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South Africa is poorly endowed with natural forests, and is heavily dependent on plantations of exotic forestry species to meet its timber needs. The first forest plantations of exotic trees were established in South Africa in 1875. Since then, there has been a steady growth in the total area of forest plantation, culminating in the approximately 1.5 million hectares that are today spread over the higher-rainfall eastern and southern regions of the country. Concerns over the effects of these forest plantations on streamflows and catchment water yields arose as far back as 1915, and were thoroughly debated during the Empire Forestry Conference that took place in South Africa in 1935. A decision taken at this conference led to the establishment of a network of long-term paired catchment experiments in various catchments located in the major forestry areas of South Africa. Since the mid 1980s, these experiments have been supplemented by a wide variety of process studies, where transpiration or evapotranspiration in particular have been directly measured above forest, grassland and other vegetation types, using heat pulse and micrometeorological techniques. Information from all these studies has been used to calibrate catchment hydrological models that have provided estimates of the hydrological impacts of forest plantations in all quaternary catchments in which some degree of afforestation has taken place. Outputs from such studies have been simplified and tabulated to permit planning authorities to predict the likely hydrological impacts of afforestation in any given catchment, and to limit the spread of further afforestation in catchments where available water resources are fully or over-committed. This paper reviews the present South African forest water use situation, and in particular the attitude towards new afforestation, outlining the requirements of the National Water Act that was passed in 1998. Recent efforts to implement an integrated water resource management system that meets the requirements of this Act are described, as are the new institutional arrangements in the process of being implemented. The concept of streamflow reduction activities is presented, and the process by which the national Department of Water Affairs and Forestry currently regulates plantation forestry in the context of all forms of land and water use, is described. Additional aspects of the new system, such as the protection of an ecological reserve (to maintain aquatic systems and ensure supply for basic human needs), water pricing and trading, Compulsory Licensing and the need for equity in the allocation of water resources are highlighted, as well as some of the difficulties hindering implementation efforts.