THEEWATERSKLOOF GREEN ECONOMY - Theewaterskloof Municipality
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THEEWATERSKLOOF GREEN ECONOMY
A renewable energy and green business opportunities scoping
study
anton@econologic.co.za 1
1
Anton Cartwright is an independent economist and a researcher with the African Centre for Cities. Jacqui Boule
and Joanna Dibden of Theewaterskloof provided invaluable support to this scoping study and comments on early
drafts. Lisa Constable from ERM (Pty) Ltd provided valuable comments on an earlier draft of this strategy.
1
CONTENTS
1. INTRODUCTION 3
2. THE NATURE OF THE THEEWATERSKLOOF ECONOMY 6
3. THEEWATERSKLOOF GREEN ECONOMY OPTIONS 10
3.1 Carbon 10
3.2 Water 16
3.3 Built environment and the space economy 20
3.4 Industry and energy security 25
3.5 Innovative farming and biodiversity 30
3.6 Innovation and the knowledge economy 34
4. WHAT ROLE FOR THE MUNICIPALITY? 37
5. BUSINESS OPPORTUNITIES, AND EMPLOYMENT POTENTIAL 45
6. CONCLUSION 46
REFERENCE LIST 48
APPENDIX A: PRINCIPLES OF THE GREEN ECONOMY 52
APPENDIX B: INNOVATORS AND PIONEERS IN THEEWATERSKLOOF GREEN
ECONOMY 58
APPENDIX C: CARBON TAX 65
APPENDIX D: LIST OF CONSULTED PEOPLE AND COMPANIES AND PRESENTATIONS 65
2
1. INTRODUCTION
Theewaterskloof Municipality is busy with the remarkable process of formulating a “2030
Strategy”. The strategy aims to guide development planning over the next 19 years, and has
identified making Theewaterskloof (1) a great place to live, (2) a visitor destination of choice, (3)
a centre of learning, (4) a vibrant economy and (5) a green and low carbon economy, as among
its ambitions. The exercise is remarkable in that local governments in South Africa, loaded with
a raft of novel and at times unfunded socio-economic development responsibilities when
municipal boundaries were redrafted in 2000 (RSA, 1996; dplg, 2002), have generally struggled
to perform their day-to-day tasks let alone plan for their future or strategise around their
development responsibilities. In the course of developing its 2030 Strategy Theewaterskloof has
identified “sustainability” as being central to the pursuit of all other goals (TWK, 2010b) and the
municipality is looking to attract investment and create employment through a “green
economy”. In so doing Theewaterskloof is aligning itself with a global trend.
The “green economy” re-entered the global economic discourse in the wake of the 2007 financial
crisis when 6 per cent (US$188 billion) of the fiscal support package was reserved for “green
stimuli” (Bloomberg, 2009). Understanding of what is meant by the “green economy” has
remained fluid. UNEP initially proposed a sector-based understanding2, but has subsequently
developed a more encompassing definition: “A green economy is one that results in improved
human well-being and social equity, while significantly reducing environmental risks and
ecological scarcities. In its simplest expression, a green economy can be thought of as one which
is low carbon, resource efficient and socially inclusive” (UNEP, 2010).3 In a signal of intent, the
United Nations indicated that the Earth Summit in 2012 (called Rio+20 to mark the 20 th
anniversary of the founding summit at which the United Nation‟s Agenda 21 was adopted) will
be exclusively focussed on the green economy and in February 2011 UNEP released its most
recent and most detailed articulation of the green economy, Towards a Green Economy: Pathways
to Sustainable Development and Poverty Eradication (UNEP, 2011) which expounds seven key
statements:
A green economy recognises the value of and invests in natural capital (especially
“living capital”)
The green economy is necessary for poverty alleviation
The green economy creates jobs and promotes social equity
2
Agricultural, manufacturing, research and development (R&D), administrative, and service activities that
contribute substantially to preserving or restoring environmental quality.
3
http://www.unep.org/greeneconomy/AboutGEI/FrequentlyAskedQuestions/tabid/29678/Default.aspx
3
In the green economy, renewable energy and low carbon technologies substitute fossil
fuels.
A green economy makes better use of resources
The green economy involves more sustainable urban living and low carbon mobility
A green economy grows faster than a brown economy (over time) while maintaining the
value of natural capital.
Behind these statements is the assertion that, “The green economy is not only the best economy
of the future, but the only economy” on the grounds that developing economies no longer have
the option of pursuing the extractive and resource intensive industrial development pathways
used by current-day OECD countries in the 20th Century (see Figure 1).
Figure 1: Over the past 30 years growth in global GDP has outpaced population growth and a $ of
global GDP has become less material intensive. Resource extraction, however, has grown at a similar
pace as global GDP and contributed to growing pollution, environmental degradation and growing
resource constraints (UNEP, 2011)
South Africa has picked up on the emerging green economy discourse, most notably in recent
State of the Nation addresses (Presidency, February 2010 & February 2011) and via the newly
formed Ministry of Economic Development.4 For South Africa the green economy offers the
hope of redressing the capital-labour ratios and spatial forms that constrain the prevailing
4
At the opening of the Green Economy Summit in Sandton 2010, Minister Ibrahim Patel said, “Government is
working on a new growth path that seeks to be more labour absorbing, less carbon intensive and that connects the
significant scientific and technological capacities of the society with the challenges of jobs and economic growth,”
4
economy. South Africa certainly has the legislative instruments to participate in such an
economy. Post 1994, South Africa‟s policy makers drew eclectically on international best
practice to craft the National Water Act (NWA) (1998), the National Environmental
Management Act (2008), the White Paper on Energy (1998) and hastily signed United Nation‟s
conventions to fight desertification (UNCCD), biodiversity loss (UNCBD), atmospheric
pollution (Montreal Protocol), wetland destruction (Ramsar Convention) and climate change
(UNFCCC). Implicit in much of this legislation was the understanding that a functional
environment was necessary for economic growth and poverty alleviation and that a reform of
environmental rights was a component of the reform of human and economic rights. Good
policies on their own, however, do not ensure change. At a national level the difficult structural
decisions that would have ensured a departure from the business as usual and particularly the
“mineral-energy complex” (Fine, 1999) have never been confronted in South Africa. Instead of a
green economy, South Africa has pursued a series of projects and programmes with distinct
economic, social and environmental objectives. The result has been a collection of economic
contradictions:
The National Water Act (1998) is internationally acclaimed but is undermined by a series
of perverse incentives for the water misallocation, not the least of which is price
protection for the sugar industry that absorbs disproportionate volumes of water
relative to the income and employment that it creates.
