China’s water security crisis
February 2014
By Beth Walker, Isabel Hilton, Chen Huiyi, Huang Yunqing and Yunnan Chen
This publication has been produced with the assistance of the European Union. The contents of this
publication are the sole responsibility of ECRAN and can in no way be taken to reflect the views of
the European Union.
This project is funded by the European Union
This project is implemented by a Consortium led by
Steinbeis GmbH & Co. KG für Technologietransfer
Contents
China’s water security crisis ......................................................................................................... 1
Part 1: China’s water crisis ........................................................................................................... 3
1.1. Overview of freshwater resources ...................................................................................... 3
1.2. Water quality .................................................................................................................... 4
Part 2: China’s water policy .......................................................................................................... 6
2.1 Strategies to increase water supply ..................................................................................... 6
South North Water Transfer Project ............................................................................................... 7
2.2 Improving water efficiency and limiting demand ................................................................. 9
2. 3 Tackling pollution ............................................................................................................ 13
2.4 Institutional and political obstacles ................................................................................... 14
Inter-provincial rivalries ................................................................................................................ 16
2.4.4 Lack of rule of law and public participation ......................................................................... 16
Other neglected issues.................................................................................................................. 17
1.3. Future pressures on water ............................................................................................... 18
1.3.1 Energy water nexus .............................................................................................................. 18
1.2.3. Urbanisation........................................................................................................................ 24
1.3.1 Agriculture and food security .............................................................................................. 26
Part 3: Geopolitical risks of China’s water crisis ........................................................................... 27
3.1 Dams, diversions and the Tibetan Plateau ......................................................................... 27
Brahmaputra River ........................................................................................................................ 28
South East Asia .............................................................................................................................. 30
3.2 Building cooperation......................................................................................................... 31
3.4 The importance of the Tibetan Plateau.............................................................................. 32
River Basin Management ........................................................................................................ 34
Wastewater and technical innovation ..................................................................................... 36
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Part 1: China’s water crisis
Introduction
1.1. Overview of freshwater resources
China is currently facing a water shortfall of around 50 billion cubic metres a year.1 By 2030, demand
is projected to exceed supply by 25%, and there are already growing conflicts between the water
demands of agriculture, energy and cities.2
Increasing demands from rapid economic development and gross levels of water pollution have put
further pressure on the already stretched natural surface and groundwater supplies, particularly in
the Northern China plain.
Although China is endowed with substantial water resources overall, per capita freshwater resources
are less than a fourth of the global average. China has more than 20% of the world’s population but
only 6% of its fresh water and 9% of agricultural land.
This natural scarcity is exacerbated by the uneven distribution of water resources. The arid north has
half of China’s population and two-thirds of the farmland, and it produces more than half of the
country’s GDP. 80% of water is in the south, but even there, severe water pollution dramatically
reduces its natural advantage. The Huai and Hai river basins in the north face acute water scarcity,
with less than 500 cubic metres of water per person per year, well below the United
Nations absolute water scarcity threshold of an annual 1,000 cubic metres per person.3
More than 400 cities face water shortages and110 of those face serious scarcity. In Beijing, per
capita annual water availability has fallen to 120 cubic metres, which puts China's capital city in a
position of more severe water scarcity than some countries in the arid Middle East.4
For the past few decades, water-stressed areas have relied on groundwater to make up the shortfall,
but rates of withdrawal have become unsustainable and water tables are dropping by about one
metre a year in the north China plain. Apart from making water difficult and expensive to access,
over-pumping allows saltwater to penetrate aquifers, rendering them unfit for human consumption.
The water table under Beijing has dropped by 300 metres (nearly 1,000 feet) since the 1970s,
causing dangerous subsidence, amongst other problems.
Over-extraction of water is already at alarming levels in many of China’s river basins. Water use and
extraction rates have reached 76% in the Yellow River, 53% in the Huai River, and nearly 100% in the
Hai River. This far exceeds the internationally recognised sustainable limit of 40%, triggering a series
1
Ministry of Water Resources. (2012). State Council Information Office held a press conference, Vice Minister Hu introduced
the most stringent water management system . Retrieved Nov 11, 2013, from Ministry of Water Resources:
http://www.mwr.gov.cn/slzx/slyw/201202/t20120216_314015.html
2 Addams, L., Boccaletti, G., Kerlin, M., Stuchtey, M., 2009. Charting our water future. 2030 Water Advisory Group, The
World Bank, Washington, DChttp://
www.2030waterresourcesgroup.com/water_full/Charting_Our_Water_Future_Final.pd
3 people in the south enjoy 25,000 m3 per capita per year. Eleven provinces are already water scarce, with available water
below the international standards for water scarcity 1,000 cubic metres per capita per year.
4 http://news.qq.com/a/20130821/001282_all.htm
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of ecological and environmental problems.5 China's First National Census of Water, carried out this
year, revealed that up to 28,000 rivers have disappeared across the country in the last 20 years.
Inefficient water use in all sectors of the economy is compounding water scarcity. China’s outdated
irrigation and water infrastructure and low cost pricing for water have encouraged inefficient and
wasteful water usage. In agriculture, for example, only 45% of irrigation water reaches its target
crops. Industry uses 5 to 10 times more water per unit of output than do counterparts in developed
countries. In cities, data suggests that pipe leakage rates range from 12% to 23%.6
1.2. Water quality
The deterioration of water quality is even more serious than the water shortage. Across the country,
industrial waste, agricultural runoff and inadequate sewage infrastructure have rendered almost half
of China’s surface water unusable.
Currently, nearly 300 million people -- more than half of China’s rural residents -- do not have access
to safe drinking water due to pollution from agriculture runoff.7 And in the urban areas, human and
industrial waste are largely left untreated, contaminating both surface and underground water
supplies. Even water that is treated cannot be safely consumed from the tap. Urban residents have
seen their water quality deteriorate significantly over the past few years, even as state officials
claimed that more than 80% of water that left treatment facilities met government standards.
A 2013 report from the Ministry of Environmental Protection revealed that there had been marked
deterioration in China's air, water and land quality over the past year. It reported that more than 30%
of the country's major rivers were "polluted" or "seriously polluted"8; 25% of monitored lakes and
reservoirs suffered from eutrophication (algae bloom); and 57.3% of the groundwater in 198 cities,
the primary source of drinking water for hundreds of millions of people, was "bad" or "extremely
bad". A February 2013 report by the Geological Survey of China revealed that 90 % of the country’s
groundwater was polluted9.
Water pollution has not only damaged the environment, but has also created a serious health crisis.
According to the Ministry of Supervision, there are almost 1,700 water pollution accidents annually,
which cause 60,000 premature human deaths every year.10 China’s water contains organic
compounds that can impair the immune system, affect fertility, cause cancer, or interfere with the
nervous system. The impacts can take as long as ten or twenty years to emerge.
A recent study by the China Center for Disease Control and Prevention confirmed links between
pollution and cancer rates in the Huai watershed over the past 30 years.11 The research revealed the
most severely polluted areas also showed the highest increase in digestive cancer rates in the
provinces of Henan, Anhui and Jiangsu – by several times that of the national average.
5
Ministry of Water Resources. (2012). State Council Information Office held a press conference, Vice Minister Hu introduced
the most stringent water management system . Retrieved Nov 11, 2013, from Ministry of Water Resources:
http://www.mwr.gov.cn/slzx/slyw/201202/t20120216_314015.html
6 Ji, B., 2011. Vast Amounts of Resources Are Being Lost to Leaky Pipes. Global Times. http://www.chinawire.org/?p=13560
7 Xinhua, 2012
8 Grade IV and V+. The Chinese water quality grading system ranges from I to V, with Grades IV and V unfit for direct
human contact .
9 Barry van Wyk, “The groundwater of 90% of Chinese cities is polluted,” Danwei.com, February 18, 2013,
http://www.danwei.com/the-groundwater-of-90-of-chinese-cities-is-polluted/
10 C.Economy, 2013
11 http://www.springer.com/life+sciences/ecology/book/978-94-017-8618-8
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In 2010, the investigative journalist Deng Fei created a widely circulated Google
Map graphic illustrating the locations of at least 100 cancer villages across China. Recent estimates
put the figure at 400.12 The Ministry of Environmental Protection made an official acknowledgement
of sorts of the existence of cancer villages earlier this year.13 Arsenic poisoning from contaminated
groundwater is widespread, affecting at least 20 million people in provinces that include Xinjiang,
Inner Mongolia, Henan, Shandong and Jiangsu,14 and in some areas, high incidence of particular
cancers have been linked to organic water pollution.
The negative impacts of water pollution go beyond China’s water supply. Unsafe disposal of
hazardous waste and the use of wastewater for irrigation is causing serious soil contamination which
quickly leads to food contamination and has become one of China’s most dangerous and politically
sensitive environmental problems.
An estimated 12 million tonnes of grain are contaminated every year15 with heavy metals absorbed
from the soil, and cadmium-laced rice has caused bone softening and weakness in some southern
Chinese villagers. A five-year long study of soil contamination by the Ministry of Environmental
Protection and the Ministry of Land Resources, completed in 2012, confirmed that 10% of land is
contaminated with heavy metals. However, officials have refused to release the results on the
grounds that the report is a “state secret.”16 Some estimates suggest that up to 70% of China’s
agricultural land may have been contaminated by industrial pollution and the over-use of chemical
fertilisers.
Pollution has become a constraint on economic growth. In 2007, the World Bank calculated the
economic costs of China’s water crisis to be 2.3% of GDP, of which 1.3% was due to scarcity and 1%
due to the direct impact of water pollution.17
Pollution is also a major cause of unrest in the country. The number of environmental 'mass
incidents' or protests has been growing steadily, reaching 180,000 in 2010, according to one
Tsinghua professor (The government stopped releasing most protest statistics several years ago,
after the annual number of "mass incidents" passed 100,000); and in 2013, the environment
overtook land expropriation as the leading cause of social unrest in the country.18
12
https://maps.google.com/maps/ms?hl=en&ie=UTF8&oe=UTF8&msa=0&msid=209600870352189728478.000469611a28a0
d8a22dd&ll=29.568591,112.286465&spn=22.144692,16.301284&t=m&source=embed
13 http://www.scmp.com/news/china/article/1155528/environmental-watchdog-admits-cancer-village-phenomenon
14 https://www.chinadialogue.net/blog/6331-Arsenic-poisoning-threatens-2-million-in-China/en
15 https://www.chinadialogue.net/article/show/single/en/724-Facing-up-to-invisible-pollution16 Christina Larson, “Soil Pollution Is a State Secretin China,” Bloomberg BusinessWeek, February 25, 2013,
www.businessweek.com/articles/2013‐02‐25/soil‐pollution‐is‐a‐state‐secret‐in‐china.
