Crisis in Cape Town: A Global Warning

“We are now in Phase 1 of the disaster plan.” Issued by the Safety and Security department of Cape Town, South Africa, in October 2017, this grim warning indicated that the city’s freshwater dam capacity was at 25% and dropping. At 13.5%, the city would have reached “Day Zero,” triggering an immediate water shutoff for millions of residents. In order to avert a crisis, the city was forced to implement extreme water-saving measures: fining high-volume households, mounting public awareness campaigns and limiting residential water use to 23 — and eventually — 13 gallons per day.

Cape Town’s near catastrophe is a global warning. From 2015 to 2018, the increasingly arid and rapidly urbanizing city was devastated by the worst drought in a century. Of course, the drought was more than a chance occurrence, with high-resolution climate simulations estimating the chance of severe drought as “five to six times more likely. As climate change exacerbates the likelihood of extreme weather around the globe, nations would be wise to recognize that the conditions that precipitated the Cape Town crisis are by no means unique to South Africa.

Cape Town narrowly avoided Day Zero thanks to policymakers’ decisive action, citizens’ sacrifices and some well-timed precipitation. Today, local reservoirs are “brimming.” However, even intermediate-emissions climate projections predict that history is doomed to repeat itself unless policymakers fundamentally rethink hydro-infrastructure and consumption habits. So, what do other regions do to heed the lessons of Cape Town and avoid future calamity?

 Diversify Supply

One of the biggest contributors to Cape Town’s water shortage was its dependence on a few unreliable sources of water. For its water supply, Cape Town relied almost exclusively on a few local reservoirs, which require precipitation to be replenished and see high evaporation rates in dry seasons. Leaky infrastructure only compounds scarcity and supply losses.

Diversifying the water supply is the first step to reducing the impact of severe droughts. Recognizing its over-reliance on limited reservoirs, Cape Town has taken steps to diversify, with plans for “constructing four desalination plants, two groundwater fields, and a new water-recycling facility.” These will undoubtedly help mitigate future water shortages, although regions must be cautious about which supply methods they choose to rely on, as each comes with its own set of challenges.

For example, Cape Town’s plan to obtain 25% of its water through desalination has not been without issues. Desalination is expensive and energy-intensive. As a result, the city’s construction process has been plagued with delays due to lack of funding, partly because short-term budget reallocation to stave off the immediate drought outweighed long-term policy considerations that might mitigate future risks. Likewise, groundwater extraction has its own environmental concerns to consider, including long recharge times for underground aquifers, damage to infrastructure and ecosystems from soil sinkage and contamination by surface water. Despite the challenges that infrastructural adaptation poses, these policy measures provide a key safeguard against the ever-growing potential for disastrous climatic shocks.

In the Market for a New Solution

Cape Town’s targeting of individual consumption to slash water demand highlights the potential for water markets to serve as an effective long-term measure for proactively combating future water scarcity. A water market puts a price on water that better reflects its scarcity and makes it tradable, allowing for easy reallocation between sectors (e.g., agriculture, domestic, etc.). Regions with vulnerable water supplies should pursue water markets wherever possible.

Australia operates perhaps the most comprehensive and effective water market in the world. In 1987, Australia launched its first regional water market; under its current system of “highly localized” markets, water entitlements can be bought and sold. This model highlights the need for regional – rather than national – water markets and demonstrates the policy’s effectiveness in promoting sustainable agricultural practices.

Equity is a crucial consideration in designing, implementing, and managing water market systems, which entails commodifying a life-sustaining substance.

To be sure, water markets won’t work everywhere. Researchers have identified the key legal and environmental criteria which must be met for water markets to be effective. If met, factors such as legal definitions of groundwater, water property rights, and sufficient storage capabilities drastically improve the chances of water markets functioning successfully. In viable regions, water markets can significantly shift demand by forcing actors (e.g., farmers) to internalize the costs of inefficient behavior. However, this is just one policy tool that governments can leverage to combat excessive water usage.

If lessons are not learned, today’s unfortunate anomaly becomes tomorrow’s disastrous reality. Sao Paulo, San Diego, San Antonio, Beijing, New Delhi, Mexico City and Tokyo are just a handful of the where circumstances are eerily similar to Cape Town. While solutions vary based on local conditions, vulnerable regions should pursue water supply diversification — and equitably enforce water market exchanges — if they wish to avoid their own Day Zero catastrophes.