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04 April 2019 | Story Leonie Bolleurs | Photo JohanRoux
Prof Chapagain  Inaugural
Prof Ashok Chapagain, Senior Professor in the Department of Agricultural Economics, recently delivered his inaugural lecture on the university’s Bloemfontein Campus. The title of his lecture was Counting Water: Simple yet Complex. From the left are: Dr Engela van Staden, Vice-Rector: Academic; Prof Ashok, Dr Frikkie Maré, Head of the Department of Agricultural Economics; and Prof Danie Vermeulen, Dean of the Faculty of Natural and Agricultural Sciences.

Virtually every economic sector, from agriculture, power generation, manufacturing, beverage, and apparel to tourism, relies on fresh water to sustain its business. Yet, water scarcity and water-pollution levels in river basins around the world are increasing due to growing populations, changing consumption patterns, and poor water governance.

These are the words of Prof Ashok Chapagain, Senior Professor in the Department of Agricultural Economics at the University of the Free State (UFS), who recently delivered his inaugural lecture on the university’s Bloemfontein Campus. The title of his lecture was Counting Water: Simple yet Complex.

He believes that in a world of increasing interconnectedness, equitable and sustainable resource management has become not only a local phenomenon, but also a global one. “The critical factors in managing these resources lie at both ends of the production and consumption chains. The interlinkages between agriculture, trade, economic, and energy policy and water-resources management must be understood,” he said.

Water footprint from farm to cup

The water footprint of a product is the volume of fresh water used to produce the product, measured over the various steps of the production chain. Water use is measured in terms of water volumes consumed or polluted, e.g. a cup of black coffee would take 140 litres of water as a result of water used in various processes, from the farm to the cup! 

Prof Chapagain said: “With the emergence of the water footprint concept, the public could for the first time see that the issue is not only related to direct water use in their houses, but also to their consumption of goods and services, such as food, fibre, and electricity. For example, a developed nation would typically state their water consumption data as around 100-200 litres per capita per day. This information is misleading, as it does not capture the massive amount of water needed to produce food, goods, and services consumed by the nation, which makes the daily water consumption a whopping 3 000-8 000 litres in these developed nations. Consumers, governments, and businesses are beginning to understand how their interests could be sustained in the long run, using this new approach to water-resource management.”

He also spoke about water as an economic enabler. According to him, harnessing the full benefit of water is constrained by three limits: hydrological limits, limits in production efficiency, limits and risks in externalising water footprints. He further elaborated, “Each river basin is unique with respect to amount of rainfall and pattern, rainfall-runoff relation, total available runoff, environmental flow requirements, groundwater recharge, etc. The actual available quantity of water is determined by all these parameters. Hence, there is a hydrological limit to water use in a river basin/aquifers”. He said: “On the other hand, making a process more efficient comes at a price, marking a limit on local efficiency gains. Similarly, importing virtual water to relieve pressure on local water resources would require second-order resources such as foreign currency, and a political will to move from a ‘water and food self-sufficiency’ policy towards a ‘water and food security’ policy. Enhancing the global water-use efficiency by means of trade has socio-economic limitations.” His current research focuses on unravelling these limits to growth, and on developing a generic analytical framework to find optimal solutions to growth under these water limits.

Trade can relieve the strain

Regarding the latter, he said trade in water-intensive goods and services could help relieve the strain on local/national water resources. For example, Switzerland covers merely 18% of its water demand from its internal water resources, i.e. 82% of it is external! South Africa’s external water footprint is only 22% of the total water footprint of national consumption. Hence, the scope of international trade to help alleviate local scarcity is limited by the availability of second-order resources such as foreign exchange, institutional capacity, socio-political context, etc. 

However, globalisation of fresh water brings both risks and opportunities. “Although national water resources could be saved for best alternative uses, the risks of a growing external dependency and the associated risks related to events elsewhere, are often not visible. These water-intensive production processes are vulnerable to the availability of water at the various locations where the production processes take place. The vulnerabilities may result from a range of factors – from reduced river flows, lowered lake levels, and declined ground-water tables to increased salt intrusion in coastal areas, pollution of freshwater bodies, droughts, and a changing climate,” he said.

