implementation to align with the EU standards and address existing gaps, particularly in the non-EU countries in the Danube. • Develop comprehensive long-term national water management strategies that address current threats and anticipate future ones. • Establish efficient water allocation mechanisms and update cadasters of water uses which involve developing systems for issuing water extraction permits, enhancing surveillance and metering, and ensuring data are up-to-date and accurately reflect current usage. • Expand and modernize data monitoring systems and water information systems. Investing in advanced technologies for monitoring meteorological, hydrological, chemical, and hydro- morphological data is essential for effective water management. • Facilitate regional policy dialogues to exchange best practices and support capacity building. These dialogues can help countries learn from each other's experiences, address common challenges, and improve overall water management in the region. 13 Regional Water Security Assessment DANUBE REGION ACTION AREA III: Adapting to Climate Change and Boosting Economic Productivity To mitigate the risks posed by climate change and enhance economic productivity, the Danube region needs to improve water use efficiency, modernize irrigation infrastructure, and expand water storage capacities. These measures will help build resilience and support sustainable development. • Invest in improving water use efficiency across all sectors by adopting technologies and practices that reduce water consumption and enhance the productivity of water use in agriculture, industry, and services sectors. • Modernize and rehabilitate irrigation systems to enhance agricultural productivity by updating aging infrastructure and shifting to more efficient irrigation methods can significantly reduce water losses and improve crop yields, addressing urban-rural inequalities and supporting climate adaptation. • Expand water storage through grey and green infrastructure to manage variability in water availability and increase resilience to extreme climate events. • Develop non-conventional water sources, such as desalination, water reuse, and rainwater harvesting which can alleviate the pressure on existing resources in high water stressed areas • Review reservoir operations to balance energy security, water supply, and flood mitigation. Optimizing the management of reservoirs can ensure that water is used efficiently and that competing demands are met, particularly during periods of scarcity or excess. ACTION AREA IV: Transforming Regional Relations to Strengthen Development Opportunities Strengthening regional technical cooperation can accelerate the implementation of EU water regulations and existing agreements. The work done by the International Commission for the Protection of the Danube River (ICPDR) is a prime example of effective cooperation, which can inspire other transboundary basins. Good practices include data and information exchange, joint monitoring and early warning systems, and collaborative research to address data and knowledge gaps. However, technical cooperation alone is insufficient without accompanying political agreements, which are essential for enabling mutually beneficial trade-offs and securing long-term investments. Specific efforts should be placed in the following areas: • Strengthen regional technical cooperation by enhancing data exchange, establishing joint monitoring systems, and conducting collaborative research. These efforts can reduce inefficiencies and improve the overall management of water resources across the region. • Update existing operational agreements to incorporate key principles of modern international water law, such as the no-harm principle. Expanding the scope of these agreements to include issues like water quantity, joint infrastructure management, and transboundary flood and drought management is essential for comprehensive water governance. • Strengthen cooperation at the Danube level and foster regional policy dialogues: Use platforms like the ICPDR and DWP to shift from experience exchanges to coordinated actions, and promote best practice discussions to support capacity building and IWRM implementation across Danube countries. • Expand multilateral and bilateral cooperation agreements: Address emerging issues such as water quantity management, ensuring comprehensive and sustainable water governance. • Develop a standardized Danube water balance model: Collaborate among ICPDR member states to create a unified approach for assessing water balance, enhancing transparency and consistency in water resource management decisions. 14 Regional Water Security Assessment DANUBE REGION 1. Introduction 1.1 Objective and scope of the report This report provides a high-level assessment of the Danube region's current water security status and drivers of future change with the aim of highlighting the key water issues that the countries of the region must tackle to enhance their water security. The report collates available knowledge and provides an overview of water security challenges, risks, and opportunities. This report responds to key questions such as: why does water security matter for the Danube region, what risks threaten water security in the region, how is the countries’ performance constrained, and what strategies/actions are needed to enhance water security in the region. The report is meant for policy and decision makers working in the space of water security or sectors for which water is a critical input, as well as non-actors working on water security. This report is intended to highlight main areas where water security can be strengthened now and in the future. Water security matters even more so in the future as climate change will be experienced predominantly through the hydrological cycle, and bringing about increased vulnerabilities that impact citizens, economies, and natural habitats. The findings in this report are based on existing information and analysis of development documents and plans and scientific studies. Thus, while it provides a framework and an initial set of recommendations for action, more detailed analysis should be undertaken on comprehensive river basin management plans, sector investment plans, and other key planning and implementation functions of the sector. The report is meant for policy- and decision-makers working in the space of water security or sectors for which water is a critical input, as well as those indirectly involved in working on water security efforts. It aims to address the following four crucial questions: 1. What benefits do Danube’s regional water resources provide to the region? 2. What are the strengths, challenges and risks to Danube's water assets? 3. What opportunities are there to leverage the benefits of water for society, economy and the environment? 4. What strategies could improve water security in Danube? The report is organized as follows: • The remainder of Chapter 1 provides a short overview of the Water Security Diagnostic Framework and the One-Water Methodology • Chapter 2 provides a general overview of key physical, and socio-institutional features of the countries of the DWP and the Danube River Basin • Chapter 3 provides a diagnosis of current water security status the Danube region, elaborates a regional narrative of the main water security challenges and risks that the Danube region is facing • Chapter 4 describes the Danube region’s future trajectories imposed by global climate and socio- economic scenarios • Chapter 5 identifies policy priorities and provides recommendations for improving water security in the Danube region 1.2 Methodology to perform the regional level assessment 1.2.1 The Water Security Diagnostic Framework Water security is a complex, multi-dimensional and multi-sectoral concept. It concerns the building of a water secure future for the people, the economy, and the environment in the face of local and global challenges. Achieving water security is therefore the overarching goal of water management and includes leveraging productive aspects of water for human well-being, livelihoods, environment and socio-economic development, and the management of the destructive impacts of water such as floods, droughts, and 15 Regional Water Security Assessment DANUBE REGION pollution to protect societies, economies, and the environment. Water insecurity is typically driven by a combination of environmental, socio-economic, technological, and governance factors. The most water insecure countries combine challenging hydrological environments with weak institutions and chronic under- investments in water infrastructure. Even when water is abundant, and the hydrologic regime is favorable, mismanagement (for example, poor pollution regulation) or inadequate infrastructure investments can lead to water insecurity. Water security cannot be adequately assessed by any single integrative index. In addition, water security often intersects with other security concerns, including energy, food, climate change and overall national security. As an alternative to establishing a strict methodology for measuring water security, the Water Global Practice of the World Bank has developed a Water Security Diagnostic Framework (WSDF) (Figure 1). The WSDF intends to establish a consistent and structured approach to diagnosing water security without being overly prescriptive. This approach is important to identify the most severe risks and significant opportunities, facilitate global comparisons, and benchmark countries. The WSDF seeks to analyze the relationship between a country’s water endowment (given and subject to change due to climate change and socioeconomic trends) and its linkage to social, economic, and environmental outcomes. This is done by examining the role of water sector architecture, encompassing infrastructure and institutions, in the performance of the water sector in managing water resources, delivering water services, and mitigating water-related risks. Figure 1: Water Security Diagnostic Framework and its different dimensions. Source: World Bank (2019) 1.2.2 The application of the ONE Water Methodology in the Danube Region The One-Water Methodology (O-WM) was developed under “The World Bank ECA Regional Water Security 16 Regional Water Security Assessment DANUBE REGION Initiativeâ€?. Its aim is to operationalize the WSDF using an innovative approach which maximizes information and resources that are already available to catalyze the implementation of high-impact actions. The O-WM process promotes a dynamic learning cycle that continuously strengthens its own methodology and accelerates the systematic identification of new gaps and opportunities. This allows the fastest possible implementation of new actions to incrementally improve the water sector performance while involving participatory stakeholders from different institutional levels and water-related sectors. The application of the O-WM in the Danube region is intended to identify and assess key water security challenges that individual countries are experiencing in the region and those that are shared across borders (upstream and downstream). Figure 2 summarizes the five different steps comprising the regional version of O-WM (“5-Steps-Processâ€?). Figure 2: The 5-Steps-Process to assess water security in the Danube region The regional O-WM comprises two main phases: A. Preparatory and Diagnosis Phase: This phase establishes the baseline for water security within the Danube region by delineating current conditions and forecasting future challenges, risks, and opportunities, considering both national and global influences. This phase utilizes a suite of quantitative and qualitative indicators to evaluate the maturity of the WSDF's four dimensions, supplemented by a qualitative analysis of regional and country-specific data, together with stakeholder engagement. The list of indicators used to perform the assessment is provided Annex I. The culmination of this phase is a comprehensive diagnosis detailing the water security status of the region, guided by the WSDF framework. It also includes the key elements of transboundary agreements as well as the key trends of regional and transboundary importance. B. Action Planning and Decision Phase: Based on the Regional Narrative, this phase identifies key policy priorities at the regional and the transboundary level. The main output is a report that compiles most pressing challenges and the identified policy recommendations. The Danube water security assessment employs a hybrid approach, combining desktop research of existing literature, development reports, scientific literature, in-country consultations and open-source datasets with insights from country-specific deep dive and general water security evaluations ( Table 1). This methodological approach ensures a comprehensive regional assessment, integrating diverse perspectives and data sources which are validated by relevant stakeholders in the selected countries to inform the identification and implementation of strategic actions aimed at enhancing water security across the region. 17 Regional Water Security Assessment DANUBE REGION Table 1: Countries assessed under Danube regional water security assessment. The table also shows the countries that underwent deep dive level assessment as part of the World Bank ECA water security project. Countries to be covered under Deep-dive Country Danube Regional Water Security Assessment Assessment Austria Bosnia and Herzegovina X Bulgaria Croatia X Czechia Hungary Kosovo Moldova Montenegro X North Macedonia Romania Serbia X Slovakia Slovenia Ukraine X Albania X 1.2.3 Advancing Water Security in the Danube region This report is designed to engage and inform a broad spectrum of stakeholders within the Danube region, encompassing national governments, regional entities, multilateral organizations, and non-governmental organizations (NGOs) that play a key role in water management and sustainability. The report has a twofold objective to address water security in the region. First, it aims to spark dialogue on the water security challenges faced by the region, offering tailored recommendations to guide policy reforms, investment strategies, and management practices at both national and regional levels. These recommendations provide a strategic blueprint for addressing common issues and enhancing water security across the Danube. Second, the report emphasizes the importance of regional cooperation for stronger coordination and more effective water management. By highlighting successful countries and best practices, it encourages collaborative efforts that leverage collective strengths to address complex water security challenges. This approach aims to promote long-term resilience and prosperity in the Danube region amidst climate change and increasing water-related pressures. 18 Regional Water Security Assessment DANUBE REGION 2. Setting the scene: The Danube region exemplifies an integrated approach to water security that aligns with global efforts to manage water resources sustainably. The initiatives in the region serve as a model for other transboundary basins striving to secure their water resources while balancing the needs of agriculture and energy production. The region's proactive stance on water management through legislative support and technological innovation underscores its role as a leader in achieving integrated water security. The Danube region encompasses all countries that are part of the Danube River Basin (DRB), including eastern Europe and the Balkan countries. Though the region is highly diverse in addition to being connected through the Danube basin, the countries also share similar historical influences. Several Eastern European countries, including those in the Balkans, were part of the Soviet bloc during the Cold War. The transition from communism to democracy and market economies has been a shared experience. Many Eastern European countries have become members of the European Union (EU), aligning themselves with Western European values and institutions. In contrast, most Balkan countries are still in the process of seeking EU membership. In the Danube region, organizations like the International Commission for the Protection of the Danube River (ICPDR), the Sava Commission, the Danube Commission, and the EU Strategy for the Danube Region (EUSDR) play vital roles in enhancing water security. These entities work collaboratively on issues ranging from environmental protection and water management to navigation and sustainable development, ensuring the long-term health and security of the region's water resources. 2.1 Historical context Since 1990, the Danube region has undergone significant transformation in the water sector, aligning with EU standards and enhancing water management, quality, and environmental sustainability. The transition from centrally-planned, socialist economies to market-driven democratic systems since 1990 has significantly impacted water supply and sanitation services. This shift has led to a comprehensive transformation in service provision, mirroring the broader political and economic transformations within the region. Countries in the Danube catchment moved toward EU integration, aligning water service standards, financing, and governance with the EU’s stringent norms. This transition period saw efforts to improve efficiency, sustainability, and public service frameworks, marked by decentralization and increased private sector involvement. The expansion of the EU played a crucial role in shaping the future trajectory of water service provision in the Danube region, emphasizing the need for sustainable practices and compliance with EU environmental standards. In this transformative period, the Danube Commission and the International Commission for the Protection of the Danube River (ICPDR) have been crucial. These entities have guided the shift toward EU standards in water management, focusing on navigation, environmental protection, and sustainable water use. Their efforts facilitated regional cooperation, aligning national policies with EU directives and promoting sustainable development in the Danube subregion. Through these initiatives, the region has seen improved water quality, effective flood risk management, and enhanced biodiversity conservation, reflecting a successful integration of environmental goals with economic and political reforms. 2.2 Key geographical and physical features Geography The Danube region derives its name from the Danube River, which is considered the most internationally shared river basin in the world, cutting across a wide range of countries with diverse political, cultural, and socio-economic conditions. The Danube River is the second largest basin in Europe after the Volga. Its river network spans across 19 countries and covers a total area of over 800,000 km2 . Countries within DRB (Figure 3) exhibit large differences in size but also diversity in terms of landscapes and key socio-economic conditions. 14 out of 19 countries have large territories (>2000 km2) draining into the DRB: Austria, Bulgaria, Croatia, Czechia, Hungary, Kosovo, Slovakia, Slovenia, Romania, Bosnia and Herzegovina, Republic of Moldova, Montenegro, Serbia and Ukraine. The remaining five countries have smaller part of their territories (<2000 km2) within the DRB: Italy, Poland, Switzerland, Albania and 19 Regional Water Security Assessment DANUBE REGION North Macedonia. 11 out of the 19 Danube countries are Member States of the European Union, with the remaining in process of adhesion or potential candidates. Figure 3: The Danube Region and the boundaries of the Danube River Basin (DRB), countries and main cities Source: GADM (2022); Lehner and Grill (2013); Natural Earth data, n.d. Topography and Climate The mountains of the Danube represent the most important source of freshwater for the countries in the region. The Danube’s geography is diverse, encompassing high mountain chains, large plains, wetlands, karst formations, and the unique Danube Delta ( Figure 3). The most important mountain ranges include: the Alps in the western part which cut across Austria, parts of Germany and Switzerland 1, and although are not entirely within the basin, contribute to the Danube's headwaters in the Black Forest. In Central and Eastern Europe, the Carpathian Mountains stretch across several countries, including Slovakia, Poland, Czechia, Ukraine, and Romania. They form a natural border between the Danube Basin and the Great European Plain. And to the south, the Dinaric-Balkan Mountain chain stretches along the eastern coast of the Adriatic Sea, from the northwest in Slovenia to the southeast of Albania. In the lowlands, there are large plains, which nowadays constitute key agricultural regions and are home to many cities and towns. The most important ones include the Pannonian or Hungarian plain located central-north part of the Danube, expanding over the southern Czechia, eastern Austria, north of Croatia and Serbia, Hungary; the Wallachian or Romanian plains expanding over the southern part of Romania and the Danube basin, and the Moldavian in the northeast. 1 Germany and Switzerland are not part of the DWP and thus are not included in the current report. 2 Future projections embrace three different socio-economic scenarios of the IPCC. SSP1 envisions a sustainable world with low fertility and high migration, focusing on human well-being and environmental sustainability; SSP2 presents a "middle-of-the-road" scenario where trends do not shift markedly, with moderate fertility rates and migration levels; and SSP3 depicts a fragmented world with high fertility rates, low migration due to restrictive policies, leading to regional disparities and challenges in global cooperation. 20 Regional Water Security Assessment DANUBE REGION Figure 4: Topography of the Danube Region. Source: own elaboration These geographical features have a strong influence on the Danube climate. Precipitation patterns vary greatly across the region. The western parts are wetter, and particularly the mountain ranges, which receive on average between 1,000 to 3,200 mm per year (Figure 5). These mountains also receive between 50 to 70 days of annual snowfall, which all in all makes them the “water towersâ€? and the primary source of freshwater in the DRB. In contrast, the plains receive significantly less rainfall, ranging from 350 to 600 mm per year. However, the lower rainfall in the plains is compensated by abundant river flows from the wet mountains, which helps to offset the evapotranspiration deficits by providing water and moisture. Figure 5: Average annual precipitation in the Danube Region. 21 Regional Water Security Assessment DANUBE REGION Hydrology The surface waters of the Danube river network sustain the majority of the socio-economic development activities in the region. The Danube river network is very extensive and many of the rivers are transboundary cutting across several countries. The countries in the Danube region share roughly 23 transboundary sub-basins larger than 2000 km2 and a few smaller ones (Table 2). Table 2: Main transboundary sub-basins shared between the countries of the Danube region Transboundary Size # Countries basins (Km2) Austria, Bosnia and Herzegovina, Bulgaria, Croatia, 1 Danube River Czechia, Germany, Hungary, Moldova, Montenegro, 801,463 Romania, Serbia, Slovakia, Slovenia, Ukraine 2 Tisza River Romania, Ukraine, Slovakia, Hungary, and Serbia 157,000 Bosnia and Herzegovina, Croatia, Slovenia, Serbia, and 3 Sava River 97,700 Montenegro 4 Southern Bug River Ukraine and Moldova 63,000 5 Prut River Romania and Ukraine 27,000 6 Inn River Germany and Austria 26,000 7 Drin River Albania, Kosovo, Serbia, Montenegro and North Macedonia 19,200 8 Drina River Bosnia and Herzegovina, Serbia and Montenegro 19,000 9 Mur River Austria, Slovenia, Hungary, and Croatia 16,800 10 Morava River Czechia, Austria and Slovakia 11,000 11 Neretva River Bosnia and Herzegovina and Croatia 10,400 12 Drava River Croatia, Austria, Slovenia, Hungary, and Serbia 10,000 13 Una River Bosnia and Herzegovina and Croatia 9,400 14 Shkumbin River Albania, North Macedonia and Greece 7,200 15 Olt River Hungary and Romania 7,000 16 Vjosa River Albania and Greece 6,700 17 Kupa/Kolpa River Croatia and Slovenia 6,500 18 Buna/Bojana River Albania and Montenegro 5,000 19 SomeÈ™/Szamos River Hungary and Romania 5,000 20 Mura River Croatia, Slovenia and Hungary 3,800 21 Mat River Albania, North Macedonia 2,700 22 Tara River Montenegro and Bosnia and Herzegovina 2,700 23 Timok River Serbia and Bulgaria 2,000 24 Leitha River Austria and Hungary 1,400 25 Crna River North Macedonia and Serbia 1,000 Among all the basins, the DRB is the largest and holds the longest river in the region ( Figure 6). It also has the largest flow, with an average discharge of 6,460 m 3/s (ICPDR, 2019). It connects with 27 large and over 300 small tributaries on its way from the Black Forest to the Black Sea. The largest tributaries are the Sava (1,564 m3/s), the Tisza (794 m3/s), the Inn (738 m3/s), the Drava (577 m3/s). All of these are located in the upper and middle parts of the Danube. Other important basins such as the Prut located in the low plains, despite their relevance in size, contribute with much less flows (110 m 3/s). 22 Regional Water Security Assessment DANUBE REGION Figure 6: The Danube River Basin and its main sub-basins Rivers in the Danube region experience important seasonal variations in flow due to changes in precipitation and snowmelt. Spring and early summer tend to have higher flow rates, while autumn and winter see lower flows. In spring, rivers in the DRB typically sees an increase in flow due to melting snow and ice from the winter season. This leads to higher water levels and increased discharge in the river. During summer, the flows tends to decrease due to reduced precipitation and higher evaporation. However, the Danube river still maintains a significant flow due to its connection to various tributaries. Autumn is characterized by a moderate flow since precipitation levels start to rise again, leading to slightly increased water levels and discharge compared to summer. The flows of the Danube River and much of its tributaries are the lowest during the winter. Cold temperatures cause reduced precipitation, and some parts of the DRB might freeze. As a result, water levels and discharge are typically at their lowest during winter. 2.3 Institutional boundaries This report will focus on the countries from the DRB that are part of the Danube Water Program (DWP), with the exception of Poland, Germany and Italy (Table 3). The DWP is a regional technical assistance program implemented by the World Bank aimed at promoting sustainable water management in the DRB, and with a particular focus on water supply and sanitation (see Box I). It does include all the countries that have larger shares of their boundaries within the DRB (> 2000 km 2), but also other smaller countries like Albania and Kosovo. This cluster of countries, will be here referred as the Danube region and/or countries of the Danube region. Most of these countries are also cooperating countries of the International Commission for the protection of the Danube River (ICPDR) (see Box II). 23 Regional Water Security Assessment DANUBE REGION Table 3: Countries of the region and their membership status in the DWP, ICPDR and EU # Country Code Danube Water ICPDR EU status Program membership 1 Albania AL ✓ - candidate 2 Austria AT ✓ ✓ member state (1995) 3 Bosnia and Herzegovina BA ✓ ✓ candidate 4 Bulgaria BG ✓ ✓ member state (2007) 5 Croatia HR ✓ ✓ member state (2013) 6 Czechia CZ ✓ ✓ member state (2004) 7 Hungary HU ✓ ✓ member state (2004) 8 Kosovo* XK ✓ - potential candidate 9 Moldova MD ✓ ✓ candidate 10 Montenegro ME ✓ ✓ candidate 11 North Macedonia MK ✓ - candidate 12 Romania RO ✓ ✓ member state (2007) 13 Serbia** RS ✓ ✓ candidate 14 Slovakia SK ✓ ✓ member state (2004) 15 Slovenia SI ✓ ✓ member state (2004) 16 Ukraine UA ✓ ✓ candidate *This designation is without prejudice to positions on status, and is in line with United Nations Security Council Resolution (UNSCR) 1244/1999 and the International Court of Justice (ICJ) opinion on the Kosovo declaration of independence. **The data from Serbia in this report do not include any data from the Autonomous Province Kosovo and Metohija - UN administered territory under UN Security Council Resolution 1244. BOX I: The Danube Water Program (DWP) The Danube Water Program is a regional technical assistance program supporting smart policies, strong utilities, and sustainable services in the Danube region (covering Albania, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Hungary, Kosovo, Moldova, Montenegro, North Macedonia, Romania, Serbia, Slovakia, Slovenia and Ukraine) by partnering with regional, national, and local stakeholders. It is implemented by the World Bank and the International Association of Water Service Companies in the Danube River Catchment Area (IAWD), and funded by a four-phased, €17 million grant from the Government of Austria to develop policy and regulatory instruments and capacity development in the water sector in the region’s countries. The activities supported by the program fall under four broad categories: (i) analytical and advisory work, by means of new research or consolidation of existing ones in order to improve the overall understanding of the situation and challenges of the sector in the region, and its use to inform evidence-based policies; (ii) knowledge sharing; (iii) capacity development activities; and (iv) a competitive grant window to finance local utility-led initiatives. Box II: International Commission for the Protection of the Danube River (ICPDR) The ICPDR is a transnational body, which was established in 1998 to implement the Danube River Protection Convention, which forms the overall legal instrument for co-operation on transboundary water management in the Danube River Basin. The ICPDR is comprised of the Delegations of all Contracting Parties and serves as a coordination platform among the basin countries and international organizations. Of the 19 countries that have a share in the Danube River Basin (DRB), those 14 that contain more than 2000km2 of the basin area are ICPDR members, in addition to the European Union: Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Germany, Hungary, Moldova, Montenegro, Romania, Serbia, Slovakia, Slovenia, and Ukraine. Following initial international donor support for the launch of the organization in the 1990’s and early 2000’s, the ICPDR is now largely self-financed via contributions of the member countries. While currently a cost sharing key with differentiated levels of member contributions is applied (based on the capacity to pay), the long-term objective is for all countries to contribute equally. In addition, the ICPDR receives project-related grants, e.g. from the EU, and is involved in externally financed project activities. 24 Regional Water Security Assessment DANUBE REGION 2.4 Key socio-economic aspects Population and migration trends The Danube is experiencing contrasting population trends with important implications for the regional water security. The region is currently facing a persistent decline in population, although the rate of decline has slowed down in recent years (Figure 7). Current population (2020 data) is roughly 165 million, and the downward trend can be attributed to a combination of low natural population growth (particularly in the upper Danube) and outward migration from the region (especially in the middle and lower parts). The phenomenon of depopulation is particularly pronounced in rural areas, where many communities are witnessing a decrease in inhabitants. However, it is important to note that certain urban areas, especially those more isolated, have also experienced population declines. In contrast, capital cities in countries like Czech Republic and Austria are experiencing strong growth—necessitating the expansion of urban water and sanitation services— whereas non-urban regions in Romania, Bosnia and Herzegovina, Albania, and Bulgaria are witnessing significant population declines. 25 Regional Water Security Assessment DANUBE REGION Figure 7 Historical population trends (top) and current shares of population in the urban, rural population and large cities (bottom) in Daube region. The bottom figure also depicts the growth rate of the urban share of population for the year 2022. Source: World Bank (2024) Future projections foresee a net reduction in population at regional level in the Danube by 2050 across all scenarios2 although countries exhibit different dynamics (Figure 8). Upstream countries like Czech Republic and Austria are expected to see their populations increased by 2050. Downstream countries like Romania and Poland are expected to see their overall populations decreased up to 10% by 2050, but in the Western Balkans, countries like Serbia, Bosnia and Herzegovina and Montenegro might experience a net growth between 20 and 40% by mid-century. 