Institutional challenges in water reuse and circularity: insights from co-creation processes in Southern Europe and Middle East Open Access

The water circular economy (WCE) seeks to harmonise the human and natural water cycles by implementing strategies like avoiding unnecessary use, improving efficiency and resource management, reusing water within operations through closed loops and recycling, and replenishing water back to river basins (EMF, 2018). The transition to the WCE generates new risks and challenges by introducing new water loops, new communities of users, new responsibilities, different quality standards, and, consequently, new monitoring requirements (Fidélis et al., 2021).

Fidélis et al. (2021) show that the Circular Economy Plans at European and national levels neglect the relevance of coherently articulating circular economy and water governance. Bixio et al. (2006) highlight the increasing use of reclaimed wastewater, the need to establish water reuse guidelines, and the underlying water cycle stakeholder's perception. The use of treated effluent in irrigation in the case study of Western Cape (South Africa) stresses that water reuse impacts variables of scarcity, policy and regulation, public pollution prevention awareness, and capital-intensive investments (Saldías et al., 2015).

New risks and challenges are further deepened by regulatory and institutional factors (Capodaglio et al., 2016). Unsuitable regulatory framework or limited institutional capacity to formulate and adopt new legislation may obstruct water reuse projects or complicate their implementation process (Miller, 2006; Scott et al., 2012; Alcalde-Sanz and Gawlik, 2014; Capodaglio et al., 2016; Scruggs & Thomson, 2017; Voulvoulis, 2018). The regulation of water services addresses many purposes, including tariff regulation, the monitoring of standards for access to and quality of services, establishing efficiency incentives, information collection, and the participation of the organisations of users (OECD, 2015).

Regarding water users, the transition to the WCE may heighten institutional concerns due to the need for information and increased awareness concerning the safety of the new sources of water and water types, as well as the associated environmental benefits (IWA, 2016). The more complex the new water uses and users in a new water loop, the more critical the institutional arrangements become, even though this does not necessarily create severe barriers (Riazi et al., 2023).

The promotion of better water management and planning, as well as public participation, is emphasised by the EU Water Framework Directive (EEA, 2014). These new approaches are shifting away from old-fashioned top-down policy-making models, leading to more transparent and holistic governance models and highlighting the contribution of various stakeholders in water management (OECD, 2015). However, water activities are often fragmented (OECD, 2015), and it is not easy to bring stakeholders' knowledge and experience together (Medema et al., 2017). Thus, it is crucial to identify who is responsible for what and at which level (OECD, 2015). Addressing these challenges requires collective efforts to perceive new water governance requisites, build adequate solutions, and adapt to new risks, responsibilities, and regulations.

Co-creation processes are collaborative approaches that create a space for sharing an understanding of the technical and governance challenges and risks (Vandael et al., 2018). Considering the existing institutional arrangements, they can guide stakeholders in identifying actions, means, and priorities for implementing new water loops. Co-creation processes may help to explore the challenges and barriers further, propose solutions, and foster water circularity.

The article focuses on four case studies in Almendralejo (Spain), Lecce (Italy), Omis (Croatia), and Eilat (Israel), in which water reuse technologies were developed and implemented under an EU/H2020 research project named Project Ô, and it is based on the results of final deliverable (Fidélis et al., 2023). The implementation of new water reuse systems is vulnerable to institutional settings and contexts and, therefore, may require diverse policy, ownership, and investment approaches. Project Ô case studies highlight different water reuse purposes. In Almendralejo, treated wastewater irrigates parks and agriculture, cleans streets, and is discharged into a river. In Lecce, it aims to aquifer recharge and rehabilitate wells, with some water released into the sea. In Omis, a textile company reuses treated water in production, discharging improved quality water into the sea. In Eilat, the recycling of wastewater in aquaculture centres is for fish tanks, hydroponic agriculture, and sea discharge.

This article examines stakeholders' perceptions of institutional challenges related to water reuse and their contributions to innovative policy and planning through a co-creation process. Section 2 explores the co-creation literature to understand how this process could be relevant to the WCE transition and to support the proposal of a model for assessing the implementation of new water reuse loops in the following section. Section 3 presents the methodology design for water reuse and details the data collection for analysis. In Section 4, the main results across the four sites are presented, including the problems identified, the solutions designed, and the strategic actions taken, with a comparison of the different contexts. Finally, the article discusses the key findings and concludes with reflections and recommendations.

