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There’s a scene in the dystopian film Mad Max: Fury Road, in which the gruesome warlord Immortan Joe addresses thousands of thirst-crazed desert dwellers. "Do not, my friends, become addicted to water — it will take hold of you and you will resent its absence," he growls.
It’s a macabre vision of an unthinkable future — but it’s not hard to imagine at least some echoes of what Day Zero would look like in Cape Town, when the taps are officially turned off due to a crippling drought. The mechanics seem nightmarish: 4m people clamouring to get their 25l every day from one of only 200 supply points. And that’s before health scares arise from not being able to flush away sewage. Picture a queue, 20,000 people long, for every water point.
Sure, not all taps will be turned off — those in poor areas and in the CBD will be left on.
Even so, it’s hard not to imagine resentment building in Cape Town, especially since it would be the first metropolis in the world to run out of water as a result of a crisis created partly by politicians (see sidebar).
Chris Herold, former president of the SA Institution of Civil Engineering, says what is happening in Cape Town "is just about as bad as it can get, short of what will happen when the taps run dry".
Herold says the odds of Day Zero arriving before the winter rains remain high. "It is a grave national emergency that will affect 4m people and wipe out close on 10% of our [gross national product]".
This week, Day Zero was shifted out from May to July 9, thanks to draconian water controls and strict usage caps on farms.
But the longer-term scenario for Cape Town remains scarily unclear. The bigger fear is that the Cape’s trials may be a harbinger of what might befall the rest of the country — including Gauteng, the economic heartland province that accounts for 35% of the country’s GDP.
With emotions running high, it’s the kind of crisis that has led to opportunists (including politicians) crawling out of their holes.
Preacher Angus Buchan, for example, claimed the drought is due to divine revenge because "God is not happy with Cape Town" over the abuse of women and children, gangsterism, drug addiction and the gap between the "extreme rich and the extreme poor". By this logic, it seems mystifying why other unequal societies, such as Brazil, aren’t permanently on rations,
Politically, the crisis also sparked a tit-for-tat between water & sanitation minister Nomvula Mokonyane and Western Cape premier Helen Zille over who was to blame.
Mokonyane, appointed by Jacob Zuma in 2014, recently rubbished the notion of a Day Zero in parliament. "It’s not us who have said there is Day Zero ... we do not understand how some people‚ somewhere‚ decided to talk of Day Zero," she said.
Zille responded that the inability to recognise a crisis sounded as if it "had been scripted by Bell Pottinger", the PR agency that covertly pushed the populist charge of "white monopoly capital" to inflame racial tension on behalf of the Guptas.
Mokonyane retorted: "We will not be drawn into petty political squabbles while the people and economy of the Western Cape are on the verge of a possible water supply blackout."
Belatedly last week, on the day Zuma eventually quit as president, SA did declare the drought a "national disaster".
In contrast, Zuma’s successor Cyril Ramaphosa has spoken clearly about "one of the most devastating droughts in a century".
He’s right, if you consider the impact that the crisis in the Cape could have on SA. Though agricultural activity in the province covers just 12% of SA’s farmland, it produces between 55% and 60% of agricultural exports. Its food-processing sector provides a quarter of SA’s manufacturing output. The Cape wine industry contributes R20bn to SA’s GDP and employs 167,500 people.
If that is what is at stake, most Capetonians have two main questions: why is this happening, and when will it end?
On the question of why, the answer is part geography and part political bungling.
SA’s geography means it has average annual rainfall of about 500mm, against a global average of 860mm. This is compounded by rainfall that varies hugely across the country, and high evaporation, resulting in regionally uneven run-off rates.
To overcome this, two-thirds of the annual rainfall is stored in 4,395 dams across SA. Cape Town has six dams that supply the city. But levels in those dams are dangerously low at around 24.7%. Day Zero is triggered once levels fall to 13.5%.
To avert this, residents have been asked to limit their individual water use to 50l/day each — a total of 450Ml a day. This is far below the current usage of 526Ml a day.
The second reason for this dire state of affairs is political bungling.
Engineering experts say SA’s water infrastructure has been badly handled for years. Herold says poor maintenance, political complacency and incompetence have led to colossal losses in the system.
This led to near-crises in Gauteng and KwaZulu Natal in recent years — a fact ignored amid the Schadenfreude up north about the Cape crisis.
