As water resources in Southern Africa come under pressure from growing population, climate change and increasing industrial and agricultural use, economic accounting for water is among the tools that could aid better management.
“Economic accounting for water (EAW) is a process of systematically measuring the contribution of water to the economy as well as the impact of economic activity such as agriculture, mining, and industry on water resources through abstraction and pollution,” explains Dr Gift Manase, lead author of a just-concluded study for the Southern African Development Community (SADC).
EAW complements information in the System of National Accounts, the standard tool for economic reporting and planning. It collects and quantifies detailed data about water use to understand the value of non-marketed goods and in so doing better appreciate the true contribution of water to the economy, which is presently underestimated.
“To put it very simply, EAW helps us to better understand the trade-offs that are made when using water,” says Dr Amy Sullivan of the Food, Agriculture and Natural Resources Policy Analysis Network who heads the Limpopo Basin Development Challenge.
The SADC Economic Accounting of Water Use project set out to establish standard methodologies, raise awareness around water accounting and build capacity for countries to set up their own water accounting systems.
The pilot was run in Malawi, Mauritius, Namibia and Zambia as well as in two river basins, the Orange-Senqu and the Maputo. It revealed several challenges to implementing EAW in the region, including collecting the wide range of data required from numerous institutions and in the case of transboundary river basins, coordinating this across national boundaries.
“EAW requires substantial data and data availability varies greatly among SADC member states,” says Manase.
Economic accounting for water produces six accounts that track quantity and quality of water, as well as its flow into the economy and back out again — including monitoring pollutants in wastewater and sewage. It presents the physical stocks and movements of water alongside the economic figures for productivity of the many sectors that use water as an input.
The picture that emerges provides a more comprehensive valuation of water’s contribution to sectors like agriculture and mining and as a consumer good in its own right in the case of domestic water supply. It also accounts for the environmental value of water, for example in the contribution wetlands make to water purification and flood control.
“Economic accounting of water combines different factors relating to water use such as hydrology, economic assessment of water resources, pollution and social distribution. It is a multidimensional system,” says Sullivan.
“It doesn’t just look at the hydrological component or the economic returns, but also takes ecological sustainability and equity into account. So it is a step up from either taking a purely hydrological, economic or ecological point of view. It is an attempt to plan and manage water resources on a basin level in the best possible way.”
“Although EAW is a critical tool for efficient and effective management of water resources,” says Manase, “it is not yet widely applied in the SADC region.” At present, only Namibia, Botswana, Mauritius and South Africa are compiling water accounts at varying levels of detail.
More accurate assessment of the role water plays in the economy — and the effects of economic uses of water on present and future availability — will aid comparison of benefits across sectors and accurately document inefficient use. It could also help water managers make a strong case for investment in water infrastructure.
“Water accounting started as a research tool, but it is slowly moving on to be a useful tool to inform policy-making,” says Sullivan. “It is still early days, the potential of economic water accounting has not yet been reached, but as the models get more detailed and allow for elaborate scenario-testing EAW will be better suited for decision-making.”