Darvill Wastewater Works (DWWW) receives and treats both domestic and industrial wastewater from the city of Pietermaritzburg, in KwaZulu-Natal. Sludge from the wastewater treatment is sprayed onto surrounding lands, causing odour and fly problems. The plant also discharges treated effluent into the Msunduzi River, compromising water quality. This study uses several economic valuation techniques to estimate the value of the benefits of improving air and water quality to overcome these problems caused by DWWW. The benefits. are then compared with the costs of upgrading DWWW to see whether or not upgrading DWWW to improve air and water quality would be worthwhile. The Contingent Valuation Method (CVM) was used to elicit people's willingness to pay (WTP) for improvements in air quality due to the elimination of odours and flies caused by sludge deposited by DWWW. The WTP estimates reflect individual's preferences for improvements in air quality. The stated WTP amounts were positively related to household income, but negatively related to the age and gender of the respondent and the number of dependants in the household. The mean monthly WTP for the surveyed households is higher for those that are closer to the pollution source (R23.00 and R29.00 for Zones land 2) and less for those further away (RI4.00 for Zone 3). Sobantu residential area had the lowest mean monthly WTP (R18.00), followed by Lincoln Meade (R27.00) and Hayfields (R54.00). This is expected, as Sobantu has relatively high levels of unemployment and lower household incomes. Strategic, hypothetical and free rider bias may have led to the unexpected signs of some estimated regression coefficients in linear regression models used to estimate WTP. The mean WTP was estimated as R307.20 per annum per household, and when this is aggregated over the total population in the residential areas impacted by odours and flies (37192 households), the benefits of eliminating odours and flies are estimated as R11 425 382.00 per annum. A hedonic price method was used to quantify the decline in property values as a result of odours and flies caused by sludge deposited by DWWW. Properties experienced a R6650.08 decline in selling price if the distance from them to DWWW is decreased by one kilometre. Properties that are closer to DWWW were worth RI5 953.90 less than those further away from DWWW. Aggregating these values over all estimated impacted households in the study, gives an estimated benefit of improving air quality of R28 480 518.00 per annum. The impact of water pollution was quantified by estimating the revenue (R3 744 975.00) that would be lost by Pietermaritzburg if the Duzi Canoe Marathon were to be cancelled due to incidences of diarrheoa reported during the race. A cost of illness procedure was adopted to quantify the effect of water pollution on the health of communities that use the Msunduzi River as a source of potable water supply. A value of R1 243 372.50 was estimated as the annual cost of water-related illnesses in these rural areas. This value represents the costs of the river pollution to those communities. Both of these exercises indicated that improving water quality of the Msunduzi River would be beneficial to society. The effect of nutrient enrichment of the Msunduzi River was quantified by estimating the cost of removing water hyacinth from the Inanda Dam, treatment cost at Wiggins water treatment works and the value of recreation at Mahlabathini Park (Inanda Dam). The annual cost of removing water hyacinth was estimated from the direct costs of chemicals and labour as R47 202.15. The increased treatment costs at Wiggins attributable to DWWW were estimated as R1 104 999.20 and R956 924.15 per annum for removal of algae, and tastes and odours, respectively. The value of R706.90 per annum was estimated as the consumer surplus accruing to recreationists, and, therefore, the value of recreation at Mahlabathini Park to an individual. These annual benefits, when aggregated over the total study population (296 590) were over two hundred million rands (R209 659 470.00). The estimated total benefits (R256 662 840.00) of eliminating odours and flies and effluent problems were compared to the actual costs of two alternative methods of upgrading DWWW using cost-benefit analysis. These alternatives were co-disposal option (R170 473 320) and a land disposal option (R168 809377). Benefit-cost ratios of 1.51 and 1.52 suggest that from society's standpoint, it would be beneficial to upgrade the plant in order to eliminate its adverse environmental impacts. The study results have important implications for policy makers, both the DWWW management and the Pietermaritzburg-TLC municipality. At present DWWW is operating beyond its design capacity, and this problem, together with the poor status of Pietermaritzburg's reticulation system, causes overflow of untreated or compromised final effluent into the Msunduzi River during rainy seasons. These problems also impact on the efficient operation of the plant as the sludge is not properly digested before being sprayed onto surrounding land. Thus to prevent further environmental degradation, a fundamental basis of the National Environmental Management Act, DWWW would need to address these issues. Upgrading DWWW would be a short-term solution if the problems with the storm-runoff into the plant is not addressed. / Thesis (M.Sc.)-University of Natal, Pietermaritzburg, 2002.