DIRECTORATE OF INSTITUTIONAL ESTABLISHMENT EASTERN CAPE REGION BUSINESS CASE Volume 1: Main Report

Transcription

1 Draft Business Case Volume 1: Main Report 17 February 2014

2 DIRECTORATE OF INSTITUTIONAL ESTABLISHMENT EASTERN CAPE REGION BUSINESS CASE Volume 1: Main Report TITLE: Establishment And Development of a Catchment Management Agency in the Mzimvubu To Tsitsikamma Water Management Area PROJECT NO: PREPARED BY: AJ Wilson & Associates International Supported by: Zwelibanzi and Associates REPORT STATUS: Draft DATE: 17 February 2014 SUBMITTED BY PROFESSIONAL SERVICE PROVIDER TEAM Adrian J Wilson Pumla Titus Project Director Project Leader APPROVED BY DEPARTMENT OF WATER AFFAIRS PumzaGasa-Lubelwana SiziweBlie Director: Institutional Establishment CMA Project Manager DATE: DATE:

3 Table of Contents List of Tables... iv List of Figures... iv Abbreviations... v Glossary of Terms... vi Acknowledgements... viii 1 Introduction Description of Water Management Area Location Municipalities Located within the CMA Area Climate Temperature Rainfall Socio-Economic Characteristics Population Economic Activity Water Availability, Requirements and Reconciliation The Mzimvubu to Mbashe ISP Area Amatola to Kei ISP Area Fish to Sundays ISP Area Tsitsikamma to Coega ISP Area Water Resource Related Challenges in the Mzimvubu to Tsitsikamma WMA Strategic Motivation Water as a Finite Resource Integrated Water Resource Management in the South African Context Management According to Hydrological Boundaries Principle of Subsidiarity Developmental / Empowerment Role Financial Viability of the CMA A Framework for CMA Establishment Principles Legal Basis Evolution of the CMA Status of the Mzimvubu to Tsitsikamma CMA Corporate Form Legal Nature of CMA A Case for Devolution Appropriate Corporate Form Departmental Programme or Dedicated Business Unit Public Entity vs. Business Enterprise Associated Attributes of the Public Entity Functions of the CMA Introduction i

4 5.2 Delegation vs. Assignment Delegation of Functions Phased Transfer of Functions Phase 1: Developing Relationships and Legitimacy Phase 2: Building Capacity and Consolidate Phase 3: Fully Functional and Responsible Authority Considerations for the Delegation Process Outsourcing or Development of a Technical Support Pool Implications for DWA Structure and Functions Organisational Arrangements Organisational Goals Proposed Functional Structure of the Mzimvubu to Tsitsikamma CMA Office of the Chief Executive Water Use Management Water Quality Management Corporate Services Organisational Requirements Staffing Requirements Human Resource Considerations Transfer of Staff Grading and Remuneration Organisational Systems Financial Arrangements Source of Finance Water Use Charges and the Pricing Strategy Financial Support Flow of Capital Financial Systems Arrangements Financial Analysis CMA Establishment / Investment Costs CMA Operating Costs Projected Revenue Financial Support to the CMA Institutional, Governance and Co-operative Governance Arrangements Corporate Governance Principles CMA Governing Board Role of the CMA Board Board Membership Process for Appointment of Board Governance Committee Structures Finance and Audit Committee HR and Remuneration Committee Technical Committee Appointment of CEO Catchment Management Committees Mechanisms for Regulation and Oversight CMA Business Planning Financial Control ii

5 11 Change Management Internal Change Management Communication, Branding and Stakeholder Engagement Strategy Risk Risks During Pre-Establishment Risks During Establishment Risks During Operations Implementation Considerations Annexure A Powers and functions under the National Water Act to be performed by CMAs as initial, inherent or delegated / assigned functions, and functions to remain with Water Affairs Annexure B Water Resource Functions Remain With The Minister of Water Affairs iii

6 List of Tables Table 1: Municipalities within CMA Area 3 Table 2: Municipalities Partially within CMA Area 4 Table 3: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Mzimvubu to Mbashe ISP area (million m3/a) 6 Table 4: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Amatole to Kei ISP area (million m 3 /a) 7 Table 5: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Fish to Sundays ISP area (million m 3 /a) 7 Table 6: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Tsitsikamma to Coega ISP area (million m 3 /a) 8 Table 7: Legal Issues 17 Table 8: Accountability Relationships 18 Table 9: Governance Arrangements 18 Table 10: Financial Arrangements 18 Table 11: HR Arrangements 19 Table 12: Powers of the Entity 19 Table 13: Estimated Major Establishment / Investment Costs 42 Table 14: Estimated Operating Cost of the CMA 43 Table 15: Volume Data m3 (2013/14) 44 Table 16: Water Use Charges 44 Table 17: Adjusted WRM Charges Based on Capping Policy for Agriculture and Forestry 46 Table 18: Recovery / Under Recovery of CMA Costs 46 Table 19: Establishment and Operating Subsidies Required 46 Table 20: Risks During Pre-Establishment 56 Table 21: Risks During Establishment 57 Table 22: Risks During Operations 57 Table 23: Institutional Establishment 59 Table 24: Organisational Development 60 Table 25: Operationalisation 61 Table 26: Stakeholder Engagement and Capacity Building 62 List of Figures Figure 1: Map Showing Location of the CMA 3 Figure 2: Map Showing the Proposed Sub-regional Areas 29 Figure 3: High Level Functional/Geographic Structure of the Mzimvubu to Tsitsikamma CMA 30 iv

