Cape Town, in South Africa, looks like being the first modern city to actually run out of water. Not to get short of it, not to just need to economise a bit, but to actually run out. This is, of course, something of a problem. But what makes it all vastly worse is that we know what the solution is. If something needs to be rationed then change the price of it. It’s that very change in price which produces the rationing, achieves the actual aim. The point being that those first two pages of the Econ 101 books, the little charts about supply and demand, they’re right, correct, an accurate description of reality. Which means that when we’ve got something that needs to be rationed it should be rationed by price:

Cape Town residents have drastically lowered their water use, allowing their drought-plagued city to push back the dreaded “Day Zero,” when the system is expected to run dry, by more than 10 weeks.

Just three weeks ago, officials were predicting that Cape Town would reach Day Zero — a first for a major city in modern times — in late April, forcing its 4 million residents to line up at collection points to receive water rations from trucks. Now, after three postponements, the city predicts that it will reach that crisis point on July 9.

That’s excellent of course and clearly public exhortations have some effect. But what we’re looking for is the best method of getting people to conserve that precious resource, water, not one that simply works a bit:

Government has allocated R6 billion in the 2018/19 financial year for drought relief, Finance Minister Malusi Gigaba announced in his budget speech on Wednesday

“Severe drought conditions are affecting large parts of the country, and it is placing extreme strain on the supply of water no nearly 4 million people in the City of Cape Town,” Finance Minister Malusi Gigaba said after tabling the budget in Parliament.

It’s entirely true that sometimes the rains don’t come, that there is therefore drought. But that’s only a reason that we’ve got to find that best method, not a reason to throw our hands up and stop thinking:

Cape Town, which attracts about two million visitors each year, wants to become more resilient as the effects of climate change are felt, similar to other dry cities including Melbourne and California.

Well, so, how do we do it? We change the price of that water.

No, this is not some Randist Rant insisting that if the poor can’t afford water they can just dry up and blow away with the dust on the wind. Rather, a call for the intelligent application of what we know about the world. Contrary to all experience just before closing time on a Friday night there are in fact some few of our fellow humans who can think. And this idea of what to do with a scarce resource is one of those things which they have thought about. Yea, even with something as controversial as the very water needed to maintain life.

The answer is a system exactly the same as the one your humble author lives under. The more water you use the more you pay for each unit of water. This means water meters, variable water bills, but it does have the wondrous property of actually working.

To set the scene, Editorial Towers is in Southern Portugal, one of the few places in the world with a similar climate to that Western Cape currently suffering (the others being a part of Chile, California and a bit of Australia). Rains do come but water supply is something that does need to be thought about. Dams, reservoirs, limitations upon usage, they’re all necessary at least at times. The usage management system which actually works – it produces both equity and efficiency – is as follows.

Some minimal, possibly even nominal, charge is made for basic connection to the system, both fresh water in and sewage out. This isn’t because we want to make sure that even the poor gain water, not at all, it’s the other end of the human we’re interested in here. Raw sewage floating around is a public health hazard, it’s worth it to all around to make sure that even the poorest member of society is, to be indelicate for a moment, having their shit managed.

Along with that minimal fee comes the basic amount of water needed to manage a household in a reasonably abstemious manner. Washing – showers for all on demand amounts – but not swimming pools full – clothes washing and so on. Again, basic public health desires mean we’d like the poor as well as the rich to be washed and in at least cleanish clothes. Typhoid isn’t a fun disease and the absence of lice kills transmission of that stone dead. The monthly charge for this, at Portuguese prices, is about €6 a month. Or two hours work at the local minimum wage. Something of a bargain for all concerned really.

But once water usage rises then the cost per unit of water does too. You can, if you so wish, go out and use the municipal supply to water the garden. It’ll cost though. To try and keep a green and verdant lawn and flower beds would cost hundreds of € per month (from painful memory a leaky faucet cost hundreds before it was identified and fixed). And there will always be those tempted to put free at the point of use water to use in agriculture, something under this scheme which would costs thousands. So, people don’t do it.

And that’s the way to ration water. To provide the minimum necessary for civilised life at low, low, prices, then to keep raising the unit cost as usage moves off to nice to haves and then things we simply don’t want people using treated water to do in the slightest. We ration by price not so that the poor can’t have it but so that the rich don’t waste it.

