Certain Aspects of Water Management as Impacted by Economic and Climate Transition in Serbia

Research article

Dimkić M.1,2, Zlatić M.3, Dimkić D.1, Milojković S.4, Stefanović M.1, Čalenić A.1, Dimkić B.5

1 Jaroslav Černi Water Institute, Jaroslava Černog 80, 11226 Belgrade, Serbia; E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it , This e-mail address is being protected from spambots. You need JavaScript enabled to view it , This e-mail address is being protected from spambots. You need JavaScript enabled to view it , This e-mail address is being protected from spambots. You need JavaScript enabled to view it
2 University of Novi Sad, Faculty of Technical Sciences; E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
3 University of Belgrade, Faculty of Forestry; E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
4 Retiree of Jaroslav Černi Water Institute, Belgrade, Serbia; E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
5 Kikinda Public Utility, Kikinda, Serbia; E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Given the current economic transition and expected impact of climate change, natural resources are becoming one of the main challenges. However, this is not only the case in most transition countries, but also, generally, in the rest of the world. In addition to food and energy, water will certainly be increasingly scarce and one of the most expensive products on our planet. In view of the existential significance of water and the fact that it is irreplaceable, water resource issues need to be addressed in a highly responsible manner, in order to meet basic human demands and socioeconomic requirements, as well as support social development. An increasing water stress is expected in the next decades due to a decreasing availability of drinking water, increasing pressures on water resources, and increasing frequency and severity of droughts and floods. Being a country in economic transition, Serbia is faced with many problems of a technical, economic and political nature. The paper highlights certain aspects of the status of Serbia’s water sector and describes possible courses of action set forth in the established Water Management Strategy of the Republic of Serbia.

Keywords: climate change, economic solutions, floods, water management, water management strategy, water supply.


Water management challenges on our planet are enormous. Drinking water, food and energy need to be provided for more than seven billion people and counting. It should certainly be kept in mind that the high water demand threatens the capacity of water resources and brings about uncertainties reflected in climate, social, economic and other manifestations, or changes, which require adaptive water management.

The UN Millennium Development Goals (Millennium Development Goals 2015) with regard to water (88% access to water and improved sanitation for 75% of the population) have not fully been met. In September 2015 in New York, the UN adopted the UN Agenda 2030 – sustainable development goals through the year 2030. One of the goals on this Agenda, Goal 6, is to “ensure availability and sustainable management of water and sanitation for all”.

Despite relatively lenient requirements, they have not been met on a global scale. The reasons can probably be found in unfavorable economic, social and climate conditions or resource availability, but also insufficiently adapted or effective water governance.

In Europe, water management is subject to much more stringent requirements – European Union directives:

  • 1991 – Urban Wastewater Treatment Directive,
  • 1991 – Nitrates Directive,
  • 2000 – Water Framework Directive (the roof directive),
  • 2006 – Groundwater Directive,
  • 2007 – Floods Directive,
  • Etcetera.

Serbia is moderately rich in water resources. They are generally of a transit nature (91% of all water resources). The average discharge is about 6,000 m3/s but 2,000 m3/s in dry periods, at which time only 100 m3/s derives from national water resources (Water Law 2010).
In addition, water resources are not evenly distributed. The average annual precipitation is approximately 750 mm – higher in mountainous regions (in excess of 1,000 mm in places) than in lowlands (below 600 mm). The areas most lacking in water are parts of central, southern and northern Serbia (figure 1) (Water Law 2010).


Figure 1: Map of the Republic of Serbia.


The state of affairs in the water sector is not satisfactory. Spending, through higher than before, is still insufficient (50-80*106 €/year) and the overall system of governance (including legislative, financial, institutional and other aspects) is not developed enough to support all the required activities (Water Institute "Jaroslav Černi" 2015; Milojkovic in preparation).

The impact of climate change in Serbia will likely be a temperature increase (latest indicators suggest 1.5-2.0°C/100 years) and no major variation in average annual precipitation, but a clear increase of the order of +10%/100 years in the western part of the country and a decrease by as much in eastern Serbia. In parallel, however, the human water demand will gradually increase. A decrease in discharges of national rivers has already been registered, especially in the eastern part of the country (Dimkić D. and Despotović 2012).

The major challenges in the water sector exceed the spending demands of other sectors (such as infrastructure, energy, mineral resources, forestry, and biosphere). Despite various avenues of cooperation with the EU, this entails multiple problems and constraints, and necessitates special attention to the macroeconomic stability of the country.

