WATER RESTRICTIONS .2. TOTAL FINANCIAL IM PACT FOR USERS OF VAAL RIVER WATER

In Part 1 the methodology to quantify the financial impact of water re strictions and to determine the unit value of water during the restric tion period for different sectors of the economy was discussed. This a rticle presents the results of applying the methodology to the Vaal Ri ver water supply system. First the study area and nature and extent of water restrictions during the restriction period, are discussed. The empirical results are then presented under the headings, direct tangib le impact, total tangible impact and average unit value of water. Tabl e 1 is a summary of the direct tangible impact at nominal values. From the table it can be seen that the highest impact occurred during the first 2 years of restrictions for the agricultural, mining, industrial and household sectors. The impact was the largest for the household, followed by the industrial and agricultural sector. A main factor cont ributing to the losses in the household and industrial sectors was the transferring of losses by the Department of Water Affairs and Forestr y and water supply authorities to these sectors via above average tari ff increases. For the agricultural sector the major component of the i mpact was crop losses. The total direct financial impact at 1990 price levels amounted to R3.2 billion over the 5-year period. Table 2 shows at nominal values the total financial impact and its composition. Fro m the table it can be seen that the indirect and induced effects are a bout 1.5 times the size of the direct effect. At 1990 price levels thi s brings the total financial impact over the 5-year period to R8 billi on or 0.7% of the value of the gross geographic product of the region. By dividing the direct and total financial impact amounts of the diff erent sectors by the water shortages that caused it (Table 3) the unit value figures in Table 4 are obtained. As can be seen from Table 4 th e average unit values differ significantly amongst sectors as well as amongst years within a sector. The total yearly average unit value per m3 of water was the largest for industry (R2.23) followed by mining ( R0.53) and agriculture (R0.40).