How Spier went off the water grid

The grass at Spier wine estate is so green no visitor would believe Cape Town is experiencing the worst drought in living memory and that residents are stockpiling water in anticipation of Day Zero — when suburban taps will be switched off.

Tour operators cheered last month when Spier general manager Joep Schoof announced that in about two months the estate will be completely independent of the municipal water supply.

As the crisis has intensified over the past year, the Western Cape tourism industry — which employs 300,000 people and contributes R40bn to the province’s GDP — has been forced to implement innovative water-saving initiatives.

Jeff Rosenberg, the Cape chairman of the Federated Hospitality Association of Southern Africa (Fedhasa), says many member establishments have saved up to 40% of their annual water usage.

Spier, which has recycled all its grey and black water since 2007, has spent R4m over the past 18 months to cover the risk of having its taps turned off by the city. Of this, R1.5m has gone to a filtration plant to make its recycled water potable.

The Westin hotel on Cape Town’s foreshore is saving 1Ml of water a month compared to the same period last year.

For years the Westin has had to pump 1Ml of sea water a day out of its basement to keep it dry. The Hospitality Property Fund, which also owns the neighbouring Cullinan and Southern Sun Waterfront hotels, has invested R4m in a desalination plant in the Westin’s basement which will produce 400,000l of potable water a day which the three hotels will share.

"It’s very exciting to witness the many changes to traditional operating procedures that have already been introduced," says Rosenberg. "These will all become the ‘new normal’."

Western Cape premier Helen Zille is counting on it. "There’s a whole new water culture developing in Cape Town which I hope by this time next year will have brought about a new water economy," she says.

She expects new water-saving technologies will generate new jobs and, by creating water security, keep the Cape’s traditional water-intensive industries like tourism, agriculture and construction going.

At the same time, Zille confesses to being "sick with worry" about the jobs situation because the province relies on these traditional labour-intensive sectors to provide most low-skilled jobs.

The recent decision to cut agriculture’s water supply by 60% has had a profoundly negative impact on industry in the region and put up to 50,000 jobs at risk.

Moody’s has warned that the crisis poses a risk to the City of Cape Town’s credit rating since the tourism and agricultural sectors are likely to decline, reducing gross value added and tax income.

In addition, the city will lose a portion of its R3.9bn annual water revenue (equal to 10% of its operating income) thanks to reduced consumption.

At the same time it will incur increased costs from crisis management and water supply projects.

Fortunately, Moody’s considers the city to be well placed to borrow to cover the costs of managing the crisis over the next three years. "However, if the crisis persists, it remains to be seen how the city will cope with the potentially wide-ranging consequences on its finances and economy," Moody’s says in a statement.

The nation’s GDP will also be affected, warns Old Mutual Investment Group (OMIG) economic strategist Rian le Roux.

Because the Western Cape accounts for approximately 13% of SA’s GDP, a 1% reduction in the province’s growth rate would knock 0.13% off national GDP. In other words, if the rest of the economy grows by 1.5% in 2018 and the province’s growth remains stagnant, SA’s GDP will be up by only 1.3%.

On the other hand, OMIG agrees with Zille that opportunities will emerge in the new water economy, particularly in small businesses and in industrial firms that are able to take businesses and homes off the grid. In the long term, it predicts that there will be investment opportunities for unlisted infrastructure debt and equity in bulk waste water treatment and desalination plants.

Wesgro CEO Tim Harris says though there have been "a handful" of queries from new and existing investors about the city’s water crisis, all the potential investors Wesgro was engaging with at the end of 2017 still remain interested in investing in the Cape.

"Investment decisions are usually taken over several years, so most investors are looking for clarity around water security well beyond the next few months," says Harris.

He is "optimistic" and "confident" that Capetonians will be able to cut their consumption to prevent Day Zero, which would significantly boost the region’s investment case.

Recently, then water & sanitation minister Nomvula Mokonyane told the parliamentary portfolio committee on water & sanitation that Day Zero would be avoided, pointing to various bulk water infrastructure projects in which the department is engaged across the province.

Zille, on the other hand, stresses that there is "every possibility" that Cape Town could get to Day Zero (currently earmarked for July 15) unless every citizen uses less than 50l of water a day. At present 60% of people are using more than this, which increases the likelihood tremendously, she warns.

"If you start complicating the message it is not helpful and mixed messages are completely not helpful," she adds.

The city says it will continue to supply reticulated water to key economic areas, including Cape Town’s central business district, should Day Zero arrive.

Informal settlements and hospitals will also be kept on the grid.

Fedhasa Cape says contingency plans are being made and all its member hotels, guest houses and restaurants will keep operating even if they fall outside the protected zones.

Last October, nearly 100 city hoteliers met at the Mount Nelson to discuss the worsening water crisis. Before they left, each one had to sign a pledge to introduce water-saving technology and train their staff and educate their customers to drive down their water consumption.

"I don’t think it was well understood at the time that by February we’d be defending our industry and telling our international clients that it’s safe to come to Cape Town, that by coming here they’re actually helping by keeping people employed," says Schoof.

Zille, whose job it is to co-ordinate water distribution in the event of Day Zero, reveals that among the contingency plans being laid is an undertaking from SA Breweries to convert two bottling lines from beer to bottling still water from the Newlands spring.

SAB will deliver 1Ml of free water over the crisis period to its existing 300 distribution points. The Peninsula Beverage Company (distributor of Coca-Cola) is negotiating a similar arrangement.

Zille also has high praise for the way the farming community has come to the party.

Last month, the Groenland Water Users Association (GWUA) donated nearly 1bn litres of water to the city from private dams on mostly pear and apple farms in the Grabouw area which has had good rains. But not everyone was appreciative of the farmers’ gesture.

Water portfolio committee chair Mlungisi Johnson argued that far from being "a gift", water was in fact a natural resource which should be freely enjoyed by all. "Government must look at expropriating the land where the dams are so that they become national assets," he added.

Mokonyane said the department is planning changes to the Water Act of 1998 governing the issuing of water licences and the ownership of dams. The amendments would give central government substantially more control over these and a host of other related matters.

Expropriation is not specifically mentioned but farmers remain nervous given the ANC’s recent decision that the constitution should be amended to allow for land expropriation without compensation.

The GWUA declined to respond to Johnson’s statement but Zille said there was "no merit" in his threat to expropriate farmers’ dams.

The bottom line is that though water may well be a national asset, water without planned investment in dams by farmers just runs away and its value is lost.