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 WRC study investigates quantification of drought shocks in South African industries 

The Water Research Commission (WRC) has commissioned a study that quantifies the impacts of drought on South African industries. This short-term study will look at the impacts of drought on production, cost of raw materials, export earnings, unemployment, profits, real non-indexed wages, and consumption of products, investment and other related factors.

Dr Jo Burgess, WRC Research Manager responsible for the study, said, “The primary aim of the project is to produce a set of fact sheets which will provide compelling arguments for early action, in the event of a future meteorological drought warning, by describing what the societal impacts of an impending drought will be.”

Drought historically has caused direct and indirect economic, social, and environmental problems throughout the world. Some of these problems are difficult to avoid, even with early preparation. However, other effects are avoidable, especially those stemming from poor economic planning and delayed drought response. This WRC project is intended to establish a baseline of typical economic consequences of drought. The specific impacts of the 1991/92 and, if possible, 2015/16 droughts in Southern Africa can be measured against this baseline to assess reducible if not avoidable costs.

According to Burgess, drought-induced economic losses include those resulting from impaired dairy and beef, crop, timber, and fishery production; lack of power for industrial use; decline in agriculture-dependent industries; increased unemployment in agriculture and other drought-affected industries; strain on financial institutions (capital shortfalls, credit risks); loss of revenue to state and local governments (from reduced tax base); reduced navigability of waterways; and increased costs for transport of water and development of new sources. Such effects are felt by municipalities, business and industry, agricultural enterprises, households and individuals, and governments.

Dr Sylvester Mpandeli, who is co-managing the study with Burgess, said, “One way to measure the impact of a disaster is to look at changes in Gross National Product (GNP) or Gross Domestic Product (GDP). Over the last three decades, specific droughts have reduced GNP by at least 1% in countries in East Africa, Europe, North America, South America, South-eastern Asia and Australia, Southern Asia, and West Africa. Measures of GDP over time show that economic downturns often materialise after a drought. For example, in the year after the 1984 droughts in Sub-Saharan Africa, the GDP for Mali, Niger, and Ethiopia fell by 9%, 18%, and 7%, respectively. Zimbabwe's GDP declined 3% after the 1983 drought.”

As part of the study, the research team will hold expert stakeholder workshops and interact with the selected industries in South Africa.

For more information contact: Dr Jo Burgess email: job@wrc.org.za or Dr Sylvester Mpandeli, sylvesterm@wrc.org.za .




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