Statement of the Problem
In 2002, the First National Water Resource Strategy, found that 98% of all available water had been allocated in South Africa, with some Water Management Areas being over-allocated by as much as 120%. Subsequent to that, science has improved and the accuracy of measurement now possible has shown that the Mean Annual Precipitation (MAP) is changing and the Mean Annual Runoff (MAR) (water available for economic development) is less than originally thought to exist before 2002. Subsequent high confidence research has shown that before 1982 South Africa was generally wetter, with a measurable shift in the seasonal distribution of rainfall patterns post 1982. Winter rainfall areas are specifically affected. In effect, in 2002 South Africa became a fundamentally water constrained economy.
In 2013, as a result of other factors, the South African economy also became capital constrained. All future job creation and economic growth potential will increasingly pivot around the ability of the water sector to attract technology and capital, both of which are in abundance. This is the primary mission of the SA Water Chamber.
The SAWC Approach
The water crisis is only a constraint if we continue to manage it as a finite stock. This is called the Old Paradigm of Scarcity, which is increasingly interpreted by investors as a risk to be avoided.
In reality water is a flux and is therefore infinitely renewable. The core logic of the SAWC is to shift our approach away from the Old Paradigm of Scarcity, where water was managed as a stock and used in a linear economy, to the New Paradigm of Abundance where water is managed as a flux in a circular economy. This requires technological upgrades to the 1000+ Water Treatment Plants and 800+ Waste Water Treatment Plants. This can be funded by private capital and managed more efficiently in a purpose designed Special Purpose Vehicle (SPV) backed by policy and regulatory certainty.
Initial Steering Committee:
Considerable research has been done by the Water Research Commission which co-ordinates much of the water research and knowledge transfer done in South Africa.
SAWC represents the water sector within the presidency’s Public Private Growth Initiative (PPGI). The PPGI is the brainchild of Doctor Johan van Zyl, CEO of Toyota Europe and his friend Roelf Meyer.
What the SAWC is doing as part of this initiative is shaping water policy in South Africa. The information under “Water” (page 26) in the extract from a document produced by South Africa’s National Treasury.
Water: Infrastructure, Regulation & Institutional Models
The estimated demand for water in South Africa will reach 17.7 billion cubic metres in 2030 (Boccaletti et al. 2010). Supply, by contrast, will equal only 15 billion cubic metres—not including the possible effects of climate change (Boccaletti et al. 2010). In addition to our water resource constraints, a significant amount of water is lost in the water provision system. Water lost to leakages makes up 25 per cent of total water consumption and 68 per cent of non-revenue water.
This situation can be attributed to old and poorly maintained infrastructure‚ a complex institutional structure, water tariffs that do not adequately cover the costs, and entities that face significant technical, financial, and management challenges.
South Africa will be unable to support inclusive growth and economic transformation if water supply is severely constrained. According to the 2019 Budget Review, water infrastructure projects have been allocated R90.4 billion between 2019/20 and 2021/22. There needs to be a comprehensive management strategy for investment in water resource development, bulk water supply, and wastewater management. It is also critical here to learn from the success of the IPP programme in the electricity space and adapt this model to infrastructure provision in the water sector, particularly in areas such as the provision of water, irrigation, and sanitation.
The department is currently developing appropriate institutional options for service provision, through the creation of regional water and wastewater utilities and expanding the mandates of the existing water boards. It is also in the process of establishing an independent water regulator—which will improve the overall efficiency and effectiveness of water provision and ensure appropriate price setting. In addition, there needs to be a national water conservation programme to reduce water waste and demand in urban areas.
The focus is on two policy/strategy items:
- The creation of an independent water regulator,
- The creation of a regulatory/contractual environment in SA that encourages the private sector to invest in the severely depleted water infrastructure in the country.
One specific example of this depletion is 800+ dysfunctional waste-water treatment works. However, the South African fiscus is severely constrained – therefore the majority of the approximately R1 trillion in capital required to rehabilitate this infrastructure will need to come from the private sector.
The SAWC is currently setting up constitutional and administration processes to enable memberships to be processed early in 2020.
Working groups are focussing on an ongoing basis:
- Policy and regulatory input to government with the Water & sanitation Master Plan released in November 2019
- Refining the contracting Special Purpose Vehicle arrangements with government
- Provide seed funding to resource up the SAWC
PPGI reports back in 2020, timing to be discussed at next PPGI meeting in January 2020.