Determining a charge for the clearing of invasive alien plant species ( IAPs ) to augment water supply in South Africa

South Africa is running out of water supply options. One option, however, is to control invasive alien plant species (IAPs) within water catchment areas and in riparian zones. The National Water Act and subsequent documentation provide a guide for the use of economic instruments to manage invasive alien plant species at a national, but also at a water management area level. This paper determines the method and level of such an invasive alien plant control charge as part of the water resource management charge.


Introduction
Natural resources are increasingly becoming the limiting factor to development as eloquently articulated by Daly, quoted by Aronson et al. (2006): 'More and more, the complementary factor in short supply (limiting factor) is remaining natural capital, not manmade capital as it used to be.For example, populations of fish, not fishing boats, limit fish catch worldwide.Economic logic says to invest in the limiting factor.That logic has not changed, but the identity of the limiting factor has.' In South Africa, an arid developing country, water is indeed becoming the limiting factor to development (Scholes, 2001).The question therefore arises: given the supply constraints, what can be done to augment the water supply in the best possible manner?Historically, water resource managers met rising water demands through the establishment of a complex system of engineering supply-side solutions, but this is no longer viable due to the limited number of rivers that can still be exploited in this way and the rising marginal cost of this option (Smakhtin et al., 2001).
Government, as trustee and custodian of the nation's water resources (DWAF, 1998), is responsible for the protection, development and management of the resource in an equitable and sustainable manner for the benefit of all people.To be able to effect this objective, the National Water Act makes provision for the use of economic incentives for water management.The Act states that 'the Minister . . .may establish a pricing strategy for charges for any water use' (Clause 56) (DWAF, 1998).While increases in water tariffs are usually viewed as a market-based demand-side intervention, water tariffs could also be used to pay for the delivery of an environmental good and service (Pagiolo et al., 2002).
It has been indicated (Cullis et al., 2007;Görgens and Van Wilgen, 2004;Van Wilgen et al., 2001) that invasive alien plant species (IAPs) lead to an undesirable reduction of streamflow and water yield.A charge aimed at preventing and eventually controlling invasive alien plant species will therefore render both an ecosystem service (increased water flow to augment the Ecological Reserve) and water as utilisable resources.The specific question addressed in this paper is therefore: What should be the structure, size and distribution of a charge to eradicate IAPs over a 25-year cycle?This question will be investigated by focusing on a water-augmentation scheme linked to the removal of IAPs in riverine and mountain catchment areas (watersheds), which are the areas in which IAPs have the most profound impact of water resources.
To investigate this problem, the study will first provide an overview on the relative scarcity of water in South Africa followed by a discussion on the impact of IAPs on streamflow reduction.Consideration will then be given to the size and distribution of a payment system required for the removal of IAPs from mountain catchment areas and riparian zones, followed by a discussion and some concluding remarks.

Current situation and future prospects
South Africa has an average precipitation of approximately 500 mm/a, well below the world average of about 860 mm/a (DWAF, 2002).Rainfall has also become increasingly more erratic during the latter part of the previous century with 1998 and 1999 being the 4 th and 5 th wettest years recorded over the period 1921 -1999.Additionally, both the frequency and intensity of the swings between dry and wet years are increasing.This implies that water resource and supply management is becoming more difficult, and hence more important.To make matters worse, South Africa is poorly endowed in groundwater because most of the country is underlain by hard rock formations that do not contain any major groundwater aquifers (DWAF, 2002).It is therefore not surprising that South Africa has been classified as a country with chronic water scarcity (Ashton, 2002).
The demand for water in South Africa is dominated by the agricultural sector (about 60%), as indicated in (DWAF, 2004).
Large-scale farmers primarily use 95% of irrigation water and small-scale farmers use the remainder (Schreiner and Van Koppen, 2002).Afforestation requires 4% of the total water requirement and rural and urban populations require 4% and 25%, respectively.Mining and bulk industrial, and power generation use 6% and 2%, respectively.DWAF (2004) estimates that the current balance of unutilised water yield is approximately 186 x 106 m 3 .This implies that South Africa's total surplus (or unutilised water yield) only 1.4% of the country's total water supply is.DWAF's baseline scenario for 2025 is that South Africa as a whole is likely to have a water deficit of approximately 1.7%.The amount of surplus water available for utilisation of any kind is therefore declining fast and this emphasises the need to find innovate ways to augment the country's water supply, such as the clearing of invasive alien plant species.

Impacts of invasive alien plants species on water resources
A number of studies have been done to estimate the impacts of IAPs on water runoff (Wicht, 1943;Bosch and Hewlett, 1982;Scott and Smith, 1997;Kaiser, 1999;Baskin, 1999;Van Wilgen et al., 2001).These studies concurred that IAPs, inclusive of plantation forestry, have a measurable negative effect on streamflow.Versfeld et al. (1998) indicated that all of South Africa is potentially subject to alien plant species invasion, but that it is the invasion of riparian zones and mountain catchment areas that are the most important from a streamflow reduction perspective.

