In an effort to determine empirical cost functions for municipal water supplies in the United States, the writer found it necessary to specify an acceptable mathematical form to represent the cost equation. A preliminary search yielded no theoretically consistent expression adaptable to the problem. The primary concern in the studstimay thus became one of identifying theoretically sound statistical etion procedures for interrelated long- and short-run cost functions. Criteria were established to recognize a mathematical form qualified to function as a generalized cost equation. The prescribed path wound its way through a traditional overview of economic production functions, cost theory literature, and curve estimation procedures; then it moved into a comprehensive review of empirical cost studies. This empirical section first identified studies of short-run cost relationships and gave examples of declining, constant, and increasing marginal costs. Theoretical literature, addressing possible reasons for these diverse shapes, was then cited. The same format was maintained for long-run studies reporting diverse shapes. Theoretical explanations followed. The last part of the literature review inspected the explicit model structure of those studies combining long- and short-run cost curves. When no econometric model was found in the literature which satisfied the pre-specified criteria for a generalized cost equation, the study assumed the task of developing such a framework. The resulting econometric structure exhibited the following properties: (1) The adopted equation generates both long- and short-run cost curves. (2) Two cost groups are retained in both the long- and short-run—costs which vary proportionately with output (i.e., operating costs), and costs which are independent of output (i.e., plant costs). (3) Plant capacity is strictly defined, and all short-run production of a plant is constrained to a quantity not to exceed that capacity. (4) Operating cost is a function of production and plant utilization while plant cost is a function of plant capacity. Once the general econometric structure was developed it was then adapted to an empirical study of the cost for supplying water to municipalities. A survey of operating data for water utilities, collected by the American Water Works Association for the year 1965, was used as the principal data source for the application. Other independent variables, considered potentially important in determining cost, were evaluated and added to or omitted from the model. These characteristics included alternative treatments, types of customers, sources of water, city density, etc.. The resulting regression equations indicated the following industry structure: (1) Although the major portion of the industry is facing economies-to- scale, the long-run cost curve turns distinctly upward for large water suppliers. (2) Over 95 per cent of the plants face downward sloping short-run average cost curves. (3) With the available data no statistical evidence could be found to indicate a plant's operating cost is affected by the level of plant utilization. The municipal water example was used to demonstrate the versatility of the generalized cost function in accommodating cost studies and hypothesis testing. The author therefore asserts that the econometric structure developed in this study is qualified to fulfill the pre-selected requirements of a theoretically sound statistical estimation procedure for interrelating long- and short-run cost functions. / Graduation date: 1978

M.Comm. / Southern Africa is considered by the rest of the world to be a water scarce region. Previously within the region water was not regarded as a high profile subject in the development process. A paradigm shift is required in the region to recognise the need to concentrate on demand management instead. The paper briefly examines the climatic conditions as a contributing factor to scarcity of the water resources. It further focuses on the human factor which is regarded as a factor that can be managed as opposed to the climatic conditions. In managing the human factor, the usage of water cannot remain the same as it was before the scarcity problem that the SADC region is faced with. It is also recognised that water resource is necessary for survival, therefore basic human requirements are examined. This scarcity makes water to be regarded as an economic good. The paper further explains the elements that make water to be regarded as an economic good. Water being an economic good, it commands a price. The study explains pricing the resource as the only method of making the population understand about the importance of the resource. Different pricing methods are explained in detail. To demonstrate this demand management of water the study interrogates three cities namely Soweto, Cape Town and Durban. In this interrogation the demand management techniques used and their efficiency are compared and contrasted to ascertain the efficiency of the chosen demand management techniques and the existence of gaps within these techniques.

M.A. / The adoption of cost-recovery policies by local government in South Africa is an effort to recover costs from the investments made in infrastructure expansion and to ensure efficient delivery of services. This study came about from the need to understand the paradox of continued adoption of cost-recovery policies in a country that faces high poverty and unemployment rates. The focus of this study is to find out what are the social impacts of the water cost-recovery policy on the livelihood of female-headed households. The first chapter is the background to the study. The main concepts of cost-recovery, female-headed households and livelihoods are defined. In addition, the demographic, social and economic description of Ward 77 in City of Johannesburg Metropolitan Municipality which is the focus of this study is provided. The second chapter is a review of literature behind the rationale of cost-recovery and its implication in South Africa. In addition, the livelihoods framework is explored. The third chapter addresses the methodological approach used to undertake this study. Qualitative methods were used, in the form of in-depth interviews with stakeholders, documentary reviews as well as a focus group and interviews with female-headed households. The fourth chapter is the discussion of findings arising from the consolidation of data. We find out about the livelihoods of the households before and after the implementation of cost-recovery and the effects this has had on the household. The final chapter is an analysis of these findings along the themes of the study namely the social impact of water cost-recovery on the wellbeing of the household, the impact on household financial security, the impact on social networks and the impact on educational spending. The study concludes by pointing out that, although there has been advancement in infrastructure development and service provided, the poor in urban townships continue to be negatively impacted by cost-recovery policies. Policy makers should consult communities in formulating approaches that tackle the issues of rights and affordability of basic services such as water. With the country’s high poverty and unemployment levels, cost-recovery would only be effective if the incomes of households are increased. Thus policy makers must take into account the socio-economic situation of a population to ensure the inclusion of all in the formulation of policies.