17 Jiang 2009, p.3189
18 http://www.scmp.com/news/china/article/1072407/environmental-protests-china-rise-expert-says
5 of 37
Part 2: China’s water policy
China’s leaders and top officials have increasingly recognised that the country’s future development
and stability will depend on successfully tackling the country’s water crisis. In February this year, the
then-new premier, Li Keqiang, said that China’s limited water resources have become serious
economic and social development constraints, and suggested that water conservation and improved
efficiency are priorities.
The government to date has two major policies responses to this growing crisis. It has channelled
vast amounts of money into massive infrastructure projects that aim to increase supply in waterscarce regions, while at the same time trying to tackle demand through institutional and economic
reform.
Over the past decade, China’s government has tried to integrate environmental targets, including a
heightened focus on water resources and pollution, into its economic planning. The Chinese central
government’s evident commitment to addressing the water crisis has been reflected in the water
conservation and pollution control targets that have featured in the 10th, 11th and 12th Five Year
Plans (FYP), as well as in stronger laws on water access and quality.19
But these efforts have failed to stem the tide of pollution or to address the underlying drivers of the
country’s water crisis. This section will evaluate the effectiveness of China’s current water policies.
2.1 Strategies to increase water supply
Despite its growing focus on environment sustainability, the government’s traditional emphasis on
heavy engineering has not yet been tamed. China has always relied on the construction of massive
water storage projects, such as large dams and reservoirs, water transfer projects and irrigation
infrastructure to try to ensure the country’s food and water security.20 These schemes build on a
long history of hydraulic engineering that stretches back to the mythical sage Yu, who calmed the
floods of the Yellow River. The great canal systems of the Han and Qin dynasties transported grain
and military supplies from the economic to the political centres and stored rain for irrigation, which
allowed their civilizations to flourish. Today, China has built up to half of the world’s dams and
created over one-fifth of the world’s irrigated land.
As impressive as China’s efforts to preserve its water resources may be, there is a litany of
controversial recent water-management schemes: the Three Gorges Dam, the South-North water
transfer scheme and even a proposal to pump sea water from the Bohai Gulf to Inner Mongolia to
feed the thirsty coal industry. These projects carry huge environmental and social costs.21
China currently has 20 major inter-basin water transfer projects which pump about 2% of the
country’s surface water from one shrinking basin to another; this will rise to 10% with the
completion of the South-North Water Transfer Project.
In a time of growing scarcity, infrastructure projects - particularly water transfer projects - are
becoming increasingly unviable and dangerous. As one official recently remarked, “If we try to solve
19
E.g. the Water Law 2002, the Water Pollution Prevention and Control Law 1996, the Three Red Lines of water
management 2012.
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our water crisis by diverting water, then new ecological problems will emerge. This is not sustainable
at all.”
South North Water Transfer Project
The ambitious South-North Water Transfer Project (SNWTP) is the centrepiece of the government’s
water strategy. This Mao-era dream, to divert water from the Yangtze River to provide a crucial
lifeline to the arid north, remains a government priority, despite controversy over its expense,
impacts on agriculture and mass relocations of communities, among other issues.
The 3,000-kilometre SNWTP will eventually pump 45 billion cubic metres of water to feed the
North’s growing cities and coalfields. It involves the construction of three canals, of which the
eastern was finished in 2013, and the central route is due for completion in 2014.22
The eastern route uses the series of waterways that make up the Grand Canal, constructed in the
sixth and seventh centuries. Due to the elevation gradient along the canal route, however, more
than a dozen pumping stations are required to lift water from the lower-level elevation Yangtze to
the Yellow basin. These electric pumps will require the conversion of millions of tonnes of coal per
year into electricity to move the water and, since thermal power generation is itself water intensive,
create further water stress.
The controversial western route – which theoretically would divert waters from the Tongtianhe,
Yalongjiang and Daduhe rivers in the upper reach of Yangtze into the Yellow River – has been halted
while the feasibility of the project is revisited. This project presents a number of potentially
insurmountable technical challenges; geological conditions in this area are unstable, with frequent
earthquake disasters; temperatures drop below freezing for six months of the year making it difficult
to keep the water flowing during this period; more than 1,000 kilometres of tunnels would need to
be blasted through the Himalayas, and a means of crossing five watersheds would have to be built in
order to divert the water; the region from which the water is to be diverted is one of the areas most
affected by climate change – where glaciers and river systems are retreating – which may lead to
future drop in water flow. Independent scientists hope that policymakers can be persuaded to
abandon this section of the project.
The routes, once complete, are only expected to meet current projected demand in the north until
2025 and the costs will be enormous. Estimates suggest a figure of US$62 billion, but the actual costs
are likely to be much higher. This will certainly be a more expensive way to address water scarcity
than improving efficiency measures and upgrades to China’s creaky, aging water infrastructure, or
the reform of water pricing.23The cost of the water that reaches Beijing will be even higher than the
cost of desalination (over 12 yuan per cubic metre according to Chinese economists, compared to 8
yuan from desalination plants). 24
http://www.economist.com/news/china/21571437-removing-salt-seawater-might-help-slake-some-northern-chinas-thirstit-comes-high]23 The SNWT Commission has estimated a cost of 2 yuan per cubic metre, but this does estimate does not
take into account full construction costs, or water treatment, resettlement or ecological costs. See:
http://www.ce.cn/ztpd/xwzt/08lh/djq/bwzg/200803/06/t20080306_14747528.shtml
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The central and eastern routes alone carry enormous social and environmental costs. An estimated
330,000 people have been relocated to make way for the middle route, which will transfer 14.5
billion cubic metres of water - about 40% of the total river flow -- from the Danjiangkou reservoir on
the Han River to Beijing every year. The diversion will significantly reduce the flow of the Han River,
a major tributary of the Yangtze River, affecting navigation, ecology, fisheries and water quality.25
The decrease in the discharge of the Yangtze River will result in seawater intrusion into the Yangtze
Delta, creating a crisis for Shanghai’s water supply and its surrounding wetlands.26
Recent droughts in central China have raised further concerns about the feasibility of the project. In
the spring of 2011, water levels in the Han river and Danjiangkou reservoir fell so low that people did
not have sufficient water for drinking and sowing their crops, let alone for sending to Beijing27.
There are further concerns that the project could exacerbate water pollution problems.28 Pollution
from factories along the eastern route may render the water unfit to drink. On the eastern route,
drinking water brought to Tianjin from the Yangtze is so polluted that 426 sewage treatment plants
will have to be built; investment in water pollution control on the route accounts for almost half of
the US$5 billion total investment for this section, according to Xinhua.29
Meanwhile, the diversion of water from the Yangtze River Basin to the north is likely to exacerbate
pollution on the Yangtze – problems that have worsened since the construction of the Three Gorges
Dam.
Experts argue the project is “irrational”: rather than shifting agriculture and food production
patterns to adapt to rainfall and water availability, China has pushed in the opposite direction,
forcibly maintaining an ecologically unsustainable agricultural and industrial hub in the north. Each
year, the water-scarce north exports to the water-rich south food that has an estimated water
footprint of 52 billion cubic metres, far more than the physical water transfer will achieve.30
An increasing number of dissenting voices are rising from within government. Most Recently, Qiu
Baoxing, vice minister of the Ministry of Housing and Urban-Rural Development, remarked that the
project would be rendered irrelevant if one-third of buildings in Beijing could collect more rainwater
and recycle more wastewater.
There is evidence that water transfer projects are rendered ineffective without concurrent
restrictions on water users. Water diversion projects to feed the Lower Tarim River since 2000, for
example, have not reduced the length of river drying up. Local residents and industry simply
extracted more of the available water.31
The SNWTP is also likely to be troubled by conflicts between regions that are asked to bear the costs
of storing and transferring water, and those that benefit from the transfer. Provinces in central China
have already complained of the SNWTP’s water treatment and human resettlement costs.
The state-level enthusiasm for engineering projects aimed at increasing water supply is replicated at
a local level. Many provincial authorities are building their own water transfer projects across river
basins to meet urban demands. 32 While cities enjoy the extra supplies, and construction companies
25
Xiao, C., & Xie, P. (2009). The influence of SNWTF on the water quality of the lower and middle reaches of the Han River.
Safety and environment Study Journal.
26 http://onlinelibrary.wiley.com/doi/10.1111/j.1752-1688.2009.00357.x/abstract
27 http://www.chinadaily.com.cn/china/2011-05/24/content_12564710.htm
28 http://usa.chinadaily.com.cn/china/2012-09/19/content_15766742.htm
29 http://www.china.org.cn/environment/2010-07/06/content_20429197.htm
30 Liu, J., Savenije, H.H.G., 2008. Time to break the silence around virtual-water imports. Nature 453, 587
31 Liu, J., Zhang, C., Tian, S., Liu, J., Yang, H., Jia, S., et al. (2013). Water conservancy projects in China: Achievements,
challenges and way forward. Global Environmental Change, 633-643.
32 https://www.chinadialogue.net/article/show/single/en/4722-China-s-thirst-for-water-transfer
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and officials make huge profits, the environment pays a heavy price. Dubious water transfers are
under construction in Yunnan, Guangdong and Zhejiang provinces, at the cost of several billion US
dollars each.33
The government is also pouring significant investment into desalination, another expensive supplyside measure. In the current 12th Five-Year Plan (2011- 2015), the State Council has called for a
fourfold increase in desalination capacity, to reach 3 million tonnes a day by 2015.34 This is an
expensive and energy intensive method of ensuring water supplies and, so far, these targets are not
being met.35
2.2 Improving water efficiency and limiting demand
The Chinese authorities have recognised the need to improve water efficiency and limit overall
water demand as well as relying on large-scale infrastructure projects to augment supply. In 2011
the Chinese government Central Document No.1, which sets the policy priorities for the upcoming
year, focused on water conservation and improving water management.36 The government
committed to doubling its spending on water conservation projects to 4 trillion yuan (US$618 billion)
by 2020.37
The document also encouraged investment in rural water infrastructure projects and water
conservancy projects, in an attempt to repair neglected and leaky water infrastructures, upgrade
small-scale irrigation infrastructure, rehabilitate small dams, and improve rain-fed agriculture.38
In early 2012 the State Council expanded upon this policy statement with the release of the “most
stringent water resources management” decree, which outlined three national goals for water,
called the “three red lines”, setting national targets for quantity, efficiency and pollution for 2030.39
These are:


cap national water use at 700 billion cubic metres per year by 2030 (amounting to about threequarters of China’s total annual exploitable freshwater resources);
achieve 95% adherence to water quality standards in industry, up from just 46% in 2011; and
33
The city of Kunming, on the shores of Dianchi Lake, in the south-western province of Yunnan, is also joining in. Here, a
“Central Yunnan Water Transfer Project” – which aims to move 3.4 billion cubic metres of water a year along a 900kilometre canal, at a total cost of 62.9 billion yuan (US$10 billion) – has been in planning for almost a decade.