The objective of co-creation is to bring knowledge from communities, organisations, and experts together and to facilitate systematic learning about problems or new challenges, such as sustainability (Steelman et al., 2015; Frantzeskaki & Kabisch, 2016; Sørensen & Torfing, 2018). Co-creation is to be interpreted as active collaboration processes to identify and tackle the challenges at hand (Vandael et al., 2018), considering the importance of the integration of experience, knowledge, and information dispersed among different stakeholders as a pillar of sustainability (Medema et al., 2017).

Co-creation processes occur in an open dialogue atmosphere, benefiting from a wide range of knowledge to produce creditable, flexible, usable, and applicable results (Frantzeskaki & Kabisch, 2016). The participants bring their experiences, skills, knowledge, and networks to help define and solve the problem in collaboration (Vandael et al., 2018). A couple of requirements are essential in the design of a co-creation process despite the diversity of methods and tools used for co-creation processes (Reed et al., 2014; Frantzeskaki & Kabisch, 2016; van de Ven et al., 2016; Frantzeskaki, 2019).

One of the requirements is the engagement process, including stakeholder identification, trust-building, and cross-boundary participation. Another is identifying the place of engagement, namely, a particular site, location (council and lab), or online platform (website and social media platforms) for stakeholder interaction and engagement. Participatory methods gather multiple benefits. It enhances stakeholder perception, bringing more effective, acceptable, and legitimate collaborations to the decision-making processes (Lange et al., 2018). However, alongside the benefits of engaging stakeholders, some disadvantages are related to costs, time consumption, and the diversity of stakeholder expectations. Also, inviting various stakeholders makes the decision-making process complex and expensive since the public authority needs to empower the participants by trusting and sharing resources. Thus, to be more effective, participatory processes need careful identification of stakeholders, extensive facilitation, and mobilisation. However, the success of co-creation and society-based initiatives depends on the cultures and processes of public authorities (van Buuren et al., 2019). Stakeholder identification helps the study understand their potential impact on projects by mapping their power and influence (Bourne & Walker, 2005) through different methods of analysis (André et al., 2012; Ginige et al., 2018).

Many scientific articles use co-creation processes as a methodological tool to collect data from the main stakeholders and reach varied research objectives (Zurbriggen & Lago, 2019; Tian et al., 2022). The development of a guide for stakeholder orientation and processing support in different activities is another possible unfolding of a co-creation workshop at the strategic level (Miah et al., 2015; Lomba-Fernández et al., 2019; Kaisler et al., 2020). Attending to the project objectives, the establishment of criteria settings to analyse the co-creation process data can include general principles (Miah et al., 2015), requirements from the stakeholders themselves (Percival et al., 2020), or metrics at strategic, tactical, and operational levels to assess organisational performance in the water sector (Almeida et al., 2021). Another relevant part of the studies combines the co-creation process with content analysis, categorising and reporting patterns in the collected information. In this pathway, the grounded and coding approach assesses the main features and factors brought by co-creation workshops, which are divided into themes and subthemes. Coding based on the authors' interpretation of the data may explore the main factors to analyse the categories according to study objectives (Gunn et al., 2021; Pradhan et al., 2021), Strengths-Weaknesses-Opportunities-Threats (SWOT)-based approach analysis (Komatsu et al., 2016), and terminology comparison in the different periods (Hidalgo & Morell, 2019), as well as evaluation by sites and qualitative and quantitative analysis (Verloigne et al., 2017). In addition, the coding could involve the two-stage method (Coggan et al., 2021) and verbal and non-verbal interaction analyses, referred to as the dialogic approach (Pifarré, 2019).

Considering the WCE and co-creation literature, a definition of the co-creation process should recognise that it enables the identification of problems, as well as the design and implementation of solutions and actions (Nambisan & Nambisan, 2013). Particularly regarding a common resource and complex technological and economic ecosystems, the co-creation process is also advisable to oversee and manage multi-actor networks and to foster trust-building and social learning (Stewart & Tyler, 2019).

Using the co-creation approach, this section provides a tailored process to explore the perception of stakeholders about the institutional set-ups and challenges and to identify collaborative solutions and strategic actions in different new water loop sites and circumstances. Considering institutional concerns raised by new water loops, a co-creation process was designed using an engagement strategy, keeping in mind that the establishment of new water loops generates new types or qualities of water, new responsibilities for stakeholders, and new potential risks. The methodology employs challenge-based learning as a stakeholder engagement mechanism, comprising a relevant structure in this context as it provides a systematic process encompassing engagement, investigation, and action phases (Nichols et al., 2016). These collectively support a comprehensive stakeholder analysis, which can be applied to future initiatives across diverse social and geographical contexts (Nichols et al., 2016).