Employment hope is placed in eco-tourism, but pristine habitats are repeatedly
compromised by the extension of mining rights.
The President has proposed strident cuts in greenhouse gas emissions and Cabinet has
approved a “carbon tax”, but State Owned Companies continue to be amongst the most
greenhouse gas intensive in the world and are expanded in the interests of
developmental government.
The natural environment provides valuable services, especially to the most poor, but
many of these services are compromised by the manner in which infrastructure and
houses are built.
A carbon tax has been levied on all new vehicles, but the statutory guidelines on diesel
and petrol quality are outdated and do not permit the type of fuel quality that would
allow fuel-efficient vehicles to be introduced onto South Africa‟s roads.
The “minerals energy complex” that defines so much of South Africa‟s economic
structure, has remained in-tact, in spite of its negative implications for the environment,
employment creation, energy security and economic diversification.
A certain level of contradiction is perhaps inevitable. Resources are limited, the legacy of past
decisions endures, needs are varied and trade-offs are an unavoidable part of development. But
5
the extent of the contradiction in the national economy is testament to the danger of pursuing
projects without principles. In South Africa‟s national discourse the green economy is seen as an
add-on, an annex to the real economy with the potential to create a few additional jobs5 and
revenue streams if it succeeds. In this way the green economy is seen much like Local Economic
Development (LED) as something distinct from the mainstream economy. If the green economy
is to fulfil its potential for job creation, investment attraction and the enhancement of economic
competiveness in Theewaterskloof then the green economy needs to be seen not as a distinct
sector, but as a way of taking economic decisions that acknowledges the principle that all
economic activity is dependent on natural resources, the flow of economic services and
environmental stability.
The green economy theory and principles that inform this scoping of programmes and projects
in Theewaterskoof align closely with UNEP‟s latest position (UNEP, 2011) and are presented in
more detail in Appendix A of this report.
2. THE NATURE OF THE THEEWATERSKLOOF ECONOMY
Theewaterskloof is a diverse municipality: humid in the west, arid in the east; accommodating
both intensive-irrigated and extensive-dryland agriculture; it is a centre of excellence for the
country‟s fruit industry and home to a number of leading enterprises while also containing a
growing level of informal business and housing. Urbanisation into rural towns has increased,
but much of the municipality remains rural, agricultural and sparsely populated.
It is ironic for a rural, hinterland municipality such as Theewaterskloof that its sustainability
success is likely to be determined by its towns. The agricultural sector will continue to provide
the mainstay of the Theewaterskloof economy until 2030, but the key changes and arising
challenges will be result of migration to the municipality‟s towns from farms, from Cape
Town‟s peri-urban settlements and from elsewhere in the sub-Continent. The ability to
accommodate and service up to 240,000 people (a more-than-doubling of the 2010 population)
by 2030 in a manner that supports local markets, facilitates the extension of services so as to
improve living standards and does not destroy the environmental resource base that supports
all economic activity in Theewaterskloof, will ultimately determine how sustainable
Theewaterskloof is in 2030. The municipality‟s towns are faced with the challenge of extending
accommodation and services, maintaining existing infrastructure and simultaneously re-
inventing themselves as economic hubs and places to live, rather than agricultural service
depots.
55
South Africa’s governing party believes the green economy can create 300,000 new employment opportunities
by 2020. The green economy in National Government’s analysis is depicted as a sector, and the anticipated
employment creation is greater than any other single sector.
6Figure 2a: TWK Gross Value Added (2000-2008) Figure 2b:Sectoral contributions to TWK economy
2008
Economic growth in Theewaterskloof has been above the national average over the past decade.
The economy relies heavily on the agricultural sector which, although growing, is unable to
generate sufficient employment to address the unskilled labour surplus. The rate of economic
diversification into construction, agri-processing and manufacturing accelerated between 2000
and 2008, but even if this trend is extrapolated these sectors are unlikely to meet the extent of
the demand for employment, services, housing and infrastructure. What the trends do reveal is
that supplying sufficient water, housing, refuse removal and employment, while still
supporting local markets, will require a structural break from “business as usual” in terms of
service delivery (TWK, 2010). Outlining how to achieve this without destroying the existing
economy or the natural resources that provide the bedrock of the municipality‟s economy is
central to Theewaterskloof‟s 2030 Strategy.
7Figure 3: Aerial photograph showing most of Theewaterskloof Municipality, the major towns and
roads. The water catchment in the west and the drier grainlands of the east.
That the Theewaterskloof economy is undergoing rapid flux is undeniable. The rate of change
requires difficult decisions, especially if it is acknowledged that a simple replication of past
development is neither possible nor capable of delivering on the socio-economic need. The
proposed Caledon Casino and golf estate development, for example, will bring an estimated R6
million worth of rates to the Municipality every year and enhance the purchasing power in the
region, but the associated housing estate and petrol station is in many ways inconsistent with
the notion of densifying and investing in the centre of Theewaterskloof‟s towns so as to create
mixed-use public spaces, while the private sector investment in water infrastructure that forms
part of the development will complicate water governance for the Catchment Management
Agency.
To its great advantage, the municipality is home to a large number of established and
innovative agri-processing businesses and business leaders and is the target location for
aspirant renewable energy and energy technology companies. It is also pioneering a number of
sustainable development initiatives and programmes through the Municipality, the
Development Bank of South Africa, the Worldwide Fund for Nature and local NGOs.
