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The Constitutional Court has granted the Department of Water and Sanitation’s (DWS) application for leave to appeal against a decision by the Supreme Court of Appeal (SCA) on the transferability and trading of water rights. The outcome of this judgment will have significant consequences for the agricultural sector, both in terms of investor confidence and access to capital.

The case came about as a result of a circular issued by the DWS in January 2018, in which the department sought to remove the right of water use entitlement holders to transfer the entitlements. The case was brought to the SCA after the Pretoria High Court dismissed applications for a declaratory order on the legality of the circular.

On 8 November 2021, the SCA ruled that water rights holders are entitled to transfer such rights in accordance with the provisions of the National Water Act (NWA) and that trading in such rights is neither prohibited nor unlawful. The department has chosen to appeal this decision, and the Chief Justice has directed that the appeal will be heard by the Constitutional Court on 25 August 2022.

Read more about South African water consumption trends here.

Appeal threatens agriculture’s sustainability

Stewardship of water involves not only the efficient use of scarce water resources but also the legal protection of water use entitlements. These entitlements are not only essential for access to water but are also a valuable asset for South Africa’s farmers. The ability to lawfully transfer water use entitlements in accordance with the provisions of Section 25 of the NWA is vital, particularly for the agricultural irrigation sector. The transferability of water use entitlements in terms of the NWA was envisaged from the outset and this was actively endorsed and supported by the DWS.

The defence of the unlawful circular by the DWS constitutes a threat to the sector’s sustainability as government is once again attempting to affect an arbitrary deprivation of property. Coupled with the ongoing debate around the Expropriation Bill, this action can only further erode investor confidence in the agricultural sector and the broader economy. 

To uphold these vital rights of farmers, Agri SA funded the legal costs in two of the three cases, leading to the SCA judgment from its Voluntary Water Fund. 

It is unfortunate that the sector has had to resort to the litigation, but Agri SA is confident that the rule of law will prevail, and that the nation’s farmers will be able to continue to do the crucial work of ensuring food security for the country at this especially difficult time. – Press release, Agri SA