Water, energy and sustainable economic development in South Africa

The interaction between macroeconomics and sustainable development is important to all countries. This relationship is of particular concern to developing countries where the economic and natural resource bases are often more closely intertwined than in industrialised nations. A research programme for investigating these issues in South Africa was initiated by the Macroeconomics Programme Office of the World Wide Fund for Nature (Washington, DC, USA), funded with a grant from GTZ (Deutsche Gesellschaft fur Technische Zusammenarbeit). It was carried out by a number of local research teams under the guidance of a broad steering committee and under the management of the Development Bank of Southern Africa. For the purposes of a manageable research project, two areas were selected where the South African economy and environment strongly interact - water and energy - together with a number of important economic sectors that use water and energy as key inputs in their production processes. The research examined macroeconomic and environmental interactions in these complexes of sectors, with particular emphasis on the effects of changing pricing and regulatory regimes for water and energy. This article presents and discusses first the analytical framework, followed by the results in each sector, and closes with some general policy conclusions with regard to the macroeconomy and the environment.