Understanding the operations, needs and strategies of local companies and their people is
essential in understanding and supporting the emergence of a green economy in
Theewaterskloof. Based on interviews conducted as part of this study, Appendix B contains a
description of some of the pioneering and innovative companies and programmes that are
underway or being considered within Theewaterskloof. From Annex B it is clear that:
8i. The extent of existing capacity (management, innovation and industrial) and activity in
Theewaterskloof is remarkable. This provides the foundation for future green economy
activity and permits a level of ambition that is not justified in many other municipalities.
It is important that the ideas proposed in this study succeed or fail on their intrinsic
merit, and not simply due to poor implementation. In the words of the Municipal
Manager6, “Theewaterskloof seeks to be a reliable guinea-pig”. Certainly
Theewaterskloof has the capacity to pilot programmes and innovations that could find
application elsewhere.
ii. Existing practise in Theewaterskloof contains both good and problematic precedents,
both of which are able to inform future decisions so as to allow for the consistent
management of existing and imminent trade-offs.
iii. There is potential for symbiotic relationships between Theewaterskloof‟s innovators, so
as to enhance the flow of materials, energy and benefits throughout the local economy.
For example (based on Appendix B) WWF‟s existing “water neutral” programme could
include the Palmiet River; combustible solid waste from the Municipality‟s landfills
could be transported to energy co-generators instead of Overstrand; energy intensive
industries could purchase “green” wind energy from the wind farm in wheeling
agreements; the Caledon Casino and large farming enterprises could benefit from the
broad-based BEE participation of the Community Trust; the Elgin Learning Foundation
and the GSDI could partner with Electricall in establishing mini-grids; eco-estates could
procure renewable energy from the proposed “green” business park; local industry
could collaborate to address the common problem of increasingly expensive road
freight; Appletiser and the Melsetter Group could share ideas on re-using “waste”
water; the findings of Colors biochar experiment could be used to benefit the entire
industry; in general there are a multitude of learning opportunities if the
Theewaterskloof innovators were to share ideas in the interests of a local knowledge
economy.
That Theewaterskloof has a number of Municipal, civil society, business leaders and companies
that are already active in their pursuit of the green economy, does not negate the need for
principles and guidelines that reduce uncertainty and manage expectations. Some of the
existing policy uncertainty is a function of national policies and it would be wrong to assume
that a local municipality such as Theewaterskloof could, on its own, create the definitive
enabling environment for a green economy; but it can be expected to play its part. A green
economy strategy, in conjunction with the 2030 Strategy, provides the framework required to
manage social, ecological and economic trade-offs in a consistent manner.
6
Mr Stanley Wallace, addressing the Stellenbosch University Council 31 March 2011.
9Central to the approach adopted in this document is the understanding that investments in
ecological capital have multiple positive spin-offs for the economy and for people. This notion is
supported by a form of Endogenous Growth Theory (Romer, 1986; Romer and Rivera-Batiz,
1990) in which investments in ecological capital create self-perpetuating spirals of growth
driven by improved human capital, greater resource efficiency and fewer market failures and
associated poverty traps. An Endogenous Growth model involving ecological capital depends
on the effective management (or governance) of the “commons” (the atmosphere, biodiversity,
water resources, soil fertility) so as to prevent productivity collapse and ensure more efficient
and equitable access to resources (Ostrom, 1990 & 1994; Williamson, 2000). Ostrom cautions
against a reliance on global institutions to solve the problem of coordinating and marshalling
work against environmental destruction, and points out that key management decisions should
be made at the local level and based on local conditions. This formed part of an idea that saw
Ostrom win the Nobel Prize for Economics, and one that fits neatly with the idea of a
Theewaterskloof green economy.
Identifying and selecting the type of investment opportunities that will lead to better
governance of the “commons” and support endogenous growth is the focus of this scoping
study. It is useful to assess opportunities within central themes. The ideas discussed below are
presented under the headings (i) carbon, (ii) water, (iii) the built environment and space
economy, (iv) industrialisation and energy security, (v) biodiversity and sustainable agriculture
and (vi) the knowledge economy.
3. THEEWATERSKLOOF GREEN ECONOMY OPTIONS
3.1 CARBON
Key programmes and targets
ACTION OUTCOME PROCESS & RATIONALE
Measure Greenhouse gas inventory Identification of key greenhouse gas
sources and planned reduction
Tourism Carbon Voluntary off-set market TWK tourism reduces its carbon footprint
functioning in TWK and revenue invested in RE &EE projects
Soil Carbon Soil carbon:nitrogen Less GHG emissions and greater soil
restored to pre-degradation fertility and water absorption.
levels
SWH and energy Installation of SWH on Demand side management as the cheapest
efficient every house in TWK. source of “energy creation”. Carbon
technologies Energy efficient lighting liabilities reduced.
10and insulation as standard
in all houses.
Gloally, the burning of fossil fuel currently emits 9 billion tons of carbon dioxide equivalent
(CO2e) greenhouse gas per annum and atmospheric concentrations of CO2 have increased from
280ppm in 1850 to 390 ppm. As a result, mean atmospheric temperatures have increased 0.74°C
over the past century and an increase of 2.2°C by the end of this century is now unavoidable
(Parry, 2009)7. The real danger is that the 9 billion tons emitted annually catalyses much greater
emissions as warming climates release greenhouse gases from vaults in the permafrost, tundra
and oceans - a scenario referred to as “run-away climate change”.
Figure 4: Temperature increases by continent. Source IPCC Fourth Assessment Report, 2007.
South Africa‟s is a greenhouse gas intensive economy. Each megawatt hour (MWh) of electricity
produced in South Africa results in just over one ton of CO2 equivalent being released into the
atmosphere, and for every $1,000 of GDP produced in South Africa almost 1.4 tons of CO2
equivalent greenhouse gas is released (Cloete, 2010). Theewaterskloof is no different. Half the
7
Martin Parry heads the IPCC’s Working Group 2 and was addressing a group at SwissRe’s Centre for Global
Dialogue in Switzerland, July 2009.
