Geoforum 30 (1999) 4359

Basic infrastructure for socio-economic development, environmental protection and geographical desegregation: South Africa's unmet challenge
Patrick Bond 1
Department of Geography & Environmental Studies, Graduate School of Public & Development Management, University of the Witwatersrand, PO Box 601, Wits 2050, Johannesburg, South Africa Received 3 March 1998; in revised form 26 October 1998

Abstract How much basic infrastructure investment water and sanitation systems, new electricity lines, roads, stormwater drainage, and other services provided at municipal level can South African society aord? What levels and types of subsidies for recurrent operating and maintenance costs assure that low-income people can meet their basic infrastructural service needs? These questions continue to bedevil policy makers. One reason is their failure to integrate into investment decision-making some basic aspects of socio-economic costbenet analysis, covering a variety of direct, indirect, developmental, ecological and geographical factors. The direct economic benets of infrastructure for low-income people have long been recognised, and include construction jobs, improvements in work productivity; and the growth of small enterprises. Indirect benets include more time and resources for women; dramatic environmental benets, public health benets (which require infrastructure of a sucient quality so as to enhance rather than endanger health), and the desegregation of urban society (with respect to enhanced employment, educational and cultural opportunities). While there are often costs associated with large, new basic-infrastructure programmes, the benets justify increased investment. If subsidies and taris are restructured to assure entitlement (``lifeline'') provision to all South Africans, plus rising block taris for higher use of resources, it appears possible to signicantly augment what the government is presently suggesting as a minimum set of investment and service provision in its Municipal Infrastructure Investment Framework. 1999 Published by Elsevier Science Ltd. All rights reserved.
Keywords: Urban infrastructure; Development; South Africa; Financing; Urban policy

1. Introduction At the end of the 1990s, it is nally fashionable to discuss public policy transcendent of a ``Washington Consensus'' the hegemonic, neo-liberal macroeconomic policy associated with the International Monetary Fund, World Bank, US Treasury Department, Federal Reserve Board and allied think-tanks which for two decades has had such an uneven eect on capital accumulation, the human condition and the environment across the globe. But if because of the 199798 crash of East Asia, Russia and some of Latin America macroeconomic orthodoxy is now thoroughly discredited (Stiglitz, 1998), and if in the wake of the Long Term Capital Management disaster, even Nobel Prize-winning economic models are in disrepute, the cost-recovery in-

E-mail: pbond@wn.apc.org

stincts associated with neo-liberal service delivery an ``urban Washington Consensus'' that has been more rigidly applied by Pretoria than by the World Bank (1994) itself nevertheless, remain a signicant deterrent to social progress. This article considers some of the main concepts, intellectual arguments and policy options that should but, in South Africa at present, do not yet inform ocial decisions (as well as academic research) about infrastructure and service delivery. The focus is on how, through national programmes and cross-subsidies that diverge from microeconomic orthodoxy, the democratic government's socio-economic, ecological and spatial responsibilities can be met in the course of expanding the quality and quantity of basic services to low-income residents. The style of argumentation combines what Harvey (1996, Ch. 13) refers to as ``ecological modernisation'' and ``environmental justice'' discourses: respectively, expanded costbenet analyses and concern

0016-7185/99/$ see front matter 1999 Published by Elsevier Science Ltd. All rights reserved. PII: S 0 0 1 6 - 7 1 8 5 ( 9 8 ) 0 0 0 3 1 - 1

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for the human ``brown'' (not just ecological ``green'') character of development. In this respect, the arguments presented relate directly to South African policy debates but are of a more general character. In the context of a new constitution and a strong political mandate for the African National Congress (1994) government, the article considers shortcomings in the government's new municipal infrastructure policy, discusses economic multipliers associated with infrastructure and services, evaluates environmental issues and public health benets associated with infrastructure and services, and oers remarks on subsidies and taris. The conclusion suggests ways in which a dierent set of policy-makers with socialdemocratic and socialist rather than neo-liberal proclivities might, in future, obtain developmental rewards through expanding infrastructure and service delivery. The article concludes that there is a need for larger infrastructure and service subsidies in the form of redistributive taris; that standards of infrastructure investment should be much higher so as to realise socioeconomic and ecological benets; and that in the light of the ``public good'' characteristics of infrastructure-related services, there should be more ambitious state and community roles in infrastructure investment and services provision, regulation and pricing. By way of background, because of apartheid and the extremely skewed legacy of economic development, South Africa is the second largest unequal country in the world (after Brazil). The income share of the top 20% of the population exceeds 60% while the poorest 20% of the population earns only 3% of the national income. Roughly, only 38% of ``African'' households have access to electricity for cooking, heating or lighting (while nearly all ``coloured'', ``Indian'' and ``white'' households have access to electricity). Only 27% of African households have running tap water inside their residences, only 34% have access to ush toilets, and only 37% have their refuse removed by a local authority (Department of Public Works, 1997). Rural African women are most aected by such backlogs. But using orthodox cost-recovery techniques to sell water and electricity to lowincome households will result in only a marginal improvement in these gures. The context in which this article was drafted in 1997 98 included not only the persistence of such formidable backlogs, but a tightening of scal constraints associated with a homegrown structural adjustment policy (the misnomered Growth, Employment and Redistribution, forced upon South Africa by international nancial turbulence in 1996), cut-os of services to hundreds of thousands of residential users due to non-payment of (increased) municipal service charges, and an upsurge in township social unrest in many of South Africa's major urban centres (Barchiesi, 1998; Bond, 1999b). This unrest has the potential to spread and intensify, and re-

minds us of the urgency, at the national level, to provide a decisive policy on infrastructure/services which combines constitutional responsibilities with an eective, redistributive system that can adequately subsidise lowincome residents, in part by recognising the myriad developmental benets that ow from infrastructure and services. Such a system would also serve as an alternative means of achieving economic growth to the failed neo-liberal model, at least in the short- and mediumterm until the vast backlogs are met. This is not infeasible, but depends upon political struggle and a sense of citizens' entitlement entirely justied to basic service delivery. Unique amongst modern states, South Africa's new constitution (Constitutional Assembly, 1996) contains guarantees of socio-economic rights in addition to general municipal ``developmental duties'': the municipality must ``give priority to the basic needs of the community, and to promote the social and economic development of the community, and to participate in national and provincial development programmes'' (Constitutional Assembly, 1996, Section 153). In an expansive reading, municipalities should seek to ensure that citizens receive access to services that have been historically denied them, so as to eventually achieve equal levels of service delivery standards across residential areas. The goal, as spelled out in the Bill of Rights (Constitutional Assembly, 1996, Ch. 2), is to progressively ensure that citizens can exercise their rights of access to water, health care, a clean environment, housing and, more generally, dignity. These constitutional obligations parallel the political promises made by the ANC in its Reconstruction and Development Programme (RDP) a 157-page document which became the policy platform upon which the ANC won the 1994 campaign, and initially represented a crucial political mandate. The RDP specied the need for infrastructure-related tari restructuring, cross-subsidies and lifeline services to the poor with respect to both water (including sanitation) and electricity, as well as a more state-driven and community-controlled (nonmarket) application of housing and land reform subsidies to nance deeper levels of capital infrastructure than those that have actually been implemented since (African National Congress, 1994, Sections 2.6.10 and 2.7.8). As shown below, the rationale for such a system based upon national tari reform emphasising crosssubsidies (using national and provincial resources, not just local) and lifeline taris for low-income consumers would be not only to meet constitutional responsibilities, but also to gain additional public health, environmental and economic benets to all of society, particularly women and children. Indeed in South Africa, as elsewhere in the developing world, women are the primary care-givers and homemakers, and hence the benets of infrastructure

