Pricing of water should reflect infrastructure costs

14 February 2011, Engineering News
URL: http://www.engineeringnews.co.za/article/pricing-of-water-should-reflect-infrastructure-costs-2011-02-14

Infrastructure degradation, water inefficiency, backlogs in providing access to basic water services, wastage and problems such as acid mine drainage were exacerbating water scarcity in South Africa, and would pose binding constraints on the economy, said Nedbank chief economist Dennis Dykes.

Speaking at the inaugural South African Water and Energy forum in Sandton, he said that pricing policies over the medium and long term would need to come into play, and would need to be reflected in integrated national plans.

Business Leadership South Africa CEO Michael Spicer added that the pricing of water should reflect the cost of infrastructure required to deliver that resource.

Trans Caledon Tunnel Authority business analyst Richard Holden said that unless consumers paid the proper price for water, improvements in this sector would not be realised. “Losses are high. If you don’t pay for water, how do you expect to attract people to work in this industry?” he questioned.

South African Institute of Civil Engineering water division chairperson Chris Herold said that water demand management in South Africa “has been a dismal failure”, when considering losses through leakages, inefficiencies and theft of water from rivers.

University of KwaZulu-Natal hydrology emeritus professor Roland Schulze noted that while South Africa’s integrated water management approach was impressive on paper, the policies were not being implemented at a practical level.

South Africa needed sustained ‘doers’ and not only transient conceptualisers, however, the country was losing skilled human resources in the water sector and new capacity was not being built up, he said.

Herold stated that the Department of Water Affairs was “losing professional expertise and institutional memory at an alarming rate”. In 2007, some 37% of engineering posts within the department were filled, and figure was said to have worsened considerably since then.

Skills, efficiencies, infrastructure upgrades and adequate management had to be remedied immediately to improve the country’s resilience, he said.

“We are not going to improve water security, climate change or not, if we cannot address the present situation. Capacity, political will, and the finances needed to achieve this must be forthcoming now,” said Herold.

Dykes added that the water debate had to advance to a more sophisticated level, and that banks should start financing responsible projects, and start using credits and derivatives to assist with solutions.

Spicer emphasised that South Africans needed to pay attention to qualitative water issues, and not only quantative issues, because “wholly inadequate management of water resources” was common practice in South Africa.

The water sector needed to engage with the political economy, and take cognisance of the fact that many South Africans still did not have access to potable water.

The speakers acknowledged that it was difficult to satisfy competing forces, and increasing input costs of water and electricity would also increase the cost of doing business in South Africa, which could affect job creation.

WATER AND CLIMATE CHANGE

The effects of climate change were expected to exacerbate South Africa’s already ailing water management problems and it was recommended that a water adaptation strategy for climate change should be formalised.

However, Herold and Holden warned that not all floods and droughts could be blamed on climate change, because bad water catchment area management and development in catchment areas contributed to these impacts.

The world was said to be aware that water availability concerns would become more urgent as the effects of climate change were felt, and thus more must be done to understand these dynamics.

Stockholm Water Prize Laureate and King’s College Professor Tony Allan said that researchers and stakeholders were aware that ‘hot spots’ existed in the areas of water, food, trade, energy and climate change, although it was not fully understood how these should be woven together.

He added that a so-called ‘meganexus’ existed, which involved the relationship between water, food, trade, energy, climate change, with the added element of the financial sector. He said that everyone should be aware of the interplay between these elements in order to be able to do anything about them, and a suitable way to communicate the issues should also be sought.

He said that the ‘water nexus’ has lagged the global warming discourse, and that while the future regarding water security was more certain than the climate change future, it was still very uncertain, and both were linked with energy use.