The impact of water scarcity on economic development initiatives

Abstract

South Africa’s unallocated water resources have dwindled to precariously low levels. Furthermore, it is generally recognised by the authorities and specialists alike that it is likely that water demand will outstrip water supply within the next decade. Macro-economically and strategically speaking, the question therefore is how to make best use of the country’s available water resources? We ask this question since South Africa is a country classified as having chronic water shortages, a condition exacer bated by climate change and the presence of invasive alien plant species. In this paper we address the question of sectoral water allocation by applying a macro-economic comparative static Computable General Equilibrium (CGE) Model using an integrated database comprising South Africa’s Social Accounting Matrix (SAM) and sectoral water use balances.

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