National Water Act, 1998 (Act No. 36 of 1998)A Pricing Strategy For Raw Water Use Charges5. Implementation of the New Pricing Strategy5.1 Water subject to Pricing |
The pricing strategy follows from the four objectives already discussed. It aims to achieve the efficient and cost-effective allocation of water, equity and fairness in the allocation mechanism, and long term sustainability of the natural environment.
The starting point for the pricing strategy is the water management area as defined in section 1 of the Act, and as defined in the Government Notice no. 1160, published in the Gazette on 1 October 1999. It begins with an estimate of the utilisable water available in the area, which will be contained in the national water resource strategy (section 6 of the Act). This will be derived from geohydrological assessments and hydrological models of the rainfall/run-off/storage relationships for the relevant catchments within the water management area. From this amount five claims on water will be deducted.
The five claims are as follows:
| • | Use allocatable under Schedule 1 to the Act. This represents reasonable use, for domestic, gardening, stock and animal watering, emergency and waste discharge purposes for individuals having access to surface and underground resources and sewerage systems such as in rural and within local government areas. |
| • | Basic human needs. This represents the first component of the Reserve as defined in section 1 of the Act, and provides for the essential current and future (10 year horizon) needs of individuals served by the water resource concerned and includes water for drinking, for food preparation and for personal hygiene. The free use demarcated under Schedule 1 to the Act already contains a basic human needs component for certain individuals who access the water resources directly. Since water for basic human needs constitutes a small portion of water demand, and storage dams are built mainly to provide water for economic use, it is appropriate that the DWAF makes the first tranche of 1st tier water (equivalent to that portion required to meet basic human needs, defined as 25 liters per capita per day) also available free of charge to water services authorities. This applies to water abstracted by local government by means of own works as well as supplied to them from public storage dams. The objective of providing a portion of the 1st tier water free of charge would be to promote the application of lifeline tariffs at the 3rd tier, which would ensure that all South Africans can achieve fair access to basic services (Section 56(6)(c) of the Act). |
The cost of raw water for meeting basic human needs from the source of supply in the areas of water services authorities should thus be borne by all the economic users within the water management area and those supplied from a storage dam or system. It is important to note that the subsidisation of the resource cost of 1st tier water (as it travels through to the 3rd tier) should not be considered as a subsidisation of the distribution costs of the 3rd tier provider of potable water supplies. Third tier costs must be borne in full by the relevant water services provider,
Therefore, even if the responsible authority makes the first tranche of 1st tier water available free of charge to the 3rd tier water supplier, it does not imply that such water will be free to the consumer. It is however intended that the DWAF will, through the proposed regulations in terms of the Water Services Act, require local government to set the charge to basic water supply at the lowest amount possible. The prescribed procedure of how water services authorities can access free raw water supplies is contained in 7.2 of this strategy.
| • | Long-run ecological sustainability. This represents the second component of the Reserve, and refers to the water (quantity and quality) required to protect the aquatic ecosystems of the water resource. The DWAF will determine what these needs are, using appropriate models. In some catchments it may be necessary to reduce existing lawful uses of water below their present levels in order to provide the required ecological reserve. It may even be necessary to construct a new storage dam to provide for the ecological reserve in an overallocated water resource. The recovery of cost of such a dam would not automatically form part of this raw water pricing strategy and subsidies may be considered on a socio-economic basis. It is important to note that this claim does not include environmental purposes beyond the ecological reserve. For example, environmental "needs" which simply enhance the real estate value of a property (e.g. a private dam) will not be considered as necessary for long-run ecological sustainability and will not, therefore, be exempt from the pricing strategy. |
| • | International obligations. The water requirements to meet South Africa’s commitments regarding international waters will receive similar priority, save where specific agreements have been reached concerning the pricing and supply of water to neighbouring countries. |
| • | Inter-basin transfers. The national water resource strategy (S6 of the Act) will identify and quantify water to be taken out of a water management area to augment water supplies in another area. |
The water that is available once these claims have been met can be allocated within water management areas between competing water users. It can also include water imported from another water management area by means of an inter-basin transfer scheme. This water will be classified as economic use of water and is subject to pricing.