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Business Implications and Response
All businesses depend on having access to water, whether to supply facilities for staff or customers (e.g. refreshments, cooling, sanitation) or as the basis of manufacturing or processing products for sale. So the drought presented challenges to all Cape Town based businesses, but those challenges showed up at different stages and intensities, depending on the nature of the business. The way businesses responded depended on a combination of government regulation, managerial judgment and access to capital with which to effect changes. That said, there were three broadly identifiable stages, in each of which the intensity of the business response increased.


 * Stage One - 2016 to early 2017. Historically, the price of municipal water supplied to businesses had been relatively low, too low to stimulate voluntary investment in water efficiency measures or alternative sources of supply. Even the most water-intensive companies in Cape Town saw no business case for significant investments of this kind in this period.
 * Stage Two - May 2017 to January 2018. Commercial water tariffs had been increased by the City for a second time in December 2016, causing a total increase since 2015 prices of 35% . However the increase was insufficient on its own to stimulate large-scale business investment in efficiencies and alternative sources. Then in May the drought was declared a provincial disaster and from then on more and more businesses, concerned about continuity of supply in the face of potential rationing, took action to become more efficient or to secure alternative sources of water (e.g. boreholes, rainwater harvesting, etc.). On 3rd October Mayor de Lille announced that 'Day Zero' was a possibility, being the day - then estimate to be sometime in March 2018 - "when supply of municipal water would not be available".
 * Stage Three - January to May 2018. On 1st February the City's Level 6B tariffs came into force, representing for businesses a 104% increase over the previous consumptive use tariff . Coupled with regular updates from the City about the expected date for Day Zero, a number of companies took this as a trigger to spend significant capital on improving water efficiency and securing alternative supply.

Agriculture

The agriculture industry is one of the largest users of water. The wine industry in and surrounding Cape Town is a major tourist draw and is a significant aspect of the economy, employing 300,000 workers. The wineries drew 1.5 million tourists in 2017 and at the same time used a third of the water. Depending on the region, a vineyard needs between 10 and 24 inches of rain to survive. South Africa’s wineries have received on average half as much precipitation in the past year. The stress is being felt by industry where less water is causing smaller berries and therefore smaller yield. The industry also has a disproportionate profit with only about 1% return on investment despite producing some of the most popular wines in the world. The grape yield for 2018 could fall an estimated 20% from the 1.4 million tons produced in 2017, resulting in a 9% decrease in the volume of wine sold.