The phases of the co-creation process should include the context and problem, which may lead to the development of insight into drivers and barriers; the co-design of solutions that outline prioritised solutions; and the co-strategy building, which includes the vision, mission, strategies, and measures addressed to the relevant stakeholders. The mechanism used to implement the co-creation process was workshops. They are interactive meetings that create opportunities to discuss and generate solutions for an identified problem (Arnold, 2017). Workshops should be held in a secure, safe, and calm atmosphere based on trust-building and away from biases. A co-creation process script was designed to follow the proposed phases and establish the steps, their methodological approaches and the tools used. A set of worksheets was developed to structure the data collection and guide the co-creation process (presented in Supplementary Information). The different worksheets were delivered to each demo-site facilitator to fill out during workshops. These are presented in the following list:

• Worksheet A: Problem identification and framing

• Worksheet B: Identification of solutions

• Worksheet C: Merging and refinement of solutions

• Worksheet D: Criteria for voting the solutions

• Worksheet E: Questions to evaluate the transformative type of the impact of solutions

• Worksheet F: Assessment of impacts of solutions using a transformative impact tool

• Worksheet G: Co-development of strategic actions and roadmap design

The first phase seeks to identify and frame problems to be faced with the implementation of water reuse and related new loops, as well as explore the stakeholders' understanding of them, aid them in taking a position regarding the problems previously pointed out, and discover related conflicting understandings among stakeholders (Bardwell, 1991). The worksheet on problem identification and framing (Worksheet A) captures stakeholders' perspectives regarding the new governance conditions generated by the new water loops.

The second phase aims to find solutions to the identified problems. The script of this phase is based on an adapted version of tools, opportunities, pitfalls, and solutions (TOPS) analysis (Worksheet B) to help foster a deeper understanding of potential solutions and strategy building (Komatsu et al., 2016). After TOPS analysis, participants are invited to refine the solutions (Worksheet C) and vote according to their priority, feasibility, and efficacy (Worksheet D). The voting process is used to select the two most relevant solutions to focus on in the final phase.

The phases of the co-creation process were adapted to the context of each studied site according to their types of water loops, stakeholders, water regulations, and utilities. The co-creation processes must be preceded by a detailed invitation statement of place, rationale, objectives, the rationale for the participation of stakeholders, expected added value, and schedule. Workshops' scripts should be flexible to anticipate unexpected interactions, poor involvement in the activities, conflicting positions, and unanticipated external developments. For this reason, the organiser has a relevant role due to the challenges and complexity of conducting a co-creation process and has good communication to comprehend and engage the stakeholders. Furthermore, ethical compliance must be assured according to the legal data protection framework.

In Almendralejo and Lecce, they were held in the native language, whereas, in Omis and Eilat, they were held in English. Due to COVID constraints and the agendas of some stakeholders, workshops had to be implemented remotely and in a one-morning format. Additional concerns should include the identification of the stakeholder types and potential participants. Participants should be involved in the decision-making arena of the site and contribute to the water governance.

Using Schmitter's (2002) stakeholder identification approach, which introduces seven types of holders (persons or institutions) who should participate in a participatory governance arrangement effectively, it is possible to possess quality resources to solve problems at stake. It should gather actors with active roles and responsibilities, such as water service providers, private and public water managers, infrastructure investors, water reuse consumers, regulators, and technology developers. These stakeholders directly impact WCE solutions and actions and encompass a range of responsibilities, including managing, investing, consuming, regulating, researching roles, and representing citizen and industry associations, authorities, companies, and research institutions.

From the data provided by worksheets, the co-creation approach developed is flexible and allows different analytical pathways. This paper proposes an analysis to describe, discuss, and compare problems and solutions in different demo-site contexts through the answers and perceptions provided by co-creation workshop participants in order to analyse the institutional challenges faced in water reuse adoption.

This section presents the co-creation process implementation for water reuse in place and the outcomes from co-creation processes, including the problems identified, the solutions designed, and the strategic actions across the four sites at the Project Ô. The researchers joined the workshops as observers and organisation supporters.

The main contextual features are presented in Table 1, presenting the various objectives for the new water loops and technology adoptions at Project Ô sites.

Regarding the identification of problems, solutions, and actions, Almendralejo stands out, showing higher percentages of interventions during the workshops. Conversely, Omis presents the lowest percentage of interventions in all workshop phases. Lecce registered the second-highest percentage of interventions in the problem and solution phases, while Eilat was second in the action phase

The main results of implementing co-creation processes, presenting the problems identified, the solutions designed, and the strategic actions by sites are summarised in Table 2. An initial review of stakeholder perspectives suggests that the main issues identified are lengthy processes, complications connected with water reuse, the quality of the new water, and health and environmental concerns. Additionally, limitations in knowledge and technology implementation are significant issues. When identifying potential solutions, participants emphasised regulatory concerns as the most pressing issue. Furthermore, policy, regulatory, and technological challenges were frequently mentioned, along with the importance of financing and training initiatives. Identifying actions, participants underscored the importance of stakeholder engagement and collaboration. Although discussions on this topic were brief due to time constraints, the critical role of government and stakeholders in shaping and organising institutional arrangements was evident. The discussions also highlighted the challenges and costs associated with upscaling these initiatives.

