This document has presented a resource pricing approach for South African water, based on financial and economic principles, and taking into account the country’s social and ecological objectives. It has argued that supply-side approaches to address the problem of water scarcity are all but exhausted, and that an integrated approach, containing also demand-side measures represent the only viable long-run solution to the management of South Africa’s water resources.

The new approach to water pricing recognises this, and proposes that the full financial cost of 1st tier water eventually be recovered from water users. Where necessary, this financial charge may ultimately be supplemented by an economic charge in water-scarce catchments, in order to reflect the relative scarcity of water as a commodity at a given time and place and thus to promote the efficient allocation and beneficial use of water.

Finally, it would be premature to assign definite time-frames to the staged phasing-in of full economic pricing in the absence of actual data. However, it is important to remember that the country’s scarce water resources are at great risk if the move towards economic pricing is delayed any longer than is absolutely necessary.