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and service delivery are disproportionately felt by women, and likewise the burden of inadequate standards of infrastructure also fall upon women (Bassett et al., 1992; Esrey, 1996). As discussed below, there are several aspects to women's utilisation of time that can be enhanced by infrastructure investments and service delivery, relating to time spent in water queues, time spent gathering fuelwood and making res, time spent walking from place to place because road conditions are not amenable for public or private transport, and time spent on other tasks that could otherwise be directed elsewhere if proper infrastructure was in place. However, in the wake of the ANC's dramatic 63% electoral victory in 1994, under circumstances of nancial panic associated with an unanticipated 20% drop in the currency during FebruaryMay 1996, the South African government adopted a deationary macroeconomic strategy in June 1996, eectively downgrading the status of the RDP. The strategy promised reduction of the state's annual budget decit to 3% of Gross Domestic Product. Ironically, perhaps, the strategy did not intend to cut back on infrastructure expenditure, but on the contrary committed to its increase: This strategy envisages a substantial acceleration in government investment spending, together with improved maintenance and operation of public assets... The provision of basic household infrastructure, in particular, is a relatively low cost and eective form of public intervention in favour of the poor and consistent with the reduction of income inequalities (Department of Finance, 1996, Section 7.1). Thus the South African government retained, in rhetoric at least, an overarching commitment to dramatic increases in infrastructure spending. Yet the detailed infrastructural policies adopted since 1994 bear little relation to the promises made. Like policies for low-cost housing (Bond and Tait, 1997) and land reform (Williams, 1996), infrastructure policy also relies excessively on market-oriented, cost-recovery provisions. In each case, World Bank advisory teams and conservative local consultants (often emanating from big business or apartheid-era think-tanks) recommended contrary approaches to those of the RDP, which as shown below have the eect of denying people basic access in a sustainable manner. Given the balance of forces in society and the weak state of social movement and trade union advocacy, such advice prevailed (Bond, 1999a). 2. Post-apartheid infrastructure policy One result of conservative policy drift, the Department of Constitutional Development's Municipal Infra-

structure Investment Framework (MIIF) a ten-year plan for infrastructure and service delivery released in 1997 but originally drafted in late 1994 by a World Bank team working with local consultants has been criticised at a detailed level elsewhere (Bond et al., 1997), in part based on a legacy of concern about neo-liberal World Bank urban policy advice to South Africa (Bond and Swilling, 1992; Bond, 1995, 1999b). Such a critique highlights the MIIF's low services standards, their implications for neo-apartheid class segregation, the larger-than-anticipated number of people likely to be adversely aected, MIIF's failure to factor in positive externalities when designing service standards and subsidies, the implications of such failure for understanding returns on investment, MIIF's insucient cross-subsidy provisions, and MIIF's dismissal of the main means of resolving many of these problems, namely a system of lifeline taris and progressive block tari cross-subsidisation. Each aspect is briey considered next, with some developed extensively in the rest of the article. With respect, rst, to excessively low (``basic'' in MIIF terminology) standards, the lowest common denominator for municipal investment pit latrines (not waterborne sanitation), yard taps (not inside the house), 58 Amp electricity supply (not 20 or 60 Amp, as exists in formerly white areas), untarred roads, no stormwater drainage, etc. will be on oer to the estimated 20% of urban residents who have anticipated real monthly incomes of R800 (US $150 in 1998) and below, and to 90% of rural residents. These are considered excessively low given South Africa's ``upper middle-income'' standard of living (of roughly US $3000 per capita annual income in purchasing power parity terms). As also discussed in more detail below, the MIIF entails a relatively permanent class segregation policy with all the consequent economic ineciencies in the form of new, post-apartheid ghettoes where it will be physically impossible or excessively costly to upgrade from ``basic'' to full services. (While recognising this problem, MIIF does nothing to counteract it in part because the costs associated with neo-apartheid geography have not been calculated nor factored in.) The basic service levels contemplated in the MIIF are not merely emergency services (piped water or portable toilets in slum settlements that are without water or hygienic facilities at present) but represent, more fundamentally, development policy that will be in place for at least a decade. It is extremely dicult to incrementally upgrade infrastructure, particularly sanitation systems, from pit latrines to waterborne sewage, resulting in permanently segregated low-income ghettoes (from which households that raise their real earnings to above R800 per month will have to emigrate in order to gain access to improved infrastructure and services). The prospect of vast, neo-apartheid ghettoes is heightened by MIIF's inaccurate (extremely optimistic)

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calculation of the low-income population by at least a factor of 100% in the form of projections that (in real terms) only around 20% of urban households will earn less than R800 per month within ten years, given the worsening unemployment situation and failure of the macroeconomic policy to meet most major economic performance targets (Bond, 1999a). The actual percentage is certain to be far higher. Apart from the question of political acceptability, MIIF's low standards for such a large proportion of the population also reected a failure to factor in potential microeconomic linkages, public health benets of higher standards, environmental problems associated with the proposed standards, the geographical and gender implications, and the possibility of a national cross-subsidy system. Each of these issues will be considered in the following. The main investment implications are important to note at this stage, namely that the ``net economic return'' on infrastructure investments should incorporate not only the immediate nancial return the amount of cost recovery as a ratio of the amount invested but also other social benets, costs, externalities and multipliers. Having failed to do so in the areas noted above, the MIIF provides for low standards of infrastructure on grounds that these standards are the most that lowincome South Africans can aord to pay. Specically, in light of the failure to consider the broader economic returns to infrastructure investment, the main reason that ``basic'' levels of service are being imposed upon the vast majority of the poor is the high level of recurrent costs of water and electricity. In the absence of generous cross-subsidies, these costs prohibit low-income households from paying full cost-recovery rates for even a minimal monthly amount of these services. Such an amount could cover sucient services according to the RDP, for example, ``an on-site supply of 5060 litres per capita per day of clean water'' (African National Congress, 1994, Section 2.6.7), and sufcient electricity to cover the minimal energy requirements associated with essential lighting, heating and cooking (approximately 20 kWh per person per month) such that all South Africans attain a relatively decent standard of living regardless of their ability to pay. Instead, MIIF emphasises cost recovery and ``limited'' local-level cross-subsidies (in the case of ``indigent'' households who must pass a means test to get access to the Intergovernmental Grant mechanism, funding which has declined in real terms by 85% since 1991) (Financial and Fiscal Commission, 1997). There is, hence, a need for more comprehensive ``block tari'' subsidies. South Africa's majority is so poor especially in relation to the minority of luxury consumers who have never had to worry about access to full services that ``limited cross-subsidies'' are insucient and the exercise of recovering costs on collectively

consumed services (a communal tap, for example) is often futile or too expensive administratively. Indeed, the reason that the phrase ``limited'' is used in this context is because of the government's explicit refusal to consider (even as a policy option exercise) restructuring national taris so that substantial cross-subsidies can be obtained. If such a proposal as noted, consistent with the RDP had been considered and adopted, it would have been relatively easy to cross-subsidise from national-scale industrial, service-sector, mining and agricultural bulk users of water and electricity, to lowincome residential consumers. The vast dierence in use patterns commercial farmers consume 52% of water, for instance, while black domestic use is less than 2% would allow a small marginal increase in taris for the large users to pay for a lifeline service at no cost to all other consumers. Such a progressive block tari system, essentially providing an entitlement to all citizens, would also penalise excessive usage, thereby contributing to conservation goals. By exploring in more detail various developmental characteristics of infrastructure and services, this article indicates the extensive benets of higher standards of infrastructure investment and service delivery; how externalities and multipliers can be calculated and incorporated into full economic (not merely nancial rate-ofreturn) costing; and how infrastructure/services markets sometimes fail to deliver infrastructure of a sucient standard and aordable price to meet basic human needs hence requiring extensive state intervention. All such arguments justify a dierent approach than that ultimately adopted in the MIIF. A reminder of the negative geographical implications of the current policy is useful at this stage, for here it is evident that the benets of desegregating South Africa's notoriously colour-coded class society and residential patterns are being denied in favour of maintaining white homeowners' property values. Social, political and economic problems caused by apartheid segregation have been recognised for many decades (e.g., Robinson, 1995; Schapera, 1928). Deepening South Africa's democratisation process will to a large extent depend upon breaking down geographical barriers faced by black (African, Coloured, Indian) people, as well as reducing segregation of people according to their income class. Few citizens would deny that South Africa requires a qualitative shift towards the social integration of society, including residential neighbourhoods. Given that the immediate community is crucial as a shaping force for individuals' values, attitudes, aspirations, expectations, skills and opportunities, it is important to guard against apartheid-era ``insider vs. outsider'' social divisions emerging in a now-deracialised way along class lines. Instead, however, by tolerating such segregation and indeed by cementing it through the MIIF income test (so that instead of along racial lines, sewage lines