"In the Vaal River system, we were forced into premature water restrictions in 2016 due not to the nascent drought, but to shocking infrastructure failures," says Herold.
As it stands, there are 35,000km of bulk water pipelines and 200,000km of reticulation pipes in people’s homes, managed by 152 water service authorities.
But many pipes are brittle and broken.
For years, government knew that municipalities needed to repair leaks to slash their water demand by 15%. They failed to do so.
Today, about 36% of water produced is "lost" before it reaches a paying customer. Three-quarters of that is due to leaks, and the rest to theft or nonpayment.
Also worrying for the economic hub, Gauteng, are the endless delays and corruption scandals involving the R26bn Lesotho Highlands Water Project.
This partnership between SA and Lesotho is meant to provide water security for the province. Originally due to be completed this year, the scheme may only finish by 2025.
Back in Cape Town, political arrogance seems to have played a role. Herold says in 2012, Mokonyane’s department urged Cape Town’s municipality to implement 10 "augmentation steps" to ensure water supply by 2015. "Instead they grossly overestimated the success of laudable, but not miraculous, water-demand-management endeavours and decided that the augmentation would not be required until 2022," he says.
Flushed with success, Cape Town then became complacent — and compounded this error by failing to carry out essential feasibility studies into fixing problems.
Trevor Balzer, deputy director-general at Mokonyane’s department, doesn’t believe national government blundered. He says that over the past three years, water restrictions have steadily escalated while water set aside for agricultural use in areas such as Stellenbosch, Paarl, Swellendam and West Coast towns was also suspended.
He says projects being implemented to deal with the crisis include building desalination plants, recycling water, tightening restrictions, and dredging dams. There’s also a plan to expedite the Berg River-Voëlvlei project to divert winter rain water to the Voëlvlei Dam 100km north of Cape Town.
He admits, however, that budget shortfalls in recent years and a lack of skills has hurt, especially in municipalities.
Most of these explanations ignore one of the central problems of SA’s water crisis, and a reason why the system remains at risk: the economics are all wrong.
Russell Lamberti, head of ETM Macro Advisors and author of When Money Destroys Nations, says the state has been mispricing water for years. "We’re living in a fantasy world where we think water is free for the first 6Kl, or at most, R20. Paying R20/month to live on one of the most precious human resources is a joke. It is a total false signal to the market," he says.
As it stands, the municipal rate charged to households for water is US$2/Kl, even after a steep hike in February.
But the scramble in Cape Town is providing hard lessons in economics, with prices around $400/Kl for bottled water — many multiples of the amounts charged by municipalities. Privately supplied water to households for pools and gardens is costing around $80/Kl.
Of course, this isn’t to suggest we just slap huge hikes on water for everyone. The indigent, for example, are guaranteed a certain amount of free water by the constitution. But the rest should be paying far more.
Anthony Turton, an environmental adviser, says because water is regarded as a "social good", it is "almost always provided at less than production cost".
"We have a pricing absurdity in SA — unique in the world, I might add — whereby private users of water pay more per unit than bulk users do. This is a historic artefact that distorts the price incentives. We see this playing out in Cape Town, where individuals have been squeezed to the point of revolt."
It means that bulk users, who can actually make a difference to pricing, have little incentive to use water efficiently.
Turton also cites the example of the hotel industry. Until now, SA’s hotels had no real reason to install greywater harvesting systems. The cost of water was far too low to justify the expense. That will now change.
Says Turton: "Our team did a presentation to a major laundry company a year ago recommending they mitigate the risk by installing MBR [membrane bioreactor] technology. They said it was too costly. Now, a year later, they are doing exactly that."
A membrane bioreactor is a crucial piece of technology that allows wastewater to be treated and re-used. It shows how the Cape crisis has caused a fundamental realignment in thinking about water economics.
So how will SA create "proper" pricing for water?
"This is a fundamental question because it’s very difficult to do when you run a nationalised monopoly," says Lamberti. "When you have a single entity controlling a resource, it has no obvious reference point to create a proper price. So a lot of the time the price is guesswork, and most of the time it becomes politically determined and therefore often too low, to try to create the perception of abundance."
Essentially, the model must change, away from one which just looks to recover costs, to one which allows providers to bank a certain amount of profit, to entice the private sector into managing it.