The most important and relatively recent legislation and planning documents include the Water Law passed in 2010, along with related secondary legislation, and the Water Management Strategy of the Republic of Serbia established in 2016 (Water Law 2010; Development Strategy of Water Sector 2016).


Indicators of Water Sector Development Potential

The water management framework of a country can be represented schematically as follows (figure 2):


Figure 2: Schematic representation of water management (Dimkić M. et al. 2008).


Some of the overriding factors for effective water sector management and development are:

  • Economic power of the country;
  • Availability of water resources;
  • Ongoing efficient water management;
  • Level of scientific and expert knowledge, development of methods and skills;
  • Climate conditions and climate change.

It follows from past research concerning gross national product and available water per capita (Dimkić M. and Milovanović 2014) that Serbia is moderately rich in water resources but a moderately poor country in terms of GDP. The distribution of water resources is not uniform and most of the rivers are international.

Certainly, given the need for a high level of investment in the water sector, as well as other resources and infrastructure, spending and development have to be prioritized. The nature of water management and the above conditions are such that a mix of centralized and decentralized management should be implemented in Serbia (Dimkić M. et al. 2011; Dimkić M. and Milovanović 2014).


Impact of Climate Change and Other Changes on Serbia’s Water Resources

Water resources are of vital importance for the survival and development of societies, such that the impact of climate change and other factors – human water demand and changes in land use (Gavrilović et al. 2013) – on water resources is a very important and topical issue both in Serbia and worldwide. Global research (IPCC 2011) indicates an average temperature increase on Earth of 0.74°C in the 20th century and a more rapid increase at the beginning of the present century.

According to the data collected in the past 70 years (1949-2016), the average air temperature in Serbia increased by 1.7°C/100 years (Dimkić D. 2018) – more at high elevations (mountainous regions) and in the north of the country (in places in excess of 2°C/100 years), and the least in southeastern Serbia. During the year, the greatest temperature increase has been recorded in spring and summer, whereas in autumn it is close to zero (no change) (Dimkić D. et al. 2014).

Predictions of average annual temperatures are derived from regional climate models (RCMs), showing a relatively broad range of potential temperature change, depending on the assumed societal development conditions. In general, most of the climate models predict a temperature increase of 0.5°C to 2°C in the next 50 years. Prognoses for a more distant future are considerably less reliable due to the inability to predict a number of parameters.

The average annual precipitation trend in Serbia over the past 70 years is close to zero, but in geographical terms there is spatial variation. In the (north)western part of the country there is an upward trend, whereas the eastern part of the country experiences a decline.

During the year, there is an upward precipitation trend at the end of summer and beginning of autumn, and a downward trend in winter and the months of May and June (Dimkić D. et al. 2014).

Some of the recent regional models predict higher precipitation levels at the end of summer and beginning of autumn in the near future, which is consistent with current trends, as well as considerably lower precipitation levels in the distant future. Most RCMs also predict lower annual amounts of precipitation in Serbia in the distant future (end of the 21st century), by as much as -25%.

The direction of annual river discharge changes in Serbia is generally in accordance with the forecasts based on the IPCC scenario A1B (IPCC 2011) and some RCMs, and particularly with the observed temperature and precipitation trends. The recorded average hydrologic trends have decreased by about 25%/100 years and depend on a large number of factors. Climate change is one of these factors, which is observed at all monitoring stations, but its significance varies. It is generally dominant in the eastern part of the country, and in the upstream parts of catchments (Dimkić D. et al. 2014; Dimkić D. 2017), but is often less significant or even minor elsewhere, especially where human impact is substantial. It should be kept in mind that the above hydrological results are given in terms of averages, while the hydrologic trend for specific catchments can differ significantly, both up and down, due to differences in human activities, above all. It should be noted that a large temperature increase could have a considerable adverse effect on the discharges and capacities of rivers in Serbia (Dimkić D. and Despotović 2012).

It is believed that a temperature increase in the Mediterranean will result in a considerable reduction in runoff. The latest estimates according to the method proposed by D. Dimkić show that an increase in annual temperature of ∆T~2°C can be expected to reduce precipitation by about 10% on average and the discharges of small (national) rivers by about 30% in Serbia (research results for the 1949-2006 period shown in Figure 3).


