IS WATER SHEDDING NEXT?

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IS WATER SHEDDING NEXT? James Blignaut and Jan
van Heerden Department of Economics, University
of Pretoria
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STRUCTURE 1 Pictorial introduction 2 The SA
water context 3 ASGISA and water 4 Conclusion
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1 PICTORIAL INTRODUCTION
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Photos Prof RJ v Aarde

• WATER
• Increasingly the limiting factor to development
• Increasingly the factor of divide
• Manage water and you will manage the economy,
  failing that implies failing the economy

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2 THE SA WATER CONTEXT
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The challenge
The availability of water of acceptable quality
is predicted to be the single greatest and most
urgent development constraint facing South
Africa. Virtually all the surface waters are
already committed for use, and water is imported
from neighbouring countries. Groundwater
resources are quite limited maintaining their
quality and using them sustainably is a key
issue. (Scholes 2001)
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DWAF 2004 NSOER 2005/DEAT 2006 SSA 2006
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Interaction between the supply demand for
natural capital The value of the last remaining
1.4 of water is very high (both level and
unitary change matter)

Farley and Gaddis, in Aronson, Milton and
Blignaut 2007
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Water shedding??
-1.7!
DWAF 2004 NSOER 2005/DEAT 2006 SSA 2006
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3 ASGISA AND WATER
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• ASGISAs perspective to SAs economic
  development Stimulate these 12 sectors
• A national biofuels initiative
• The Makhathini Cassava Sugar Project KZN
• A national livestock project in NC and NW
• Afforestation in EC
• Mining expansion in Limpopo
• A water reticulation project in Limpopo
• The Square Kilometre Array in NC
• The Cape Flats Infrastructure Project in the WC
• A diamond gemstone jewellery project in NC
• A Moloto Corridor Rail Project, mostly in Mpmlga
• Gauteng-Durban Corridor and
• The Joburg Intern. Airport Logistics Hub and IDZ.

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. . . another perspective . . .
More and more, the complementary factor in short
supply (limiting factor) is remaining natural
capital, not manmade capital as it used to be.
For example, populations of fish, not fishing
boats, limit fish catch worldwide. Economic
logic says to invest in the limiting factor.
That logic has not changed, but the identity of
the limiting factor has. (Herman Daly)
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Quantifying the impact of stimulating some
water-intensive sectors UPs SAM-based integrated
economy/ environment CGE model using
GEMPACK Papers based on this model published
in The Energy Journal Ecological Economics Water
Resources Research South African Journal of
Economics South African Journal of Economic and
Management Sciences
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• Quantifying the impact of stimulating some
  water-intensive sectors
• Measuring the impact on GDP, employment, water
  use and CO2
• Scenarios
• Hypothetical R1billion injection in 6
  water-intensive sectors
• 1c/m3 increase in water tariff
• Balance budget 1c/m3 increase in water tariff,
  but revenue recycled to 6 water intensive sectors

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Model results
  change in change in change in change in
  GDP Unskilled Water use CO2-emssions
  GDP labour Water use CO2-emssions
Scenario 1 R1bn injection in        
- Dryfield agriculture 0.03 0.11 0.02 0.03
- Irrigation horticulture 0.05 0.18 0.72 0.02
- Livestock 0.09 0.22 0.10 0.07
- Timber 0.08 0.25 0.67 0.04
- Other mining 0.04 0.10 0.02 0.09
- Water sector 0.07 0.16 0.64 0.10
Total 0.36 1.02 2.17 0.35
Unallocated water 1.4 of supply
Scenario 2 Water tariff inc. 1c/m3 (no recycl.) -0.01 -0.03 -2.78 -0.01
Scenario 3 Water tariff inc 1c/m3 recycl.        
- Dryfield agriculture 0.00 -0.01 -2.78 -0.01
- Irrigation horticulture 0.00 0.00 -2.65 -0.01
- Livestock 0.01 0.01 -2.77 0.00
- Timber 0.01 0.02 -2.68 0.00
- Other mining 0.00 -0.01 -2.77 0.01
- Water sector 0.00 0.00 -2.68 0.01
Total (Ave.) 0.01 0.01 -2.74 0.00

• Water use impact worsen in the wake of
• presence and spread of invasive alien plant
  species, and
• global climate change

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4 CONCLUSION
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• SA needs economic development
• Increasingly, however, natural capital is the
  limiting factor to development
• Selection of non-water intensive projects key to
  development OR get water from other sources
• Cannot ignore the limiting factor when
  considering macro-economic policies and
  development planning
• ASGISA could be utilised to act as catalyst for
  development when investing in integrated
  packages, otherwise water shedding might be next
  (and soon)
• Water shedding will behave different from load
  shedding with a delayed feedback loop, which
  could lead to ill-founded complacency while
  action is needed