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become the mark of class-based residential area) municipal politicians and ocials both abdicate their responsibility to reunite sharply divided cities and towns, and forego the socio-economic benets that come from integrated planning. Economic benets of desegregation include education gains within an entire community in cases where some families typically from higher income classes within the immediate area invest in skills (Benabou, 1993). Likewise, segregation prevents full and fair competition in an ecient and transparent labour market, particularly for low-income job-seekers (Wilson, 1987). Residential segregation has also been cited as a source of employment discrimination by employers (Neckermann and Kirschenmann, 1990). Another reason to promote class residential integration through enhanced infrastructure investment and service delivery is to improve community ecology more greenery, more light, more fresh air, and physical spacing which in turn has environmental, public health and social benets. Community ecology also relates to what some have (controversially) termed a ``culture of poverty'' that exists within low-income ghettoes (Lewis, 1961; Tucker and Scott, 1992) which can also be combatted through class desegregation. The biggest gain to low-income residents from integration may indeed lie in the prevention of social disillusionment through provision of more chances for upward mobility. Moreover, integration can diminish negative factors such as community-distrust and crime, by ensuring that the broader fabric of the community is more tightly knit (Rakodi, 1994). In sum, developmental municipal planning beyond the scope MIIF permits is required to direct the structure, size, composition and location of infrastructure and housing so as to promote social and economic residential integration. The provision of high-quality infrastructure that retains sucient exibility to allow upgrading of individual household standards is essential, as is the involvement of many more residents in municipal planning than has ever happened before. An additional set of economic rationales for transcending the existing policy is discussed next. 3. Economic multipliers To consider, next, the explicitly economic arguments, there are three main types of multipliers associated with basic-needs infrastructure to be considered: construction-related job creation; literacy and productivity enhancement; and small business promotion. Women are particularly important beneciaries of such economic spinos. Firstly, research on potential employment creation in infrastructure and housing is typically based upon both formal sector jobs (Merrield, 1996) and upon estimates

of informal sector activity (Building Industries Federation of South Africa, 1995). According to most accounts, formal employment stimulated by infrastructure varies between 7 construction jobs for every million rand (US $170,000) spent in the civil engineering sector, to 12 jobs per million rand in non-residential new construction, to 23 jobs per million rand in public housing construction (Merrield, 1996). But by adding employment creation in the informal sector specically, an estimate of 50 jobs per million rand for informally constructed housing the average for all housing construction is raised to as high as 30 jobs for every million rand spent, a gure competitive with investment in labour-intensive manufacturing. Such high rates of job creation, in a context of more than 30% ocial unemployment, warrant a large increase in state expenditure in both the construction of infrastructure and in the cross-subsidisation of services to enhance basic consumption. Secondly, literacy and productivity improvement are associated with access to infrastructure, and have economic spinos (World Bank, 1993). Electrication reduces population growth rates through altering social relationships and generating economic opportunities, and as a result, women in electried areas place more emphasis on children's education than on children as productive agents. Electrication provides some of the essential prerequisites for education, such as lighting and opportunities for ecient administration. In addition it generates the potential for longer schooldays, opening of night schools and access to audio visual aids. It enables children and adults to study at home and oers the opportunity for health promotion through the broadcast media such as television and radio. Education has been shown to directly aect a range of variables which, taken together, contribute to the health status of domestic units and ultimately of the society. There is a high rate of social return through investment in education and this rate of return is substantially higher for women than men. Female education has been shown to lower reproductive rates and improve childrearing practices and child-mortality rates. Higher levels of maternal education have a signicant impact on nutrition of children, improved child health and reduction in diarrhoea morbidity. The use of electricity in a household can have several eects on the productivity of inhabitants. Firstly, improved lighting, as well as access to television, bring about considerable improvements to the quality of the working environment of students and scholars. The ability to study at home, although dependent on other factors such as the number of people in the household and the number of rooms available, is certainly enhanced through electrication. Improved lighting and air quality (to the extent that the latter occurs) can also increase the quality of life of inhabitants and this has a

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positive eect on their productivity in places of employment or income generation. Thirdly, the expansion of Small, Medium and Micro Enterprises (SMMEs) is crucial to South Africa because all other aspects of orthodox macroeconomic policy have led to massive job loss, not employment creation (out of 126,000 new jobs in 1996 according to the policy's claims, 71,000 were lost; out of 252,000 new jobs in 1997, 116,000 were lost). Yet the hoped-for burgeoning of SMMEs may be hampered at the outset if access to water and electricity is not ensured. Such access comes initially through home-based activities, so a full supply of services to residences (not limited, for example, to a single yard tap or small-voltage electricity meter) should also be seen as an investment in micro enterprises and Local Economic Development. The benets of electrication, for example, are obvious, in terms of both SMMEs and the additional R800 million per year that will be spent on appliances from electrication (at existing rates of expansion). Recent Eskom experience suggests that for every 100 households which are connected to an electricity supply, between 10 and 20 new economic activities are started. Electrical fridges are often acquired by small traders to store drinks and perishable goods; in one rural KwaZulu-Natal town, of 23 enterprises 21 required electrical refrigerators to store produce, meat and drinks for sale. The benets of moving from very low electricity supplies (the basic 58 Amp for urban areas) to an intermediate 20 Amp supply are particularly large, given the need to operate appliances such as refrigerators and small motors. For enterprises involved in welding or carpentry, higher levels of service (up to 30 A) are required (van Horen, 1996a,b; Bond et al., 1997). The special case of water for small-scale farming enterprises is also important (Bond, 1999b). The element of time savings from improved infrastructure is also important, particularly to women. Time savings due to the nearness and availability of an improved water source has been reported to lead to more time not only for child care, including breastfeeding and better food preparation, but also for agricultural or income generation activities which could result in better family health. 4. Environmental implications A variety of themes have emerged in infrastructure research related to South Africa's fragile ecology (see Himlin, 1997, for a more comprehensive overview, and Bond, 1999b for an expanded argument). In most cases, there are obvious benets from improved access to infrastructure, although nuances are important, since they may lead us ultimately to question the imposition of western-style norms and standards associated with ur-

