The macro economy and irrigation agriculture in the Northern Cape Province of South Africa

[摘要] English: The overall objective of this study was to develop a model capable of quantifying the economywideimpacts of market risk and other exogenous factors, with specific reference to efficientirrigation water use along the banks of the middle and lower Orange River in the Northern CapeProvince (NCP). The study is based on the second of two parts of a larger Water ResearchCommission (WRC) funded project, titled: 'Market risk, water management and the multipliereffects of irrigation agriculture with reference to the NCP.One of the sub-objectives was to simulate the effects of selected market change(s), i.e. a changein the world price of fruit, on the provincial economy as well as to quantify the economy-wideimpact of selected regional shocks and structural changes. A second sub-objective includesrecommendations on institutional responses that will increase effective water management forregions where irrigation agriculture makes a major contribution to the economy such as the NCP.The ability to quantify and/or simulate the economic-wide effects of different exogenous shocks orrisk factors influencing agriculture and specifically irrigation agriculture therefore contributes to thegroup of already existing decision support systems available to role-players and decision makersin South Africa.In order to reach the first specific sub-objective, two sets of economic linkages between the microand macro economic models were applied, i.e. one bottom-up or micro-to-macro and the other atop-down or macro-to-micro. The top-down linkage, utilizes the simulated results from a static Computable General Equilibrium (CGE) model, calibrated to a Social Accounting Martix (SAM),as inputs into a Dynamic Linear Programming (DLP) model on farm and irrigation regional level.A 20% reduction in the world price of fruits was used as simulation in the CGE model, with themain linkage between the macro and micro economic models being the changes in the localprices of fruits. Some of the key results from the micro analysis include amongst others the levelof structural adjustments and other influencing factors, including the impact on farm and regionallevel profitability for example.With the bottom-up linkages, simulated results (i.e. the changes in the objective function values)from the regional DLP model was multiplied by three sets of economic multipliers (production,value added and labour) in order to quantify the economy-wide impacts thereof. Despitenumerous shortcomings of economic multipliers, this analysis was performed to quantify in broadterms the direct, indirect and induced economy-wide impacts resulting from amongst others a20% decrease in the local price of table grapes under various water trade and crop deviationallowances specified in the DLP model.As hypothesised, the simulated results explained above proved that significant economy-wideimpacts can result from market risks or other exogenous factors influencing local irrigationagriculture, especially in a region where irrigation agriculture plays such an important role as inthe NCP. It is believed that the current South African water law is comprehensive and wellwrittencompared to international standards and benchmarks. The implementation thereof, inmany aspects however remains a challenge. Recommendations on required institutionalresponses to improve the effectiveness of irrigation water utilization were made to reach thesecond specific sub-objective.The main conclusion from this study is that South Africa is relatively under-developed in themanagement of water supply and demand. In this regard, innovative technological developmentcombined with cutting edge research in this field, is the only way in which effective water use willultimately advance and thereby optimise the net benefit of society as a whole. It therefore callsfor an integrated water resource management approach, with commitment from all role playersinvolved. Government should provide an enabling environment, within which all levels from theprivate sector and communities can participate in the form of Public-Private-Partnerships (PPP) toenhance prosperous economic growth and development.

[发布机构] University of the Free State