Although South Africa has adopted a very modern permit/license system to control access to water as a resource, the attainment of the lofty objectives (efficiency, equity and sustainability) of the National Water Act of 1998 depends on two critical factors: (1) the institutional efficiency of the water management system; and (2) the development of water markets and their efficient functioning. This study lists a number of concerns that the Act is not geared to resolve efficiently or in a timely manner. These concerns include the high administrative costs of implementation, poor incentives for long-term investments, bureaucratic inefficiency, practical problems in water pricing and adaptability to climate change threat. There is a need to re-think the ways and means with which to make water distribution more efficient in the country. One possible solution would be to develop water markets in the country.

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