The use and appropriateness of different economic instruments for water demand management at Buffalo City Municipality

Ngcobo, Eugene Sihle (2006-04)

Thesis (MPA)--Stellenbosch University, 2006.

Thesis

ENGLISH SUMMARY : Water demands are growing as a result of the increase in living standards as well as population and economic growth. On the other hand, water resources are limited in availability. The scarcity of water has led to a paradigm shift from supply management to demand management. Several laws and policies have been developed in South Africa to drive the need for water development management. The main objectives are to promote sustainable use of water, economic efficiency, cost recovery and water pollution control. To meet these objectives, several water demand management measures have been introduced which involve technical measures, financial incentives, legal instruments and institutional arrangements. The concept of water as an economic good has received worldwide acceptance which has led to the potential role of economic tools in managing water demand. The use of economic tools in providing socially acceptable decisions, efficiency and addressing equity is in line with Agenda 21 and the Dublin principles. The Buffalo City Municipality, like any water services authority, is expected develop water conservation programmes and promote sustainable use of water resources for its jurisdiction. One of the instruments that Buffalo City can use is water pricing. Water pricing is one economic instrument that has bee'n widely used in water demand management. The success of water pricing structures depend on factors such as quality of administration, political and public acceptability, and sustainability of water supply. Coupled with this, is a proper policy framework that promotes public awareness. Failure to consider these factors, when designing water price structures affects the effectiveness of the instruments negatively. A Buffalo City Municipality investigation revealed that there is considerable understanding of the need to price water at a marginal cost level. It showed that the water pricing structure used that accommodates equity and efficiency , primarily serves the purpose of financial sustainability through cost recovery and sustainable use of water through use of pricing structure. However, the effect and the appropriateness of the pricing structure cannot be easily measured because of a poor billing system and administration incapacity.

AFRIKAANSE OPSOMMING : Die vraag na water is besig om toe te neem as 'n gevolg van 'n verhoging in lewensstandaarde, sowel as bevolkings- en ekonomiese groei. Aan die ander kant is die beskikbaarheid van waterbronne beperk. Die skaarsheid van water het aanleiding gegee tot 'n paradigma skuif vanaf bestuur van voorsienning tot die bestuur van aanvraag. Om die behoefte vir water ontwikkelingsbestuur te rig is wetgewing en beleide ontwikkel. Die hoofdoelwitte is die volhoubare gebruik van water, ekonomiese doeltreffendheid, koste herwinning en waterbesoedelingsbeheer. Om hierdie doelwitte na te streef, is verskeie water aanvraag bestuursmaatreels in plek gestel wat tegniese maatreels, finansiele intentiewe, regsintrumente en institusionele reelings behels. Die potensiele rol wat ekonomiese intrumente in die bestuur van water aanvraag kan speel volg na die wereldwye aanvaarding van water as 'n ekonomiese middel. Die benutting van ekonomiese instrumente in die voorsiening van sosiaal aanvaarbare besluite, doeltreffendheid en gelykheidberegtiging is in lyn met Agenda 21 en die Dublin beginsels. Dit word van die Buffalo City Munisipaliteit, soos van emge ander water dienste owerheid verwag om water bewaringsprogramme te ontwikkel en die volhoubare benutting van water hulpbronne binne sy jurisdiksie te bevorder. Die vastelling van die prys van water is een van die ekonomiese instrumente wat Buffalo City kan gebruik in die bestuur van water aanvraag. Die sukses van water prys strukture hang af faktore soos die kwaliteit van administrasie, politiese en openbare aanvaarbaarheid en die volhoubaarheid van water voorsienning. Gekoppel hiermee is 'n behoorlike beleidsraamwerk wat openbare bewustheid bevorder. 'n Gebrek om hierdie faktore in ag te neem by die ontwerp van water prys strukture impakteer negatief op die effektiwiteit van die instrumente. 'n Ondersoek by die Buffalo City Munisipaliteit het aan die lig gebring dat daar 'n aansienlike begrip vir die behoefte om water teen die marginale koste vlak te prys, bestaan. Dit het ook getoon dat die water prys struktuur wat gebruik word wat beide gelykberegtiging en doeltreffendheid te akkomodeer, die oogmerk van finansiele volhoubaarheid deur middel van koste herwinning en die volhoubare benutting van water tot 'n groot mate bevorder. Nie te min kan die effek en toepaslikheid van die prys struktuur nie maklik gemeet word nie as gevolg van 'n swak rekening stelsel en 'n gebrek aan administratiewe kapasiteit.

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