Confronting South Africa’s water challenge: A decomposition analysis of water intensity

Abstract

Water is a vital natural resource, demanding careful management. It is essential for life and integral to virtually all economic activities, including energy and food production and the production of industrial outputs. The availability of clean water in sufficient quantities is not only a prerequisite for human health and well-being but the life-blood of freshwater ecosystems and the many services that these provide. Water resource intensity measures the intensity of water use in terms of volume of water per unit of value added. It is an internationally accepted environmental indicator of the pressure of economic activity on a country’s water resources and therefore a reliable indicator of sustainable economic development. The indicator is particularly useful in the allocation of water resources between sectors of the economy since in waterstressed countries like South Africa, there is competition for water among various users, which makes it necessary to allocate water resources to economic activities that are less intensive in their use of water. This study focuses on economy-wide changes in South Africa’s water intensity using both decomposition and empirical estimation techniques in an effort to identify and understand the impact of economic activity on changes in the use of the economy’s water resources. It is hoped that this study will help inform South Africa’s water conservation and resource management policies