Spain and Portugal share five main river basins. Three of these (Duero/Douro, Tajo/Tejo, and Guadiana) are also some of the largest basins in the Iberian Peninsula. In general, Spanish territory is upstream and around 70% of the annual water resources of these rivers is generated in Spain. The total area of these five basins represents 45% of the surface area of the Iberian Peninsula, and nearly 64% of Portuguese territory. Extreme variations in rainfall – from season to season and year to year - exacerbate scarcity in water flows, particularly in the drier south. Irrigation, a highly consumptive use, is the main source of demand in both States. Low water pricing also results in overexploitation and lack of progress in conservation and efficiency. These water scarcity and allocation problems are aggravated by the traditional focus of both countries on dam construction and large-scale water transfers from wetter to drier regions (from the Tajo to the Segura, from the Guadiana to the Sado, Odiel and Piedras river basins).

The first water treaty between both States dates from the 19th century. Later, in 1927, a first treaty regulating the use of the border stretch of Douro River for hydropower production was signed, and was followed in 1964 and 1968 by two new treaties. With these treaties the hydropower potential of the border stretches of the five basins and their tributaries was shared in equal parts between the two States.

In 1993 the Spanish Government disclosed its National Hydrological Plan where a new transfer of 1 billion m3 with origin in the Douro River towards the Mediterranean region was announced, with an impact on the environment and on Portuguese interests, without consultation. The Portuguese Government reacted and negotiations followed that led to the signature of a new water treaty in 1998, the so-called Albufeira Convention.

This convention is inspired by the traditional spirit of friendship and co-operation between both Nations and seeks to balance environmental protection with sustainable use of the water resources within the framework of International and EU Law, whilst at the same time respects the provisions of previous water treaties.