During a water crisis there is a risk not only of running out of water but also of running out of money. With municipal revenue tending to drop as consumption is curtailed, unless sufficiently counteracted with rising tariffs, and additional costs being incurred for supply augmentation, the financial dimension adds another layer of challenge to an already difficult situation, imposing limitations and requiring careful management.
When water users cut back on consumption, they are playing their part to conserve a scarce resource. But this puts the water provider under pressure as its revenue falls. The pricing structure can help.
City of Cape Town Chief Resilience Officer Craig Kesson led the Water Resilience Task Team during 2017. He sketches the multiple constraints encountered in the planned implementation of an ambitious 500 megalitre a day emergency augmentation programme.
Running your business in such a way that a large proportion of your stock is lost or not charged for is not compatible with sound commercial practice or financial viability. Yet this is precisely what many municipalities in South Africa are doing, with non-revenue water rates as high as 41%. Claire Pengelly unpacks the concept.