The lack of rain in more than half of Catalonia not only worries about the water restrictions that citizens may suffer in their daily lives when facing water cuts or pressure reduction, but many are concerned about the impact that the drought is having and will have on economic activity.
A large part of the business fabric of the territory—from farmers, ranchers and the agri-food industry, the areas that are suffering the most from the effects of the drought, to water-intensive industries or companies of all types such as laundries, hotels and restaurants—is already undergoing due to difficulties or sees them on the horizon.
While the Generalitat has once again postponed the declaration of the emergency scenario - the toughest phase of the Special Drought Plan (PES) -, the employers' associations are asking the Government to launch aid lines and give clear orders.
All in all, the effects of the drought, which lasts 39 months, are already so evident that the BBVA Research study firm revised downward the economic growth forecasts for Catalonia for this year, to 1.4%, partly due to this impact.
“It is difficult to put absolute numbers on this impact.
In the case of Andalusia it is easier, because the gross added value of the agricultural sector has more weight, and we have been able to quantify it in more detail.
In Catalonia, the weight of agriculture is lower, but the drought is advancing and may affect other sectors more,” says Pep Ruiz, head of regional analysis at BBVA Research.
He explains that they cannot analyze exactly how much of the reduction in growth will be due to the drought because there are two aspects that they do not know: whether it will rain again, and the extent of the restrictions.
In any case, "the indicators say that this does not look good," he explains in relation to water availability that "will continue to decrease for agriculture, and can be transferred to tourism and industry."
According to Antoni Cunyat, professor of Economics and Business Studies at the Open University of Catalonia, the drought already has a quantifiable cost in some aspects, and that is accumulating: “The 10 million losses in 2023 crops, trees that deteriorate more will have to be started, higher prices for the consumer, a water bill in the metropolitan area of Barcelona that increases by 11.5%, the increase in costs in companies... but it is still early to quantify everything” , he points out.
In the image, the Sau reservoir, at 5 percent of its capacity with the pier above ground. Albert Garcia Gallego (Albert Garcia)
Carles Mas, director of Economy and Business at Pimec, defines the effects of the lack of water as a chain: “If it is not done well, with aid so that companies make a transition towards efficiency systems, and with aid so that they simply can survive, we will have a domino effect that begins in the primary and agri-food sector, but then continues in the others.
It is not about saving either the economy or the water for people to drink: it is everything at once, because otherwise there will be nothing to save.”
The spokesperson for the small and medium-sized business association explains that right now the most affected sector is the primary sector (agriculture and livestock) and the agri-food industry, “because they depend a lot on water, and because they do not have the capacity to undertake rapid investments that would make them efficient.”
The water-intensive industry (chemical, pharmaceutical, paper, steel industry) is composed mainly of large companies that in recent years have already made investments to reduce water consumption, and in the current pre-emergence phase, for now they can breathe.
But SMEs in other industrial and service sectors (laundries, refrigeration companies, gyms, tourism companies, among many others) have it more complicated: “Many have done their homework, but they have little room to improve efficiency and reduce the consumption up to what the emergency phase dictates, since it would mean an investment that they have to amortize in seven or eight years, and the banks are not financing under these conditions.
In this we can already see the rise in interest rates,” explains Mas.
The foreseeable result is that to comply with the emergency phase, companies will have to reduce production.
Can companies close due to the drought?
In the primary sector it is more worrying, because more restrictions will mean loss of crops, and in the case of livestock farmers, a drop in production by half.
We will see if there are companies that have to end up closing, it all depends on whether an aid system is created,” he points out.
The employers' associations have met with the Government, but at the moment aid is not on the table.
They do not participate in decisions and ask to have more say.
Salvador Sedó, director of sustainable development of the Foment del Treball employer association, believes that the Government has to define essential sectors, open lines of aid and enable temporary employment regulation files as in the pandemic, and be more efficient in the search for solutions , both cyclical and structural.
“It is going late and without due diligence.
Clear orders are also needed and not passing the buck to the City Councils, speeding up the awarding of urgent works... The great solution would be the interconnection of the Ter-Llobregat system with the Tarragona water consortium, the Government cannot close itself to this option,” he explains about the controversial project that has been rejected by the Terres de l'Ebre.
blow to agriculture
The reduction in water supplies has already caused the agricultural sector to suffer serious economic losses in the pre-emergency phase.
Josep Cuscó, head of Water at Unió de Pagesos, states this: “Many have covered the investment, but have not obtained benefits.”
In the current pre-emergency phase, a previous step that the Government designed in November to avoid harming the economy and the harshest restrictions, the sector must reduce water consumption by up to 40%, destined for subsistence irrigation and cleaning of animals to maintain sanitary conditions.
Farmers reduce the area of cultivated land because they cannot cover the investment.
“It's tossing a coin in the air,” says Cuscó.
If it does not rain, the sector expects to harvest a quarter of the usual September harvests, which will also have an impact on the consumer.
The industry is obliged to restrict water use by up to 15% in this phase.
When the emergency progresses, new projects will not be able to start, such as farms, urban planning or tourism projects, that require intensive use of water, although they will be able to continue with the legal procedures to get started once the worst scenario has passed.
In the image, an aerial view of the Sau reservoir at 5% of its capacity. Albert Garcia Gallego (Albert Garcia)
The Generalitat had always stressed until now that the entry into emergency would take place when the 18 units of the internal hydrographic basins fell to 16% of their capacity.
However, after having crossed that threshold this Thursday, the Government clarified that the beginning of the emergency and, of the harshest measures due to drought, will come when the five reservoirs of the Ter-Llobregat system (Sau, Susqueda, La Baells, Llosa del Cavall and Sant Pons) reach 16% of their capacity (currently they are at 16.55%).
Once the toughest phase of the PES is activated, agriculture will restrict the use of water as an irrigation system by 80%, although only tree survival irrigation may be authorized;
livestock 50%;
and the industry, 25%.
Up to 202 municipalities in the metropolitan area of Barcelona and some towns in Girona will enter the emergency phase in a matter of weeks.
Almost six million people will be forced to reduce their water consumption to 200 liters per inhabitant per day in the first step of the scenario.
The Catalan Executive, led by Pere Aragonès, has designed up to three levels in which, in addition to limiting human, agricultural and industrial water consumption, it will force swimming pools, gyms and federated sports centers to close showers to offset the cost of water.
The limit per inhabitant per day will be lowered to 180 liters in the second level, and to 160 liters in a third, if the water shortage continues to worsen.
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