Figure 3: Actual average annual discharge and precipitation as a function of average annual temperature change, 1949-2006 (based on 18 watersheds) (Dimkić D. et al. 2014).


In addition to the above annual and seasonal temperature and precipitation changes, there are significant variations in the frequency and severity of storms and extreme climate events, such as heavy rainfall and severe and protracted droughts. Serbia is already recording and can expect increasingly frequent dry periods in the future, but this does not preclude an increasing frequency of flood events. However, the trend of the latter is less reliable and less predicable at this time.

Temperature increase and reduced or non-uniform precipitation, apart from affecting the evaporation balance, will often cause lowering of water tables. This might threaten agriculture, grasslands and forest vegetation. Climate change can and will probably increase the need for irrigation, which would further reduce river discharges and possibly (likely) lead to political issues. Moreover, reduced river discharges have an adverse effect on water quality.


Current Status of Water Management Segments

Water management has a long tradition in Serbia. The first significant projects were implemented back in the 18th century (flood protection in Vojvodina) and the first water law was passed in the 1870’s by the government of the then Kingdom of Serbia.

Major capital projects were undertaken after World War II (water supply, sanitation, hydropower, drainage, erosion control, dikes, and the like).

After a long slowdown, investment activity is gradually intensifying. Following is an outline of the status of the major water management segments.

Water governance and water management are under the jurisdiction of the Serbian government, which delegates and assigns responsibilities to the Ministry of Agriculture, Forestry and Water Management, other ministries, provincial and local governments, agencies, and public utilities. Most of the administrative functions in the water sector belong to the Ministry of Agriculture, Forestry and Water Management, or more precisely its Water Directorate. There are three public enterprises engaged in water management: Srbijavode (Serbia Waters), Vode Vojvodine (Waters of Vojvodina), and Beograd Vode (Belgrade Waters). Some of the jurisdiction is vested with the Ministry of Environmental Protection.

The water sector is founded upon the following primary documents:

  • The Constitution of the Republic of Serbia,
  • The Water Law (2010) and related secondary legislation,
  • The Environmental Protection Law (2004),
  • The Water Management Strategy of the Republic of Serbia, and
  • The Law on Ministries.


Public Water Supply and Irrigation

Drinking water supply in most agglomerations is satisfactory in terms of quantity. Estimates show that 85% of the population has access to the public water supply. However, some areas in Serbia, such as parts of Vojvodina and the Morava River Valley, experience drinking water quality issues. The quality of the delivered water is often inconsistent with applicable regulations, even though the causes of “contamination” are not of an anthropogenic but genetic origin. Most of them are related to the occurrence of organic substances and arsenic in the main groundwater complex in Vojvodina, and due to specific sedimentation conditions in the Pannonian Plain. There are some quantity issues, particularly in parts of Šumadija and southern Serbia. Finally, a certain number of settlements are still not covered by the water distribution network.

To ensure adequate water management, water tariffs need to be adequate. The current price of water in Serbia (Figure 4) is lower than required, on average.


Figure 4: Total water price (delivered water + evacuated wastewater) in agglomerations larger than 100,000 inhabitants (Waterworks and Sewerage Association of Serbia 2018).


According to the Water Management Strategy, the price of water needs to be 1.35€ + VAT, to cover:

  • Operation and maintenance;
  • Capital improvement;
  • Economic cost and
  • Environmental cost.

Water losses in the distribution network are one of the characteristics of the public water supply. There is a definite need to improve the water distribution network, by replacing inadequate or worn out piping, extending network coverage, and building new water reservoirs.

Irrigation is accessible to a small portion of state-owned land, about 40,000 ha, despite the fact that irrigation systems cover some 105,000 ha. Crop yields vary accordingly. In addition, 45,000 ha of land is covered by other irrigation systems installed though various private arrangements. One of the main reasons for insufficient use of existing irrigation systems in agriculture is a lack of involvement of their owners in agro-economic procedures (planning, production, distribution, and market placement of agricultural products) (Water Institute "Jaroslav Černi" 2015; Development Strategy of Water Sector 2016).

Further development of agriculture, including irrigation, largely involves matters related to water use and water pollution control. However, here too, policy and economic solutions are of overriding importance.


Water Pollution Control

Water pollution control is the least developed segment of the water sector. The sanitation network covers slightly more than 50% of the country’s territory, but wastewater treatment is provided for only about 10%. Few industrial facilities operate wastewater treatment plants and discharge treated water into the sewer network or watercourses, which are the main recipients (Water Institute "Jaroslav Černi" 2015; Development Strategy of Water Sector 2016).

