Global water, energy and food resources are under enormous pressure. Over the next few decades, increases in population and consumption, as well as rapid urbanisation will exacerbate this pressure.

Historically, South Africa’s economic wealth and success can largely be attributed to the mineral wealth of the country, combined with under-priced natural resources. Over the past 100 years, the growth of the South African economy has been energy and resource intensive and based on the extraction of relatively cheap and accessible coal as the primary source of energy. However, the cost of the environmental damage has not been factored into the equation. Today, the threat of climate change is not only real but the effects can already be felt and climate change will have a direct impact on the availability of water resources globally.
As it stands, 10 of the 19 Water Management Areas (WMAs) have negative water balances, which essentially means that water consumption in these areas exceeds the ecological reserve amount that is required to maintain the functionality of the existing ecosystem.

In line with this, KPMG has research into what can be dubbed The Energy-Climate-Water Nexus, providing further insights on what the implications of water scarcity and water quality due to climate change influences for Southern Africa will be – particularly as addressing climate change becomes increasingly important globally.

Natural resources
Water, energy and food security are inextricably linked and will be fundamentally altered by the increasing effects of climate change.

There is no substitute for water. Water security is at the heart of the relationship between energy generation, economic growth, development and food security. It plays a crucial role in any economy, serving as an input to production and the basis for sustaining life. However, the price of water does not reflect the underlying value that we derive from the resource.

Climate change will have a direct impact on the availability of water resources globally. As a water-scarce country with relatively low average rainfall and high evaporation rates, this is of particular importance for South Africa. Only 8% of South Africa’s rainfall converts into river runoff, i.e. water that is accessible for consumptive use. Increased temperatures could result in increased evaporation, reducing the quantity of water available for consumption.

A recent Africa Earth Observation Network (AEON) report predicts that climate change implications for southern Africa could include:
• 70% reduction in runoff
• 50% increase in the frequency of drought occurrence
• 40% reduction in maize crop yields

Food security is highly dependent on the availability of water resources and certainty in its supply. Global volatility in food prices over the past few years is indicative of the future that awaits us as uncertainty of water supply increases. Increased demand for food leads to increased demand for water to produce food, as does the uncertainty of supply in relation to climate change and increasing global temperatures.

Figure 2 illustrates the dependence of both the agriculture and energy sectors on water resources, with irrigated agriculture accounting for 62% of total water demand in South Africa. Increased variability in water supply would have a large impact on the agriculture sector and thus on domestic food security. Small-scale farmers who rely on rainfall for irrigation would be particularly vulnerable to variability.

The energy sector is also a big consumer of water resources, accounting for 2% of water demand in 2000. South Africa’s dependence on coal-based energy also has significant implications. Power generation and mining use about 10% of water available in the country. As such, the consequences for water resources are twofold. Firstly, more reliance on coal-fired power stations increases our carbon emissions and overall water use. Secondly, continued coal mining will increase water pollution and the degradation of existing water resources and related ecosystems.

Water balances
Currently, 10 of South Africa’s 19 Water Management Areas (WMAs) have negative water balances. This essentially means that water consumption in these areas exceeds the ecological reserve amount required to maintain the functionality of the existing ecosystem.

Besides water scarcity, reduced water quality warrants consideration as it, too, could have significant social and economic implications. The AEON report highlights that the acid mine drainage derived from both coal and gold mining could be major drivers of a reduction in water quality over the next 15 years. More than half of the water deficit in South Africa predicted for 2025 could be the result of pollution generated from acid mine drainage. The report estimates that addressing the problem will cost about R360 billion (15%) of South Africa’s current GDP. This will be done through the construction of water treatment and desalination plants to deal with both quality and quantity constraints.

In an attempt to mitigate the risks associated with climate change, South Africa will have to embark on a fundamental restructuring of its economy. This will require a transition from a reliance on ‘sunset’ industries (such as mining and other primary sector activities) toward ‘sunrise’ industries (some of which include renewable energy and the services sector) which will not only protect the environment, but could potentially enhance the country’s productivity through technological innovation.

The challenges and opportunities emerging from energy, climate change and water conservation are inseparable but, at the same time, poorly understood. Internationally, the focus has been on reducing carbon emissions. Little attention is paid to the link between a country’s approach to generating energy and the resultant carbon emissions levels. These in turn influence climate change and the consequent availability of water resources for industrial and consumer uses.

Holistic and integrated mitigation strategies to manage climate change and water resources will be fundamental to addressing the socio-economic and developmental constraints that we currently face.