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Opportunities and risks of the digitisation of critical municipal infrastructures using water and waste management as examples

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Thematic background

Municipalities are responsible for numerous areas of public services and the necessary technical and social infrastructures. In a classical understanding, these include the supply of water, gas, electricity, lighting, the disposal of wastewater and waste, and the operation of local public transport. In addition, education and healthcare systems with their facilities and a functioning public administration are services that the municipalities themselves or with the support of (other) public-law bodies provide to all citizens as "basic services".

Digitisation is a key future task for municipalities and municipal enterprises. As in other contexts, however, its effects and consequences are quite ambivalent and challenging: Similar to the entrepreneurial sector, digitalisation offers municipalities and municipal utilities numerous opportunities for efficiency and quality improvements in technical and operational processes, in administration and work organisation or, for example, in communication with citizens or customers. Accordingly, the opportunities of digitization for municipalities are manifold, ranging from improved or expanded municipal services through digital administrative offerings to the relief of public budgets through operational efficiency improvements to innovative solutions for resource-saving supply and disposal of drinking water and wastewater as well as in waste disposal and treatment. At the same time, such a far-reaching digital transformation poses enormous challenges for municipalities. In addition to the high investment costs for the necessary IT infrastructure, municipalities often lack appropriately qualified specialists for implementation. Municipal utility companies also see strong structural changes and new business models and players coming their way as a result of digitalization. Finally, municipalities must also increasingly deal with possible risks of digitalization, for example in the area of IT security or data protection.

Municipalities and municipal utilities are currently trying to set themselves up as models with digitalized concepts and infrastructures in order to respond as specifically as possible to current challenges such as increasing resource consumption, new and ambitious environmental protection targets or demographic change. Current surveys indicate that municipalities are generally insufficiently prepared for the changes associated with digitalisation. At the same time, however, the numerous funding programmes, initiatives and strategies underline the fact that politicians and many decision-makers in local government have fundamentally recognised the great potential of digitisation and want to exploit it.

Many of the municipal social and technical infrastructures also come under the heading of "critical infrastructures", the protection of which represents a central core task of state and corporate security provision, as impairments or a failure of such infrastructures could have dramatic consequences for society. The effects of the digitalisation of municipal infrastructures are also ambivalent from the point of view of critical infrastructures: on the one hand, the monitoring and more flexible control functions made possible may offer new options for responding better and faster to extraordinary events (such as extreme weather events, accidents, local power failures or criminal threats) by means of intelligent modes of operation, thereby increasing the overall availability and reliability of infrastructures. On the other hand, digitalisation and networking increase the complexity of infrastructures and thus also the risks of technical and human errors, which can lead to impairments in critical municipal infrastructures. In addition, this generally increases their dependence on functioning power and IT infrastructures, as a result of which power failures or IT disruptions could assume far more serious proportions than before. Last but not least, digitised infrastructures offer new attack surfaces for criminal offences targeting computer systems and networks themselves (e.g. cyber espionage or cyber terrorism).

Aim and approach

In the context of this study, the development as well as opportunities and risks of the digitalisation of critical municipal infrastructures are to be dealt with on the basis of two examples: Municipal water management (water supply and wastewater disposal) and municipal waste management. Digitalisation offers great potential for these economic and infrastructure sectors in particular, but their realisation is often still in its infancy. For example, automation technology is already being used in water management today that can take over simple monitoring, control and regulation functions based on sensor data. However, a consistent collection, networking and algorithm-based evaluation of the existing large data sets in analogy to Industry 4.0 solutions is hardly taking place at present. In the waste management sector, the first municipalities are experimenting with "intelligent" waste containers that transmit the respective fill level to the scheduling system. The aim is to enable needs-based emptying, efficient routes for waste collection vehicles, improved operational work structures and new forms of inter-municipal cooperation.

For the study, it is useful to distinguish between the two levels of the question - opportunities and risks of the digitalization of municipal infrastructures and the effects of digitalization on supply security. The project will therefore be conducted in two successive phases.

Project phase 1

Based on the current state of digitalisation in municipal water and waste management, the application and development potentials of digital solutions are to be determined first. This forms the basis for the discussion of obstacles to implementation and of the challenges and risks of digitisation for municipalities. The following guiding questions form the content framework for this project phase:

  • What role can the digitization of municipal infrastructures play in overcoming current challenges for municipalities?
  • What opportunities and risks are associated with digitized municipal infrastructures, taking into account economic, ecological and social criteria?
  • Which best practice examples of the digitization of municipal infrastructures exist in Germany (but also abroad)? Can concepts implemented and experience gained here be transferred to other (or German) municipalities?
  • Which parliamentary needs for action or options can be derived in order to promote the realisation of potentials or to minimise associated risks?

Project Phase 2

The second project phase builds on the results of the first project phase and focuses on water management. Based on the scenario of a more advanced digitalisation in the municipal water management, the security of supply under these new framework conditions is to be evaluated here. The central questions of this project phase are:

  • To what extent does the digitalisation of technical processes lead to a higher vulnerability to disruptions in the power supply or in the IT infrastructure (including cybercrime)?
  • In this context, what challenges are posed to state and corporate existential and security provision by the changes in business models and actor structures of municipal utilities promoted by digitalisation?
  • How can the resilience of municipal infrastructures be further increased by digitalisation in the face of extraordinary events?
  • What parliamentary action needs and options can be derived for the protection of critical municipal infrastructures in the light of digitalisation?

Status of the project

Currently, the two expert reports prepared as part of the first project phase for the supply areas of water and wastewater as well as waste management on the following main topics are being evaluated for the report preparation:

  • Industry overview and technical basics
  • Status quo of digitalisation, trends, potentials and problems of a digitalised municipal infrastructure
  • International, national and regional best practice examples in implementation

In addition, two external expert reports on the effects of digitisation on supply security in the water industry will be prepared as part of the second project phase.