11electricity consumed in Theewaterskloof is purchased by the Municipality from Eskom for
forward sales to urban consumers. The balance is purchased by industry and rural consumers
directly from Eskom. In both cases the low grade of coal used as a feedstock, transmission losses
as the electricity is transported from the East Rand to Theewaterskloof and energy intensive
applications and activities in Theewaterskloof combine with land use practices to release an
estimated 877,000 tCO2 in the municipality annually (based on 2010). Unchecked this could
increase three-fold by 2030 as population and the economy grow (TWK, 2010). There is
mounting international pressure, however, to curtail emissions and although South Africa (as
an “Annex 2” developing country signatory to the Kyoto Protocol) does not currently face a
legally binding emissions reduction target, the Presidency has provisionally committed the
country to a 34 per cent reduction in emissions relative to “business as usual” by 2020 and 42
per cent by 2025. Many municipalities and cities, seeking a presence in international markets,
are forging their own climate change mitigation strategies (see Amman, Vancouver, Curitiba,
Cape Town, Durban, New York, London).
Figure 5: Carbon intensity of economies with GDP greater than US$ 200 billion (2008). Source: Cloete
(2010)
In late 2010 National Treasury published a discussion paper exploring options for
implementing a carbon tax in South Africa (National Treasury, 2010). The proposed carbon
taxes were approved by Cabinet in December 2010. Treasury considers a carbon tax of R75 per
ton of carbon dioxide (tCO2), increasing to R200/tCO2 over time to be “feasible and
appropriate” to induce behavioural changes and achieve reduction targets. A domestically
raised carbon tax would avoid the alternative of this levy accruing to South Africa‟s export
markets in the form of “border adjustment taxes” levied by countries seeking to manage their
12own emissions. As a phenomenally carbon intensive economy (see Figure 3), South Africa‟s
commitment to the global need to reduce emissions will have a disproportionately negative
impact on the country‟s economy, relative to many of our competitors. The production and
export of a kilogram of fruit from Theewaterskloof, for example, results in 2.0 kilograms of CO2
being emitted on average.8 A carbon tax of R100 per ton of CO2 would add R 0.20 to the cost of
each kilogram of export fruit. Significantly the same tax levied on Chilean fruit would add only
R0.06 – R0.11 per kilogram of fruit.
A carbon-constrained world will affect the competitiveness of all Theewaterskloof sectors. The
solution lies in better managing the municipality‟s greenhouse gas emissions, and using this
process as a means of introducing a suite of production efficiencies so as to gain an economic
advantage over other South African municipalities and competitor regions outside of South
Africa. The planned installation of utility-scale wind turbines is unlikely to reduce the carbon
intensity of the municipal economy, given that the carbon credits from these projects have
already been sold. There are, however, a number of potential actions listed below that
Theewaterskloof could readily pursue in preparing its economy for carbon constraints.
Measure:
The chief greenhouse gas, CO2, is for the most part, colourless and odourless and
invisible. Yet the Stern Review (2007) estimated that each ton of CO2-equivalent costs
society ZAR 770.9 This is a cost worth managing, but management is only possible if a
clear indication of the volume and source of emissions is available. As a signatory to the
UNFCCC South Africa is required to submit a national greenhouse inventory, but this is
a compliance measure not a management tool and it provides little information at the
local scale. A regularly updated Theewaterskloof greenhouse gas inventory would
enable local awareness and management of emissions. A local inventory, compiled to
international standards, would give Theewaterskloof credibility in its efforts to reduce
its emissions and allow the municipality to promote its carbon management efforts with
credibility on the national and international stage.
Tourism Carbon:
The global carbon market attempts to channel investment in renewable energy and
energy efficiency to regions and technologies with the lowest “marginal abatement cost”
8Citrus: 1,22 kg CO2e/kg, Topfruit: 1,70 kg CO2e/kg, Stonefruit: 2,58 kg CO2e/kg, Grapes: 2,33 kg CO2e/kg, Easy
Peelers: 1,33 kg CO2e/kg fruit, Oranges: 1,17 kg CO2e/kg
9
TruCost, the UK NGO put the “marginal social damage cost” at US$ 31 per ton.
13– those which achieve the greatest reduction in emissions for the least money. The
market, which operates through the Clean Development Mechanism and various
voluntary market standards, has become hampered by high transaction costs and an
inability to accommodate small developmental projects, most notably in Africa. It is,
however, possible for regions and sectors within regions to operate their own carbon
markets. A precedent for this has been established by the “Kruger2Canyons Community
Carbon Trading Project” in the South African Lowveld, and a similar programme is
proposed for Theewaterskloof‟s tourism sector.
The Lowveld project operates on a voluntary basis. Tourists are given the option of off-
setting the emissions associated with a typical bednight and during game drives. The
required payment amounts to just under R15 per person per bednight (based on typical
consumption of Eskom energy during a bednight) and the revenue gathered is used to
support local development projects to introduce renewable energy and energy efficient
technologies and forestry and agricultural projects that sequestrate carbon. All
transactions are recorded in a central registry and off-setters are issued which credit
certificates when they check out of their accommodation.
Such a programme would allow Theewaterskloof to market itself as a “low carbon”
tourism destination, but also position it for a time when mandatory restrictions are
required of the municipality or the tourism industry. In addition money would be
generated for use in renewable energy and energy efficient projects. Where effectively
managed, this money can be used to supplement the Municipality‟s indigent energy
budget and create community development projects that tourists themselves may visit.
