An assessment of the impact of a water crisis on the economy of South Africa’s predicts a possible decrease in disposable income, a hike in government spending and thousands of job losses. The study was commissioned by the trade union UASA.
The study forms part of UASA’s ongoing Water Security Campaign and was conducted by independent economic research and advisory firm Plus Economics, headed by its CEO professor Charlotte du Toit, also professor in economic modelling at the bureau of market research at the University of South Africa.
The Engineering News in March reported there was a growing concern, “almost turning into general consensus, that South Africa could experience a water crisis in the not-too- distant future, particularly given a chronic lack of skills in the sector and, hence, what some are describing as inadequate management of infrastructure, especially at local government level.”
Du Toit says a “decrease in the quality, and therefore usability, of water in South Africa by 1% may result in the loss of 200 000 jobs, a drop of 5.7% in disposable income per capita, and an increase of 5% or R18.1 billion in government spending,” In her presentation, Du Toit said that additional macroeconomic effects of decreased water quality included a rise in the ratio of government debt to Gross Domestic Product (GDP) of 28%, a drop of R16 billion in household spending, a drop of 1% in the GDP growth rate as well as a drop of R9 billion (2.5%) in total fixed investment, the South African Press Association said.
“A decrease in the quality of water will have negative and different effects on the individual economic sectors. Among our findings are that growth in the electricity, gas and water sector will decrease by 2 percentage points, and that as many as 14 000 jobs may be lost in the financial services sector,” she said.
Du Toit also discussed the effect of a decrease in the quantity of water available on the different economic sectors. She said that if a decline in the final availability of water supply of for example R10-million was assumed – which would need to be supplemented from other sources, including desalination of sea water and towing of ice-bergs to our shores and melting them – the study showed the following effects can be expected to manifest within the next three years:
– Agricultural output would drop by R570 000
– Mining output would decrease by R1.1 million
– Manufacturing output would drop by R7 million
– Electricity output would drop by R1 million
– Tourism output would decrease by R2.3 million
– Financial services output would decrease by R4.6 million
– Transport and communication output would drop by R2.3 million
– Community and social services output would drop by R2.4 million
Du Toit said this means that the total economic output would decrease by R41.7 million and the compensation of employees by R5.4 million. SAPA added Du Toit showed how a decline of R10 million in the availability of usable water for manufacturing would over the next three years result in a decrease in total economic output of R51.5 million while the decrease in employee compensation would decrease by R7.8 million as a result of a decrease in the quantity of water available.
“For every one job lost in the manufacturing sector, a further 12 jobs are lost elsewhere,” she said.
UASA said that the effect of a decreased quantity of water available on the community, social and personal services sector look even more frightening. The total economic output of this sector will decrease by R106 million and the compensation of employees in the sector by R11.4 million. Du Toit said that further research and proactive solutions to the problem were required.
Golder Associates business unit leader of environmental technology Dr Ralph Heath added to the Engineering News in March that continuous mass urbanisation has placed the water industry under severe pressure, particularly regarding sanitation. “Urbanisation and industrialisation put pressure on the country’s water management because they change the need and increase the demand for water,” he said. Further, political change in the country during the 1990s, as well as a lack of finance and skills for the management of water, resulted in shifts in water governance. This led to the malfunctioning sewerage and water works, while capacity issues in local and national government crippled proper monitoring and enforcement.
SAPA last month reported the Department of Water and Environmental Affairs would next month tell Cabinet how it planned to resolve an acid mine drainage threat and how much this would cost. “There are certain commitments, timelines and deadlines that the department of water and environmental affairs have committed to,” government spokesman Vusi Mona told reporters. An inter-ministerial committee on acid mine drainage last month also completed a report on the toxic swill in disused mines in Johannesburg and other northern parts of the country.
Mona said Cabinet extended the mandate of the committee to probe complaints from farmers and retailers that widespread water pollution problems was affecting food production. “(Cabinet) considered this serious enough to say that the interministerial committee… should actually extend its mandate and look into this issue as well,” Mona said. “Cabinet does not make light of this issue because it does affect the health of South Africans, it does affect the economy of this country.”
Farmers have warned that deteriorating water quality could put European export markets at risk, while retailers Spar and Pick n Pay expressed concern that food could be contaminated with waterborne pathogens seeping into irrigation supplies from sewage plants and others warned heavy metals, radioactivity and hazardous chemicals from industry and mines could poison produce. SAPA said Stellenbosch University epidemiologist Dr Jo Barnes has said 80% of existing sewage treatment works in South Africa were overloaded, and about 40% of those in towns were on the brink of collapse. Acid water was already decanting from mines in Gauteng’s West Rand and Mpumalanga, while the overall quality of the country’s river water had fallen by 20% in the past five years.
Last year May political scientist Anthony Turton said South Africa stood on the “edge of an abyss” as far as the future of water supply was concerned. He said unless business stopped the “blaming game” and “denialism” and acted swiftly in partnership with the government to deal with the threat, the country faced a catastrophe. Turton was suspended by and then resigned from the Council for Scientific and Industrial Research in 2008 after he planned to make controversial remarks in a conference paper on water about the implications of SA’s water situation on socioeconomic development — which some in government said were alarmist.
Turton said the water problem SA faced was that of quality and quantity, as well as demand and supply. “By 2035 SA will need 65-billion cubic kilometres of water and our current national stock stands at 33-billion. Our problem is that we are managing our water resources so badly, and are putting pressure on available fresh water,” he said according to the Business Day. Turton also suggested that the country’s water allocation reform process should ensure that industry — which contributed about 80% of gross domestic product (GDP) but received only about 20% of water allocation — should get more water at the expense of agriculture, which received about 60% of water allocated but only contributed about 2% to GDP.