Investment in South Africa's water resources needs to double in the next 10 years if the country is to meet growing demand, Water and Environmental Affairs Minister Edna Molewa said on Monday.
"It's going to require a lot of money but the demands require us to put more funding into water infrastructure," Molewa told reporters in Pretoria.
"At the same time, we need to emphasise the importance of saving what we have."
According to the draft National Water Resource Strategy released by the department on Monday, South Africa will require up to R670-billion to beef up its entire water sector over the next 10 years, with a funding gap of R338-billion having been identified.
Molewa said the strategy addresses concerns that the socio-economic growth of South Africa could be restricted if water security, quality and management were not resolved.
The document identifies inadequate financing and poor investment in maintenance and refurbishment of water infrastructure as challenges that need to be tackled in the short term.
Molewa could not say if the required investment in water would mean tariff increases for the consumer.
"We have said it before, that it is highly likely that if we do our billing properly and the right people pay for water, there would not be a need for constant tariff increase but tariffs do increase from time to time," she said.
The strategy document, which has secured the nod from Cabinet, demands a shift in policy so that financial resources are allocated better to water resources, especially at municipal level.
It also warns that an increased water scarcity will escalate competition between business and local communities and this would lead to conflicts.
Of the 223 river ecosystem types in South Africa, 60% were threatened and 25% of these are considered critically endangered.
"It is therefore clear that steps must be taken to address issues of water quality and water quantity and that solutions to these problems are inter-related and need to be addressed as such," Molewa said.
The department had identified a shortage of skills in the water sector, with the shortage of engineers described as critical. There was also an apparent lack of capacity and management of the available water resources.
"A key issue is the lack of effective financial management in water management. This includes the ring fencing of water business and the need to be able to measure the actual cost of water delivery, ensuring cost recovery with actual protection to the poor." the strategy document states.
The strategy further says the energy sector, which only uses 2% of water, is highly reliant on the efficient supplies of water for electricity generation and if this supply was threated, South Africa's economy could suffer the consequences.
Agriculture remains the single largest user of water, with the sector consuming up to 60% of the country's water.