Macro-Micro Feedback Links of Water Management in South Africa : CGE Analyses of Selected Policy Regimes

The pressure on an already stressed water situation in South Africa is predicted to increase significantly under climate change, plans for large industrial expansion, observed rapid urbanization, and government programs to provide access to water to millions of previously excluded people. The present study employed a general equilibrium approach to examine the economy-wide impacts of selected macro and water related policy reforms on water use and allocation, rural livelihoods, and the economy at large. The analyses reveal that implicit crop-level water quotas reduce the amount of irrigated land allocated to higher-value horticultural crops and create higher shadow rents for production of lower-value, water-intensive field crops, such as sugarcane and fodder. Accordingly, liberalizing local water allocation in irrigation agriculture is found to work in favor of higher-value crops, and expand agricultural production and exports and farm employment. Allowing for water trade between irrigation and non-agricultural uses fueled by higher competition for water from industrial expansion and urbanization leads to greater water shadow prices for irrigation water with reduced income and employment benefits to rural households and higher gains for non-agricultural households. The analyses show difficult tradeoffs between general economic gains and higher water prices, making irrigation subsidies difficult to justify.

Bibliographic Details

Main Authors:	Hassan, R., Thurlow, J., Roe, T., Diao, X., Chumi., S., Tsur, Y.
Language:	English
Published:	World Bank, Washington, DC 2008-11
Subjects:	ACCESS TO WATER, AGRICULTURAL ACTIVITIES, AGRICULTURAL ECONOMY, AGRICULTURAL EMPLOYMENT, AGRICULTURAL POLICY, AGRICULTURAL PRODUCTION, AGRICULTURAL USES, AGRICULTURAL WATER, AGRICULTURAL WATER USE, ALLOCATION OF WATER, ANNUAL RUNOFF, ARID AREAS, AVAILABILITY OF WATER, AVAILABLE WATER, AVAILABLE WATER RESOURCES, AVAILABLE WATER SUPPLY, AVERAGE ANNUAL RAINFALL, BASIN TRANSFER, BULK WATER, BULK WATER SUPPLY, CATCHMENT, CATCHMENT MANAGEMENT, CATCHMENT MANAGEMENT AGENCIES, CLEAN WATER, CLIMATE CHANGE, COASTAL AREAS, COMMERCIAL AGRICULTURE, COMPETITION FOR WATER, CONSERVATION, CONSTRUCTION, CONSUMPTION CHARGES, CROP PRODUCTION, CROP YIELDS, DAMS, DEMAND ESTIMATES, DEMAND FOR WATER, DISTRIBUTION SYSTEMS, DOMESTIC USE, DOMESTIC USERS, DOMESTIC WATER, DOMESTIC WATER DEMAND, DOMESTIC WATER USE, ENVIRONMENTAL IMPACTS, EQUITY IN ACCESS, EXPORT, FARM MANAGEMENT, FARMERS, FARMING, FISHING, FLOW REGIMES, FOOD SECURITY, FORESTRY, FRESH WATER, FRESHWATER, FRESHWATER ECOSYSTEMS, GEOLOGICAL FORMATIONS, GROUND WATER, GROUNDWATER, GROUNDWATER RESOURCES, HIGH LEVELS, HOUSEHOLDS, IMPORTS, IMPROVING SERVICE DELIVERY, INDUSTRIAL GROWTH, INDUSTRIAL OPERATIONS, INDUSTRIAL USE, INDUSTRIAL USERS, INDUSTRIAL WATER, INDUSTRIAL WATER USE, INTER-BASIN TRANSFERS, IRRIGATION, IRRIGATION AGRICULTURE, IRRIGATION BOARDS, IRRIGATION WATER, LAND COVER, LAND REFORM, LAND USE, LOCAL SERVICES, LOCAL WATER, LOW-INCOME HOUSEHOLDS, MANAGEMENT OF WATER, MANAGING WATER RESOURCES, METROPOLITAN AREAS, MUNICIPAL AREAS, MUNICIPALITIES, NATIONAL WATER POLICY, NATIONAL WATER RESOURCES, POLLUTION, POPULATION GROWTH, POWER GENERATION, PRESSURE, PRICE DISTORTIONS, PRICE OF WATER, PROGRAMS, QUANTITY OF WATER, RAW WATER, RESERVOIRS, RIVER BASIN, RIVER BASINS, RIVERS, RUNOFF, SANITATION, SCARCE WATER, SCARCE WATER RESOURCES, SECTORAL WATER, SERVICE DELIVERY, SURFACE WATER, SURPLUS WATER, TARIFF RATES, TOWN, URBAN AREAS, URBAN CENTERS, URBAN WATER, VITICULTURE, WATER AFFAIRS, WATER ALLOCATION, WATER ALLOCATIONS, WATER AVAILABILITY, WATER BOARDS, WATER CHARGES, WATER CONDITIONS, WATER CONSUMPTION, WATER CONSUMPTION CHARGES, WATER DEMAND, WATER DISTRIBUTION, WATER DISTRIBUTION NETWORKS, WATER DISTRIBUTION SYSTEM, WATER DISTRIBUTION SYSTEMS, WATER MANAGEMENT, WATER MANAGEMENT AREAS, WATER MARKET, WATER MARKETS, WATER POLICY, WATER REQUIREMENTS, WATER RESEARCH, WATER RESOURCE, WATER RESOURCE MANAGEMENT, WATER RESOURCES, WATER RESOURCES DEVELOPMENT, WATER RESOURCES MANAGEMENT, WATER SCARCITY, WATER SECTOR, WATER SERVICES, WATER SHORTAGES, WATER STORAGE, WATER SUPPLIES, WATER SUPPLY, WATER TARIFF, WATER TARIFFS, WATER TRANSFER, WATER TRANSFER SCHEMES, WATER TRANSFERS, WATER USE, WATER USER, WATER UTILITY, WATER YIELD, WATERSHED,
Online Access:	http://documents.worldbank.org/curated/en/2008/11/9993285/macro-micro-feedback-links-water-management-south-africa-cge-analyses-selected-policy-regimes https://hdl.handle.net/10986/6903
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