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The level of streamflow reduction is linked to the vegetation type and the density thereof.Research has shown that there is an inverse correlation between runoff (or streamflow) and plant biomass loads (Le Maitre et al., 1996;Versfeld et al., 1998), and the link between changes in runoff and the occurrence of invasive alien species has also been shown (Table 1).The way in which streamflow reduction is influenced by the type and degree of infestation of IAPs, and whether the infestation occurs in mountain catchments or riparian zones, motivated Cullis et al. (2007) to estimate the overall reduction in water yield by IAPs per water management area (WMA).South Africa is divided into 19 Water Management Areas that correspond more or less to the major river basin areas.These estimates are provided in Table 2, (mountain catchment areas), Table 3 (riparian zones) and Table 4 (the total).
These estimates indicate that South Africa is currently losing utilisable water equal to 4.1% of the registered water use of the country (Table 4) due to the reduction in water yield from riparian and mountain catchment areas.If not controlled this could go up to as much as 16.1%.The remainder of the paper will focus on determining a structure and level of a charge that would be sufficient, appropriate, practical, and that could be levied on water users to combat IAPs.

Calculation of the user charge for the control of IAPs Background
Given the impact of IAPs on streamflow, the government decided in 1995 to commission a public programme Working for Water (WfW) under the jurisdiction of the Department of Water Affairs and Forestry (DWAF) to control the infestation of alien plant species.The WfW Programme has an annual budget of approximately R450m.and employs more than 33 000 previously unemployed individuals (RSA, 2003), which constitutes the largest single poverty relief and public works expenditure in the country.The Programme effectively acts as conduit for the provision of environmental goods and services, most notably water supply, through the removal of IAPs, and the provision of unskilled job opportunities, using taxpayers' money.Though the WfW has many benefits, can it be improved?Currently payments made, either to WfW or to the contractor who is directly involved in the removal of IAPs, are not strongly linked to water supply delivery targets.Payments are linked to hectares cleared and the result-ant job creation in the process is more often than not seen as the major project delivery.This would make sense from the perspective of a public works programme, but it might not be an optimal allocation of resources since the financial investment is not linked to water provision -which is one of its major objectives.Also, while the programme is involved in removing IAPs, it creates the impression that neither the landowner nor the water user is responsible for the presence of weeds either on their land or in the catchment from where they derive their water.
To remove the inherent problems associated with WfW a much bigger system is required, a system that includes all water users.Legislation (DWAF, 2005) allows for the introduction of an invasive alien plant water charge: 'The cost of controlling invasive alien plants with acknowledged negative impacts on water resources; e.g.riparian zones, mountain catchment areas, wetlands and in areas where there could be an impact on aquifers may be charged to affected water users..... in consultation with affected stakeholders, will recommend whether the control of IAPs in a particular catchment is necessary for water security,..... before going ahead with clearing, the cost of control must be communicated to all affected stakeholder organisations.These costs will be supported by subsidy where available and appropriate.The agreed upon cost of control will then be allocated to all water user sectors in proportion to their registered abstraction related water use.In the event of consensus not been reached amongst water user sectors,..... will go ahead with clearing in cooperation with those sectors who have agreed to participate in the clearing process.The resultant additional water after taking the Ecological Reserve and reducing over-allocation into account may be allocated to sectors that financially participated in the clearing project.'

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The principles and operating mechanism for implementing a charge are clearly communicated by government.Water users should pay for their water, and in those water management areas where it is deemed necessary and appropriate, an IAP control charge could be levied.This charge will be added onto the existing water resource management charge.Should the charge be excessive, government could provide a subsidy to support the programme.Legislation does not determine either the level or the method in calculating this charge, but does state that the charge should be linked to their registered water use.
The method and level of this charge will be determined here for three main water use categories namely bulk (domestic and industrial), agriculture and forestry.

Method
The most appropriate level of the charge for controlling IAPs was determined in five stages.These will subsequently be discussed.

Stage 1: Calculation of an average clearing cost per water management area
Based on historic WfW records it was possible to calculate what it would cost to clear each WMA of IAPs situated in mountain catchments and in riparian zones.This average cost was estimated after taking the different densities of the different species within each of the different WMAs into consideration and was calculated over three different clearing cycles, namely 15, 20 and 25 years.Based on practical experience of the WfW programme we focus on 25 years here, since it seems to be the more realistic.

Stage 2: Estimation of a series of three individual weighed tariffs:
The baseline tariff (T1) It is accepted that the sectors with the largest water use will be more sensitive to tariff increases.The cost of clearing estimated in Stage 1 was therefore weighted proportionately to the registered water use per sector.

Incorporation of the assurance of supply (T2)
To incorporate the assurance of supply, the cost of clearing estimated in Stage 1 was subsequently weighed with the degree of assurance of supply to estimate T2.Bulk water use has a very high (99% to 99.9%) assurance of supply and was therefore set at 1, while agriculture only has a 70% assurance of supply.It is therefore only fair that the higher the assurance the higher the tariff.There is, however, some difficulty in allocating the assurance of supply to the forestry sector.Some argue that as forestry is a streamflow reduction activity and therefore dependent on rainfall, their assurance of supply will be the lowest.Others, however, argue that forestry is generally upstream and therefore has access to all runoff before any other water user.This study did not attempt to develop an argument for the allocation of a fair assurance of supply value for forestry, and assumed that the forestry assurance of supply is somewhere between that of agriculture and bulk water supply and used a value of 90%.