ban development. Water-related issues are considered rst, including optimal sewage service levels, the negative environmental consequences associated with increased water supply, the importance of water drainage systems, and issues surrounding water quality treatment. Environmental issues related to electrication follow. To begin with water supply, sewage, drainage, and treatment, it is true that there are negative environmental consequences of increased water supply and indeed of the relatively high infrastructure and service levels associated with the RDP, particularly with respect to dam construction, the most prevalent method for supplying water in South Africa. But according to one study, in the absence of conservation measures, in 1990 the total water supply would only have had to increase by 1.5% if all those not yet receiving water-borne sanitation were to receive it, and the additional households that are expected to be provided with new direct water supply would increase household water demand which itself is responsible for less than 15% of all water use by just 12% (Palmer Development Group, 1993a). Currently under-served households will not place any substantial burden on South Africa's water supply (Palmer and Eberhard, 1994). There are very strong possibilities for reducing water demand in society, through a water pricing policy (to replace the existing system of riparian rights) catchment area management, xing leaky supplies approximately 25% before it reaches the household (Rencken and Kerdachi, 1991) and other demand-side management measures. One study found that the cost of detecting and xing leaks were minimal compared to the savings in the cost of the recovered water over only seven months (Johannesburg City Engineer's Department, 1989). Other conservation techniques include more ecient appliances (toilets that ush with 4.5 litres, as opposed to the 913 litres common in South Africa, can reduce household water consumption by 1823%) (Imiesa, 1993) and the installation of internal household water meters (rather than solely outside, disguised near the mains) so as to raise consumer (including company) consciousness and reduce water demand. By all accounts, conservation makes more sense than constantly building more dams to increase the supply of water, especially given limits to the viability of further dam construction, and especially for the water-scarce Johannesburg metropolis (Mayekiso and Menu, 1998). Nevertheless, the government's intention to deny water access by oering pit latrines instead of waterborne sanitation to low-income urban residents is short-sighted. At present it is envisioned that, based on national resources allocated (regarding both capital and recurrent expenses) lowest-income households will receive a minimum package of a Ventilated Improved Pit (VIP) latrine, water supplies in the form of yard standpipes for urban residents and taps only within 200

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metres of rural homes, and open urban stormwater drainage (Department of Constitutional Development, 1997). Municipalities are then given the responsibility of deriving the additional resources required to further improve standards in low-income areas. There is no conclusive analysis of the environmental costs and benets associated with particular sewerage and water service levels in South Africa. But while there exist conceptual problems and data limitations that prohibit an exhaustive analysis, the major environmental hazards associated with low service standards and the benets associated with improved standards can, nevertheless, be explored. Regarding sewerage, both major systems VIPs and water-borne sewage produce pollutants. VIPs rely on the soil on the site of the latrine to lter out contaminants from the water system, and treatment works for dealing with sludge o-site. A water-borne system controls treatment of the sewage at a central location osite. Pollutants can usually be better controlled by using a centralised treatment system, except in cases of sewer breakage. Groundwater and/or surface water contamination from pit latrines is virtually guaranteed, and treatment of this contamination is non-existent. Contaminants from sewage are of two general types, biological and chemical. Biological contaminants include pathogens in the form of bacteria and viruses, with consequent risks to human health. Chemical contaminants (or nutrients) include nitrates and phosphates, which damage ecosystems through eutrophication, which is the excessive growth of algae and other plants at the expense of other aquatic life. There are also health risks to humans (especially infants) consuming nitried water. Additionally, other organic material present in waste contaminates water supplies by encouraging the growth of bacteria, which depletes the oxygen in the water (chemical oxygen demand) thereby killing other aquatic life (Palmer Development Group, 1993a). Advocates of VIPs argue that pollution created is generally contained on-site, whereas leakage due to sewer-system failure is more concentrated and therefore poses more of a threat to the environment (Palmer Development Group, 1993b). However, the failures of apartheid-era, resource-deprived, badly-managed township sewer systems should not now be assumed as characteristic of future urban or rural developments. The premise must be that well-managed water-borne systems will be adequately maintained and that leaks will be rapidly identied and patched. In contrast, pit latrine pollutants could in fact be relatively concentrated due to high density levels in low-income urban settlements, with no controlled treatment possible. There is also a high variability of pollutant release by VIPs, depending upon soil conditions and methods of sludge treatment, and the practice of households adding sullage (washing water waste) into the VIP system.

Where the water table is high, such as in Cape Town, groundwater pollution due to pit latrines can be severe. In Winterveld, near Pretoria, the high water table allows boreholes to serve as a reliable source of drinking water, yet the use of pit latrines by most residents has resulted in dangerous groundwater exposure to biological contaminants such as faecal coliform bacteria and salmonella, in turn causing a typhoid epidemic in 1991. Of 59 wells and boreholes tested in Winterveld during the early 1990s, only 12 were free of faecal coliform bacteria (Palmer Development Group, 1995). Where soil is nonabsorbent, the pits may overow, exposing populations to direct sewage and polluting surface water. In Botshabelo, where pit overowing was described as ``continuous'' during heavy rains, high bacterial counts were found in the river system (Palmer Development Group, 1994). Low-lying land in oodplains presents another problem, for again in the case of Botshabelo, ooding caused sewage from the pits in the oodplain to ow directly into the river. Where there is rocky ground and/or ssures, such as fractured bedrock or dolomite (as in much of Gauteng) swift lateral and vertical movement of pollutants from VIPs can be expected, which means that even short-lived pollutants like viruses can leach into drinking water supplies or onto the surface, and will also leach quickly into the groundwater (Fourie and van Ryneveld, 1995). Such soil conditions pose problems for all VIP-related contaminants. Finally, on steep inclines, as in many residential areas of Natal, leakage to the surface can be expected, where people are directly exposed to the VIP sewage waste (Palmer Development Group, 1993c). Where the soil is excessively granular in character, even most of the bacterial contaminants that are ltered out well by most soils, along with the other contaminants, escape into groundwater. In all such cases, water-borne sanitation is especially important for protecting the surrounding environment. It should be noted that many negative results observed in cases of pit latrines were not associated with VIPs, but rather with poorly constructed, conventional pit latrines. Yet it is dicult to expect any dierences regarding ooding, overow and groundwater leakage of VIPs, although sanitation may be improved due to VIP improvements in y control and ventilation. In sum, on-site sanitation systems do pose signicant risks to the spread of disease, if conditions are less than ideal, in cases noted above. Regrettably, the South African government's elevation of the principle of aordability above other considerations in the provision of sanitation runs the risk of ignoring the high costs of pit latrine pollution in inappropriate geological conditions. The overriding issue is that the poor are often forced to locate on inferior and precarious land which makes for dicult provision of services and the risk of extreme environmental pollution.

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Regarding other aspects of water-related infrastructure, good water drainage systems are an important protection against ooding in crowded urban developments, where much of the natural drainage capacity of the land has been inhibited as the land is covered with concrete and as surface vegetation is lost (due to its use as rewood as well as by land development). Flood disasters, experienced periodically in South Africa, result in billions of rands in property damage and a substantial death toll every year. The impervious surfaces of urban areas not only increase ood peaks during storms, but also decrease low ows between storms. Less rainwater seeps into underground aquifers and the area becomes drier when the rains stop (Stephenson, 1993). In addition, the soil conditions and topography of urban and rural areas makes a major dierence in drainage. Drier, uncovered sections of the urban areas, often found in low-income black townships, contribute sediment to stormwater ows. This can smother aquatic life and clog dams. High pollutant loads particularly nutrients, salts and chemicals are products of urban run-o (Allanson, 1995). Environmental destruction can be reduced through moving from open drains and gravel roads to tarred roads and closed drains beneath roads (the MIIF's affordability guidelines dictate that low-income communities receive the former). With respect to both open and closed drainage, water is rapidly channelled to downstream areas, which results in heavy downstream ooding. Open drains are much less desirable in heavily settled areas due to their high potential for being blocked by solid waste (this is somewhat less of a problem with closed drains, but improved solid waste collection is required in either case). Open drains may also carry excessive amounts of sediment into the receiving water body, and have proven to be dangerous for young children who can be swept into rivers. Open drains may also facilitate erosion in the vicinity of the channels, and result in property damage to nearby homes. It is true that tarred roads also involve environmental costs, decreasing the surface area for absorption of water, speeding up the rate of stormwater runo, and increasing the contamination from oil and other automotive by-products to receiving water bodies. And closed drains speed the water ow, increasing the risk of ash ooding. But innovations in closed stormwater drainage systems have a huge potential for savings in construction costs and in costs to the environment. The main principle of a better-integrated system is to slow down the movement of urban run-o. This involves containment areas for stormwater near the site of impact, which would also allow for water treatment of the polluted urban run-o. Household rain catchment could be introduced to remove a portion of rain water from the sewer system, water that could then be used by in-

