Study reveals the impact of SA’s water crisis

2010-11-15 12:08

A Uasa economic impact study on the impact of South Africa’s water crisis, which was released today, predicted a possible decrease in disposable income, a hike in government spending and thousands of job losses.

The study was commissioned by trade union Uasa to establish the real impact of the water crisis.

The study forms part of Uasa’s ongoing Water Security Campaign and was conducted by independent economic research and advisory firm Plus Economics, headed by professor Charlotte du Toit.

“Any decrease in the quality, and therefore usability, of water in South Africa by 1% may result in the loss of 200 000 jobs, a drop of 5.7% in disposable income per capita and an increase of 5% or R18.1 billion in government spending,” Du Toit said.

In her presentation, Du Toit said additional macroeconomic effects of decreased water quality included a rise in the ratio of government debt to gross domestic product (GDP) of 28%, a drop of R16 billion in household spending, a drop of 1% in the GDP growth rate as well as a drop of R9 billion (2.5%) in total fixed investment.

“A decrease in the quality of water will have negative and different effects on the individual economic sectors. Among our findings are that growth in the electricity, gas and water sector will decrease by 2 percentage points, and that as many as 14 000 jobs may be lost in the financial services sector,” she said.

Du Toit also discussed the effect of a decrease in the quantity of water available on the different economic sectors.

She said that if a decline in the final availability of water supply of, for example, R10 million was assumed – which would need to be supplemented from other sources, including desalination of sea water and towing of icebergs to our shores and melting them – the study showed the following effects can be expected to manifest within the next three years:
» Agricultural output would drop by R570 000;
» Mining outpunt would decrease by R1.1 million;
» Manufacturing output would drop by R7 million;
» Electricity output would drop by R1 million;
» Tourism output would decrease by R2.3 million;
» Financial services output would decrease by R4.6 million;
» Transport and communication output would drop by R2.3 million; and
» Community and social services output would drop by R5.4 million.

Du Toit said this meant that the total economic output would decrease by R41.7 million and the compensation of employees by R5.4 million.

Du Toit showed how a decline of R10 million in the availability of usable water for manufacturing would over the next three years result in a decrease in total economic output of R51.5 million, while the decrease in employee compensation would decrease by R7.8 million as a result of a decrease in the quantity of water available.

“For every one job lost in the manufacturing sector, a further 12 jobs are lost elsewhere,” she said.

Uasa said the effect of a decreased quantity of water available on the community, social and personal services sector looked even more frightening.

The total economic output of this sector will decrease by R106 million and the compensation of employees in the sector by R11.4 million.

Du Toit said that further research and proactive solutions to the problem were required.

Koos Bezuidenhout, CEO of Uasa, said the report would help South Africa to gain a better understanding of the crucial role of water in our daily lives.

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