1. 10th Inkaba yeAfrica/!Khure Africa (AEON) Conference/Workshop
Lord Milner Hotel, Matjiesfontein - Karoo
29 September – 3 October 2014
SHALE GAS IN SOUTH AFRICA: CONTEXTUAIZING THE SOCIO-ECONOMIC and POLITICAL IMPLICATIONS
Barry Morkel1
M.J. De Wit1
1. AEON-ESSRI (NMMU): Shale Gas Research Programme
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2. OUTLINE Introduction Methodology and Approach Background and Context
Critical Drivers: Socio-Economic and Political
Socio-Economic Profile and Situational Analysis
Risk Identification and Categorization (S-E,P)
Strategic Risk Mitigation Factors: Sign-posts for Policy Makers and Regulators

3. Introduction This study seeks to achieve the following:
To better understand the socio-economic and political implications of shale gas development within the Karoo;
To develop a nuanced perspective on the social, economic and political context in which this “Game Changer” is unfolding (i.e. International, National and Regional)
To identify and highlight critical risks, existing ‘blind-spots’, and responses to these factors for further investigation and analysis.

4. Methodology and Approach
Contextualize the debate within its broader social, economic and political context;
Situational analysis of key socio-economic and political factors in the debate (at a National, Regional and Local level);
Based on available data (Stats SA, IDPs, Govt. publications, and documentary sources).
Based on this environmental scan, identify associated Risks
Identify responses for mitigation at a strategic level.

5. Methodology and Approach
Contextualize the debate within its broader social, economic and political context;
Situational analysis of key socio-economic and political factors in the debate (at a National, Regional and Local level);
Based on available data (Stats SA, IDPs, Govt. publications, and documentary sources).
Based on the above, to identify and categorize critical risks and implications for shale gas development in the Karoo;
Responses are then identified for each of these risks.

6. Background and Context
Considerable attention into SG potential for future energy security and as a catalyst for economic growth.
This has been characterized as a “Game Changer” for South Africa?
In the light of associated risks , this has ignited fierce debate and opposition in the Karoo.
However, little is known of the socio-economic and broader political impact this sector might have on the Karoo.
Background and Context

7. Critical Socio-Economic and Political Drivers behind the Shale Gas

8. Critical Drivers: Socio-Economic and Political
Economic growth
Employment creation and Poverty alleviation
Rural economies& small towns
Energy Security
Reduction of the carbon footprint
Critical Drivers: Socio-Economic and Political
Reduce dependency on agriculture
Anticipated ‘R1 trillion’ contribution to GDP
Potential
contribution to regional and local economies (i.e. EC Provincial Industrialization strategy, and LED)
Stimulate local employment through industrialization
Current levels of poverty in Karoo towns (CHMD & CDM)
Alleviation from dependency on coal
Reducing GHG related to coal burning power

9. Socio-Economic Profile in Affected Localities of the Karoo

10. Socio-Economic Profile and Situational Analysis: The Study Area

11. Socio-Economic Profile and Situational Analysis
Finance, business sector
General government

12. Socio-Economic Profile and Situational Analysis
Low population density;
The Cacadu alone covers approximately one third of the Eastern Cape’s land area, however it only houses 5.4% of the provinces’ population.
Local economic development remains challenged across these LMs
Average <1% growth in GDP( )
Camdeboo remains the only exception at 1.08%
An average of 30% Unemployment across the affected LMs.
Poverty levels are high with significant dependency on social grants (37% for Cacadu LMs*).

13. Socio-Economic Profile and Situational Analysis
Agriculture is restricted to Extensive farming
Characterized by agricultural production system that uses small inputs of labour, fertilizers, and capital, relative to the land area being farmed.
This has contributed to:
Typically low population densities; and,
Scattered small inland towns as employment opportunities are fewer.
Rural depopulation (movement of people to the more densely populated areas in search of employment).
It becomes costly to initiate and develop new infrastructure in areas with low population density.
The Population/Funding link in the Equitable share.