Soil Carbon:
Theewaterskloof‟s commercially successful agricultural sector has, in conjunction with
the local forestry sector, depleted much of the municipality‟s soil carbon reserves over
many years. Soil carbon represents a sink for atmospheric carbon. When depleted, soil
carbon contributes to global warming – globally roughly 25 per cent of the increase in
atmospheric CO2 since the industrial revolution is the result of land use changes and the
associated depletion of soil carbon (IPCC, 1998). Soil carbon is further important in
controlling the impact of erosion and enhancing water infiltration. We know that in
semi-arid climates, rainfall events exceeding 10 mm tend to result in run-off, some
erosion and soil carbon losses (Boardman et al., 2010). The extent of erosion increases
dramatically as rainfall increases and where soil has been predisposed to erosion by
overgrazing, compaction or organic material depletion.
14A Theewaterskloof programme that committed farmers to periodically restoring and
maintaining pre-degradation soil carbon:nitrogen ratios would sequestrate greenhouse
gases, improve water infiltration and nutrient cycling and reduce erosion thereby
contributing to a more sustainable agricultural sector. It would also secure considerable
acclaim for the municipal agricultural sector. The Melsetter Group is, in conjunction
with Stellenbosch University, already undertaking such a programme. Soil carbon is
relatively easy to measure and soil carbon levels can be restored through judicious crop
rotation and the addition of either biochar, nitrogen fertilisers, treated municipal sludge
or the ploughing-in of alley crops and weeds. The proposed concept would be similar to
maintaining what the water sector refers to as the “ecological reserve” – a critical
minimum amount of water in each catchment so as to maintain hydrological functions.
A soil carbon reserve would maintain the long term fertility of the region‟s land.
The recording and managing of soil organic carbon within the municipality is
compatible with the ongoing effort to identify the region‟s “terroir” locations for the
production of quality wines (see below) and the compatibility is itself symptomatic of
the type of value-addition that the green economy frequently yields.
In discussion the University of Stellenbosch‟s has committed its Department of Soil
Sciences to conduct an experiment involving the use of biochar, alley cropping and
inorganic nitrogen fertilisers to gauge the relative merits of each approach to improving
soil carbon:nitrogen ratios.
Solar water heaters and energy efficiency technologies:
Solarwater heater (SWH) roll-outs are already a component of the national energy
strategy. The national programme offers (at best) a 90 per cent rebate on the cost of
installation (Worthman, pers comms)10 and the most successful programmes are those
supported by their local municipalities in order to cover the balance of funding and
maintenance. The cost of SWHs is coming down, the quality is improving, the cost of
Eskom electricity is increasing. The trends combine to give a current pay-back on a
solarwater heater installation to private houses of between 2 and 4 years. The payback is
quicker if the Eskom rebate is accessed. A 150 litre SWH heater saves roughly 2 tons of
CO2 per annum per household of four people. Trading this carbon could contribute
roughly R160 per annum per unit to the revenue streams available for installation and
maintenance, provided suitable voluntary carbon market outlets can be secured.
Regardless of carbon revenue, a SWH saves domestic users up to 25 per cent of their
monthly electricity bill.
10
Cedric Worthman is in charge of the low cost solarwater heater roll-out at Eskom
15The same increasingly favourable cost-benefit trends apply to a suite of demand-side
management technologies such as Low Emission Diode (LED) building and public
lighting, geyser insulation sleeves, ceilings in houses and solar passive design of
buildings. These technologies are set to become a feature of all South African
municipalities regardless of how the national grid sources its energy. Supporting the
establishment of industrial capacity to either manufacture or install these technologies
within Theewaterskloof will ensure Theewaterskloof businesses a stake in a local growth
sector.
The Municipality is not responsible for housing budgets but does have a say in where
and how these projects are developed. By enforcing the use of energy efficient and
renewable energy technologies on houses at both ends of the market, the Municipality
would not only reduce the local greenhouse gas emissions, but support better quality,
more sustainable, residential development. Demand side management technologies do
reduce the amount of money that the Municipality can make by forward selling bulk
electricity from Eskom to private users. This budget short-fall would have to be
managed and should prove negligible relative to the rates and levies secured by the
Municipality once Theewaterskloof is recognised as a prosperous, sustainable and well-
managed municipality.
Crucially, demand side management technologies can be financed by banks or
mezzanine finance instruments, where the savings on Eskom electricity are used to pay-
back the costs incurred in the installation of the technologies. IDC, commercial banks,
UNEP Finance Initiative, DBSA and even some installers such as Teljoy have explored
this model with success.
3.2 WATER
Key programmes and targets
ACTION OUTCOME PROCESS & RATIONALE
Water governance CMA functional and NWA Water governance is closely linked to
rolled out returns on water and avoiding crises. The
NWA is an acclaimed piece of legislation
that requires local implementation.
Water Different qualities of water Not all uses requires the same quality.
differentiation applied for different uses Differentiating can save money and see
better utilisation of resource.
Plug leaks More efficient municipal Existing leaks are extensive and the cost
water use benefit of plugging leaks is favourable.
16Promote efficient Less water used for higher Agriculture is the greatest consumer of
irrigation yields, less soil erosion. Gap water. Current wide range in gap
technology between best and worst between best and worst irrigation
irrigation practice narrowed. practice can be easily closed.
Prevent Municipal Less sewerage and Water quality reduces the available
and agricultural agricultural discharge. Better resource.
contamination water quality in natural
resources.
Expand links with Rehabilitation of the Palmiet Expanding existing links with WWF‟s
WWF‟s Water River and investment in water neutral programmes attracts
neutral programme hydrological infrastructure investment, creates employment and
rehabilitates existing water resources,
freeing up water.