dividual households to water yards or use for general washing. A third component of integrated management is the strategic planning of green areas that would absorb stormwater runo (Andoh, 1994). Regarding water treatment, most local water researchers stress the importance of carefully managing South Africa's limited water resources, warning that water pollution is already a serious problem. Poor water quality not only aects South Africa's ability to continue to provide clean drinking water to a growing population, but the ecosystem as a whole suers from a lack of biodiversity. Enormous environmental destruction is occurring, disrupting the delicate balance of interdependence among species (Allanson, 1995). Some of the foreseen consequences include a reduction in the water body's natural purication systems, and increasing levels of ooding and erosion as the vegetation mediating these processes is depleted. In the case of surface water, point and non-point source pollution from dense urban settlement and industrial sources has created a serious water quality problem. Many urban streams and rivers do not meet the general euent standards established by the Department of Water Aairs and Forestry. Problems discussed earlier bacterial contaminants, organic silt, and nutrients, along with toxins and oil have killed o aquatic life in urban streams and have polluted the major raw water supply reservoirs which now must be treated to high standards for human consumption. Most conventional water treatment plants are ill-equipped to adequately purify the increasingly polluted water (Rencken and Kerdachi, 1991). The costs of pollution control are justied by the often greater costs of environmental damage and pollution clean-up. Systems that clean up water pollution or ameliorate its eects are becoming available. One temporary measure to preserve aquatic life in the wake of a pollution event is an aeration system that costs more than R25,000 per week to operate, and other even more elaborate systems have been designed to lter pollution from urban water courses (Imiesa, 1993). A great deal of eort is required to deal with the after-effects of the pollutants in reservoirs. Control is even more dicult for the non-point sources in agricultural run-o and informal settlements (i.e., VIPs) whose euent is not centralised through a water-borne sanitation system. In the case of groundwater resources, prevention of groundwater pollution should receive high priority in water management. Such resources are already used to supply water to towns throughout the country, and oer enormous potential to further supplement surface water supply, especially during periods of drought. Groundwater remains three to ve times cheaper to develop than surface water sources. However, pollution to aquifers is dicult to clean up. Groundwater moves much more slowly than surface water, and thus the self-

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cleansing properties evident in surface water are weak. The damages from groundwater pollution to ecosystems is often long term, and often leads to abandonment of aquifers. While it is impossible to put a price tag on a clean environment, the most direct environmental cost of pollution to water systems is the cost of the clean-up of contamination. Preliminary calculations by the Development Research Institute in Johannesburg conrm that if only a 10% reduction in water purication costs were achieved by moving all under-served households to water-borne sanitation instead of providing pit latrines, these savings would outweigh the costs for sewage treatment and greater water demand from the additional households served, by roughly R117 million per annum (Himlin, 1997). Other elements that could be included in a more comprehensive environmental cost-benet analysis that in turn would justify, on economic grounds, higher infrastructural service standards, include purication of sewage euent to required standards, which would generate an increased quality water supply; purication of drinking water reservoirs, which would have commercial shing potential; removal of silt from dams, which has potential recreational benets; restoring surface water to required standards, which would generate health care savings; cleaning of groundwater aquifers, which would add to property values; restoration of estuaries, replacing river vegetation and rehabilitation of aquatic life/sh, which would add to the intrinsic value of the ecosystem (Himlin, 1997). As with water, it is true that increased electricity service levels may cause additional social and ecological costs due to the generation of electricity to meet additional demand, but as in the case of water this demand would represent a tiny fraction of existing consumption (no more than 3% additional demand, if all South African households received electricity). Environmental benets associated with increased access to electricity certainly beyond the small supplies envisaged in the MIIF, which is a 5 Amp supply, compared to the 20 Amps required to run several small appliances and the 60 Amps supply available in most middle- and upperincome white households include diminished air pollution from coal and wood res and diminished fuelwood collection. Some of these costs (such as indoor air pollution) are limited to households, while others (deforestation, pollution caused by burning coal in urban neighbourhoods) are externalities that society as a whole pays for. Based on the experience since Soweto was electried in the 1980s, and in the rst ve years of the accelerated electrication programme, under conditions that did not include RDP-style lifeline taris (i.e., whereby electricity still cost an inordinate amount), it has been observed that electricity generates a substitution eect for higher-

value services such as powering lights, radios, televisions and small appliances. Without a lifeline tari, energyintensive applications such as cooking, space heating and water heating are more expensive if electricity is used rather than coal, wood and paran (Thorne, 1996). In short, the mere availability of electricity does not change behaviour if the price is not suciently low to create a substitution eect. The incremental eects of moving from one service level to the next depends substantially upon the levels of standards and whether a lifeline tari exists (as well as whether the retail price of small, domestically-produced appliances can be subsidised). At the low infrastructure levels envisaged in the MIIF, access to small volumes of electricity may replace the use of candles and paran for lighting, and batteries for small appliances, but there will generally be no cooking or space heating. It is possible to make some monetary estimates of the incremental benets of improving service levels beyond MIIF standards, based on recent research about the positive and negative externalities associated with retail electricity provision (van Horen, 1996b) and on a range of studies undertaken of newly electried households around South Africa (Simmonds and Mammon, 1996). Some of the eects noted are associated with public health, but are included here due to the fact that disaggregation of costs has not yet been completed. The cost of air pollution due to coal is R307 per household per year, 25% of which would be abated if higher supplies than those envisaged through the MIIF are provided, even in the absence of a lifeline tari. The respective estimates for air pollution due to wood usage are R944 per household per year, of which an estimated 5% is abated at higher levels of electricity than MIIF envisages, but again in the absence of a lifeline tari. The cost of fuelwood collection is presently estimated at R291 per household per year, and again 5% of these costs are abated with higher electricity standards (also without a lifeline tari). The time spent by rural households in South Africa (usually women) collecting wood for res fall within the range of 5.218.6 h per week (average 11.9). In aggregate each year, 1.2 million hours of travel time could be saved (nearly entirely by women) along with 12 million tonnes of rewood (Bond et al., 1997). It is only possible to guess what the abatement levels would rise to if both higher standards and a lifeline supply to provide sucient free electricity to ensure cooking, a limited supply of refrigeration, water heating and space heating were oered. The use of coal and wood for res would then be largely limited to social purposes. The main benets of electrication are with respect to health, as noted below, but there are additional benecial eects of moving to electricity from coal and wood for the sake of biodiversity, aesthetics and visibility.

