Modelling the potential impact of a water market in the Berg River Basin

[摘要] English: An increasing number of economists believe that market mechanisms should be incorporatedin water allocation policies. It is widely recognised that central planning as an economicsystem has been inefficient. In fact, it is impossible to plan efficiently from the centre, andthe bigger and more open the economy is, the more impossible it becomes.The literature abounds with models for analysing alternative water allocation mechanisms.However, the positive mathematical programming (PMP) technique, which was introduced inthis study, to calibrate the regional water market, is a relatively new approach. Modelling ofwater markets in South Africa has received very little interest in the past. This is probablybecause formal water markets were not permitted in the old Water Act (1956).The new National Water Act (1998) makes explicit provision for the transfer of water rights.However, the rules and procedures for introducing water markets have not been stipulated.To date no attempt has been made in South Africa to develop methodologies to simulatewater markets. According to the new National Water Act one of the most important tasks ofCatchment Management Agencies (CMA's) will be to design water allocation strategies foreach of the major catchments in South Africa. This study contributes to enhance the capacityof water authorities to make economically sensible water allocation decisions.Without a market price, there is little or no incentive to use water efficiently. True pricingwill lead to highest-value uses (e.g. drinking water and the production of high valueproducts). Creating incentives for the most-valuable economic use of water will providecertainty; increase supply for more efficient uses, and create an even playing field for allwater users including natural systems.There are legitimate concerns that the market mechanism per se will not guarantee equity.Government therefore has an important role to play in ensuring that the rules and proceduresexist to deal with externalities. The secret is to achieve a balance that involves interfering inthe market mechanism without jeopardising the proper functioning of water markets. Thefunctional organisation for policy-making, water allocation, water management, andmonitoring of users, plays an important role in the implementation of a sustainable waterdevelopment system.

[发布机构] University of the Free State