South Africa is a water scarce country.11 Theewaterskloof is fortunate to be part of the Breede
Overberg Catchment, a basin that was reported to have a small water surplus in DWAF‟s
internal strategic perspective study (DWAF, 2000). This surplus is under extreme pressure as
demand in Cape Town and locally grows, and much of Theewaterskloof is socio-economically
constrained by water shortages. The origins and economic implications of this scarcity are not
always understood. South Africa captures 79 per cent of its available water resource in large
dams – the highest proportion of capture in the world (Turton, 2010) – a status that precludes
the construction of new bulk water storage infrastructure. Accordingly, the national policy
focus has shifted to making better use of existing water. Technology has a role to play. Grey
water recycling, more efficient industrial users and agri-processors, the adoption of more water
efficient irrigation technology, residential water storage tanks, judicious use of ground water
reserves and small off-stream farm-dams could contribute to greater economic returns on the
available water resource. But technology on its own will not suffice; globally the efficiency gain
in industrial and agricultural water use between 1990 and 2004 was only 1 per cent per annum
(McKinsey, 2009). The overarching need is for better water governance. Water governance is
complicated in that water is simultaneously a social, economic and environmental asset, but
South Africa‟s National Water Act (1998) and National Water Resource Strategy (NWRS) (2003)
provide a comprehensive framework for managing the country‟s water in the face of competing
development needs.
The legislation acknowledges catchments as the unit of water governance, prohibits any private
water ownership, safeguards an “ecological reserve” for the maintenance of hydrological
systems and provides structured and progressive means of allocating the remaining water in
line with both economic and social interests (DWAF, 2003). Both the Act and NWRS have
received international acclaim, but have also proven extremely difficult to implement against
11
The country receives an average of 470 mm per annum, while the global average is 857mm per annum.
17the backdrop of vested interests in historical water allocation patterns and an under-capacitated
Department of Water Affairs.
Water governance:
Water catchment boundaries do not align with municipal boundaries, but given that the
bulk of Theewaterskloof falls within the Breede-Overberg Water Management Area and
the Municipality has a vested interest in ensuring good water governance, the influence
of the Municipality on the Catchment Management Agency (CMA) is critical. The
Municipality is represented on the CMA‟s board, and should use this influence to ensure
that national water legislation gains local traction and serves local needs. Crucial in this
regard is the inter-basin transfer of water out of the Breede-Overberg catchment to meet
growing demands in the City of Cape Town - over 37 per cent of the surface water
resource in the Breede Basin in transferred in this way (DWAF, 2009). The CMA is the
key to managing these transfers and in ensuring that Theewaterskloof is suitably
compensated for the constraints that Cape Town‟s expansion is placing on its
sustainability and development.
A robust and proactive CMA would serve Theewaterskloof‟s green economy aspirations
in others ways too. It would, for example, become possible under the NWA to allocate
water that is realised by alien clearing and the introduction of grey-water recycling to
poor female headed households under the Act‟s Compulsory Licensing arrangement or
through General Authorisations. Such allocations would require commercial users
seeking additional water to purchase or rent water from these women, and render the
local water resource an instrument for social inclusion and equity.
Similarly a local application of the NWA would permit the marshalling of water in
support of employment creation or other mandated programmes, as opposed to locking
historical water allocations into the Theewaterskloof economy regardless of their merit.
Water differentiation:
Irrigation and stock-watering does not require residential drinking water quality. South
Africa‟s water is considered a “unitary resource” (NWA, 1998). Water can, however, be
differentiated at the local level in terms of its quality and reliability. Since different users
require different levels of quality and reliability of supply, differentiating at the local
level, can save purification costs, realise new water sources (such as grey water and
industrial effluent) and make more efficient use of existing water.
18Plug leaks:
The cheapest source of water available to Theewaterskloof‟s expanding towns is, “The
water that is already supplied to [them]” (Turton, 2009). The figures are difficult to
establish but nationally up to 30 per cent of available water is “lost” between reservoir
and tap (IWA, 2008). Not all of this loss is leakage, some of it is due to administrative
and measurement errors, and in many instances managers already lower water pressure
during off-peak periods so as to reduce leakage. However preventing leaks through
pipeline maintenance in bulk and private infrastructure offers potential for significant
gains and is cheaper than constructing new supply side infrastructure. A programme
aimed at plugging leaks can, as with demand side management, generate some of its
own finance as water that is recovered is resold.
Promote efficient irrigation technology:
Agriculture and forestry account for roughly 95 per cent of Theewaterskloof‟s water use
(DWAF, 2009), but the gap between the best available irrigation and stock-watering
technologies and those used by most farmers in Theewaterskloof is wide, and widening
in the absence of technical demonstration days organised by the Department of
Agriculture. Uptake of more efficient irrigation technology represents a relatively easy
water demand management gain. By facilitating show-days in which farmers get to see
and learn about new technologies that are operating in Theewaterskloof, the rate of
technology absorption would be advanced and irrigation efficiency improved. The
Fruitways packshed, for example, makes use of a closed loop water system that saves
water costs and prevents the release of contaminated effluent.
Prevent contamination, especially from municipal systems and agriculture:
Contamination of Theewaterskloof‟s water resources reduces the amount of available
water, increases the cost of using water (see South African Breweries‟ efforts to purify
water from Theewaterskloof Dam in Appendix B), threatens the phytosanitary
compliance of fruit and vegetables produced in the area and causes disease and illness
for people and livestock. Water quality in certain Theewaterskloof rivers is known to be
compromised. Agricultural run-off, packshed and industrial effluent and towns that fail
to maintain patent bulk water and sewerage systems are the chief culprits. Measurement
using the Department of Water and Environmental Affairs‟ “Blue Drop” programme is a
start. Improving the impacts of Theewaterskloof‟s municipal water quality provides a
cost-effective means of reducing the economic burden of scarce water.
193.3 BUILT ENVIRONMENT AND THE SPACE ECONOMY
Key programmes and targets
ACTION OUTCOME PROCESS & RATIONALE
Densification More people living in Greater purchasing power in tows,
TWK‟s towns in mixed use shorter commuting distances, less habitat
buildings destruction for residential sprawl
Rural residential Up-market eco-villages New residential opportunities to create
clusters living off-grid and purchasing power. Affluent market for
independently of bulk clean technologies supports these sectors.
services.
Sustainable low cost SWHs, ceilings and gutters Ease financial and environmental burden
housing to be mandatory on low on poorest residents by building better
cost housing. houses, saves money in the medium
term.
