Market efficiency and welfare effects of inter-sectoral water allocation in South Africa

James S. Juana, Kenneth M. Strzepek, Johann F. Kirsten

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

The need for increased agricultural production to meet the growing demand for food, coupled with concerns for environmental sustainability, economic growth and poverty reduction has increased demand on the already scarce water in South Africa. At the same time, because of agriculture's minimal contribution, compared to the industrial and mining sectors, to South Africa's GDP and employment, the call to reallocate water from agriculture to non-agricultural use has been intensified. This study updates the 1998 Social Accounting Matrix (SAM) for South Africa and uses the computable general equilibrium model to analyze the impact of water reallocation from agriculture to the non-agricultural sectors on output growth, value added at factor cost, which captures the payments from the production sectors to the factors of production, and households' welfare. Using different water reallocation scenarios, the simulation results indicate that water reallocation from agriculture to non-agricultural sectors beyond the level of a market allocation scenario will lead to a decline in sectoral output and a significant deterioration in the welfare of poor households. It thus undermines development efforts aimed at reducing the existing level of poverty in the country.

Original languageEnglish
Pages (from-to)220-231
Number of pages12
JournalWater Policy
Volume13
Issue number2
DOIs
Publication statusPublished - 2011

Fingerprint

welfare
water
efficiency
agriculture
market
poverty
scenario
cost factor
secondary sector
computable general equilibrium analysis
demand
equilibrium model
agricultural production
Gross Domestic Product
value added
economic growth
sustainability
effect
Africa
allocation

All Science Journal Classification (ASJC) codes

  • Management, Monitoring, Policy and Law
  • Water Science and Technology
  • Geography, Planning and Development

Cite this

Juana, James S. ; Strzepek, Kenneth M. ; Kirsten, Johann F. / Market efficiency and welfare effects of inter-sectoral water allocation in South Africa. In: Water Policy. 2011 ; Vol. 13, No. 2. pp. 220-231.
@article{0d728a63dc42405bb8867a15fbd3aedd,
title = "Market efficiency and welfare effects of inter-sectoral water allocation in South Africa",
abstract = "The need for increased agricultural production to meet the growing demand for food, coupled with concerns for environmental sustainability, economic growth and poverty reduction has increased demand on the already scarce water in South Africa. At the same time, because of agriculture's minimal contribution, compared to the industrial and mining sectors, to South Africa's GDP and employment, the call to reallocate water from agriculture to non-agricultural use has been intensified. This study updates the 1998 Social Accounting Matrix (SAM) for South Africa and uses the computable general equilibrium model to analyze the impact of water reallocation from agriculture to the non-agricultural sectors on output growth, value added at factor cost, which captures the payments from the production sectors to the factors of production, and households' welfare. Using different water reallocation scenarios, the simulation results indicate that water reallocation from agriculture to non-agricultural sectors beyond the level of a market allocation scenario will lead to a decline in sectoral output and a significant deterioration in the welfare of poor households. It thus undermines development efforts aimed at reducing the existing level of poverty in the country.",
author = "Juana, {James S.} and Strzepek, {Kenneth M.} and Kirsten, {Johann F.}",
year = "2011",
doi = "10.2166/wp.2010.096",
language = "English",
volume = "13",
pages = "220--231",
journal = "Water Policy",
issn = "1366-7017",
publisher = "IWA Publishing",
number = "2",

}

Market efficiency and welfare effects of inter-sectoral water allocation in South Africa. / Juana, James S.; Strzepek, Kenneth M.; Kirsten, Johann F.

In: Water Policy, Vol. 13, No. 2, 2011, p. 220-231.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Market efficiency and welfare effects of inter-sectoral water allocation in South Africa

AU - Juana, James S.

AU - Strzepek, Kenneth M.

AU - Kirsten, Johann F.

PY - 2011

Y1 - 2011

N2 - The need for increased agricultural production to meet the growing demand for food, coupled with concerns for environmental sustainability, economic growth and poverty reduction has increased demand on the already scarce water in South Africa. At the same time, because of agriculture's minimal contribution, compared to the industrial and mining sectors, to South Africa's GDP and employment, the call to reallocate water from agriculture to non-agricultural use has been intensified. This study updates the 1998 Social Accounting Matrix (SAM) for South Africa and uses the computable general equilibrium model to analyze the impact of water reallocation from agriculture to the non-agricultural sectors on output growth, value added at factor cost, which captures the payments from the production sectors to the factors of production, and households' welfare. Using different water reallocation scenarios, the simulation results indicate that water reallocation from agriculture to non-agricultural sectors beyond the level of a market allocation scenario will lead to a decline in sectoral output and a significant deterioration in the welfare of poor households. It thus undermines development efforts aimed at reducing the existing level of poverty in the country.

AB - The need for increased agricultural production to meet the growing demand for food, coupled with concerns for environmental sustainability, economic growth and poverty reduction has increased demand on the already scarce water in South Africa. At the same time, because of agriculture's minimal contribution, compared to the industrial and mining sectors, to South Africa's GDP and employment, the call to reallocate water from agriculture to non-agricultural use has been intensified. This study updates the 1998 Social Accounting Matrix (SAM) for South Africa and uses the computable general equilibrium model to analyze the impact of water reallocation from agriculture to the non-agricultural sectors on output growth, value added at factor cost, which captures the payments from the production sectors to the factors of production, and households' welfare. Using different water reallocation scenarios, the simulation results indicate that water reallocation from agriculture to non-agricultural sectors beyond the level of a market allocation scenario will lead to a decline in sectoral output and a significant deterioration in the welfare of poor households. It thus undermines development efforts aimed at reducing the existing level of poverty in the country.

UR - http://www.scopus.com/inward/record.url?scp=79955019566&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=79955019566&partnerID=8YFLogxK

U2 - 10.2166/wp.2010.096

DO - 10.2166/wp.2010.096

M3 - Article

VL - 13

SP - 220

EP - 231

JO - Water Policy

JF - Water Policy

SN - 1366-7017

IS - 2

ER -