Exploring the use of incentive-based water regulation in South Africa

N Kranz1 & M de Witt2

Hatfield Gardens Office Park Block C, 333 Grosvenor Street, Hatfield, Pretoria, 0028. Tel: 012 423
5900. Email: Nicole.kranz@giz.de; marlene.dewitt@giz.de
GIZ1 and GIZ2

Although it is predicted that South Africa will have a water demand and supply gap of approximately
17% by 20301, current events are begging for quick, drastic, innovative intervention. Severe water
shortages in KwaZulu-Natal, water restrictions in the Eastern Cape, municipal non-revenue leakages
of up to 40%, and towns running dry are just some news
daily basis. In addition to the environmental and social risks raised by water scarcity, the situation
also poses a significant risk to the sustainability of businesses. So
sectors to the GDP are all water-intensive agriculture, mining, construction, the automotive
industry while its coal-intensive energy production is also dependent on significant water
resources.
resources management.

Some businesses are recognising the risk that water poses to the sustainability of their operations in
. One way in which companies are
seeking to contribute is through the Strategic Water Partners Network (SWPN): a group of
companies, NGOs and government departments, lead by the Department of Water and Sanitation
(DWS)
companies that are part of this network openly recognise the importance of and business case for
joint efforts to conserve water, thousands of other private sector players of all sizes do not. Even the
representatives of member companies of the SWPN are not always guaranteed to be able to
convince their executives to commit large sums of money to projects.

How does one convince businesses across various industries and of varying sizes to, firstly, strive for
more efficient water use in their own operations, and secondly, to commit to water conservation as
a water user in a catchment together with many other role players (beyond their factory fenceline)?
One solution that Government mentions at various sections of its National Water Resources Strategy
II is incentive-based regulation for water conservation, similar to what it has successfully done with
the Blue Drop and No Drop programme, and is working towards in the Wastewater Discharge

the SWPN for investigation. Sasol and DWS in 20122 together compiled a detailed proposal on what
such a concept could look like for South Africa. Although supported by the Ministry at that time,
discussions are progressing slowly.

The paper that the authors will submit to the Conference will explore the various incentive-based
regulatory tools (including water offsetting) that have been used internationally and relate these to
the South African context. The discussion will focus on the benefits, downfalls and suitability for
each in the South African context. What are considered the most suitable options for the country in
terms of South African legislation, context and business needs are discussed in more detail and
implementation recommendations are made.

Keywords: incentive-based regulation, water offsetting, water stewardship

1
Charting our water future. Water Resources Group, 2009
2
A proposal: water offsetting framework. DWS, Sasol, WRC, WRG, 2012