EMAIL
PRINT
HOME CAREERS CONTACT US LOGIN
Day Zero Will Most Likely Be Avoided
7 February 2018 | SA Views | Dwaine van Vuuren
 


The City of Cape Town have today moved Day Zero to 11 May 2018. But this is based off a simple linear projection of the last two weeks’ consumption trend:

(Click image to enlarge)image1

In this exercise, we looked at consumption and rainfall figures of 2017 to see if something a little more sophisticated than a 2-week linear projection would yield any different results. We examined two scenarios, namely:

  1. Where we simply follow the rainfall and consumption pattern of 2017 for the remainder of the year, or
  2. If we continued to consume less than 2017 at the rate we currently have been doing (more likely outcome).

The two scenarios below peg "Day Zero", when the City switches the taps off to all areas except the CBD and informal settlements, at between 27 April and 19 May 2018.

image2

Although this is close to the City of Cape Town estimate, we need to caution that simple linear regression estimates could start proving less useful moving forward as clearly the historical consumption trend is not at all linear, especially in the lead up to April.

Our feeling is that we have reached the point of diminishing returns in trying to get city dwellers to save more. Month after month we consistently miss targets given by the City and even the large enforcement efforts over the last few months don’t seem to be making much of a difference.

Two successive water restriction escalations in February 2017 and late April 2017 reduced consumption by 25% from 800 million litres per day to 600 million litres per day, but since June 2017, even with further restrictions, enforcement, press and awareness programmes, we have hardly managed to make a meaningful difference:

image3

It is debatable if the new punitive tariffs (which should have been implemented a long time ago) will have an effect before Day Zero. These kick in for February usage, and you’re only going to receive your sticker shock in your March or April assessment, meaning your behaviour will only change for April, May usage - too late to make a difference. For now, we are merely relying on the fear of punitive tariffs to make a difference to avoiding Day Zero, not the punitive tariffs themselves. Also, most of the augmentation programmes kick in after April - making it dangerous to rely on them to avoid Day Zero.

This is not to say that Cape Town citizens have not cut back their usage. In fact, Cape Town water consumption reduction is world-class, given that we have almost halved overall water consumption from an average 1,100 million litres per day to 550 million litres per day - all the while with no new water infrastructure and massive urbanisation, semigration and massive increases in tourism numbers. Our point is that to expect massive savings from further cutbacks is unrealistic, especially as a long-term solution. We have played this card already. The massive savings efforts are demonstrated below:

image4

The big wildcard here is going to be agriculture restrictions. This is the only way to make a difference given the short time ahead of us. This usage is dictated by national government and not the local government, and has been way over budget for some months now, consuming over 50% of all water supplies in the Western Cape and not having consumed very much less than the last five years’ average. At this point in time city dwellers have been effecting all the savings. It remains to be seen if agriculture cuts back to meet the usage target which they are about to exceed. If not, then the 19 May "Day Zero" date above is a reality given the assumption that not much more meaningful savings are likely to be attained from the City.

image5

If agriculture cuts back however, then this will accelerate the current water consumption savings rate we have assumed in our calculations, and we should easily see Day Zero move ahead into June/July where it needs to be. And this is why any projections being shown now don’t really mean anything, since they do not take into account agriculture’s likely water usage moving forward. We will only start knowing how agriculture will contribute to savings toward the end of February.

Whilst savings and cutbacks in agriculture will make a huge difference, what about agricultural contribution to additional water? Yes, you read that right - agriculture can actually inject more water into the system. Today, on Tuesday 11th, the fruit growers of the Groenland Water Users Association (GWUA) in the Western Cape will begin the release of between 7 to 10 million cubic meters of water from their privately built dams into the Palmiet river which will make its way to the Steenbras dam. This is huge, and at the current consumption rate of 547 million litres of water a day, will push Day Zero out by 12 to 18 days, which at current rates moves Day Zero from 19th May to between 31st May and 6th June.

So it’s the agricultural savings and additional contributions to water that are likely to save the day - not further massive reductions in city-dweller usage.

We have no doubt we will probably avoid "Day Zero" by the skin of our teeth. But then, if rainfall patterns do not improve, we are really in trouble, and the next phase of our challenge begins.

The fact of the matter is that, despite booming population growth and mass urbanisation, the national government has been more interested in focusing entire ministries on procuring nuclear power against a backdrop of excess electricity than investing in water infrastructure against the backdrop of dwindling supplies.

This problem is perhaps limited to the Eastern and Western Cape for now, but our national water supplies are drying up too. This is a classic case of a lack of long-term planning at the national government level that got us into the electricity crisis a few years back. You would think we had learnt our lesson by now. Catch me once, shame on you. Catch me twice, shame on me.

To view if your house, street or neighbours are meeting the water restriction levels, go to this water useage map https://citymaps.capetown.gov.za/waterviewer/


Dwaine
Dwaine van Vuuren
Retail-side Research
RecessionAlert, Sharenet Analytics

Dwaine van Vuuren is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com (US based) and PowerStocks Research (now Sharenet Analytics) into companies used by hundreds of hedge funds, brokerage firms, financial advisers and private investors around the world. An enthusiastic educator, he will have you trading and investing with confidence & discipline.


Disclaimer:
The information contained in this article is for informational purposes only and must not be regarded as a prospectus for any security, financial product or transaction. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial issue. Investors should consider this research/article as only a single factor in making their investment decision. We recommend you consult a financial planner/advisor to take into account your particular investment objectives, financial situation and individual needs.

Share This Story

Send e-mail to for any enquiries or see Contact Details for phone numbers
Home   •   Terms & conditions   •   PAIA   •   Privacy Policy   •   Security Notice   •   Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.
© 2018 SHARENET (PTY) Ltd, Cape Town, South Africa