This problem has the greatest impact on rivers with low discharges associated with large polluters. Pressures on the Velika Morava are considerable, but even more so on small rivers with densely populated riverbanks or adjacent large urban centers. This will definitely necessitate major investment and spending in the future.

However, despite the elevated pressures on most watercourses, the quality of surface water is relatively good, especially of large rivers such as the Danube, the Sava, the Tisa and the Drina, but also numerous smaller rivers. This is a result of several factors. Above all, there has been a significant downward trend in industrial/manufacturing activity in both Serbia and other countries in the region, but also increasing wastewater treatment and addressed river water quality concerns in the upstream parts of the drainage areas of the large rivers. Another important aspect is the self-purification potential of rivers transiting Serbia, as corroborated by a comparative analysis of river water quality at the point where the Danube enters Serbia (at Bezdan) and leaves (at Radujevac). The analysis indicates that Serbia does not contribute to the deterioration of the Danube’s water quality.

Protection of river reservoirs from aggradation and water quality deterioration is also of major importance.

The needed spending on wastewater treatment plants and the sanitation network is estimated at 5 billion Euros (Development Strategy of Water Sector 2016). However, the current rate of spending does not match that called for by the Strategy.


Flood Protection

Climate change is becoming an increasing challenge in terms of flood risks in Europe. Without doubt, the increasing costs of flood relief and remedy over the past several decades are in part attributable to the fact that more people live in floodplains. According to EU data sources, one-fifth of European cities, with populations of more than 100,000, are at flood risk. Analysts claim that because of global population growth, more people will be forced to live in areas susceptible to extreme weather events.

The territory of Serbia is threatened by a large number of torrents, ranging in size from gullies to large torrential rivers. At present, most damages attributed to flashfloods and erosion are sustained in hilly and mountainous regions.

The year 2014 is a true example how climate change leads to floods and flashfloods in Serbia. Protracted heavy rainfall affected more than 30,000 km2 of Serbia’s territory and threatened more than 40 municipalities.

Flood protection has been implemented by means of dikes and other linear structures, which are more than 3,500 km long. In addition, river engineering works have been undertaken and river sediment and ice transport controlled to improve the overall status and condition of riparian lands, along 400 km of the rivers. A number of artificial lakes, river reservoirs and retentions also play a role in flood management, to a greater or lesser extent. However, a large part of the territory still remains directly or potentially threatened by floods (Water Institute "Jaroslav Černi" 2015; Development Strategy of Water Sector 2016).

The major dikes along the large rivers were mostly built in the 1960’s and 1970’s. Aggradation (particularly of the reservoir on the Danube), dike ageing and climate change have caused weaknesses in the current flood protection system.

Drainage (dewatering) systems cover about 2 million ha and play an important role in the evacuation of excess water from land. However, lackluster maintenance, incompleteness, and inadequate use often hinder the needed level of efficiency and the ability to meet requirements in certain parts of the country (Water Institute "Jaroslav Černi" 2015; Development Strategy of Water Sector 2016).

A higher frequency of sudden and protracted floods necessitates flood management and erosion/river sediment control projects. Such activities include erosion prevention by afforestation, planting of suitable types of vegetation, and other methods that prevent sediment from reaching the recipient. Despite these measures, threatened areas remain poorly protected, erosion is still intensive and its effects considerable.

When assessing the feasibility of erosion control works, past erosion control trends, other structural measures for water management and the development of society as a whole need to be taken into account, along with the needs and financial capability of the country.

It is a well-known fact that forests are natural resources, which represent a considerable factor of stability with regard to climate elements and events. As such, they play a major role in the stability of all ecosystems. Apart from their basic functions – air purification and reduction in greenhouse gases, forests influence the amount and distribution of precipitation, subsurface runoff, the formation of water sources, and water quality and quantity.

Considerable amounts of sediment come from farmland as well. In addition to repurposing of farmland to forestland, plans call for erosion control measures on farmland, to reduce the amount of sediment that ends up in rivers. This requires sustainable land management (Zlatić 2010).