2 Future projections embrace three different socio-economic scenarios of the IPCC. SSP1 envisions a sustainable world with low fertility and high migration, focusing on human well-being and environmental sustainability; SSP2 presents a "middle-of-the-road" scenario where trends do not shift markedly, with moderate fertility rates and migration levels; and SSP3 depicts a fragmented world with high fertility rates, low migration due to restrictive policies, leading to regional disparities and challenges in global cooperation. 26 Regional Water Security Assessment DANUBE REGION Figure 8 Future population in Danube and surrounding ECA region by 2050 under different SSPs. Source: Satoh et al (2017) The population decline trend in the Danube contrasts with trends of neighboring regions like Central Asia, South Caucasus and other peripherical countries like Russia Federation and Turkey, which are projected to have their populations increased across most scenarios. Overall, and while a declining population in the Danube region might reduce the strain on water resources, increasing economic activity could counteract this effect by intensifying water usage. And moreover, diminished population could impact the financial support and scale benefits essential for sustaining and modernizing water infrastructures. Socio-economic development Despite the pronounced socio-economic differences Danube countries exhibit, all are largely dependent on the waters of the Danube and its tributaries. From an economic perspective there are substantial disparities, with the wealthiest country in the region (Austria) exhibiting a GDP per capita nearly 16 times higher than that of the poorest country (Montenegro) (see Figure 9). Differences are largely related with the sectors’ specialization of countries and the fact that the region hosts a combination of developing and developed economic profiles. Agriculture's share of GDP varies largely, being lower in developed economies like Austria (1.1%) and higher in developing ones like Albania (19.1%). The industry and services sectors dominate in economies like Czechia and Hungary (88% and 82% of the GDP, respectively), reflecting their advanced manufacturing capabilities and dynamic service industries. In such industrial economies water serves as a crucial input for manufacturing, energy production, and cooling processes. The Danube River and its tributaries are central to the region's development, supporting agriculture, industry, and energy sectors while facilitating trade. 27 Regional Water Security Assessment DANUBE REGION Figure 9: GDP per capita (constant 2015 US$ prices) of the Danube countries. Source: World Bank, (2024). The weight of the agricultural sector explains the high disparities in water use and economic productivity across the region. Most of the economic differences stem from the different country development models, and the weight of the agricultural sector in their economies (Figure 10). The upstream and western countries (Austria, Czechia, Slovakia, Slovenia) are more industrialized economies, and the agricultural sector holds a comparatively lower economic weight. In contrast, the agricultural sector plays an important role in the economy of the southern and eastern countries of the Danube region, including Albania, Moldova, Ukraine, and North Macedonia. These countries have also the higher share of employment linked to the agricultural sector (Albania 36.4%, Moldova 39.4%, Romania 21.2%, Ukraine 15%), and exhibit the lowest levels of economic water productivity. Throughout the Danube countries, the services sector contributes the most to the respective countries’ GDP. Notably, this includes tourism, which is an important economic activity in most countries and highly dependent on reliable water supply, with particularly high demands during the drier summer months. Not least, tourism also depends on thriving landscapes and nature, and as such on healthy (water-dependent) ecosystems. Figure 10: Share of the GDP across sectors in the Danube countries and overall economic water productivity (measured as the country GDP to total water withdrawals). Source: World Bank 2019 data and AQUASTAT (2020) 28 Regional Water Security Assessment DANUBE REGION On average across the region, the water demand of the service sector (which includes tourism) is low compared to its contribution to GDP and employment. The industrial and agricultural sectors are more water intensive compared to the contribution to GDP and employment (see Figure 10). 2.5 Key governance features Regulatory Framework The Danube has an ambitious water regulatory framework but there are large disparities in terms of the adoption and implementation given the diversity of political and socio-economic conditions across countries. The EU water acquis is the body of legislation and regulations that are part of the European Union's efforts to protect and manage water resources, and to which all EU Member State countries of the Danube are aligned, or in the process of alignment. For candidates and potential candidates, the prospect of EU membership provides a framework for alignment and concrete targets to be achieved by the time of accession, by when countries must be able to implement and enforce all EU legislation and policy. The EU water acquis is composed of several Directives (Figure 11). The Water Framework Directive (WFD) (2000/60/EC) is the main legislation and is supported by so-called “sisterâ€? Directives, which together aim to ensure the sustainable use of water, protect water quality for drinking and environmental purposes, promote efficient water management, and address issues related to water pollution, wastewater treatment, and flood risk management, among other main policy goals. Figure 11: European Union water policy framework. Source: own elaboration 29 Regional Water Security Assessment DANUBE REGION A short description of the main legislation and policies comprising the EU water acquis is provided in Table 4. Existing legislation has a strong focus on managing water quality aspects (ambient and drinking) and prevention and management of water pollution. However, aspects related to water quantity and drought management, while considered, are yet much less developed in the Danube countries. Most member states have made significant improvements with implementing the Water Framework Directive, Drinking Water Directive (most recent revision-2020), Bathing Directive and Floods Directive, while the Urban Wastewater Treatment Directive remains challenging for many countries. In candidate states, efforts have been level of implementing the Water Framework Directive, along with the others. Challenges remain also in candidate states to fully implement the Urban Wastewater Treatment Directive, due to several factors including the high investments required in treatment technologies able to comply with high standards, as well as the fact that the Directive is under review and eventually standards have become more ambitious. Annex II provides a detailed summary of the implementation status of the EU Directives in member and candidate states. Table 4: The EU water acquis and its main goals Scope Legislation Overview Since 2000, the Water Framework Directive (WFD) has been the main law for water Water Framework protection in Europe. Its main goals are to achieve good ecological and chemical Directive status of water bodies, ensure sustainable water use, and mitigate the effects of Water quality, and floods and droughts. It ensures an integrated approach to water management, sustainable use (Directive 2000/60/EC) respecting the integrity of whole ecosystems, including by regulating individual pollutants and setting corresponding regulatory standards. It is based on a river basin district approach to make sure that neighboring countries cooperate to manage all their water bodies, also those transboundary. It requires Member States to develop and implement River Basin Management Plans (RBMPs) and Programmes of Measures (PoMs) to protect and, where necessary, restore water bodies in order to reach good status, and to prevent deterioration. The Water Framework Directive (WFD) is the primary legislation. It is supported by two so-called daughter directives (see Figure 11). The Floods Directive (FD) aims to reduce and manage the risks that floods pose to Floods Directive manageme Flood risks human health, the environment, cultural heritage and economic activity. All EU (Directive 2007/60/EC) countries are required to assess all areas where significant floods could take place, nt map the flood extent and assets and humans at risk in these areas, and take adequate and coordinated measures to reduce this flood risk. EU countries are required to create and update Flood Hazard Maps and Flood Risk Maps. The Groundwater Directive is a European Union legislation that aims to protect and Groundwater improve the quality of groundwater resources in the EU. It sets out measures for Directive the monitoring and protection of groundwater, including the establishment of (2006/118/EC) groundwater quality standards, the identification of vulnerable zones, and the development of monitoring programs. The directive also requires member states to take measures to prevent or limit inputs of pollutants into groundwater and to control and reduce the impact of human activities on groundwater quality. Its ultimate goal is to ensure the sustainable use and protection of groundwater resources in the EU. Drinking Water The Drinking Water Directive (DWD) is the EU’s main law on drinking water. It sets Water quality Directive the minimum quality standards of drinking water at EU level. It concerns access to and the quality of water intended for human consumption to protect human health. (Directive (EU) Among other, the Directive includes reinforced water quality standards, in line or, 2020/2184) in some cases, even more stringent than the World Health Organisation (WHO), introduces a methodology to identify and manage quality risks in the whole water supply chain, and establishes a watch list of emerging substances such as microplastics. It applies to all water, either in its original state or after treatment, intended for drinking, cooking, food preparation or other domestic purposes. Also, it includes measures to reduce water leakages and to increase transparency of the sector. (European Commission, 2022b). The Water Reuse Regulation aims to promote the use of treated wastewater for Water Reuse agricultural irrigation, urban green spaces, and other non-potable purposes. The Regulation Directive directive sets out minimum quality standards for water reuse, including limits on microbiological and chemical contaminants, and requires member states to establish (COM 2018/337) monitoring programs to ensure compliance with these standards. It also encourages 30 Regional Water Security Assessment DANUBE REGION Scope Legislation Overview the use of economic instruments, such as pricing and subsidies, to promote water reuse, and provides for public participation in the development of water reuse plans The Urban Wastewater Treatment Directive (UWWTD) was adopted in 1991 and is Urban Wastewater currently under revision. The UWWTD aims to protect the environment from the Treatment Directive adverse effects of urban wastewater discharges and discharges from certain industrial sectors, and to ensure that domestic and industrial wastewater is (Council Directive effectively collected, treated and discharged. Among other, the UWWTD requires 91/271/EEC) the collection and treatment of wastewater in all urban areas of more than 2,000 people (Article 3); and secondary treatment of all discharges from urban areas of Water pollution more than 2,000 people (Article 4), and more advanced treatment for urban areas of more than 10,000 people in catchments with sensitive waters (Article 5) (European Commission, 2022a). The Nitrates Directive aims to protect water quality by reducing nitrate pollution Nitrates Directive from agricultural sources. The directive sets out measures for the management of (91/676/EEC) livestock manure and other fertilizers, including limits on the amount of nitrogen that can be applied to crops and requirements for the storage and application of manure. Member states are required to establish action programs to reduce nitrate pollution in vulnerable zones, which are areas with a high risk of nitrate leaching into groundwater or surface water. The directive also encourages the use of best agricultural practices to minimize the environmental impact of farming activities. Its ultimate goal is to ensure the sustainable use of agricultural land while protecting water resources from nitrate pollution. Transboundary cooperation The Danube has several joint bodies with distinct roles supporting the cooperation and implementation of the water transboundary agreements. The International Commission for the protection of the Danube River (ICPDR) is the transboundary river basin organization established in 1998 and in charge of ensuring the sustainable and equitable use of freshwater resources in the Danube River Basin. The main functions of the ICPDR, involve supporting the implementation of the Danube River Protection Convention (DRPC), making it a living tool to coordinate sustainable and equitable water management, including conservation, improvement, and rational use of water resources. The ICPDR is also the body in charge of facilitating the implementation of the EU Water Framework Directive and Floods Directive. In partnership with its contracting partners, the ICPDR coordinates the development of the Danube River Basin and the Flood Managements Plans. Along this direction, the ICPDR also provides guidance and support to riparian states to strength institutional and technical capacities for basin and flood risk planning and management. This is particularly important to assist candidate states in overcoming the challenges related with the EU accession and the implementation of the EU water acquis. The ICPDR is made up of delegations from each of the contracting parties of The Danube River Protection Convention. It has its Secretariat in Vienna and while initially it was funded with donor support, now it is self-funded via contributions of the riparian countries, EU and non-EU. In addition, the ICPDR also receives funding from projects grants. The Danube Commission (DC) is another important joint body established in 1948 and its members include Austria, Bulgaria, Croatia, Germany, Hungary, Moldova, Romania, Serbia, Slovakia, and Ukraine. The DC is responsible for ensuring safe and efficient navigation on the Danube River, including the maintenance of navigational infrastructure such as locks and dams. The DC is primarily funded through contributions from its member states. Each member state provides financial contributions to support the operations and activities of the DC. The amount of the contribution is determined based on a formula that takes into account factors such as the length of the Danube River within the member state's territory and the volume of traffic on the river. Other important joint bodies include the International Sava River Basin Commission (ISRBC), which was founded in June 2005 to implement the objectives of the Framework Agreement on the Sava River Basin (FASRB). The ISRBC was established in 2005 to promote cooperation and sustainable management of the Sava River Basin on issues related to water quality, flood risk management, navigation, and biodiversity. 31 Regional Water Security Assessment DANUBE REGION 3. Regional Diagnosis The regional diagnosis is based on an indicator-based benchmarking of the 16 countries, providing an assessment of the current water security status in the countries of the Danube region across the four water security dimensions (endowment, architecture, performance, and outcomes) following the methodological approach which was developed for the assessment (see Chapter 1.2). 3.1 Endowment Water endowment encompasses water supply and water demand. Water supply represents the total available water resources. Water demand includes the water withdrawal of agriculture, municipal and industrial sectors. Key messages ➢ The Danube is a water rich area with almost two times higher water per capita availability than the global average (9,140 m3 per capita versus 5,500 m3 per capita). ➢ Surface water is the predominant source meeting water demands, representing over 83% of available resources, but groundwater acts as a crucial backup during dry spells. ➢ Despite being water rich, the dependency on transboundary surface waters is very high (regional average 40%) and with seven out of 16 countries having dependency ratios above 50%. ➢ Interannual and seasonal variability is low to moderate in the Danube region, signifying reliable water availability. However, storage capacity is half of the regional ECA average, representing a threat in the light of changing climate conditions and higher frequency of extreme events (droughts and floods). ➢ Water withdrawal to availability represent a small fraction (< 50%) indicating that water resources are sufficient to meet current demands. Industrial and municipal water demands are the largest, while agriculture represents a very small fraction of the water demands, given the yet limited development of irrigation sector. ➢ Climate Change impacts will manifest differently across the region, altering water availability and importantly increasing the risk of extreme events. In the downstream countries, the temperature increase is expected to be accompanied by reduction of rainfall, although there is no clear signal. Nevertheless, and given the high transboundary dependency, downstream countries are likely to receive fewer annual flows during the summer due to the snowmelt; all these factors will together exacerbate the risk of droughts in the lowland areas, and potential competition for fewer water resources. 3.1.1 Supply Water availability in the Danube region is high compared to the global average. However, available water resources are unevenly distributed among the countries which poses challenges for water security at the subnational/national level. Water availability in the Danube region is high3 (on average 9,140 m3 per person per year) compared to the EU or global average (Figure 12). 3 Note: the indicator “Total Renewable Water Resources per capita â€? is theoretical in the sense that it considers all water resources, independently of their actual physical accessibility. Not least, it is a national average of water resources divided by population, and not the actually available resources to each inhabitant in the country. 32 Regional Water Security Assessment DANUBE REGION Figure 12. Total renewable availability per capita across major regions in the world for the year 2020. Source: AQUASTAT (2024) While no country of the region is considered water scarce (i.e., <1,000m3/person/year), Czechia is not much above this threshold (1,233 m3/person/year), with Kosovo (1,600 m3/person/year) also having relatively low levels of freshwater availability (see Figure 13). Water availability is not only unevenly distributed among countries, but also within many of them. For instance, Croatia is the Danube country with the highest water availability (25,383 m3/person/year) in the region, but 75% of its water resources are concentrated in the Danube River Basin District (RBD), whereas the remaining 25% is flows through the Adriatic RBD, which in turn sustains most of the tourism water demands (World Bank, 2023c). In Montenegro, approximately 35% of the country suffers from chronic lack of water, whereas 10% experiences seasonal excess (World Bank, 2023d). Also, in Bosnia and Herzegovina, there is significant spatial and temporal variation in terms of availability and demand. The areas where water is scarce are those where it is most needed, such as the sub- basin of the Bosna River, which is densely populated and contains a large concentration of industries (World Bank, 2023b). 33 Regional Water Security Assessment DANUBE REGION Figure 13: Total Renewable Water Resources in m³ per capita per year. Source: AQUASTAT (2024)4 Nearly 90% of the exploitable water resources in the Danube are surface waters, but groundwater plays a critical role as a buffer stock during prolonged dry periods. Romania and Ukraine surface waters, account together for almost 40 percent of total water resources available (surface water and groundwater) in the entire Danube region (see Figure 14). Serbia and Croatia are also home to large endowments despite being smaller in land area. Notably, a considerable share of these water resources originates from upstream countries, underscoring the critical transboundary nature of water dependency in downstream countries. Renewable groundwater resources are particularly important in some western Balkan countries such as Serbia and Bosnia Herzegovina. Groundwater other than being the most important source for drinking purpose also represent a key resource to cope with droughts, especially in the middle and lower parts of the Danube. Figure 14. Total renewable water resources by country for the year 2020. (Source: AQUASTAT, 2024)5 Although Danube countries are water rich, the anticipated climatic changes could lead to increased variability, with potential surges in the Upper Danube's water availability contrasting with declines in the middle and lower regions. The interconnected nature of surface water and groundwater systems means that groundwater levels are replenished by high river water levels and, conversely, support river flows during dry periods, playing a critical role in drought mitigation (See section 4.2 on Future Trajectories). Interannual and seasonal variability6 in the Danube is currently lower than the ECA average, increasing the reliability to secure access to water. Climate variability has important socioeconomic and environmental consequences because it influences water availability when and where it is needed for agriculture, hydropower generation, human consumption, and for securing environmental flows. The Danube benefits from favorable climate conditions as a region (Figure 15), yet there are some western Balkan countries like Albania, Kosovo, or North Macedonia are subjected to higher seasonal variability, which also translates into higher storage per capita (Figure 16). Nevertheless, storage across the Danube is low, and 4 Due to lack of data in the FAO-Aquastat database, the value for Kosovo is taken from the Water Security Outlook for Kosovo (World Bank, 2018a). 5 Data for Kosovo and Montenegro are unavailable. Serbia's information regarding total renewable groundwater resources is also lacking. An estimation was made by averaging the proportion of renewable groundwater resources within the broader Danube region to derive Serbia's share. 6 Variability measures the average between-year (interannual) or within-year (seasonal) variability of available water supply, including both renewable surface and groundwater supplies. Higher values indicate wider variations of available supply. 34 Regional Water Security Assessment DANUBE REGION currently decreasing as a result of the poor maintenance and increasing sedimentation. According to Perera et al. (2023), dam storage losses in Danube countries range between 12-27% by 2022. Figure 15: Interannual and Seasonal Variability. Variability measures the average between-year (interannual) or within- year (seasonal) variability of available water supply, including both renewable surface and groundwater supplies. Higher values indicate wider variations of available supply. Source: FAO (2022) 35 Regional Water Security Assessment DANUBE REGION Figure 16. Per capita dam storage capacity vs Interannual variability. (Source: AQUASTAT, 2024) The high level of dependency from upstream surface water flows across many Danube countries constitutes a potential challenge to water security in the region. Seven of the 16 assessed countries have a high or very high dependence on neighboring countries in terms of their available freshwater resources, meaning that more than 50% or 75% of their available freshwater resources originate outside of their national territory (Figure 17). Countries depend to different degrees on the resources of the Danube and its tributaries, and this is captured by the transboundary dependence ratio indicator (see Figure 17). Hungary, Serbia, Romania, Austria and Slovakia have a strong physical footprint within the basin, underscoring their considerable impact on the geographic dynamics of the DRB, and a high inter-dependency among them (as sources and/or recipients of water along the Danube’s flow) . Conversely, countries such as Bosnia and Herzegovina, Montenegro, and Bulgaria have a smaller impact on the resource base in the basin and depend to a lesser degree on the shared waters and ecosystems of the Danube. 36 Regional Water Security Assessment DANUBE REGION Figure 17: Transboundary dependence ratio (in %). Source: AQUASTAT (2024)7 Given the relative abundance of water resources in the Danube region, managing water quantity at the transboundary level has not been an area of great concern for most countries. This can be seen in Chapter 2.5 as well as in Chapter 3.2.1 regarding the current treaties which deal with other topics but not with water quantity and their allocation. While currently there is no agenda focus set in discussions of transboundary water allocation, this is a challenge that could be further explored in the long-term in order to increase water security. Due to climate change and socio-economic dynamics, water quantity will increasingly become a management issue, starting at national level, and supported by regional cooperation. 3.1.2 Demand Water demands are low in most parts of the Danube region, suggesting that there may be untapped potential for sustainably increasing water withdrawals. The average water demand per capita of the region's countries is 327 m3/person/year, half of the ECA average (715 m3/person/year). Only a few countries Bulgaria, and Serbia have higher withdrawals per capita (see Figure 18). Overall, the Danube has experienced a prominent decrease of about -33% (AQUASTAT, 2023) of its total water demand (from 70 to 47 km3/year) from 2020 to 2022, mainly driven by the reduction in industrial water demand, followed by a decrease also in the municipal and agricultural water demand. The combination of high-water availability and relatively small water demand represents a buffer against water stress, at least at country and regional level. However, it’s important to consider that significant expansions in water usage within countries, especially those with downstream effects on water resources, would need through assessment based on robust hydrological and socio-economic data that consider current and future supply and demand on a transboundary scale, including climate change impacts. 7 Due to lack of data in the FAO-Aquastat database, the value for Kosovo is taken from the Water Security Outlook for Kosovo (World Bank, 2018a). 37 Regional Water Security Assessment DANUBE REGION Figure 18: Water withdrawal in m³ per capita per year. Source: AQUASTAT (2024)8 The Danube region is characterized by a dense river network, and it relies primarily on surface water to meet its water demand. Surface water supports different uses such as irrigation, hydropower, fisheries and navigation. However, the utilizable fraction is much smaller due to constraints of spatial access and availability. Consequently, groundwater plays a pivotal role in supplying drinking water and most Danube countries consider it to be a critical resource (ICPDR, 2015). For example, in Ukraine, groundwater is a key source, accounting for 12 percent of the country’s total renewable water resources . Despite the reduction in industrial water demand, water withdrawal in the region is still dominated by industrial and municipal uses, representing on average 48% and 34% of total withdrawal respectively, while the share of water withdrawals for agriculture is low (18%) . The highest water demand arises in the larger and more highly populated countries of Ukraine and Romania (see Figure 19). These countries also present the highest levels of water demand for agriculture in the region and a dominant industrial sector in water use, of which a large share is used for cooling thermoelectric power plants. Water demand for energy production presents a significant strain on water resources, with the industrial requirement for water in the energy sector demonstrating substantial variability across different countries and subregions. In Austria, Bulgaria, and Hungary, water consumption for energy production ranges from 31.9 Mm3/year in Austria to 52.4 Mm3/year in Hungary, with a notable portion of this attributed to electricity and biofuels (Spang et al., 2014). Given the relatively high level of precipitation, rain-fed agriculture dominates in large parts of the region and irrigated agriculture plays a minor role in most countries, and hence the relatively low regional average of agricultural water withdrawals in global comparison. Yet they represent the largest share of water consumption, i.e., water that is taken ‘out of the system’ through evapotranspiration, while most of the water withdrawn for municipal and industrial uses is returned as wastewater into the system. 8 Due to lack of data in the FAO Aquastat database, the value for Kosovo is taken from the Water Security Outlook for Kosovo (World Bank, 2018a). 38 Regional Water Security Assessment DANUBE REGION Figure 19: Average annual water demands per sector. Source: AQUASTAT (2024)9 Besides domestic and industrial uses, other important non-consumptive uses in the region are hydropower and river navigation. These uses have specific requirements in terms of river flow which are not always compatible with other uses. Hydropower and river navigation are also increasingly affected by the impacts of climate change on the water regime. Future water management strategies at national, sub-basin and basin level need to take these factors and potential trade-offs increasingly into account. While Danube countries are for the most part water rich and exhibit water demands well below their renewable water stock, the potential impact of climate change on water variability poses a significant concern for these nations as well. Forecasts indicate substantial interannual and seasonal fluctuations in water availability across various scenarios (refer to Chapter 4.2). This may aggravate the already pronounced dependance of downstream countries (e.g., Moldova, Serbia, Romania, Hungary, etc.) on upstream countries for their water security. 9 Due to lack of data in the FAO-Aquastat database, the value for Kosovo is taken from the Water Security Outlook for Kosovo (World Bank, 2018a). 39 Regional Water Security Assessment DANUBE REGION Enhancing water productivity is imperative on the demand side (see Chapter 3.4.3). With the Danube’s water endowment being subject to change, an increased focus on water quantity management (supply and demand), investment in water conservation, pollution reduction, water use efficiency, and improved mechanisms for water quantity management is required. This concerns both upstream and downstream’ water management strategies in order to ensure water security in the long run. 3.2 Architecture This section explores the institutional setup (rules, actors, and functions) of the water sector and existing infrastructure, highlighting the strengths, challenges, and risks faced by Danube countries in sustainably governing water resources. Institutional analysis will provide an overview of status of the following subsectors: national, basin and transboundary water resources management and the water supply and sanitation sector. Infrastructure assessment will explore the status, challenges, and risks related to water supply and sanitation services and to irrigation, hydropower, and storage infrastructure. 