7 Abbreviations AC - Advisory Committee BCM - Buffalo City Metro BCWG - Business Case Working Group BEE - Black Economic Empowerment CMA - Catchment Management Agency CMF - Catchment Management Forum CSIR - Council for Scientific and Industrial Research DC - District Council DM - District Municipality DWA - Department of Water Affairs DWAF - Department of Water Affairs and Forestry EC - Eastern Cape EFR - Environmental Flow Requirement ER - Environmental Reserve GB - Governing Board HA - Hectares ISP - Internal Strategic Perspective IWRM - Integrated Water Resources Management KZN - KwaZulu-Natal MAP - Mean Annual Precipitation MAR - Mean Annual Runoff NC - Northern Cape NGO - Non-government Organisation PE - Public Entity PSP - Professional Service Provider RO - Regional Office RPF - Resource Poor Farmer SP - Selection Panel ToR - Terms of Reference WAI - Wilson and Associates International cc WMA - Water Management Area WSA - Water Services Authority WSDP - Water Services Development Plan WUA - Water User Association v

8 Glossary of Terms Alien plants - plants not indigenous to (not found naturally in) South Africa Anthropogenic - pertaining to the scientific study of the origin and development of human beings Aqueduct - artificial pipe or channel for conveying water Aquifer - any rock formation-containing water in recoverable quantities Bacteriology - the study of bacteria; a class of micro organisms that is often parasitic, agents in putrefaction and the cause of many diseases Biotic - pertaining to living organisms Catchment - the area from which a river is fed i.e. the area draining into a river Conurbation - dense cluster of neighbouring towns considered as a single unit in some respects Demography - the study of population Ecological Status Classification - a system developed to define the ecological health of a river Ecological - related to the study of plants, animals, peoples and institutions in relation to their environment Effluent - liquid industrial waste or outflow from a sewer Environmental Reserve - the volume and pattern of water releases required to maintain the health of ecological systems associated with a river Estuarine - relating to the wide lower tidal part of a river Faecal - emanating from human or animal excrement Genera - group consisting of closely related species Hydrogeology - the branch of geology dealing with groundwater Hydrology - the study of water resources in land areas Impoundment - in this context, a reservoir of water Institution - an organization established for some objective Invertebrate - collective name for all animals without a backbone Jurisdiction - extent of power or area over which authority extends Nutrients - in this context, chemical compounds in water, which sustain and feed plants; normally nitrates and phosphates emanating from fertilizers and detergents Riparian - in the floodplain of a river or stream Runoff - that part of rainfall, which finds its way into watercourses Social Reserve - the basic water requirement set aside for human consumption based on 25 litres per capita per day Socio-economics - study of the relationship between economics and social factors Statutory - enacted or recognized by statute Stochastic - statistically random Stratigraphy - geological study of rock strata and their succession Taxonomy - classification or its principles e.g. classification of animals or plants vi

9 Topography - the detailed study, description or features of a specific area Trophic - extent of nutrients in a water body Water Demand Management - a programme of measures undertaken to reduce the consumption of water vii

10 Acknowledgements It is always difficult to single out the contribution of individuals towards a document such as this as it is, essentially, a team effort. The authors would like nevertheless to acknowledge the inputs of the following people: Members of the Business Case Working Group for giving generously of their time to attend meetings and make inputs Numerous people in the DWA Eastern Cape Regional Office for providing the team with key information and insights The DWA Project Leader:Ms.SiziweBlie The DWA Eastern Cape Director of Institutional Establishment:Ms.PumzaGasa-Lubelwana viii