34
The Chinese government plans to increase its desalination from 600,000 tons a day currently to 2.5 to 3 million tons a
day by 2020. See: http:// chinaenvironmentalgovernance.com/2011/04/13/ chinas-desalination-plans-and-its-waterenergy- nexus/. Producing one tonne (one cubic metre) of desalinated water requires up to 4 kWh of electricity. Also see
David Cohen Tanagi, A pinch of salt: Why China’s Brute Force Push Toward Desalination May Leave the World Better Off, in
China Environment series: special edition on energy and water, nexus in China, 2013
35 National Development and Reform Commission 2012.
36 A 2002 Water Law aimed to address the problem of over extraction in trans-provincial rivers by declaring all water as
state property and made all water use contingent on obtaining a usage license from local authorities (Yong 2006 Y).
Subsequent regulations have established the basis for water trading rights, and a few such transfers have taken place.
37 State Council 2010
39
State Council ‘Opinions of the State Council on the Implementation of the Most Stringent Water Resources Management’
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
attain or approach advanced world levels of water use efficiency by 2030, reducing water
consumption per 10,000 yuan of industrial value added to below 40 m3, and raising water use
efficiency of farmland irrigation to above 60%.40
Specific targets are in the table below:
2015




2020
Water usage cap at 635

billion cubic metres by 2015
The water consumption for 
every 10,000 yuan of valueadded industrial output to be
reduced by 30%
Effective utilisation

coefficient for irrigation
water to be increased to 0.53
or above
Restrict pollutants so that

over 60% of the water in key
lakes and rivers is useable

2030
Water usage cap at 670

billion cubic metres by 2020
The water consumption of 
every 10,000 yuan of valueadded industrial output to be
reduced to less than 65 cubic 
metres
Effective utilisation
coefficient for irrigation
water to be increased to 0.55 
or above
Restrict pollutants so that
over 80% of the water in key 
lakes and rivers is useable
Water quality in cities to be
fully potable
Water usage cap at 700
billion cubic metres by 2030
Raise water use efficiencies
to around the levels of
developed nations
The water consumption of
value-added industrial
output to be reduced to less
than 40 cubic metres
Efficiency index for irrigation
water to be increased to 0.6
or above.
Restrict the number of
pollutants in key lakes and
rivers to improve water
quality so that over 95% of
these bodies of water is
useable
These targets have been subdivided and allocated to the provincial and then the county level, with
the focus on managing demand and efficiency of use for groundwater in the dry north, and on
pollution and surface water in the south.41
Significantly, officials down to the county level have been given are responsibility for achieving
specific water targets, which will then be factored into their performance evaluation, assessment
and promotion. As of yet there are no details of how this agenda will be developed into concrete
policy.
40
Currently official statistics put efficiency standards 0.5, far behind the 0.7-0.8 efficiency of developed countries (PRC
Ministry of Water Resources 2012). Water use per industrial added value in Japan was 17 cubic meters and the effective
utilization coefficient of irrigation water was 0.7-0.8 in Israel in 2000.
41
State Council 2013
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Chinese academics and officials argue that the “three red lines” policy marks a significant shift in
policy from a focus on supply side engineering to demand side management, as well as a greater
focus on ecology efficiency and water saving, and making water management outcomes more
measurable, accountable and verifiable.42
However, local provincial and municipal governments lobbied the Ministry of Water Resources
heavily for larger quotas of water and waste water discharge. Regional targets were only decided
after four years of intense negotiation, lobbying and competition between regions, rather than as a
result of any comprehensive decision-making, or of balancing rival sectoral interests. 43
42
Professor Ni from China Institute of Water Resources and Hydropower Research explained the concept at the China
Europe Water Platform Inception Workshop of the World Water Week 2013
43 Liu. J et al. 2013
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Nor are water targets consistent with the red lines established for arable land, ecosystem protection
and energy planning. Overall, there are serious doubts over whether the red lines are sustainable, as
water use is set to grow beyond 2020 (see figure 1).44
Market mechanisms, water trading and pricing
Since the 1980s, China has also been developing market-based mechanisms as an alternative
approach to command-and-control environmental measures, and market mechanisms are set to
play an increasing role in allocating natural resources, including water, in the future, as confirmed by
the Communist Party’s “Third Plenum” communiqué on the future direction of reform in China
published in November 2013.
However, so far these have had limited effects and the gap between policy and practice remains
wide. For example, implementation of eco-compensation mechanisms has been hampered because
there are no standards for compensation, distribution of benefits among different water uses and
provinces, or determining the responsibility of companies, etc. For market-based approaches to be
effective, the government needs to establish and improve relevant laws and regulations,
institutional systems and guidance to implement these.
Experiments with water rights markets and other market mechanisms have been ongoing. The 2002
Water Law made it possible for businesses and individuals to buy water licenses, and subsequent
regulations have established the formal basis of water trading.45 However, progress has been slow,
partly because of the technical problems of defining rights to water resources. Effective water
trading schemes also require water rights to be priced free of government intervention, a high
degree of information about resource availability, and strong market oversight.46
The viability of future water trading is hotly debated, with many arguing that trading systems will
further exacerbate pollution. Opponents argue that water trading will concentrate resources in the
hands of a small elite, undermine farmers’ access to water, and further weaken government control.
Thus, the pace of water trading has slowed.
The communiqué issued after the Third Plenum indicated that the government does intend to push
water price reforms forward and to strengthen market mechanisms for water trading and waste
discharge rights.47 However, insiders at the Ministry of Water Resources maintain that water trading
will remain limited to a few regions, and the main focus of water conservation will continue be to
improve water use efficiency and to achieve a more stringent management of resources.48
In some cases, water rights trading has proved effective in increasing water use efficiency. For
example, the privatisation of tube wells in northern China has led to more efficient management of
groundwater, according to the authors of one study, by encouraging farmers to switch to less waterintensive higher value crops.49
44
Discussions with Beth Walker at Word Water Week 2013
In 2006, the State Council officially published the detailed Regulations on Water-taking Licenses and Water Resources
Fee Management, which indicated that enterprises or individuals could trade their saved water resources by improving
their technologies or changing products structures under the supervision and permission of the government (State Council
2006)
46 https://www.chinadialogue.net/article/show/single/en/6026-Water-trading-could-exacerbate-water-shortages-in-China
47 CCP Central Committee Resolution Concerning Some Major Issues in Comprehensively Deepening Reform:
http://news.xinhuanet.com/politics/2013-11/15/c_118164235.htm
48 Representatives speaking at Stockholm WWW 2013, MWR fears they will loose control over water resources
49 Wang J., J.Huang and S. Rozelle. 2005. Evolution of tubewell ownership and production in the North China Plain. The
Australian Journal of Agricultural and Resource Economics, 49, 177-95.
45
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Water pricing
Pricing reform will be key to curbing demand. Water in China is cheaper than in other countries, and
does not reflect the cost of supply, the protection of water sources or the costs of water and
wastewater treatment. Historically, the government has set the prices and they are generally below
the costs of transfer and treatment, particularly for irrigation water.50 Even after price increases in
recent years, average prices remain 70-80% below the international average. User charges in most
urban areas do not cover wastewater treatment, which leads to a lack of investment in
infrastructure and maintenance.
Traditionally, the water price paid by farmers has been too low to reflect its scarcity, and has often
been calculated on land acreage rather than the volume of water used, which contributes to
inefficient consumption. Water pricing reforms in 2004 aimed to make water prices reflect the
supply cost, but the government remains reluctant to raise prices for irrigation water, out of
concerns both for social equity and rural welfare, and anxiety about food production and food price
inflation.51
Some cities, such as Beijing, are experimenting with tiered pricing to distribute the burden of price
rises, but, so far, significant increases in water pricing have yielded only slight improvements in
urban water use efficiency. The water utility companies’ lack of operational transparency has also
impeded public acceptance of water pricing in China.52
As with water price reform in agriculture, urban price reform is a difficult political task and a Water
Pricing Proposal draft has been delayed for six years.53
Tariff reform will never be enough to improve efficiency without institutional reforms in water
regulation, collection systems, financial management and governmental subsidies, as well as a
willingness to address public participation, and social and equity questions.
Still, reining in overall water usage will require raising the cost of industrial water. The National
Development and Reform Council has signalled that it expects industry to bear the brunt of rising
industrial water and wastewater discharge tariffs in the upcoming years. The MEP should also step
up monitoring and enforcement, with higher penalties for pollution violations.
2. 3 Tackling pollution
In the past, the Chinese government has underinvested in pollution control and failed to implement
effective monitoring and enforcement mechanisms. In rural areas, China did not begin to invest in
water pollution control until 2008, with the ministries of environmental protection and agriculture
planning to cover 10% of all villages by 2015. However, even if current rates of expansion were
doubled, total coverage is still decades away.
Urban sewage treatment facilities also face chronic under-investment. There is no urban
groundwater quality law, with about 66% of urban sewerage plants operating either below capacity
or not at all, according to a report from the National People’s Congress54
50
Hu, Y., Cheng, H., 2013. Water pollution during China's industrial transition. Environmental Development 8, 57-73.
ICID 2005
52 Zhong, L., Mol, A.P., 2010. Water price reforms in China: policy-making and implementation. Water resources
management 24, 377-396.
53 Carmody 2010
54 Grumbine, R.E., Xu, J., 2013. Recalibrating China’s environmental policy: The next 10 years. Biological Conservation 166,
287-292.
51
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The 2008 Water Pollution law aimed to strengthen legislation by increasing penalties, including fines
for polluting enterprises. To help meet these standards, the government will invest 380 billion yuan
in the course of the 12th Five Year Plan to improve urban wastewater treatment facilities and to build
14,000 monitoring stations throughout the country.
The three red lines brought in a more stringent target, namely that 95% of tested water should meet
the recently updated national water quality guidelines, which will include a range of organic and
microbial pollutants as well as heavy metals.