3.2.1 Institutions Water Resources Management Key messages National and basin institutions ➢ The region has made important strides in supporting the implementation of IWRM, undertaking reforms to adapt countries’ regulatory frameworks, allocating responsibilities for policymaking and management across institutions, and identifying financing needs. Nevertheless, further efforts are required, and especially among non-EU member states. ➢ The EU water acquis has elevated water in the policy agenda and supported the consolidation of policymaking for water resources management at national within single or combined water ministries (e.g., Water, Water and Environment, Water and Agriculture). Nevertheless, institutional fragmentation and overlapping responsibilities continue to exist in many countries, creating many inefficiencies. ➢ Implementation of IWRM policies is lagging due to: 1) yet limited normative development in candidate states (particularly on allocation mechanism, ecosystem protection and drought management); 2) limited institutional capacities and 3) insufficient funding. ➢ The basin management approach is expanding and basin institutions have been largely developed. But they exhibit important institutional weaknesses, mostly because of their limited authority, and they largely act as consultative organizations, with minimum budget and IWRM capacities. Decentralization of the water management approach is yet pending. Transboundary institutions ➢ The Danube has one of the largest dependencies on transboundary waters in the world, yet the large majority of its waters are covered under cooperation agreements, largely multi-lateral. Bi- lateral cooperation is yet insufficient within some Danube countries, particularly in the western Balkans. ➢ The transboundary basin legal framework is largely compliant with all key principles of international water law. This is the case for the Danube and Sava transboundary agreements, although other relevant transboundary basins such as Dniester and Dnieper, existing treaties do not include provisions for the no-harm principle, which requires notifying the co-riparian states when one 40 Regional Water Security Assessment DANUBE REGION country is needing additional water resources or is planning to construct water infrastructure such as dams or diversion channels to. ➢ Except for the Danube and Sava, the large majority of water treaties are very narrow in focus and do not regulate important aspects for water resources management such as water quantity, joint infrastructure management or flood control. Water quality and to a lesser extend hydropower management are the most recurrent topics addressed in the current legal frameworks National & Basin institutions Danube countries have made important strides to support the implementation of an integrated water management approach, although gaps remain, particularly in non-EU member states. Efforts have been made upon all fronts, to support a more conducive enabling environment, with the development of institutions, as well as supporting the development of management instruments, promoting the wider participation of societal actors in the water policy cycle and advancing in the identification of financial instruments (see Table 5). Nevertheless, challenges remain, and particularly in candidate (or potential) candidate states, where further reforms are needed upon most fronts. Financing is cross-cutting challenge across most Danube countries. Table 5 Degree of IWRM implementation with country scores. Source: UNEP (2023) Country Overall Enabling Institutions Management Financing implementation of Environment & Instruments IWRM Participation Austria VERY HIGH (91) 92 95 93 84 Bulgaria VERY HIGH (96) 77 72 70 58 Croatia HIGH (90) 97 98 84 80 EU Czechia HIGH (80) 87 83 83 67 member states Hungary HIGH (75) 80 79 77 63 Romania HIGH (77) 92 82 82 52 Slovakia MEDIUM-HIGH (61) 64 71 62 48 Slovenia HIGH (87) 87 88 81 90 Albania MEDIUM-LOW (47) 49 58 47 33 Bosnia and MEDIUM-HIGH (53) 60 53 56 43 Herzegovina EU Kosovo --- --- --- --- --- candidate/ Moldova MEDIUM-LOW (46) 57 53 46 27 potential Montenegro MEDIUM-LOW (35) 54 24 38 23 candidate N. Macedonia MEDIUM-LOW (33) 35 26 43 28 Serbia MEDIUM-LOW (36) 37 42 42 23 Ukraine MEDIUM-LOW (39) 35 49 40 32 Very high 91-100 Vast majority of IWRM elements fully implemented and objectives consistently achieved. High 70-91 Objectives of programmes generally met, stakeholder engagement generally good. Medium-High 51-70 Capacity to implement IWRM elements under long-term programmes generally adequate Medium-Low 31-50 Elements of IWRM generally institutionalized, and implementation underway Low 10-30 Implementation of some elements of IWRM begun, but potentially low stakeholder engagement. Very Low 0-10 Development of IWRM elements generally not begun, or stalled. Water legislation requires further development in non-member states and its implementation is also largely constrained by limited institutional and financial capacities. The regulatory framework 41 Regional Water Security Assessment DANUBE REGION for water resources management in Danube countries is shaped by the EU water acquis, with all countries’ policy and regulatory frameworks being guided by the Water Framework Directive and “sisterâ€? Directives 10. EU member states have the most developed regulatory frameworks. EU candidate states (or potential candidates) are making significant reforms to adapt their national water legislation so that it aligns with the EU water directives, but further efforts are still required. For instance, Montenegro lacks important normative developments regarding climate change adaptation and drought management; in Bosnia and Herzegovina, the legal frameworks of the three districts that have jurisdiction over water management do not yet satisfy the harmonization process with EU standards and require further improvements to clarify administration and organization of the water sector. These districts are Federation of Bosnia and Herzegovina, Republic of Srpska, and BrÄ?ko District. Similarly, the transposition of the EU directives into the Serbian legal and institutional framework is ongoing and the “Water Lawâ€? („Zakon o vodama“– Water Law, published in „Official Gazette of the RS“, No. 93/2012, 101/2016, 95/2018 and 95/2018) is currently being revised to ensure compliance with EU water acquis. Other than the further development of legal provisions, existing legislation faces important implementation challenges, across member and candidate states (Figure 20). Overall, the most important barriers are related with the yet limited institutional capacities to support implementation of legislation in place, and connected to this, financial constraints, and limited enforcement capacity. Unclear Institutional functions Limited Public participation No clear allocation mechanism No Financial Mechanism Insufficient Supporting legislation Limited Institutional capacities Limited Enforcement 0 10 20 30 40 50 60 70 80 % countries experiencing such barriers Figure 20 Main challenges candidate states in the Danube experience when implementing EU water acquis. Note: this assessment is based on the analysis of selected Danube countries: Austria, Serbia, Bosnia Herzegovina, Montenegro, Albania and Croatia. Source: own elaboration. The institutional framework for water resources management within countries is adequate but further efforts are required to continue developing planning functions and basin-level institutions. Institutions are here understood as the entities (organizations) and rules (law and regulations) that enable or constrain the management of water resources and the provision of water services. All countries have developed unified national water policies embracing all key principles of IWRM11 (Table 6). Competences in policymaking for water resources management are well defined, largely falling under ministry of environment or joint ministries (e.g. water, environment and forests; water and agriculture). Planning competences while decentralized on paper, they remain largely centralized, either because basin institutions are not sufficiently developed and play largely only a consultative role (e.g. Montenegro, Serbia), or because planning functions in practice executed by strong national bodies (e.g. Croatia, Albania) that apply a basin management approach. Sub-national bodies responsible for planning are often administrative regional or local 10 See the European Union water policy framework described in Figure 11 11 Key IWRM principles refer to the development on provisions and plans to manage water quantity, quality, water services, management and protection against water-related risks, protection of water bodies, defines functions of water institutions, participation, basin planning 42 Regional Water Security Assessment DANUBE REGION offices, whose jurisdictions do not necessarily overlap with those of the basin boundaries. The basin management approach is nevertheless implemented, although further efforts are required to strengthen basin institutions and their planning functions. Table 6 Key features of the institutional arrangement of water resources management in ECA. Source: own elaboration Legal Framework Integrating key Institutions in Institutions in Basin Water IWRM principles National IWRM charge of charge of WRM Country Management (+ equivalent to low, Strategy developing WRM planning & Approach ++ moderate and policies management +++ high) Water Resources Integrated Water Agency for Water Management Agency Resources Resources Albania +++ (depending on Yes Management Strategy Management (and its National Water (2018-2027) regional branches) Council) Federal Ministry of National plan for the Agriculture, Forestry, Austria +++ management of Provincial government Yes Environment and waters 2021 Water Management Water Management Strategy for the Federation of Bosnia and Herzegovina Entity Ministry of Bosnia & (2010-2025) Agriculture, Water River Basins & +++ Regional Water Yes Herzegovina Management and Integrated Water Agencies Forestry Management Strategy of the Republic of Srpska (2014-2044) National strategy for management and Ministry of River Basin Bulgaria +++ development of the Environment and Yes Directorates water sector (2012- Water 2037) Ministry of Economy Croatia’s National and Sustainable Croatian Waters (and Croatia +++ Water Management Yes Development its regional branches) Strategy (2008–2038) (Croatian Waters) Strategy of the Ministry of the Ministry of Agriculture Environment Czech River boards (State +++ of the Czech Republic (protection) and Yes Republic enterprises) with a view to 2030 Ministry of Agriculture (2016-2030) (water management) National Water Regional Water Hungary +++ Strategy – Kvassay Ministry of Interior Yes Directorates Jeno Plan Ministry of National Water Kosovo +++ Environment and River Basin Authority Yes Strategy (2017-2034) Spatial Planning Ministry of Ministry of Agriculture, Agriculture, North National Water +++ Forestry and Water Forestry and Water Yes Macedonia Strategy (2012-2042) Resources Resources Management Management Only sectoral policies Regional (e.g., Water Supply Ministry of Moldova +++ Development Yes and Sanitation Environment Authorities Strategy (2013-2027) Ministry of National Water Agriculture, Forestry Montenegro +++ Management Strategy -- Yes and Water (2017-2035) Management National National strategy for Ministry of Administration of Romania +++ water management Environment, Water Yes Romanian Waters & (2023-2035) and Forest Basin administrations Water Management Ministry of Provincial Serbia +++ Yes Strategy (2016–2034) Agriculture, Forestry Governments, Local 43 Regional Water Security Assessment DANUBE REGION Legal Framework Integrating key Institutions in Institutions in Basin Water IWRM principles National IWRM charge of charge of WRM Country Management (+ equivalent to low, Strategy developing WRM planning & Approach ++ moderate and policies management +++ high) and Water Agencies, & Public Management water management companies Orientation, Branch offices of the principles, and Slovak Water priorities of the Ministry of Management Slovak Republic +++ Yes Slovak Republic's Environment Enterprise water policy (2015- 2027) Slovenian Ministry of Natural Regional branches of Slovenia +++ Development Strategy Resources and Spatial Water Management Yes 2030 Planning Office Ministry of Basin Management Water Strategy Environmental and Regional Ukraine ++ of Ukraine (2022- Yes Protection and Departments of water 2050) Natural Resources resources National water strategies are in place, but their implementation lags due to insufficient funding, and limited prioritization of cost effective measures. Despite the fact that all Danube countries have relatively unified national water strategies in place, their implementation is very disparate. Front-running countries include Austria and Croatia, both of whose strategies have been harmonized with the EU water Directives, passed into national legislation, and entered into force. Such national policies include ambitious goals to support IWRM principles, although water risk management has a strong focus on floods, and droughts still need to be addressed (Schmidt et al, 2023). In EU candidate countries like Serbia and Albania, national water strategies are facing implementation challenges due to the limited budget availability and the lack of prioritization. Serbia’s Water Management strategy (2016–2034) outlines critical water challenges; it defines strategic goals for the development of water management based on the current state of the water sector in the country and the international obligations involved in meeting the requirements of EU regulations. But action plans lack a clear prioritization of measures and funding is not secured. Albania’s national Integrated Water Resources Management strategy (2018–2027) underpins the management of national water resources in compliance with EU water directives. Implementation of the national strategy should have been carried out through the National Sectoral Program for Integrated Water Management (2018-2030), but has not been approved given that funding is not secured. The national water management responsibilities remain fragmented within and across the water sector in many candidate countries, leading to major gaps and overlaps with respect to clear roles and responsibilities. Overall, and when compared to other neighboring regions such as south Caucasus or Central Asia, the institutional readiness at national level to support water resources management across Danube countries is very good overall, but there are very important differences (Table 6). EU member states have national water institutions with clear and distinct roles and responsibilities, but with different levels of decentralization. Austria and Croatia, for instance, have a relatively centralized system for water policy and management, where regional institutions (basin or administrative units) mainly support implementation, monitoring, and enforcement. For instance, Croatia has two main state institutions, the water directorate within the ministry of economy and sustainable development, responsible for policy development, coordination, and international cooperation, and Croatian Waters, which is the legal entity for water management (World Bank, 2023a). In Austria, most water management functions are under the responsibility of the federal minister of agriculture, regions and tourism (ECR, 2022). In contrast, water governance is more decentralized in Romania, with the Ministry of Environment, Water and Forests holding a strong regulatory role, and the Basin Administrations of the National Administration for Romanian waters holding the water management and planning functions. Despite ongoing reforms, candidate states, also have a high level of fragmentation of water functions, spread over institutions within and outside the water sector, which, significantly, creates overlapping roles and 44 Regional Water Security Assessment DANUBE REGION responsibilities. In Serbia, there are at least seven ministries with critical responsibilities in the water sector (World Bank 2023c). The Republic’s water directorate of the ministry for agriculture, forestry and water management of Serbia is a central institution responsible for setting strategies and implementing the EU water acquis in the water sector, but is limited in terms of the high fragmentation and overlap of responsibilities which constrain the strategic investment planning and decision-making by the many ministries and institutions involved. Montenegro faces a similar situation with more than five different state institutions with unclearly defined water management functions and major overlapping of competencies (UNECE, 2016). For example, water supply is a responsibility of the ministry of ecology, urbanism and spatial planning, but the ministry of agriculture runs a program for water supply improvement in rural areas (World Bank, 2023d). Clear-cut institutional roles and responsibilities are, however, needed for efficient investment planning, monitoring, and decision-making. Against this background, countries like Albania have undertaken major institutional reforms to address existing inefficiencies and duplication, including the development of the Agency for Water Resources Management (AMBU); this is the powerful arm of the National Water Council, which assumes most water management competences, including support for policymaking and planning functions. Agencies like AMBU and Croatian Waters represent good examples of institutions with relatively strong institutional and technical capacities to support effective management of water resources that can be replicated in other Danube countries, especially across small to medium size countries of the Balkans. Basin institutions, though expanding, still exhibit major institutional weaknesses, with often limited planning functions and insufficient capacities. Proponents of IWRM have argued that basins are the appropriate territorial unit for water management given that, at that scale, hydrological and socioeconomic interlinkages are stronger where water management is most important. Based on this rationale, basin organizations are intended to play a major role in ensuring basin water resources management and planning, and also ensure the coordination and engagement of all water stakeholders. The EU has made substantive strides to support the adoption of basin management approach through the Water Framework Directive. But for basin management to be effective, basin institutions need to be equipped with clear planning roles, authority, and adequate institutional, technical, and financial capabilities to enable them to carry out their functions effectively. Across the Danube, the basin management approach has largely been adopted, but there are large disparities in terms of the maturity of basin institutions. In EU member states, basin institutions have been developed to a large extent; these mainly support implementation of EU policies and facilitate the engagement and participation of stakeholders in basin planning. For instance, in Romania, water planning is coordinated by the national administration of Romanian Waters, but carried out by 11 basin institutions that have sufficient technical and institutional capacities to develop and implement the river basin and flood management plans, as well as coordinate the public participation activities (ECR, 2022). A different but relevant example is Croatia, where basin water management has been implemented, but no river basin organizations as such. Croatian Waters is responsible for water planning, including the development of river basin and flood management plans, as well as the issuing of water permits. To cover the main basins, Croatian Waters has established so-called Water Management Departments, which support the state agency in the implementation of plans, monitoring, surveillance, and conducting public consultations (ECR, 2022). The absence of basin institutions in Croatia is largely motivated by the fact that the country has only two main river basin districts, and Croatian waters has very strong technical, human, and financial capacities to support policy design and implementation. There are large disparities among EU candidate states. Albania has a similar structure to that of Croatia, with AMBU being the national water resources management agency coordinating water planning, supported by regional branches from AMBU across the territory. River basin councils have also been set up under AMBU and are chaired by the largest prefecture in the basin. Other countries like Montenegro and Serbia, despite having implemented a basin water management approach, have still not developed basin institutions, and planning is coordinated directly at the national level (World Bank, 2023c, 2023d). 45 Regional Water Security Assessment DANUBE REGION Transboundary arrangements The Danube region has one of the world's highest dependencies on transboundary waters, yet the large majority of its waters are covered under cooperation agreements. As described in Section 3.1 on Endowments, over 40% of its surface waters are transboundary. However, Danube countries have also made important strides to enable water cooperation, and nearly 72% of the transboundary river basin area and nearly 77% of the transboundary aquifer area have cooperation agreements in place (UNECE, 2016; UNESCO, 2020). This ratio of transboundary cooperation is far beyond the global average (see Figure 21), meaning that Danube countries are to a large extent front runners and have a strong basis to support effective cooperation. 100 77 80 72 58 60 % area 41 40 20 0 Transboundary river basin area cover by Transboundary aquifer area cover by an an agreement agreement Danube Global Figure 21 Transboundary area covered by an operational agreement for water cooperation. Source: UNECE (2016) and UNESCO (2020) The legal framework in the main transboundary river basins in the Danube is largely compliant with key principles of international water law. Key principles captured in modern international water conventions, agreements and treaties 12 , include: 1) principle of equitable and reasonable utilization, 2) principle of not causing significant harm, 3) principle of environmental protection, 4) principle of cooperation and information exchange, 5) principle of notification, consultation or negotiation, and 6) principle of consultation and peaceful settlement of disputes (ILC, 1996; ILC, 2004; McCaffrey, 2003). Transboundary agreements in place in the Danube show a wide disparity in terms of how they integrate all these key principles, which translates into legal risks (Figure 22). The Danube and the Sava river basins are the only transboundary basins in the region where the basin legal framework is guided by all key principles of the international water law to a very strong degree and countries have ratified the UNECE Water Convention, except Kosovo13 (Figure 22). Legal frameworks in the Drin, Dniester and Dnieper incorporate most, but miss important ones such as the principle of notification and no harm i.e., agreements that require countries to notify co-riparian states if they need additional water resources or are planning to construct water infrastructure such as dams or diversion channels. Overall, the more international water law principles enshrined in the legal framework, the stronger the framework becomes as a basis for cooperation and negotiation across borders and thus the lower the risks. 12 Such as Convention on the Protection and Use of Transboundary Watercourses and International Lakes (UNECE Water Convention) and the United Nations Convention on the Law of Non-Navigational Uses of International Watercourses (UNW Convention) 13 As Kosovo is not an official member of United Nations, it does not ratify international agreements 46 Regional Water Security Assessment DANUBE REGION Figure 22 Risks of the transboundary basin legal framework across the Danube region. Note: low risks means that basin legal frameworks gather all key principles of international water law and countries have signed the Convention on the Protection and Use of Transboundary Watercourses and International Lakes (UNW Convention) Source: Transboundary Waters Assessment Program (2016) The Danube has a large number of transboundary water agreements involving cooperation across a large number of areas, but so far with a strong focus on hydropower and water quality. Given the transboundary nature of the Danube, there is a large number of transboundary cooperation agreements across the region. Currently, there are over 38 agreements on transboundary waters in place (see Annex II for a description of treaties). Except for the Danube Basin, where the scope of the treaties 47 Regional Water Security Assessment DANUBE REGION address most of the main topics, except water quantity, the scope in the other transboundary basins is narrowed, and important aspects related to flood control and water quantity management are barely considered in the existing treaties (Table 7). This is the same for other relevant issues such as infrastructure management and joint economic development. The increasing demands of water but also the effects of increasing frequency of droughts are likely to have important impacts across countries, and therefore raising the concern for improved joint management to cope with droughts and water scarcity management, as well as with floods. Yet, efforts in this pace are still incipient. Table 7 Focus of the main transboundary water agreements in place in the Danube region. Source: own elaboration based on Transboundary Freshwater Dispute Database (2018) Transboundary Basin (# treaties) Danube (17) Sava (1) Drava (1) Drin (1) Dniester (2) Dnieper (1) Economic Development 1 Flood control Topic of the agreements 2 1 Hydropower 9 1 1 Infrastructure Development 5 Joint Management 2 1 Navigation 2 1 Water Quality 1 1 1 1 Water Quantity 1 While most countries in the Danube have their transboundary waters covered under multi- lateral agreements such as the Danube River Protection Convention, bi-lateral agreements are relative scarce in the western Balkans countries. According to UNECE (2021), there are 31 bilateral agreements on transboundary cooperation on the Danube’s waters reported to be in existence. These agreements play an important role for water cooperation, as they focus on issues of cross-border significance, such as water abstractions, infrastructure operation, joint monitoring, and particularly flood management. Major achievements in bilateral cooperation in the Danube basin include: a reduced risk of transboundary conflicts; coordination of specific measures (e.g., surface water and groundwater abstractions, wastewater discharges and construction); coordinated monitoring of water quality; coordination of national Water Framework Directive planning and other cooperation in accordance with the requirements of the European Union directives; provision of coordinated input to the ICPDR; and the designation of transboundary groundwater bodies. However, bilateral cooperation in the Danube is irregular, even absent across some regions. This is particularly the case in the countries of the Western Balkans, where there are no bilateral agreements between Bosnia and Herzegovina and Montenegro, Bosnia and Herzegovina and Serbia, Croatia and Serbia, or Montenegro and Serbia. For cooperation between Bulgaria and Serbia, an existing bilateral agreement of 1958 ratified by the then Government of Yugoslavia is not operational. ICPDR plays a key role in facilitating multi-lateral cooperation and has become the main platform to support the dialogue of parties involved in the different transboundary agreements in the absence of dedicated joint bodies. Established through the DRPC, the ICPDR other than supporting the implementation of DRPC, has been a key driver for the implementation of the water acquis, and in particular the WFD and FD, tackling key water management challenges, particularly related to water quality, ecological status and flood risk management. This constitutes a major opportunity for the region in terms of further aligning policy objectives and developing joint management practices for water security. In the absence of dedicated joint bodies for supporting the implementation of the other transboundary agreements, 48 Regional Water Security Assessment DANUBE REGION ICPDR has been used as the main platform to support the dialogue and cooperation among riparian states. Box III describes the role and major achievements of ICPDR. Box III: The Danube River Basin: A global benchmark for transboundary basin management and cooperation The Danube River is the second longest river in Europe (2857 km); its waters are shared by 19 countries and flow through numerous large cities, including four national capitals: Vienna, Bratislava, Budapest, and Belgrade, before draining into the Black Sea. Over 20 million people rely on the Danube for drinking water, and its waters are also critical to the generation of hydropower, navigation, agriculture, and recreation, and for sustaining a rich biodiversity. One of the key initial drivers for transboundary cooperation on the Danube was the significant decline of the Black Sea ecosystem following the collapse of the former Soviet Union. Growing levels of nutrient and organic pollution reached a peak in 1990 when about 40,000 km2 of the Black Sea were considered “dead.â€? This ecological crisis and the resulting socioeconomic consequences quickly evolved into a convention, the Danube River Protection Convention (DRPC) signed in 1994. The 11 signatories to the Convention (Austria, Bulgaria, Croatia, Czech Republic, Germany, Hungary, Moldova, Romania, Slovakia, Slovenia, and Ukraine) agreed to cooperate on fundamental water management issues, including: the conservation, improvement and rational use of surface and groundwater; preventive measures to control hazards originating from accidents, floods, ice or hazardous substances; and measures to reduce the pollution loads entering the Black Sea from sources in the Danube River Basin. The International Commission for the protection of the Danube River (ICPDR) is the transboundary river basin organization established by the DRPC that works to ensure the sustainable and equitable use of freshwater resources in the Danube River Basin for the benefit of over 80 million people. The ICPDR consists of delegations from contracting parties that meet twice a year to make decisions regarding the aspects of basin management mentioned above. The ICPDR also includes expert groups and task groups. Expert groups are panels of specialists and external observers and comprise at least one national expert for each contracting party. These expert groups provide technical advice on a wide range of aspects related to relevant basin planning and management, including monitoring and assessment, river basin management, pressures and measures, information management and exchange, accident prevention, public participation, and flood protection. Task groups comprise national experts from ICPDR contracting parties and representatives of observer organizations. Task groups report to the expert groups, thereby making valuable contributions to the work of the ICPDR. The main goals of the ICPDR: • Support the implementation of the DRPC, making it a living tool to coordinate sustainable and equitable water management, including conservation, improvement, and rational use of water resources for the benefit of the Danube River Basin countries and their people. • Facilitate the implementation of EU policies (Water Framework Directive and Floods Directive). In conjunction with its contracting parties, ICPDR has developed the Danube River Basin Management Plan. This plan helps to coordinate the national river management plans, developed by individual countries across the basin. Only the EU member states in the ICPDR are legally bound by the EU Water Framework Directive to fulfill the Danube RBMP and achieve “good ecological statusâ€? by 2027 at the latest; all countries in the ICPDR have, however, agreed to fully commit themselves to implement the Plan and the Directive. The ICPDR developed the first Danube Flood Risk Management Plan (DFRMP), which is based on the EU Floods Directive (FD). The DFRMP focuses on the strategic management of flood risks across the entire river basin, and it promotes the â€?Solidarity Principleâ€? which is designed to prevent countries from simply exporting their flood problems to downstream neighbors. The application of this principle is essential because structural flood protection, such as dikes and demountable barriers, may simply transfer more water downstream during extreme flood events. • Develop guidance and mechanisms to strength riparian states’ institutional and technical capacities for basin and flood risk management. Through the expert groups and task groups, the ICPDR has also significantly strengthened the capacity of the Danube countries to continuously meet the challenges related to EU accession and to the Acquis Communautaire. Moreover, political and economic incentives for environmental compliance resulting from the EU accession process has facilitated a speedier implementation of the objectives of the Danube River Protection Convention. As more Danube countries implement EU water policies, the Danube becomes safer, cleaner, and healthier as expertise grows and more lessons are learned. Key achievements: • Within countries: o Danube countries are now backed by the solid environmental regulation and investments needed to meet their own environmental needs. o Country capacities are strengthened to continuously meet the challenges of EU accession and the Acquis Communautaire challenges. 