11 1 Introduction A key provision in the National Water Act of 1998 is for the of Catchment Management Agencies (CMAs). These entities are geographically based with their boundaries coinciding, as far as is possible, with river catchment boundaries. Ultimately it is foreseen that 19 CMAs will be established to cover the whole of South Africa. The broad purpose of CMAs is to manage water resources within their area of jurisdiction for the ultimate benefit of all stakeholders. The CMA process can conceptually bethought of as developing in four phases: Phase 1: Pre- The pre- phase primarily involves the development of a Business Case for the of the CMA. It includes development of a situational assessment for the catchment management agency s area, which is primarily a desk study based on existing information sources. It also includes a public participation process, which is an essential component defined in the National Water Act. These two latter requirements are captured in Volumes 2 and 3 of this Business Case. Phase 2: Establishment The process follows pre- and allows for the formal in terms of legislation. The Catchment Management Agency is listed as a public entity in the schedules of the PFMA and the Selection Panel process is completed to provide the structure of the Governing Board and suggest the organisations and institutions that should be approached for nominating Board members. The Governing Board is appointed by the Minister after receiving nominations. Initial set-up takes place to ensure that the institution has financial controls in place. Phase 3: Organisational Development During this phase the Governing Board will establish its Board Committees. The CEO is appointed. The Human Resources and procurement policies and systems as well as operational and reporting systems will need to be finalised. Initial organisational design will be completed and the first Business Plan will be completed, noting that this needs to take place within 6 months of the Governing Boards inaugural meeting. Phase 4: Functional Development This phase sees the appointment of the first line managers and subsequently secondment of staff from the Regional Office to the CMA. Thereafter, CMA staff will be appointed with careful consideration to ensure that these cannot be filled by staff transfers from DWA. The CMA will then develop its first comprehensive business plan and start to perform its initial functions. This document, Volume 1, sets out the Business Case for the of the Mzimvubu to Tsitsikamma Catchment Management Agency. The Business Case has been developed to facilitate approval by National Treasury and the Minister of Water Affairs for the of a new public entity. This report is structured as follows: Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Description of the CMA area Strategic Motivation for a New Public Entity Corporate Form Functions of the CMA Organisational Arrangements Organisational Requirements / Human Resources AJ Wilson and Associates International 1

12 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Financial Arrangements Institutional, Governance and Co-operative Governance Arrangements Regulation and Oversight Change Management Risk Management Implementation Considerations Volume 2 of the Business Case is the Situational Assessment. Volume 3 is the report on the Public Participation Process followed in developing the Business Case. AJ Wilson and Associates International 2

13 2 Description of the Water Management Area 2.1 Location The Mzimvubu to TsitsikammaCatchment Management Agencycovers the majority of the Eastern Cape, and includes portions of KwaZulu-Natal, Western Cape and the Northern Cape, as shown in Figure 1. Figure 1: Map Showing Location of the CMA The Catchment Management Agency area incorporates two former Water Management Areas i.e.: Water Management Area 12 - Mzimvubu to Kei (referred to below as the eastern half of the new WMA) Water Management Area 15 Fish to Tsitsikamma (referred to below as the western half of the new WMA) 2.2 Municipalities Located within the CMA Area Table 1: Municipalities within CMA Area DM Cacadu Local Municipality Kou Kamma Kouga Ikwezi Sundays River Valley AJ Wilson and Associates International 3

14 DM Local Municipality Blue Crane Route Makana Ndlambe Nelson Mandela Bay Metro Camdeboo Chris Hani Amathole OR Tambo Alfred Nzo Joe Gqabi Tsolwana Lukanji Emalahleni Sakhisizwe Engcobo IntsikaYethu Nxuba Nkonkobe Great Kei Ngqushwa Amahlathi Mnquma Mbashe Buffalo City King SabataDalindyebo Nyandeni Port St Johns Mhlonto Ngquza Hill Ntabankulu Umzimvubu Matatiele Elundini Table 2: Municipalities Partially within CMA Area DM Cacadu Chris Hani Chris Hani Joe Gqabi Alfred Nzo Local Municipality Baviaans InxubaYethema Inkwanca Gariep Mbizana Kwa Zulu Natal - Greater Kokstad LM Western Cape - Beaufort West LM Northern Cape - Ubuntu LM 2.3 Climate A more comprehensive assessment of the Climate is provided for in Volume 2, Section 6. AJ Wilson and Associates International 4

15 2.3.1 Temperature Climatic conditions vary significantly from west (Drakensberg mountain range) to east (Indian Ocean) across the CMA area. The mean maximum annual temperatures range between 33 to 35 o C in the west to 25 to 27 o C at the coast. Mean minimum temperatures range between -2 C for the northern central part of the CMA to 7 C along the coast. Maximum daily temperatures are experienced in summer over December and January and minimum daily temperatures in winter over June and July. Snowfalls on the Drakensberg Mountains between April and September have a significant influence on the climate of the eastern part of the CMA. Frost occurs in the inland areas from May to August Rainfall Rainfall is strongly seasonal in this CMA though this pattern is quite different in the eastern and western sides. On the eastern side, in excess of 80 % of rain occurs as thunderstorms during the period October to March. The peak rainfall months are December to February in the inland areas and November to March at the coast. Mean annual precipitation (MAP) ranges from in excess of mm in the Wild Coast area, near Storms River in the south west and adjacent to the Drakensberg in the northeast, to less than 200 mm in the Karoo in the west. On the western side of the CMA, there is a more even distribution of rainfall between the summer and winter. 2.4 Socio-Economic Characteristics Population The total population of the CMA area is approximately 6.36 million people, with the majority living in the eastern half. The largest urban areas are the Nelson Mandela Metro, Buffalo City Metro and King SabataDalindyebo Local Municipality with populations of approximately million, million and million people respectively. The population density figures closely mimic the population figures with the eastern half relatively densely populated with over 26 people per square kilometre, and the western half mostly between 0 and 10 people per square kilometre. People living in the western half predominantly live in urban areas (60% and above classified as urban dwellers). People living in the eastern half predominantly live in tribal or farming environments. These estimates are based on the 2011 Census Data per Municipal Area and a detailed breakdown as well as the maps is provided in Volume 2, Section Economic Activity The household income levels in the CMA area are relatively low. The average per household income for the entire CMA is R per annum, which is far lower than the national average household income of R per household per annum. The highest average incomes are found in the two Metros followed closely by Makana, Kouga and Camdeboo Local Municipal areas. Nelson Mandela Bay Metro is the only area that exceeds the national average household income, and just marginally at R vs the national average of R per annum. AJ Wilson and Associates International 5

