National Water Act, 1998 (Act No. 36 of 1998) A Pricing Strategy For Raw Water Use Charges 7. Application of Pricing Strategy to Different Categories of Water Use/User Sectors 7.4 Irrigation Sector

 

 

Established schemes and commercial farmers

 

Negotiations were concluded in 1995 with the South African Agricultural Union (SAAU) on a strategy for tariffs to be imposed on State irrigation schemes. This strategy was based on the following principles:

 

 

To give impetus to implementation of the strategy, it was further agreed that tariff increases would be gradually and uniformly effected from 1996/97 onwards on the following basis:

 

 

Full recovery of water resource management costs must be achieved in a phased approach. The agreement reached with the South African Agricultural Union (SAAU) makes provision for the allocated costs for the Working for Water Programme (water conservation) to be subsidised by 90% due to the fact that this activity will only increase the assurance of supply to this sector and will not make additional allocations possible. The catchment management activity costs relating to water conservation (invasive plant and water weed control) and water utilisation (storage, abstraction and afforestation permit control) which have already been introduced, plus a 10% surcharge (to account for under-recovery of costs during drought years), will be phased in together with operation and maintenance costs, to be recovered in full by March 2001. Thereafter the other water resource management costs in terms of this strategy will also be introduced for water pricing purposes, but only after the majority of water uses in a particular water management area have been registered.

 

In line with an agreement between the DWAF and the SAAU, described in 1) above, all management, operating, maintenance and current refurbishment costs, together with certain water resource management costs plus a 10% surcharge, will be recovered in respect of existing Government schemes by March 2001, by gradually phasing out the subsidy over a five year period. The agreement also makes provision for the full recovery of future refurbishment and betterment costs. This agreement will be reviewed before April 2001, from which date the introduction of a depreciation charge on existing schemes, in line with 5.3.2 of this pricing strategy, will be considered. This depreciation component will replace the obligation to pay for the future replacement, betterment and drainage costs in terms of the current agreement.

 

It is not DWAF’s policy to develop new Government irrigation schemes. Where a storage dam scheme is developed for other purposes and established irrigation farmers will benefit by an increased assurance of supply, the full operation and maintenance costs will be payable. New farmers would only be given access or existing farmers allowed to expand on condition that the full financial cost (O&M plus depreciation plus return on assets) would be payable for such new development.

 

Total existing tariffs will be increased gradually to reach full recovery of the SAAU negotiated costs by March 2001. The maximum annual increase of existing tariffs will be limited to 50% of the previous tariff during this period. Tariffs would also not be decreased in any year. From April 2001, the other water resource management activity unit costs for water resource management and a depreciation component of water resource development costs should be added to the charge. Terms of a new agreement will be negotiated in this regard with the full spectrum of organised irrigation agriculture (not only the SAAU).

 

Ex-homeland schemes and emerging irrigation farmers

 

In redressing the imbalances with respect to irrigation farming in the past, it should be noted that the State is committed to supporting disadvantaged individuals and communities through land restitution, land reform, or other programmes of corrective action. These could include concessionary periods during which the full cost of water, based on the approach proposed in this document, is not levied. A phasing-in period of 5 years for catchment management plus the use of waterwork charges on State irrigation schemes is proposed, in order to bring the strategy in line with current practice on established schemes.

 

The following strategy will be applied to the pricing for ex-homeland irrigation schemes and emerging farmers given access to established or new government water schemes:

 

 

 

 

 

Registration of irrigation water use for pricing purposes

 

An existing lawful water use as defined in section 32 of the Act, can continue to be exercised until the responsible authority requires that water use be licensed. As the extent of existing lawful use has in many cases not been quantified by means of the authorisations granted in terms of legislation which was in force immediately before this Act came into effect, the Act empowers the responsible authority to record the extent of such existing lawful use by means of a registration process, subject to regulations made under section 26(1)(c) of the Act.

 

The necessary regulations to guide the registration of existing water use will be promulgated. These regulations will enable the DWAF to register existing lawful use in all water management areas from October 1999 in order to facilitate the effective allocation and management of water use and waterworks and the imposition of charges as set out in the pricing strategy. In terms of section 59(2) of the Act, any person registered in terms of a regulation under section 26, or holding a license to use water is liable for water use charges.

 

For pricing purposes, irrigators not supplied from waterworks owned by the Government or water management institutions, must be registered for their estimated average annual volumetric water use, which will be based on the crop water requirements of those crops and irrigated areas which constitute their registered existing lawful use and the estimated water losses incurred by their registered on-farm irrigation systems. On Government or WUA schemes, the water use on the scheme will be registered as a unit and will be based on the sum of the individual volumetric allocations at field edge, adapted for assurance of supply to represent long term average annual use, plus average annual distribution losses on communal infrastructure.

 

The following methods will be used by DWAF to determine the volumetric extent of average annual water use of individual irrigators for pricing purposes, based on information provided on the official registration application forms:

 

 

The following procedure will be followed to calculate the crop water requirement:

 

The SAPWAT computer program currently being developed under the auspices of the Water Research Commission, using the internationally accepted Penman-Monteith climatic model for crop water requirements as developed by the FAO, plus the effective rainfall for different crops at 350 weather stations country-wide, will be used for estimating the irrigation requirements for those crops noted in the program, anywhere in South Africa. The weather station with climatic characteristics nearest to those experienced on the specific farm will be chosen and for crops not noted in the program, a crop with more or less similar characteristics will be chosen in the model.

 

 

The following system efficiencies (which accounts for losses between the farm dam and where water is placed on the soil surface) as given in the "Irrigation Design Manual", 1996, produced by the Agricultural Research Council, will be used:

 

 

 

Stepped water tariffs

 

To promote water conservation and the beneficial use of water in terms of the National Water Act, the introduction of stepped water tariffs for irrigation will form part of the pricing strategy. The present agreement with the SAAU regarding the phasing-in of the recovery of current expenditure at schemes may lead to under-recovery of costs if stepped tariffs are introduced immediately, and such an immediate introduction may therefore be counterproductive. The introduction of stepped tariff structures also needs further applied research and refinement and can furthermore only be effectively applied where water supply is accurately measured and monitored.

 

The development of stepped tariff structures to promote water conservation will also form part of the revised agreement to be concluded with organised agriculture, which will be implemented from April 2001.

 

Government institutions

 

Water supplied for irrigation purposes from State schemes to other government departments or institutions financially supported by government departments, will be charged a tariff based on full financial cost recovery, without subsidisation.

 

Purchase of "extra water"

 

The current policy of allowing scheduled irrigators on Government water schemes to purchase "extra water" under certain conditions at heavily subsidised prices will be discontinued. Only under exceptional circumstances, such as an unexpected heat wave, will irrigators be allowed to purchase additional water over and above the quotas. The tariff for such extra water will be the raw water tariff for domestic and industrial supply.