49 Regional Water Security Assessment DANUBE REGION o National decision-makers have greater capacity to balance the competing needs and uses of the Danube River, such as hydropower, agriculture, and management of climate risks. • At Danube basin scale: o A basin-wide climate change strategy to help Danube countries to develop more effective water management approaches in the face of increasing extreme floods and droughts. o Basin-wide key plans to manage water resources and floods, regularly updated (every six years), are taking strategic measures across the entire river basin to meet EU water goals. o A vital learning hub and platform to: 1) exchange experiences and innovation among countries facing vastly different economic and environmental challenges; and 2) support pioneering inter-sectoral cooperation and structured dialogue across the different users of the Danube’s water resources, from navigation and water supply to hydropower and sanitation. Source: ICPDR 2018. Lessons from the Danube. A World Leader in Transboundary River Basin Management Water Supply and Sanitation Key messages National and subnational institutions ➢ Water supply and sanitation institutions are well-developed but are experiencing some institutional fragmentation, which translates into jurisdictional asymmetries with regulatory, management, and financing functions being spread across different institutional levels, and not always being fully coordinated ➢ Policymaking is normally developed at the national level and coordinated by different ministry lines (water, environment, agriculture, infrastructures, and health), whereas planning and management are largely decentralized to the regional and municipal level. ➢ There are different types of service providers, mostly public, with still very limited participation on the part of the private sector. Capacities of public services providers are largely missing outside big cities, in the peri urban and rural areas, which affects the delivery of quality water supply and sanitation services. ➢ Independent regulator institutions and functions are developed but they remain far from achieving their full potential. Where they do exist, they are sometimes also multi-sector. ➢ Public–Private-Partnerships (PPPs) are not widespread, but successful examples that exist show that these can support public utilities improving the performance of water services. Other than assisting government in addressing infrastructure investment needs, PPPs can help to improve water services along the value chain by assisting public utilities to manage a specific subset of activities and/or address emerging performance challenges. While institutional arrangements are well developed, there are important jurisdictional asymmetries in the governance of water supply and sanitation. Water supply and sanitation (WSS) institutions are more mature across the region in comparison to those linked to WRM, although they still face important challenges. A recurring one is institutional fragmentation, which translates into a spread of regulatory, management, and financing functions across different institutional levels; these are not always fully coordinated. In terms of policies, the water supply and sanitation agenda has received greater attention, and investments have contributed to reaching a good level of water supply and sanitation coverage, although efforts now need to focus on increasing the quality of the services (see Sections 3.4 on Social Outcomes for further details). Table 8 shows the key institutional arrangements and their different jurisdictions of this sector. 50 Regional Water Security Assessment DANUBE REGION Table 8: Key features of the Institutional arrangement of the water supply and sanitation sector in the Danube. Source: DWP (2019) Is there an Institution Institution in Dominant type of service independent WSS Country in charge of charge of provider (level of national Legislation policies planning decentralization) regulator? Albania National Local Government Joint-Stock Company Yes Yes Austria National Local Government Municipality Owned Enterprise Yes Bosnia and Regional Local Government Public Utility Company Yes Herzegovina Bulgaria National National & State-Owned Enterprise Yes* Yes Local Government Croatia National Local Government Public Utility Yes Yes Company Czech National Local Government Privately Owned Company Yes Republic Hungary National National & Municipality Owned Enterprise Yes Yes Local Government Kosovo National National Regional Water Company Yes Yes Government North National Local Government Municipal Public Enterprise Yes* Yes Macedonia Moldova National Local Government Municipal Public Enterprise Yes* Yes Montenegro National Local Government Municipal Public Enterprise Yes* Yes Romania National Local Government Regional Operator Yes Yes Serbia National Local Government State-Owned Enterprise Yes Slovakia National Local Government Joint-Stock Company Yes Yes Slovenia National Local Government Municipal Public Enterprise Yes Ukraine National Local Government Communal Enterprise Yes* Yes Policymaking responsibilities remain with central government authorities, but are usually shared among different ministries, sometimes creating coordination challenges. For instance, responsibility for water service provision has been quite fragmented but in the past years countries have undertaken several reforms toward creating single line ministries. The general trend is that water resources management, utility affairs, infrastructure, and wastewater treatment, falls under the responsibility of single ministries (often ministries of water, environment, and/or agriculture) (DWP, 2019). Nevertheless, drinking water standards are mainly the responsibility of the ministry of health. There are exceptions, with countries still showing a high fragmentation (in e.g., Czech Republic, Hungary, Kosovo, North Macedonia, Serbia). The multiplicity of water- services–related ministries sometimes create confusion or leads to a lack of ownership for any utility reform agenda. To alleviate this challenge, some countries have resorted to the creation of coordination bodies (e.g., the inter-ministerial council for water in Kosovo and the regulatory authority in Hungary), which have taken on active policy coordination or advocacy roles. Planning of WSS services is largely carried out at the local level. Decentralization is the predominant form of organization across the Danube, with service provision and controlling jurisdiction accrued at the municipal level. Most recurrent types of service provider are formal and include: regional (37%), municipal (28%), and to a lesser extent private service providers (11%) (Figure 23). Formal providers predominate in the urban and peri-urban areas. In rural areas, water services are normally organized through a nearby utility or community- based organizations, but in very remote areas, WSS services are often managed through self-provision (i.e., informally). Many of the self-provision providers are not registered and do not necessarily follow the established national or local regulations and standards. Their financial and technical viability is limited, and governments’ response is to pursue reforms that consider a menu of delivery model options to promote the expansion of formal services in order to ensure safe and adequate delivery of services, including the regionalization of rural service providers (DWP, 2019). Successful regionalization processes have the following 51 Regional Water Security Assessment DANUBE REGION in common: a deliberate equity objective and a clear mandate; dedicated measures to support integration of rural systems; and targeted investments and technical assistance to local governments and service providers to handle complexity. Multiple management models have been implemented, including the regional utility model and also the small-scale municipal enterprises or community organized models. Such regionalization is and should be considered an option not just for rural service providers, but also for those in the urban and peri-urban areas facing technical and financial challenges. While the EU water acquis do not request specific governance reforms to member states, most EU candidate states from the Danube have also embarked on regionalization processes as mean to increase their capacity to absorb EU funds and achieve the policy goals. Figure 23: Water services providers market distribution in the Danube region (top) and population served type of service provider by country (below). Source: World Bank (2018) Regulatory functions and institutions are not always well developed and remain far from deploying their full potential. Danube countries have been part of a trend toward greater independent regulation of water and wastewater service provision, especially in countries with larger utilities. Eleven of the 16 Danube countries have an independent national regulator (Albania, Croatia, Hungary, Kosovo, Romania, Slovakia, Moldova, Bulgaria, North Macedonia, Montenegro), and in four countries this regulator is multi- sectoral (Moldova, Bulgaria, North Macedonia, and Montenegro) (Table 8). The functions of independent regulators are very much focused on tariff setting and control, granting of operator licenses, and monitoring of consumer complaints, although some regulators are underperforming. For example, the tariff review is not conducted periodically but upon the request of the utility; regulators do not grant operator licenses, and in practice they carry out limited monitoring of consumer complaints even though they have a legal mandate to do so (DWP, 2019). While Danube countries are making progress on the development of regulatory bodies, the functions of these bodies could be strengthened to increase the accountability, efficiency, and transparency of service providers. This effort ultimately translates into a better quality of water services for consumers, society as a whole, and the environment. Public–Private Partnerships (PPPs) are not widespread, but successful examples show that they can support public utilities to improve the performance of water services. PPP contracts are signed and in force for WSS service provision in 7 countries in the region: Bulgaria, Serbia, Romania, North Macedonia, Czech Republic, and Ukraine (see Figure 23). Currently, 75 private operators are reported to serve 52 Regional Water Security Assessment DANUBE REGION close to 15 million people, equivalent to 11% of the market share. Between 2014–2019, the number of PPP arrangements decreased by 8%, but the total number of PPP customers increased by 6%, underlining that private operators tend to expand services to additional customers rapidly, mainly in large and urban areas (DWP, 2019). In Albania and Moldova, where there are presently no PPP contracts in place, dedicated legal provisions have been made to support PPP introduction, because PPPs are perceived as positive drivers for change and improvement. In countries like Austria, Bulgaria, Czech Republic and Slovenia, PPPs largely suffer from a negative perception, irrespective of their real efficiency and performance. Many of these countries instead have developed waterworks associations, which offer services within countries to strength the capacities of services providers through knowledge exchange, training workshops, etc. as a mean to lift capacities of public service providers to increase their performance, efficiency and accountability of services providers through knowledge exchange, training workshops, drafting of technical standards and guidelines, among other supporting actions. 3.2.2 Infrastructure Water infrastructure encompasses the systems that collect, treat, and distribute water and collect, treat, and release wastewater. This includes dams and reservoirs for storage, treatment plants for drinking water and sewage, pipes for distribution, stormwater systems to manage runoff, and irrigation systems for agriculture. These structures and networks are vital for ensuring water security, public health, and environmental protection. Key messages Water Supply and Sanitation ➢ The Danube region, particularly the EU Member States, boasts extensive water supply infrastructure backed by substantial investment and regulatory frameworks from the European Union, but aging systems and high non-revenue water (NRW) rates present significant challenges. ➢ Access to safely managed coverage is yet a pending subject across many Danube countries, with only 67% of the population connected. The largest challenges remain in the western Balkans and in the rural and peri-urban areas. ➢ Guided by EU policies and funding, the region has made significant progress in developing wastewater treatment infrastructure, yet substantial investments are still needed to meet the increasingly stringent EU environmental standards and ensure full compliance with the Urban Wastewater Treatment Directive. Currently, only about 66% of wastewater generated is collected and only 49% receive treatment. Water Storage ➢ Danube's reservoir infrastructure plays a critical role in supporting essential functions such as water supply, hydropower generation and navigation. ➢ Yet, storage capacity within the Danube (650 m 3/cap) is half of the one of the average for Eastern Europe and Central Asia (1398 m3/cap). ➢ Along with the low and unevenly distributed gray water storage, the region also faces additional challenges related with significant dam storage losses, estimated at 22% at regional level, highlighting vulnerabilities in the region's reservoir infrastructure amidst present and future climate variability. Irrigation ➢ The favorable climate conditions and the tertiarization of many Danube economies have not propelled the development of the irrigation sector, with most regional agriculture relying on rainfed, and less than 10.5% of cultivated land under irrigation. ➢ Existing irrigation infrastructure is marked by either low coverage or aging systems with high water losses, suffers from inefficiency that hampers water productivity and underscores the need for comprehensive modernization and expansion to improve resilience and productivity. 53 Regional Water Security Assessment DANUBE REGION ➢ Many irrigation systems suffer from inadequate maintenance and technological upgrades, leading to inefficient water use and reduced agricultural output across the region. Water Supply and Sanitation In the Danube region, particularly the EU member states, boasts robust water supply infrastructure due to historical investments and regulatory frameworks. The region faces significant challenges due to aging infrastructure and high levels of non-revenue water (NRW), averaging 44%—nearly double the EU average. The Danube region's water supply infrastructure reflects a legacy of investment and strong EU regulatory frameworks. However, this system requires modernization, as much of it has aged (more than 50 years old) without adequate maintenance. Limited cost recovery from utilities prevents them from fully covering operating costs, making it difficult to maintain or upgrade infrastructure effectively (see Section 3.2.2 Water Service Delivery). Water supply infrastructure in the Danube region generally has strong coverage, with an average continuity of 23.3 hours per day (Figure 24). However, the aging and deteriorating condition of this infrastructure means that the region, and particularly some countries like Albania or Kosovo, face challenges in modernizing and maintaining it. Many utilities cannot cover their operating costs with billed revenues, resulting in significant maintenance backlogs and non-functional or inefficient systems. Figure 24: Continuity of service in average hours per day. Source: IBNET (2020). Note: Due to lack of data in the IBNET database, the data for Austria and Slovenia is taken from the State of Sector Report 2018 for the Danube Region (DWP, 2019). The NRW rate across the Danube region averages 44% (see Figure 25) near double the EU average (23%), causing significant economic losses and concerns over water security. Western Balkan nations, including Albania, Montenegro, and North Macedonia, have NRW rates above 60%, resulting from outdated infrastructure and poor water management. Croatia's NRW is also high at 44%, prompting a national program to reduce leakages. Similarly, Albania provides only 15 hours of daily water service due to deteriorating infrastructure and aims to implement 24-hour supply by improving continuity and reducing NRW. High NRW 54 Regional Water Security Assessment DANUBE REGION rates represent not only significant economic losses but also raise concerns about water resource sustainability, especially given the pressing issues of climate change and increasing water scarcity. It also compromises the quality of water delivered. Figure 25: Non-revenue water. Source: IBNET (2020). Note: Due to lack of data in the IBNET database, the data for Austria and Slovenia is taken from the State of Sector Report 2018 for the Danube Region (DWP, 2019). Drivers of high NRW are diverse but often linked to poor conditions of existing infrastructure, which in turn are closely connected with limited financial capacity to support operational and maintenance costs. Despite EU WFD's requirement for cost recovery, many countries in the Danube, including EU members like Bulgaria, Hungary, and Romania face financial instability in their utilities due to low revenue collection. Looking at the level of NRW and the average water bill per m3 in the region (Error! Reference source not found.), there is a negative correlation, meaning that with lower water prices, the level of unbilled water tends to be higher. A possible interpretation is that lower water prices do not allow for sufficient revenue to maintain distribution infrastructure, leading to technical water losses. A different interpretation is that countries with lower economic development levels have deficiencies in the water supply sector leading to higher NRW percentages due to technical leakages but also due to illegal connections, more probable if the population faces economic challenges. In such countries, lower average water bills might be imposed as a social water pricing measure. Low water tariffs also have a historical background in countries of the former Yugoslavia and other former socialist countries. Often it is a political decision not to adjust (increase) water tariffs, although in most cases there is both a willingness and an ability to pay for adequate WSS services. However, as the indicator for average water bill is unweighted (meaning there is no adjustment made to account for the different price levels of the countries), no robust interpretations can be made. 55 Regional Water Security Assessment DANUBE REGION Figure 26: Non-revenue water (source: IBNET, 2020) and average water bill (source: Global Water Intelligence) The region still needs to make substantive efforts to ensure access to sufficient and safely managed sanitation coverage. Safely managed sanitation infrastructure in the Danube region varies significantly, with coverage averaging 67%. However, many EU candidate states struggle with gaps in safely managed sanitation services (Figure 27). The existing gaps in sanitation infrastructure lead to a relatively low level of the population covered with safely managed sanitation services in several countries (see Section 3.4.1 on Outcomes). Wastewater treatment requires significant investment and policy focus to align with the EU Water Framework Directive. Rural areas in particular lack reliable service and require strategies to address their unique needs, including self-supply mechanisms and decentralized systems. Encouraging on-site sanitation and wastewater treatment systems can offer efficient, cost-effective solutions that address rural infrastructure needs. Figure 27: Total sanitation coverage by sewer facilities. Source: WHO/UNICEF (2020)14 14Due to lack of data in the JMP database, the data for Kosovo is taken from the State of Sector Report 2018 for the Danube Region (DWP, 2019). 56 Regional Water Security Assessment DANUBE REGION The Danube region, driven by the EU, has made substantial strides in developing wastewater treatment infrastructure but requires further investment and collaboration to meet ambitious environmental and sustainability standards. The level of wastewater treatment remains moderate at about 66% of wastewater collected and 49% treated (Figure 28). Compliance with the EU's Urban Wastewater Treatment Directive (UWWTD), which sets rigorous standards for the collection, treatment, and discharge of urban wastewater, remains challenging for all countries. The directive aims to protect the environment from the adverse effects of wastewater discharge. While the share of the population connected to wastewater treatment has increased particularly in EU member states, compliance with the objectives of the EU Wastewater Treatment Directive (UWWTD) constitutes a major challenge for most of them. The low level of compliance with EU objectives among member states in terms of wastewater treatment suggests that the timelines set in the EU accession process may have been overambitious or may not have sufficiently considered the many challenges posed by underdeveloped institutional and technical capacities, governance models, and poorly maintained and insufficient infrastructure (DWP, 2019). EU member states like Croatia, Bulgaria and Romania have made substantial investments in collecting and treating wastewater, yet less than 30% of its waters are treated according to the UWWTD requirements (WISE, 2024)15. Only countries like Austria or Slovakia have almost closed the gap and over 93% of its waters are treated meeting the requirements. In candidate states like Serbia, adherence to the UWWTD is crucial but it will demand considerable upgrades to its wastewater treatment infrastructure. Yet, Serbia, lacks both an investment plan and comprehensive agglomeration studies necessary for the design and development of infrastructure. Private sector participation could provide a viable solution for securing the needed investments. Meanwhile, the upcoming revision of the UWWTD will introduce even stricter standards, including broader coverage down to agglomerations of 1,000 population equivalents, advanced treatment processes, and a push towards energy neutrality by 2045. Producers of certain pollutants will be required to cover a portion of treatment costs, while ambitious goals will be set to reduce greenhouse gas emissions. Figure 28: Share of Wastewater safely treated (in %) 16. Source: UN Water (2023b) 15 https://water.europa.eu/freshwater/countries/uwwt 16 This indicator (based on the SDG indicator 6.3.1) tracks the proportion of domestic and industrial wastewater flow safely treated in compliance with national or local standards for its intended recipient (e.g. lake, river, ocean or soil) or further use (e.g. in agriculture). It is measured as a percentage of the wastewater treated (UN Water, 2023a). 57 Regional Water Security Assessment DANUBE REGION At the regional level, investments totaling €42.5 billion have been made towards UWWTD implementation, but an additional €57 billion is needed to achieve and maintain full compliance by 2040 (World Bank, 2018c). Furthermore, reinvestment needs for wastewater infrastructure renewal are estimated at €40 billion between 2015 and 2040. EU funds have been crucial, particularly for new member states implementing the directive. As these funds diminish, countries will need to create strategies and plans to secure financing through tariffs and other external funding sources. Regional dialogue and knowledge exchange facilitated by the DWP, led by the World Bank and the International Association of Water Supply Companies in the Danube River Catchment Area (IAWD), offer valuable support. At the Danube River Basin scale, nearly 4,000 centralized wastewater collection and treatment facilities exist (Figure 29). Over half have nutrient removal technology, while 20% possess biological treatment capabilities. However, around 20% of these facilities lack adequate capacity and are unable to remove pollutants effectively. Upstream countries have relatively well-developed systems, while countries in the middle-basin also possess good infrastructure. Conversely, downstream states often struggle with uncollected or insufficiently treated wastewater (ICPDR, 2021a). Figure 29: Urban wastewater collection and treatment facilities in the Danube basin. Source: ICPDR (2021a) The quality of wastewater collection and treatment varies across the basin, with upstream countries typically maintaining more robust systems. Countries located in the middle section of the Danube demonstrate well- established infrastructure, while downstream states still face challenges with uncollected or inadequately treated wastewater. Notably, more than 50% of surface water emissions from urban wastewater originate from agglomerations with existing sewers but lacking treatment facilities. These agglomerations represent only 6% of the total population in the basin, meaning that improving wastewater treatment for a relatively small share of municipalities can lead to substantial progress (ICPDR, 2021a). 58 Regional Water Security Assessment DANUBE REGION The Black Sea suffers significantly from eutrophication due to insufficient treatment, compelling Romania to designate coastal areas as sensitive under the UWWTD in 2007. As a result, medium to large wastewater treatment plants (>10,000 PE) in EU member states throughout the Danube basin are required to implement stricter treatment standards than secondary treatment (ICPDR, 2021b). Although significant progress has been made, the Danube region must further invest in innovative solutions and upgrade its infrastructure to meet the increasingly stringent EU environmental and sustainability standards. This endeavor requires a combined effort between public and private stakeholders, along with enhanced regional cooperation, to achieve lasting improvement in wastewater treatment. Reservoir Infrastructure The Danube’s reservoir storage infrastructure demonstrates resilience in supporting essential functions like water supply and hydropower, yet relatively low and unevenly distributed gray water storage, alongside dam storage losses, remains a significant challenge amid increasing climate variability. Danube average storage capacity (650 m3/cap) is low compared to the ECA average (1398 m3/cap) (Figure 30). Those parts of the region where no or limited storage capacity is available are more vulnerable to changes in precipitation patterns, unexpected variations in water availability, and to droughts. Inadequate storage capacity poses a significant risk as climate variability increases, particularly since much of the water flow relies on snowmelt. Dam storage losses have ranged from 12-27% by 2022 (Perera et al, 2023), mainly driven by sedimentation, underscoring the need for improved storage strategies to meet growing water demands. Therefore, continued regional cooperation and robust allocation mechanisms at the sub-basin and basin level addressing also water quantity are needed and paramount to long-term water security in the region, as several countries greatly rely on water inflow from the ‘international’ Danube River and its tributaries for their water supply (going beyond some partial aspects already covered by some agreements regarding flood protection – mainly information exchange – and sediment management. Figure 30: Per capita dam storage capacity in m³ per capita. Source: FAO (2022). Note: Due to lack of data in the FAO- Aquastat database, the value for Kosovo is taken from the Water Security Outlook for Kosovo (World Bank, 2018a). The functions of dams and reservoirs throughout the region are diverse including hydropower generation, cooling for thermal power plants, flood protection, regulation of water levels for navigation purposes, recreation and tourism, and water supply (Figure 31). The adoption of the "Guiding Principles on Sustainable 59 Regional Water Security Assessment DANUBE REGION Hydropower Development in the Danube Basin" in 2013 represents a strategic effort to balance hydropower's benefits against ecological costs through upgraded technologies and mitigative actions. Regulatory measures for flood protection have modified over 80% of the Danube, impacting floodplain ecosystems and groundwater levels crucial for drinking water. The river is essential for the water supply and supports a significant portion of the region's electricity generation through hydropower, which accounts for an average of 28.3% of the energy production Given the fact that the by far largest share of freshwater storage is not in reservoirs but in nature (99% globally), there is a need to consider natural (‘green’) storage such as groundwater, wetlands and soil moistur e reserves as fundamental ecosystem functions that need to be protected, and form part of an integrated approach to managing and planning water storage in order to close the “storage gapâ€? and thereby strengthen the adaptive capacity towards droughts, floods, and changes in variability. Such an approach should include both gray and green storage, and consider multiple uses and stakeholders. A necessary starting point is the monitoring and assessments of natural water storage capacity, which is lacking in most countries (World Bank 2023g). Figure 31:Main reservoir purposes in the Danube region. AQUASTAT, 2023. Irrigation Irrigation infrastructure is mostly underdeveloped or underutilized in the Danube region, thus being a field of action/investments for increasing water security. Overall, irrigation plays a rather minor role in the region, with on average 10.5% of cultivated land under irrigation (Figure 32). With a 60 Regional Water Security Assessment DANUBE REGION relatively high availability and reliability of precipitation, rain-fed agriculture is dominant in almost all countries. But even where cultivated land is equipped with irrigation systems, this is partly not functional, due to a lack of maintenance and/or outdated design and technology. Many of the systems are outdated and inefficient (or even not operational at all), leading to water losses through evaporation, runoff, and inefficient distribution. Romania stands out for its high fresh surface water use for irrigation, but this has not translated into proportionally high yield levels due to inefficiencies such as outdated infrastructure and poor coordination between water suppliers and farmers. The data indicates that in Romania, maize yields reach 4 t/ha as compared to 7.4 t/ha in Hungary, pointing to substantial room for improvement in water use efficiency. Climate change introduces additional uncertainties in water availability, with potential impacts on agricultural productivity. The droughts of 2017 and 2022, for instance, led to substantial economic losses in the agricultural sector across several countries in the region. In Bulgaria and Hungary, extensive but often inoperative irrigation systems from communist times suggest significant potential for modernizing infrastructure to better manage water resources, particularly in light of predicted increasing drought intensity and frequency in Central and Eastern Europe. Figure 32: Share of cultivated land under irrigation (in %). Source: FAO (2022) From a regional perspective, despite the relatively low water withdrawals of the agriculture sector (17.8%) compared to industrial (47.9%) and municipal uses (33.3%), irrigation represents the largest water consumer in the Danube basin, meaning that the water consumed ultimately evaporates, rendering it no longer available, compared to the other uses which may alter the quality of water, but the quantity remains the same (ICPDR, n.d. f). Hence, expanding irrigation could have more pronounced impacts on the water balance of the Danube basin, which need to be analyzed through transboundary assessments. Additionally, inefficient irrigation practices like flood irrigation and leakage contribute to higher methane and nitrous oxide emissions, increasing the sector’s carbon footprint. Modernizing infrastructure and improving irrigation efficiency could help mitigate these effects. Agricultural production is characterized by low intensity in many parts of the region, with a significant number of small farms (ICPDR, 2021c). The conditions for agriculture are generally favorable in terms of soil and climatic conditions. The overall challenge for the agricultural sector in relation to water security is two-fold: 61 Regional Water Security Assessment DANUBE REGION adapt to the impacts of climate change related to uncertainty in water availability, and enhance economic productivity, while decoupling further agricultural development from its negative effects on water resources and aquatic ecosystems. In 2021, the ICPDR released a guidance document on sustainable agriculture to mitigate drought impacts and reduce nutrient pollution. The guidance does suggest a ‘paradigm shift’ in agricultural policy, i.e., moving away from traditional regulatory enforcement policies that solely rely on command-and-control approaches, towards a balanced approach that considers the economic benefits for farmers. This requires strengthening of governance and institutional capacity in many countries of the region. Navigation Significant water infrastructure in the Danube region has been developed for inland navigation, providing significant benefits to the countries while also having direct impacts on the hydrology, hydromorphology and water-dependent ecosystems. Inland navigation is an important economic activity for some countries in the region, while no commercial inland navigation exists in the countries on the edges of the Danube River Basin. Romania and Serbia are the countries with the highest tonnage transported, each with more than 10 million tons of cargo shipped annually. Many other countries also transport significant amounts (ICPDR, 2021a). The EU Strategy for the Danube Region includes a specific focus on navigation as a key component of its overall objectives. The strategy recognizes the importance of the Danube River as a major transportation corridor connecting countries and regions within the Danube Basin and beyond. River transport itself is an economic means of transport (compared to e.g., road transport), yet the development and maintenance of navigational infrastructure, such as locks, dams, and channels, require substantial investments. Aging infrastructure combined with limited funding can hinder efficient navigation and lead to bottlenecks, delays, and increased operating costs. Water levels also pose a direct challenge to navigation. Droughts, like the one in 2022, often lead to low water levels, reducing cargo loads and disrupting navigation altogether. Conversely, excessive rainfall and flooding can cause high water levels, limiting bridge clearance and making currents dangerous for travel. Effective flood forecasting, early warning systems, and integrated drought management strategies are essential to mitigate these risks and maintain navigability Climate change exacerbates these challenges by potentially altering the severity and frequency of extreme weather events, thereby affecting the reliability and efficiency of navigation on the Danube. Plans to further develop the Danube’s navigation infrastructure require careful consideration of trade -offs between different water uses, including non-consumptive (e.g., hydropower, cooling) and consumptive (e.g., irrigation, municipal supply) activities. Moreover, ecosystem needs like floodplain and wetland preservation must be factored in, given that climate change will continue to alter hydrological patterns and potentially make older infrastructure projects economically unviable under new and future conditions. 