Gaps between policy intent and implementation are wide. Serious releases of highly polluting toxins
remain common. Historically, pollution fines in China have been so low that it has been financially
expedient to pay any penalties rather than to spend money on prevention, and some companies
even incorporate the cost of fines into their budgets. The pollution of Kunming’s Yangzonghai Lake
provides an example: the Yunnan Chengjiang Jinye Corporation repeatedly preferred to pay fines for
polluting local water resources rather than to prevent pollution at the source. The fines, in fact, were
relatively few and only imposed after a particularly serious incident.55
New tougher fines and penalties for polluters introduced this year may increase pressure on
companies,56but greater public participation will be necessary to improve transparency and
disclosure of pollution. Without effective legal redress for environmental damage, people affected
by pollution often have no choice but to turn to protest.
2012 saw a string of high profile pollution incidents. In December that year, for instance, a toxic
chemical spill of 39 tonnes of aniline, leaked by Tianji Coal Chemical Industry’s Changzhi chemical
plant in Shanxi, poisoned drinking water for millions of people and sparked a public outcry across the
country. The spill was only uncovered when the downstream city of Handan in Hubei suspended its
own water supplies, after local government officials in Changzhi took nearly a week to admit to the
accident. Propaganda officials in Changzhi continued to deny there had been a cover-up: “It is not
necessary to report to any body, including the provincial government, as long as the pollutants have
not yet spread to regions out of our jurisdiction,” they said.57
2.4 Institutional and political obstacles
New national policies and increased funding to control water use and to reduce pollution are
unlikely to succeed, since they fail to confront China’s intractable institutional and political problems.
Ambitious plans risk being derailed by inter-regional conflicts and the many obstacles that are
responsible for deep weaknesses in China’s governance system: poor enforcement of regulations,
fragmented governance systems, weakness of the rule of law, corruption, and lack of public
participation.
The institutional fragmentation and decentralisation of water management has contributed to the
weak implementation of measures to control water use and pollution.58
Responsibilities for water resources, data and information, construction of infrastructure,
environmental protection, agricultural development, transportation, and other water-related
activities are split between competing and conflicting institutions.5960
55
http://chinawaterrisk.org/regulations/enforcement/pollution-fines/#inline_demo
http://www.greenbiz.com/blog/2013/06/21/china-target-polluters-tougher-fines-and-penalties
57http://chinawaterrisk.org/notices/the-handan-cover-up/
58 World Bank 2009
56
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State ownership of water resources is enacted at different scales, ranging from extremely local to
the basin scale. For example, the Water Resources Department in western Yunnan’s Nujiang
prefecture controls surface and groundwater allocation, but some resources also fall under the
national-level Yangtze River Basin Commission. Local level decisions are likely to be trumped by
national level policy on inter-basin transfers.
At the central level, the role of implementing and supervising laws and policy is split between the
State Council and the National People’s Congress. There are nearly a dozen ministries or authorities
(sometimes called the “nine dragons”) that are involved in water management in some capacity,
with overlapping responsibilities and conflicting agendas.61
The fragmentation of responsibility makes water management more expensive and less effective.
For example, the MWR is responsible for water project construction and water allocation (quantity),
while the MEP is responsible for pollution prevention and control. This has led to a two-track
planning process, with the same basin jurisdictions using separate monitoring stations and data
collection systems, with little inter-ministry coordination or data sharing.62
Compared to the larger, more established bureaucracy of the MWR, the MEP, which only attained
ministerial status in 2008, is less powerful and lacks the institutional capacity to enforce regulations.
The MEP must supervise hundreds of thousands of companies with only a few hundred core staff.
This means the MEP has to depend on local Environmental Protection Bureaus (EPBS), which answer
primarily to local, not central, government to enforce pollution regulations.63
Decentralisation of authority from central to local governments has also created a conflict between
the goals of environmental protection and economic growth. Cash-strapped local authorities
continue to prioritise growth and GDP targets over environmental protection. 6465EPBs are often
financially dependent on their local governmental body, producing perverse incentives to allow
pollution and turn a blind eye to non-compliance.66
The establishment of Regional Supervision Centres (RSCs) in 2006 was an important development in
China’s environmental reform. These centres are tasked with the supervision of local governments in
the oversight of their environmental management. However, their authority is limited to supervision
and information gathering, with few sanctioning powers. RSCs are also understaffed and financed
through local governments.67
Horizontal fragmentation of authority has further complicated effective planning in water
management of rivers. The establishment of River Basin Management Commissions (RBMCs), which
delineate management within river basins rather than on established administrative lines, has gone
some way to improve water governance. The Yellow River Basin Commission has had some success
in reversing the deterioration of the delta’s water flow and quality. However, the RBMC’s authority
59
Gleick, Peter H. 2008. “China and Water.” The World’s Water 2009: p.89
See World Bank 2009; Wang, Canfa, and Edwin D. Ongley. 2004. “Transjurisdictional Water Pollution Management: The
Huai River Example.” Water International 29 (3) (September): 290–298.
61 Predominantly the responsibility for managing water quantity and quality is split between the Ministry of Water
Resources (MWR), and the smaller Ministry of Environmental Protection (MEP). However, several other ministries,
including the Ministry of Housing, Urban and Rural Construction (MHURC), Ministry of Finance, Ministry of Agriculture
(MOA), Ministry of Land and Resource, Ministry of Transportation (MOT), the State Forestry Administration, and the
National Development and Reform Commission (NDRC), among others.
62 World Bank 2009; Wang and Ongley 2004
63 Moore, S. 2010. “Shifting Power in Central-Local Environmental Governance in China: The Regional Supervision Centers.”
China Environment Series 2010/2011: 188–193.
64 Economy, Elizabeth C. 2004. The River Runs Black : The Environmental Challenge to China’s Future. Ithaca, N.Y.: Cornell
University Press.
65 Wang and Ongley. 2004.
66 ibid, p. 113
67 Moore 2010, p.4
60
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does not stretch to the sub-provincial and local levels: their remit is also limited essentially to the
functions of the MWR at a smaller scale, that of management of water resources, rather than as an
“integrated river basin management agency”.68 RBMCs are still subordinate to the MWR, with little
integration with the goals of the Ministry of Environmental Protection, or institutional
representation of other stakeholders such as provincial or regional actors or the general public,
making them unable to confront pollution effectively at the source. Pollution control is still generally
dealt with by local, provincial and county governments. 69
Inter-provincial rivalries
Policies to reduce water use and address geographical imbalances in water resources have failed to
confront emerging political and economic conflicts. Conflict with the regions that are asked to bear
the costs of storing and transferring water, or to sacrifice their own water rights in the interests of
other provinces, are likely to undermine the effectiveness of these policies in the long run. Similar
rivalries threaten to undermine water licensing and water rights trading schemes. In periods of
drought, upstream provinces often take more than their allocated quota, reducing the water supply
to downstream provinces.70
Lack of rule of law and public participation
China’s environmental laws and regulations are progressive on paper, but the country has a poor
record of implementation, and lack of public participation and open information further undermine
their effectiveness.
Public participation is essential for improving water governance and improving pollution. Although
the principles of public participation are stipulated in laws, in practice, the public is excluded from
major planning decisions at a local level and frequently has to resort to protest in defence of its
interests.
Some policymakers – particularly those in the MEP – have advanced the idea that central
government should support public participation to supervise and monitor implementation and
enforcement through social pressure. Regulations and measures have been introduced to
institutionalise public participation, including the 2002 Environmental Impact Assessment (EIA) Law –
– though the implementation of such rulings have been patchy.
Recent draft revisions to the Environment Protection Law represent a step backwards in the rule of
law, restricting the right to bring public interest lawsuits to the All-China Environment Federation, a
government organised non-governmental organisation (GONGO), while excluding more autonomous
environmental organisations and affected individuals. 71
Individuals and NGOs have made significant efforts to tackle pollution. One of China’s most
influential water advocates is Ma Jun, formerly a journalist at the South China Morning Post. His
first book, China’s Water Crisis, published in 1999, set out starkly the extent and seriousness of
water quantity and quality problems in the country. He founded and directs the Institute for Public
and Environmental Affairs, which has created an important internet database of water pollution
68
Shen, Dajun. 2009. “River Basin Water Resources Management in China: A Legal and Institutional Assessment.” Water
International 34 (4) (December 7):, p.492
69 World Bank. 2009. Addressing China’s Water Scarcity: Recommendations for Selected Water Resource Management
Issues. World Bank-free PDF.
70 at http://www.caijing.com.cn/2011-07-28/110791023.html;
https://www.chinadialogue.net/article/show/single/en/2144-Trading-water-in-thirsty-China
71 https://www.chinadialogue.net/blog/6171-New-environmental-protection-law-would-exacerbate-pollution-in-China/en
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incidents, including a pollution map and profiles of responsible parties. With others, he has also
sought to prevent water pollution by helping global manufacturers who operate in China to green
their supply chains. Greenpeace’s Detox Campaign targets water pollution from the global textile
industry, and has had some success in securing commitments from manufacturers to reduce or
eliminate toxicity in their production lines.
Other neglected issues
There are a number of other important elements that are currently overlooked in Chinese water
governance.
Climate change implications are still not sufficiently taken into account in policy planning, either in
setting caps on water use, or in the design and operation of water infrastructure.72 There is already
significant influence of climate change effects on water resources in China: one example is the
drying trend in the Han River, the source of the central route of the SNWTP. If this continues, the
river will soon have no more water to spare for diversion. Coastal cities are threatened by rising sealevels and increasing frequency of typhoons. Shanghai sits on a sinking river delta and has dropped
by more than 1.8 metres since 1921. Shifting monsoon and rainfall patterns are also impacting
agriculture in the northern plains.
The value of the ecosystem services is not recognised in the evaluation of water infrastructure and
conservancy projects, and water is not set aside to ensure environmental flows in river basins.
Though China is leading the way with small scale, innovative ways to conserve water, such as
payment for ecosystems services and ecological recovery projects, these still are marginal when
compared to overall investment. In 2011, only 3.3% of the investment on water conservancy was
spent on ecological recovery projects, the rest went on physical water infrastructure. More
investment in restoring degraded grasslands and ecosystems is urgently needed.
Finally, current water policies only take account of blue water (surface water and ground water)
while neglecting green water (water stored as soil moisture). However, green water contributes
more than 80% of the water consumed in agriculture, forests and grassland. Various measures to
retain green water in the soil – such as mulching, conservation tillage and terracing - can save vast
amounts of water.
