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Determining the Socio-Economic Value of Groundwater: Franschhoek Case Study
Expanded Title:In the past decision making systems have focused on the value of groundwater as a resource in its own right. This has led to a significant spectrum of water values being excluded from the decision making process. There is thus very little knowledge amongst policy and decision makers regarding the true value of groundwater. This study seeks to address this issue through the development and application of a holistic valuation model that incorporates all the significant use and non-use values of groundwater. The case study area is Franschhoek. Franschhoek is a small peri-urban community located in the South West of South Africa in the province of the Western Cape. The main objectives of the study were to: (1) develop and apply a valuation model in order to determine the total socio economic value of groundwater within specific sampling areas and (2) identify the underlying socio-economic factors that influence that the value of groundwater. The scope of the contingent survey was to include only the residential sector and would not include the commercial or agricultural sector. The method that was selected was the contingent valuation method (CVM). The CVM can be used to measure any kind of data without the need for observable data. It is also the only method capable of measuring existence and bequest value. The disadvantages of the method include errors due to survey/respondent biases and the need for thorough survey development and pretesting to minimize these errors. The market value of groundwater is indeterminate because the consumption is non-responsive to changes in price. This is because the price of water is too low and as a result consumers don’t factor it into their consumptive considerations. The willingness to pay estimates of R119 and R457 for the less affluent and more affluent segments of the Franschhoek community are strong evidence of society’s willingness to protect the environment. There are several factors that influence the willingness to pay for the non-market values of groundwater, though most of them relate back to household income levels and perceptions of the municipality/state.
Date Published:01/06/2012
Document Type:Research Report
Document Subjects:Water Resource Management/IWRM - Hydrogeology
Document Keywords:Ground Water
Document Format:Report
Document File Type:pdf
Research Report Type:Standard
WRC Report No:1974/1/12
ISBN No:978-1-4312-0281-2
Authors:Pearce D; Xu Y; Makaudze E
Project No:K5/1974
Originator:WRC
Organizations:University of Western Australia
Document Size:5 664 KB
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