62 Regional Water Security Assessment DANUBE REGION 3.3 Performance Performance determines to what degree water sector architecture leads to desired water outcomes. The performance of existing institutions and infrastructure will largely determine the capacity of the water sector to deliver multiple social, economic, and environmental outcomes. This dimension is assessed through three different areas: water resources management, delivery of water services and mitigation of water-related risks. 3.3.1 Water Resources Management Key messages ➢ The basin planning and management approach is widely adopted across the Danube, largely driven by the EU water acquis, and the WFD in particular. However, both EU member and candidate states face important challenges to support its full implementation. Common challenges are related with the very large financial, technical and institutional capacities required. In EU candidate states, legislation is yet not harmonized to be fully EU fully compliant, and this is delaying the development of key management instruments, such as river basin management plans (RBMPs) and flood risk management plans (FRMPs) ➢ Knowledge on water bodies is yet limited in EU candidate states due to the limited monitoring and technical capacities. This stems from insufficient monitoring, out-of-date water data infrastructures, and poor information flow among water sector institutions. Knowledge gaps are the largest with respect to the ecological, hydro-morphological and quantitative status of water bodies. Such gap prevents yet an effective and sustainable water management approach ➢ Water allocation mechanism have been put in place across most Danube countries, including the establishment of water permits, and in some cases, a register of water users. These registration systems are, however, not always up-to-date and countries are failing to keep up with charging water tariffs, either because these charges do not contribute to cost recovery or simply because no such system has been created. ➢ Groundwater is a strategic resource for drinking water and irrigation across Danube countries, yet it remains poorly understood in comparison to surface waters. Available information confirms that large and transboundary groundwater bodies have a good quantitative and chemical status, but efforts to expand monitoring of smaller groundwater bodies is required given that such knowledge gap represents a socioeconomic risk. ➢ Data exchange and cooperation needs to be strengthen. Within countries, data exchange mechanisms are often insufficient, except in the EU member states of Danube. Across countries, data exchange mechanisms are strong in the Danube basin, due to the role of ICPDR, but further efforts are required in other important transboundary basins such as the Dniester, Dnieper, among others. Management instruments While the basin management approach is being widely adopted across the Danube countries, its implementation remains challenging. Driven by the EU Water Framework Directive (WFD) and the Floods Directive, Danube countries have made important strides to support the implementation of a basin management approach. Key requirements to support the basin management approach require countries to delineate basin planning units (the so-called river basin districts), and develop comprehensive basin plans (also called the so-called river basin management plans, RBMPs), which include several requirements including a characterization of water bodies, a detailed assessment of their ecological, chemical and quantitative status, the development of economic and legal instruments to manage water quality and quantity, and a program of measures to support the achievement of the environmental and socio-economic goals encapsulated in the 63 Regional Water Security Assessment DANUBE REGION WFD. The Floods Directive (FD) also requires countries to develop management plans to prevent and mitigate the impacts of floods (also called Flood Risks Management Plans, FRMPs). EU member states have developed comprehensive RBMPs and FRMPs, addressing key relevant aspects of IWRM (water allocation, water quality, water services provision, management and protection from water- related risks, and protection of water ecosystems) (Table 9). EU candidate states are also investing significant efforts in developing EU-compliant plans. Nevertheless, both Directives are very ambitious and requires significant efforts and investments on the part of countries to generate the knowledge base needed and support implementation of the program of measures. Table 9: Overview of adoption of RBMPs and FRMPs in the countries of the Danube region by January 2024. Sources: European Commission (2023d) and European Commission (2023e) Flood Risk Management Plans Country River Basin Management Plans (RBMPs) (FRMPs) 1st generation - Partly developed (for some River 1st generation - Partly developed (for some River AL - Albania* Basins) Basins) AT - Austria 3rd generation 2nd generation BA - Bosnia and 1st generation - Partly developed (for some River 1st generation FRMPs – preparation ongoing Herzegovina* Basins) 2nd generation (public consultation not yet started st 1 generation (Public consultation for second FRMP BG - Bulgaria for the 3rd RBMP) ongoing) CZ - Czechia Third RBMP reported 2nd generation 2nd generation (Public consultation concluded but 1st generation (Public consultation concluded but HR - Croatia third RBMP not reported yet) second FRMP not reported yet) HU - Hungary Third RBMP reported 2nd generation MD - Moldova* 1st generation is under the preparation 1st generation FRMPs – preparation ongoing 1st generation RBMPs developed (but not ME - Montenegro* 1st generation FRMPs – preparation ongoing reported) MK - North 1st generation RBMPs under preparation for some st 1 generation – preparation is ongoing for some Macedonia* River Basins River Basins Public consultation concluded but third RBMP not Public consultation concluded but second FRMP not RO - Romania reported yet reported yet RS - Serbia* 1st generation RBMPs is ongoing Development is ongoing 2nd generation - Public consultation concluded but SI - Slovenia 2nd generation third RBMP not reported yet 1st generation - Public consultation concluded but SK - Slovakia Third RBMP reported second FRMP not reported yet UA - Ukraine* 1st generation RBMPs preparation is ongoing 1st generation FRMPs – preparation ongoing XK - Kosovo* 1st generation is ongoing for some River Basins 1st generation is under development for some RBs * Non-EU countries or Candidate countries are not obliged to report to the EU Commission about the state of play of the RBMP or FRMP adoption. Data for Non-EU countries referencing documents from EU communication, WB, OECD, UNDP, and other reports prepared in local languages. The legal requirement of the WFD establishes planning cycles of 6-years duration, after which plans need to be revised and updated to monitor progress and identify emerging pressures. EU member states are currently implementing the third RBMP (planning cycle 2021–2027). Since the first plans were developed (2009–2015), Danube EU countries have made substantive progress along different axes. Investments oriented toward ecosystem protection have had two positive outcomes: 1) moderate improvement of the ecological status of water bodies across some countries (e.g., Austria, Bulgaria, Czech Republic, Romania); and 2) improved the knowledge base on the status of water bodies across some countries with important gaps (e.g., Hungary and Poland). Yet, Danube EU member countries remain far from reaching the target of achieving good status for all water bodies (initially set for 2015 and later extended to 2027 for all member states) (Figure 33). 64 Regional Water Security Assessment DANUBE REGION First RBMP (2009-2015) 100% 1 10 39 41 36 75% 49 57 56 38 83 79 50% 52 59 63 25% 51 52 42 43 18 17 9 0% 3 AT BG CZ HR HU PL RO SI SK Good Status No Good Status Unknown Second RBMP (2016-2021) 100% 1 2 3 9 13 33 75% 39 44 52 58 45 69 79 50% 78 66 59 57 25% 47 46 42 31 19 9 0% AT BG CZ HR HU PL RO SI SK Good Status No Good Status Unknown Figure 33: Comparison of the ecological status of the surface water bodies in Danube EU member states between the first (2009–2015) and second planning cycle (2016–2021). Source: WISE (2022) In the past two basin planning cycles, water allocation mechanisms have been put in place across member states. All countries have established water permit systems and have developed a register of water abstractions. In some cases, permits are required only above certain volume of abstractions (e.g., Bulgaria, Slovenia), but in most cases permits are required regardless of the volumes extracted (European Commission, 2021). As for the control of water quality, all EU member states in Danube have an authorization and/or permit regime to control wastewater point source discharges and have developed a register of wastewater discharges for both surface and ground waters. Czech Republic and Romania have water quality control systems only for surface waters. While such measures represent a positive step toward monitoring water quantity and quality, they need to be backed by strong enforcement and surveillance mechanisms, which are still lacking in many countries. Despite the progress, Danube EU member state countries face important challenges to fulfill the implementation of the program of measures from the RBMPs (Figure 34). Some of the most important challenges are related to the limited financing, the bureaucracy that needs to be overcome to implement some of the measures, and the limited application of cost-effectiveness approach to prioritize measures. Governance aspects related to the limited technical and human capacities to enforce existing regulations is also a recurrent problem. Croatia, for instance, has a water abstraction permitting system and a water use register in place, but surveillance and enforcement mechanisms are insufficient, and is estimated that reported water abstractions are only 60% of the real abstractions that are taking place (World Bank, 2023a). 65 Regional Water Security Assessment DANUBE REGION Figure 34: Barriers affecting the implementation of the program of measures in River Basin Management Plans to achieve the river basin planning goals in EU Member States of the Danube. Source: European Commission (2021) EU candidate states are making significant efforts to adapt their institutional frameworks to the requirements of the EU Water acquis. There are, however, major gaps with respect to river basin planning. River basin districts have been identified in most countries (e.g., Albania, Montenegro, Serbia), and RBMPs are being developed (see Table 9), often with international funds, but most lack government approval, and are thus not being implemented. The development of the plans has also revealed major gaps that need to be filled, including: 1) the limited knowledge base on the status of water bodies due to the narrow coverage of monitoring systems required to monitor biological, ecological, hydro-morphological, and chemical quality; and 2) limited data on the hydrogeological functioning of aquifers, which prevents an accurate picture to be formed of the dynamics and quantitative status of groundwater bodies. EU candidate states have made major efforts to advance the establishment of water allocation mechanisms. Water codes and associated legislation require users to obtain a water permit for water abstractions. Major gaps remain, however, including: 1) technical gaps, given that water cadasters even if available, are not well maintained and have information that is scattered across the different institutions issuing the permits; 2) governance-related gaps, given also countries’ limited capacities for surveillance and enforcement, which prevents them having realistic control over water abstractions (e.g., Albania, Serbia); and 3) financial gaps, given that even when a water tariff for different water users exist, cost recovery is not achieved; moreover, environmental and resource cost charges have not yet been developed (e.g., in Albania and Montenegro). Overcoming these technical, institutional, and financial gaps is key to strengthening the implementation of river basin management instruments and adopting the IWRM approach at basin scale. Groundwater is a strategic resource across the Danube, but it is poorly understood and therefore not well managed. Groundwater plays a vital role in providing nearly 72% of the drinking water for about 59 million people across the Danube; it also serves agricultural irrigation and industrial needs, including cooling and heating applications. Groundwater is, however, under significant threat from pollution, primarily stemming from untreated sewage, agricultural fertilizers and pesticides, and chemicals leaching from industrial waste sites. Abstractions for drinking water and agriculture are increasingly putting pressure on groundwater bodies. To ensure the sustainable use of Danube groundwater, the ICPDR has set up a Groundwater Task Group. This group has managed to identify relevant groundwater bodies of transboundary importance and to develop strategic visions to address and manage pollution and over-abstractions. Of the 12 transboundary groundwater bodies identified in Danube, 75% have a good chemical status and 86% have a good quantitative status (Figure 35). 66 Regional Water Security Assessment DANUBE REGION Figure 35: Chemical (top) and quantitative status (below) of groundwater bodies in Danube. Source: Danube River Basin Management Plan 2021. Note: green indicates good status and red poor status. Data and monitoring There are large disparities in terms of monitoring capacities across countries and therefore knowledge to effectively support water planning and management. EU member states have made 67 Regional Water Security Assessment DANUBE REGION major progress in expanding the water monitoring systems and currently have reasonably good monitoring networks, although there are some monitoring gaps for biological, chemical, and hydro-morphological parameters (Figure 36). In the EU candidate states, monitoring programs still need to be expanded much further, with regard to all key parameters for determining the ecological status of surface water (biological, chemical, and hydro-morphological) and groundwater bodies (quantitative and chemical status). Technical capacities to coordinate and manage the monitoring approach need to be strengthen need along with investments in expanding the monitoring network. Figure 36: Biological chemical and hydro-morphological parameters monitored to assess the ecological status of water bodies in the EU Member States of the Danube countries. Source: EEA (2023) Water data exchange frameworks within countries are largely missing in the EU candidate states, which impedes coordinated responses to risks and leads to inefficient planning. EU member states have the most developed national water information systems (e.g., WISA, Water Information System in Austria). At the EU level, the European Commission and the European Environment Agency have created the “Water Information System in Europe (WISE)â€?,17 which is a comprehensive portal containing relevant WRM information on surface water and groundwater status and pressures, water resources and use, and wastewater treatment. Candidate states are also developing national water information systems, but those are still in progress in many countries. To be useful for planning and management, candidate states need to place efforts in designing systems that are responsive to information needs and importantly based on open data principles. The Danube basin and ICPDR have dedicated many efforts to support transboundary monitoring and data exchange. Among the different initiatives, ICPDR has put in place a Transnational Monitoring Network (TNMN) to support the joint monitoring and data and information exchange among Danube countries. This infrastructure network is supported with harmonized methods for monitoring and assessment, and joint approaches for data processing and exchange are established with the objective to comprehensive overview of pollution and long-term trends in water quality and pollution loads in the major rivers of the Danube River Basin (ICPDR, n.d. g). The ICPDR also leads the development and maintenance of several data 17 https://water.europa.eu/ 68 Regional Water Security Assessment DANUBE REGION exchange platforms (e.g. Danube GIS18), compiling information from all Danube countries on industrial and urban pollution sources, wastewater treatment, continuity interruptions to fish migration, hydrological alterations, and the status assessment of water bodies. The Danube GIS also helps the ICPDR to monitor and support the implementation of the two main directives, EU WFD and EU FD. Such data exchange practices represent good practices to be scaled into other transboundary basins across. 3.3.2 Water Service Delivery Key messages ➢ On average most water service providers in the region generate operational surpluses with revenues exceeding their costs. In some regions increasing revenues or cutting costs could produce the surpluses providers currently lack, but need for investments in maintenance and upgrading of infrastructure. ➢ Increasing technical efficiency of water services is closely linked to business efficiency. Countries in the region with low losses due to non-revenue water also generate higher operational surpluses. ➢ Electricity costs as share of total costs for water service delivery is low at 14% in the Danube region compared to Eastern Europe and Central Asia. Climate change and changing demand patterns in the future could increase these costs and should be monitored. The operating costs of water services delivery are covered by revenues of service providers in almost all countries of the region but there is further room for improvement (Figure 37). While service providers in several countries, including Montenegro, and Kosovo accrue significant surpluses according to own reporting of a subset of suppliers (IBNET, 2020), a minority of Danube region countries runs deficits in their water service delivery operations. Revenues are not sufficient in these countries for maintenance and required investments. Countries where operating cost coverages below the threshold of one indicate that revenues cannot cover costs all are not EU members. Namely, these are Bosnia and Herzegovina, Ukraine and North Macedonia. Partly the water services sector is underfunded and in some instances tariffs are too low. These financial constraints pose a major obstacle for improving coverage and hence a challenge for water security. In some regions in the Danube countries, the performance of water and sanitation infrastructure is inadequate. This includes outdated or insufficient water supply networks, inadequate wastewater treatment facilities, and limited access to safely managed sanitation services. Business efficiency is largely associated with technical efficiency but other factors need to be considered to ensure the sustainability for water users and service providers . High losses in the piped system are often linked to financial losses. Such correlation can be observed across Danube region, where those countries with the largest non-revenue water (NRW) shares are also those experiencing the lower cost operating ratios, and thus generating the lower revenues from service provision (see Error! R eference source not found. in section 3.2.2 on Water Infrastructure) . Poland is a good example where indicators are well on track, and low levels of non-revenue water contribute to a high operating cost coverage ratio. However, while business efficiency is largely driven by technical efficiency, some countries like Montenegro with NRW equivalent 67% are still able to generate significant revenue surpluses (equivalent to 93%). The example of Montenegro showcases that other factors such as water tariffs can be buffering and sustaining the business model. However, this model is likely to be unsustainable in the future, as infrastructure requires upgrading, and operational and maintenance costs increase (e.g. quality standards become more 18 https://www.danubegis.org/maps 69 Regional Water Security Assessment DANUBE REGION stringent, electricity costs, new sources of water need to be developed, etc.). Increasing costs could compromise the financial sustainability of service providers and affordability of water tariffs for water users. Maintaining, upgrading and expanding infrastructure is essential but requires significant investment and planning. The cost of infrastructure development, operation, and maintenance can be high, and some regions may struggle to allocate sufficient funds for these purposes. The combination of inefficient WSS systems with high NRW and low tariffs means some utilities can only cover operational costs. Adequate asset management with lifecycle planning is often only available in large cities. Smaller utilities, in rural areas in particular, need to catch up in this respect. In addition to the lack of financial resources, service providers also lack human resources, both at management and operational level. It is the management deficits at the utilities and municipal level in particular that lead to existing financing instruments not being fully utilized. An important role is given to the regulatory body, when existing (see Section 3.2.2 on Water Supply and Sanitation Institutions). Strengthening independent regulators that can both adjust tariffs according to needs and provide incentives for utilities is an important step. Fully covering the costs for operation, maintenance, and renewal of water services through the utilities’ own revenue is necessary to sustain service quality. In the long term, to ensure the continued quality of services, utilities must cover both their operation and maintenance (O&M) expenses and the costs required for asset management and infrastructure renewal. These expenses will have to be funded either through their own generated revenues (i.e. tariffs) or by receiving sufficient allocations from public budgets (i.e. taxes) to support their operations (DWP, 2019). Covering the operational costs of water and sanitation services is a key determinant for financial sustainability, for which reducing non-revenue water, establishing adequate water prices, as well as improving and/or enforcing the economic regulation of water and sanitation services are key requirements. Figure 37: Operating cost coverage. Source: IBNET (2020). On average, prices set for water are less relevant for business efficiency of water service delivery in the Danube region than cost structures and institutional setup. Looking at the level of operating cost coverage and the average water bill per m3 in the region (Figure 38) there is a weak correlation if the 70 Regional Water Security Assessment DANUBE REGION outlier Montenegro is discarded from the data. The outlier in the Montenegro case could either be due to exceptionally low spending compared to low revenues or due to incomplete reporting by Montenegrin utilities in data collection to IBNET. The observed type of correlation hints toward a trade-off between affordability of water services and sustainable financial operations. In most cases, the higher the water bill, the higher the cost coverage ratio. This effect is however dampened by the higher efficiency of countries with higher water bills. In these countries which exhibit lower levels of NRW (Error! Reference source not found.), prices c harged for achieving similar revenues for the same amount of water delivered to the system can be somewhat lower since higher shares are billed to customers. Additionally, the use to which water service suppliers put the collected revenues is crucial for the bills charged. In many EU candidate countries costs are significantly higher because they aim to achieve sufficient levels of service coverage to comply with EU requirements. This increases their costs while not significantly increasing the service delivery quality. Other countries such as many EU member countries which can invest higher shares in maintenance do not face this problem. Here, higher maintenance investments contribute to lower NRW, increasing cost coverage and opening opportunities for increasing water bills due to the higher quality standards of water service delivery. Figure 38: Operating cost coverage (source: IBNET, 2020) and average water bill (source: Global Water Intelligence) Note: Due to lack of data in the IBNET database, the cost data for Austria and Slovenia is taken from the State of the Sector Report of the Danube Region (DWP, 2019). Currently electricity costs play a small role in the overall costs of water service providers in most Danube countries compared to other countries in the wider region. Electricity costs as shares of operating costs only contribute to 14% of total operating costs in the Danube region on average. In Central Asia for example this share is significantly higher at 25%. Countries need to plan for adaptation of their water supply services to climate change to avoid future shortages and cost increases. Many areas depend on the dynamics of snow and glacier melt, as well as water from mountainous areas in general. The peaks associated with glacier melt could, however, reduce substantially in the future. Relying on surface water for shares of water supply throughout the entire year might thus be less feasible than it is today. Similarly, the increasing probability of flood occurrences could destroy water infrastructure more frequently if no additional disaster risk reduction measures are implemented (Howard et al., 2016). The locally adapted mix of surface water and groundwater for water supply and required infrastructure must hence be evaluated across countries and sectors and adapted to changing future conditions. Expanding and leveraging existing storage capacities is needed at a varying degree across countries to cope with increasing climate variability. 71 Regional Water Security Assessment DANUBE REGION 3.3.3 Mitigation of Risk Key messages ➢ Floods and droughts put significant risk on the region’s population and economic activity. The Western Balkan countries constitute a risk hotspot. ➢ EU candidate and potential candidate countries slowly align their flood risk management efforts to meet the highest standards set by the Flood Directive, but institutional fragmentation and financing are challenging the progress. Drought risk management remains a gap at the regional scale. ➢ The loss of ecosystem services has increased flood risk across the region, and water retention nature-based solutions are proposed as a viable risk reduction measure. Riverine floods threaten the livelihoods of nearly 2.6 million people and assets-worth $38 billion (or 1.6 percent of the population or GDP) region-wide. Causalities, displacement, and damage to dwellings are among the most common outcomes of floods, occurring both in developed and less-developed countries. Lethal flood events that occurred in the past two decades in the Czech Republic (2009) and Slovenia (2023), resulted in the displacement of over 8,000 people and caused at least 19 causalities (IFRC, 2010 and 2023). In economic terms, floods damages to houses, industries, agricultural lands, and critical water and transportation infrastructure can reach a staggering figure of $10.9 billion in the 2023 floods in Slovenia (Bezak et al., 2023). The economic costs linked to flood risks are particularly high in the western Balkans, representing between 2-3% of their annual GDP (Figure 39). Figure 39: Share of GDP exposure to riverine floods (%) in the Danube region countries under current conditions. Source: Ward et al., 2013. 