Intensifying water scarcity calls for higher extraction prices from Berlin's main river – economists

The cost of extracting water from Berlin’s main river, the Spree, should be increased to reduce future demand and help prevent conflicts about allocation, economists at the German Institute for Economic Research (DIW Berlin) have said. Water in the Spree is set to become scarce, as climate-change induced droughts become more common and severe in Germany and other parts of Europe. Water levels are also set to be hit by the coal phase-out in the nearby Lusatia region as, for a long time, lignite mines had pumped groundwater into the Spree to keep the open-pit coal mines dry. 

The eastern German states of Berlin, Brandenburg and Saxony, through which the river flows, should take joint and early action amid a looming threat of water shortages, the economists said, calling for structural reforms. The DIW recommends a uniform increase in water abstraction charges to bring them in line with the Berlin fresh water price, which in 2024 stood at 31 cents per cubic metre, several times higher than in Brandenburg (10 cents/m3) and Saxony (5.6 cents/m3).

Harmonising prices could reduce total water usage by up to 16 percent. In a more drastic scenario, tripling the harmonised fees to 93 cents/m3 could reduce commercial water demand by up to 21 percent, the DIW report found. An increase in charges would especially incentivise industry, energy suppliers and other companies along the Spree to use the resource more effectively - these are by far the largest consumer of the river's water.

The Spree could have up to 75 percent less water in certain areas during dry summer months after the coal phase-out in Lusatia in the 2030s, with huge consequences for lakes, canals and drinking water supplies, according to a 2023 report by the Federal Environmental Agency (UBA). Re-establishing a functioning water cycle in the region could take up to 100 years and is expected to come with significant costs.

Increasing heatwaves and droughts in recent years have led to regional water scarcity and associated conflicts over distribution between agriculture, tourism, industry, municipal water use and nature conservation in Germany. The situation is set to intensify as climate change progresses, a 2024 report by UBA found.