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Water economy is top priority  

The message for National Water Week 2007 from the Department of Water Affairs and Forestry (Dwaf) is ‘Water is life – protect our scarce resources’. The Department goes on to emphasise that we need water to grow our economy and alleviate poverty in South Africa, thus must conserve water and use it with care.

The Water Research Commission (WRC) conducts research into water and the economy, assessing the economic value of the blue gold.

Water and the economy are a cross-cutting domain applicable to all key strategic areas: water resource management, water-linked ecosystems, water use and waste management, water use in agriculture, and water-centred knowledge.

The commission explains that in South Africa water is seen first and foremost as a common social good, an essential life-sustaining commodity to which everyone has a legal right.

The water and economy domain of the WRC, however, also recognise water as an economic good, having an impact on and acting as a catalyst for wealth creation and prosperity.

The department is interested in investigating and implementing the use of water tariffs to effect changes in water consumption, and the use of waste discharge charges to inter- nalise pollution costs, and, in so doing, to effect pollution reduction and desirable improvements in water quality. Projects under the water and eco-nomy domain determine the value of water, assess its role in wealth creation and the use of economic instruments in changing the behaviour of society at the appropriate micro, regional and national levels. Following from this, the aim of this research portfolio is to demonstrate the applicability of economic principles in the water field and to provide convincing evidence and sound knowledge and support to water institutions and implementing authorities.

There are four main areas of research undertaking that the department is concerned with; these are ongoing with various projects under each thrust.

The first of these is ‘the value of water to different sectors of the economy’, deter- mining that various sectors of the economy and different parts of the country are willing or able to pay different prices, and assisting decision-makers regarding the allocation and development of water resources.

The latest project in this field is an econometric model to predict the effect that various water resource management scenarios would have on South Africa’s economic development, and is being under-taken by Conningarth Economist, with an expected cost of R2-million and completion expected by 2008.

The second is ‘the economic advantages and disadvantages of water resource development’, which quantifies the effect that water resource development can have on wealth creation, or, on the other hand, the adverse costs that may be incurred resulting from pollu- tion of the water environment.

Many projects under this thrust have thus far concerned the economic effects associated with irrigation development. The latest projects in this area of research are the development of a model to asses the costs associated with eutrophication (the decay of organisms, which depletes the shallow waters of oxygen), being undertaken by Umgeni Water, with an estimated budget of R2-million and results expected in 2008.

Another project researches free basic water services, and whether these are making a difference or not, with a budget of R600 000 and results expected later in 2007.

The third undertaking involves ‘the use of economic instruments to effect behavioural change regarding water use’, and is based on the rationale that where economic value is attached to the use of water, it also presents the opportunity to effect behavioural change.

For example, increasing the water tariff on a sliding scale as consumption increases is an economic instrument to encourage water conservation, and, similarly, pollution can be reduced in an economically efficient way, by levying a charge on waste discharges.

These projects are in support of the development of the Waste Discharge Charge System, currently being implemented by Dwaf.

The fourth and final undertaking is research into ‘the use of economic instruments to promote equitable and efficient water allocation and distribution’.

Issues under this thrust are the use of cross-subsidisation to promote equitable distribution of water, privatisation of water services to promote efficient delivery, and trading of water use licences to achieve optimal redistri- bution of water in the interest of greater economic efficiency and the most efficient use of resources.

The most recent project under this research thrust is towards the establishment of water market institutions for effective and efficient water allocation, as it has been proved that the market mechanism is an efficient tool to effect the transfer of water to more efficient users and improve water use and efficiency under South African conditions.

The estimated cost of this is R1,5-million and results should be made available later this year. Another project under this thrust looks at the sustainability of sanita- tion services, addressing capital investments in infrastructure.

The budget for this is estimated at R600 000, with results expected this year.

Various projects have already been completed under each of the four research thrust areas, with involvement from universities, water utilities and institutes, Environ- mentek, the Council for Scientific and Industrial Research, consulting firms and various other stakeholders, and results have been a positive contribution to the sector.

Funding for these research projects is acquired through levies, and a budget of about R4,4-million was made available for the 2005/6 projects.

There was a reported 30% increase in funding in the 2005/6 period compared with the previous year’s funding.

This highlights the growing realisation of the importance of research in contributing to the growth of the economy and poverty alleviation in South Africa



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