72 Regional Water Security Assessment DANUBE REGION The Balkan countries are hotspot of flood exposure and risk. Roughly 400,000 people in the Western Balkan (or 2.3 percent of the Western Balkan population) and $3.6 billion (2.4 percent of the Western Balkan GDP;Figure 39) are exposed to riverine floods. Exposure levels are also high in some up- and midstream countries (like Austria, Hungary and Slovakia), in particularly in terms of population ( Error! Reference s ource not found.). However, four floods out of the top five in terms of the share of population affected between 2000 -2023, occurred in the Western Balkans, with an extreme flood affecting almost 28% of the population of Bosnia and Herzegovina in 2014 (see Table 10). Figure 40 Share of population exposed to riverine floods (%) in the Danube region countries under current conditions. Source: Ward et al., 2013 Table 10 Top five flood events in terms of the share of affected population relative to total population. Source: Delforge et al. (2023; EM-DAT). Country Year % Population affected Bosnia & Herzegovina 2014 28% Czechia 2013 12.4% Bosnia & Herzegovina 2021 7.6% Bosnia & Herzegovina 2004 6.6% North Macedonia 2004 4.9% Droughts in the Danube region drive large economic loss due to impacts on agriculture, energy, navigation, and water supply systems. Widespread rainfed agriculture, aging and inefficient irrigation, and low water storage capacity in the Danube subregion makes it highly vulnerable to droughts (see Section 3.2.2 Infrastructure), resulting, for example, in annual average yield losses of up to 10% (see maize example in Figure 41). Drought impacts on hydroelectricity power generation is evident in the Danube region countries, and to larger extent in the Western Balkans, where hydropower constitutes a large share of electricity generation (IEA, 2024). During the severe drought in 2022 hydroelectricity dropped by a third in Romania (Reuters, 2022), by half in Serbia (Balkan Green Energy News, 2022) and by two thirds in Austria (CTGN, 2022) in the summer of 2022. The 2022 drought had also negative impacts on shipping and river transport 73 Regional Water Security Assessment DANUBE REGION due to low water levels below the 2.5m threshold in many river segments (Emerging Euro, 2022). The highest relative economic loss due to droughts between the years 2000 -2023, range from 1.1% of the GDP in Ukraine (2008) to 6.5% in Serbia (2014). Figure 41 Annual average losses of maize yield in the Danube region at a NUTS2 spatial resolution. Source: Fridman et al., 2023, and Rossi et al., 2023 Flood risk management plans (FRMPs) are at full or partial development across the region, yet financing and institutional fragmentation challenge flood risk reduction. Most of the EU member states in the Danube have completed the second cycle of FRMPs, while approval of the first cycle is pending in some countries. Candidate and potential candidate countries are slowly adopting the Flood Directive (2007/60/EC), and in the process of developing flood hazard and risk maps for most of its river basins (see Table 9, in Section 3.3.1 Water Resource Management). Institutional fragmentation and financing challenge flood risk management mostly within candidate and potential candidate countries (see Section 3.2.1 Water Resources Management Institutions). In Serbia, budget allocations to flood risk management is insufficient in many places, and in Albania funds are lacking for repairing and constructing flood defense measures or the deal with flood emergencies. Furthermore, implementation of flood risk management plans by public water management companies in Serbia causes coordination challenges on a national scale due to a mismatch between administrative division and river basin borders. Floods risk is partially the consequence of reduced ecosystem services and nature-based solutions may play a key role in risk reduction. Increasing flood risk is associated with the reduction of flow regulation services provided by natural wetlands, floodplains, pastureland and forests. Approximately, 80% of the natural wetlands and floodplains in the Danube River basin were disconnected from rivers due to development of river navigation and hydropower infrastructure (ICPDR, 2021d). Deforestation and overgrazing in Albania resulted in increased runoff intensifying flood hazards and risks. Recently, some Danube region countries have started to put focus on retaining and restoring floodplains as a natural flood protection measure. Other nature-based solutions, like reforestation and promoting sustainable grazing practices can also promote risk reduction. 74 Regional Water Security Assessment DANUBE REGION Drought risk management planning is underdeveloped, and most countries pursue a reactive approach to drought management. Some regional efforts push towards a proactive approach. A recent assessment on Drought Preparedness and Management led by the European Commission reports that while EU member states have made considerable progress in flood management, drought management is still pending (Schmidt et al, 2023). The normative development of drought risk management is still limited, and countries are pursuing reactive approach to scarcity and drought management (SuÅ¡nik and Moderc, 2021). However, a regional Danube Drought Strategy, developed under the DRIDANUBE Project29, aims to build capacity to cope with droughts, and pushes towards a proactive approach of drought management planning. 3.4 Outcomes Outcomes comprises the positive and negative impacts on people, the economy and the environment that are influenced by the country’s endowment, as well as its decisions with regards to infrastructure and institutions, and materialize through its ability to deliver services, manage resources and mitigate risks. Hence, outcomes are assessed along the social, environmental, and economic indicators. 3.4.1 Social Outcomes Key messages • Despite the high access to drinking and sanitation services (WSS) in the Danube, still 12% od the population do not have access to safely managed drinking water, and 35% still miss access to safely managed sanitation. Bridging this quality gap is needed to further improve public health, free up time for education, and increase labor productivity. • The lack of access to safely managed WSS is most prevalent in rural areas, driven by the lack of economies of scale to cost-effectively provide networked services. However, some urban centers also lack access to safely managed sanitation; this is due to limited investment in expanding networks to connect the growing urban population, and to weak operational and maintenance practices, including lack of cost recovery. • Addressing local hotspots for flood risks and water scarcity can contribute to a reduction of the shares of population exposed to these risks. The reductions can help save lives of people living in flood-prone areas and reduce the social and economic impacts of floods and droughts. Health Benefits from Water Services While access to basic water and sanitation services (WSS) is almost universal in the Danube, additional substantive efforts are needed to expand access to safe and sustainable WSS. Safely managed drinking water is accessible to 88% of the population in the Danube compared to 74% in Central Asia and 81% in the South Caucasus (Figure 42). The sanitation gap is larger, and only 65% of the Danube population has access to safely managed sanitation services. Across countries, there are disparities in terms of coverage and quality of services. EU candidate states have still a large gap when it comes to safely managed services, with less than 33% of population having access to high quality services, whereas in EU states safely managed sanitation services reaches up to 81% of the population. The lack of access to safely managed WSS is most prevalent in the rural areas. Rural areas, marginalized communities, and economically disadvantaged populations often face greater challenges in accessing safe water and sanitation facilities. They are often not prioritized in political agendas and typically lack the economies of scale for cost effective network services (DWP, 2019). Closing the gaps in unsafe water and sanitation services in the Danube countries is paramount for improving the populations’ heal th outcomes. On average, 73 life years are lost per 100,000 inhabitants in the Danube countries due to unsafe water, sanitation and handwashing (Figure 43). Sanitation services being ‘safely managed’ does not necessarily mean connection to a sewer network and treatment in a wastewater treatment plant. There are three main ways to meet the criteria for having a safely 75 Regional Water Security Assessment DANUBE REGION managed sanitation service (SDG 6.2). People should use improved sanitation facilities which are not shared with other households, and the excreta produced should either be (1) treated and disposed of in situ, (2) stored temporarily and then emptied and treated off-site, or (3) transported through a sewer with wastewater and then treated off-site. Strategies to uplift the service levels in rural areas to safely managed include (i) ensuring that emptiers dispose their load at sewerage treatment facilities, (ii) treatment facilities should have a provision to receive faecal matter emptied from cesspools and transported to the site and (iii) occupational Health and Safety (OHS) protocols for private and public emptiers should be put in place and enforced. Figure 42: Basic and safely managed drinking water coverage and sanitation coverage. Source: WHO/UNICEF (2022) Access to safely managed water supply and sanitation contributes to human well-being and socioeconomic development. Good and safe access to drinking and sanitation water been shown to be crucial for socioeconomic development globally, as it improves public health, frees up time for education, increases labor productivity, and supports various economic activities (e.g., fisheries, tourism, property 76 Regional Water Security Assessment DANUBE REGION markets, etc.); it also provides several environmental benefits (e.g., ecosystems services, biodiversity, etc.) (OECD 2011). Health benefits include low prevalence of diarrheal diseases, intestinal nematode infections, and other diseases linked to unsafe WSS. In the Danube region, the levels of mortality (3.09 people/100,000 inhabitants) and disability-adjusted life years (DALYs) 19 (73 DALYs/100,000 inhabitants) attributed to unsafe WASH are low compared to other regions of the world 20 (Figure 43). In comparison, Central Asia shows much higher levels of mortality (4.62 people/100,000 inhabitants) and DALYs (367 DALYs/100,000 inhabitants), although this is still much better than many other regions around the world. Figure 43: Number of DALYs due to unsafe water, sanitation and handwashing. Source: IHME/GHDx (2019) Inadequate treatment of fecal sludge in rural areas with sparse population tends to have only localized effects, while in large urban areas the impacts are felt at regional and transboundary level. Serbia can be cited as an example, alongside other countries in the region. Belgrade and other major cities are not yet equipped with adequate wastewater treatment. Only a few cities in the country treat sewage in wastewater treatment plants. Out of the 37 existing urban wastewater treatment plants in Serbia only 7, which are newly constructed, are EU compliant. The construction of wastewater treatment plants in large cities can lead to a sharp increase in safely managed sanitation coverage in a country. For example, the commissioning of the wastewater treatment plant in Podgorica, for example, will cover a third of the total population in Montenegro. Addressing inequalities in wastewater and fecal sludge treatment requires targeted interventions and inclusive approaches. Rural migration poses challenges, when existing infrastructure becomes underutilized and can no longer be sustained by the revenues it generates from a shrinking population remaining in rural areas. 19 DALYs depict the overall burden of disease with a time-based measure that combines years of life lost due to premature mortality (YLLs) and years of life lost due to time lived in states of less than full health, or years of healthy life lost due to disability (YLDs). One DALY represents the loss of the equivalent of one year of full health. 20 The number of DALYs per 100,000 inhabitants amounts to 1,131 globally, 3,865 in Africa, 748 in Asia, 202 in America, and 64 in Europe. Mortality rates attributed to WASH amount to 17.01 people per 100,000 inhabitants in Asia, 3.71 in Europe, 6.51 in Latin America and the Caribbean, 2.26 in North America, and 49.16 in sub-Saharan Africa. 77 Regional Water Security Assessment DANUBE REGION Looking at the level of safely managed sanitation coverage in the region and vulnerability of children under five years (Figure 44), there is some correlation indicating that with lower access levels, vulnerability is higher. This can be associated to the important role of safe sanitation to public health, and the negative impacts of the lack thereof particularly on health outcomes in children at young age. Figure 44: Safely managed sanitation coverage (source: WHO/UNICEF, 2022) and vulnerability of children under five (source: INFORM) Water pollution, including contamination from industrial, agricultural, and domestic sources, poses risks to water and sanitation improvement efforts. Poor water quality affects both the availability and safety of water resources. Not least, climate change puts further pressure on water and sanitation services in the region, among other by affecting resource availability, quality and by exposing infrastructure to extreme weather events. Preparedness for water-related risks While water stress in the Danube subregion is generally low and the share of the population living in highly water-stressed areas is roughly 15%, there are remarkable differences between countries. Water stress occurs when the water supply is insufficient to meet water demand 21. A region or a country is considered highly water-stressed if the ratio of demands to withdrawals is greater than 0.4. The social outcomes of living in water-stressed areas may include a lack of reliable access to clean water, increasing vulnerability to diseases, and reduced labor productivity; loss of crop yields and livestock production, causing a loss of food calories, income, and employment; and rural-to-urban migration, putting additional pressures on cities (Damania et al., 2017). Most countries exhibit very low levels of water stress (<10%) (Figure 45), indicating a favorable situation for water security. The only two exceptions are Albania and North Macedonia with water stress ratio ≥ 40%. Albania has a water stress ration equivalent to 60% despite being a water-rich country. The high water demand from economic uses (DWP, 2015) and the concentration of the demands in space (along coastal areas), translates into 76% of its population affected by high water stress conditions. Albania also represents a good example of a country that while being water 21 In this assessment, water stress is measured as the ratio of total withdrawals for human use to total renewable freshwater resources, after considering environmental water requirements. 78 Regional Water Security Assessment DANUBE REGION rich it can suffer water stress, and it requires strong management instruments to ensure sustainable allocation and use of water resources. Across the Danube countries there are growing challenges related to water availability and demand, notably the uneven distribution of water resources among and within countries and the high transboundary dependency of many countries (see Section 3.1 on Endowment). Climate change is further expected to have an impact on water stress in the region, while the upper part of the Danube basin is expected to generally benefit from high water availability, resulting in relatively low water stress, the middle part is anticipated to experience moderate to severe water stress, while the lower basin is projected to face severe water stress (ICPDR, 2019) (see projections on water stress in Section 4). Therefore, countries need to improve their water quantity management as well as engage in stronger cooperation on this issue at the transboundary level, which is currently not a top issue on the agenda (see Section 3.2.1 on Transboundary Water Resources Management Institutions). Figure 45: Water stress ratio. Defined as ratio between total freshwater withdrawn by major economic sectors and total renewable freshwater resources, after considering environmental water requirements. Source: WRI (2023) 3.4.2 Environmental Outcomes Key messages • An average of 71% of water bodies in the Danube region are reported to have good ambient water quality. Good water quality across multiple dimensions contributes to safeguarding ecosystems and biodiversity relying on it. • On average across the region the chemical status of waster bodies is better than ecological status. Austria and Slovenia report particularly low chemical status. Romania and Slovenia are leading the ranking of high reported ecological status contributing to healthy and vibrant ecosystems such as found in parts of the Danube Delta. • Lifting levels of wastewater treatment in the Danube region to at least the standards of Austria, Slovenia and the Czech Republic who treat more than 70% of wastewater can contribute significantly to higher water quality. 79 Regional Water Security Assessment DANUBE REGION • Some areas in the Danube region exhibit potential for expanding the use of groundwater. However, caution must be applied to ensure safe use for humans. Unsafe nitrate and arsenic levels potentially harmful to humans or the environment have been observed in several countries. While consumptive groundwater use beyond replenishing is not currently a major issue changing water use patterns and climate must be monitored to avoid this issue in the future. • Wetlands continue to contribute to flood risk reduction, ecosystem services and climate change mitigation across many Danube countries. Slovenia, Slovakia, Montenegro and Moldova serve as good examples with very low losses of wetlands in the past. Preserving wetlands and restoring them in areas such as North Macedonia which has lost the most significant shares of its wetlands will be essential for maintaining the wide array of beneficial wetland functions. Sustainable water management is crucial for sustaining the health of environmental assets in the Danube region. Freshwater ecosystems include rivers, lakes, wetlands, streams and underground aquifers. They store and clean the water that's crucial for people and wildlife. Healthy, biodiverse, unpolluted freshwater ecosystems provide food, livelihoods, drinking water, transportation and recreation and tourism, along with cultural, mental health and other benefits. They also help to prevent erosion, store carbon, dispose of waste, and provide natural protection from flooding. The Danube region is home to diverse and unique ecosystems that support a wide variety of plant and animal species. Examples of habitats include fast flowing mountain streams, wide and slowly flowing lowland rivers, large sand and gravel banks, wetlands and floodplains, wet meadows, oxbows, small and large lakes, and the dynamic Danube Delta. These habitats host some 2,000 vascular plants and more than 5,000 animal species, including over 40 mammals, about 180 breeding birds and 100 fish species, 12 reptiles and amphibians. The Danube’s remaining large floodplain forests and the Danube Delta are the last refuges in continental Europe for the white-tailed eagle and white pelicans. However, those freshwater ecosystems and the biodiversity they support in the Danube are under several pressures, including pollution from agricultural runoff, industrial discharges, and inadequate wastewater treatment, the effects of hydraulic infrastructure and hydromorphological alterations, and climate change impacts. Where water pollution continues to be a major concern for water security in the region it negatively impacts public health in human settlements and environmental health of natural ecosystems that rely on affected water resources. Ambient water quality in a country’s water bodies is used as an indicator for overall pollution and ecological status. The indicator shows a mixed picture in the region. On average, 71% of water bodies in the countries are reported to have good ambient water quality (Figure 46)22. Among the main sources that contribute to water pollution in the region are point source (untreated wastewater and industrial discharges) and diffuse sources (agriculture). While the share of water bodies with good ambient water quality as reported by countries to SDG 6.5.1 monitoring is a good starting point to assess the status of water bodies, it comes also with some uncertainties. First, the country assessment is in many cases based on qualitative judgement, and not necessarily benchmarking against the EU standards of the WFD. This issue applies specially for non-member states, where monitoring is limited and expert judgement is used to define the status of water bodies. A second recurrent problem, is that countries report good status when only 25% of the water bodies are monitored. The assessment of water bodies included in the RBMPs EU countries need to undertake is the most reliable source of information, but such is not available for non-member states yet to carry out a regional assessment. 22 This indicator monitors the percentage of water bodies (rivers, lakes and groundwater) in a country with good ambient water quality. “Goodâ€? indicates an ambient water quality that does not damage ecosystem function or human health according to core ambient water quality parameter groups that are relevant globally: oxygen (surface water), salinity (surface water and groundwater), nitrogen (surface water and groundwater), phosphorus (surface water) and acidification (surface water and groundwater) (UN Water, 2023b). 80 Regional Water Security Assessment DANUBE REGION Figure 46: Share of water bodies with good ambient water quality. Source: UN Water (2023b) The ecological status of water bodies in the Danube region varies widely. On average the half of the water bodies of the EU member states of the Danube do not reach the good ecological status, despite the large differences across countries. This facts reveal that EU countries have not yet and remain far from meeting the main goal of the WFD of having 100% of water bodies reaching the good status by 2027 (see Figure 47). Specifically at the level of the Danube River Basin, 24.1% of the river network is reported to have achieved good ecological status or good ecological potential (7,006 out of 29,127km river network) (ICPDR, 2021a). Despite progress made at national and regional levels over the past decades in tackling water pollution, nutrient pollution, organic pollution and hazardous substances pollution remain among the Significant Water Management Issues (SWMI) in the RBMP of the Danube Basin. Figure 47: Surface water bodies: Ecological status or potential (2nd and 1st RBMP), by country. Source: European Commission/EEA (2021) 81 Regional Water Security Assessment DANUBE REGION The chemical status water bodies is mostly reported to be good across the EU countries of the region. For EU countries, the benchmarking data for ambient water quality can be contrasted with reports on the ecological (for surface water) and chemical (for surface and groundwater) status of water bodies under the Water Framework Directive (WFD). Major exceptions from good chemical status are Austria and Slovenia for their surface water bodies (100% and 99% respectively fail to meet good chemical status) and Czechia for groundwater (63% fail to meet good chemical status) (European Commission/EEA, 2021). Three types of water pollution – nutrient pollution, organic pollution and hazardous substances pollution – have effects across national boundaries and hence a transboundary dimension. Therefore, they are considered Significant Water Management Issues (SMWIs) at the scale of the Danube River Basin. Addressing water pollution has been a focus of the cooperation under the ICPDR since its inception, and particularly of the Danube River Basin Management Plan (DRBMP) developed in compliance with the EU Water Framework Directive (WFD). Important achievements have been made in the Danube Basin: Since 2015, organic water pollution has been reduced by 30%, and total nutrient (nitrogen and phosphorus) emissions dropped by around 20% (ICPDR, 2021).Yet, while addressing water pollution has been driven by the EU Water Framework Directive with its objective of “good statusâ€? of water bodies, achieving the 2027 ‘deadline’ is a major challenge for many countries. Further investments are needed to reduce pressures, including point and diffuse sources of pollution. Agriculture is a diffuse source of nutrient pollution contributing from a third to almost half of nutrient pollution in the Danube region. Excessive nutrients from use of fertilizers and pesticides, particularly nitrogen (N) and phosphorus (P) can lead to eutrophication with negative impacts on various human water uses such as drinking water supply, recreation and tourism. At the scale of the Danube River Basin, agriculture is responsible for 44% of nitrogen (N) and 37% of phosphorus (P) pollution (ICPDR, 2021). Implementing measures to reduce nutrient runoff and promote sustainable agricultural practices is hence essential to the region. Although natural systems like rivers, floodplains, wetlands, and reservoirs can partially mitigate nutrient pollution by retaining nutrients, substantial amounts can still reach lakes and even seas, causing water quality issues far downstream from the pollution sources. In addition, industrial activities, including chemical manufacturing, mining, and waste disposal are a source of hazardous substances pollution. Hazardous substances pollution can have severe consequences for both the environment and human health. Toxic chemicals can accumulate in the food chain, posing risks to aquatic organisms and wildlife. They can also contaminate drinking water sources, jeopardizing the health of communities that rely on these water supplies. The degree of wastewater treatment and its contributions to water quality vary widely across the Danube region. Safe disposal of wastewaters helps to improve the quality of surface waters with benefits for the environment (e.g., functioning of ecosystems; biodiversity), as well as for economic sectors that depend on good water quality (e.g., fishing, agriculture, tourism) (OECD 2011). Basic wastewater treatment exists across many Danube countries (see Section 3.2.2 on Water Supply and Sanitation Infrastructure), but the share of wastewater safely treated (i.e., at least secondary treatment) at the source or through centralized wastewater treatment plants before being discharged into the environment is lagging behind in parts of the Danube region (Figure 28). While in Austria, Slovenia and the Czech Republic around three quarters (80%, 72% and 71% respectively) of wastewater are treated, the share of total wastewater released that was treated is only 2% in Serbia. Since many factors beyond treatment of municipal and industrial wastewater determine water quality, countries with low levels of treatment need not necessarily exhibit the lowest water quality. However, implementing safe wastewater treatment is an essential cornerstone of increasing various dimensions of water quality contributing to human health and functioning ecosystems. Groundwater remains vital for sustainable development, and while underutilized in some areas, in others it is facing depletion, low quality, and/or pollution, impacting its economic and environmental viability. Sustainable use of groundwater requires that extraction rates do not surpass 82 Regional Water Security Assessment DANUBE REGION recharge rates. As soon as the extraction rates exceed the recharge rates, groundwater will start to deplete. In the ECA region, which encompasses the Danube region, around 14% of the abstracted volumes of groundwater is not replenished, compared to a global average of 39% (Wada et al., 2010). In the Danube groundwater is still underutilized and there is potential for further development of this resource for the most part except for Bulgaria, and southern part of Romania and Moldova. Groundwater quality in the Danube is compromised in some areas by agricultural pollution or untreated wastewater, with high nitrate levels observed in aquifers in Poland, Serbia, Croatia, and Romania. Addressing high ion concentrations in groundwater necessitates costly pre-treatment measures (Abscal et al., 2022). Additionally, groundwater use poses a risk of exposure to toxic substances, with notable arsenic concentration hotspots in Hungary and Romania posing health risks (Podgorski and Berg, 2020). A significant part of wetlands has been lost in many countries of the Danube region, affecting ecosystem functions and services. The average score of the countries on wetland loss is 63.3 on an index ranging from 0 to 10023. Wetland loss, however, has not occurred in all countries to the same degree (Figure 48). Loss of wetlands in the Danube region is in part due to the development of hydraulic infrastructure, particularly hydropower projects. Losing wetlands and their ecosystem functions and services can have direct transboundary impacts, including alteration of water flow, reduced flood retention, reduced water quality and loss of biodiversity. One of the most prominent examples from the Danube region is the GabÄ?íkovo dam in Slovakia, where most of the 230km2 of wetlands downstream of the dam in Slovakia and Hungary were lost due to water diversions (Balon and HolÄ?ík, 1999). A specific issue of concern is the focus in the Western Balkans (in the context of the renewable energy transition) on the construction and exploitation of small hydropower plants (SHPPs), which has caused damage to environmentally protected areas, living conditions of local communities, and touristic and agricultural potential (PavlakoviÄ? et al., 2022). Wetland loss is a concern regarding water security and needs to be tackled through a stronger consideration in strategic planning of the multiple benefits wetlands have and through related (wetland renaturation and protection) investments throughout the countries in the region. 23 This index measures wetland loss as a proportion: the average annual loss in wetland area over the past five years (updated continually), divided by the total extent of wetland area in the year 1992. A score of 100 indicates virtually no wetland loss, and a score of 0 indicates the worst levels of loss (EPI, 2020). 83 Regional Water Security Assessment DANUBE REGION Figure 48: Wetland Loss score (0-100) with averages weighted with a proxy for size. Source: EPI (2020) The impacts of climate change, including rising temperatures, changes in precipitation patterns, and extreme weather events, pose a significant threat to water-dependent ecosystems and biodiversity in the Danube region. Integrated water resources management practices that account for climate change considerations are needed to mitigate the impacts of climate change on aquatic ecosystems. This involves sustainable water use, efficient water management, and measures to improve water quality. Also, investing in the restoration and creation of green infrastructure and nature-based solutions such as floodplains and wetlands, can provide natural buffers and help regulate water flow, improve water quality, and support biodiversity in the face of climate change. Climate change is also expected to increase water stress significantly in the middle and lower parts of the Danube basin. 3.4.3 Economic Outcomes Key messages • Average water productivity in the Danube region is high at 49 US$/m³ compared to global and regional peers. EU member countries are on the high end of the Danube region’s productivity spectrum while states outside of the EU produce less in comparison to their water use. • There is significant economic potential in many Danube countries to expand hydropower beyond the current average of 28% of total electricity production. • Where hydropower already produces the majority of the consumed electricity, diversifying the supply to alternative sources of energy can help increase resilience to extreme events such as droughts. Albania is most prone to these risks since its electricity supply relies to close to 100% on hydropower. • Irrigation is currently utilized only in a minority of Danube region countries. Irrigated agriculture therefore contributes to only 3% of Gross Value Added in agriculture. Expanding irrigation in suitable areas can increase crop yields and under certain conditions increase resilience to droughts. 