Turning crisis into opportunity

2008-01-24 00:00

There are many laments that frequent load shedding over the next five years, until Eskom can fire up new power plants, is going to be bad for business and severely hinder the expansion of industrialisation and accompanying foreign investment and that this will impact on unemployment, poverty reduction, Accelerated and Shared Growth Initiative — South Africa (AsgiSA) and that supposedly hallowed measure of how the country is prospering, the gross domestic product, GDP. Let us examine some of these assumptions and also ask if there is a way by which the present calamity could be overturned.

Take the idea that GDP is an accurate measure of a country’s prosperity. GDP is a measure of economic output. It measures how much a country produces and the revenue that flows from that production. It does not necessarily measure how the proceeds of that production are distributed into society.

GDP does not account for the loss to a nation of reserves of non-renewable natural resources. Nor does it factor in natural resources that might be lost, wasted or degraded in the process of producing inefficient methods of utilisation.

There is no doubt that revenue that arises from human use plays a major role in driving an economy. The trouble is that natural resources are not infinite. If production uses up resources faster than they can naturally restore themselves, then, in business terms, one is eating into the “capital base” of that which helps create a country’s wealth. So although GDP might be showing growth, this might not be sustainable for any length of time if the country is fast using up reserves of natural resources that drive that growth. If production of any sort is of the kind that results in irreversible loss of natural or other resources without producers being billed for the cost of those losses, then in the long term the country is not getting richer but poorer, by the long-term “capital base” of the country being eroded. If production both degrades the natural resources base of the country and the benefits from that accrue to only a few, GDP can show positive growth (for a time) while the country as a whole gets poorer. So GDP is not a very accurate or useful indicator of how well a country is doing as far as managing long-term and widespread prosperity. Aiming for an ever-increasing economy through increasing industrialisation without thinking how this impacts on the “limits of resources” that a country has, is tantamount to selling up all a company’s capital stocks in order to show a fast profit to shareholders; a course that eventually leads to ruin.

What does all this have to do with Eskom’s blackouts and a better way forward?

It seems that the one under-lying reason for the load shedding is that the true cost of electricity production, through cheap supply, has not been picked up by industrialisation and the price is now being paid by the public in terms of decaying electrical infrastructure.

Many progressive and forward thinking countries have encouraged methods of private, local and renewable energy production using pollution-free solar energy, wind power, small- scale hydroelectrics and energy production through clean biomass utilisation (using waste products to generate heat or gas for electricity).

Excess power produced by the public and private enterprise by these means is bought by the national grid to feed back into the national power supply. In this way the public have the ability to become their own small-scale electricity producers and to make money out of doing so. Leading developing nations such as China, India and Brazil have all adopted renewable energy programmes such as these as part of a multipronged approach to energy production.

If Eskom’s rolling power cuts last long enough, maybe South Africa will finally wake up to the potential of doing the same.

• Val Payn is enrolled in Stellenbosch University’s M.Phil in Sustainable Development programme and is a founder member of the NGO programme “Sustaining the Wild Coast”.

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