Cape Town residents’ willingness to pay for a secure and ‘green’ water supply

Abstract

The City of Cape Town experienced a serious drought between 2016 and 2018 which led to severe water shortages and concerns for the environment. This study took advantage of a period of unprecedented levels of awareness about water security in order to investigate households’ willingness to pay (WTP) for reliable water supply and their WTP to avoid environmental damages in securing this supply. Increasing the supply of water from dams and groundwater will ultimately impact on aquatic ecosystems, but alternatives are more expensive. We surveyed 248 households from 105 suburbs and used contingent valuation methods to investigate WTP for both secure and less damaging or ‘greener’ ways of supplying water. Depending on income level, households were willing to pay 63–127% more for their normal levels of consumption in order to have security of supply, and a further 35–68% more to ensure its environmental sustainability.  Based on the relationship between WTP for 7 income categories, the overall WTP for secure water supply under non-drought conditions amounted to some 2.8 billion ZAR/year, which is about 90% higher than pre-drought revenues.  Aggregate WTP for securing this supply using options that ensured the protection of the region’s rivers and estuaries was 3.3 billion ZAR. These results have an important bearing on water investment and pricing decisions over the longer term.