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Adding health benets of electrication i.e., abatement of morbidity costs including medication, lost production, transport costs, and costs of treating in- and out-patients, and mortality costs based on a range of international studies (and adjusted to take account of South African income levels) van Horen (1996) found large net benets from increasing electrication standards so as to reduce some of the pollution associated with inecient energy use. The net eects include not only avoided environmental costs from household consumption, but also an estimate of the additional environmental costs of electricity generation by Eskom including the eects of coal-red power plants and ozone depletion to supply these customers. If electrication occurs at much higher standards in urban areas, the net benets begin at roughly R100 million in year one and rise (in present value terms) to R200 million in year two, R400 million in year four and R800 million in year eight. In rural areas, the net environmental benets of electrication rise more gradually, to R50 million by year eight. In sum, improvement of infrastructure and service standards should be undertaken in part because of the negative environmental externalities associated with lower standards. It is the environment that pays when pit latrines leak pollutants into groundwater, when sewage systems fail, when improper drainage leads to ooding, erosion and the washing of human waste into surface water, and when coal and wood are used by households instead of cleaner, healthier electricity. Environmental pollution results in actual costs to health, property, and quality of life. The environment is a public good, and the public as a whole must take responsibility for it. 5. Public health promotion Geographical, economic and ecological benets of infrastructural services are important, but perhaps the greatest inuence on policy-making should be but is not, to date the large savings to the public health budget that can reasonably be expected if standards are improved and services subsidies provided. The key component of calculations associated with health and infrastructure is the cost of communicable diseases related to inadequate water supply and sanitation. According to Sanders and Groenewald (1996), such diseases may be water-borne (spread through water supply) water-washed (lack of water for personal and food hygiene) or water-based, as well as noncommunicable diseases due to water-borne toxins. In addition, inadequate sanitation can result in the spread of intestinal helminths through contact or ingestion of

soil contaminated by human faeces. Since the transmission of many of the above diseases depend on access of human wastes to water or people's mouths, the chain of transmission can be broken by safe disposal of excreta, personal and domestic hygiene (washing hands after defecating and before preparing food) improving water quality and preventing recontamination of water supplies. Diarrhoea is the most common such disease, and is generally transmitted through food-borne processes or directly transmitted via ngers, eating utensils or dirt. Such water-washed transmission can be dramatically curtailed by increasing the quantity, availability and utilisation of water. According to Sanders and Groenewald (1996), Here distance to the water source is of the utmost importance as well as the promotion of positive water-use behaviour. A recent burden of disease study in developing countries, using the DALY (disability adjusted life year) to measure burden of disease, ranks diarrhoeal disease as one of the largest causes of disease burden. It is estimated to account for 8.1% of total DALY loss in these areas. Infants and children carry the main burden of inadequate water and sanitation-related disease with more than 80% of the DALY loss due to diarrhoea being the result of infections in children under age 5. In South Africa, diarrhoeal disease is responsible for almost 25% of deaths amongst black and coloured children between 1 and 4 years of age, and for nutritional deciency and low weights. The primary risk factors are the absence of an inside tap, a ush toilet in the home, a refuse receptacle, and electricity, as well as low household income and lower than standard ve maternal education. In addition, there are health benets from improved water and sanitation services, according to Sanders and Groenewald (1996): Health benets of variable magnitude have been reported. Studies have reported 081% (median 21%) lower child mortality rates amongst children with improved water and sanitation facilities than those without such facilities. Other studies have reported 4080% reduction in diarrhoea mortality in infants and children with the provision of piped water in the house. Several studies analyse the impact of improved water and sanitation on morbidity rates due to diarrhoeal disease. The expected decrease in morbidity rates associated with access to adequate levels of water and sanitation is regarded to be between 22% and 46%. One study shows that a decrease of between 35 and 50% can be expected, if

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improved water and sanitation are combined with excreta disposal and hygiene education. Another shows that up to 70% of diarrhoeal disease cases can be attributed to inadequate disposal of child faeces and garbage and poor caretaker hygiene. A recent review of research into the health benets of water and sanitation facilities suggests that improved water supply in itself does not necessarily produce signicant health improvements, sanitation may be a more important factor than water supply, the greatest benets seem to be associated with an improvement in both sanitation and water supply, water quantity may be more important than water quality and hygiene education enhances the health benets of improved water supply and sanitation. The factors required to achieve maximum impact from improved water and sanitation have not been well researched. Sanitation coverage is slipping behind safe water coverage and if sanitation has a larger impact on health than improving water, this disparity will result in fewer health benets to the population. Specically, based on a review of international evidence of the eects of dierential infrastructure and services on disease abatement, Sanders and Groenewald (1996) recommend relatively high standards of infrastructure provision: Where water was supplied on site or inside the house and a water-based sanitation system or ush toilet was present diarrhoea prevalence was 40% lower than with unimproved water and no sanitation. In the same study, improvements in child nutritional status were found with improved water and sanitation. Increases in height ranging from 0.81.1 cm were associated with improvements in sanitation to the level of pit latrines, and 1.51.9 cm with optimal sanitation improvements (ush toilets) in comparison with no improved sanitation. Another study estimated that provision of in-house water connections would reduce diarrhoea morbidity among infants by 12% and the provision of private excreta disposal facilities would reduce diarrhoea morbidity by 42%. Such estimations allow for rough calculations of cost savings associated simply with abatement of diarrhoea, which accrue through improved infrastructure (beyond the standards set out in the MIIF). If, for example, a 22% reduction in diarrhoea morbidity is achieved, and assuming a conservative cost estimate of hospitalisation of R2250 per diarrhoea case, upgrading from minimal levels to intermediate/full water and sanitation services, to both urban and densely populated rural areas, would

yield direct cost savings of more than R750 million to the health sector over a ten-year period. In addition to the positive impact of water on diarrhoeal disease abatement, electrication also has major health benets. University of Cape Town researchers estimate that a universal supply of electricity would curtail more than 3000 deaths each year due to acute respiratory infection (caused by wood/coal burning) burns and paran poisoning. The direct health sector cost saving due to reduced morbidity associated with electrication is, using even conservative estimates about electricity access and utilisation rates, between R343 and R515 million over a ten-year period (van Horen and Davis, 1996). Utilising a dierent database that focuses much more on household-level eects (still, however, without lifeline tari estimation), van Horen and Davis (1996) estimate savings due to the abatement of a broad range of health costs that follow the introduction of additional electricity. In the case of morbidity, costs included transport costs, medication, lost production and costs of treating in- and out-patients. For mortality, valuation estimates from a range of international studies were used and adjusted to take account of South African income levels. The implications of reducing household air pollution from coal and wood were noted above. In the case of paran poisoning, average per household costs of R90 per year can be abated by an estimated 50% due to electricity access even without a lifeline supply (and presumably much higher with lifeline) while health costs associated with res and burns an estimated R491 per household per year can be abated by an estimated 75% with higher levels of electricity supply. There are, in addition, health benets from higher municipal standards of roads and drainage systems. South African township roads are often unpaved and unlit with consequent deleterious impact on quality of life. In Soweto, road dust contributed 16% on average to particulate pollution, which is linked to respiratory diseases (Sanders and Groenewald, 1996). Improvements in transport infrastructure should promote safe, secure travel. This is not currently the case in many urban areas where wide roads, the lack of law enforcement and dangerous rail systems result in high levels of injury. To illustrate, in the greater Cape Town area from 1981 to 1984, 15% of deaths in childhood were due to transport accidents. The majority of transport related deaths involving pedestrians in Cape Town occurred in peri-urban areas with poor transport infrastructure, substandard roads and poor safety enforcement (Cape Town Metropolitan Non-natural Mortality Study Group and Health Consulting Oce, 1997). Many pedestrian deaths are preventable if the road network construction is accompanied by speed control, walkways, footbridges and recreational facilities for children.