Identifying the solutions, the co-creation process contributed to understanding what types of solutions the stakeholders need to face to overcome the reported problems (Table 3). They are classified into six groups: Policy and planning, Regulations, Process and organisation, Data and transparency, and Training and awareness. The frequency of each type of solution is ranked as follows: never mentioned (−), once or twice (+), three or four (++ ), and five or six (+++).

The results show that solutions related to Policy and planning and Process and organisation pose the most challenging issues in the transition towards WCE adoption. However, the site's approach to problem-solving shows little concern for data and transparency. Almendralejo and Lecce underscore the need to advance a broader variety of subjects, particularly those related to Policy and planning and Process and organisation, followed by Training and awareness. Omis expressed concerns in almost all typologies despite the low incidence being due to a lack of solutions. Eilat is concerned with Policy and planning, and Expenditure and investment address the problems identified.

The analysis across the sites reveals that implementing the two most-voted solutions at all sites is likely to have a more significant impact on Policy and planning, Regulations, and Training and awareness, emphasising the emergency need for adjustment of the mentioned typologies. The impacts of the solutions on Process and organisation, Data and transparency, and Expenditure and investment in Omis and Eilat are greater than those in Almendralejo and Lecce. It signifies that the type of solution and its impact depends on the type of water reuse and the new water users, considering public health risks. For instance, in Almendralejo and Lecce, the impacts are more relevant to raising awareness regarding water reuse for agricultural or potable purposes. However, in Omis, where the water loop is inside the factory, the solutions intervene in cost efficiency and enhance the expert's capacity to operate the WCE.

Identifying actions, although the actions are context-dependent and each site requires specific measures, the participant's perspectives emphasise the importance of enhanced water monitoring mechanisms, regulatory compliance, and decision-making tools regarding the issues raised in sites.

The co-creation process used in the sites revealed the following three significant points. First, the more diverse the loops and the purposes of reuse are, the more complex the problems and solutions are. This diversity increases the governance complexity due to new stakeholders, authorities, spill authorisation, and reuse concessions (Capodaglio et al., 2016; Voulvoulis, 2018). Besides, different types of loops (e.g., street washing and agricultural irrigation) necessitate new permits and new spatial considerations for developing infrastructure (transportation and storage) (Fidélis et al., 2022), especially in Almendralejo and Eilat.

Second, dealing with the problems and challenges raised by adopting new water loops, even if they are technical, may rely on non-technical solutions related to the institutional setting and use a co-creation approach to co-find and co-solve the problems. The problems raised in the workshops highlight the difficulty and cost of implementing new technologies in Omis and Eilat, emphasising a lack of a WCE strategy and measures in policy, planning, and regulatory instruments (Fatta et al., 2005; Frijns et al., 2016; Dare & Daniell, 2017). In addition, spatial concerns regarding the distances between producing and reusing water exacerbate the transportation and cost problems in Almendralejo and Eilat.

Third, the diversity of the participants not only contributed to the complexity of the discussion in the workshops but also provided an expansive range of information regarding problem identification and solution design. In addition to covering and confirming prior research on institutional drivers and barriers to the WCE, the findings of the in-place co-creation process also help identify the main problems faced and the more effective solutions. In Almendralejo and Lecce, the participants were better able to identify institutional concerns, especially regarding water monitoring (Capodaglio et al., 2016), regulatory adequacy (Voulvoulis, 2018), and collective engagement (OECD, 2015; IWA, 2016). In Omis and Eilat, most of the issues indicated by participants are not among the institutional barriers, highlighting the significance of the co-creation process in WCE adoption.

Relevant parts of the problems faced by the participants are technical, regulatory, and cost-related, corroborating with uncertainties regarding the operation, finance, environment, public health, and institutionality founded by works of Elazegui et al. (2016), Oulahen (2021), and Wanda et al. (2017). Nevertheless, these challenges can be solved with solutions and actions associated with Training and awareness, Policy and planning, and Regulations. Training is not usually referred to as a WCE transition concern, despite its relevance to cost and benefits awareness (Bixio et al., 2006), trust-building (Karambelkar & Gerlak, 2020), and technical development. Meanwhile, the last two solution typologies are often discussed in water governance literature, for example, pointing out policy boundaries and spatial policies and regulations (Fidélis et al., 2023; Trapp et al., 2017). Furthermore, the role of the government in the organisation of institutional arrangements and the importance of management and fostering technical progress are highlighted. To endorse this finding, institutions are considered essential to reduce bottlenecks and facilitate the transition to water circularity and management in literature (Riazi et al., 2023; Saldías et al., 2015).