16 2.5 Water Availability, Requirements and Reconciliation Approximately eight to nine years ago, the Department of Water Affairs commissioned studies known as Internal Strategic Perspectives (ISPs). The object of these was to capture the state of the art in terms of water resources management in each of the Water Management Areas. The embedded knowledge of senior DWA water resources staff was a key input in this. The intention was to provide a critical input into Catchment Management Strategies, which are required to be developed by Catchment Management Agencies, once they were in place. Although the ISPs are now slightly out of date, they capture a wealth of information and cover aspects such as features of the area, demography, land use, economics, institutional factors, infrastructure and of course the water resources aspects, including availability, demand, water quality and groundwater. They also looked at future projections in terms of demands, infrastructure development and proposed so-called ISP strategies in each case. These studies were substantial and in order to be able to ensure ease of presentation, they were split into two for each of the two previous Water Management Areas. As a result there are four applicable ISPs for the Mzimvubu to Tsitsikamma WMA. They are discussed briefly below The Mzimvubu to Mbashe ISP Area There is relatively little development of water resources infrastructure in this area with the main one exception being the Mthatha Dam on the Mthatha River. There is an irrigation transfer between the Kei and the Mbashe catchments. There are a number of small rivers in the Pondoland area, which are in excellent condition but their potential for development is very limited. A summary of the reconciliations in the area is shown Table 1: below for the year This indicates that this area has surplus water available and that is without any further development of significant water resources infrastructure. The potential for this on the Mzimvubu is huge however it will obviously depend on more detailed feasibility assessments, which are currently underway. Water quality in the area is generally good with the exception of the Mthatha River below Mthatha. At the time, it was noted that more detailed work was necessary on environmental flow requirements in view of the high quality nature of some of the estuaries and rivers. It was identified that there is forestry potential in the upper Mbashe and Mzimvubu and in the Pondoland area. Table 3: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Mzimvubu to Mbashe ISP area (million m3/a) Available water Water requirements Balance ISP Subarea Local Local yield Transfers in Total Transfers out Total requirements Mzimvubu Pondoland Mtata Mbashe Totals Amatola to Kei ISP Area The main rivers within this area are the Buffalo, Keiskamma, Nahoon and the Great Kei. The population of this area as of 2004 was estimated to be approximately 1.76 million. The main economic activities are manufacturing, agriculture, forestry and tourism. The area includes the major urban area of Buffalo City, including Kingwilliamstown, Bisho and Mdantsane. There is significant infrastructure in this area consisting of a series of dams on a number of rivers to supply the Buffalo City area. There is also a water transfer scheme out of the ISP area from the Ncora Dam to the Mbashe catchment for use in the Ncora Irrigation Scheme. The Natural Mean Annual Runoff in the area is million m³ per annum. The largest use in the area is for irrigation at 51%, with urban use AJ Wilson and Associates International 6

17 accounting for 43%. There is also a significant area of afforestation. Groundwater use is relatively small. A summary of the overall water balance is shown in the Table 1 below. This illustrates that, as it stands, this area has surplus water resources available. The Amatola catchment is currently highly developed and regulated, whereas there is limited infrastructure development in the Kei. Rivers such as the Buffalo and Nahoon have suffered quite significant pollution due to urban impacts. The quality in the Kei is better although there is quite significant soil erosion. In this ISP area the impact of alien wattle plantations is significant and will need to be addressed. The pristine nature of some of the rivers and estuaries is also identified as a critical issue that will need to be looked at in more detail when the ecological reserves are analysed. Table 4: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurancefor the Amatole to Kei ISP area (million m 3 /a) Available water Water requirements Balance ISP Subarea Local Local yield Transfers in Total Transfers out Total requirements Amatole Kei Totals Fish to Sundays ISP Area The most critical component or characteristic of this system is the Orange-Fish-Sundays Water Supply System, which primarily supports irrigation in the Fish and Sundays catchments but also provides a further water transfer into the Nelson Mandela Bay area. Generally speaking this area is water-scarce and the underlying geology also mitigates that water quality tends to be poor. The main rivers are the Great Fish, Sundays, Bushmans, Kowie and Kariega. The population of this area is approximately Most cultivated land is irrigated and is located along the Great Fish and Sundays Rivers. There are also significant areas involved in game farming. The area is particularly known for citrus as well as vegetables, pineapples, chicory and some dairy. Almost 60% of the world s mohair is produced in this area. There is limited industry in the area and this is mainly linked to agriculture in some form. The main infrastructure consists of the Grassridge and Darlington Dams, together with various balancing dams, weirs, canals and tunnels. The Lower Fish Scheme transfers Orange River water to Grahamstown and to irrigators along the Great Fish River. The total yield of this area is estimated to be 757 million m³/annum. There is high salinity in the lower reaches of many of the rivers including the Bushmans, Kariega, Kowie, Sundays and Fish. Groundwater is widely used in the drier areas. Total water use of the area is estimated at 759 million m³ per annum. A summary of the reconciliation of water requirements and availability for the year 2000 at 1:50 year assurance of supply is shown in Table 2 below. This shows that the area is approximately in balance. Some 38 million m³ has been marked for Resource Poor Farmers. To date this has not been taken up. Although there is limited capability within this area for water resource development there is the possibility of some localised new schemes in the Kat and Koonap catchments. Table 5: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Fish to Sundays ISP area (million m 3 /a) ISP Subarea Local yield Transfers in Available water Water requirements Balance River losses Total Local requirements Transfers out Fish Albany Coast Sundays Total AJ Wilson and Associates International 7