84 Regional Water Security Assessment DANUBE REGION Water plays a key role in the economies of the Danube region. Water is a vital factor of production supporting favorable economic outcomes through a wide range of benefits. Among the key benefits of water security are irrigation water supply for crop production, provision of water to industrial processes, provision of safe WSS and water-based recreation activities for tourism, the generation of electricity through e.g., hydropower, increased economic activities due to de-risking induced by flood and drought risk reduction measures, and high labor productivity of healthy populations with access to safe WSS. While in the region irrigated agriculture only contributes to an average of 3% of the agricultural gross value, Albania (48%) and North Macedonia (27%) already rely on their water resources for agricultural production. Climate change is set to increase irrigation needs also in other areas of the Danube region. Further, hydropower produces 27% of the electricity. Tourism also plays an important role in the economy of several ECA countries such as Albania, Croatia, Moldova, and Montenegro. For example, in Croatia tourism represents about 20% of GDP and the country receives 18-20 million tourists per year, which is almost 5 times the country population. Inland navigation is an important economic activity for some countries in the Danube subregion. Romania and Serbia are the countries with the highest tonnage transported, each with more than 10 million tons of cargo shipped annually. Many other countries also transport significant amounts (ICPDR, 2021). The EU Strategy for the Danube Region recognizes the importance of the Danube River as a major transportation corridor connecting countries and regions within the Danube Basin and beyond. Moreover, water-dependent economic activities such as irrigated agriculture, agri-food manufacturing, hydropower production and tourism generate considerable employment opportunities. Water-dependent exports contribute between 17 (in Czech Republic) and 66% (in Montenegro) of total exports of Danube countries, thus representing an important source of foreign currency. Figure 49: Share of Sector in overall Gross Domestic Product in the Danube region compared to the sectoral economic water productivity. Source: FAO (2023). Water productivity is high in the most advanced economies in the EU, driven by the allocation of water to high-value services. The water productivity indicator measures the water intensity of the economy and can be useful in monitoring how efficiently a given economy uses water over time. An increase in the indicator over time would capture the reallocation of water to more economically productive sectors of the economy. The average water productivity in the Danube region measured as Gross Value Added (GVA) in US $ per m³ of water amounts currently to 49 US$/m³ (Figure 49). This average water productivity is strongly driven upwards by highly industrialized EU member countries in the Danube subregion with water productivities of above 100 US$/m³ in some countries such as Austria, Czech Republic, and Slovakia, being among the highest in the world. Meanwhile, the economic output that can be generated using water in countries with lower GDP outside of the EU is substantially lower (Figure 50). The low water productivities in non-EU countries compared to the EU members in the Danube region are partly driven by the sectoral allocation of water. These differences in water productivity among the countries in the Danube region show that the sectoral composition of a country's economy and its overall levels of GDP play a role in shaping the impacts and productivity of water in this economy. More service sector-oriented areas tend to use lower quantities of water to generate their economic outputs as they gradually shift most of their income-generating activities from agriculture toward manufacturing and further into the service sector. Since value-added is often higher in the manufacturing and services sectors, 85 Regional Water Security Assessment DANUBE REGION a shift of water as a means of production away from agriculture toward these sectors could increase GDP (Roson et al., 2017). While reallocation of water from agriculture to more profitable sectors such as manufacturing and services is desired, it must be, however, balanced with other important values of agriculture including food security, biodiversity conservation, climate mitigation, the linkages to agri-food processing industry, exports, employment, and rural development. It is important to mention, however, that in the Danube region countries with low shares of agricultural value added in their overall economic output still exhibit lower overall water productivity. Thus improving water productivity cannot be achieved by exclusively targeting sectoral allocation of water but must be accompanied by suitable measures for the industrial and service sectors. Such measures could include multiple instruments such as improvements in regulatory frameworks, investments in water-saving technologies and where appropriate the introduction or improvement of water pricing mechanisms. Figure 50: Economic Water productivity in USD/m³ (overall). Source: FAO (2023) Countries in the Danube region depend on hydropower to different degrees for their energy security. Overall, hydropower plays and important role for electricity generation in many countries of the Danube region, with an average share of 28.3%. However, there are very large differences among the countries, as the potential for hydropower generation varies depending on water endowment and topography (Figure 51). Particularly the upper part of the Danube provides a large potential due to the river's considerable natural gradient (ICPDR n.d., e). The countries in the region hence face a diversity of challenges and opportunities related to hydropower generation. There is an untapped potential for further expanding hydropower generation but only part of it is technically feasible, economically viable, and environmentally acceptable. Only in three Western countries of the Danube region (Austria, Slovenia and Slovakia), significantly more than half of the economically feasible hydropower potential have already been developed. Some countries, particularly Albania which relies almost exclusively on hydropower for its electricity supply can gain by diversifying their energy supply thereby increasing their resilience vis-à-vis water shortages. In the remaining countries there is significant room for upscaling if environmental assessments deem additional hydroelectric plants acceptable. 86 Regional Water Security Assessment DANUBE REGION Currently, in the Danube River Basin, hydropower generation is among the key sectors/water users causing significant hydromorphological alterations (96%), interruption of river continuity (56%), reduction of sediment transport and disconnection of former floodplains form the river (ICPDR, 2021a). These changes can have negative consequences for aquatic biodiversity, ecosystem health, and the services that ecosystems provide, thus affecting the achievement of objectives set by EU water and nature law (WFD, NATURA2000) and also of various biodiversity targets. These impacts must be carefully considered and addressed to ensure equitable and sustainable development of hydropower. Such hydromorphological alterations are among the Significant Water Management Issues (SWMIs) addressed in the Danube River Basin Management Plan. Already in 2013, the ICPDR member states adopted ‘Guiding Principles on Sustainable Hydropower Development in the Danube Basin’, a set of principles related to sustainability, integrated basin management, environmental assessment and climate resilience, among other, to guide hydropower development on the national level in the countries of the basin. Further strengthening of governance and institutional capacity in the countries is required for effective implementation of such an approach to hydropower development. Figure 51: Share of electricity production from hydropower and share of economically-feasible hydropower potential not developed in ECA region. Source: World Bank (2023f) Hydropower generation is highly vulnerable to changes in the hydrological conditions and at the same time it generates significant impacts on the water regime and ecosystems within and across borders. In the past for instance, late 2021 to early 2022 was a very dry period in the Balkan countries, resulting in historically low water levels in North Macedonia's reservoirs and a 5-year low in Serbia. 87 Regional Water Security Assessment DANUBE REGION Albania had to halt electricity generation in 11 out of 13 state-owned hydropower plants, declaring an energy emergency. Fluctuations in energy generation between years often result in the importing of expensive electricity (Gallon and Ralev, 2022). In the entire Danube region, where climate change is expected to affect the availability and variability of water resources, the changing climate patterns will potentially have an impact on the operation and efficiency of hydropower plants. Changes in precipitation patterns, increased frequency of extreme weather events, and altered river flows can pose challenges to the reliable and consistent generation of hydropower. Conversely, hydropower development can cause ecological disruptions by fragmenting river habitats, altering natural sediment regime and nutrient flows, and impeding fish migration, and affect downstream water availability. While the benefits of hydropower are significant, those also need to be weighed against the risks of future changing climate, and importantly the externalities generated on water bodies and the provision of ecosystem services and socio-economic benefits. Against this background there is a need to diversify the energy transition of Danube countries and support the development of other non-renewable energy sources (solar, wind) to meet the future demands and support the decarbonization of the region. There is an untapped potential to increase the value of agricultural production by upgrading and expanding irrigation systems where they are most needed in the Danube region. While agriculture only represents 4% of GDP, and thus plays a minor role for most Danube region economies, currently the Western Balkan countries of Albania, North Macedonia and Montenegro accrue significant shares of their agricultural gross value added from irrigated agriculture. In all other countries in the Danube region, this share remains around or below 5%. The share of irrigation for agricultural gross value is on average low in the Danube region at only 3% (Figure 52). Across the Danube basin, and particularly in the lower basin, there are areas where additional irrigation could enhance crop yield significantly, however, this would require substantial amounts of withdrawals, which may get into conflict with other demands. As a solution, drip irrigation is suggested as a viable option to mitigate agricultural water needs. Yet, the economic feasibility of any irrigation expansion would need to be carefully assessed, giving the required investments and market prices (De Roo et al., 2019). Ensuring the availability of water for agriculture while maintaining ecological flows and meeting other water needs is a critical challenge. It is therefore paramount to improve irrigation technologies, practices, and infrastructure can enhance water use efficiency, reduce water consumption, and minimize the strain on water resources. For example in the Sava River basin, it was found that intensifying irrigated agriculture could lead to significant improvements in crop yields. However, the current water resources available in the sub-basin are insufficient to fully realize this potential. Moreover, if irrigation were to be substantially increased, it could adversely affect other sectors. The energy sector might face challenges due to reduced availability of cooling water and potentially impacting hydropower production. Also, navigation in the region could be affected by more frequent and lower low flows. Additionally, environmental or minimum flow requirements would be breached, leading to negative ecological consequences (De Roo et al., 2016). 88 Regional Water Security Assessment DANUBE REGION Figure 52: Agricultural gross value by irrigated agriculture (as % share of total agricultural GVA). Source: FAO (2022) 89 Regional Water Security Assessment DANUBE REGION 4. Future Trajectories This section provides quantitative projections for several indicators representing selected water security dimensions described earlier. The following indicators with future projections include renewable water availability, total water demand, water stress, and flood and drought risks. The projections are based on the combinations of climate and socio-economic projections as implemented by the IPCC (Refer to the Box III) obtained via desktop review and inhouse model simulation. Key Messages ➢ By 2050, the Upper Danube may see increased water availability, while the Middle and Lower Danube could face significant declines ➢ Water demand in the Danube region is expected to rise by 24-52% by 2050, with industrial demand increasing by 50-90% and domestic demand by 36-72%, particularly in Hungary and Romania. ➢ Water stress will likely escalate in the Middle and Lower Danube regions, especially in Bulgaria and Romania, with Bulgaria potentially seeing a 10% increase by 2050. ➢ Flood risks are projected to increase in major cities like Vienna and Budapest, while drought hazards are expected to rise significantly in the Balkans and eastern Ukraine, necessitating enhanced regional cooperation. Box III. The Intergovernmental Panel on Climate Change (IPCC) Scenarios The Intergovernmental Panel on Climate Change (IPCC) uses a set of climate and socio-economic models to study future scenarios related to climate change. The climate scenarios, called the Representative Concentration Pathways (RCPs), are four projections of how concentrations of greenhouse gases in the atmosphere will change due to human activities. The four RCPs (i.e., RCP2.6, RCP4.5, RCP6.0, and RCP8.5) range from low future concentrations (RCP2.6) to high (RCP8.5). In this assessment, two RCPs are considered, RCPs 4.5 and 6.0. For each RCP, we used the average of projections from different climate models (Satoh et al., 2017). The socioeconomic scenarios, called the Shared Socioeconomic Pathways (SSPs), are five narratives describing alternative future development, cooperation, and priorities. For this assessment, we explored three scenarios: SSP1, SSP2, and SSP3. SSP1 is called the “Sustainability Pathâ€? and imagines a world acknowledging environmental boundaries, increasing equality and education, economic growth motivated by human well-being, and decreasing the use of resources and energy. SSP2 is called the “Middle of the Roadâ€? and it represents a "business as usual" pathway where trends typical of recent decades continue, with moderate levels of economic development and slowly evolving environmental concerns. SSP3 is called “Regional rivalryâ€? and envisions a future where there is a resurgent nationalism, increasing concerns about competitiveness and security. Regional conflicts push countries to increasingly focus on domestic or, at most, regional issues. A low international priority for addressing environmental concerns leads to substantial environmental degradation in some regions. Each of the SSPs is associated with quantitative projections of Population and Gross Domestic Product (Jones et al., 2016), which drive the changes in water demand. The report considers combinations of these climate and socio-economic scenarios. The report considers combinations of these climate and socio-economic scenarios as SSP1 with RCP 4.5, SSP2 with RCP6.0), and SSP3 with RCP6.0) to provide a range of possibilities. The socio-economic projections include population projections are made using various assumptions including fertility, mortality, migration, and education rates. 4.1 Socio-economic trajectories Population dynamics Future population in the Danube is expected to increase in the upper part, whereas the middle and lower Danube regions is expected to decline. The population projections for the Danube region are guided by different Shared Socioeconomic Pathways (SSPs) that factor in elements such as fertility, mortality, migration, and education (KC & Lutz, 2017). The upper Danube region, represented by Austria and Czechia among others, expects positive population growth across most scenarios. Specifically, Austria is set for up to an 14% population increase by 2050 in the SSP1 scenario, and Czechia similarly projects a 15% rise. Such growth is likely influenced by strong educational systems and healthcare infrastructure, contributing to these nations being attractive destinations for migration. The middle Danube, which includes countries like 90 Regional Water Security Assessment DANUBE REGION Hungary and Croatia, show a tendency towards declining populations. Hungary could see a sharp decline of up to 24% by 2050 in the SSP3 scenario, while Croatia could experience a 8% decrease. These projections might be reflective of a combination of factors such as limited investment in education, higher mortality rates, and the prospect of emigration for better opportunities elsewhere. The lower Danube region, consisting of countries like Romania and Bulgaria, also anticipates a downward trend in populations across most scenarios. Romania's forecasts indicate a drop of as much as 19% by 2050, and Bulgaria faces a similar 18% decline in the SSP1 scenario. This negative outlook stems from challenges in these countries, such as dwindling fertility rates, high mortality, and a potential drain of educated individuals seeking better economic prospects. Growing populations in the upper Danube would mean increased demand for water, potentially straining resources. Meanwhile, the decreasing populations in the middle and lower Danube regions suggest reduced human capital to address water-related challenges.24 Economic Development trends The SSP-based future GDP projections signal significant economic growth and GDP per capita expansion, driven by economic development, investments, trade, a productive labor force, and infrastructure development. These projections, generated using the ENV-Growth model's six key drivers of economic growth (physical capital, employment, human capital, energy demand, fossil fuel resource management, and total factor productivity), underpin long-term economic forecasts (Dellink, 2017). The regions are expected to gradually converge toward their technology frontiers at varying rates. Specifically in the Danube region, GDP per capita changes highlight a varying economic landscape spanning the upper, middle, and lower Danube regions, with the fossil-driven SSP3 scenario predicting higher growth compared to the SSP1 (sustainable) and SSP2 “middle of the roadâ€? scenarios (Figure 53). In the upper Danube region, countries such as Austria have achieved substantial economic growth, with GDP per capita increasing by over 58% under SSP3, fueled by factors like high human capital, efficient energy usage, and favorable demographics. Meanwhile, in the middle Danube region, nations like Hungary and Slovakia have experienced remarkable economic progress, witnessing GDP per capita increases of more than 101% and 126%, respectively, in the same scenario, driven by improvements in physical capital, rising employment rates, and enhanced total factor productivity. In contrast, the lower Danube region, represented by countries like Bulgaria and Romania, has undergone impressive economic expansion, with GDP per capita surging by over 153% and 106%, respectively, in SSP3. This growth can be attributed to factors including increased resource extraction, robust total factor productivity gains, and resilient demographic trends. Importantly, this economic development and growth can have significant implications for water security and resource management in the Danube region, as increased economic activity may lead to heightened water usage, potentially necessitating sustainable water management strategies to safeguard the region's aquatic ecosystems and water resources. 24 Please note that these projection do not account for the recent political developments in the region. 91 Regional Water Security Assessment DANUBE REGION Figure 53: Changes in GDP growth across the Danube countries. Source: Dellink et al. (2017) Note: % of change with respect to the year 2010 for the SSP1- top panel and SSP5 scenarios- bottom panel in the year 2040. 4.2 Projections on water availability and demand Water availability The future projections of water availability in the Danube region presents a contrasting picture: the Upper Danube is expected to see periods of increased annual water availability, while the Middle and Lower Danube regions face a decline, raising water scarcity concerns. Future projections of water availability within the Danube region until 2050 indicate significant spatial variability under the RCP 4.5 and RCP 6.0 scenarios. The projections reveal a complex landscape of water resource distribution that is expected to undergo notable changes by mid-century. Countries situated along the Upper Danube, such as Austria and Slovakia, present a complex scenario, with projected water availability indicating both increases and decreases across the region. However, by 2050, these countries could experience an overall decrease in water resources, Austria potentially facing a reduction by about 9% and Slovakia by approximately 8% under the RCP 4.5 scenario compared to 2010 levels. Despite occasional increments, the 92 Regional Water Security Assessment DANUBE REGION broader trend indicates a leaning towards decreased water availability. Countries along the Middle and Lower Danube, particularly Romania and Bulgaria, are uniformly projected to witness a pronounced decrease in water availability. By 2050, Romania could see its water resources dwindle by roughly 12%, while Bulgaria might experience a decrease of approximately 11%, compared to the 2010 benchmark. This uniform decline across the middle and lower segments of the Danube underscores a looming challenge of potential water scarcity that these regions may have to contend with in the future. These contrasting trends could lead to heightened water scarcity in the Middle and Lower Danube, while potentially increasing flood risks in the Upper Danube (ICPDR, 2018) & Burek et al., 2020). Figure 54: Comparison of surface water availability between the baseline in 2010 and RCP4.5, and RCP 6.0 scenarios in 2050. Source: Satoh et al., 2017. 93 Regional Water Security Assessment DANUBE REGION Impact on river flow trends due to climate change has significant implications for hydropower, riverine transport and ecosystems services. Climate projections indicate increased peak flows in the Upper and Middle Danube which could potentially enhance hydropower production Bissenlink et al. (2018) (Figure 55). However, these high flows might also pose challenges like increased flood risk. Conversely, reduced flows in Croatia, Bulgaria, and other countries in the Lower Danube region could negatively impact both riverine transport, by limiting vessel accessibility, and hydropower production, as highlighted in the Climate Risk Profiles (World Bank 2021b-e) from the World Bank Climate Change Knowledge Portal (World Bank, 2023f). The overall decrease in average streamflow during summer months could be detrimental to wetland ecosystems across the countries, affecting biodiversity and water quality) (Probst and Mauser, 2023). In agriculture, which is intensely reliant on predictable water availability, the anticipated decrease could exacerbate water stress, impacting crop yields, and demanding shifts towards more drought-resistant crops or advanced irrigation practices. Riverine transport, chiefly in the Lower Danube, stands to be adversely affected by reduced flow levels, possibly leading to navigation restrictions that could disrupt trade and elevate transportation costs. Moreover, transboundary water management will become increasingly complex as countries navigate the dual challenges of flood mitigation and water scarcity, underscoring the urgency for enhanced regional cooperation and integrated water resource management frameworks. Figure 55: Maps of the long-term mean seasonal mean-discharge (MQ) change [%] in the Danube River Basin. Source: Probst and Mauser (2023). Note: according to the GCM-RCM-driven simulations (ensemble mean) under RCP2.6 and RCP8.5 for the near future (2031–2060) and the far future (2071–2100) compared to the historical GCM-RCM-driven simulations. (ensemble mean, 1971-2000). Water Demand Future projections of water availability and its mismatch with escalating water demand particularly in the industrial sector could strain the water resources in the Danube region. The 94 Regional Water Security Assessment DANUBE REGION Danube region, is projected to witness a significant uptick in water demand, reflecting broader regional patterns of growth and development. In the period spanning from 2010 to 2050, the total water demand in the Danube region is forecasted to rise by 24-52% (Satoh et al., 2017). Notably, this increase is most pronounced in the domestic and industrial sectors, signaling a shift in water use dynamics. The industrial sector's demand is anticipated to surge between 50 to 90%, a reflection of industrial growth and the potential for more water-intensive production processes. This expansion is poised to elevate the stress on water resources, as industries vie for their share alongside other water use sectors. In the domestic sector, the projections are equally compelling, with an expected increase of 36% to a staggering 72% in 2050 in comparison to the baseline year of 2010. This trend is most pronounced in Hungary and Romania, where water demand could surge by 62% and 59%, respectively (Bissenlink, 2018). In Bulgaria, Serbia, and Bosnia and Herzegovina, rising energy consumption is expected to drive the need for more cooling water, further straining available resources. Austria and Germany's Danube regions are also slated to experience a surge in industrial water demand. Despite some countries potentially facing population decline, overall water withdrawals are expected to rise, particularly in the industrial sector (Figure 56). Additionally, the energy sector's burgeoning needs, especially in Bulgaria, Serbia, and Bosnia and Herzegovina, are predicted to amplify the demand for cooling water, implying a direct link between rising energy requirements and water resource utilization. With energy production and industrial activities expected to expand, the ensuing demand could lead to a substantial draw on the Danube's water reserves. Agriculture, a primary water consumer, is also expected to see an uplift of about 6-8% in the same period, assuming the area under irrigation remains consistent with the 2010 baseline. Such an increment is indicative of intensified agricultural practices aimed at supporting the food demands of potentially growing economies. This increased demand risks aggravating water stress. Countries like Croatia, Montenegro, and Albania are already considering agricultural intensification, adding another layer of pressure on already-stressed water resources, in case the intensification increases water consumption beyond water use efficiency savings. Figure 56: Comparison of total water demand between the baseline in 2010 and SSP1 RCP4.5, SSP2 RCP 6.0 and SSP3 RCP 6.0 scenarios in 2050. Source: Satoh et al., 2017. 95 Regional Water Security Assessment DANUBE REGION Water Stress Water Stress is projected to escalate in the Danube region particularly in the eastern and south- eastern parts. In the face of climate change and varying water availability, different parts of the Danube region are slated to experience disparate levels of water stress. While the Upper Danube remains relatively cushioned with high water availability, the Middle and Lower Danube face moderate to severe water stress, as detailed by the ICPDR (2019). In the Danube region, downstream countries like Bulgaria and Romania are expected to see an increase in water stress, but the levels remain relatively moderate, with Bulgaria reaching an increase of up to 10% by 2050 (Figure 57). Pistocchi et al (2020) projected that climate change could lead to more severe flooding and water scarcity if global temperatures rise beyond 2°C, impacting water resources significantly and increasing the risks of droughts, particularly in the lower parts of the basin. A 2° increase in temperature paints a complex picture: Romania, Bulgaria, Albania, Bosnia and Herzegovina, and Slovakia will likely face rising water stress predominantly during autumn and spring (Bissenlink et al., 2018;Figure 57). On the flip side, Austria, Slovenia, Serbia, and Kosovo might experience reduced water stress. The key driver in many of these scenarios is the upsurge in water demand. Figure 57: Comparison of water stress ratio (ratio of total demands to total available surface water) between the baseline (year 2010) and SSP1 RCP4.5, SSP2 RCP6.0, and SSP3 RCP 6.0 scenarios in 2050. Source: Satoh et al., 2017. Projections for water related risks 4.3 Projections for water related risks Flood risks Economic and human costs linked to flood risk remain significant under climate change, though minor decrease is projected for many countries in the Danube region. Flood risk increases 96 Regional Water Security Assessment DANUBE REGION anticipated in areas already categorized as high-risk. Minor changes in the relative population or economic exposure to flood risk are expected in most of the Danube region countries. Some countries (Montenegro, Kosovo, Ukraine, and Moldova) anticipate large decreases in flood risk, while significant increase is anticipated in others (Austria, North Macedonia;Figure 58). Hotspots of high flood risk around Danube region’s major cities like Vienna, Bratislava, Budapest, and Belgrade, expect large risk increases (by a factor of 1.1 -1.5, Figure 59). On the other hand, the flood risk in large parts of the Danube region is expected to decrease by 10% -25% or remain unchanged, as in the case of the major Ukraine Rivers (e.g., Dnipro; Figure 61). Though large parts of the Danube region are expected to experience some decrease in flood risk, the relative risk remains significant, exceeding 2% of the population and GDP in eight and five countries, respectively. Figure 58 Change in GDP flood exposure between 2010-2080 in RCP 4.5 and RCP 8.5. Source: Ward et al., 2013. 97 Regional Water Security Assessment DANUBE REGION Figure 59: Change in floods economic risk (left) and population risk (right) between 2010 and 2050 at a subnational level in RCP 8.5. Source: Hofste et al. (2019) Drought Risk Anticipated rise in drought hazards poses elevated risks to the Danube region, particularly the Balkans and eastern Ukraine. The complexities of drought risk stem from intricate interactions among drought hazards, vulnerability, and exposure. Given future uncertainties, this assessment focuses solely on changes in drought hazards, measured by the CMIP5 multi-model ensemble standardized precipitation evapotranspiration index (SPEI). Under a pessimistic scenario for the years 2040-2059, the Danube region is poised for a dramatic surge in drought hazards (Figure 60). Currently, the Balkans face a low to medium risk, and Eastern Ukraine is already at high risk—both are expected to see a significant rise in drought hazards. While adaptive measures may offset some risks by reducing vulnerability, shifts in population and economic activities could further influence drought risks. 98 Regional Water Security Assessment DANUBE REGION Figure 60: CMIP5 ensemble projected absolute change in annual average SPEI relative to the 1995–2014 baseline under RCP8.5. Source: World Bank (2023) 99 Regional Water Security Assessment DANUBE REGION 2 Recommendations to leverage water benefits and opportunities Danube countries operate within global and regional frameworks that establish international and national development objectives to tackle common priority challenges. The 2030 UN Sustainable Development Goals Agenda and the Paris Agreements, along with the EU policy framework, which includes the European Green Deal and the EU Strategy for the Danube Region provide the reference frameworks for Danube countries to advance the sustainable development agenda and place a strong focus on water security. National strategies should therefore be designed to achieve these sustainability goals, spanning across a whole range of domains, including safe water and sanitation, food security, clean energy, protection of ecosystems and climate actions, among others. Reaching all these different goals represents a daunting task for all countries, and requires the smart strategies to ensure that countries can reach the proposed goals effectively and efficiently, generating the largest possible co-benefits to third sectors, or at least minimize unintended cross-sectoral impacts. Pathways to achieve water security in the Danube are largely driven by the EU policy framework and are intended to improve people’s livelihoods, economies and ensure environmental sustainability; but actions need to tailored to national and regional priorities and capacities. Based on the diagnostic assessment undertaken (Section 3) and the national development priorities, four main priority action areas emerge as those where clear opportunities are available to countries to improve their water security and deliver larger economic, social and environmental benefits (see Figure 61). ACTION AREA 1 ACTION AREA 2 ACTION AREA 3 ACTION AREA 4 Stepping up to the Strengthening Adapting to climate Transforming regional highest water and institutional and change and boosting relations to strength sanitation service level management capacities economic productivity development to protect human well- to support the opportunities being, support implementation of IWRM socioeconomic development and become climate neutral National Agenda National & Regional National Agenda Regional & National Agenda Figure 61 Action Areas for Water Secure Development Pathways in the Danube region Priority actions aiming at improving water security will need to happen at national level but they will need to consider regional implications. Regional coordination needs to be maintained and strengthened given the high hydrologic interdependency on Danube’s rivers and the need to manage cross - border hydraulic infrastructure to mitigate hydrological risks, as well as to exploit regional coordination and trade opportunities. 