72
Matthews JH, Wickel BA, Freeman S (2011) Converging Currents in Climate-Relevant Conservation: Water, Infrastructure,
and Institutions. PLoS Biol 9(9): e1001159. doi:10.1371/journal.pbio.1001159
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1.3. Future pressures on water
Rapidly growing industrial and urban demand, along with the growing water footprint of the power
sector, will increase the pressure on supply. These pressures are not adequately accounted for in
current government planning, which makes it likely that China’s future water deficit will be larger
than predicted.
1.3.1 Energy water nexus
The water and energy nexus is at the heart of China’s future water challenge. Continuing China’s
economic growth and meeting its growing energy demands depend on sustainable water resources.
Few countries have prioritised data collection and policies to deal with the growing confrontations
between water and energy. In China, this is particularly urgent where the water footprint of energy
development and the energy footprint of water are large and growing.
97% of China’s electricity requires water to produce, although how much depends on the energy
source, and so improved water efficiency in the power sector is crucial. Energy demand in China
continues to grow and, according to the Ministry of Land and Resources, may not peak until 2030–
2035.73 To meet this demand, the central government plans to double power capacity by 2030.74
This target includes 1,212 gigawatts of power capacity, equivalent to almost six times India’s current
installed generation capacity.
Coal and hydroelectric power (and to a lesser extent nuclear power) are highly water intensive. The
power sector currently uses about 10% of China’s water. 75 By 2030, power sector withdrawals
could reach 190 billion cubic metres, which would account for 25% of the government’s national
2030 water cap of 700 billion cubic metres. This projected increase in power-related water
withdrawals would quickly become unsustainable, particularly since China’s energy needs and
generation capacity tend to be concentrated in the dry northeast of the country.
Coal
China needs to reduce its dependency on coal for the sake of its water resources as well as its air
pollution. As an energy source, coal is both water-intensive and polluting. Coal supplied 77% of
China’s energy needs in 2012. The government is trying to reduce the proportion of coal in its energy
mix, but, given the expansion of overall demand, coal use is still projected to increase by 70% from
current levels in the next two decades.7677
Coal consumes a large amount of water at every stage in the supply chain, from mining and washing
coal to cooling power plants. The coal industry accounted for one sixth of China’s total water
withdrawals in 2011, although some estimates have put this as high as 20%.78 This share of available
water is not sustainable; water tables are declining and in some areas in the north coal mining is
already being constrained.
73
http://www.chinadaily.com.cn/business/2013-05/27/content_16534753.htm
from 967GW in 2010 to 2,470GW in 2030.
75 http://about.bnef.com/files/2013/03/BNEF_ExecSum_2013-03-25_China-power-utilities-in-hot-water.pdf
76 Best, D. Levina E. 2012. Facing China’s Coal Future, International Energy Agency, Paris
77 Future Directions 2013 One tonne of coal requires an estimated 3,000-11,500 litres of water to produce. See more at:
http://chinawaterrisk.org/resources/analysis-reviews/china-no-water-no-power/#sthash.bGXHkzqW.dpuf
78 http://grist.org/article/2011-02-23-coal-is-chinas-largest-industrial-water-consumer/
74
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70% of China’s roughly 15,000 coal mines are located in water-scarce regions; 40% are estimated
already to have severe water shortages. According to HSBC global research, the water demand from
China’s coal sector will increase by 80% by 2020 and 160% by 2035 on 2008 levels of 90.6 billion
cubic metres.79
Source: HSBC 2013
Pollution from untreated mine tailings also reduces the availability of usable water and
contaminates groundwater and has come under increasing scrutiny from China’s civil society and
environmental NGOs.80
If the coal-fired power sector is to continue to expand, it will have to make heavy investments in
increased efficiency and new technologies, or China will need to import more coal.
To address this, the Ministry of Water Resources released a Water-for-Coal Plan in December, which
states that future development of large coal bases in China will depend on the availability of regional
water. Miners will also need to invest in technology that not only treats wastewater but allows the
extraction of more coal with less water.
Alternatives to coal, such as natural gas, nuclear and hydropower are also constrained by water
availability, and each has its own set of serious implications.
Hydropower and renewables
Hydropower is being promoted in China as a green substitute for fossil fuels. But by prioritising rivers
as an energy source, China’s aggressive dam building will have enormous ecological ramifications for
its water resources.
Hydropower is China’s second largest energy source after coal, making up 22% of total installed
capacity in 2010. Approximately half of the world’s 45,000 large dams are in China.
In recent years, the government has been more cautious about damming major rivers because of
environmental concerns and widespread opposition from civil society. But ambitious plans to meet
79
80
HSBC 2013. p.11
Greenpeace 2012, Thirsty Coal and UNEPFI October 2012
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low-carbon intensity goals in the 12th Five-Year Plan, combined with intensive lobbying by major dam
builders and electricity companies, have opened the way for a fresh round of dam building.
China plans to double hydropower capacity from 216 gigawatts in 2010 to 568GW by 2030
(equivalent to 1.7 times India’s total power generating capacity in 2012). The government has
committed to approving 140GW of new hydropower by 2015, around 80% of which will be located in
the ecologically sensitive and seismically active regions in the southwest.
To meet this goal, the state council has recently approved new dam cascades on the Nu (Salween),
Lancang (Mekong), and Yarlung Zangbo (Brahmaputra) river basins – all along internationally shared
rivers, which is likely to stoke tensions with neighbouring countries downstream(see section 4).
The new hydro push has caused domestic controversy. In January 2014, 19 Chinese NGOs published
a report warning that the development of China’s rivers has already gone too far, and if they are not
protected by the end of the 13th Five Year Plan in 2020, it will be too late. The NGOs are particularly
alarmed by the impact of the 1,750 megawatt Xiaonanhai dam, which will damage the last habitat
for rare fish on the upper Yangtze, and the previously halted Nu River cascade of dams, now
included in state plans.81
Their concerns centre on the negative impact on river ecosystems and fisheries, worries about dam
safety in seismically active regions, and poor quality environmental impact assessments. Since there
has been no cumulative impacts review of cascades of dams on rivers, the extent of potential
damage remains largely unknown.
Environmentalists argue that so-called “green” hydropower is in fact spurring polluting industries to
develop in south-western China. Since many hydropower plants in this region are not connected to
the grid, the electricity produced has to be consumed locally. This affordable power allows local
governments to attract energy-hungry industries.
Factories cannot rely on dams for power during the dry season and so the hydropower boom has
required the construction of other power capacity, generally new coal-fired facilities, creating a
vicious circle of water demand. For example, in order to ensure a stable supply, Guizhou has built
more coal-fired generating capacity than hydropower. Sichuan, Guangxi and Yunnan are doing the
same.
Fragmentation of the power grid between regional, independently-operating companies means that
grid companies which cannot accommodate electricity surpluses simply waste power generation
potential by curtailing production. In Yunnan province, potential energy is being wasted because of a
dispute over electricity prices, with provincial officials trying to find ways to boost local industry,
rather than selling power to Guangdong at the lower prices enforced by the central government.82
For hydropower, one challenge is how to transfer electricity across the huge distances from the
southwest, where the bulk of hydropower is produced, to the east coast, where it is consumed.
The colossal West East Electricity Transfer Project – initiated under the 10th FYP – aimed to expand
electricity generating capacity in the west, through the construction of new coal bases and
hydroelectric dams, to relieve east coast electricity shortages. As part of this, three ultra-highvoltage direct current power lines are under construction, capable of transmitting power over long
distances more safely, and with less loss of power, than existing lines. Currently, the power grid
81
82
http://pan.baidu.com/s/1mg7EKAG
https://www.chinadialogue.net/article/show/single/en/6347-The-battle-over-Yunnan-s-hydropower
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infrastructure across much of the southwest is relatively frail, and operates at low voltages that are
unsuitable for long-distance transfer of large quantities of electrical energy.
Hydropower is also highly vulnerable to the effects of climate change. The recent droughts and
forecasts of drier conditions in south and central China, call the viability of aggressive hydropower
expansion into question. The extreme drought of 2011 impacted hydropower production by nearly
25% due to decreased river run-offs, and occasioned a power shortfall estimated to be nearly 4-5%
of total national electricity production.83 In 2011, drought in Yunnan caused a 47% decrease in
hydropower capacity. In central China more than 1,000 dams – including the Danjiangkou dam at the
source of the South North Water Transfer Project’s middle leg – were forced to suspend operations
due to reduced water flow.
Such periods of scarcity also create zero-sum trade-offs, such as on the Yangtze River, where
drought conditions in the past decade have forced the Three Gorges Dam to suspend water
discharge, thus forfeiting both energy production and downstream water supply, in order to
maintain the river’s minimum navigable depth for freight traffic upstream.84
The water footprint of large hydropower dams is also sizeable: a 2011 UNESCO study estimates that
the evaporation loss from hydropower dams worldwide is 90Gm3/year, equivalent to 10% of the
total water footprint of global crop production in 2000. This water loss is not generally taken into
account in assessment of hydropower’s water consumption.85 The energy used in constructing and
operating water supply infrastructure, including dams and wastewater treatment also carries its own
water footprint.86
Some environmentalists argue that China should channel more investment into wind and solar,
which also have a smaller water footprint.87 However, getting renewables onto the grid remains a
challenge. In 2011, due to institutional implementation and pricing barriers, the State Regulatory
Electricity Commission estimated that 23% of wind turbines and 28% of solar panels were not
connected to the grid and therefore not contributing to power production.88
Nuclear power
Nuclear power generated 1.8% of China’s total electricity in 2011. China’s most recent official plan
projects 40 GW of nuclear capacity by 2020, but, unofficially, the Chinese government has signalled
its intention to build up to 80 GW of nuclear power by 2020, from the current 10.8 GW. If those
plants are built, nuclear power will meet 5% of the country’s energy needs by 2020.89
Nuclear power plants use an enormous amount of water for cooling; hence, they are usually built in
proximity to a lake, river, or ocean. All of China’s 14 operating plants are on the eastern coastline.
The total water withdrawals depend on the plant’s thermal efficiency, but on average, for every unit
of heat converted to electricity, two additional units are carried away by the water.
83Deutsche
Bank Group. 2011 p.15.
Ibid, p.22
85 Mekonnen, M. M., and A. Y. Hoekstra. 2011. “The Water Footprint of Electricity from Hydropower”. Value of Water:
Research Report Series 51, p.8
86 Kahrl and Roland-Holst 2008
87 Li Bo, director of friends of nature at a workshop in Kathmandu 2013.
88 To reach its target to increase the share of non-fossil fuel energy to 15% by 2020 China aims to increase wind energy
capacity to reach150GW, and solar power to reach 20GW in 2020. But by some estimates China has an exploitable
potential of 2200 GW for solar power, and 700 to 1200 GW for wind power.
