Investments in ecological infrastructure: an assessment of the expected costs and benefits of rehabilitation of the Mthinzima Wetland in KwaZulu-Natal.
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Date
2018
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Abstract
The uMgeni River is an important water resource in KwaZulu-Natal. It is, however, one of the major systems identified as having water that may pose a serious health risk to users of its (untreated) water. Increasing pollution in the upper catchment, supplying the Midmar Dam has been attributed to sewage effluent due to inadequate sewage infrastructure, expanding agricultural lands and household waste from Mpophomeni Township. The Mthinzima River flows adjacent to the settlement where it joins a tributary that flows through Mpophomeni settlement (a 6000-unit settlement that was developed in the 1960s), after which it flows under the district road (R617), through a degraded wetland system (The Mthinzima wetland) and into Midmar Dam. The Mpophomeni township development was poorly planned and should not have been situated near a strategic water resource, because it posed threats to the water resource.
Two interventions were proposed to reduce the pollution flowing from the Mpophomeni Township into Midmar Dam: a new Waste Water Treatment Works (WWTW) would be built in conjunction with rehabilitation of ecological infrastructure. The rehabilitation of ecological infrastructure would primarily entail wetland rehabilitation. Ecological infrastructure has value that is important for human well-being. However, the key incentive challenge is the public dimension of the value. Often studies that aim to value investments in ecological infrastructure give total economic value of the ecological infrastructure instead of the change in total economic value attributable to the investment. The purpose of this study was to investigate the incremental change in supply of services from the wetland post rehabilitation, considering the demand, supply and opportunities for those wetland services.
The new conceptual framework introduced in this study considered the potential of ecological infrastructure to supply its services, the opportunity (activities or circumstances that make it possible for the wetland to be used) afforded to the ecological infrastructure to supply its services and the demand for ecological services. It also examines the impacts of investments (or disinvestments) in ecological infrastructure and/ or engineering infrastructure on the value of ecological infrastructure.
Economic Cost-benefit analysis (CBA) was used for this analysis, it is widely applied as an appraisal technique particularly for use as an input into public decision-making processes. CBA both helps inform decision-makers and helps hold them accountable for their decisions. The cost benefit analysis technique was used to evaluate whether investments in ecological infrastructure bring about a worthwhile change in ecosystem services. The study was limited by data shortages and used the replacement cost technique (one mega litre waste water treatment works) to value the incremental change in wetland services post rehabilitation.
The net present value results of the CBA were all positive, the estimated net present value for change in wetland services post rehabilitation over the period of 20 years was found to be between R7 086 573 and R11 935 240 using different discount rates. The net present value of the wetland rehabilitation investment showed an increasing pattern as the wastewater treatment plants maintenance costs were assumed to be a higher percentage of the wastewater treatment plant. Therefore, the study concluded that investments in ecological infrastructure in the form of the Mthinzima wetland rehabilitation was worthwhile as the investment yielded net positive marginal results post rehabilitation. The results of CBA do not govern the choice of investment especially as data availability was limited, rather it is a useful tool to test the robustness of a project to alternative assumptions concerning the magnitude of costs and benefits, and the various social demands with respect to the return on invested capital. Based on this the results of the CBA, the study concluded that investing in wetland rehabilitation of the Mthinzima wetland is robust.
Description
Master Degree. University of KwaZulu-Natal, Pietermaritzburg.