Finland’s water services system is often praised for its high quality and reliability. Our water bodies are in good condition, drinking water meets strict quality requirements, and the services are fully financed through customer payments. In international comparisons, Finland is frequently placed at the forefront of sustainable and equitable water management. However, beneath these positive indicators lies a set of challenges that have prompted a strategic national reform effort.
The Finnish Water Utilities Association (FIWA) represents nearly all large and medium-sized utilities in Finland—around 300 in total, covering 90 percent of the country’s water services. Our membership also includes some 200 companies and organizations operating in the sector. In addition to advocacy, FIWA coordinates the national water preparedness work under Finland’s Emergency Supply Agency. While the institutional setting is robust, the operational environment is showing signs of strain that cannot be ignored.
Mounting Challenges Despite Strong Foundations
One of the most acute problems is the growing infrastructure renovation debt. Much of Finland’s water infrastructure, especially pipelines, is approaching the end of its technical life. The pace of rehabilitation is far too slow. Estimates suggest that the current rate of investment must be multiplied two- or threefold to prevent further degradation. Over the next two decades, required investments in rehabilitation alone may exceed €10 billion. Small utilities are vulnerable, as they are responsible for wide networks but lack the customer base to support such financial burdens.
Another growing concern is emergency preparedness. Especially in smaller utilities, contingency planning has been insufficient. Some lack legally required emergency response plans, power backup systems, and even basic cybersecurity protocols. While many have made progress recently—helped by tools such as the VILSO climate adaptation platform—the level of preparedness still tends to correlate strongly with organizational size and professional capacity.
A third, and perhaps most systemic challenge, is fragmentation. Finland currently has over 1,100 registered water utilities. Only around 80 of these units employ more than ten people and manage their operations professionally. The rest include hundreds of cooperatives and municipally owned units with limited technical and financial capacity. This extreme decentralization weakens operational reliability, complicates regulatory oversight, and reduces resilience in the face of emerging risks such as climate change, cyber threats, or evolving EU directives.
A National Reform with Ambitious Goals
In response to these interlinked challenges, Finland launched a national water services reform in 2021. Led by the Ministry of Agriculture and Forestry, the reform aims to modernize the sector by 2030 in collaboration with municipalities, utilities, public agencies, and stakeholder organizations. The overarching goal is to ensure that the sector remains secure, sustainable, and fit for the future.
At the heart of the reform lies the pursuit of operational reliability, financial sustainability, digital maturity, and resilience. Ensuring public ownership and democratic accountability is also central, particularly as water services are increasingly recognized as critical infrastructure. The reform also seeks to make the sector more attractive to new professionals by strengthening training pathways and promoting innovation.
Significant progress has already been made. A revised Water Services Act was submitted to Parliament in spring 2025. Among its provisions are measures to prevent privatization of core infrastructure, reinforce planning obligations, and require more transparent asset management. The reform also encourages voluntary cooperation and mergers, supports the development of digital tools, and lays the groundwork for carbon-neutral water services. However, regional cooperation and structural consolidation have progressed more slowly than hoped.
Navigating Resistance and Building Momentum
One of the key bottlenecks has been the reluctance to merge small utilities into larger, more resilient units. Despite clear technical and economic arguments, political resistance and local identity concerns remain strong. Discussions are underway on whether stronger steering mechanisms—such as an operational licensing model—might be necessary to accelerate progress. Croatia’s recent reform experience, where licensing requirements triggered structural consolidation, has been discussed as a potential model of last resort, in case voluntary incentives do not yield the desired outcomes.
Other policy priorities include strengthening digital infrastructure, integrating circular economy practices—particularly in sludge management—and aligning national regulation with new EU directives on drinking water and wastewater. The reform also continues to support export-oriented innovation and international collaboration.
A mid-term evaluation is scheduled for 2026. By then, it should become clearer whether the reform’s current soft tools—such as financial incentives and voluntary guidelines—are sufficient, or whether more binding measures will be needed. Many in the sector believe that a combination of carrot and stick will be necessary to ensure real transformation.
Conclusion: Reforming to Strengthen Societal Resilience
Finland’s experience illustrates a paradox familiar to many advanced water systems: high performance today can mask growing risks beneath the surface. Without deliberate and forward-looking reform, even the most successful systems can become vulnerable. The national reform is an attempt to act before crisis forces change.
By aligning technical, regulatory, and organizational developments, Finland seeks to secure water services not just as infrastructure, but as a foundational pillar of public trust and national resilience. The reform is not merely a sectoral update—it is a societal investment in continuity, competence, and collective preparedness.
Riku Vahala
CEO
Finnish Water Utilities Association (FIWA)
Finland