89 World Nuclear Association, 2011
84
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Shale gas
Shale and other unconventional gas reserves are now seen as critical to meeting a significant portion
of the country’s overall energy demand. While there are high hopes that shale gas could provide
China with a less carbon-intensive energy supply than coal, there is also growing awareness of the
damage that extraction could inflict on the country’s aquifers.
At 36 trillion cubic metres, China’s shale gas reserves are double those of the US, according to
estimates from the US Energy Information Administration.90 The industry in China is still nascent and
growing slowly, with only around 100 shale gas test wells in 2013. But the 12th Five Year Plan called
for the development of non-conventional oil and gas resources, including shale gas. The plan sets an
initial production goal of 6.5 billion cubic metres for 2015, and 60-100 billion cubic metres by 2020.91
However, in most of China’s promising shale gas areas, such as the Tarim basin in the northwest,
water supplies are limited.
Critics say that fracking, which involves pumping millions of litres of “slick water” – a mixture of
water, sand and chemicals – down a well at high pressure, is poisoning water supplies. Without an
environmental protection framework in place, large-scale development of shale gas in China could
damage surface and ground water, with detrimental effects on social stability and public health.
90
Energy Information Administration: http://www.eia.gov/
Xingang, Z., Jiaoli, K., Bei, L., 2013. Focus on the development of shale gas in China—Based on SWOT analysis. Renewable
and Sustainable Energy Reviews 21, 603-613
91
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Air pollution and water
China’s plans to clean up its air pollution may create unintended problems for the country’s water
supply. In response to the headline-grabbing periods of smog in Beijing and northern cities in the
past year the State Council set ambitious goals in reducing air particulates and coal consumption as
part of an Air Pollution Control Action Plan in September 2013.
One of the plan’s key recommendations is to replace coal with cleaner natural gas, including
synthetic natural gas (SNG) converted from coal92. However, converting coal to natural gas is
an extremely water-intensive process; one cubic metre of SNG requires 6 to 10 litres of freshwater
to produce. Many SNG plants are located in water-stressed regions, and the process will exacerbate
water scarcity.
Beijing will become the first Chinese city powered by SNG, receiving at least 4 billion cubic metres of
the fuel annually.
While SNG emits fewer particulates into the air than burning coal, it releases significantly more
greenhouse gas than mainstream fossil fuels and so could also be a step backward for China’s lowcarbon energy strategy. China’s government will need to think carefully about whether SNG’s air
pollution benefits outweigh its water and climate change costs. Water authorities should consider
92
The plan aims to reduce particulate matter across the north China plain by 25%, and reduce coal’s share of the national
energy mix to 65% by 2017.
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tightening caps on industrial water withdrawal and water-pollutant discharge or introducing stricter
local environmental standards in high water-risk area.
Energy intensive water infrastructure
The energy intensity of water provision is increasing in China, as the government looks to transport
and clean ever-larger quantities of water to meet growing demand. Besides transporting water
across mountains to satisfy demand, China is using larger amounts of energy to treat and reuse
wastewater.
Infrastructure projects like the South-North Water Transfer Project (SNWTP), or the proposed Bo Hai
sea water pipeline, drive up the energy costs associated with providing water. The eastern portion of
the SNWTP must raise the water 45 metres, which could use upwards of 3 billion kWh of electricity
annually.93 It is not clear whether policymakers view the water supply infrastructure as a high-energy
consuming industry and a sector that also requires stringent energy conservation targets.
Desalination
Chinese policymakers are now intent on expanding the role of desalination, from its current 600,000
tonnes a day to 2.5 to 3 million tonnes a day by 2020.94 This will be expensive: desalination facilities
currently produce water at roughly double the retail price and many times the cost of water-saving
measures, with local governments subsidising the extra cost.
Environmentalists are concerned about the negative impacts of such projects. High concentrations
of brine (a waste product of the desalination process) can damage coastal vegetation, and these
projects can have high carbon footprints depending on the energy source.
Beijing, Tianjin and Qingdao are ramping up their desalination capacity, but national targets under
the 12th Five Year Plan have not been met. Currently the industry is dominated by foreign
investment but the government is encouraging domestic companies to increase their participation
through financial incentives.95
1.3.2. Urbanisation
China’s rapid urbanisation has also put stress on water resources. More than 400 million people
have moved into cities in the past thirty years, and today more than 52% of Chinese citizens live in
cities. By 2025, the government wants that figure to be 70%, which means that over the next 17
years, a further 300 million people will be urbanised.
Urban Chinese on average consume more water, energy and material goods than their rural
counterparts, though some models show that they also attain increased energy efficiencies
compared to rural dwellers.96 Urban demand for water is projected to increase by between 65-100%
over the next 20 years. Driving this demand will be rising residential water consumption: urban
93
Schneider, 2011
http:// chinaenvironmentalgovernance.com/2011/04/13/ chinas-desalination-plans-and-its-water-energy- nexus/
95 David Cohen-Tanagi 2013
96 O’Neill et al., 2012
94
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residents consume 2-3 times more water than rural inhabitants in domestic households. China still
ranks far below the US in per capita usage, however, and growth has been stable at 3%.97
Cities in the Hai and Huai river basins and in the northeast are particularly at risk of shortages: by
2025, water demand in the Hai basin will outstrip supply by 119%. Even with the SNWT to ease
water shortages, total demand in Beijing and Tianjin is predicted to outstrip supply by 2025. In
Beijing, demand is already estimated to be 80% of available supply, while international consensus
maintains a ratio of 20-40% as sustainable.
There is a huge potential for water saving in urban areas. Huge quantities of water are wasted in
China’s cities. Data from the China Urban Construction Statistical Yearbook and a Beijing NGO
suggest that pipe leakage rates range from 12% to 23%.98McKinsey has calculated a possible 40%
savings in urban household water through water saving initiatives, such as installing water-saving
appliances or tackling leakages in distribution systems.
Growing urbanisation may also exacerbate water pollution. Chinese cities urgently need to improve
wastewater infrastructure. China’s urban sewage-systems produce close to 22 million tonnes of
sludge every year – of which 80% is untreated toxic sludge, and with only urban household sewage
being collected and treated, these figures do not include most of the sludge from industrial
wastewater or rural household sewage.99
If wastewater treatment remains at current levels, urban pollution could increase by a factor of 5,
outstripping that from industrial sources. Urban pollution is worse in medium and smaller cities,
where treatment rates are lower and authorities find it difficult to clamp down on small-scale highly
polluting industries, particularly pulp and paper.100
China has made plans to expand wastewater investment in the 12th FYP, set minimum limits for
wastewater treatment for cities to reflect their capacity, and promised US$60 billion for urban
wastewater infrastructure, with significant investment from the private sector.101 However, at
present, the cost of running these systems means municipal level governments have little incentive
to upgrade.
The water recycling rate of around 40% in Chinese industry is far below the developed world average
of 75-85%. Increasing water recycling and treatment could reduce consumption in high-usage
industries by 18%, and overall urban industrial water use by 7%. Potential gains from water
recycling in urban contexts mean that urbanisation may be necessary to slow down groundwater
depletion rates.
Water recycling from urban usage can be key to addressing inter-sectoral conflicts and competition
over water between residential, industrial and agricultural demands.102 Recent cases from Hebei, on
the North China Plain, have shown that aggressive urban wastewater treatment to maximise reuse
and minimise water consumption can help to alleviate water shortages and groundwater depletion.
97
McKinsey2009. p.438
Sustainable Analytics 2010, p.63 Ji, 2011
99 http://chinawaterrisk.org/resources/analysis-reviews/the-money-in-sludg/
100 McKinsey, p.456
101 Global Water Intelligence 2012, Zhong et al. 2008
102 Kendy, Eloise, Jinxia Wang, David J. Molden, Chunmiao Zheng, Changming Liu, and Tammo S. Steenhuis. 2007. “Can
Urbanization Solve Inter-Sector Water Conflicts? Insight from a Case Study in Hebei Province, North China Plain.” Water
Policy 9 (S1) (January): 75.
98
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In Luancheng County, local action resulted in a decrease in water consumption at the regional
scale.103
1.3.3 Agriculture and food security
Agriculture makes up 65% of water demand in China (down from 88% in 1980). Agricultural water
consumption is likely to stay stable, but as the main consumer of water in China’s economy,
agricultural water efficiency savings remain crucial.
The high demand for water in the agricultural sector is driven by the fact that flood irrigation is still
the main approach. In 2007 only 0.4% of China’s arable land used drip irrigation.104
Water use in agriculture is highly inefficient, however, with low water productivity of around US $3.6
cubic metres (compared to OECD average of US$35.8 cubic metres). Underfunded and aging water
and irrigation infrastructure means that only 45% of irrigation water is consumed by crops105 Only 40%
of agricultural water is recycled, compared to 85% in developed countries.106 Agriculture also has the
lowest output per unit of water input of any sector and over use of chemical fertiliser means that
the run-off is polluted.107
The 12th FYP outlines support for agricultural technology to improve efficiency and food production,
as well as greater social support for rural farmers. However, market instruments and price reforms
have been slow to materialise.
Traditionally, the government has prioritised food self-sufficiency over sustainable water use.108
However, with rising food demand, China’s grain and food imports have grown in recent years. In
2012, China’s grain self-sufficiency fell to 87–88% of total production, well below the government
target of 95% self-sufficient in grain. In January 2014, for the first time the government set a grains
output target well below domestic consumption rates, effectively abandoning its ideological
commitment to producing all the grains it needs, a commitment that has been central to Communist
party thinking for decades.109
The state council’s new guidelines placed a greater emphasis on the quality, rather than the quantity,
of what is produced, and called for grain production to “stabilise” at roughly 550 million tonnes by
2020, below the 2013 harvest of 602 million tonnes.
Crucially, under the new rules the country will prioritise the supply and quality of meat, vegetables
and fruits, all of which require less land than bulk grains, but demand more water.
Population growth, rising prosperity and the increase in the urban population will all fuel demand for
more water-intensive meat and dairy products. Meat consumption approximately quadrupled
between 1980 and 2010, and is projected to double again by 2030. This will put increased strains on
103
Ibid.
http://www.csmonitor.com/World/Making-a-difference/Change-Agent/2011/1020/Cheap-drip-irrigation-couldtransform-small-farms
105 OECD-FAO. 2013. “OECD-FAO Agricultural Outlook - Organisation for Economic Co-Operation and Development.”
106 Future Directions. 2013. “Food and Water Security China’s Most Significant National Challenge”. Feb 8.
http://www.futuredirections.org.au/publications/food-and-water-crises/873-food-and-water-security-china-s-mostsignificant-national-challenge.html.