"When anything is priced too cheaply for long periods of time, you get undersupply and overdemand and you run out. The Cape is obviously the worst and most obvious example of this, but I think it’s just a taste of what’s to come," he says.
In 1998, government "nationalised water" under the National Water Act. Turton says: "We are now seeing the implications of nationalisation, without the institutional capacity to administer effectively."
This created private sector antipathy and a belief that water should be free for all. It coalesced disastrously under Mokonyane.
To her critics, the minister seemed more intent on propounding "radical economic transformation" than dealing with the crisis.
This month she told parliament: "Recently ... water was released by farmers, which was viewed ‘as a gift’ to the people, when in fact, water is a natural resource which must be freely enjoyed by all. Government must look at expropriating the land where the dams are, so they become national assets."
Statements like these led Zille to claim Mokonyane’s thinking was grounded in "Marxist assumptions".
Whether capital will flood into the bond market to fix SA’s water infrastructure depends on how quickly Ramaphosa can fix the leaks in the wider fiscus. But it’s vital that it happens. Government, after years of profligacy under Zuma, doesn’t have the cash to solve the crisis by itself.
Estimates of what it will cost to fix SA’s water backlog, including fixing infrastructure, are between R70bn and R110bn.
Turton says companies who take the risk "will rapidly gain a foothold and market share of the [water] recycling sector, which will be roughly 25bn m³/year by 2025."
Aveng Water MD Suzie Nkambule says her company has been hoping for a "revolution" in water along the lines of the spectacularly successful (at least at first) renewable energy programme. "We were hoping we’d have a similar type of policy shift when we saw the independent power producer programme take off," she says.
Private companies could manage water treatment and bulk supply, just for a start.
But there is a problem: applying a market-centric approach to water means those with the most money will be catered for, while the indigent will be ignored.
What model would account for this?
Lamberti believes "a municipal water division should try to make money ... because that can be recycled back into all sorts of endeavours, not least of which is water supply. You can also still provide water for free to the poor."
Poor citizens, he says, should always get free water. "Just because you move to a market-based price doesn’t mean you can’t still deliver free basic services — you’ve just got to know how much those basic services are actually costing the taxpayer. We’re under this silly illusion that free water to the poor costs us X when actually it’s 10X."
It’s not just meeting the needs of the poor that is a problem; it is also collecting what is owed from those who can pay.
According to a 2017 paper from non-profit organisation Green Cape, in 2014/2015 municipalities earned R28bn from selling water and R11.5bn from sanitation. While government has done well to provide water to millions, its ability to actually collect the money it is owed has gone backwards.
As Green Cape says: "The increase in the percentage of households with access to water has coincided with a decline in the percentage of households paying — dropping from 66.9% in 2004 to only 43.7% in 2014."
This equation must be reversed.
Lamberti says many people are stuck in a binary mindset where the answer is either full-tilt socialism or hard-nosed capitalism. "The reality is you can get some of the best features of market-based systems but still deliver on your constitutional mandate. When you do play-play pricing for long periods of time you get the worst of all worlds where everyone ends up without water."
The flip side of radically increasing water prices is the devastating impact it could have on farming.
It’s a critical question, considering that agriculture contributes 2.5% to SA’s GDP, employing around 700,000 people or 4.6% of the labour force.
Yet agriculture accounts for 66% of all water used in SA, while farmers also get a R1.5bn irrigation subsidy from government.
As Lamberti puts it: "There is no reason for farmers to be getting special subsidies on water. They should be competing like anyone else, and it’s only when we have proper market competition for water that we know who needs it the most."
This is unpalatable for AgriSA’s Janse Rabie. He says agriculture "supports a significant portion of the economy ... SA is the only country in Africa that is food-secure, which brings enormous social stability. A price shock would deter new entrants — emerging black farmers — entirely."
But if government has to make a call on who should get water in Cape Town — agriculture, or 4m fractious inhabitants who could turn on them if the taps run dry — it seems obvious who’ll get stiffed. AgriSA is aware of this. Rabie describes the agricultural sector as an "easy target for those taking part in the blame game".
Surprisingly, AgriSA has come out in support of Mokonyane. After a meeting in January, Rabie described her as "calm and purposeful", while she has described AgriSA as an "ally" in the drought crisis.
