Sustainable Asset Valuation of Waterway Rehabilitation in Cape Town, South Africa

The rivers and wetlands in Cape Town, South Africa, provide important services for the city's residents. They supply freshwater from nearby Table Mountain, regulate water flow, improve water quality, support biodiversity, and offer spaces for recreation, tourism, and fishing. 

However, urban development, land-use change, and pollution have severely degraded these waterways, reducing their ability to manage and supply clean water. Climate change is also making rainfall more unpredictable, with droughts and floods expected to become more frequent and severe. 

To respond to these challenges, the City of Cape Town has developed a Water Strategy, aiming to become a water-sensitive city by 2040. The city has also launched the Green Infrastructure Programme and the Liveable Urban Waterways Programme; the latter focuses on restoring urban waterways and catchments through water-sensitive design and nature-based solutions. 

The study area for this project lies in two adjacent catchments of the Liveable Urban Waterways Programme: the Diep/Sand River and Zeekoe catchments. Our report analyzes the socio-economic and environmental impacts of the sought interventions. Namely, creating retention ponds, extending and establishing wetlands, setting up community gardens and educational areas, designing and upgrading walkways, installing litter traps, revegetating and landscaping riverbanks, and removing invasive species and replacing them with appropriate indigenous alternatives. 

In partnership with the C40 Cities Finance Facility and the City of Cape Town, we evaluated two scenarios: one in which no further action is taken, and one in which NBI interventions are implemented. This comparison helps communities and decision-makers understand the costs of continued ecosystem decline and the benefits of investing in nature-based solutions. 

The results show that NBI interventions generate significant net benefits compared to the business-as-usual scenario, in which the ecosystems continue to degrade. 

We found that in the Diep/Sand River catchment, for every ZAR 1 invested in the NBI, about 2 ZAR could be returned over a 25-year period, amounting to net benefits of ZAR 121 million from avoided costs and added environmental, social, and economic benefits. Among other things, the NBI reduces flood damages, avoids impacts of ecosystem deterioration on tourism and properties, creates jobs, and avoids the costly dredging of lakes. 

Similarly, in the Zeekoe catchment, every 1 ZAR invested in NBI can yield ZAR 1.56 in benefits for society, amounting to net benefits of about ZAR 68 million over 25 years when using an 8% discount rate and an optimistic climate scenario with relatively little flooding. 

We analyzed the performance of the NBI under different climate change scenarios and found that the NBI is particularly valuable under pessimistic climate scenarios with high avoided flood damages. The study also demonstrates that the NBI interventions benefit local communities by creating jobs and preserving valuable ecosystems and spare the City of Cape Town from large spending on grey infrastructure.