Serbia’s Water Management Strategy

The Strategy was adopted by the Serbian government in December 2016 for the period through to the year 2034. The Strategy is a document designed to serve as a basis for water sector reform, aimed at achieving needed water management standards, including organizational adjustment and systemic national capacity strengthening. The stated objectives constitute the groundwork for the development of the river basin management plan for the Danube in Serbia and river basin district management plans. Figure 5 is a schematic representation of the Strategy.


Figure 5: Schematic representation of the Water Management Strategy of the Republic of Serbia (Development Strategy of Water Sector 2016; Dimkić M. and Kovačević 2018).


The Strategy calls for: (1) institutional strengthening of the water sector, (2) required funding and sources, and (3) needed water sector activities. Integrated water management is to be achieved over time. Constraints include: (1) the need for considerable spending, (2) the need to maintain macroeconomic stability of the country, (3) insufficient capacities, and (4) potential adverse effects (e.g. of climate change).


The Strategy: Goals by Water Sector Segment

Goals by Water Sector Segment (Water Institute "Jaroslav Černi" 2015; Development Strategy of the Water Sector 2016)

Objectives are defined for each water sector segment, which need to be met during the planning period in order to achieve the strategic goal of water management.

Water use – public water supply

  • Increase public water supply coverage to 93% by the end of the planning period;
  • Ensure stable water supply and required water quality, and reduce risk of water supply interruptions during extreme events and emergencies;
  • Reduce unbilled amounts of water in public systems to 25%;
  • Promote efficient water use and gradually increase water prices to economic levels.

Water use – irrigation

  • Provide sufficient amounts of water for irrigating 250,000 to 350,000 ha of farmland in the first and part of the second development groups by the end of the planning period (rehabilitate existing systems on 100,000 ha and build new systems for 150,000 to 250,000 ha);
  • Promote efficient water use through appropriate irrigation depths and train farmers in modern irrigation techniques, protection from droughts, setting up of associations, and market placement of products.

Water pollution control

  • Establish and monitor the implementation of regulations prohibiting wastewater discharges that contain pollutants in excess of permissible concentrations;
  • Establish and implement a Water Pollution Control Plan and set up monitoring of surface water and groundwater based on programs and protocols;
  • Ensure protection of water supply sources (sanitary protection zoning) and explore, safeguard and conserve water resources;
  • Develop municipal infrastructures and wastewater treatment plants (reconstruct existing and build new) in agglomerations of more than 2,000 inhabitants (85% population coverage);
  • Reduce discharges of pollutants from industrial facilities by wastewater treatment to prescribed levels;
  • Remove illegal waste dumps, primarily from protected areas, riparian lands of rivers with unfavorable hydrologic regimes, and similar places, and rehabilitate existing and build new landfills based on applicable strategic and planning documents;
  • Reduce pollution from diffuse sources, such as farmland, forestland, roads and agglomerations with less than 2,000 inhabitants;
  • Reduce pressure on groundwater quality by delineating, monitoring and maintaining sanitary protection zones around drinking water supply sources;
  • Conserve or achieve good status of groundwater bodies to ensure sufficient water quantities of satisfactory quality for present and future demands of all legitimate users;
  • Establish comprehensive monitoring of chemical and quantitative status parameters of groundwater and systemic monitoring of micropollutants in large rivers (Sava, Danube, Tisa and Velika Morava) and riverside groundwater sources that tap the alluvial aquifers of these rivers.

River engineering

  • Undertake river training as per environmental conditions, with minimal hydromorphological alterations;
  • Ensure that the excavation of river sediment from water land is primarily aimed at conserving and/or improving the water regime, and that the extent and rate of such excavation are conditional upon minimal disturbance of aquatic and riparian ecosystems, with mandatory remediation of gravel pits.

Protection against the adverse effects of water – floods, erosion and torrents

  • Reduce flood damages and risks by:
    • completing, extending, reconstructing and maintaining existing structural measures along lowland rivers and implementing new structural measures;
    • active flood management (attenuating flood waves) and preventing rapid runoff from rural and urban areas with small- and medium-size rivers, as well as local protection measures involving single structures or groups of structures;
    • adequate use of water land and flood-prone areas;
    • applying new construction principles and methods in actual and potential flood zones;
    • locating away from risk zones of highly vulnerable structures, facilities and installations relevant to public safety and defense, or maintenance of public order, or those whose destruction would threaten the population;
  • Ensure efficient and coordinated flood management, including ice floods and ice events;
  • Constantly monitor and forecast hydrometeorological events and upgrade flood forecasting and early warning systems in watersheds devoid of structural measures for flood protection;
  • Improve the legal framework to upgrade erosion and torrent control;
  • Improve conditions for erosion and torrent control by implementing preventative, technical and biological works and measures, updating cadasters, increasing the level of efficiency of inspection and other services, raising awareness of the population, etc.

