Monday, September 14, 2009

Water Shedding?

It was argued in an earlier post that natural resource constraints, which are generally ignored by macroeconomic planners advising South Africa's government, could have a detrimental impact on South Africa's development path. A new paper by South African economists James Blignaut and Jan van Heerden on water limits to economic development takes a stab in this direction. They do point out that increasing the price of water may help avert such a crises, but remain sceptical on the implementation of such measures:

Is Water Shedding Next?

James Blignaut and Jan van Heerden

July 22, 2009


South Africa is in the grip of an electricity crisis marked by a euphemism known as ìload

sheddingî. The demand for electricity has grown to the point that the supply reserve margin is

often under threat, necessitating the electricity supplier to cut supply to some areas for various

periods of time, or to shed load. This is a condition previously unknown to South Africa since

the country has enjoyed electricity security from the mid-1950s. Are we, however, heading in

the same direction when considering water? Is water shedding inevitable?

We ask these questions since South Africa is a country classified has having chronic water

shortages, a condition exacerbated by climate change and the rapidly increasing demand for

water. Can we avert a water shedding crisis by being proactive? In this paper we address

this issue by applying a Computable General Equilibrium (CGE) model using an integrated

database comprising South Africaís Social Accounting Matrix (SAM) and sectoral water use

balances. We refer to AsgiSA, the governmentsíAccelerated and Shared Growth Initiative in

South Africa, and conclude that continuing business as usual will indeed lead to a situation

where water shedding will be inevitable.

Unlike electricity, however, water security is much more serious from livelihood, health and

socio-economic development perspectives since there are no substitutes for it, although its influ-

ence is not directly and immediately visible. This delayed effect can create a degree of comfort

and ill-founded complacency leading to non-action, whereas there is an urgent need for proactive measures.

See here for more on water pricing is an important policy instrument to manage water scarcity and risks.


Jerome L said...

I believe that increasing the price of water sharply would be the only effective means of causing a significant drop in use. Legislated restrictions such as seasonal bans on lawn & garden use on certain days are often ignored or else cause over-watering on the days that they are allowed. Restrictions or "load-shedding" for industrial water users will cause serious constraints on economic development. Pricing then remains the best method. A good precedent is the sharp increase in petrol prices the past couple of years, which was the first time in my personal experience that I saw a change in behaviour with people starting to consider commuting by bicycle or public transit for financial reasons, or choosing the type of vehicle they purchase based on fuel efficiency as the primary consideration.

Martin de Wit said...

Yes I agree. Historically low price elasticities of water, does not mean that future price elasticities will be low as well. There is just a point where overall expenditure becomes a measurable part of the household budget, or where sufficient attention has been drawn to the topic of water scarcity that behavioural shifts are starting to emerge.

Urban Solar said...

Water is becoming a serious issue, here is a post highlighting how saving electricity saves water too!

LightSavers said...

This century will be dominated by water and energy, and there relationship to one another. Responsible use is key I believe and it is of course a good idea to regulate through pricing. It would make sense though if we started to use sustainable methods of water creation and reuse especially within urban contexts.