Can you sell your wa­ter-use en­ti­tle­ment?

Daily Dispatch - - Business - Bon­gani Qan­gule Bon­gani Qan­gule is an at­tor­ney with Drake Flem­mer & Orsmond At­tor­neys. He can be con­tacted on 043-7224210.

“With all the at­ten­tion be­ing on Covid-19, peo­ple have for­got­ten that large parts of our coun­try are still suf­fer­ing from a pro­longed drought. The drought and our suf­fer­ing econ­omy has made me look into sell­ing my wa­ter use to a neigh­bour who ur­gently needs it and is will­ing to buy such from me and which money I could re­ally use. How­ever, I’m not sure whether I can in fact sell my wa­ter use to him. Is this pos­si­ble?”

Wa­ter use in SA is mainly reg­u­lated in terms of the National Wa­ter Act, 36 of 1998 (“Wa­ter Act”). The Wa­ter Act clearly states that wa­ter is a scarce and un­evenly distribute­d re­source and that gov­ern­ment has a re­spon­si­bil­ity to man­age wa­ter use and dis­tri­bu­tion in a sus­tain­able way to the ben­e­fit of all users. Wa­ter is a nat­u­ral re­source that be­longs to all peo­ple and to achieve sus­tain­abil­ity and equal­ity, and to pro­tect our wa­ter re­sources, gov­ern­ment must man­age the use and dis­tri­bu­tion thereof.

Chap­ter 4 of the Wa­ter Act deals with wa­ter use. Wa­ter use is broadly de­fined to in­clude the tak­ing and stor­ing of wa­ter, ac­tiv­i­ties which re­duce stream flow, waste dis­charges and dis­pos­als, con­trolled ac­tiv­i­ties, al­ter­ing a wa­ter­course, re­mov­ing wa­ter found

In gen­eral, wa­ter use must be li­censed un­less it is listed in Sched­ule 1, which mainly deals with use for do­mes­tic and not com­mer­cial pur­poses

un­der­ground for cer­tain pur­poses, and recre­ation. In gen­eral, wa­ter use must be li­censed un­less it is listed in Sched­ule 1, which mainly deals with use for do­mes­tic and not com­mer­cial pur­poses.

The North Gaut­eng High Court re­cently had oc­ca­sion to con­sider whether li­censed wa­ter use can be trans­ferred and/or sold in terms of the Wa­ter Act. In re­view­ing the po­si­tion, the court held that trad­ing in wa­ter is not per­mis­si­ble as it would al­low the hold­ers of wa­ter use en­ti­tle­ments to choose who the re­cip­i­ents of such wa­ter would be.

The Wa­ter Act also does not pro­vide any ba­sis for al­low­ing the holder of wa­ter use rights to sell such to a third party, as it is ul­ti­mately the rel­e­vant Min­is­ter’s re­spon­si­bil­ity to en­sure that wa­ter is al­lo­cated eq­ui­tably and used ben­e­fi­cially in the pub­lic in­ter­est.

Ac­cord­ingly, the sale of wa­ter use en­ti­tle­ments by hold­ers in pri­vate agree­ments would dis­crim­i­nate against those who can­not af­ford the price de­ter­mined uni­lat­er­ally by the holder thereof. Such a prac­tice would there­fore es­tab­lish a mo­nop­oly of ac­cess to wa­ter re­sources by es­tab­lished farm­ers with the fi­nan­cial re­sources to pur­chase wa­ter use and would frus­trate equal ac­cess to wa­ter and keep his­tor­i­cally dis­ad­van­taged peo­ple out of the agri­cul­tural in­dus­try. As such the court found that wa­ter use en­ti­tle­ments can­not be sold to a neigh­bour or any other per­son.

Should this case be ap­pealed, one will have to mon­i­tor whether the po­si­tion changes.

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