Economic/Financial impact of water scarcity on tourism sector in South Africa

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1. Background

Water scarcity means that the availability of water is limited. This implies that the demand for water is huger than the supply of water. Therefore, due to water scarcity, water users have limited choices associated with water use. Water is a scarce resource which make it more valuable however, in really life people do not see water as valuable and scarce resource as the result they tend to misuse it. This implies that water is scarce resource that is easily available to it users, mainly because water is supplied by government at lower cost.
Tourism is the action and process of people moving from one place to another for short-term period for business, leisure, entertainment, travelling and other additional purposes. Due to interdependence of sectors, tourism is affected by activities taking place in water sector and extreme weather conditions such as droughts and floods. Therefore, water scarcity has negative impact toward the financially/economically wellbeing of tourism sector.

2. Introduction

Water scarcity is the global pandemic. Although water is essential for both life and economic activities, the supply of water is limited in South Africa. Furthermore, water is distributed unequally between South African, and they’re those who have easy access to safe driving water, those who must spend hours just to get water, and those who don’t have access to safe drinking water (Informal settlements) due to water scarcity. Many scholars argue that water scarcity results from climate change, rise in water demand, high levels of population growth, old infrastructure, low tariffs charged on water usage and lack of proper policy to address the issues of water withdrawals, water usage by agriculture sector and water pollution by mining sector.
Tourism sector relies on all the features of natural environment and human. Thus, accommodation is classified as one of industry within tourism sector, and accommodation for tourist depend on water provision hence the water crisis tends to have negative impact toward the industry. Droughts and floods from extreme weather conditions cause by climate change, pose a risk on water availability and this have a negative impact on the financially wellbeing of tourism sector. Water is being use as input factor in production process more especially by agriculture, manufacturing, and tourism sectors. Therefore, the issue of water scarcity has negative impact on the operations, costs and financially of the above-mentioned sectors which will further create economic development implications. To meet water demand government should import water from other countries, reuse of wastewater and water purification, and those options are capital intensive and expensive for government to implement. Thus, the application of above-mentioned options will have negative impact on poor people because water tariffs will rise making water less accessible.

3. Sectors within tourism industry

• Transportation-The role of transportation industry in tourism sector is to move tourists from one destination to another through provision of transports. Transportation industry include airlines, car rental, buses, railway etc.
• Entertainment-Some people travel from one place to another for entertainment purposes. Therefore, entertainment industry play an important role in tourism by providing entertainment to tourists.
• Accommodation-Accommodation play major role on tourism sector. Accommodation industry relies on water provision for daily operations therefore water scarcity has huge negative impact on businesses within accommodation industry. Accommodation includes hotels and guest housing where tourists stay and sleep during their travelling trips. Water scarcity tend to affect reputation of the business and its financially wellbeing.
• Food and Beverage-Food and Beverage play an important role in tourism by providing food and refreshments to tourists. Food and Beverage includes restaurants, bars, cafes, and catering. Water scarcity also have negative
impact on the finances and reputations of the food industry, this is because food companies need water to cook and clean their restaurants.
• Other sectors-Financial sector and tourism firms are some of the sectors that play vital role in tourism sector either indirectly or directly.

4. Cape Town water crisis

Globally and in South Africa access to water and climate change have impact on tourism sector and tourism activities. The city of Cape Town including hotels, guest houses, restaurants and other established tourism destination play important role in the tourist industry. Nevertheless, the city of Cape Town experienced water scarcity which resulted from drought between 2015 to 2018, which led to fears of pending “Day Zero” the point of taps running complete dry. The water crisis had a negative impact on tourism sector because the number of tourists visited Cape Town declined throughout the droughts years compared with years of no droughts. The number of tourists who visited Cape Town declined due to restrictions on water usage and the negative images shared on social media of Cape Town water crisis.
Although job creation, GDP, and movement of passengers continued to rise in city of Cape Town during that period of drought, those factors rose at lower rate compared with years of no drought. The City of Cape Town tourism sector contributes to the GDP and job creation in the country. In the previous decade the sector contributed about 3.5% of GDP locally and sustained about 5% of all jobs in the city of Cape Town annually. Tourism employs around 150,000 jobs in total. However, the harsh drought and water shortage experienced by Cape Town during Summer 2017/2018 had a negative influence on the industry financially wellbeing.

5. The link between water scarcity and tourism sector financially wellbeing

Water is an input factor for most of industries within tourism sector. Therefore, water scarcity becomes a problem for tourism organisations, leading to increased costs, operational issues, business risks, financial problems, reputational risks etc. This further have major negative impact on job creation and economic growth of the country. The impact of drought to tourism sector
in City of Cape Town was minimal because the city managed to handle the drought through marketing strategies, water usage restrictions, government support, community engagement etc hence the impact was lower than what was expected.


Tourism sector is one of the economic activities with the greatest exposure to the effects of water scarcity. Therefore, Water scarcity have long term negative impact on the tourism industry, for example if someone visit certain hotel and experience water problems, they might not visit that hotel again and even tell other people to not visit hotel. Therefore, water scarcity will not only affect the financially wellbeing of the sector but damage the reputation of businesses within the tourism industry. However, City of Cape Town more especially tourism was able to recover after the drought.

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