Protection against the adverse effects of water – drainage

  • Maintain appropriate inland water regimes in land reclamation areas;
  • Complete, extend, reconstruct and maintain structural measures for the protection against inland waters (waterlogging), and build new systems, beginning with soil of drainage class I.

Regional and multi-purpose water schemes

  • Re-evaluate current uses and the management, control and maintenance models of existing river reservoirs;
  • Increase water storage capacity, primarily by completing dams at Stuborovni, Selova and Svračkovo, and then by building new, multi-purpose reservoirs;
  • Properly use and monitor the conditions of areas gravitating towards existing and future reservoirs.


Needed Funding, Capacities and Timeframe for the Achievement of Objectives (Development Strategy of the Water Sector 2016)


The implementation of needed development projects, to improve the state of affairs in the water sector, would require funding of approximately 10 billion Euros:

About 600 million € annually should be set aside for maintenance and capital improvement.

When viewed collectively, annual investments in the water sector including operating and maintenance expenses amount to about a billion Euros. Given that the present turnover is 300-350 million, it is clear that crucial changes – improvements in the organization of the water sector are essential.


Funding According to Serbia’s Water Sector Development Strategy

This section discusses the funding projected by the Water Sector Development Strategy and the assumed rate of spending.

The implementation of development projects that will improve the state of affairs in the water sector over the 20-year planning period requires about 9 billion € (450 million € annually, on average), from difference sources (Table 1). Annual operating expenses are estimated at 550 to 600 million € on average. Together this would be 1 billion €, or several times more than the current allocations to the water sector.

The rate of development of the water sector will not be uniform over the years (Figure 6). Capital projects will be implemented as social and economic conditions are created and financial and human resources made available.

In the first year of the planning period, spending on development is not expected to exceed 200 million €. However, the amount would increase from year to year and reach 500 million € annually at the end of the first 10-year period. Thereafter, through to the end of the planning period, the rate of spending would be relatively uniform (500-600 million € annually), at which time the state of affairs in the sector should be satisfactory. These objectives are consistent with expected EU requirements. However, from the viewpoint of macroeconomic stability and in general, from the current perspective, the country’s capability is questionable. The undertaking would require an increase in domestic spending (allocations) from 50 million € to approximately 200 million. Furthermore, total investments in the water sector over the next 20-25 years would amount to 350-400 million annually. The overall turnover would increase from 300-350 million to about 1 billion €. This requires different (wider ranging) organization and operation of the water sector, including legislation, finance, capacity-building, functioning, and development of human resources.


Table 1. Water sector development funding and sources by segment (Water Institute "Jaroslav Černi" 2015; Development Strategy of the Water Sector 2016).


Figure 6: Rate of investment in water sector development (Water Institute "Jaroslav Černi" 2015; Development Strategy of the Water Sector 2016).


Securing of Funding

Domestic sources

Water tariffs

Water pricing above all. On the one hand, it ensures normal functioning of the system but on the other, the Water Law provides for about 10% of the water tariffs to be allocated to investments in the water sector. The Strategy estimates that the average price of water (water supply + wastewater evacuation) should be 1.35€ + VAT. Serbia still differentiates water tariffs (households and other users). Given that the proportion of water revenues coming from industry is still relatively small, there would be a considerable shortage of funds from water tariffs.


Other domestic sources1

According to current legal and institutional solutions, water management is funded from the following domestic sources:

  • The national budget, the provincial budget (of the Autonomous Province/AP of Vojvodina), and the budgets of local governments (“units of local self-government”), originating from public revenues and used by relevant ministries, funds, agencies, etc. to fund, co-fund or provide incentives for structures and systems;
  • Funds of public utilities that engage in drinking water supply and wastewater and stormwater evacuation and treatment, from service charges;
  • Commercial bank loans, primarily from banks that support capital projects and similar endeavors;
  • Other domestic sources, such as donations, grants, project owners’ resources, and the like.

