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SoCIo-eCoNoMIC BeNefItS of PuBLIC-PrIvate PartNerShIP for MuNICIPaL Water ProvISIoN IN eMaLahLeNI LoCaL MuNICIPaLIty
Mhlongo, S.M.
Emalahleni Local Municipality, Technical Services, 39 Mandela Street, Emalahleni, Mpumalanga, South Africa Correspondence: Sphamandla Mhlongo sphamhlongo8@ gmail.com
abstract
Water infrastructure is a crucial renewable natural capital for cit- ies’ prosperity, development, and functionality as it promotes sustainable and economic growth, enhances investment cli- mate, competitiveness, and investments, and is instrumental in poverty alleviation. This study analysed the socio-economic benefits of municipal water provision through public-private partnerships (PPPs). It was conducted by analysing water ef- ficiency indicators such as per capita water footprint (PCWF), water import dependency (WID), water self-sufficiency (WSS), water security (WS), and water footprint intensity (WFI). It also analysed the decoupling of water consumption from eco- nomic development using the Tapio decoupling model and its decomposition using the Logarithmic Mean Divisia Index (LMDI). It was found that external water footprint has a small volume contribution when compared to internal supply. How- ever, it is critical to improve water security as there is a growing dependency. The decoupling results indicated that total water services contribute approximately a quarter of the municipal GDP. Still, there was minimal contribution from external PPP schemes as the volume of water supply was low. The decom- position results, however, indicated that approximately 50% of external supply supports economic development, thus indi- cating that it can be a considerable means of water augmenta- tion and a reliable source for economic growth. The study out- come indicated that there is great potential for PPP schemes to improve the socio-economic aspect of the municipality and there is a growing dependency, which indicates its pos- itive value. The system dynamic model analysis indicated that PPP water supply schemes have multiple benefits spanning economic development, employment contribution, social development, municipal revenue creation and improved tax contribution. It was therefore concluded that water provision through PPPs has critical success factors and socio-economic benefits which support the municipality in meeting its consti- tutional mandate.
Keywords: socio-economic growth, water footprint, water efficiency, decoupling
Introduction
Water infrastructure is key to cities’ prosperity, develop- ment, and functionality (Kong et al. 2019). It promotes sus-
tainable and economic growth, enhances investment and competitiveness, and is instrumental in poverty alleviation (Arimah 2017; Kajimo-Shakantu et al. 2014). Water utilities are faced with challenges such as climate change, water scarcity, technical inefficiency, financial instability, eco- nomic profitability, high non-revenue water and declin- ing public investment (Pinto and Marques 2015; Romano et al. 2015). Shortage of funds discourages critical capital investment by water utilities for infrastructure upgrades, refurbishments, and new augmentation initiatives (Roma- no et al. 2015). Water has economic value, and its business management operations should take advantage of its value (Wibowo and Mohamed 2010). Most governments in low- to middle-income countries face capital invest- ment and productivity challenges in the development and modernisation of public infrastructure (Opara et al. 2017). African countries in particular need considerably more in- frastructure investments to support their economies than their governments can afford through tax and support aids (Collier 2014). Limited public budget and insufficient tax collections challenge governments to consider alternative infrastructure funding models (Li et al. 2017; Noring 2019). There is a critical need for water utilities to invest in new projects and to address the imbalance between asset dete- rioration and maintenance funding required to ensure the reliability of infrastructure assets.
Ilaya-Ayza et al. (2017) mentioned that 60 million members of the rural population do not have access to sufficient clean water for domestic use, while approximately 309 million people worldwide are supplied intermittently. In the year 2000 it was estimated that approximately 60% of households with piped water connections in Latin America and the Caribbean had an intermittent water supply; in Asia more than 50% experienced intermittent supply, while in Africa, over one-third of urban supply operated intermit- tently (Erickson et al. 2017). Burt et al. (2018) reported that in India approximately 150 million people are served with water intermittently, while most cities are reported to have water 4 hours per day, and some areas get water in 5- to 10- day intervals. Rossiter et al. (2010) indicated that sub-Saha- ran Africa has the lowest coverage for lack of access to safe drinking water. Bezuidenhout and Adeleke (2011) reported that the required fresh water in South Africa is limited and vulnerable regarding availability, quantity, and quality.
Wibowo and Mohamed (2010) mentioned that the water provision crisis is not due to scarcity but rather misman-
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