Transcript Document

IS WATER SHEDDING NEXT?
James Blignaut and Jan van Heerden
Department of Economics, University of Pretoria
STRUCTURE
1 Pictorial introduction
2 The SA water context
3 ASGISA and water
4 Conclusion
1
PICTORIAL INTRODUCTION
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
2
THE SA WATER CONTEXT
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)
Water dist.: m3
Water dist.: %
186
1.4%
13041
Allocated
98.6%
Balance
Allocated
Balance
DWAF 2004; NSOER 2005/DEAT 2006; SSA 2006
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)
Marginal exchange value
Critical natural capital
Perfectly inelastic demand
Vulnerable natural capital
Inelastic demand
Relatively abundant natural capital
Elastic demand
Demand for Nat. Cap.
Q1
Q2
Natural capital stock
Farley and Gaddis, in Aronson, Milton and Blignaut 2007
-1.7%!
DWAF 2004; NSOER 2005/DEAT 2006; SSA 2006
3
ASGISA AND WATER
ASGISA’s perspective to SA’s economic
development: Stimulate these 12 sectors:
1. A national biofuels initiative;
2. The Makhathini Cassava & Sugar Project KZN;
3. A national livestock project in NC and NW;
4. Afforestation in EC;
5. Mining expansion in Limpopo;
6. A water reticulation project in Limpopo;
7. The Square Kilometre Array in NC;
8. The Cape Flats Infrastructure Project in the WC;
9. A diamond & gemstone jewellery project in NC;
10. A Moloto Corridor Rail Project, mostly in Mpmlga;
11. Gauteng-Durban Corridor; and
12. The Jo’burg Intern. Airport Logistics Hub and IDZ.
. . . 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)
Quantifying the impact of stimulating some
water-intensive sectors
UP’s 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
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
Model results:
Unallocated
Scenario
1: R1bn injectionwater
in
=agriculture
1.4% of supply
- Dryfield
- Irrigation horticulture
- Livestock
- Timber
- Other mining
- Water sector
Total
Scenario 2: Water tariff inc. 1c/m3 (no recycl.)
% change in
Unskilled
GDP
labour
Water use CO2-emssions
0.03
0.05
0.09
0.08
0.04
0.07
0.36
-0.01
0.11
0.18
0.22
0.25
0.10
0.16
1.02
-0.03
0.02
0.72
0.10
0.67
0.02
0.64
2.17
-2.78
0.03
0.02
0.07
0.04
0.09
0.10
0.35
-0.01
- 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
Scenario 3: Water tariff inc 1c/m3 & recycl.
4
CONCLUSION
• 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