Should commercial forestry in South Africa pay for water? Valuing water and its contribution to the industry

Abstract

Water is a limiting input/factor in the production of timber in the commercial forestry industry of South Africa. Being a water-stressed country, South Africa has opted for demand management strategies which suggest pricing of water as a commodity. Since commercial forestry is one of the big users of the country's water resources, it is time to decide whether the industry should now pay for water or not. The questions that need to be answered are:
• If yes, how much should the industry pay?
• Is the current proposed charge for water a fair representation of the value of water in timber production?
The value of water used by the commercial forestry is essential information and is very much needed for making water-demand
management decisions. The results of the study indicate that water values are much higher than the water management charge levied on the commercial forestry, confirming large subsidies being transferred to the industry. This ushers in a debate on whether South Africa should have more commercial forests or significantly convert them to grasslands.

Water SA Vol.31 (3) 2005: pp.319-326