| Economic value of Groundwater |
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Farmers Weekly: Ground water Part One: Economic value of groundwater
Water is the true wealth in a dry land; without it land is worthless or nearly so. And ifyou control water, you control the land that depends on it. Wallace Stegner (1954) At my visit to the recent Nampo Expo I overheard a pump salesman and a farmer talking. The farmer was enquiring about protection for his borehole pump to prevent it from burning out and about problems he is experiencing with the water level in his borehole. The salesman had a hundred and one devices that he could sell in order to protect this farmer’s pump. As a matter of interest I stepped closer and asked the salesman if he knows how people actually test boreholes? He answered – “they talk about a step drawdown test, but it is really so expensive to test a borehole that it is really not worth it!” Considering the economic value of ground water this was, and remains a shocking answer! Although one cannot generalise I was wondering how many irrigation farmers still have the same outlook on this matter? Here you are spending hundreds of thousands of Rand on capital equipment to irrigate crops, more on working and planting, and more money on protecting the pump, yet it is considered too expensive to test the borehole? The very reason opting for irrigation is economics and profits, yet it is concluded that it is too expensive to test this resource! Having a borehole tested means amongst other things that one knows how much water one can extract to retain sustainability as well as the quality of water you extract. Can you justify spending a large capital outlay on an irrigation system without the assurance that you will have a constant water supply? A proper borehole test and resource evaluation will cost you a fraction of your capital outlay but/and will give you the peace of mind that you will have water to irrigate. The notion of – water is always there and will always be available, if my borehole packs up I’ll just drill another and carry on – will be much more costly than just gaining the know how of proper aquifer testing, management and maintenance. Economic decisions in the farming business are often taken with the aid of complex financial and crop models, but seldom on an economic model of your groundwater resource. Precision farming with the aid of satellite imagery is also fast winning ground, but is this the case for groundwater? This lead me to ask the question – does groundwater have an economic value at all? If it does why do so few ground water user in Southern Africa actually contemplate spending money on the scientific evaluation and exploration of this valuable resource? According to the Water Research Commission (WRC) of South Africa, 55.8% of water used in South Africa is used in the agricultural industry. This water is made up of both surface water and groundwater. Irrigation agriculture contributes in the order of 25 to 30 % of the gross agricultural production and is of great importance in the economic activities in rural areas. This, while groundwater in many areas around the world is considered as either an invaluable good or as a “free” good. In order to put the economic value of groundwater into perspective the United States Government commissioned a project in 1994 to determine the economic value of groundwater. According to that study the first and fundamental step in valuing of a groundwater resource is recognizing and quantifying that resource’s total economic value (TEV). For the purposes of that study groundwater services have been divided into two basic categories: extractive services and in situ services. Each of these is considered to have an economic value which can be summed up as follows: TEV = extractive value + in situ value. The most familiar of these two are the extractive values, which are derived from municipal, industrial and agricultural demands met by groundwater. (In the majority of these cases the economic value of groundwater is only translated in related costs, e.g. cost of exploration and production drilling, pumping equipment and operational costs (such as electricity, lubricants and repairs), but not as a value per unit of groundwater abstracted.) The in-situ services (i.e. services or values that occur or exist as a consequence of water remaining in place in an aquifer) include e.g., the capacity of groundwater to, a) buffer against periodic shortages of surface water supplies, b) prevention or minimizing of subsidence due to groundwater abstraction (sinkholes), c) protect water quality by maintaining the capacity to dilute and assimilate groundwater contaminants, to name but a few. The valuation of extractive and in-situ services of groundwater requires an understanding of geology, geohydrology and ecology of a certain groundwater resource. Hydrological and geohydrological information includes numerous factors such as rainfall, runoff, depth to groundwater, whether the water-bearing zone if confined or unconfined, the groundwater flow rates and direction, type of vadoze and water bearing zone materials and water quality associated with different strata. Most groundwater applications in especially the agricultural sectors have focused on the valuation of limited production related services provided by groundwater. This has lead to misallocation of resources in the past as well possible conflict situation where the demand on a certain resource has changed with one user taking legal precedence over another. Enormous amounts have been spend in attempting to augment water supplies in agriculture, trying to clean up polluted groundwater resources and fighting court battles resolving water allocation issues. It is clear from the above discussion that estimating and quantifying the TEV of groundwater is not a simple issue, but remains a pressing and important issue for industry, and agriculture throughout the world. The big questions now for my friend the pump salesman, is this: “Is it too expensive to test a resource and make sure of it’s sustainability before you embark on major capital projects, or would you prefer to work and build on a proven, and well understood, sustainable resource?” In the next article we look at the occurrence of groundwater as well as the legal environment and recent legislation changes in South Africa.
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