Costs of eutrophication at the Vaal River system : an integrated economic model

Abstract

Currently 35 per cent of the total water storage available in South African dams has deteriorated in water quality due to excessive nutrient loading. Eutrophication poses a significant threat to freshwater resources in South Africa. Although there are policies in place to deal with this threat, the problem of eutrophication still persists. The main goal of this study was to investigate the existence of tradeoffs between the different economic costs associated with eutrophication in the Vaal River System. This was done with the aim of understanding the water quality management policy implications that follow as a result of the existence of tradeoffs between the different economic costs associated with eutrophication in the Vaal River System. This study contributed to the understanding of the current and historic impact of eutrophication on the Vaal River System. Using Seemingly Unrelated Regressions (sample period 1996 – 2006), similar to De Villiers (2009) and Mostert (2009), this study revealed that the impact of eutrophication on property prices in the study areas was not discernible. This study further confirmed that eutrophication had an economic impact on agriculture and water treatment. Future research is necessary to estimate coefficients in the case of extreme eutrophication level changes. Estimation techniques such as System Wide Dynamic Modelling, which combines traditional data and expert opinion, can capture the impacts of extreme eutrophication level changes.