Re: The Water Crisis

Eyewitness News has done a good expose of how deep the SA water infrastructure crisis runs. EWN reports that:

According to the latest census, nine out of 10 people have such access. But the reality on the ground, from Nkandla to Stellenbosch, paints a very different picture. The last seven years have seen a dramatic drop in how communities perceive the quality of their water. Millions of people don’t have access at all while others report queuing for up to ten hours to get a single bucket of water.

I’ve written about the water crisis in SA many times before (see here). This is a chronic and systemic crisis that will continue to grow for many years to come. The poorest people of South Africa will be worst affected.

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Have Another Glass of Crisis

Independent water expert Anthony Turton told the Business Day: “I predict the price of water has to increase dramatically, to double or even treble. If we don’t do that we won’t catch up with our growing (infrastructure maintenance) backlog…. We had a sophisticated economy based on sophisticated infrastructure, but we have not invested in that infrastructure over the last 17 years.”

Neglecting infrastructure maintenance is a political decision, says independent water expert Richard Holden. “It is a short-term way of keeping costs down … (but) like in any normal business you have to price for asset depreciation, maintenance and so on or you run your asset down and can’t replace it.”

The government is going to suck massive amounts of resources from the private sector to pay for the mess it has created after a good 17 year party since the ANC took over. This is going to be a water price crisis, not so much a water shortage crisis. There is a mismatch of supply and demand because water prices are set too low by the government. The increase of water prices is going to be dramatic to make up for this. This has major implications for household spending and corporate factor prices. A big re-allocation of resources is on its way. Be ready for it.

Read the Business Day article, here.

Water Crisis Bubbling Under the Surface

A water crisis is bubbling just under the surface in South Africa. The government has not maintained –  never mind expanded – the capacity of other State Owned Enterprises such as Transnet, Portnet, Eskom, or the road network to deal with growing demand, and here’s more evidence the water catchment, purification, or distribution utilities have not been managed any better. Writes News24:

Mbombela – The water affairs department intervened over the weekend in the crisis in Carolina, in Mpumalanga, where drinking water has been contaminated by acid mine water seepage…

He said the department had appointed a rapid reaction team of scientists and engineers to help local authorities remove heavy metals – iron, aluminium and manganese – from the drinking water.

At this stage, officials at the Chief Albert Luthuli local authority were pouring dozens of bags of lime into the town’s drinking water every day to try and raise pH levels and supply water to the approximately 15 000 local residents…

Local authorities have been trucking drinking water to Carolina from nearby Breyten and Chrissiesmeer.

Khumalo said the department had offered to assist the community financially while the water was being brought in, and to supply two water trucks.

Municipal water tariffs are well below a level that would allow the state to maintain and reinvest in water infrastructure. Also,  prices are too low to ration demand for water. There is massive excess demand owing to the relatively low public water prices.

Water tariffs have not kept up with other commodity price increases in recent years. This is set to change in the coming decade or two. Expect a massive reallocation of capital into water catchment, purification, and distribution infrastructure in coming years.

This is going to be water price crisis, as opposed to a water shortage crisis.

That said, the private sector is well placed to deal with the coming crisis, as water can be supplied and distributed outside of state control. While the state controls the fixed water distribution infrastructure in the form of pipelines, etc. the private sector would be able to service water demand, potentially for less, using trucks, the road network, and water storage facilities on residential properties. Unlike with Eskom and Telkom, the state does not have sole control over the methods through which water can be produced, distribute, and marketed.

To give you an idea of what may be to come, expect water truck-tanks delivering water to water storage tanks at your home, at a cost probably about double the current ~R4 per kilo liter you pay the municipality.