Which is what should be done in Cape Town of course. If you’ve a shortage of something ration usage. Rationing by price is the best way to do it. So, to solve Cape Town’s water problems start charging the heck out of those who spray it over their lawns or fields so there’s enough for everyone else to drink and wash.

Water shortages are best solved by rationing water by price.

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  1. That might work if all properties already have a metered water supply. I’ve no idea whether that’s true in RSA generally or the Cape in particular, but in the UK it’s still a (growing) minority of properties on a metered supply (and fitting a meter is a non-trivial procedure).

    FWIW my own property had a water meter fitted because we have a swimming pool. But as there are only two occupants, the annual water bill dropped considerably :).

  2. Oh dear Tim. Not like you to make such a basic mistake.
    This is exactly the system which has been in place for years. Everyone with a water connection has a metered supply. Water rates start at R4 per thousand litres for usage under 5K a month and rises on a sliding scale to R1,000 when you use over 50K a month. People in squatter camps who get water from a standpipe don’t pay anything.

    A couple of years ago I had a monthly water bill of over R80,000 due to a leak which wasn’t noticed until I got the bill.

  3. In RSA, all properties on a properly developed stand have water meters. They’ve even made them electronic now. Squatter camps are not metered but their usage is not considerable as the average shack doesn’t have a garden and jacuzzi.

    Elsewhere in RSA our silted-up dams are overflowing but nobody has even considered a pipeline from the reasonably flush North to the dry South. The grey water industry has done well out of the crisis and thousands of mini desalination plants arrive at the docks every day, for those who can afford them. So it’s not a total train smash.

  4. Quentin Vole: “and fitting a water meter is a non-trivial procedure”

    I beg to differ. I had a water meter fitted here in Warrington last week. It took the guy 30 minutes, including a bit of carpentry. Cost? Nothing, free.

    • It’s (often, but not always) trivial to fit one, but fitting 20 million premises is highly non-trivial. But I see from a poster above who lives there that most RSA properties are already equipped with meters.

  5. In Cape Town do they use expensively processed and tested drinking water to flush toilets? That’s always struck me as madness, and after living in Hong Kong where we had seperate potable and flushing supplies, I did the same when I moved back to the UK by collecting rain water for flushing. Cape Town being on the coast could use the Hong Kong method of using filtered sea water.

  6. That sounds all very commendable jgh, but surely it means having to build a comlete new pipeline system for flushing supplies? I’m not sure it’s economically viable, certainly in this country where water isn’t really in short supply. Having water meters are a good solution and certainly concentrate the mind when it comes to cost.

    • You don’t necessarily need to have the capital costs of a secondary mains system. Implement surge pricing on all but the bottom tier or two of water consumption whenever there is a water shortage to the point where tanker deliveries of grey water are cheaper than the municipal supply.
      At this point, the capital cost of installing a couple of 10,000l rooftop tanks and the necessary internal plumbing changes needed to use this water to flush toilets, wash cars and water gardens should be affordable to the householder on the margin between the municipal supply and the cheaper grey water supply.
      If surge pricing starts happening rather more frequently rather than for a few months every decade then installing a ‘grey’ main — to at least the areas that use a lot of grey water — might become worthwhile: once the capex of installing such a main becomes competitive against the opex of running a tanker fleet, some enterprising soul will do it.

  7. The problem is political. Bulk water supply is the monopoly of national government which is ANC, as opposed to the DA led Western Cape. The Western Cape is the least corrupt and best run of all the provinces and Cape Town the best run (and most beautiful) city in Africa. The climate of the WC is Mediterranean relying on winter rainfall. These were disrupted by the very strong El Nino of 2015/16 and then by a peristent high pressure zone blocking the cold fronts rolling in off the Atlantic as usual in 2017 due to a static jetstream unmoved by the weak solar wind of an indolent sun. Cape Town has more than doubled its population with internal refugees from the failing ANC heartland Eastern Cape and the middle and rich classes of Gauteng(Joburg, Pretoria and surroundings). Attempts to increase supply by desalination plants and tapping aquifers have been thwarted/shelved by central government and Cape Town has until now squeaked by in 1997 and 2005. Given that averagedover ten years rainfall is normal, itwould be bad luck not climate change if rain failed to arrive this winter.

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