UNE Business School Seminar Series

12pm- 1pm, Friday 4 April

LT5, W39, Economics, Business and Law

Setting Municipal Water Service Tariffs for Cost Recovery in South Africa

Presented by

Professor Stephen Hosking, Nelson Mandela Metropolitan University

Historically the benchmarks for municipal water service provision in South Africa were set nationally and with reference to the level of income of the community in an urban settlement. A better service was provided to the well-off sections of communities than to the poor sections of communities. The municipal water service provision benchmark (standard) was set for the well-off and, historically, has been comparable with best international standards.  The well-off users were required to pay for the cost of providing the service.  They were concentrated in relatively small urban areas. The tariff structure they faced was flat and determined with reference to a diverse range of accounting principles and practices. The burden of recovering the cost of provision was averaged over the users, proportional to use.

During the last decade there have been several important changes, including a national government led initiative to increase  the level of service provided to the poor (towards a uniform service for all) and a movement away from a flat tariff structure to an increasing block tariff structure. The latter was motivated partly by the objective of managing demand to the available supply and partly by the desire to redistribute the cost of providing a water service to the more well off users (rich households) of the service.  Along with all these changes, dual concerns emerged over the sustainability of the provision of municipal water services at the minimum quality levels set by government for itself, and over the possibility that water service consumer welfare were being neglected or sacrificed as a consequence of extending a uniform level of water service to all.  The sustainability concern has been fueled partly by the limit of freshwater available in South Africa, partly by reduced hiring of personnel with the required competencies and partly by failures to collect sufficient revenue to cover the costs of providing and managing water services. This seminar proposes discussing some of the challenges South African municipalities currently encountered in recovering the costs of water service provision, and drawing parallels with experience in Australia.

Biography: Stephen Hosking is Professor of Economics at Nelson Mandela Metropolitan University based on its Summerstrand Campus in Port Elizabeth, South Africa.  Stephen has a PhD from Rhodes University and his research interests focus on environmental economics and applied microeconomics.

You would be most welcome and encourage to attend.