100 Regional Water Security Assessment DANUBE REGION ACTION AREA I: Stepping up to the highest water and sanitation service level to protect human well-being, support socioeconomic development and become climate neutral. Adopting a "portfolio approach" is crucial to address the coverage gap in water supply and sanitation services. While the region has achieved near-universal access to basic drinking water (97%) and sanitation (95%), significant disparities remain - particularly in rural areas where safely managed sanitation reaches less than 54% of the population. The gaps are larger in the non-EU member states, where only 32% of the rural population has safely managed sanitation. In EU countries, further efforts are required in Croatia, Bulgaria and Slovenia to lift the sanitation service standards. To overcome this gap, a mixed delivery model should be pursued, prioritizing centralized solutions in large urban centers, while exploring on-site and decentralized services in peri-urban and rural areas where centralized systems may be unaffordable or infeasible. Improving water service standards will not only reduce health risks and mortality rates attributable to unsafe water, but also support socioeconomic development by boosting productivity and catering to growing sectors like tourism. Implementing this diversified approach will require Danube countries to continue adapting their legislative frameworks to EU standards, but importantly, develop targeted investment programs that recognize the variety of service models and associated financial resuroces. These efforts should be undertaken in close cooperation with local governments and communities to ensure affordable and effective solutions tailored to the unique needs of each context. Expand wastewater treatment coverage to overcome water pollution, meet EU policy targets, and promote new climate-neutral business models. Investments in water supply and sanitation services have been largely oriented to drinking water supply and increasingly sanitation. Wastewater treatment, however remains the pending subject since at regional level Wastewater treatment has received less attention, and currently only 55% of the wastewater is safely treated. There are large disparities among countries in the Danube, with non-member states facing the biggest gaps, since on average only 30% of the water is treated as oppose to EU member states, where the share increases up to 77%. Nevertheless, there are large disparities even among EU countries. For instance, in Croatia, Bulgaria and Romania despite the investments in collecting and treating wastewater, yet less than 30% of its waters are treated according to the UWWTD requirements (WISE, 2024). The only Danube countries that managed to close the gap are Austria or Slovakia where over 93% of its waters are treated meeting the UWWTD requirements. Accordingly, the larger majority of the countries still need to identify solutions to improve wastewater treatment, which might include centralized wastewater treatment plans in the largest agglomerations but alongside with decentralized and cost-effective technologies such as nature-based solutions in the rural and peri urban areas where expensive technology is not affordable. Financial requirements will be substantive. According to Strong et al (2020), Danube would require annual investments of nearly US$ 2.4 billion/year until 2030 to bridge the WASH gap and meet SDG6. More than half of these investments are required to improve sanitation and wastewater treatment. The EU requirements for wastewater treatment are more stringent than the SDG6 targets, meaning that US$ 2.4 billion/year is probably a low estimate for the region. Mobilizing such funds will require a combined approach e.g. through taxes, tariffs, further transfers from state budgets, EU (including the pre-accession processes), multi-lateral donors and even private investments. Private capital mobilization has proved to be a successful strategy in several Danube countries and beyond for addressing infrastructure needs and helping public utilities manage different services, including wastewater treatment, through public- private partnerships (PPPs). While some countries like Albania and Moldova currently lack PPP contracts, dedicated legal provisions have been made to support their introduction, as PPPs are perceived as positive drivers for change and improvement. Wastewater treatment offers attractive business opportunities for service providers to promote green and circular economy models, such as wastewater reuse, which shows great potential in the Danube region, with less than 4% of the water treated is reused; along with the recycling of sludge for biogas or agricultural fertilizers, shifting to a "from waste to resource" paradigm, which can generate additional revenues for service providers. Investments to address the WASH gap need to be designed to support climate change mitigation and enhance the resilience of water supply and sanitation systems. WSS services contribute significantly to greenhouse gas emissions both directly through the breakdown of excreta and indirectly through the energy required for collection and treatment, with centralized plants estimated to require 3% of 101 Regional Water Security Assessment DANUBE REGION global electricity consumption and wastewater treatment contributing ~1.57% of global GHG emissions, while on-site solutions like pit latrines account for ~1% of global anthropogenic methane emissions. However, emissions are rarely considered in the selection of technologies, despite the significant potential to reduce them through the recovery of energy and nutrients, renewable energy production, and reduced dependency on fossil-based fertilizers, which would not only contribute to climate action and reduced environmental discharge, but also provide co-benefits like food and energy security across countries. To improve service delivery, quality and efficiency, favorable institutional frameworks and enabling environments must continue to be built for service providers' improved operational and financial performance. Institutional arrangements for water supply and sanitation are quite well developed in Danube, but there is major institutional fragmentation, which translates into jurisdictional asymmetries with a spread of regulatory, management, and financing functions across different institutional levels; these are not always fully coordinated. Such fragmentation is rooted in the decentralization processes that many countries have upon; nowadays most countries have policymaking functions (and financing) coordinated at national level by different ministry lines (water, infrastructure, health and environment), whereas planning is largely decentralized to the regional and municipal level. Such decentralization process needs to be completed with further reforms, so that local regional and local governments have sufficient financial and institutional capacities to match investments with coverage needs. Institutional reforms include the application of cost- effectiveness approaches in program planning and funding, as well as targeting the professionalization of the staff of service providers to build the capacities of their people, and this should also be captured in the legal frameworks. Good practices include the development of waterworks associations, such as those developed across several countries in Danube (e.g. Austria, Bulgaria, Czech Republic and Slovenia), which offer different services to assist service providers by providing technical assistance, support knowledge exchange and developing technical guidelines. Likewise, Danube countries should also pursue the expansion of national regulatory bodies, which are yet only present in 11 out of the 16 countries. Either multi-sector or water specific, regulators can play a major role to improve the quality and efficiency of water services, by protecting customers from low quality or too expensive services, through tariff setting and control, granting operators’ licenses, and developing standards for safe drinking water and wastewater treatment. Service efficiency and upgrading of ageing infrastructure require improved management of Enhanced management of service revenues. In Danube countries, 4 out of every 10 m3 of water served are not charged to the users, either because this water is physically lost in the network or illegally abstracted. This is almost double of the European average, where non-revenue waters amount to 23% on average (EurEau, 2017). The Western Balkan countries like Albania, Montenegro and North Macedonia are amongst the countries with the highest non-revenue water rates (greater than 60%). Such circumstances not only mean physical water losses, but also financial losses. Revenues from water tariffs across the Danube region are just sufficient to cover operational costs at the regional level, but surpluses (17% on average) are likely to be insufficient to cover asset management as well as the renewal of infrastructure. Investments to upgrade existing water services infrastructure can help to reduce the non-revenue waters, achieve cost recovery, and generate surpluses which can be reinvested in maintenance and expansion of infrastructure. But such investments need to be accompanied or preceded by institutional reforms aiming to strengthen service providers' ability to recover their operation and maintenance costs, as well as those necessary for asset management and the renewal of infrastructure. Otherwise, new investments will end up in non-maintained infrastructure that will have to be rebuilt in the future. Many countries across the region (e.g. Montenegro) are in this vicious circle, where despite having operating cost coverage greater than 1, they face high non- revenue waters, but this model is likely to be unsustainable in the future, as infrastructure requires upgrading, and operational and maintenance costs increase, which could compromise the financial sustainability of service providers and affordability of water tariffs for water users. A first step out of this vicious circle will be to make a stock-take of existing assets, identify opportunities to maintain them, and look for efficiency gains. 102 Regional Water Security Assessment DANUBE REGION ACTION AREA II: Strengthen institutional and management capacities to support the implementation of IWRM and EU policy acquis Strengthen the legislative and institutional frameworks to support the implementation of a truly IWRM approach. The Danube countries have made important strides to support the implementation of IWRM as defined in the EU water policy framework, undertaking reforms to adapt their national regulatory frameworks to the EU legislation, allocating responsibilities for policymaking and management across institutions, and identifying financing needs. Major gaps remain, however, and reforms need to continue to create a strong enabling environment, especially in the non-EU member states. EU countries have mature regulatory frameworks almost if not fully compliant with EU Water Framework Directive and associated Directives, but candidate states still need to make further efforts in transposing and further aligning their national policies. Despite the different level of development of the water regulations, almost all countries face important implementation challenges, given the limited institutional capacities to support implementation of legislation in place, financial constraints to implement the program of measures, and limited enforcement capacity. Where climate variability and environmental degradation are growing risks further development and modernization of existing regulatory frameworks are needed to address these critical aspects. In fact, both Eu and non Eu countries have little development of the policy framework on drought management, despite being a growing risks for all countries. Such regulatory reforms should also address the existing institutional fragmentation and overlaps of responsibilities within and across the water sector observed in many countries (e.g. Serbia and Montenegro). Progress has been achieved and many countries have pursued the development of water ministries in an attempt to centralize water policy functions. However, many still have water functions spread across multiple state bodies e.g. water policy functions in Serbia remain spread across seven ministry lines. Such reforms are quite complex and require in-depth institutional assessments to identify an effective and efficient pathway to reform. Addressing existing threats to water resources and anticipating future threats requires a smart long-term water management strategy and a prioritization approach to support its implementation. While all Danube countries have developed comprehensive water strategies, the implementation of these strategies is often constrained by limited regulatory development and/or insufficient funding. As outlined in Section 3.2.1, water management functions are exceptionally broad, requiring a substantial effort to facilitate their realization. Although countries' strategies need to provide a comprehensive long-term vision for the water sector and guidance on overcoming existing and emerging threats, an incremental approach is also necessary to enable effective implementation. This incremental approach means that countries will have to prioritize reforms and investments over a timeline to ensure they can be carried out in fulfillment of the strategy's overarching vision. Establishing such a strategic framework and securing the requisite capacity necessitates sustained political support and the prioritization of water as a key asset for socioeconomic development on the political agenda. The river basin management approach needs to be further expanded and existing institutional weaknesses overcome. The experience gained in the Danube EU member states shows that basin planning is instrumental to support the implementation of IWRM. However, substantive institutional, technical and financial capacities are required, which are often lacking in non-EU countries. Even so, non-EU countries have made important efforts to implement the basin water management approach guided by the Water Framework Directive, including the development of river basin organizations. However, existing river basin organizations face important institutional weaknesses, mainly because they have limited authority and largely act as consultative organizations (basin councils), with minimum budget and IWRM capacities. In some cases, water management remains heavily centralized by a national institution (e.g. Croatia, Albania) with regional branches that support the implementation of management instruments. Last but not least the decentralization of WRM has been directly delegated to regional branches of the state body or administrative regions with jurisdictional borders that do not align with hydrographic basins (e.g. Austria, Moldova, Serbia). Therefore, to support the implementation of IWRM at basin scale, it is fundamental that existing and new institutions are provided with expanded functions beyond a consultative function, in order to plan, manage, and allocate water within basin boundaries. In the same way, institutions need to be provided with sufficient human and technical capacities and financial resources. Enhancing the participation mechanism, and improving technical 103 Regional Water Security Assessment DANUBE REGION autonomy, accountability, transparency, and efficiency principles are also key for having robust and well- performing institutions. Adopt a strategic approach to flood management to reduce risks for Danube’s populations and economic assets. Flood Risk Management is key topic in the Danube and its implementation is largely driven by the EU Floods Directive. Program of measures to manage floods have already contributed to reducing flood risks, and joint implementation by EU member states and candidate countries within the Danube River Basin has facilitated a common perspective on a holistic flood risk management approach in the region. Nevertheless, at the country level, further work is needed regarding a strategic national approach on how to implement and operationalize the EU flood Directive, while also taking into account future risks imposed by climate change. Strategic implementation requires addressing three important aspects: 1) Financing, which should either come from national budgets or international funds; 2) smart and innovative solutions, including a pool of green and grey measures to maximize the co-benefits and reduce costs; and 3) application of cost effectiveness criteria for the prioritization of measures. At regional level, the ICPDR can play a pivotal role in better coordination and selecting the most cost-effective flood protection measures from a transboundary perspective (while here again even such solutions are of difficult political nature). Develop the knowledge base to understand the risks to water scarcity and assess potential social, economic and environmental impacts. The Danube region is on average water rich in global comparison; however, the resources are unevenly distributed among the countries. This uneven distribution of water resources in the region is expected to get even more pronounced in the future due to the impacts of global climate change, with some areas facing structural imbalances of supply and demand for certain sectors, increased water scarcity and droughts. So far, countries have mainly pursued a reactive approach to scarcity and drought management, and many are still missing a comprehensive policy framework on drought management. Sectoral agendas are often not aligned with drought management priorities. Therefore, it is fundamental to develop the knowledge base to understand and anticipate to future water stress risks and associated impacts. At the policy level, this requires understanding what policies are in place and level or preparedness. On the management side, this will require the development of different tools, including a water balance at national but even beyond, transboundary level, to take stock of how water is available and used by different sectors across countries and borders and the implications for downstream users. Management instruments need to be further developed to increase the performance of water resources management. Main priorities to implement IWRM, include: 1) Development of a country- and basin-wide water balance integrating surface and groundwater resources. Most Danube countries, have rather limited and uncertain water balances at country or basin level. Such information is necessary now and for use as a structural tool in the future; countries can benefit from using advanced earth observation technologies, and open source hydrological and hydro-economic models for planning purposes. There is a particular knowledge gap with respect to groundwater availability and dynamics. 2) Establishment of water allocation mechanisms . Danube countries have established a water extraction permit system, and some have developed a cadaster of water uses, although these need to be updated and maintained, given that data are often not up-to-date and are scattered across institutions. Surveillance mechanisms (e.g., metering) in the field are largely missing and need to be strengthened. These technical measures need to be complemented by financing measures. Water tariffs for services beyond water supply and sanitation (e.g. irrigation) as well as economic instruments such as environmental and resources charges need to be much further developed. The development of these economic instruments also needs to be accompanied by a strategy to ensure service cost recovery; this will ensure the financial sustainability of the service provision while generating the appropriate incentives for users to use water efficiently and sustainably. 104 Regional Water Security Assessment DANUBE REGION 3) Expand and upgrade data monitoring systems. Data monitoring systems (meteorological, hydrological, chemical, hydro-morphological) are under-developed in non-EU countries and the existing networks have a limited coverage; meaning that evidence-based decision making for water resources planning and management is very challenging. Countries have started to reinvest in modernizing water information systems, yet allocation of adequate financial resources for investment, operation, and maintenance remains a challenge. Water pollution remains a challenge in the Danube and water quantity management might become a growing challenge, to which countries need to anticipate and invest in developing stronger monitoring systems. 4) Develop water information systems and promote data exchange . Currently, the large majority of countries lack a water information system, or when available is in a basic form. Developing such systems will also facilitate the data exchange across water institutions and increase transparency with the public. Such systems will need to be aligned with open data principles. 5) Enhance public participation. While reflected in the Water Framework Directive, stakeholder participation is limited and not always inclusive in practice. Where mechanisms for public participation exist, these are generally articulated around river basin councils, but such institutions have limited resources and capacities to engage wider groups. Strengthening public participation will help to empower local communities, improve decision-making to develop consensus among key players on the best way of conserving and utilizing water, and ultimately, create a common ground for developing solutions, so as to potentially avoid conflicts in the future. 6) Ensure that operational planning tools for management of water resources and water related risks are developed and regularly updated. River basin , flood, and drought management plans are basic instruments to manage water resources mitigate the impacts of water-related risk. All EU countries of the Danube have developed the second or even third generation of RBMPs and the second round of FRMPs. Candidate States are largely still in the process of developing the first generation of RBMPs and FRMPs compliant with EU legislation. Drought management plans are still lacking across the entire Danube, and a first step in the development of such plans will require taking stock of what approaches and experiences countries have to manage droughts, and to co-define a standard approach to measure drought risks and establish management measures. Drought management plans represent a cornerstone for climate change adaptation, given that rising temperatures and growing rainfall variability will increase the risks of extreme events and of droughts. Candidate States need to continue investing efforts in completing and further updating the RBMPs and FRMPs. 7) Develop program of measures that are cost-effective and support climate action. Climate change has been defined as one of the five Significant Water Management Issues (SWMIs) in the Danube River Basin Management Plan, and particularly as a cross-cutting issue that has an impact across the other four SWMIs (organic pollution, nutrient pollution, hazardous substances pollution and hydro morphological alterations). Therefore, in the upcoming review of the Danube RBMP, it is important to include a program of measures that i s “climate proofâ€?, avoiding negative and unintentional side effects even under climate change conditions. This same approach is also valid for the RBMPs that are being developed within the Danube countries. Likewise, given the large investments required to implement the program of measures, countries need to also apply prioritization of measures based on cost-effectiveness criteria. Promote exchange on good practices and lessons learnt on water resources management across the region. EU Danube countries have made an important leap to support the implementation of the EU water acquis on water resources management, and candidate states can benefit from exchanging and receiving advice on how to implement the different EU policies. Such exchange can happen in the format of 105 Regional Water Security Assessment DANUBE REGION policy dialogues, such as those led by UNECE25, or with the technical support of ICPDR, to help candidate countries to improve their legal and regulatory frameworks in line with IWRM principles and EU water policies; as well as getting support and technical advise on how to develop planning instruments. Area III Adapting to climate change and boosting economic productivity Improved water management can boost water productivity and associated economic benefits. Danube as a whole currently holds one of the highest cash per drops in the world (>above 100 US$/m³). But this regional figure masks important subregional and country differences. While EU Member States such as Austria, Czech Republic or Slovakia have overall water economic productivities averaging above 132 US$/m³, candidate states from the western Balkans do not surpass the 20 US$/m³. This sharp contrast between countries, shows that there is an untapped potential to increase the efficiency and management of water resources, which can contribute to boosting economic growth and increasing the resilience to climate change. Since value-added is often higher in the manufacturing and services sectors, a shift of water as a means of production away from agriculture (the largest water user) toward the manufacturing and services sectors could increase GDP and water productivity. However, agriculture is a key sector contributing to the achievement of other important regional objectives such as food security, biodiversity conservation, climate mitigation, the linkages to agri-food processing industry, exports, employment, and rural development. Agriculture is, and will remain, an important sector for the region, in terms of both rural livelihoods and water management, and strategies should therefore be focusing on improving productivity across the different sectors, including agriculture, while adapting to changing climate conditions. Most countries across the Danube have agricultural water productivities below the EU average (1.76 US$/m³), meaning that there is a lot of potential to increase the economic revenues of agricultural water use. Expansion, rehabilitation, and modernization of irrigation methods can improve agricultural productivity, help address urban–rural inequality and support climate change adaptation. The irrigation sector in the Danube region is under-developed, with less than 11% of the agricultural land under irrigation. Where present (e.g. Albania, Moldova, Romania), irrigation infrastructure is decaying (up to 50 years old), and therefore highly inefficient and at the root of low water agricultural productivity. Through the modernization and rehabilitation of current irrigation systems there are big opportunities to achieve water savings. Improving productivity can also be achieved by investing in more efficient irrigation systems, shifting toward high-value crops, implementing pricing mechanism to reduce overuse and pollution, better water delivery control, and improved access to knowledge and finance for farmers. Climate change is going to have multiple economic impacts, and the Danube is is considered one a vulnerable region, given that the expected increase in temperature is likely to increase water demands for crops, irrigation infrastructure and water storage as coping mechanisms are rather limited. Expansion and modernization of irrigation systems, along with increasing storage capacity are adaptation strategies that can help to buffer the impacts of increasing temperature and frequency of droughts. Hydropower development in the Danube region needs to concurrently consider water security and energy security. Integrated water-energy planning is crucial for harmonizing water and energy needs in the Danube region. This approach involves considering the interdependencies between water and energy sectors, taking into account water availability and environmental constraints when designing hydropower projects. Climate change poses additional challenges to both water security and energy security in the Danube region. Integrating climate change considerations into hydropower planning can enhance resilience and adaptive capacity. While there is some untapped potential for further expanding hydropower generation, only part of it is technically feasible, economically viable, and environmentally acceptable. Yet, for existing hydropower infrastructure, investments are urgently needed in many Danube countries in order to improve dam safety, but also to restore the initially planned electricity production. Further financing of hydropower development needs to be planned taking into account future water scenarios and the environmental effects of such projects carefully evaluated through participatory processes. The designation of “no -go areasâ€? for 25 The so-called National Policy Dialogues on Water Resources Management under the EU Water Initiative 106 Regional Water Security Assessment DANUBE REGION hydropower development can be an important cornerstone of the relevant national strategy. The potential multi-benefits of current, but also potential future related infrastructure/water storage (e.g. for irrigation, urban water supply and serving flood protection purposes) need to be more systematically assessed, leading to potential changes in the way water storage infrastructure is managed. Adapting to climate change should be a priority to strengthen the economic and social resilience of the Danube region. While the Danube is relatively water-rich, 15% of the population lives in areas facing water stress. This situation is likely to worsen due to the combined effects of climate change and growing demands from population growth and socioeconomic development. Climate change is expected to impact water availability by altering hydrology, changing seasonal flows, increasing temperature-driven water demand, and reducing snowpack storage. Meanwhile, water demands in the region are projected to increase by 30-60% by 2050. This scenario will likely intensify water stress and conflicts between different water users. To reduce future conflicts and increase sectoral resilience, Danube countries should prioritize the implementation of adaptation measures to build broader economic resilience to climate change. Key adaptation measures include: 1) expanding water storage through grey or green infrastructure to cope with climate variability and address high rates of dam storage losses; 2) upgrading existing water facilities to reduce losses in irrigation, water supply, and sanitation; 3) developing non-conventional water sources, such as desalination, water reuse, and rainwater harvesting, especially in coastal tourism-dependent areas; 4) improving and expanding weather and water information systems, including short-term weather forecasting; and 5) reviewing reservoir operations to better balance energy security, water supply, and flood mitigation. Area IV Transforming regional relations to strength development opportunities Strengthening regional technical cooperation can contribute to speed up the implementation of EU water acquis and of existing agreements. The work done by ICPDR in Danube Basin is an example of cooperation and can lead the way to inspire other important transboundary basins. Good practices include exchange of data and information related to water resources and their use across countries, the establishment of joint monitoring and early warning systems, and joint research activities can reduce existing data and knowledge inefficiencies. However, increased technical cooperation on its own without political agreements, limits the remit of potential mutually beneficial trade-offs and constitutes a weak basis for long-term investments. Existing operational agreements need to be updated to include key principles of modern international water law and broaden in scope. While the transboundary basin legal framework is largely compliant with all with key principles of international water law in the Danube and Sava, in other relevant transboundary basins such as Dniester and Dnieper, existing treaties do not include provisions for the no- harm principle, which requires notifying the co-riparian states when one country is needing additional water resources or is planning to construct water infrastructure such as dams or diversion channels to. Likewise, and again except for the Danube and Sava, the large majority of water treaties are very narrow in focus and do not regulate important aspects for water resources management such as water quantity, joint infrastructure management or flood control. Water quality and to a lesser extend hydropower management are the most recurrent topics addressed in the current legal frameworks. 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