CAPE TOWN, SOUTH AFRICA: Global environmental activist group, WWF, recently teamed up with the national broadcaster to host a discussion on the price of water. Because the Environmental Monitoring Group (EMG), an Untold Stories partner, operates at the coalface of social justice issues relating to accessing and pricing water, the group’s Jessica Wilson responded with this thoughtful piece, published in the weekly national paper, the Mail & Guardian.
Water has no price. Deprived of water for long enough, you’d give everything – literally – for a sip, to save your life. For some, ‘everything’ is the wealth of nations; others have nothing material to give.
Government is relooking at water pricing, particularly for the bulk users – industry, agriculture and municipalities. Water is currently too cheap, they argue, and because of this, we use too much and are wasteful. This is quite probably true at a bulk-level, certainly for industrial water users. But as we look at domestic water, things get a little more complex.
Municipalities pay a flat rate for water – each litre costs the same. They then charge consumers a rate based on a rising-step tariff, where each litre of water costs a different amount, depending on how much you use. At least three tariff tiers are required: the first step is free (at least for ‘indigent’ households); the last step is the most expensive. In many places, including Cape Town, there are many more tiers, which allows for a more sophisticated pricing strategy. The lessons gleaned here apply to municipalities around the country.
With enough water to drink, what each person is willing to pay for water differs radically. The R27.50 you paid for your M&G this morning is more than 70 percent of your fellow South Africans have to live on each day. It is within this context of vast inequality that municipalities must design their tariff systems. When deciding how much to charge for water, municipalities must also think about human dignity and health, the ‘public good’, how they will cover the costs of buying and treating water and getting it to people, water scarcity, and future water supply. That is to say, setting a price for water is complex.
What’s more, water is a source of revenue for municipalities, many of which have empty coffers.
At a domestic level, water consumption increases with both household income (wealth) and with property size. Those whose water consumption is limited to the lowest pricing tiers are primarily poor and living on small properties. They are not lavish water users with multiple bathrooms, swimming pools or large, irrigated gardens. Rising food, electricity and transport prices combined with low or non-existent wages means that this is the group who should be targeted for below-inflation tariff increases.
Yet in Cape Town this year, the proposed price increase for the second tier (those using 6 to 10.5 kilolitres of water per month) is more than 30%, while for all other tiers it is less than 10%. In 2010, this skewed price increase was even more severe. In the scenario of water scarcity, in which the city aims to reduce water consumption by 30%, those using 10 kilolitres of water per month would pay 10% more in 2010/11 than they did in 2009/10, whereas those using 50 kilolitres would pay a staggering forty-five percent less.
This ‘flattening’ of the tariff curve is in essence a transfer from poor to rich.
The city argues that these tariff changes are to ‘reduce the level of subsidisation’. In other words, the city believes that currently high water consumers (generally richer people) are paying too much to ‘subsidise’ those using very small amounts of water (generally poorer people).
But think about it: within cities, water services are currently very unequally provided – many people in poor areas survive with a single tap, often in the backyard, and an outside toilet; household plumbing is shoddy and fixing municipal leaks, including leaking sewerage, can take months. Yet the tariffs being paid are the same. It is only by using less water that you are able to save money, which means that some households ‘choose’ to use less water than they would need if they wanted to remain healthy.
The level of water services people receive is a symbol of class and contributes to the shame or sense of entitlement they feel, depending where they fit on the spectrum. This entrenchment and deepening of inequality is a social time-bomb, as evidenced through rising levels of services protests. Water pricing can play its part in redressing this. Rich municipalities, such as Cape Town, should maintain progressive tariff curves, since it is easier to keep them in place than to introduce them; and they should stop pandering to the 10% of South Africans who are rich. Water pricing needs to be part of an integrated strategy that addresses inequality and ensures sufficient affordable water for all.
 The 2005/6 income expenditure survey shows households in 7th decile earn on average R43600/year, which if there are 5 people in a house, is R23.90 per person per day.