18 ISP Subarea Local yield Transfers in Available water Water requirements Balance River losses Total Local requirements Transfers out Totals Total Tsitsikamma to Coega ISP Area This area extends slightly into the Western Cape Province. It includes the Nelson Mandela Bay Metro which clearly dominates the economy of the area, though the addition of the Coega Deep Water Harbour is adding further economic stimulus to the area. Water supply to the area is from the socalled Algoa Water Supply System which consists of a series of dams and related transfer infrastructure. This is also supplemented by water from the Orange-Fish Transfer Scheme. Most of the inland area has a typically dry Karoo climate where rainfall can be as little as 100 or 150 mm per annum, while some of the coastal areas to the west can reach mm per annum. Important conservation areas are the Baviaanskloof area and the Tsitsikamma National Park. The estimated population in the area as of 2004 was just over a million. There is some significant irrigation in the Langkloof from the Gamtoos Water Scheme. The Tsitsikamma coastal area is heavily forested. Other dams in the area are the Churchill and Mpofu Dams on the Kromme River, the Bergvlei Dam on the Groot River, the Kouga Dam on the Kouga River and the Groendal Dam on the Zwartkops River. Groundwater is widely used in the hinterland areas of the Karoo. Water quality varies dramatically with the water in the Tsitsikamma area generally being very good, and poor in the Seekooi River and the middle and lower reaches of the Zwartkops. The reconciliations of water resources for the year 2000 for a 1:50 year assurance is shown in Table 3 below. This shows that the area as a whole is approximately in balance though this could result in a situation where there is no water available for future growth. This will be addressed by a combination of strategies including water conservation and demand management, reuse of sewerage effluent, increased groundwater development, possibly water trading and an increasing volume of transfer water via the Orange-Fish Scheme. The ISP sets out a number of approaches and strategies for specific catchments. Most of these are under stress and a number have quite serious water quality challenges, including the Zwartkops River in particular. Alien afforestation was identified as a significant problem in a number of the catchments. As a number of the systems are under stress, compulsory licencing was also proposed in a number of cases. Table 6: Reconciliation of Water Requirements and Availability for the year 2000 at 1:50 year Assurance for the Tsitsikamma to Coega ISP area (million m 3 /a) Available water Water requirements Balance ISP Sub-area Local Transfers in Total Local requirements Transfers out Total yield Groot Kouga-Gamtoos Subtotal Algoa Coast Subtotal Kromme-Seekoei Tsitsikamma Coast Subtotal Totals AJ Wilson and Associates International 8

