BY ANTONY CURRIE
Cape Town’s water crisis
presents an opportunity, and a potential lesson for other arid areas around the
world. As the United Nations’ 26th World Water Day approaches on Friday, the South
African city’s taps are now unlikely to run dry this year. But the root causes
of the problem persist. Creating water markets can bypass some of these, and
help limit the social and economic pain that scarcity causes.
In February the capital city
of South Africa’s Western Cape was just two months away from Day Zero, when
residents would have to line up at government stations for a meager daily
ration of water. The end of the province’s farming season and severe municipal
restrictions on use – Capetonians get just 50 liters a day, a sixth as much as
the average American uses – have averted that scenario for now.
Yet dams stand closer to
empty than last year, so only a very wet winter or new supplies — or both —
will do the trick next year.
Political dams
Cape Town ought not to be in
such a state. The growing risk of water shortages has been clear for decades.
Demand has been rising, not least because the city’s population has grown by 76
percent to some 4 million since 1990, and may add another 2 million by 2030. On
top of that, rainfall is declining thanks to climate change.
South Africa has been
addressing these trends. Pretoria passed laws to help prepare for water
scarcity just before the millennium. It also proposed detailed recommendations
for Cape Town a decade ago.
Businesses have stepped up
too, according to a survey late last year by nonprofit investor lobby group
CDP. Some 90 percent of respondents have completed a company-wide water
assessment, integrate water management into overall strategy and have board
members fully engaged.
But several years of
plentiful rains lulled government planners into a false sense of security. They
postponed a number of measures in a 2007 plan for Cape Town, such as tapping
groundwater and building desalination plants. That left them unprepared for
three of the driest years since records began almost a century ago.
Short-term decisions aren’t
the only problem, though. Poor governance plays a large role. The best way to
manage the resource is at the watershed level, ignoring political boundaries.
South Africa does the opposite. Pretoria determines how water is allocated. It
decided in 2016 to keep giving 40 percent of the Western Cape’s water to
agriculture, and was slow to declare a drought emergency and release financial
aid.
Cape Town, by contrast, has
little or no jurisdiction over most potential solutions so is mostly a demand
manager. City officials have made some progress: municipal pipes now lose just
15 percent of water to leaks, compared with a national average of 36 percent in
2016, according to the Department of Water and Sanitation.
Poor governance also impedes
some obvious solutions from being adopted. Much of the Western Cape’s
watershed, for example, is covered with non-native plants, like eucalyptus trees,
that soak up some 38 billion liters more water than local foliage — enough to
cover almost three months’ supply for Cape Town at current emergency usage
rates. If allowed to spread, these invasive flora could siphon off as much as
130 billion liters, according to the Nature Conservancy, a global nonprofit.
Restoring the native
shrubbery would take a year or two, but would be far quicker and cheaper than
building major dams, water reuse facilities and desalination plants.
Contingent liability
Left unchecked, poor water
governance will hinder investment and growth. Emergency measures forcing
farmers to cut water use cost over 30,000 jobs last year. Foreign trade
accounts for around a third of the Western Cape’s gross regional product, with
water-intensive goods like food and wine contributing more than half of that.
Lack of water could impact another major industry, tourism. And any pain is not
limited to the immediate area: the Western Cape provides around a tenth of
South Africa’s GDP.
It’s little wonder that
authorities are scrambling to tap aquifers and build desalination plants to
source new supplies. Acting smart is as important as acting fast, however:
these engineering solutions come with their own risks. Overpumping aquifers,
for example, can damage water quality, cause the ground to sink — or both — and
render the supply unusable.
The market solution
Two key features of water
markets could bring about big changes. First, major users — such as water
authorities, agriculture and even other industries — would have the option to
buy and sell water according to their needs. Setting a tradable price on a
dwindling resource would help clarify its value to each constituent, and force
decisions on how, and whether, to use it. They are already in operation, often
in small scale, in parts of Australia, Latin American and parts of the western
United States.
Water markets could unleash a
virtuous cycle. Farmers might decide that it’s better to forgo planting certain
crops some years and sell their water to another user. Or they may feel
incentivized to upgrade irrigation technology so they use less water each year.
Tech has already helped
farmers in the Western Cape cut water use by 10 percent in recent years, and
could increase those savings to 40 percent – separate from any
government-imposed restrictions. That could boost supply for residents and
businesses by up to a fifth. If farmers could use recycled water for 70 percent
of their needs, as happens in Israel, they’d save even more. Manufacturing and
other industries can make similar calculations.
In areas like Cape Town,
water utilities are likely to end up being the main buyers. That raises a major
concern: won’t residents have to stump up more for their supplies?
The answer is a qualified no.
The price for basic daily needs for drinking, washing and sanitation ought not
to change much – unless it is heavily subsidized, which can encourage waste.
Otherwise, only non-essential water uses ought to carry a higher tariff – and
significantly so. Outdoor residential water consumption like tending gardens
and filling swimming pools can soak up a huge amount. It accounted for more than
half of Californians’ average use earlier this decade, according to the Pacific
Institute.
Integrated watershed-level leadership is the ideal scenario for the Western Cape – and many other regions. The best way to achieve that is to call everyone to account. Setting a tradable price for water is a smart way for businesses and municipalities alike to manage what they’ve got.
First published March 19, 2018
IMAGE: REUTERS/Mike Hutchings