Policy Brief // Upscaling of water governance Instruments - Water and energy sustainability in small island economies
This RETOUCH NEXUS policy brief applies dynamic modelling and Monte Carlo simulations over a 50-year horizon to show that without deliberate reinvestment policy, current growth trajectories risk becoming unsustainable within three decades.
About RETOUCH NEXUS
Water scarcity is a pressing issue that threatens socio-economic development and environmental sustainability. To address this, the RETOUCH NEXUS project promotes an integrated Water-Energy-Food-Ecosystems (WEFE) Nexus approach. This approach supports the EU water economy by considering ecological and social factors, ensuring that water governance practices are coherent and effective across different levels and sectors.
Objectives and Approach:
The RETOUCH NEXUS project aims to design and advance integrated, innovative, and inclusive Nexus-smart water governance schemes and institutional settings. By leveraging the Water-Energy-Food-Ecosystems (WEFE) Nexus, the project seeks to ensure a secure water future in the EU that is resilient to climate change. Our approach involves proposing, assessing, and optimizing Nexus-smart methods across five innovative dimensions of water governance.
Expected Outcomes and Results:
The RETOUCH NEXUS project is expected to deliver significant results and outcomes, including the development of 35 water governance metrics to support the implementation of the European Green Deal and the Sustainable Development Goals. At least 6 water governance schemes will be designed to support coordination between water policies and improve policy implementation for securing sustainable water use across sectors. Additionally, the project will develop and test economic instruments, link water to economic and social sectors, and help society implement measures for sustainable water management. Furthermore, 12 engagement mechanisms will be established to empower citizens to influence water governance decisions.
Key messages
Water and energy sustainability are deeply coupled in island systems: Desalination and wastewater treatment are energy-intensive processes that create structural interdependencies between water and energy security. Pricing instruments and investment strategies must reflect this coupling, not treat water and energy as separate policy domains.
Without deliberate reinvestment policy, economic growth leads to resource depletion within a generation: Monte Carlo simulations run over 50 years show that under baseline assumptions, Malta’s current growth path becomes potentially unsustainable within three decades. The share of economic output reinvested in sustainable water and energy infrastructure is the critical variable.
Full-cost recovery pricing is essential, and currently incomplete: Malta operates stepwise water tariffs with high financial cost recovery via the economic regulator REWS. However, resource and environmental costs are currently only assessed qualitatively. Integrating these into pricing frameworks, alongside renewable energy subsidies for solar-powered desalination, would better reflect true scarcity.
Malta’s governance foundation must expand to a full WEFE nexus scope: The existing Water Table stakeholder platform and Inter-Ministerial Committee provide a strong governance base, but their current water-energy focus needs to broaden to include food and ecosystem dimensions. Malta’s small size enables effective centralised coordination, a significant policy asset if formalised.
Dynamic modelling supports long-term compatibility assessments: The methodology, tracking resource stocks, feedback loops, and constraints over time, is directly portable to other Mediterranean islands (Cyprus, Crete, Sardinia, Balearic Islands) and water-stressed coastal cities dependent on desalination, enabling cross-context policy learning.
Published
04 June 2026