19 2.6 Water Resource Related Challenges in the Mzimvubu to Tsitsikamma WMA By South African standards, this WMA is relatively well endowed with water resources, however this is all in the eastern part. As a result, the instances of water shortages in drought periods occur primarily in the western part of the WMA. The surplus water resources create potential opportunities for development on the eastern side if feasibility can be demonstrated. Of the current usage in the WMA, the most significant by far is agriculture via irrigation. The next largest use is by municipalities. There is quite extensive water resource infrastructure development in the western side of the WMA but little in the eastern side. The infrastructure in the west is understandably primarily focussed on the Nelson Mandela Metro but also includes very large irrigation schemes in the Fish and Sundays rivers, supplied via the very large Orange Fish scheme. The socio-economic analysis reveals that this WMA is one of the most disadvantaged in South Africa, with average income being below the national average. There are also significant disparities within the WMA in terms of income, education and access to services, as is common in many parts of South Africa. Most of the population is located in rural and peri-urban areas. The most impoverished areas are generally situated in rural parts of the WMA but certain peri-urban areas also have significant problems. The National Water Act dictates that addressing past inequities must be a primary consideration of CMAs. In addition, it is relevant to note that the areas in question are often the most vulnerable with respect to water quality problems, the most susceptible to flooding, the least well endowed with safe sanitation (resulting in severe faecal pollution) and the most susceptible to poor agricultural practices. All of these facts emphasize the importance of these communities being represented on appropriate structures and also being the focus of significant upliftment and capacity building efforts. With respect to groundwater use, the first impression is that the prevailing geology of the WMA is not favourable. This is however misleading, as there is an extensive system of structural features such as dykes, joints and faults that have good potential for groundwater. Generally speaking, groundwater is underutilised in the area, which creates an opportunity for more effective use of this resource in the future, particularly in the rural areas. Taken as a whole, water quality in this CMA is not a serious problem, primarily due to dispersed settlement and the sheer size of the catchments. There are however localised problems as a result of major urban settlements. This impacts on rivers such as the Umtata, the Buffalo and the Zwartkops. This could lead to localized eutrophication problems. The fact that many rural communities are directly reliant on raw water from the rivers and streams emphasizes the importance of improving this situation. There are also high salinity problems with a number of rivers on the western side primarily due to the local geology, which is aggravated by large irrigation schemes. The most serious form of pollution in the CMA is high turbidities as a result of erosion of soils. This has reached very serious proportions in the rivers on the eastern side. The cause of this is primarily over settlement and poor agricultural practices, which are exacerbated by the steep catchments and severe storms that occur. Another serious problem in the CMA is the extent of alien plant infestation though this problem requires further assessment and analysis to determine the full scope and implications. The institutional environment is complex. Not only is there a large range of institutions involved but also there continue to be very significant capacity challenges. Nowhere is this more evident than at local government level. There are a number of well-established Water User Associations and these can potentially play an enhanced role in catchment management in future. The presence of suitable institutions is extremely important as it relates directly to the capacity within the area to address catchment management in a meaningful way. The fledgling CMA will inevitably need this capacity to ensure that it can execute the challenges and activities that it will be facing. In addition, the nature of AJ Wilson and Associates International 9

20 the CMA model relies implicitly on a cooperative and collaborative approach so the capacity of the various potential partner institutions is of considerable interest. It is also of note that there does appear to be a fair degree of consensus around the need for catchment management, even though there is some concern with respect to the precise role and functions of the new institution. There is a medium sized base of water users in the WMA. The process for registering these is largely complete. The history of cost recovery in the area is patchy. The large institutions generally have reasonable track records but many local authorities are experiencing serious problems. TheMzimvubu to Tsitsikamma Situational Assessment highlighted that there are significant gaps in the information regarding the WMA. A programme to address this will be important for the new CMAas informed decision-making will not be possible without it. Key gaps include the following: Comprehensive environmental reserve determinations for important rivers More extensive water quality data in general More detailed evaluation of the extent and impact of alien plant infestation The extent and impact of erosion problems generally Ecological status classification The status of wetlands The water resources of the eastern part of the Eastern Cape have been identified by the Provincial Government as having potential for development in the Provincial Spatial Development Framework. This is because it could provide the stimulus for growth in sectors such as agriculture, wet industries and tourism. This again emphasizes the importance of protecting the water resources of the Province and managing them as effectively as possible. The full potential of the WMA will not be able to be realised if the condition of its water resources continues to deteriorate. Following on from the previous paragraph, development of the water resources of the Mzimvubu has been as a Presidential Priority Project. To respond to this, DWA has commissioned a study to look at the feasibility of various dam sites on the river. This study is nearing its conclusion and will make recommendation regarding the preferred site. The proposed scheme will incorporate water supply, irrigation and hydroelectric components. AJ Wilson and Associates International 10

21 3 Strategic Motivation The National Water Policy for South Africa and the National Water Act were developed on the basis of extensive public participation and considerable international expertise and advice. This gave rise to the recommendation to follow international good practice in the decentralisation of water management and the of water management institutions based on hydrological rather than political boundaries. In the development of the National Water Resources Strategy (2004), a process that included extensive public participation, 19 water management areas were defined for the country. It was envisaged that a Catchment Management Agency (CMA) would be established in each of these. To date, there are two functional CMAs, one in the Inkomati water management area, and one in the Breede-Overberg CMA. Six others were formally established on paper however this did not include either of the two former CMAs now incorporated into the Mzimvubu to Tsitsikamma WMA. The Mzimvubu to Tsitsikamma CMA is now proposed for. As has been mentioned in the introduction, the intention is to present strategic considerations for the of the Mzimvubu to Tsitsikamma CMA. The following sections set out some of the reasoning behind the need to establish a CMA to manage water resources in the Mzimvubu to Tsitsikamma water management area. 3.1 Water as a Finite Resource South Africa is a water scarce country, with less than 1700 m 3 per capita water available per annum. Even in areas where water is relatively bountiful, there is serious inequity in distribution and availability. Some of the particular challenges facing water management in the Mzimvubu to Tsitsikamma catchment management area have been highlighted in the previous section Integrated Water Resource Management in the South African Context Integrated water resource management (IWRM) has been internationally recognised as the most appropriate paradigm for managing water. The principles of IWRM are enshrined in the White Paper on a National Water Policy, and the National Water Act. Some of these aspects are highlighted below Management According to Hydrological Boundaries Water is best managed in an integrated manner, taking cognisance of the linkages between land and water, between groundwater and surface water, and between the social and natural environment. Water is most easily managed within the natural boundaries of catchments (within which water drains into one river system) allowing for integrated management of that system. The of a CMA allows for the management of scarce water resources according to hydrological rather than political boundaries, as is best practice internationally. The National Water Policy also recognises the protection of aquatic ecosystems as critical to ensuring sustainable delivery of resource-related goods and services. Management of water resources according to hydrological boundaries will enable more effective and integrated protection of river systems Principle of Subsidiarity As a social and economic good, water is critical to peoples lives and livelihoods. Accordingly, to ensure equity and sustainability water resource management must be based on the principle of subsidiarity (i.e. taking decisions at the lowest appropriate level) such that all relevant stakeholder AJ Wilson and Associates International 11

