National Pricing Strategy for Water Use Charges

The National Pricing Strategy for Water Use Charges outlines a hybrid tariff system for South Africa, combining national and catchment-level charges. It defines six water use categories and five main charge types: Water Resources Management, Infrastructure (including O&M, Depreciation, FIBC, and Capital Use), Waste Discharge, Water Research Commission, and Economic Regulator charges. The strategy emphasizes the 'user pays' and 'polluter pays' principles while providing targeted subsidies and phased-in charges for resource-poor farmers and foresters to support racial and gender equity. Implementation began on 1 April 2016, introducing multi-year tariffs and a structured process for budget planning and price setting.

• The pricing strategy adopts a 'Hybrid tariff approach' to balance affordability and cost-reflectivity, utilizing a mix of 'nationally and water management specific charges'.
• Water use is divided into six categories to allow for targeted charging: Municipal, Industrial/Mining, High Assurance Use (99.5% supply assurance), Agriculture, Stream Flow Reduction Activities, and Hydropower.
• The Water Resources Management Charge (WRMC) is designed to recover the full cost of managing water resources within each Water Management Area (WMA), including activities like catchment strategy, monitoring, and disaster management.
• Infrastructure charges are split into four components: Operations and Maintenance (O&M), Depreciation, Future Infrastructure Build Charge (FIBC) for social and economic stimulus, and the Capital Use Charge (CUC) for debt service on commercially viable projects.
• The Waste Discharge Charge System (WDCS) follows the 'polluter pays' principle, using a Waste Mitigation Charge (WMC) to recover costs of mitigating impacts on surface water resources based on net waste load.
• To support equity and transformation, resource-poor farmers and tree growers have their WRMC charges phased in over ten years, with no charges for the first five years and 20% annual increases thereafter.
• Hydropower is treated as a renewable energy source with a specific pricing mechanism consisting of a fixed charge on installed capacity and a variable charge based on power generated; micro-hydropower (<1 MW) is exempt.
• The strategy introduces a multi-year tariff system where sectoral charges are set for three-year periods to provide certainty for users and institutions.
• Specific indexation rules are applied to charges: the Consumer Price Index (CPI) is used for O&M components, while the Production Price Index (PPI) is used for infrastructure-related charges.
• The strategy provides for the waiver of certain charges during natural disasters, such as droughts, where charges are reduced or waived based on the percentage of the irrigation quota available.

APA

GreenCape (n.d.). National Pricing Strategy for Water Use Charges. https://greencape.co.za/assets/Sector-files/water/Department-of-Water-and-Sanitation-DWS/DWS-National-pricing-strategy-for-water-use-charges-2015.pdf

Chicago

GreenCape. National Pricing Strategy for Water Use Charges. n.d. https://greencape.co.za/assets/Sector-files/water/Department-of-Water-and-Sanitation-DWS/DWS-National-pricing-strategy-for-water-use-charges-2015.pdf.

Wikipedia

{{cite report |author=GreenCape |title=National Pricing Strategy for Water Use Charges |url=https://greencape.co.za/assets/Sector-files/water/Department-of-Water-and-Sanitation-DWS/DWS-National-pricing-strategy-for-water-use-charges-2015.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greencapendnational, author = {{GreenCape}}, title = {{National Pricing Strategy for Water Use Charges}}, institution = {GreenCape}, url = {https://greencape.co.za/assets/Sector-files/water/Department-of-Water-and-Sanitation-DWS/DWS-National-pricing-strategy-for-water-use-charges-2015.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }