Biodiversity offsets for a river create the incentive for cooperation amongst stakeholders with benefits to the environment. Because of the isolation paradox supporting institutions need to be created to facilitate cooperation. Environmental pollution caused by mining activity is a problem in the Olifants River (East) in South Africa. The catchment surface is fractured by mining activities and water is drained into underground aquifers, after which it seeps into streams. Mines have been permitted to release nutrients in the streams during periods of high flow, which is called the “controlled release scheme”. A main problem is the effluent leakage from old disused mines during times when river flow is low and not sufficient dilution of nutrients is possible. DWAF (Department of Water Affairs and Forestry) has accepted ownership of these mines but they may not have the technology (which is expensive) to desalinate the effluent. In an offsetting arrangement, incentives can be provided to existing mines to desalinate water from these defunct mines by allowing them to discharge a given amount in the Olifants when the water flow is sufficiently high. The above arrangement will cost the taxpayer nothing while discharge during low flow periods is reduced. A discussion was held with stakeholders of the Olifants River Forum during 2006 and support was received for some of these policy options. It is shown how offsets can mitigate negative effects of dam construction. It is further proposed that tradable pollution permits be adopted which are subject to a rule that discharges in the river are only allowed when flow is sufficiently high and that trades may only occur within certain parameters.


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