An Economic Approach to Allocating River Water to Estuaries in South Africa

Estuaries are last in line as a recipient of river water and for this reason they are particularly vulnerable to negative environmental impacts due to water scarcity and pollution. They only receive the runoff that has not been abstracted or prevented from reaching rivers. When this runoff is substantially reduced their functionality is undermined and they often become less attractive for recreational use. This article explores some aspects entailed in efficiently managing the allocation of water to estuaries problem and some associated problems. It is shown that efficient management requires the marginal social costs of the inflows to be brought into equivalence with the marginal social values of the inflows, and these values may be estimated, but that there are the challenges in this estimation and in linking these estimates to the welfare of the people in whom the managers of river systems are (presumed to be) interested.