In 2016, the National Water Directorate had at its disposal roughly 23 million € (including EU funds and loans), which was 0.26% of the national budget and only 0.007% of Serbia’s GDP in 2016. In previous years, more funding was available to the Directorate from its activities. Given still unresolved issues in the water sector segments, it is expected that the annual level of water sector funding will notably increase in the forthcoming period.

Vojvodina’s provincial budget in 2016 allocated 38 million €, which together with the allocations for the National Water Directorate amounted to 61 million €. A breakdown in € is shown in Table 2.


Table 2. Funding breakdown in € (Milojkovic in preparation).


The national and provincial budgetary water funds have been set up pursuant to the 2010 Water Law, to record special funds earmarked for national and provincial affairs. The budgetary water funds are fed by:

  • National and provincial appropriations for the current year;
  • National and provincial water resource charges, except water pollution fees;
  • Leasing of public water land2;
  • Revenues from fund management.

Water resource charges and fees include:

  • Charge for water use;
  • Charge for water discharge;
  • Water pollution fee;
  • Drainage fee;
  • Fee for the use of water structures and systems;
  • Fee for river sediment excavation.

Funds used to implement water management programs, which do not derive from budgetary water fund revenues, come from budget appropriations earmarked for funding or co-funding of approved programs in various water sector segments (e.g. Program for the Development, Protection and Use of Farmland in the AP of Vojvodina, projects implemented by Serbian government offices, grants, etc.).

The 2013 amendments to the Budget Law rescinded a provision mandating the designation of revenues for specific purposes, such that the use of water resource charges for water sector purposes was no longer obligatory. As a result, a portion of the collected charges is not being transferred to the budgetary water fund. This reduces the potential monies intended for the water sector. For the same reason, it is difficult to obtain a breakdown of revenues from charges collected over a certain period.

Practice has shown that available funding does not adequately support maintenance or capital improvement of water projects, per applicable standards, and that not enough attention is being paid to the development function.

Local government revenues:

  • Source revenues (primarily property and building land development taxes),
  • Ceded revenues (divided among local and national budgets, primarily personal income tax),
  • Transfers,
  • Income from loans.


International sources of funding

The main sources are:

  • EU funds and programs,
  • Loans from international financial institutions,
  • Grants from foundations.

The EU Instrument for Pre-accession Assistance (IPA) was designed to target reforms by means of a unique and flexible facility that directly benefits citizens, while countries receive additional assistance to achieve EU standards. Since 2000, the EU has granted more than 3 billion € through its partnership with Serbia. Only a small portion was dedicated to water resources.

The partnership with Serbia began in 2001 with the Community Assistance for Reconstruction, Development and Stabilisation (CARDS) program. CARDS was replaced by IPA in 2016, which lasted until 2013. It was followed by IPA 2, which will provide grants to Serbia of 1.5 billion € from 2014 to 2020 (roughly 200 million € annually). IPA 2 targets the most important segments that should facilitate Serbia’s preparation for accession to the EU. Each year Serbia and the EU sign an IPA agreement for projects slated for implementation in the forthcoming period.

In simple terms, IPA funds can be used in four ways:

  • For technical support, generally involving experts/consultants who help Serbian institutions, like the Consumer Protection Department, to prepare project documents, develop strategies, implement training, and the like;
  • To implement twinning projects, or establishing collaboration between local institutions in Serbia with similar bodies in EU member states, whose objective is to undertake joint projects, exchange knowledge and experiences, and provide assistance in the implementation of the EU acquis;
  • To implement capital projects, primarily for the procurement of equipment and the implementation of arrangements with other financial institutions;
  • To fund projects pertaining to the civil society, local governments, agencies, etc.

IPA 2 is granting Serbia 1.5 billion € over the period from 2014 to 2020. Most of the projects prepared so far are in the following segments: rule of law, infrastructure, energy, environmental protection, and local economic development of small and medium enterprises. The social component will continue to be the focus of the next programming cycles.

Interreg is a program that relies on three EU policy instruments:

  • The European Regional Development Fund (ERDF), which supports cross-border, transnational and interregional programs of cooperation among member states;
  • The Instrument for Pre-accession Assistance (IPA), which supports cooperation among EU regions/states and pre-accession countries;
  • The European Neighbourhood Instrument (ENI), which supports cooperation among EU regions and neighboring regions.

The Interreg-IPA program of cross-border cooperation is an initiative within the EU financial framework for the period 2014 – 2020.

