South African businesses need to assess their reliance on water and introduce strategies that will enable them to adapt as water resources become scarcer, says global professional services firm KPMG senior econo- mist and water sector leader Kim Adonis.
Following the response in 2011 by South African businesses to global initiative the Water Disclosure Project, which encourages large businesses to disclose information on their water consumption, it was revealed that 58% of participants stated that they had experienced detri- mental water-related business impacts, such as the disruption of operations due to water supply interruptions over the past five years.
When assessing a business’s exposure to water risks such as availability and quality, Adonis suggests measuring and quantifying water use by calculating a ‘water footprint’, for example.
The assessment of a water footprint should be performed to focus on the water stress points along a business’s value chain.
She adds that the movement towards integrated reporting on financial and nonfinancial information in companies has gained momentum over the past few years and is the first step towards many sustainability indicators being included by businesses in their mainstream performance.
“Integrated reporting provides a holistic picture of the relative performance of a business and allows a complete analysis of business performance within a resource-constrained world. The inclusion of water data and informa- tion in the integrated reporting framework is essentially the beginning of gearing businesses towards assessing their exposure to water-related risks,” Adonis states.
This allows businesses to consider the role of water as a resource within their value chain, either directly or indirectly.
Many companies rely heavily on reliable access to high-quality water for their operations and as they begin to realise that there is an uncertain water supply in the country, they will be heavily affected.
Reduced water supply and increased water prices will impact directly on businesses that are water intensive, she says.
Water supply constraints and reduced water quality will also have socioeconomic impacts and water will be prioritised to fulfil basic human needs.
Adonis notes that the Department of Water Affairs (DWA) estimates that by 2025 there will be a deficit of about 234-million cubic metres of water, with water demand exceeding supply by 1.3%.
She explains that the country is divided into 19 water management areas and that in 2000 ten of these areas had negative water balances or the demand for water in these areas had exceeded the supply.
This can be attributed to South Africa’s unique spatial development, which involved human settlement patterns being dictated by the location of mineral resources that, in many cases, were located relatively far from water resources.
“Therefore, our access to water is heavily dependent on complex interbasin transfers that bring water into cities to service water needs. With increased urbanisation and water demand, further pressure will be placed on our existing infrastructure and it will require that we develop new ideas to conserve water and effectively manage the resource,” states Adonis.
However, some areas, such as the Mossel Bay municipality, in the Western Cape, are proactive in solving water availability challenges.
As a result of a drought 132 years ago, the municipality initiated an emergency project that entailed the construction of a desalination plant to overcome water shortages.
The plant continues to service the area, can produce 15 Mℓ of water a day and won an award in 2011 from Consulting Engineers South Africa in the engineering excellence category, and has a value between R50-million and R250-million.
Adonis says it is important to note that one of South Africa’s biggest challenges relating to water infrastructure is underinvestment in the maintenance of existing infrastructure.
While the DWA estimated in its 2010 yearly report that there is a maintenance backlog of more than R10-billion, another constraint is the lack of technical skills at a municipal level to roll-out maintenance programmes.
Ageing water infrastructure is prevalent in South Africa and, combined with the future erosion of existing infrastructure, this could increase infrastructure costs that could further affect water prices.
The World Economic Forum’s ‘Global Risks 2012’ report states that the water-supply crisis has been highlighted as one of the most likely future risks facing society.
Adonis says water is central to the ability to sustain and grow the South African economy and that water availability and access to water are fundamental socioeconomic challenges.
“The crucial role that water plays in the country is not fully comprehended or understood. If initiatives such as National Water Week, which takes place from March 18 to 24, can enhance our understanding of the importance of the role of water, this would go a long way towards changing our mindset as consumers of water,” she concludes.