Determinants of quality and quantity values of water for domestic uses in the steelpoort sub-basin : a contingent valuation approach

This chapter estimates the value that domestic users in the Steelpoort sub-basin (SPSB) attribute to improved quantity and reliability of water supply and to improved quality of water. Apart from estimating the willingness to pay for improved quantity and quality of water, the chapter describes the pattern of water use and its distribution in rural and urban parts of the SPSB. Water resource allocation is an important issue in present day South Africa. The policy framework for water allocation and management includes the Water Services Act (WSA, 1997) and the National Water Act (NWA, 1998), both of which place on government the responsibility for, and authority over, water resource management, including its efficient and equitable allocation and distribution. The NWA provides the framework for a decentralized water resource management based on 19 Water Management Areas (WMAs), where the emerging catchment management agencies (CMAs) will be in charge of local policies for water allocation to competing users. The SPSB, situated in the Olifants WMA, is a good case study for the analysis of water demand management and allocation at catchment level. The sub-basin includes water users ranging from domestic households to industries, mines and commercial farms. It is expected that these users place different values on quantity and quality of water depending on their socio-economic characteristics and, for the economic sectors, their production functions. The chapter is organized in five sections. Following this introduction section 2 sets the theoretical basis and specifications of the empirical model; section 3 describes the data used to calibrate the empirical model; section 4 presents and discusses the empirical results; and the conclusion and implications of the study are drawn in section 5