Europe risks a €500bn GDP hit from water stress by 2050. Despite a €2 trillion EU budget plan and an ambitious Water Resilience Strategy, water remains sidelined. To secure sovereignty, resilience and competitiveness, the EU must treat water as strategic asset and dedicate €300bn in the next MFF.

In July, the European Commission tabled its proposal for the next Multiannual Financial Framework (MFF), covering 2028–2034. Nearly €2 trillion, 1.26% of Europe’s gross national income, is set aside to strengthen the EU’s independence, security, and competitiveness. But one vital question remains unanswered: where is water?

Water is Europe’s financial blind spot

Europe’s economy is built on water, yet it remains chronically underfunded. The Commission has identified an annual €23bn investment gap in water infrastructure. Water received less than 3% of the EU Recovery and Resilience Fund, far behind energy, transport, and defence.

Meanwhile, the risks are mounting. Droughts in Spain and Italy are already reducing crop yields. Floods in Slovenia and Germany have caused billions of euros in damages. Semiconductor factories in France and Germany have warned of potential shutdowns during water shortages. Today, nearly €100 billion in economic value is already at high risk. Without urgent investment, Europe could face GDP losses of up to €500bn by 2050.

Globally, water demand will rise by 30% by 2050. Already, water scarcity affects one-third of EU territory and 38% of its population. Climate change, agriculture, industry, and pollution will only tighten the squeeze.

Water is not a cost — it is a growth driver

Water resilience is not just about avoiding crises. Every euro invested in water generates €2.35 in economic output and creates 16,000 jobs per €1bn spent.

This matters for Europe’s strategic industries. Semiconductor manufacturing, hydrogen production, data centres, and EV battery plants, all cornerstones of Europe’s future competitiveness, depend heavily on water. Today worth €192bn, these sectors could expand to €1 trillion by 2030, potentially tripling water demand. If Europe fails to secure water for these industries, its economic sovereignty will be at risk.

The €300bn test

Water Europe’s new position paper calls for €300bn in the next EU budget dedicated to water. This funding should be structured in three pillars:

€255bn to meet EU legal obligations on water, under the EU prosperity and security fund.
€35bn to mobilise private investment and innovation for a water-smart economy, through a European Competitiveness Fund.
€10bn for resilience against droughts, floods, and disasters, via civil protection and external action funds.

This is more than a budget request. It is a test of whether the EU treats water as strategic infrastructure, on par with energy, transport, and defence.

How to build resilience dividends

Dedicated water funds in the MFF would deliver multiple benefits across Europe:

Anticipating risks across value chains that threaten jobs, growth, and the EU’s sovereignty.
Boosting Europe’s competitiveness by scaling up exports of water-smart technologies and services.
Scaling blended finance platforms to mobilise capital at the required level.
Delivering the Water Resilience Strategy adopted by the Commission.

Beyond this, the EU should focus on four priorities:

Invest in research and innovation. Horizon Europe’s €175bn budget must make water a strategic priority, driving solutions such as PFAS-free materials, nature-based solutions, and energy- and water-efficient technologies.
Integrate water into defence planning. From securing supply chains to protecting rivers in conflict situations, water is already a defence issue. More than 25% of Russia’s hybrid attacks on EU infrastructure in 2024 were water-related.
Digitalise Europe’s water systems. Better digital tools are needed to monitor risks, improve resilience, and raise public awareness of water’s value. Europe should continue to invest in as we are doing by building digital twins within a source-to-sea approach (IDEATION EU-funded project). This must be paired with safeguards against threats to infrastructure and data collection.
Fulfil global water commitments. Half of Europe’s water footprint lies in the most water-insecure regions of the Global South. Global Europe should dedicate funds to water security abroad, supporting stability and development.

Water must be central in national plans

If the EU adopts a “one national plan per Member State” model for the next MFF, water must not be sidelined again as it was in the Recovery and Resilience Fund. Each plan must embed concrete water targets, aligned with the Water Resilience Strategy.

Cross-border cooperation is also vital. As the Nexogenesis  EU-funded project has demonstrated, rivers, aquifers, and basins do not stop at borders, and neither do the risks. The next MFF must make joint river basin planning and cross-frontier water management a binding requirement.

Invest in Europe’s future

Water cannot be Europe’s blind spot any longer. Without it, climate resilience, economic sovereignty, and global competitiveness will all falter. With it, Europe can unlock growth, stability, and leadership in a world increasingly defined by water security.

The choice for the EU is clear: either treat water as an afterthought, or make it the backbone of the next European budget.