Water Scarcity, Policy Responses and Gender Inequality: Evidence from South Africa

In South Africa, climate change and rising demand are projected to generate a water deficit of up to 17% by 2030. While the macroeconomic implications of water scarcity are increasingly recognized, less is known about its distributional and gendered effects, as well as the relative efficiency of alternative policy responses. Using a CGE-microsimulation framework, this paper evaluates the socio-economic and gendered impacts of increased water scarcity in the country and of water management policies aimed at mitigating its effects, such as improvements in water-use efficiency, expansion of water supply through public investment, and water pricing reforms. The results show that increased water scarcity reduces economic activity, increases unemployment, and worsens poverty, with disproportionately adverse effects on female-headed households. Policy responses mitigate these impacts but involve trade-offs.Efficiency measures emerge as the most inclusive option, reducing price pressures and poverty. In contrast, supply-side policies stimulate growth but increase public deficits and consumer prices, thereby exacerbating poverty and gender inequalities. Pricing reforms have more limited effects. These findings highlight the importance of integrating distributional and gender considerations into water policy design.