107 Kahrl, Fredrich, and David Roland-Holst. 2008. “China’s Water–energy Nexus.” Water Policy 10 (S1) (February): 51.
108 Chellaney, Brahma. 2012. “Asia’s Worsening Water Crisis.” Survival 54 (2) (May): 143–156
109 http://www.ft.com/cms/s/0/6025b7c8-92ff-11e3-8ea7-00144feab7de.html?siteedition=intl#axzz2t1t8v03d
104
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the country’s water resources; one kilo of beef consumes 10 times as much water as a similar output
of rice.110
The “red lines” that the state has set in order to shore up agricultural production dictate that China
must maintain a minimum of 120 million hectares of arable land. While the latest national survey of
land, carried out in 2009 and published recently, reported a comfortable surplus of 135 million
hectares of land, the quality of the land, and so its suitability, has decreased. Arable land lost to
development and contamination is frequently replaced by marginal and lower-quality alternatives —
although land surveys do not distinguish between them.111
An increasing dependence on imported oilseeds and meat offers China the co-benefit of a gain in the
‘‘virtual water’’ embedded in imports. China is already a massive importer of corn, soybeans and
wheat and rising food demand from China will, in turn, affect global grain and food prices. Recent
opaque and controversial purchases of arable land in Africa, Australia, and Ukraine add to concerns
about the international ramifications of China’s food (in)security.112
Changing climate patterns and the accompanying water variability, evident in the droughts of recent
years, may put further stress on the main food-producing regions, many of which are already waterscarce. With only 5% of China’s water resources, the Hai and Huai river basins produce 57% of
China’s wheat and 22% of its vegetables. Long term changes in climate and rainfall patterns will
affect the output of rain fed crops such as rice and wheat across much of China.
Part 3: Geopolitical risks of China’s water crisis
China’s hydro plans and water needs are bringing the country into conflict with its neighbours. In the
past, tensions have arisen with Russia from trans-boundary water pollution on the Amur.113 In
recent years, China has shown an increasing interest in developing the hydroelectric potential of its
trans-boundary rivers. These plans have stoked tensions with neighbouring countries downstream in
Central, South and South East Asia, which are worried about the security of their own water supplies.
3.1 Dams, diversions and the Tibetan Plateau
China sits on the headwaters of Asia’s major rivers, which originate in the glaciers of the Himalayas
and the Tibetan Plateau. This region is also known as The Third Pole because its glaciers store more
freshwater ice and snow than any region outside the North and South Poles – nearly 10% of the
global total. The Yellow, Yangtze, Mekong, Brahmaputra, Salween, Sutlej, and Indus rivers carry
water to 1.5 billion people from the mountains in Tibet down to deltas in Bangladesh, China, India,
Myanmar, Pakistan, and Vietnam. As the upstream power, China has the ability to control the quality
and flow of water that reaches its downstream neighbours.
111
http://www.nature.com/news/china-must-protect-high-quality-arable-land-1.14646
Future Directions 2013; Reuters 2013
113 In 2005 an industrial accident in China resulted in serious pollution downstream in Russia on the Amur River on the
border between Russia and China. A huge oil slick polluted the Songhua River, a tributary of the Amur, and the main source
of drinking water for the 600,000 residents of the Russian city of Khabarovsk, across the border from China; the accident
also affected the Chinese city of Harbin, leaving up to four million people without public water services.
http://www.terradaily.com/reports/Water_ Pollution_Found_In_Eastern_Russia_Following_Chinese_Factory_Blast. html.
112
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China’s growing demand for hydropower and water is driving dam building in the Himalayas, which
may have important impacts on flow downstream in South and South East Asia.
China plans to double hydropower capacity by 2030 in a bid to meet low-carbon intensity goals, and
most new dams will be built on international rivers: the Nu (Salween), Lancang (Mekong) and
Yarlung Zangbo (Brahmaputra).114
China has no formal agreements with its neighbours on the use of trans-boundary rivers and has
shown little enthusiasm for engaging in the complex process of drawing these up.
China’s leaders continue to reaffirm their desire to play the “good neighbour” and promote
“regional cooperation” in public forums,115 while at the same time maintaining their total sovereign
right to develop water resources within their borders.116 China treads an increasingly delicate line in
balancing good international relations against concerns for its national water and energy security
needs. There is a risk that competing demands could spill over into real conflict in the future.117
Existing agreements have been bilateral, rather than multilateral. China has inked a number of
treaties and set up institutions to manage some of the rivers that it shares with its northern
neighbours (Russia, Kazakhstan and Mongolia), but there are no agreements between China and its
neighbours south of the Himalayas, although there are now some legal arrangements on
hydrological data sharing.
Brahmaputra River
China’s plans to develop the Yarlung Zangbo-Brahmaputra (shared by China, India and Bangladesh)
have long been a sore point in relations between China and India.118 The proposed dams, irrigation
and hydro-electric projects, and reports of diversion plans to other parts of China, have been
controversial.
Three dams are planned on the middle reaches of the river. Work has already started on the Zangmu
Dam, which is expected to begin generating electricity this year.
Indian fears have focused on supposed plans to construct a massive water diversion at the “great
bend” of the river just before the Yarlung Zangbo swings round into India; this would involve
tunnelling through the Himalayas to pump 17 billion tonnes of water to the northwest Gobi desert.
The Chinese government has repeatedly denied the plan, which was originally proposed by a retired
army general, and which experts dismiss as an engineering fantasy.
It would be staggeringly expensive and complex to divert the Brahmaputra to the Yellow River, even
for a powerful country that has demonstrated its penchant for heroic engineering. The costs in
114
2011-15 energy sector blueprint:http://www.scmp.com/news/china/article/1135463/ban-lifted-controversial-nu-riverdam-projects
115 advanced strongly at the 18th Communist Party of China National Congress in November 2012 and now being
reaffirmed in public forums
116 `China issues white paper on peaceful development' September 201 http://www.fmprc.gov.cn/eng/zxxx/t856325.htm
118
http://www.thethirdpole.net/view-the-brahmaputra-as-a-living-ecosystem/
https:/www.chinadialogue.net/article/show/single/en/4632-Talking-about-the-Yarlung-Zangbo
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energy and finance of a project that would involve crossing the upper reaches of the Salween, the
Mekong and the Yangtze en route are almost incalculable.
A series of mega dams are, however, planned for the “great bend,” where the river plunges through
the Brahmaputra Gorge. The world’s deepest gorge, it is a storehouse of genetic diversity, a
transporter of moisture, and a rich potential source of hydropower. For 400 kilometres, the river
twists around the mountains, dropping more than 2,000 metres in altitude and giving up huge
energy potential as it goes.
Here, a cascade of nine dams at Medog (or Mutuo), with a total generating capacity of 60 GW ,
almost three times the capacity of the Three Gorges dam, is under active consideration, but it is
likely to be built only after related infrastructure and ultra-high voltage power transmission lines to
the east coast are completed.
Publicly, Chinese officials deny such plans. But news reports confirmed the completion of a new
highway to the site of the proposed dam in Medog county at the beginning of November, 2013,
connecting China’s last roadless county to neigbouring Bome county.119
The project would involve diverting part of the flow into a canal, running it through a cascade of nine
dams and allowing it to rejoin the river below them. Although run-of-river dams of this type can
have disruptive effects, Chinese scientists argue that the dam would not impact the flow of river
water downstream. In fact, outflow of the river once it reaches India is more than double that at the
point of the proposed dam site, but these reassurances have done little to allay Indian fears.
Security hawks in India argue that China is intent on aggressively pursuing projects on the Yarlung
Zangbo and employing water as a “weapon." The Indian government is advocating the urgent
damming of the waters of the Brahmaputra in Assam and Arunachal Pradesh (where 168 mega-dams
are proposed), to secure priority rights to the river. China would see any Indian development further
downstream as a threat to its claims over Arunachal Pradesh, which it refers to as South Tibet. There
is little debate on the issue in China, as few are prepared to challenge the state with regard to
Tibet, or its claims to Arunachal Pradesh.
Downstream, meanwhile, scientists and policymakers in Bangladesh have tried in the last decade to
deal with the rising frequency of mega floods and to reduce damage from salt water intrusion as sea
levels rise. Once in Bangladesh, the Yarlung Zangbo becomes a massive, moving, braided system,
which can be destructive and hard to manage. Many fear that construction upstream, and the
potential loss of silt it entails, will make this situation worse.
Climate change is already causing major environmental problems on the Tibetan Plateau and in the
river basins: snow lines creeping higher, accelerating glacier melt (on average 200 to 500 metres
retreat over the past 20 years) and widespread desertification and degradation that have turned
vast swathes of the river basin into sandy dunes.120Mudslides caused by glacier avalanches are also
on the rise.
The greatest risk of all comes from seismic activity. The Himalayas and Tibetan plateau were formed
by the collision of tectonic plates and earthquakes are common in Tibet. Medog county, where many
Chinese dams are planned, was struck by a massive quake in the 1950s, and according to scientists’
calculations, another big one is overdue. The site of the proposed Medog hydropower project is
particularly vulnerable, situated at the confluence of three big mountain ranges, within a gorge that
119
http://news.xinhuanet.com/english/china/2013-10/31/c_132848040.htm
Presentation in 2010 by Yang Yong, chief scientist at the Hengduan Institute of Mountain Hazards, Chengdu
https://www.chinadialogue.net/article/show/single/en/4604-Saving-south-Asia-s-water
120
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is more than 5,000-metres deep. Earthquakes, and landslides exacerbated by human activities,
regularly shake these young mountains.
Across the region, there are large scale plans in Pakistan, India, Nepal and Bhutan to build more than
four hundred dams, with over 160,000 MW of new projects proposed over the next 20 years.121 If
these plans are realised, the Himalayan region will have the highest concentration of dams in the
world, with far-reaching implications for the landscape, ecology and economy of the region
South East Asia
Similar problems have emerged in South East Asia along the Mekong. Proposals to harness the
power of the Lancang (upper Mekong) and Nu (upper Salween) rivers, in particular, have been
framed as unilateral Chinese development schemes that ignore the concerns of the downstream
countries, Myanmar, Thailand, Laos, Cambodia and Vietnam, and that threaten widespread social
and ecological damage.