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There are signicant potential health benets associated with improved drainage of waste and storm water, and in the prevention of contaminated ground and surface water and soil by human excreta. With communal standpipes, water waste can be high as there is no individual responsibility to see that the taps are closed. In areas where water supplies have been improved without provision of wastewater disposal the result has been a shift from one set of diseases to another. Many diseases thrive in areas where there is poor drainage and inadequate provision for garbage collection, sanitation and piped water. Anopheles mosquitos which spread malaria breed in standing water; Culex mosquitos which spread lariasis breed in sewage water (cracked or open septic tanks, pit latrines and drains); Aedes mosquitos breed in small containers of clean water (tins, tyres, water storage containers) and spread yellow fever and dengue. Intestinal parasites are also a major source of morbidity amongst low-income urban settlements (Sanders and Groenewald, 1996). Other environmental and hazard-related aspects of roads and drainage systems were discussed above. Health benets from other infrastructural improvements include abatement of seven types of environmental health hazards that are common in urban areas: biological pathogens; chemical pollutants; a shortage or lack of access to particular natural resources; physical hazards; aspects of the built environment with negative consequences on physical or psycho-social health, natural resource degradation and national/global degradation. The rst four directly aect health and the other three inuence health indirectly (Sanders and Groenewald, 1996). Inadequate water and sanitation service provision result in large numbers of pathogenic microorganisms and disease vectors in the environment. Air pollutants are produced by biomass or coal combustion as well as road dust. Physical hazards such as burns, scalds and accidental res are associated with the use of alternative energy sources to electricity. The risk of res is further increased in low-income urban settlements because of the proximity of dwellings and ammable materials used for their construction. Flooding is a problem in areas where there is inadequate drainage. Moreover, many psychosocial disorders are associated with poor quality houses and living environments. The stress of living under these conditions may undermine the immune system and predispose people to diseases. Good quality housing and living environments provided by good quality infrastructure and service delivery can greatly reduce stress and its negative health consequences (Sanders and Groenewald, 1996). In sum, the public health arguments for improving the proposed levels of service provision are numerous. Incremental improvements in sanitation result in incremental improvements in health. Health benets from improved water supplies only appear when improved

sanitation is present and only when water is provided on the premises or inside the house. Communal water facilities have been shown to have no or little health impact or in some cases worsen the situation. Water provision without adequate wastewater disposal provision such as that provided by water-borne sanitation, may be a health hazard in itself. The quantity of water is almost more important than water quality for household health production. For this reason the provision of private household or yard taps is advocated, as distance to the water source is the most important factor aecting the quantity of water used by households. Improvements in both water and sanitation produce larger impacts than either alone. For better health impact, improved water and sanitation and better hygiene behaviour are required. The reduction in morbidity due to energy related diseases is a function of the relationship between electrication and developmental attributes such as housing, safe water, sanitation, education and health care. The direct health sector cost saving that would stem from upgrading the proposed urban infrastructural investment with regard to water and sanitation is R570 million, and almost R450 million with regard to electrication (assuming 80% access by 2012). This saving is the direct result of investment in urban infrastructure, and should be included in any nancial evaluation of the urban infrastructure investment as a return on the initial investment. This has implications in the broader debate concerning nancing and aordability. The issue of health sector nancing is particularly pertinent in the light of the disparity between health expenditures and health outcomes in South Africa. In addition, indirect health benets will also result in substantial savings due to the release of time, particularly women's time, which can be used for child care and productive activities; improved worker productivity; and opportunities for education. Given the historical disparities between race groups in South Africa, it is not appropriate to provide inferior services to the disadvantaged populations. Countries with the largest gaps in the quality of infrastructure between the wealthy and the poor, have the worst overall health status. In addition to the ethical and moral arguments, there are sound public health arguments for improving infrastructure in the poorer areas. Many of the diseases related to poor infrastructure are contagious, and as such, have the potential to threaten the health of higher socio-economic groups in the vicinity (especially cholera, malaria, dengue, lariasis, yellow fever and tuberculosis). It is short-sighted to provide a lower level of infrastructure given the longer term potential for environmental degradation. And there is evidence to show that people are much more likely to maintain services which are their own than those which are shared.

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Such public health considerations are important for gender equity. Women's savings in energy expenditure from bringing water closer to households results in reduced incidence of low birth weight babies born as well as a corresponding reduction in energy intake which could be transferred to children. Similarly, time savings due to the use of electricity for cooking and heating could be utilised in ways more benecial to health. In sum, health is primarily produced at the level of the household and is directly related to the living environment, which includes municipal service provision. There is much evidence to demonstrate the signicant public health advantages of improved infrastructure. The health gains will be both a direct result of improved water, sanitation, electrication and drainage, as well as indirectly achieved mainly through releasing women's time for caring and productive activities. But to realise the large gains possible not only the health budget savings that are likely if standards are improved, but strong moral and political benets associated with improved infrastructure development will also require the government to revisit its pricing of services. 6. Subsidies and taris The South African government's failure to lower the prices of basic services will mean that the range of benets from basic infrastructure described above cannot be achieved. Restructuring subsidies and taris requires coming to grips with extremely low levels of aordability, and a willingness to look beyond the orthodox cost-recovery approach that has dominated policy, programmes and projects to date. It is in this sense that the South African government has not even advanced to the stage of ecological modernisation whereby cost-benet analysis would permit the internalisation of externalities, nor have socio-ecological justice instincts been sharp enough to redistribute wealth in the form of progressive block taris. Thus most government urban policy documents fail to consider that services in existing middle- and highincome areas (still mainly populated by white South Africans) are still heavily subsidised, and have been for decades, from surpluses generated through business levies (ultimately based on transfers from black workers and consumers whose employers and retail outlets were historically, by law, located in white areas). Redistribution for the sake of social and historical justice is one rationale for dramatic changes in infrastructural service pricing. But there are other reasons that the government should systematically diverge from setting prices based on orthodox marginal cost, average cost or other narrow nancial-return techniques. A pure cost-recovery model is inappropriate for municipal and other social services. The South African

government rejected a cost-recovery approach to primary health care not only because health is a basic human right (guaranteed in the Constitution's Bill of Rights) and because low-income people's spending on healthcare is typically subtracted from spending on vital food and other components of good health, but also because it is administratively expensive to do so. It often costs more in cost recovery administration than can be squeezed out of low-income people desperate for treatment (see Bond, 1998a, for the Zimbabwe case). The same is true with respect to other basic governmentsupplied services. If we consider the implications of the cost-recovery approach in perhaps the most critical area of services basic water supply it is clear that attempting to be thrifty by providing merely collective (not individual onsite) taps, as proposed for most rural water consumption, is penny-wise but pound-foolish. The collection of monies from standpipes poses considerable problems. A at rate charge is inequitable in that it favours those consuming larger quantities and this has the potential for social conict. Consumption related charges entail costly methods of collection which either lead to signicant underrecovery of costs or signicantly higher prices to consumers. In contrast, a progressive block-tari and lifeline subsidy system assures that a minimum supply of municipal services could be consumed at no charge by all residents, with rising increases in prices based on increasing consumption levels. The rationale for a block tari is partly the long history of resource consumption at inordinately low prices by South Africa's large industrial and agricultural corporations, and extravagant domestic use by the white population. By generating a surplus through slightly higher marginal costs for corporations, free lifeline taris can easily be designed for the rst block of consumption (e.g., 50 litres of water per person per day). If such lifeline taris are to be considered an entitlement, there is no reason that they cannot be structured so that all domestic users receive their rst monthly units of water and electricity on a fully subsidised basis, provided that subsequent levels consumption are priced at increasing rates so as to cover the initial costs. With respect to nancing the capital costs of infrastructure, tari reform can support the stretching of payment for capital. However at present, an insucient amount of public sector capital expenditure is occurring, by all accounts. In the case of electricity, Eskom (which in 1995 installed 80% of all new connections in South Africa) only spent half of the amount suggested in the RDP for the peak annual capital cost of electrication, with no plans to augment its capital expenditure beyond present levels (300,000 units per year) that would decisively diminish the backlog of approximately 4.5 million households.

