In the extremely imbalanced South African economic landscape that has the affluent and the marginalised living side by side the Water Research Commission (WRC), commissioned the Public and Environmental Economics Research Centre (PEERC) to research the classification system which differentiated water users for pricing purposes. At present, the system was theoretically unsound and left to the discretion of the Minister of Water Affairs thereby jeopardising the very goal of developing a sustainable and long-term financing model for water resource infrastructure.

Upon rigorous research and scientific study, the PEERC produced a report in May 2022 outlining user classifications based on their method of use. This pricing strategy could then promote social equity and economical upliftment. The need for clear guidelines underpinned by objective methodology which distinguishes raw water volumes for domestic use in areas with limited revenue generating potential (social users) from raw water volumes for commercial use by other domestic, industry and agricultural users (commercial users) was a key objective of this report and one which was fundamentally amiss in the 2015 pricing strategy.

This distinction forms the basis for a national charge and user charges that will fund water resource projects. Therefore, this report recommends that the Minister incorporate a classification system based on scientific criteria when classifying infrastructure as this will ultimately determine funding arrangements which are essential for the promotion of social equity and economic development in South Africa.

Off the back of this report the Department of Water and Sanitation is now calling on members of the public for input on the raw water pricing strategy. All comments have to be submitted by 3 November 2022.