Economic-Financial Sustainability and Risk Assessment in the Water Sector in Italy

Abstract

The National Recovery and Resilience Plan (PNRR) is the document prepared by Italy to relaunch the economy after the COVID-19 pandemic and enable the country’s green and digital development. One of the many objectives of the PNRR is to ensure the sustainability of water resources and the improvement of the environmental quality of the water. With this work, we intend to define a procedural process for the assessment of the risk of lack of economic and financial sustainability in projects relating to Mission 2 Category 4 (Protection of the territory and water resources) of the PNRR. Specifically, the probabilistic tools for economic-financial risk assessment are integrated with the As Low As Reasonably Practicable (ALARP) principle, traditionally used in high-risk sectors to estimate acceptable and tolerable levels of health and safety. The work is part of the recent stream of literature that uses the ALARP principle to evaluate the economic and financial convenience of projects in the fields of construction and civil engineering. The model is applied to a potential project, financed through funds allocated to the PNRR, aimed at the construction of a new purification plant and the expansion of the existing sewer network in a medium-sized city. The application allows you to select the best design alternative in terms of both expected return and the probability of failure.