The co-creation process outlined in this article is particularly influential in addressing concerns related to the WCE and institutional arrangements. It explored the stakeholder's experience in innovating policy, planning, and institutional arrangements for water reuse. The model developed reached results that were able to identify institutional concerns (Gunn et al., 2021; Pradhan et al., 2021), potential solutions (Komatsu et al., 2016), and their impact level according to the experienced experts (Almeida et al., 2021).

Among many different methods and tools for stakeholder engagement, the co-creation process offers a better quality of information by suggesting a solid framework for participants to identify the problems and design the solutions (Miah et al., 2015; Frantzeskaki & Kabisch, 2016; Almeida et al., 2021). As a result, the problem-solving approach proposed can develop pathways for the implementation of WCE initiatives, identify challenges, and promote data gathering by engaging a wide range of participants and backgrounds while building a guide (Miah et al., 2015; Lomba-Fernández et al., 2019; Kaisler et al., 2020).

The processes and data collection are especially limited in three ways. First is the limited stakeholders' availability, time flexibility, and willingness to participate and interact. The second limitation is the high possibility of a lower-than-expected quorum. The third is the level of complexity of the discussions caused by governance topic issues. From the analysis perspective, the different phases, worksheets, and data types require an ordered and oriented study to improve comprehension and the assessment of categories and dimensions.

This article designed and applied a co-creation process to analyse the perceptions of key stakeholders about institutional challenges for water reuse. It searched for pathways to reduce barriers and foster innovative approaches for the WCE on the four sites where new technologies are being implemented for water reuse. The results show concerns related to the relevance of integrated and efficient water management and planning, which encompasses and considers economic, policy, and regulatory aspects, specifically the following:

• permits and water quality risks and monitoring (Almendralejo and Lecce cases),

• process control and awareness measures (Almendralejo and Lecce cases),

• improving policy, planning, regulation, and decision-making mechanisms,

• new water costs associated with adopting new technologies (Omis and Eilat cases),

• recommending improvements to mechanisms for the clear identification of users, uses, and cost-effectiveness.

Among the critical institutional factors that are poorly considered by stakeholders is the recognition of those involved or affected by decision-making. It is essential to have a clear notion of their responsibilities, as well as how to deal with the insertion or removal of new users in new water loops and public interests. Social acceptance was also poorly noticed. However, according to the result, not all stakeholders are fully aware of the institutional challenges of implementing new water reuse loops.

The co-creation processes developed in this article, although with limits, may foster the adaptation of the WCE by involving a wide range of stakeholders, leading to the identification of more problems and practical solutions, as explored in Section 5. In addition, these processes are valuable tools to identify the main institutional challenges and efforts necessary for the WCE transition in place and its level of stakeholder awareness. The findings stress the relevance of adopting co-creation processes for adopting new water loops as they highlight the stakeholder concern for collective solutions and other concerns relevant to adequate governance of water loops that are mis-considered by stakeholders. The potential need to revisit water policies, ensuring that water reuse objectives have multi-sectoral and multilevel approaches, and the spatial planning strategies to foster symbiotic territories are still far from the scope of stakeholders. The site's upscaling by increasing water reuse volume or adding new users requires particular attention to institutional factors and spatial concerns, such as the challenges brought by the distance between water producers and users, as well as water use regulations related to spatial factors.

The authors are grateful to all officials of government and non-government agencies who participated and responded to the co-creation questions.

This work was supported by the ‘Project Ô – Demonstration of planning and technology tools for a circular, integrated and symbiotic use of water’, a Research Project funded by the European Union's Horizon 2020 research and innovation programme under grant agreement No. 776816. This work was also funded by the Foundation for Science and Technology (FCT) (grant no. 2020.05570.BD). In addition, thanks for the financial support due to the Research Unit on Governance, Competitiveness and Public Policy (UIDB/04058/2020 and UIDP/04058/2020), funded by national funds through the FCT and to the Centre for Environmental and Marine Studies (CESAM) (UIDP/50017/2020 + UIDB/50017/2020), to FCT/MCTES through national funds, and the co-funding by the FEDER, within the PT2020 Partnership Agreement and Compete 2020.

All relevant data are included in the paper or its Supplementary Information.

The authors declare there is no conflict.