14. Socio-Economic Profile and Situational Analysis
These low populated areas generally result in low liveability due to:
Long transport distances to work;
Low-density housing;
Inadequate facilities (e.g. health, recreational, entertainment)
Poor rates base to maintain and improve infrastructure.
Also exacerbated by poverty and unemployment
These areas still require further:
Housing, and transport infrastructure;
Health and Education;
Community and safety services.
If infrastructure grant allocation is dependent on population size?
These LMs will continue to struggle

15. Socio-Economic Profile and Situational Analysis

16. Socio-Economic Profile and Situational Analysis

17. The Underlying Social and Political Landscape

18. Risk Identification and Categorization (S-E,P)
Inadequate Public consultation with affected communities (by Govt. and Industry)
A need for deeper and more extensive consultation and education
Impact of this on social cohesion and tensions between communities
The Social License to Operate
Coordination and Planning across all spheres
Areas such as Community health, Disaster Management, and Infrastructure Maintenance and Development
Local Economic Development
Spatial Planning and Land Use Management
Current challenges not restricted to skills and funding, but also:
Land Restitution (Land Rights Amendment Bill of 2013)
Minerals and Petroleum Development Bill (MPDA, 2013)
Will both have profound impact on communities in the Karoo, and
The future development of Shale Gas resources
Changes in the Regulatory Environment
Small Town & Rural Municipalities already challenged in critical areas of service delivery
Water Quality Management and provisioning (Blue/Green Drop compliance)
Infrastructure maintenance (O&M) related to Water, Sewage and Waste disposal
Roads and transport infrastructure
Preparedness to deal with the Complexity and Uncertainty of SGD
Risk Identification and Categorization (S-E,P)

19. Shale Gas development in the Karoo: Socio-Economic and Political Risk Identification

20. Critical Drivers: Socio-Economic and Political
Environmental Risks:
Contamination of Groundwater
Pollution of the surface ecology
Earthquakes and seismic activity
Air pollution and GHG emissions
Human Health Risks:
Potential health risks associated with contamination of groundwater and pollution
Safety risks associated with truck and freight movement
The effects of a transient workforce on a relatively isolated communities
Psycho-social impacts related to industrialization (i.e. noise, and influx)
Social and Political Risks:
Inadequate public consultation and the SLO
Potential impact on social cohesion
Inadequate institutional capacity within government (at all spheres, and between the spheres) to address the complexity associated with shale gas development
Impact on existing economic sectors
Knowledge Gaps and ‘Blind-Spots’:
Uncertainty and Complexity of Shale Gas
Shale Gas Economics, and long-term viability and sustainability Questions (still to be answered)
Impacts with long-term and ‘inter-generational’ risks, to be paid by future generations (i.e. pipeline & well infrastructure etc.)
Critical Drivers: Socio-Economic and Political

21. Strategic Risk Mitigation: Sign-posts for Policy Makers and Regulators

22. Deepening Public Community Engagement (SLO)
Structured and sustained public participation and community engagement (effectively coordinated across various stakeholders and spheres of govt.)
Integrate into LM public participation and IDP processes
Initiate broad based Citizen Science Programs (e.g. Groundwater and ecosystems monitoring)
Address specific sectoral and community concerns (i.e. Karoo farmers and poor local communities)
Urgent focus on Human Capabilities and Institutional Capacities Complexities and Uncertainties
Scientific and Engineering Competency planning, up-scaling and up-take into existing strategies (i.e. Research, and Scarce skills) and ‘Thinking Out of the BOX”
Regulatory and Monitoring Capacity (Govt. and Industry) at the ‘Critical Zone’
Well construction and Extraction Processes
Environmental and Natural Resources impacts (i.e. Water and Air Pollution)
Improve coordination and integration capability “A Whole of Government Approach”
Disaster Management
Water quality, Infrastructure (OM) and monitoring
Land Use Management and Planning
Addressing “The Importation of Risks and the Exportation of Benefits”
Assess the extent of the opportunity cost of the SG extraction sector for existing economies and livelihoods
Reviewing existing Funding Models and Support Strategies for Local and Regional authorities (i.e. Small Towns)

23. Thank You