Incorporation of the raw water charge (T3)
To assure equitability and affordability across all the WMA's and water use sectors the raw water charge was used and the third tier of individually weighed tariffs using the cost of clearing estimated in Stage 1.

Stage 3: Estimation of a non-equalised tariff (T4)
During Stage 2, three different tariffs for each of the three water use sectors in each of the 19 WMAs were calculated based on the volume of water use, the assurance of supply and the current water tariff payable.The non-equalised tariff is the average of the above three tariffs allocated to each sector and for each WMA separately, i.e. ((T1 + T2 + T3)/3).

Stage 4: Estimation of a gross equalised tariff (T5)
Multiplying T4 with the registered water use does not equate to the total cost of clearing per WMA (as per Stage 1).To calculate the charge for the control of IAPs it is necessary to estimate the total income if the non-equalised tariff (T4) used in conjunction with the registered water use per sector in each water management area.The gross equalised tariff is then estimated by adjusting the non-equalised tariff according to the ratio of estimated clearing costs to non-equalised income potential.

Stage 5: Subsidised tariff (T6)
The subsidy that each water use sector in each WMA may apply for was based on the users' ability to pay for invasive alien plant control.If the water resource management charge is smaller than the gross equalised tariff, then the difference between the two is considered as a subsidy.The current proposal is to fund the subsidies from the Government's existing expanded public works programme (EPWP).It fits well with the objectives of the EPWP in that it will secure and release water resources for economic use.The intervention can be equated to the restoration and maintenance of infrastructure.It can therefore be described as the maintenance and restoration of 'natural water infrastructure'.

Results
Table 5 reflects the estimated invasive alien plant control charge per water management area and major water user group using the method discussed above.The EPWP component is the subsidy (T6), whereas the EPWP component and the sector component combined is the total charge (T5).Given the registered water use per water use sector and WMA, the total value of the charge to the respective sectors and the subsidy per water management area is provided in Table 6.The distribution of the burden of the charge among the water use sectors is also indicated.

Discussion
Though the method discussed above is rigorous and done in as much detail as possible and taking as many as possible variables into consideration, there are still some shortcomings.Firstly the shortcomings of the models developed by Cullis et al. (2007) need to be taken into account.The study included only those quaternary catchments with a mean annual precipitation (MAP) of more than 800mm.A substantial percentage of the original mountain catchments listed in the Department of Agricultural Technical Services Report (1961) occur in dry areas where the average MAP for the total catchment is below 800mm.The MAP in the mountain (watershed), however, is much higher.This means that the runoff from those mountains contributes to the bulk of the runoff in the catchment, but for the purposes of this study they are not included as contributing to the utilisable runoff.They are therefore not recognised as mountain catchment areas.
The estimates here were made at a WMA-level, which is not necessarily practical for water resource managers.However, the model is developed in such a way that it could potentially be applied at smaller units, such as at the secondary catchment scale.However, when considering applying the model at a smaller scale one has to take into account the transaction costs for the implementation of the system.
Lastly, some of the cost estimates are high, such as for the Inkomati and Usutu to Mhlatuze WMAs.From an implementation perspective it will be highly impractical to spend R44.5m./a and R63m./a respectively in those two WMAs.It is suggested that this outcome can be ascribed to the quality of the original data from Versfeld et al. (1998) that is used by Cullis et al. (2007).At the other extreme it is suggested that the estimated cost of control (R1.26 m./a) in the Olifants/Doorn WMA is an underestimate.The reason for this can be ascribed to the fact that some of the mountain catchment areas in this water management area have been excluded as discussed under the first point above.

Conclusion
Natural capital is increasingly becoming the factor of limiting supply when considering economic development.Water in South Africa is no exception.Engineering-based water supply options are running out, but an alternative water augmentation system that operates within the ambit of the water pricing and extended public works programme framework is offering alternative options.Currently IAPs in mountain catchments (watersheds) consume more than 4% of all registered water use; if left uncontrolled this figure might become as high as 16%.By adding an IAPs control charge to the water resource management charge of the water tariff it is possible to increase both the speed and the efficiency of the control of IAPs.The IAPs control charge developed here incorporates the volume of water use, the assurance of supply, the water tariff, equity, affordability, species-and site-specific characteristics.This charge is an application of the principles of the water pricing strategy of South Africa, which is in accordance with the philosophy of the establishment of either markets and/or payments for ecosystem goods and services and has the potential to improve water supply by between 4% and 16%.

TABLE 2 Reduction in mean annual runoff and yield due to non-riparian IAPs in mountain catchment areas by WMA WMA Incremental MAR Yield from minor dams Yield from major dams RoR yield: disturbed
Notes: MAR = mean annual runoff and RoR = run of river