22 groups are actively involved in the decision-making process. This is also important in the effective functioning of a democratic developmental state Developmental / Empowerment Role International best practice shows that decentralised institutions often have a greater developmental and empowerment role than centralized institutions. Decentralised institutions have a greater ability to respond to developmental needs and opportunities on the ground as a result of reduced bureaucracy and smaller, more effective organizations. Additionally, by involving stakeholders in the decision-making process and the management of the resource, decentralized water resource management will contribute significantly to the redress of historical inequities and support the equitable allocation and effective management of this limited resource Financial Viability of the CMA This issue will be discussed in much greater detail later in this document, but effective water resources management is premised on efficient and effective institutions with the appropriate resources to deliver. The financial viability of institutions is crucial to ensure adequate resources in the delivery and sustainability of these functions over the longer term. Ensuring financial viability and good governance requires strong financial systems and controls, linked to the requirements of the Public Finance Management Act (Act 1 of 1999) and Treasury Regulations, amongst others. Financial viability refers to the requirement for the CMA to be financially sustainable in the long-term, taking into account all possible sources of funding, which include, in particular, revenue from water use charges and fiscal transfers from DWA. 3.2 A Framework for CMA Establishment Principles Reform of the South African public service following the new dispensation to i) service delivery and adoption of the principles of Batho Pele and ii) transformation of the public sector to ensure employment equity and redress of historical inequality, informs an institutional, organisational and cultural transformation from the way in which water resources were managed in the past. Chapter 1 of the National Water Act (Act 36 of 1998) sets out equity,sustainability, efficiency and representivityas guiding principles in the protection, use, development, conservation, management and control of water resources in South Africa, as captured in the slogan of the White Paper1: some, for all, forever. This implies a shift in water resource management to an approach based on integrated water resource management (IWRM), stakeholder involvement/ participation in decision-making (empowerment of citizens), and cooperative governance. Moreover, institutional change is indicated; water management institutions must develop a service delivery orientation, which must reflect a customer approach to the business of water resources management. These principles of institutional reform, sustainability and equality, in conjunction with the philosophy of social and economic development and poverty eradication, are reflected in the National Water Act (NWA) as a process of decentralisation and subsidiarity. This implies an organisational and institutional change process within the Department of Water Affairs (DWA), resulting in the formation of catchment-based water management institutions. Associated with, and inherent to, this process is the significant transfer of roles, responsibilities and functions from central government (DWA) to the Catchment Management Agencies (CMAs) as catchment-based organs of state Legal Basis Chapter 7 of the National Water Act makes provision for the progressive of CMAs and states the purpose of establishing a CMA is to assign or delegate water resource management to the 1 DWA White Paper on a National Water Policy for South Africa. Department of Water Affairs and Forestry, Pretoria, South Africa. AJ Wilson and Associates International 12

