Hydro-Economic study shows economic benefits for Western Cape

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  • South African cities are particularly vulnerable to the effects of climate change, which jeopardizes the reliability of their water systems, ultimately impacting their competitiveness, quality of life for residents, and prospects for economic development.
  • In recognition of the strong interdependence between the economy and water system, a multi-year hydro-economic study was completed for the Western Cape Water Supply System (WCWSS). 

“For a water-stressed country such as South Africa, understanding the close relations between water and the economy is key for sustained economic growth. This has been clearly illustrated by the hydro-economic study. The direct economic impact of the drought on the Western Cape economy was estimated to be nearly R15 billion, which is about 3.4 percent of provincial GDP and 0.3 percent of national GDP in 2018,” said Asmeen Khan,  Manager of Operations for the World Bank in Southern Africa.

The findings demonstrate the economic benefits of augmentation and a reliable water system, as well as opportunities and requirements for building a climate-resilient water system and economy. This can be achieved through collaborative governance by South Africa’s national, provincial, and local governments, water users, and key stakeholders.

“The preparation of hydro-economic studies for water supply systems supports the integration of water resources, and the reliance of all water users on these resources, into economic planning. For the Cities Support Programme (CSP) this work is welcomed as an important lens for cities to build resilience at the local level,” said Sibongile Mazibuko Program Manager of the National Treasury’s CSP.

The Western Cape Water Supply System provides water to businesses and over four million people in Cape Town, as well as to agriculture and businesses in Stellenbosch, Drakenstein, Swartland, and Saldanha Bay municipalities. The hydro-economic study has shown promising opportunities to integrate water issues into overall city planning, making it a valuable tool. The study’s key findings are:

  • The Western Cape province’s planned augmentation program must urgently be implemented to mitigate the risk of economic loss and to create economic value.
  • Augmentation alone is not necessarily sufficient to catalyze the full economic development benefits. Confidence in the system and trust in the process are also needed for investment.
  • Operation and financing of the alternatives (aquifers, water reuse, and desalination) should consider the economic benefit beyond direct supply and the increase of assurance for the entire WCWSS.
  • A deliberate pro-poor focus on water access and job creation is needed.

A workshop was convened today in Cape Town, bringing together selected high-level stakeholders who participated in the preparation of the report to share the hydro-economic study’s methodology and results with other cities and provinces, identify opportunities for its application, and chart the next steps to follow up on the recommendations.

Representatives from various levels of government and economic sectors attended the meeting, including the National Treasury; Department of Water and Sanitation; Office of the Premier of the Eastern Cape province; the Department of Agriculture of Mpumalanga province; the City of Cape Town; South African Local Government Association (SALGA); Economic Development Partnership (EDP); World Resources Institute (WRI); and research partners.

“The hydro-economic study’s results have enabled us to better understand the financial tradeoffs in the city’s water resources planning, as well as identify priority actions for water augmentation, including the removal of alien and invasive vegetation,” said Michael Killick, Director of Bulk Services in the City of Cape Town.

“Following the study, the Western Cape Economic Development Partnership (EDP) now convenes a Western Cape Water Supply System User Forum, which acts as a platform for diverse stakeholders to find common ground around critical issues such as assurance of supply, maintenance and operation of infrastructure, water demand management, integration of operations and planning, water pricing, climate change responses, and clearing of invasive alien vegetation,” said Andrew Boraine, Independent Partnering Practitioner and former Chief Executive Officer of the EDP.

The hydro-economic study serves as a blueprint for building a more climate-resilient water system and economy, highlighting the crucial role of stakeholder collaboration and the need to integrate water variables into overall city planning. By working together, South African cities and provinces can build a more sustainable and prosperous future.

Link to the study HERE

Author: Bryan Groenendaal

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