Investment and Returns in the Environment and Health: The Water Sector, Energy, and Government Expenditures

Environment and Health Chapter in State of the Nation Report 2025:

• Expenditure on environmental protection out of all government expenditure has declined over the years, and today stands at only about 1.2%
• The majority of environmental expenditure is on waste management, and the local authorities finance 92% of it
• The water sector in Israel in 2025: The hidden water crisis that the public is unaware of
• Israel is at a turning point in its energy sector and may lock in the use of fossil fuels for many years to come

Environmental resources belong to the general public and have a direct impact on citizens’ well-being and health. In Israel, the security agenda at times pushes environmental issues to the margins. Nonetheless, since these are basic and essential needs, investment in the environment is of great importance for public health as well as for social and economic resilience.

Below are the main points of the chapter Investment and Returns in the Environment and Health: The Water Sector, Energy, and Government Expenditures, published as part of the State of the Nation Report 2025 of the Taub Center for Social Policy Studies in Israel. In this chapter, the researchers Or Siman-Tov, Yael Yavin, Nir Kaidar, and Dr. Maya Sadeh examine public investment in key environmental areas. The study analyzes the link between public investment and environmental conditions and their implications for public health. It also presents structural challenges and proposes possible policy directions for improvement, for the benefit of the public and society as a whole.

Most environmental spending is devoted to waste management, while investment in reducing air pollution, wastewater management, and research is low

Public expenditure on environmental protection in Israel has grown over the past decade and reached about NIS 10.7 billion in 2024, but expenditure as a share of GDP has declined over the years, as has its share of total public expenditure, which stands at only about 1.2% (compared to 1.5% in 2015). Most of the spending — about 87% (around NIS 9 billion) — is financed by local authorities, with the remainder financed by the government.

In 2024, spending on waste management accounted for 83% of total public expenditure on environmental protection, 92% of which was financed by local authorities. Over time, spending on waste treatment in 2024 was 54% higher than in 2013, even though the population grew by only 25% over the same period. The main surge in spending occurred in the past three years (2022–2024) and stemmed from extensive use of funds from the Maintenance of Cleanliness Fund to establish advanced waste treatment and recycling facilities.

By contrast, spending on wastewater management accounts for only 8.4% of total public expenditure on environmental protection. In 2024, this spending was only 7% higher than in 2013. Spending on air pollution prevention is very low, despite Israel’s relatively high mortality due to air pollution.

Government expenditure on waste management as a percent of total government expenditure
on environmental protection, international comparison, 2023

The government’s target of generating 20% of electricity from renewable energy by the end of 2025 will likely not be met, and Israel may further entrench its dependence on polluting fuels

Israel is currently at a pivot point in its energy sector. In recent years, important foundations have been laid for expanding the use of renewable energy, but additional effort is required to meet national targets — and perhaps even to set more ambitious goals — in order to ensure improved environmental and health outcomes. The study’s data show that despite targets to expand renewables, dependence on depleting fossil fuels (coal, diesel, and gas) continues in practice. This dependence creates “infrastructure lock-in” — that is, a situation in which investment in new gas infrastructure for transmission and electricity generation entrenches the energy system for years to come and makes it harder to transition to renewable and more efficient energy sources. During Operation Rising Lion (Am Kelavi) in June 2025, Israel was reminded of the vulnerability of its electricity generation system: offshore gas production almost completely halted, and at its peak the share of coal and diesel in the electricity generation mix reached 60%, compared to about 10% in routine times. At the same time, the power system’s reserve margin — the gap between generation capacity and peak demand — shrank from 37% in 2014 to only 15% in 2023.  Despite regulatory steps taken in recent years, electricity generation from renewable energy in Israel in 2024 amounted to only about 14% of electricity consumption. According to the researchers, it may be difficult to achieve the target set by the government of generating 20% of electricity from renewable energy by the end of 2025.

Economic viability

The study shows that a full transition to electricity generation from renewable sources is expected to yield long-term savings to the economy of billions of shekels, indicating a clear economic rationale for continuing to promote and expand renewable energy. Moreover, international experience shows that expanding the use of renewable energy contributes to job creation, increases labor productivity, and raises the growth rates of the local economy.

Crisis in natural water resources: Household water consumption in Israel is growing faster than the population

The expansion of desalinated water use in recent decades has created a public sense of a lasting abundance in water supply. However, the study’s data indicate that this perception does not reflect the reality, and that Israel’s water sector in 2025 is in crisis. In 2008–2011, Israel implemented an active water conservation policy that included extensive public campaigns and an increase in water tariffs, and household water consumption indeed declined substantially. But from 2011 onward, with the end of the campaign and alongside the expansion of desalination, household water consumption returned to an upward trend, at a pace even faster than population growth. Between 1998 and 2023, the share of household consumption out of total water consumption rose from 31% to 43% — a figure indicating an increase in per capita consumption beyond what would be expected from demographic change alone.

In 2023, total water consumption in Israel stood at about 2.4 billion cubic meters. More than 50% of the water was used for agriculture, and the rest for household, public, and industrial consumption. Even so, the growth in water consumption in Israel in recent decades does not stem from an expansion in agricultural use, which declined slightly over the years, but from increased household and urban use. Water consumption for household use grew in 1998–2023 from about 670 million cubic meters to more than 1,000, and its share of total consumption rose substantially. At the same time, data for 2000–2022 show that over time, water consumption in Israel exceeds the potential of natural water sources, and in 2022, it was about 30% higher than the amount of water available in the reservoirs, despite the growing use of desalinated water. The researchers stress the importance of preserving natural water sources, since beyond serving as drinking water reservoirs, in both routine times and emergencies they also contribute to public enjoyment and well-being. It is therefore important to raise public awareness of water conservation, including through information campaigns, as was done successfully in the past.

The expansion of desalination has made it a significant factor in Israel’s water supply — today, about 60% of drinking water is desalinated — and it makes an important contribution to the stability of drinking water supply. However, the desalination process removes essential minerals found in natural water sources, including calcium, magnesium, fluoride, and iodine. The increasing use of desalinated water raises questions about drinking water quality and health aspects related to its composition. In addition, desalination has environmental implications stemming from the construction, operation, and maintenance of the facilities. Finally, desalination entails high energy consumption, creating a dependence of the water sector on energy. This situation highlights the need for long-term infrastructure solutions and comprehensive management of the water sector that addresses supply, consumption, water quality, and the energy implications of providing it.

Rising water consumption is also reflected in increased wastewater generation, which increases the burden on wastewater treatment plants and undermines the quality of treatment they can provide. In 2022, 1,544 malfunctions in sewage and effluent systems were reported — an increase of about 135% since 2017. These failures have many environmental and health implications, including contamination of soil, streams, and groundwater. The study points to a link between inadequate wastewater treatment and sewage overflows and morbidity events, such as the outbreak of West Nile fever in June 2024, following which hundreds of people fell ill and dozens died.

Household and public water consumption in Israel relative to population size