But two of SA’s largest construction firms — Murray & Roberts and Aveng — which are bidding to build water infrastructure in SA, are less complimentary.
Henry Laas, CEO of M&R, says: "The most difficult thing for us is to actually work out who to talk to in government and how to get solutions heard by the relevant people."
Laas says the infighting between national and provincial government is an example of the chaos between the various authorities.
Nkambule agrees that there are too many officials stepping on each other’s toes.
"Until the ministry decides that the mandate to execute a particular service for a bulk project is going to sit with X, we don’t know where our efforts are meant to go in terms of trying to advance the project. It’s incredibly frustrating," Nkambule says. he scramble to build desalination plants in Cape Town is one example of this chaos.
The city delayed issuing tenders for desalination plants until it was far too late.
And in the end, neither Murray & Roberts nor Aveng have yet snared any of the city’s desalination tenders.
The city’s proposal called on companies to carry the cost of building the desalination plants in return for an "offtake agreement" in which they’d be paid based on the volume of water used by those plants.
Both companies say the city’s decision to offer a supply contract of just two years once the plants are built, when those plants have a lifespan of more than 10 years, is an inherent problem with the tender.
Says Nkambule: "[This] makes the water [supplied] excessively expensive. That for us was just a complete no-brainer. It’s not necessary to build an asset that has a life in excess of 10 years and then use it for only two years and expect the user to pay."
Says Laas: "You need to depreciate the capital over 15 years, and not over two years if you want to get to an economical solution. We can’t buy all these assets and install them and after two years, with the contract not being renewed, what do you do with it?"
The bottom line: a desalination plant could charge R14-R15/m³ of water over a 10-or 15-year period. But over two years, this pushes the cost up to about R30/m³.
"I was very disappointed by that," says Laas. He describes the city’s procurement process as "appalling".
This remains an example of just one of many bungled efforts by politicians.
Nkambule tells a fascinating tale of Namibia’s brush with Day Zero.
In 2007, Aveng was contracted by French nuclear powerhouse Areva to build a 55Ml a day desalination plant in the arid country to supply water to the Trekkopje uranium mine in the Erongo region.
Desalination, while expensive and power-hungry, may be the only solution for SA’s continuing water crisis
— What it means:
Namibia’s government, says Nkambule, was asked to participate in building the plant in 2007. But she says it did exactly what SA’s government did: "The officials believed it would rain, and they believed they’d have enough water coming out of their aquifers."
So Areva carried the cost of building the desalination plant, completing the facility in 2010. Then Japan’s Fukushima nuclear disaster happened, and the uranium mine was shelved. "We put the plant in care and maintenance. It sat there for some time, running every now and then," she says.
But then, in 2016, drought hit Namibia and the aquifers in the region ran dry.
Mercifully, the desalination plant was there. Today, it’s the sole supplier to the industrial economy of the coastal regions around Swakopmund and Walvis Bay.
"If it had not been available, those mines, those businesses would have shut down and the Namibian economy would have collapsed," she says.
It’s a tale relevant for SA’s coastal towns.
Turton cannot see an economic future "for any of the coastal cities, from Richards Bay to Cape Town, without desalination".
The reason is simple: "They are all downstream of rivers that have been sucked dry by upstream users. Frankly, if we don’t have desalination on the scale needed to make it viable — large plants that produce more than 250Ml a day — then the SA economy will increasingly be water-constrained."
SA’s changing rainfall patterns have also made coastal cities’ plight that much more acute. If lower rainfall, particularly in the western part of SA, is the future, a mix of water sources is necessary to mitigate this.
Not everyone agrees desalination is the solution. Critics say it is environmentally destructive and uses loads of electricity.
Mike Muller, a visiting adjunct professor at the Wits School of Governance and a former director-general of water affairs, says the current crisis is only part of the issue.
"The problem is not so much that water may run out ... but that the region may experience yet another season of low rainfall. The city will then have to get through next summer starting with low reserves."
Muller says large-scale desalination will take a couple of years to come on stream and would not be the first choice.
"Apart from anything, it will be the most expensive."
Years ago, it wouldn’t have made economic sense. But as SA authorities get to grips with a fundamental realignment in water pricing, every option is now on the table to stop a national Day Zero.
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