Water footprint assessment

Prof Chapagain also touched on the Water Footprint Assessment; he believes it has provided a sound method to analyse the water footprint in the relevant context and formulate appropriate response strategies. “The water-footprint assessment breaks down the different water-footprint components and checks the sustainability of these components against three sets of criteria: environmental, economic, and social. The application of the Water Footprint Assessment has evolved from basic quantitative studies to a powerful advocacy tool that can support decision-making and policy processes and help mitigate water-related business risk.

“Counting water drops is simple, yet unravelling the underlying complexities is the key! I count on you to start by counting water drops in counting for sustainable growth,” he concluded.

News Archive

Inaugural lecture: Prof. Phillipe Burger
2007-11-26

 

Attending the lecture were, from the left: Prof. Tienie Crous (Dean of the Faculty of Economic and Management Sciences at the UFS), Prof. Phillipe Burger (Departmental Chairperson of the Department of Economics at the UFS), and Prof. Frederick Fourie (Rector and Vice-Chancellor of the UFS).
Photo: Stephen Collet

 
A summary of an inaugural lecture presented by Prof. Phillipe Burger on the topic: “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

South African business cycle shows reduction in volatility

Better monetary policy and improvements in the financial sector that place less liquidity constraints on individuals is one of the main reasons for the reduction in the volatility of the South African economy. The improvement in access to the financial sector also enables individuals to manage their debt better.

These are some of the findings in an analysis on the volatility of the South African business cycle done by Prof. Philippe Burger, Departmental Chairperson of the University of the Free State’s (UFS) Department of Economics.

Prof. Burger delivered his inaugural lecture last night (22 November 2007) on the Main Campus in Bloemfontein on the topic “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

In his lecture, Prof. Burger emphasised a few key aspects of the South African business cycle and indicated how it changed during the periods 1960-1976, 1976-1994 en 1994-2006.

With the Gross Domestic Product (GDP) as an indicator of the business cycle, the analysis identified the variables that showed the highest correlation with the GDP. During the periods 1976-1994 and 1994-2006, these included durable consumption, manufacturing investment, private sector investment, as well as investment in machinery and non-residential buildings. Other variables that also show a high correlation with the GDP are imports, non-durable consumption, investment in the financial services sector, investment by general government, as well as investment in residential buildings.

Prof. Burger’s analysis also shows that changes in durable consumption, investment in the manufacturing sector, investment in the private sector, as well as investment in non-residential buildings preceded changes in the GDP. If changes in a variable such as durable consumption precede changes in the GDP, it is an indication that durable consumption is one of the drivers of the business cycle. The up or down swing of durable consumption may, in other words, just as well contribute to an up or down swing in the business cycle.

A surprising finding of the analysis is the particularly strong role durable consumption has played in the business cycle since 1994. This finding is especially surprising due to the fact that durable consumption only constitutes about 12% of the total household consumption.

A further surprising finding is the particularly small role exports have been playing since 1960 as a driver of the business cycle. In South Africa it is still generally accepted that exports are one of the most important drivers of the business cycle. It is generally accepted that, should the business cycles of South Africa’s most important trade partners show an upward phase; these partners will purchase more from South Africa. This increase in exports will contribute to the South African economy moving upward. Prof. Burger’s analyses shows, however, that exports have generally never fulfil this role.

Over and above the identification of the drivers of the South African business cycle, Prof. Burger’s analysis also investigated the volatility of the business cycle.

When the periods 1976-1994 and 1994-2006 are compared, the analysis shows that the volatility of the business cycle has reduced since 1994 with more than half. The reduction in volatility can be traced to the reduction in the volatility of household consumption (especially durables and services), as well as a reduction in the volatility of investment in machinery, non-residential buildings and transport equipment. The last three coincide with the general reduction in the volatility of investment in the manufacturing sector. Investment in sectors such as electricity and transport (not to be confused with investment in transport equipment by various sectors) which are strongly dominated by the government, did not contribute to the decrease in volatility.

In his analysis, Prof. Burger supplies reasons for the reduction in volatility. One of the explanations is the reduction in the shocks affecting the economy – especially in the South African context. Another explanation is the application of an improved monetary policy by the South African Reserve Bank since the mid 1990’s. A third explanation is the better access to liquidity and credit since the mid 1990’s, which enables the better management of household finance and the absorption of financial shocks.

A further reason which contributed to the reduction in volatility in countries such as the United States of America’s business cycle is better inventory management. While the volatility of inventory in South Africa has also reduced there is, according to Prof. Burger, little proof that better inventory management contributed to the reduction in volatility of the GDP.

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