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APPENDIX E Water Use and Dependency in the Mhlathuze Catchment: a Macro Economic and Sectoral Analysis

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APPENDIX E Water Use and Dependency in the Mhlathuze Catchment: a Macro Economic and Sectoral Analysis APPENDIX E Water use and dependency in the Mhlathuze catchment: a macro economic and sectoral analysis MACRO AND SECTORAL ECONOMIC ASSESSMENT OF WATER USE Water use and dependency in the Mhlathuze catchment: a macro economic and sectoral analysis FINAL REPORT By Anthea Dallimore with Stuart Ferrer, Andrew Pott, David Thompson and BJ Ashburner APRIL 2000 DRA-DEVELOPMENT REPORT 2000/05. DRA offices: DURBAN PRETORIA PORT ELIZABETH JOHANNESBURG CAPE TOWN Address: 59 Rosebank Avenue Lobby1, Bankfin Building, 53 Avondale Village, 237 Wyoming Avenue 3 Orange Street, Roseglen. Brooklyn. Avondale, Crestview. Berario. Newlands. Post Box: 37656, Overport, 4067 12139, Hatfield, 0028 3433, Newton Pork, 6055 52503, Saxonwold, 2132 as above, 7700 Email: [email protected] [email protected] [email protected] [email protected] [email protected] Telephone: +27-31-208-4112 +27-12-346-8350 +27-41-360-7257 +27-82-558-3011 083-703-0180 Facsimile: +27-31-208-4113 +27-12-346-8633 +27-41-360-7257 +27-11-478-2187 +27-21-683-0314 DRA-development 1 Water use and dependency in the Mhlathuze catchment: a macro economic and sectoral analysis TABLE ON CONTENTS 1 SECTION ONE: INTRODUCTION ............................................................................................................................ 3 1.1 OBJECTIVES OF THE STUDY AND TERMS OF REFERENCE..................................................................... 3 1.2 RESEARCH METHODOLOGY ......................................................................................................................... 3 1.3 INTRODUCTION ............................................................................................................................................... 4 2 SECTION TWO: THE MACRO-ECONOMY.............................................................................................................. 5 2.1 THE INTERNATIONAL SETTING..................................................................................................................... 5 2.2 NATIONAL CHARACTERISTICS...................................................................................................................... 6 2.2.1 Poverty and Inequality................................................................................................................................... 6 2.2.2 Interest Rates................................................................................................................................................ 7 2.2.3 Employment and Labour Relations............................................................................................................... 8 2.2.4 Production and Output................................................................................................................................ 10 2.2.5 Investment................................................................................................................................................... 12 2.3 THE MHLATHUZE CATCHMENT IN KWAZULU-NATAL .............................................................................. 12 Demographic and Socio-Economic Features.......................................................................................................... 13 2.3.2 Production and Output................................................................................................................................ 18 2.3.3 Investment – Past, Present and Future...................................................................................................... 20 2.3.4 Transport, Utilities and other Infrastructure ................................................................................................ 21 2.3.5 Water Resource Management.................................................................................................................... 22 2.4 SECTION TWO: DISCUSSION AND CONCLUSIONS .................................................................................. 24 3 SECTION THREE: ECONOMIES OF THE DOMINANT SECTORS ...................................................................... 26 3.1 INDUSTRY ...................................................................................................................................................... 26 3.1.1 Aluminium - Hillside and Bayside................................................................................................................ 26 3.1.2 Heavy Machinery - Bell Equipment............................................................................................................. 29 3.1.3 Fertilisers - Indian Ocean Fertilisers........................................................................................................... 31 3.1.4 Paper and Pulp - Mondi Kraft...................................................................................................................... 32 3.1.5 Mining - Richards Bay Minerals .................................................................................................................. 33 3.1.6 Other Industries in Catchment .................................................................................................................... 35 3.1.7 Corporate Social Investment....................................................................................................................... 36 3.2 AGRICULTURE............................................................................................................................................... 37 3.3 COMMERCIAL AGRICULTURE ..................................................................................................................... 37 3.3.1 Sugar Cane................................................................................................................................................. 38 3.3.2 Sugar within the Mhlathuze Catchment...................................................................................................... 39 3.3.3 Citrus........................................................................................................................................................... 42 3.3.4 Citrus in the Mhlathuze Catchment............................................................................................................. 42 3.3.5 Other factors affecting Commercial Agriculture in the Mhlathuze.............................................................. 43 3.4 SUBSISTANCE AGRICULTURE .................................................................................................................... 45 3.5 FORESTRY ..................................................................................................................................................... 49 3.5.1 Global Context............................................................................................................................................. 49 3.5.2 Forestry in South Africa............................................................................................................................... 50 3.5.3 Growth Potential of the Industry.................................................................................................................. 51 3.5.4 Efficiency of the Sector ............................................................................................................................... 52 3.5.5 Competition within the Industry................................................................................................................... 52 3.5.6 Forestry in the Mhlathuze Catchment......................................................................................................... 53 3.6 SECTION THREE: DISCUSSION AND CONCLUSIONS............................................................................... 55 4 SECTION FOUR: COMPARATIVE ECONOMICS ................................................................................................. 57 4.1 SECTION FOUR: DISCUSSION AND CONCLUSIONS................................................................................. 59 5 REFERENCES......................................................................................................................................................... 60 6 APPENDIX 1: ASSUMPTIONS FOR COMMERCIAL AGRICULTURE................................................................. 62 DRA-development 2 Water use and dependency in the Mhlathuze catchment: a macro economic and sectoral analysis 1 Section One: Introduction 1.1 OBJECTIVES OF THE STUDY AND TERMS OF REFERENCE The objective of this research is to develop a decision making tool which will inform the Strategic Environmental Assessment (SEA) which is currently being undertaken by the Department of Water Affairs and Forestry’s Sub-directorate: Stream Flow Reduction Allocations. The implementation needs of the National Water Act and the necessity to take a participatory approach has resulted in the brief being widened to consider all forms of water use. The SEA has identified three key components – environmental, social and economic – which need to be evaluated and weighed up in terms of their costs and benefits, with each component having equal consideration. The move towards establishing Catchment Management Agencies to manage water resources in South Africa has influenced the decision to undertake a “case study” of a catchment in order to gain a greater understanding of how these key components interact with each other. In this instance the Mhlathuze Catchment, in the Kwazulu-Natal province
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