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Does the construction of a desalination plant necessarily imply that water tariffs will increase? A system dynamics analysis

Crookes, D.J.
Water resources and economics 2018 v.21 pp. 29-39
capital, desalination, developing countries, dynamic models, income, infrastructure, introduced plants, invasive species, operating costs, predator-prey relationships, tariffs, water management
The City of Cape Town (the City) is experiencing a water crisis. However, although a major desalination plant has been on the table for a number of years, this continues to be regarded as a ‘long term option’ due to the apparent high costs associated with this technology. We therefore develop a predator-prey system dynamics model to assess the feasibility of a major desalination plant compared with the baseline scenarios of business as usual: (clearing of invasive alien plants in the Berg and Breede water management areas and renovating and constructing dams). Cost include both capital costs, as well as operational costs. We find that increasing block tariffs (IBTs) do not always benefit the poor, since these are not always the lowest water users in volumetric terms. A major outcome is that, in contrast to expectations, a desalination plant may actually reduce tariffs across the full spectrum of water users. A desalination plant also has the potential to increase access to water by the poorest communities. The finding has implications for other developing countries considering a major water infrastructure investment where there are large disparities in income between wealthy and indigent consumers.