23 regional or catchment level and to involve local communities in the decision-making processes. The intention is for water resource management to:- - meet the basic human needs of present and future generations, - promote equitable access to water, - redress the results of past racial and gender discrimination, and - facilitate social and economic development. Broadly, the initial role of a CMA is articulated in the Act as:-i) managing water resources in a WMA, ii) co-ordinating the functions of other institutions involved in water related matters and iii) involving local communities in water resource management. Further functions are then to be assigned or delegated to the CMA as it evolves. These functions and the phased development of the CMA are detailed below and captured in detail in Appendix A and B. The Act requires the progressive development of a national water resource strategy 2 (NWRS) that provides the framework for water resource management for the country as a whole, and guides the of CMA institutions to manage water resources at a regional or catchment scale 3 in defined water management areas 4 (WMA). In addition, the Act requires for the progressive development of a catchment management strategy (CMS) for each WMA by each CMA. This CMS must be in harmony with the NWRS 5. Both the NWRS and CMS must engage stakeholders and ensure participation Evolution of the CMA The principles guiding reform and transformation in resource management, and the legal requirements of decentralisation and subsidiarity contained with the NWA, imply a process of institutional change in the management of water resources. This process moves the responsibility for resource management from DWA to the CMA as the catchment-based organ of state. A number of stages can be identified that describe this process of shifting responsibilities and the evolution of the CMA. The first stage following the of the CMA is about creating legitimacy within the WMA,during which relationships are developed between the CMA, other water management institutions (WMIs) and stakeholders in the WMA. The CMA undertakes the critical role of advising on, and coordinating water resource management, and developing the catchment management strategy (CMS). This stage is about building relationships, and establishing credibility and legitimacy within the WMA. The CMA assumes a number of initial functions, as defined in Section 80 of the NWA: - to investigate and advise interested persons on the protection, use, development, conservation, management and control of the water resources in its water management area; - to develop a catchment management strategy; - to co-ordinate the related activities of water users and of the water management institutions within its water management area; - to promote the co-ordination of its implementation with the implementation of any applicable development plan established in terms of the Water Services Act, 1997 (Act No. 108 of 1997); and - to promote community participation in the protection, use, development, conservation, management and control of the water resources in its water management area. In order to perform these functions, the CMA has some inherent powers under the NWA:-i) the powers of a natural person of full capacity (Section 79(1)), ii) a range of powers related to planning 2 Section 5(1) of the NWA 3 Section 6(1)(j), (k) and (l) of the NWA 4 Section 6(1)(c) of the NWA 5Section 9(b) of the NWA 6 Section 5(5)(b) and (c) and Section 8(5)(b) and (c) of the NWA AJ Wilson and Associates International 13

24 and conducting the routine administrative and organisational business of the CMA (Schedule 4) and iii) powers to make and recover charges in terms of the Minister s pricing strategy for water use charges to cover their costs in executing (at least) the initial functions (Section 84(1)). Following the legitimisation of the CMA,a phase of consolidation is entered into during which the CMA is focused on building capacity and strengthening the organisation to undertake its water resource management functions. This implies strengthening of systems within the organisation, including fiduciary management and governance of the CMA, and the of stable information and implementation systems. Additional water use management functions are delegated to the CMA. Proto-CMA staff, possibly seconded to the CMA during the legitimisation phase, are now transferred to the CMA as a coherent business unit, with the requisite infrastructure and budget. The CMA (led by the Governing Board and CEO) should compile its comprehensive business plan. This must also link to the DWA timeframes for establishing water use charges (under the Pricing Strategy). The final phase during the evolution of the CMA is the delegation or assignment of responsible authority functions 7 as contemplated in sections 73 and 63 of the National Water Act. The majority of water resource management and implementation roles and responsibilities are now seated in the CMA, which assumes the role of Responsible Authority. The relationship between the CMA and DWA is well established, and the systems and processes within and between these institutions are stable. Under Section 73(1)(a) of the NWA, the Minister can assign the powers and duties of a responsible authority to a CMA. The most significant of these are the powers and duties related to authorisation of water use and the issuing, review and amendment of licences. In Section 63 of the NWA, there is provision for the delegation of powers and duties vested in the Minister 8, rather than assignment. However, the Minister is prohibited from delegating certain powers under Section 63(2)9. In addition to providing the legal basis to the CMA performing its functions in its WMA, the NWA also allows the CMA to perform functions outside its WMA, under the condition that this does not impinge on the execution of its functions or detrimentally affect other water management institutions Status of the Mzimvubu to Tsitsikamma CMA The process to develop the business case in this WMA only commenced in the first part of Prior to that and unlike other WMAs, no significant work had been undertaken on the formal CMA process. This status also applied to the two former WMAs making up this new WMA. This business case process therefore represents the first formal step in the process for this CMA. Following the conclusion of the development of the business case it will gazetted for public comment. Once comments have been addressedadequately, then the process of selecting suitable individuals to serve on the new governing board will commence. 7 The powers and duties of a responsible authority are described as:-i) issue general authorisations and licences in respect of water use subject to conditions, ii) extend the licence period under certain conditions, iii) review licences at periods stated in the licence and make amendments to its conditions or renew it, iv) waive the need for a licence if the water use is authorised under another law, v) promote one-stop shop licensing, vi) require license applicants to provide security for licence obligations, vii) require registration of existing lawful water uses, viii) require an existing water user to apply to verify its water use, ix) undertake compulsory licensing where there is water stress, x) suspend or withdraw entitlements to use water and xi) enforce licence conditions. 8 Some additional powers and duties may be delegated to the fully-functional CMA, as described in Schedule 3 of the NWA:-i) power to manage, monitor, conserve and protect water resources and to implement the CMS, ii) of water-use rules, iii) of management systems, iv) require alterations to waterworks and may direct users to terminate illegal use and v) temporarily control, limit or prohibit the use of water during periods of water shortage. 9 i) the power to make a regulation, ii) the power to authorise a water management institution to expropriate under Section 64(1) of the NWA, iii) the power to appoint a member of the Governing Board of a CMA and iv) the power to appoint a member of the Water Tribunal. AJ Wilson and Associates International 14