Sebastiaan Hess

Triple dividends of water consumption charges in South Africa

The South African government is exploring ways to address water scarcity problems by introducing a water resource management charge on the quantity of water used in sectors such as irrigated agriculture, mining, and forestry. It is expected that a more efficient water allocation, lower use, and a positive impact on poverty can be achieved. This paper reports on the validity of these claims by applying a computable general equilibrium model to analyze the triple dividend of water consumption charges in South Africa: reduced water use, more rapid economic growth, and a more equal income distribution. It is shown that an appropriate budget-neutral combination of water charges, particularly on irrigated agriculture and coal mining, and reduced indirect taxes, particularly on food, would yield triple dividends, that is, less water use, more growth, and less poverty.

Flexibility mechanisms and sustainable development: lessons from five AIJ projects

Do ‘Activities Implemented Jointly’ (AIJ) projects contribute to sustainable development in the host countries? Which factors have contributed to the success or failure of the projects? Five AIJ projects were examined, accounting for 90% of the total AIJ expenditure of the Dutch government. The projects are at different stages of implementation, and four are in the process of being submitted as Clean Development Mechanism (CDM) projects. Although all five projects focused on small renewables, only one was very successful in also promoting sustainable development, while one failed completely in both achieving emissions reduction and promoting sustainable development. In this small set, the project with the most cost-effective reduction of greenhouse gases was also the project that attained the most sustainable development benefits. In order to develop successful projects that also contribute to sustainable development, it is critical that projects should be demand-driven (not only by governments, but also by involved stakeholders), designed carefully, well-documented in order to ensure institutional memory, and should aim to have a demonstrative effect.

Fighting CO2 pollution and poverty while promoting growth: searching fot triple dividends in South Africa

A CGE model of South Africa is used to find the potential for a double or triple dividend, if the revenues raised from an energy related environmental tax are recycled into households and industry through lowering existing taxes. Four environmental taxes and three revenue-recycling schemes are compared. The environmental taxes are (i) a tax on greenhouse gas emissions, (ii) a fuel tax, (iii) a tax on electricity use, and (iv) an energy tax. The four taxes are constructed such that they have a comparable effect on emissions. The revenue is recycled through either (i) a direct tax break on both labour and capital, (ii) an indirect tax break to all households, or (iii) a reduction in the price of food. A triple dividend is found when any one of the environmental taxes is recycled through a reduction in food prices.