Escalating prices just one risk of water scarcity for business
26 November 2015
Water prices look set to escalate to reflect its importance and scarcity, says Karin Ireton, Chairperson of the Sustainable Development Forum at the Institute of Directors in Southern Africa (IoDSA). She believes this price escalation will be the catalyst for greater efficiency in the use of water, and stimulate the necessary broad cooperation across all stakeholder groups.
“The Department of Water Affairs and Sanitation’s revised pricing strategy is now available for comment, but it’s clear that prices will rise in order to reflect the fact that this is an essential resource and one that is in short supply,” Ireton explains. “The proposed pricing model is based on ‘user pays’, and will cover also the costs of pollution and future infrastructure. Business, industry and agriculture are the biggest users (and polluters) of water, and also thought to be the best able to pay, so it can be expected that higher water prices will be a reality.”
Ireton’s comments are based on a recent panel discussion hosted by the IoDSA’s Sustainable Development Forum. The event focused on water scarcity and the impact on business and brought in the views of environmental scientist and disaster risk specialist, Professor Coleen Vogel, Insurance and Investment risk expert, Dr Arthur Kamp and Dr Nezar Eldidy, infrastructure consultant and member of the Water Institute of South Africa. The dialogue focused on equipping directors and executive managers to improve management of water risks.
Ireton says that while boards need to start developing strategies around mitigating water risks, they also need to be aware of the complexities. The challenges they face are not restricted only to increased water pricing, or the many technical issues relating to water quality and access to reliable supply. Access to water is also a social justice issue and the cause of numerous service delivery protests. The challenges also stem from a lack of technical and managerial skills within the multiple players in the governance structure as well as the inefficient- sometimes corrupt – allocation of funds.
At a more practical and immediate level, Ireton argues that businesses generally need to take a highly proactive approach to water use. Research has shown that there is a wide variation in the efficiency with which businesses in the same industry use water. Benchmarking themselves against their peers, locally and globally, would provide businesses with realistic targets based on what is achievable. Starting to report on water impact separately in their integrated reports should thus be a priority because it will take some years for companies to understand the complexities and start generating accurate and meaningful reporting.
“Water presents business, and society more broadly, with a complex set of challenges. We need to put the right governance processes in place to ensure we come up with the solutions,” adds Parmi Natesan, Executive: Centre for Corporate Governance at the IoDSA.