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Improving water pricing decisions through material flow cost accounting model: a case study of the Politsi Water Treatment Scheme in South Africa

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  • Michael Bamidele Fakoya

    (University of Limpopo)

  • Emmanuel O. Imuezerua

    (Vaal University of Technology)

Abstract

The challenge of water pricing by water treatment schemes is related to the inability of the traditional cost accounting method to provide enough water purification-related cost information to assist water scheme managers in making informed water management decisions. We adopted the material flow cost accounting (MFCA) model to capture water purification-related costs in highlighting inefficiencies in the water purification process and to adequately align other systems’ cost to the cost of water loss for effective water management decisions. We conducted a case study of the Politsi Water Treatment Scheme (PWTS) in South Africa to assist the management in making informed water management decisions by revealing inefficient processes, water loss volume and corresponding costs. Findings reveal that the water scheme is operating at a loss because of high water purification overhead costs. Furthermore, we found that the current input–output measurement approach used at PWTS is substantially inefficient in capturing water loss and water-related costs during purification. We recommend that the adoption of the MFCA model by Politsi should not be intended as a one-off project but should be gradually integrated into the existing system to realise consistent improvement in determining the volume of water loss and its related costs information for effective decision-making.

Suggested Citation

  • Michael Bamidele Fakoya & Emmanuel O. Imuezerua, 2021. "Improving water pricing decisions through material flow cost accounting model: a case study of the Politsi Water Treatment Scheme in South Africa," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(2), pages 2243-2260, February.
    • Handle: RePEc:spr:endesu:v:23:y:2021:i:2:d:10.1007_s10668-020-00672-7
    DOI: 10.1007/s10668-020-00672-7
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    References listed on IDEAS

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