Greening low cost Less money spent on Locals paid if they are able to sustain
housing establishing trees and trees and shrubs provided with public
shrubs in low-cost funds.
neighbourhoods.
Green MIG for MIG used to maintain and Ecological goods and services provided
ecological restore ecological goods to all TWK residents, and functionality of
infrastructure and services. services retained.
The spatial the mis-alignment between people and markets – a direct legacy of the apartheid
space economy – continues to provide one of the defining structural constraints on the South
African economy. In Theewaterskloof this manifests as low residential densities in the rural
towns of Grabouw, Villiersdorp and Caledon, people living a long way from their place of work
and spending disproportionate amounts of time and money getting to their place of work, high
transaction costs for producers in getting their goods to markets and a lack of purchasing power
concentrated in the municipality‟s rural towns. Theewaterskloof‟s low urban densities are
linked to weak “agglomeration forces” (World Bank, 2009) and insufficient local market size to
support local businesses and industries or to attract new industries and investment. The result
is that Theewaterskloof‟s towns remain stuck in an “agricultural service-town” mode, and fail
to fulfil their economic and social potential. The same spatial form means that South African
towns are inefficient in their use of energy, materials and land. Public transport, including rail,
bus and taxi services are part of the solution (agglomeration economies only work if people can
access the opportunities), but transport is not within the Municipality‟s powers or remit.12 The
12
Local industries such as SAB, KROMCO and Appletizer in partnership with the municipality might enter into
collaborative partnerships with TRANSNET rail and port facility to ensure greater and easier mobility of their goods
and people, but this is at best a partial solution for the municipality.
20Municipality can, however, control the built environment. The built environment defines the
relationship between people and the natural environment, and is central to the creation of
sustainable markets, the management of environmental impact and the nature of economic
development.
The apartheid state used spatial planning in towns and cities extremely effectively in the 1960s
to support its socio-economic ideology. The challenge for Theewaterskloof is to use space as
effectively to reverse the apartheid legacy and support a more inclusive socio-economic system.
Densification:
The Municipality controls the allocation of development rights, building designs and
spatial planning and could use this control to influence the nature and density of
residential developments, so as to create a critical purchasing power and financially
sustainable local businesses within Theewaterskloof‟s towns. Certainly, the main roads
and central business districts of towns such as Grabouw, Villersdorp and Caledon offer
considerably more economic, real-estate and social potential than is currently utilised.
Very few people live in the town centres and development is restricted to low-density
ribbon expansion of commercial property along the major roads, and retail at the
respective taxi termini. The flow of traffic and people in these towns is controlled by the
location of petrol stations, a casino (in Caledon) and franchised retail outlets. The towns
cater for “passers through” rather than seeking to attract permanent residents and their
money. They do not have public recreation space and do not have easily recognised
town squares that combine recreation, retail and residential property. The result is that
many people who work in Theewaterskloof live and shop outside of the region, and
businesses in the major towns often struggle to attain critical scale.
A town planning approach that creates residential space in the municipality‟s town
centres in multi-storey mixed purpose buildings is to be piloted in Grabouw by the
Grabouw Sustainable Development Initiative. The potential is to reduce transport costs,
generate a critical mass of local residents for local businesses, reduce the sprawl and
associated habitat destruction of existing residential developments and lower the unit
cost of service delivery.
Rural residential eco-clusters:
Theewaterskloof offers an attractive location for middle and high income households
who either work in Somerset West or Strand or are not required to be in the City of Cape
Town for their work. Such households represent purchasing power and investment
potential, but are restricted by the lack of suitable accommodation in the municipality.
21They are unlikely to be attracted to the region‟s towns, even if they do embrace denser,
mixed-use property development, and struggle to find land and housing outside of the
towns without purchasing a farm. Whilst some Public Works and State forestry land is
available, the process of alienating this land from State entities for private development
is protracted. Similarly the process of using private agricultural land for residential
development is restricted by the Subdivision of Agricultural Land Act (70 of 1970) and
its attempts to protect food security. It is proposed that the concept of food security
promoted by the Act has its origins in apartheid-era isolationist thinking, is outdated
and incorrect.13 As one farmer pointed out, he has a 12 hectare piece of land on his farm
that has no agricultural potential, is currently occupied by water thirsty pine trees but
could serve as a home for 6-8 houses with a mountain and dam view, fynbos gardens
and clean technology.
Challenging this Act and its implications represents a long-term process, but the
Municipality has the role of interpretation and application. It is proposed that clustered
developments on pockets of low-potential agricultural land be used for up-market
developments, with the intention of increasing investment and purchasing power in the
municipality. Such eco-clusters would only be possible with strong guidelines from the
Municipality. Necessarily these estates would have to exist without access to the
national electricity grid or the bulk water system, but the technologies to enable this are
available, proven, and falling rapidly in price. A combination of gas, photovoltaic energy
panels, solarwater heaters, rainwater harvesting, grey water systems and composting
toilets, can currently be installed in an upmarket house for a total of R150,000- R250,000
without any noticeable impact on services (Cohen, 2010)14. The type of houses envisaged
should be able to pay this premium.
In addition to enhancing purchasing power and facilitating investment, such
developments would generate ideas, showcase opportunities and attract the type of
industries and skills to the region that would see the formation of businesses that will
prosper when these approaches become the norm.
Sustainable low cost housing:
Making better use of existing commercial and residential property in the rural towns is a
component of the solution to Theewaterskloof‟s housing challenge, but even where this
13
While retaining food and fibre production is an important component of the Theewaterskloof economy, food
security is equally supported by the creation of viable markets and a wide number of options for accessing food.
