Table 6.

Scenario narratives (after Luís et al. 2016)

Scenarios	Narratives
(1) Reference	As Portugal has just exited an economic recession, the state of the economy is becoming stagnant. Energy prices register slight positive or negative fluctuations, and consumption patterns evidence a slight decrease. Both water quality and water availability at source remain at good levels. Water supplied complies with national standards and economic regulation is becoming gradually stronger. Infrastructure developments return to their “normal” configuration, i.e. increasing maintenance and reducing capital investment, thus optimising assets'life without compromising the agreed levels of service to the clients. The company maintains a developed degree of automation, allowing a global view of the system and its centralised operation
(2) Strong economic growth	Significant improvement in water quality happens in a context of strong economic growth. Although existing industries in the water shed increase their activity and new ones arise, they comply with EU water quality legislation and treat all the wastewater before it is discharged into the rivers or the sewage network. Farmers also use permitted pesticides only, complying with the Nitrates Directive. Municipalities' wastewater treatment is of secondary or tertiary levels. There is a slight increase in water consumption. This context of strong economic growth makes way to an increase in Capex, targeting trunk mains' rehabilitation because of their ageing process, and also enables the company to adopt or develop new technology, becoming “best in class”. For example, EPAL augments its own power generation capacity, through the production ofsolar, wind and micro-hydric energy. As a result of all these factors, EPAL faces a reduction in Operational Expenditure, due to reduced costs with energy and chemicals, as well as to an increase in the revenue from the clients
(3) Financial resources’ scarcity	In a prolonged global economic recession context, water quality at sources gets worse, since industries and municipalities cannot afford adequate treatment of the wastewater they produce and, on the other hand, farmers tend to use non-approved pesticides. EPAL faces a significant decrease in consumption, which lowers annual revenue. Both capital and operational expenditures are constrained, andpart of the installed automation system may begin to fail. EPAL moves from a preventive attitude in asset management towards a reactive one.Economic regulation is weak, since regulators know that water utilities have no financial resources either to put measures in place toaccomplish the established levels of service or to pay any fines. Development of new solutions or technology may occur, due to the need to findcheaper ways to operate the water supply system
(4) Water scarcity	Downscaled climate change scenarios indicate that severe drought periods are expected to occur in the next 40 years. During these periods, that may extend over one year or more, there may be a fluctuation in the prices of energy, as energy production is also affected by droughts, as well as a fluctuation in the state of the economy. Consumptions will decrease due to restrictions imposed by EPAL and the regulator. Water quality at sources will also decrease, due to the reduction inflows in the water bodies, which augments the concentration of pollutants.This decrease of water quality may become significant if compliance with environmental standards is self-regulated and economic regulation is weak. In order to cope with the increased water treatment operational costs and the costs associated with the implementation of adaptation measures to water scarcity, along with the reduction in revenue due to a decrease in consumption, tariffs will be gradually increased. EPAL will decrease the regular investment costs, thus increasing maintenance expenditure, and will maintain a developed degree of automation, since having aglobal view of the system is shown to be crucial for its operation in this scenario