Pricing of Water for Cost Recovery, Economic Efficiency and Social Equity

Abstract

The National Water Act (Act No.36 of 1998) recognises that water is a scarce and unevenly distributed national resource and that it is the responsibility of Government to ensure that the resource is managed in an equitable and sustainable manner. Due to the high costs and limited exploitable potential associated with supply-side water management solutions, demand-side management is becoming increasingly critical to ensure water security in South Africa. Fundamental to this approach is the appropriate pricing of water resources. The current water act aims to apply water pricing tiers based on the principles of economic efficiency, social equity, financial sustainability and ecological integrity. Failure to implement both supply-side and demand-side water management strategies effectively may result in the prospect of South Africa facing chronic water scarcity within 2–3 decades.