14
http://www.mg.co.za/article/2010-12-23-unplugged-life-off-the-grid
22is successful, the Provincial Government, in partnership with the Theewaterskloof
Municipality, will be required to build new low cost housing. The current approach to
building government housing requires a rethink – especially in rural areas where houses
tend to be poorly constructed from inferior products without consideration of the
natural environment or the socio-economic consequences of the lay-out or location of
these houses. More sustainable low cost housing offers multiple benefits: (i) adding
gutters would facilitate rainwater harvesting and reduce soil erosion and localised
flooding; (ii) solarwater heaters tend to last longer than electric geysers, reduce the
residents energy costs, save green house gas emissions and create a market for the local
industry; (iii) ceilings regulate internal temperature, reduce energy costs and make for a
healthier living environment; (iv) biodigesters collect sewerage from the neighbourhood
and convert this to energy and clean water, saving bulk infrastructure construction,
providing an energy source, saving water purification energy and providing a local
source of irrigation water; (v) magnesium (as opposed to calcium) carbonate cement
products save CO2 emissions in construction; (vi) designing settlements with public
spaces that are observed from the respective houses makes neighbourhoods safer.
Low-cost housing is not the place to experiment with unproven technologies, but many
of the well-proven technologies have the potential to save households money, save the
Municipality money over the long-term and deliver better services. It is incumbent on
the municipality to insist that contractors install these products. The MFMA requirement
to install “lowers cost” options in all instances need not be an impediment if the life-
cycle cost, and external costs are considered (De Visser, 2010).
Greening low cost settlements:
The need for greenery – trees, shrubs and groundcover – is a much cited need in low
cost developments. The reality is that greenery is often used as fodder, fuelwood or
building material and is expensive to irrigate and maintain. A municipal system in
which households are paid if trees that are planted by the Municipality or Province are
kept alive is more likely to succeed. Experience in Durban15 shows that where
incentivised in this way households find a variety of innovative ways to protect and
nurture greenery in their environment and that the approach is both more successful
and less costly than Municipal approaches involving water trucks and periodic
replanting.
15
Durban has run a “Tree-preneur” Programme
23Green MIG and ecological infrastructure:
The Municipal Infrastructure Grant (MIG) is the largest conditional grant from National
Treasury to local governments. In 2011/12 Theewaterskloof will receive a R21.5 million
MIG allocation and will spend this on a range of water and sewerage projects. The role
of infrastructure and the services that they deliver are understood to be central to the
functioning of “developmental local government”. The reality is that municipalities are
struggling with the “triple challenge” of building new infrastructure, maintaining
existing infrastructure and using new infrastructure to contribute to poverty eradication
(Brown-Luthango, 2010), and whilst MIG allocation and expenditure has improved
considerably over the past decade, much of the infrastructure delivered has not been
well maintained or provided adequate services. At the same time, the environment, and
the value of services and goods provided by functional environments, has been a key
oversight in the roll-out of MIG (MXA, 2003). In a rural municipality such as
Theewaterskloof, the value of services provided by the environment – pollination, water
purification, provision of food and fibre to wild harvesters, soil nutrient recycling,
carbon sequestration, emotional well-being and tourism support – is probably greater
than the value of services provided by the municipality. Just as municipal service
delivery faces a number of pressures, so too is the value of ecological services under
pressure. Balancing the roll-out of traditional municipal services such infrastructure and
solid waste disposal, with the services provided by the natural environment represents a
key challenge for the green economy.
The Development Bank of South Africa (DBSA) with support from the South African
National Botanical Institute (SANBI) has made the case for permitting the maintenance
and restoration of “ecological infrastructure” with MIG grants, particularly where this
infrastructure contributes to municipal services and can provide these services more
cheaply than infrastructure projects creating more jobs in the process. It is a compelling
argument, and one in which National Treasury has expressed interest.16 Grabouw
already has a sustainability initiative operating with DBSA and has the institutional
capacity to run a trial project around this “Green MIG”. The soil carbon project
mentioned above, wetland restoration programmes, the tree-preneur programme used
for greening, solid waste recycling programmes, rainwater harvesting, composting
toilets and the clearing of alien vegetation from water catchments are all examples of the
type of activity that might be funded by the Green MIG. Where such a trial was
launched it would further distinguish Theewaterskloof as a place of significance and
innovation in the global green economy.
16
Ian Palmer, Anthony Black and Dave Savage are three Treasury consultants that would be useful in advancing
this idea.
243.4 INDUSTRY AND ENERGY SECURITY
Key programmes and targets
ACTION OUTCOME PROCESS & RATIONALE
Wind farmers Bulk wind energy produced TWK has an excellent wind resource.
assisted in securing and consumed in TWK Localisation of a national industry. TWK
PPA & RODs gains international profile and benefit5s
form a new clean industry. Local
businesses have access to clean energy.
Co-generation of Industrial plants using waste
energy at industrial to generate electricity and
plants avoid landfill methane
Local manufacturing New labour intensive Local markets for technologies supported
manufacturing and by local manufacturing and expertise that
maintenance of strategic RE will be exported when the industry
and EE technologies grows.
Green business hub Cluster development of green Critical mass of green economy players
economy players running developing markets and providing an
business off renewable energy attractive location for businesses and
and material recycling. industries requiring a green profile.
Includes a logistics hub linked Cement or glass depot to reduce road
to rail service freight, particularly on Sir Lowry‟s Pass.
Differentiate tariffs Cheaper electricity and more Charging lower prices for off-peak
between peak and efficient use of available electricity and higher prices for peak
non-peak electricity, most notably electricity is permitted by NERSA and
renewable energy would encourage companies and
households to run non-essential items
during off-peak, thereby smoothing the
demand curve.
Net metering Allow industrial and Incentivise local electricity users to install
residential electricity meters to localised energy generating devices so a
run in two directions to reduce their energy consumption
Waste to energy Landfill content used in Theewaterskloof has 4 landfill sites all of
combustion. “Excess” solid which pose problems for the
waste transported to Municipality. South Africa‟s waste has a
cogeneration sites instead of high energy content and burning it in a
Overstrand landfill. Later controlled environment can provide
landfill methane used as an energy and reduce the solid waste
energy feedstock. Avoid burden.
transport of solid waste to
Overstrand.
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