Venice is sinking because the Adriatic plate underneath the city is subducting beneath the Apennines Mountains due to plate tectonics and the slow compaction of the sediments that support the city. One or both of these processes is also causing a slight tilt of the city to the East. Historically, pumping groundwater from beneath the city also contributed to the sinking, but such pumping was stopped.
Venice is sinking at a rate of approximately 0.08 inches per year. The sea level around Venice is rising at almost the same rate, exacerbating the problem. Both the city and the land of the surrounding lagoons is sinking. Satellite measurements between the years 2000 and 2009 indicated that the sinking had stopped after the groundwater pumping ceased, but subsequent GPS techniques revealed that the city has continued sinking.
As a consequence of both the sinking of the city and sea level rise, flooding is becoming more common in Venice. Plank walkways must now be used several times a year to allow residents to traverse large portions of the city. The primary solution currently in the works is a series of gates, designed to keep out water during rising tides.