Serbia received 1.58 billion € from international sources in 2014 as developmental assistance. More than half of these grants were spent on local programs, projects, and government reforms, including large projects in the education, energy and environmental sectors. The lead partner in 2014 was the EU and the biggest bilateral donors, the US, Germany, Switzerland and Sweden.

With regard to concessional loans3 in 2014, 750 million € came from the United Arab Emirates, 150 million € from the World Bank, 140 million € from the European Investment Bank, 130 million € from China, 59 million € from Azerbaijan, and 47 million € from the European Bank for Reconstruction and Development (EBRD).

Only 2-3% of the international assistance to Serbia was allocated to the water supply and flood protection segments.


Water Sector Development Challenges and Impediments

Issues of Water and Other Resources

In addition to a number of aggravating factors, such as those in the inherent uncertainty of water sector development in Serbia, the tasks that the Strategy defines for the segments of water pollution control, water supply, and protection against the adverse effects of water are rather cumbersome on their own. Among them is the need for a major increase in capital project investment (from the current 50-80 million € to more than 300 million € annually). In addition, the water sector turnover would have to increase from the current 300-350 million to about 1 billion €. This, of course, requires major changes in the water sector: fiscal, financial, legislative, capacity-building, and strengthening of human resources in terms of count, quality and organization.

Apart from the utmost importance of water resources, major and costly undertakings (several tens of billions of Euros) lie ahead in other sectors: energy, mineral, forest, ecological, social and other resources.

The general development of the Serbian society, as well as environmental status improvement, largely depend on the manner in which natural resources are used and protected. Physically insufficient or depleted natural resources might hinder future development and sustainability. This is particularly true of non-renewable resources. Improper management of renewable resources, such as water, might impede economic development and affect human health and the environmental status in general.

The following key principles need to be implemented in order to ensure sustainable use and management of natural resources: (1) the use of renewable resources should not exceed the rate of renewal, (2) the use of non-renewable resources should not exceed the rate of development of substitutes, (3) discharges to the environment should not exceed its capacity for transforming pollutants into harmless substances.

Although it is one of the most important resources, water issues are not independent of solutions for other resources and society as a whole.



Serbia has a long tradition in water management. There is considerable infrastructure and a substantial pool of experts continually fed by universities. Still, insufficient funding over the past few decades has devastated the water sector in terms of technical capability and performance. In this regard, the Water Law (Water Law 2010) was passed in 2010 and the Water Sector Development Strategy (Development Strategy of Water Sector 2016) adopted in 2016.

The Strategy calls for measures that need to be implemented to address Serbia’s considerable water issues. It highlights water as a crucial challenge for Serbia, to be tackled in parallel with other resources, development, and economic stability.

Climate change increases the need for improved knowledge, planning, maintenance and development in the water sector. This is largely related to:

  • The need to considerably increase water sector development funding and set up a special Water Fund per the Water Law and the Water Sector Development Strategy;
  • Funding of the water sector consistent with macroeconomic policies and expected economic growth, such that water sector spending would amount to 350 million € annually, on overage, over the next 20 years;
  • Ensuring that 40-50 million € from future international loans is earmarked for water sector development;
  • Increasing investment in education of water sector specialists and supporting Serbian universities and institutes involved in water management and water resources4;
  • Reaching economic water prices and water resource charges, to cover enough, notably of the money needed to fund capital projects, meaning limiting of domestic and international borrowing on account of public debt;
  • Monitoring loan interest rates in Serbia and the international capital and money markets in the coming years.

All the above certainly requires strengthening of the national capability to respond to climate change and other major challenges. In the water sector, this requires strengthening of administrative, scientific, professional and operative capacities. The relatively high complexity of the issues requires several crucial bodies: (1) a Water Council, (2) a Water Fund as a legal entity, and (3) an Advisory Body, primarily composed of human resources from existing institutions.


Conflict of interest statement

Conflict of interest - none.


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1 Part of this sub-section comes from (Milojkovic in preparation).

2 The Water Law as amended in 2016.

3 Very favorable loans that can be used to fund infrastructure, energy and environmental projects (usually require part of the goods and services to come from the country granting the loan).

4 Serbia spends 13.4€ per capita annually on science, research and development, as opposed to 410-420€ per capita in the EU. Budget allocations to science amount to only 0.4% of GDP on average. The Scientific and Technological Development Strategy ultimately calls for 1% of GDP. The EU aims to increase R&D spending to 3% of GDP by 2020.