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How much capital investment is required? An ``intermediate'' service level for urban and rural people much higher than the proposed MIIF would have capital costs of up to R56 billion in urban areas and R59 billion in rural areas over the next decade, amounts feasible within the existing planned housing and land reform budgets (Bond et al., 1997). At just over R11 billion per year, this corresponds to the stated desire of government to spend 5% of its annual resources in 1998 rand R10 billion of a R200 billion budget on housing (of which basic infrastructure is the core component) (actual spending has been less than 1.5% of budgetary resources since 1994). Additional spending on land reform would support enhancement of rural services (which are more costly to install given geographical friction). A large part of the government's reluctance to expend amounts anywhere near this level on decent household infrastructure notwithstanding rhetoric to the contrary in even the macroeconomic strategy stems from the inability of consumers to pay the recurrent operating and maintenance expenses. Because the argument for cross-subsidisation and lifeline taris is ultimately about recurrent consumption, is important to show how water and electricity can become self-nancing through ``ringfenced'' cross-subsidisation (requiring no other external subsidies). Other aspects of infrastructure such as roads and water-borne sewage involve relatively minor operating and maintenance costs, which can generally be internalised within the rates base of, and central scal transfers to local authorities. To achieve sucient cross-subsidisation in the two most crucial cost-centres, water and electricity, requires moving from local-level tari determinations (which still often reect residual apartheid-era distributional arrangements) to a national policy and structure. This could be accomplished while still giving local authorities sucient autonomy to establish additional levies for other funding purposes, as is provided for in the Constitution (Swilling, 1997). To consider water, there are numerous potential sources of income from within the water sector to cover the operating and maintenance costs of an improved level of service with a basic entitlement provided for free. These include cross-subsidisation from rich to poor consumers, from mining and industry to residential users, and from urban to dense settlement and rural. There are sucient nancial surpluses within the water sector at catchment-area and national levels, and some interesting pilot studies of local cross-subsidisation (e.g., the Western Cape town of Hermanus) to suggest the feasibility of this approach. Current water pricing policy is indeed to allocate 5% of all water in South Africa to a basic needs reserve, for precisely this (abstract) purpose of assuring all basic needs can be met; however, local authorities have generally failed to apply progressive

tari structures, in part due to rising opposition to such block taris from the World Bank (Roome, 1995; for a rebuttal, see Bond, 1998b), DCD and the Department of Finance. (One strong basis for opposition is that it makes privatisation of municipal water more dicult, as rms have diculty matching their marginal cost curves to retail price levels.) With price elasticities of water in the Johannesburg area estimated at 0.3, there will not be a dramatic impact initially on large-scale users (though such an impact would certainly be desired, ultimately, for conservation purposes) (Roome, 1995). Similarly, the electricity sector has historically distorted end-user tari prices so as to maintain its product articially inexpensive for many heavy industrial consumers (in part to take up large underutilised capacity due to 197080s over-expansion) hence leading to serious economic distortions. Cheap electricity, according to Fine and Rustomjee (1996), fuelled the corporate ``minerals-energy complex'' which so dominated other aspects of South African economic development that it can largely be held responsible for many of the country's vast structural economic problems, including the underdevelopment of small-scale business, monopolisation, low levels of investment, relative lack of capacity in intermediate and capital goods, poor export performance in manufacturing, low skill levels of the workforce, and inappropriately high capital-intensity in key economic sectors. The problem continues, for between 1987 and 1994, Eskom was able to reduce the real price of electricity by 24%, and is aiming to reduce it by a further 15% by 2000. Consumers were not so fortunate (though they are subsidised extensively given the far higher costs of supplying power at peak morning and evening hours and in relatively small, atomistic volumes). While there has been great variance due to deals favouring particular consumers (such as the giant aluminum exporters) the mean 1994 electricity tari was R0.05 R/kWh (40%) higher for domestic consumers than for mining or manufacturing consumers (Electricity Working Group, 1996). Within domestic consumption, large tari variances still generally favour residents of well-established areas (not low-income black people) whose predecessors had long ago paid the capital costs of installation. To replace these distortions with cross-subsidies founded on social justice principles, the cost implications of providing a lifeline subsidy of 20 kWh per capita per month would be approximately R6 (the average consumption at present by vesix person households with prepayment meters is 80 kWh per month, which implies that a new system would dramatically increase consumption for lower-income users). As is the case for water pricing, a lifeline tari is not technically dicult to implement, once either billing systems are adjusted or prepayment meters are fully installed (in the latter case, cards are purchased regularly from outlets, and it would

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be administratively feasible to provide the subsidy to a household representative each month at a given sales point). With approximately nine million households, the total annual cost internal to the electricity supply sector would eventually reach approximately R3 billion per annum (roughly twice the existing internal cross-subsidy to domestic users) once the entire nation had electricity connections. As noted below, there will be economic consequences of an inclining block tari, including fuelswitching and conservation. Ideally, fuel-switching would also encourage the development of inexpensive solar and wind systems with much lower life-cycle cost and greater applicability in isolated rural areas (Davis, 1996). Data on price elasticities are relatively scarce, although one study indicated a short-run price elasticity of 0.097 and a long-run price elasticity of 1.01 (Pouris, 1986). In short, given South Africa's combination of maldistribution of resources and enormous poverty, there is a crucial need for a systematic approach to cross-subsidies, at national level but with scope for some degree of municipal variation, thus ensuring a lifeline supply for all. 7. Conclusion: expanded developmental infrastructure and service delivery To sum up the intellectual and policy argumentation, there is a good case for considering the criteria listed as the basis for: (a) generous infrastructure and service subsidies, utilising national tari restructuring so as to achieve redistribution, conservation and other socio-economic objectives; (b) increasing the standards of infrastructure provision, even to the very poor, based on sound socioeconomic benets of higher standards; and (c) much more eective roles for the state and communities in infrastructure investment and services provision, regulation and pricing. All of these conclusions from the review of available international and domestic evidence should be considered as minimal justications for broader state intervention and community participation. The broader costbenet analysis supported in this paper should help shift the terrain of debate surrounding allocation of national budgetary resources so as to allow policymakers from the national DCD (as well as Finance, Water Aairs, Minerals and Energy, and related departments) the provinces and municipalities to make a stronger case for infrastructure investment and broader service delivery. There is, in addition, a growing political imperative associated with aligning infrastructure and service de-

livery to developmental goals (instead of merely to full cost-recovery principles). This imperative is reected in the severe tensions, particularly evident during 199798, associated with cut-os of services by municipalities in highly politicised townships. Some such cut-os have occurred in a manner that even important community organisations (such as SA National Civic Organisation branches) have been unable to mediate or justify, and that have intensied local-level alienation and anger (leading, occasionally, to rebombings of houses belonging to municipal councilors even from the ANC, to violent attacks on municipal ocials, and in one case to a tragic assassination of a Johannesburg suburban ANC mayor in October 1998). The diculty of marrying two lines of advocacy on the one hand, technical, rationalist and acceptance of the broad premises of capital accumulation, and on the other hand, grounded in decades of social struggles for both racial and socio-economic justice is here apparent. For even in the face of evidence that basic infrastructure for socio-economic development, environmental protection and geographical desegregation is aordable and pays handsome direct and indirect dividends, the numerous South African government departments associated with its supply from national to local levels have all, in varying degrees, endorsed a stingy system of lowquality, relatively unsubsidised infrastructure and service provision which will neither capture the bulk of positive externalities described above, nor fulll popular yearnings for dignity. The people (and their organisations) most aected by municipal infrastructure and service delivery policy have been largely excluded from the national policy debates through their political representatives in government and parliament, and an ineectual tripartite bargaining forum. There is still a chance, however, given the politicised nature of these issues at present and the threat they pose to the popularity of the nationalist government, to change that. An exploration of how, politically, low-income South Africans can reinsert themselves into the decision-making process should become a top priority, prior to any nalisation of the policy debates. Acknowledgements Acknowledgements are due to many colleagues with whom these arguments were developed during 199098, including George Dor, Becky Himlin, Mzwanele Mayekiso, Litha Mcwabeni, Greg Ruiters, David Sanders, Selby Shezi and Mark Swilling. Funding support from the British Department for International Development and the SA Department of Constitutional Development is acknowledged, and Ben Casdan and Chippy Olver are thanked for supporting the research process.

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