The Mekong is Southeast Asia’s longest river, but almost half of its course is in China. From its source
on the Qinghai-Tibet plateau, it flows out of China’s south western Yunnan Province into Myanmar,
Laos, Thailand, Cambodia, and Vietnam. Chinese dams built on the Mekong in recent years are
slowing the river’s flow, threatening the health of Southeast Asian fisheries and water security.
Fifteen dams are planned on the Lancang River in Yunnan, which in total will generate 25.605
gigawatts of electricity;122 six of these dams are already in operation or under construction. A further
cascade of six dams is planned on the Tibetan stretch of the Lancang, where it is known as the Zaqu.
Here, the social and ecological uncertainties associated with a project of such scale may be even
greater. Very little information is publicly available about these dams, and what information exists is
unreliable.
Concerns about water availability are well-founded in a region where summer monsoons bring
torrential rains, but where the dry season can see little precipitation. The volume of the entire
cascade’s reservoirs in Yunnan, roughly 60 billion cubic metres, is approximately equivalent to 13%
of the Mekong’s mean annual discharge. The dams with the two largest reservoirs, Xiaowan and
Nuozhadu on the lower reach, occupy more than half that capacity. With Xiaowan complete and
Nuozhadu expected to fill in 2017, downstream users fear China might “bank” water in large
reservoirs during the rainy season for more controlled release during the dry season.
Water levels in the Mekong Delta reached their lowest levels in 50 years in 2010. Downstream
countries accuse the Chinese of exacerbating the situation by filling the reservoir on the recently
completed Xiaowan dam. Chinese officials and dam developers responded by inviting downstream
officials to visit the dam site, and by promising greater transparency and data sharing, a promise as
yet unfulfilled.
The lower Mekong is governed by the 1995 Mekong Agreement (Cambodia, Laos, Vietnam and
Thailand). China and Myanmar have refused to join the admittedly weak Mekong River Commission
(MRC), but cooperate with it as `dialogue partners.' China has an agreement with the MRC
123
concerning provision of hydrological data.
121
http://www.sciencemag.org/content/339/6115/36.summary
Sinohydro website: http://www.wcb.yn.gov.cn/slsd/ztyj/3857.html
123 101 UN Doc E/CN.11/457, ST/ECAFE/SER.F/12 `Development of water resources in the lower Mekong Basin' 1957) 12
Flood Control Series 3. 102 Agreement on the Cooperation for the Sustainable Development of the Mekong Basin (signed
and entered into force 5 April 1995) ILM 34 (1995) 864. The Mekong Agreement, upon closer scrutiny, appears to cover
122
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Eleven dams are planned on the main stream of the lower Mekong outside China. The decision of
the Laos government to proceed with controversial dams on the mainstream of the Mekong at
Xayaburi and Don Sahong, heedless of objections from Cambodia, Vietnam and the international
community, have further weakened the Mekong River Commission and damaged future hopes for
collaboration in the basin.
Building all eleven dams would slash the river’s fish supply by 16%, an economic loss of US$476
million each year, according to a recent study by WWF. If all of the 88 dams proposed for the
Mekong river basin are completed, fish stocks could drop by 40%by 2030. 124
3.2 Building cooperation
China maintains a restrictive territorial sovereignty approach in its relations with its southern
neighbours. While the trans-boundary water resources across this region are not covered by treaties,
China is involved in some, albeit limited, forms of cooperation. It has been acknowledged that
sharing hydrological data on the Lancang/Mekong has improved the quality of flood forecasting for
the Mekong River and played a significant role in reducing losses caused by floods downstream.
Increasing scientific collaboration, including data sharing on issues such as the sedimentation and
flow volumes would go a long way towards building trust, reducing uncertainty, and establishing the
basis for cooperative management of the Lancang-Mekong.
Overall, however, there is a clear lack of institutional frameworks that could be capable of
reconciling the competing demands over shared water resources of the trans-boundary states
concerned.
Water was a major topic of discussion between India and China’s top leaders in 2013. In October
2013, Li Keqiang and his Indian counterpart Manmohan Singh, signed a Memorandum of
Understanding (MoU) on strengthening cooperation on trans-border rivers. Under the agreement,
both parties recognised “trans-border rivers and related natural resources and the environment are
assets of immense value to the socio-economic development of all riparian countries,” and agreed to
cooperate through the existing expert level mechanism on flood-season hydrological data and
emergency management.125 China also agreed to provide India with monsoon-season hydrological
data for the Yarlung Zangbo for an extra two weeks every year.
The agreement was seen as a welcome sign that China was willing to be more transparent on transboundary river projects and accepted downstream countries’ right to river development. However,
hopes that the new agreement would mark a turning point in water relations may be premature.
Not only does the language of the most recent agreement not mention dams, river projects or
each of the cornerstone issues relevant to effective transboundary watercourse management scope, substantive rules,
procedural rules, institutional mechanisms and dispute settlement. See P Wouters `The international law of watercourses'
(n 100) 347.
103 Agreement on Provision of Hydrological Information on the Lancang/Mekong River during Flood Season
http://www.mrcmekong. org/news-and-events/news/agreement-on-provision-of-hydrological- information-renewed-bychina-and-mrc/.
124 http://www.sciencedirect.com/science/article/pii/S0959378012000647
125 http://mea.gov.in/bilateral-documents.htm?dtl/22368
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India’s water rights, India is paying China for the hydrological data and does not make it publicly
available.126
Given the powerful economic and political interests behind dam building in the region, the deal
could be seen as a tacit agreement between India and China to continue their respective dam
building plans in the Himalayas, regardless of the potentially disastrous environmental consequences.
Central Asia
China has taken steps to cooperate with downstream neighbour Kazakhstan over shared rivers. Back
in 2001, China agreed to set up a joint river commission with Kazakhstan. While the scope of
activities of the commission has remained narrowly focused on monitoring and research, the
establishment of a commission is still a large and unprecedented step for China. In early 2011, the
two countries finalised an agreement on water quality protection along shared rivers, and later that
year, launched a joint water diversion project on the Khorgos River, a 150-kilometre long tributary of
the Ili and a border river between both countries.
While many in Kazakhstan remain concerned about the negative effect of China’s enormous water
withdrawals from the Ili and the Irtysh rivers to feed its growing cotton and gas industries in Xinjiang,
the agreement indicates that progress on bilateral water issues is possible with Beijing.
However, Kazakhstan is a crucial partner for China’s border security, a major exporter of oil to China,
and a transit country for natural gas from Turkmenistan, vital for China’s energy security and
continued economic growth. China is unlikely to extend a similar approach to its southern
neighbours, none of which are in a position to offer such strategic assets.
3.3 The importance of the Tibetan Plateau
The Tibet-China relationship is primarily characterised as a human rights question but there is
another dimension to China’s relation with Tibet: water and other natural resources.
Tibet (or “western treasure house” in Chinese) is rich in water, minerals and other resources.
Hydropower development on the Tibetan plateau is closely tied to mining, a major user of
hydropower for ore concentrators and smelters.
The construction of hydro dams will pave the way for growth of intensive mining and widespread
industrialization of the plateau, which risks irreversible environmental damage and pollution of the
rivers of China and South Asia.
Tibetan Plateau holds 80 million tonnes of extractable copper and 2000 tonnes of gold, proven by
Chinese geological teams. China’s new mines are set to operate in Tibet for decades, benefiting from
state investment in roads, railways, communications, hydro dams, pipelines and urban infrastructure.
The manufacturing hubs of Chongqing and Chengdu in southwest China will benefit hugely from the
exploitation of Tibet’s minerals. As Gabriel Lafitte argues in his new book, Spoiling Tibet, “It may not
be long before your next smart phone or tablet is powered by lithium from Tibet.” Mining is already
polluting water resources, leading to environment and health problems and protests.
126
http://sandrp.wordpress.com/2013/10/24/media-hype-vs-reality-india-china-water-information-sharing-mou-of-oct2013/
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Part 4: Conclusions and opportunities for Europe-China cooperation
Europe needs to start taking China’s water crisis seriously. Water scarcity has predictable
implications for China’s economy and thus major ramifications for Europe and the global economy.
China’s leaders have taken ambitious steps to tackle the country’s water problems over the past
decade. However these policies had limited impact so far because of deep weaknesses in China’s
governance system.
Most crucially future water security also depends on tackling pollution – or “quality-induced water
scarcity” as it is now referred to among policymakers in China. This is the biggest constraint on
future water resources and intimately linked with issues of tackling corruption.
Institutional reform is key to improving water governance in China. Top-down technological
approaches that lack coordination in and across the state bureaucracy will not be sufficient to
address the inadequacies of current policies or to spur institutional reform. The responsibilities of
different government agencies need to be clearly defined and coordinated, and a politically and
financially independent government agency should be established to supervise water resources
management and pollution control, particularly for the management of trans-regional water issues.
A more radical shift is required away from reliance on heavy engineering solutions towards a greater
emphasis on coordination between institutions, monitoring, and cooperation. This can be
accomplished through reform of current water laws, (including the creation of China’s first laws on
groundwater quality), legal water management mandates between provinces and water bureaus
within river basins, and more policy participation from civil society, NGOs and businesses.
There are a number of other key areas Chinese authorities should urgently address.
First, sound scientific research and reliable data are needed to inform policy design and government
decision-making. Poor policy design and management waste resources and exacerbate water
problems. Currently, river basin level decision-making does not integrate the biophysical and
hydrological aspects of water resources, or the social and economic uses of water.
There is no standardised system to measure the quality and quantity of water, restricting the ability
of implementing agencies to make informed decisions. Even where data exists, it may be considered
classified or ‘internal,’ and therefore is not shared with water resource planners, especially where
foreign experts are involved. As a result, there is little effective information sharing between users
within basins, and river commissions lack the legal authority to facilitate such sharing.
The government’s capacity to conduct rigorous scientific research and policy analysis is weak, and
this presents an obstacle to the policy design. Greater investment in scientific research and in
developing information systems on water resources is required. At the same time, mechanisms are
needed that can ensure that research does inform policy design and water management.
Second, market mechanisms are set to play an increasing role in the allocation of natural resources
in China. However, for market-based approaches to be effective, the government needs to establish
and improve relevant laws and regulations, institutional systems and guidance on implementation.
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Water trading, and effective water pricing in particular, will be key to reducing water demand, but
could exacerbate water scarcity and incite conflict if strong institutional mechanisms are not in place
to regulate the market. More effort is needed to provide the right incentives for the uptake and
development of new water efficiency technologies – in industry and power sectors as well as urban
wastewater treatment.
And finally, stronger links need to be developed between energy, water and overall development
planning. Current government strategies do not take into account rising water demand from the
various sectors in the economy, or the inter linkages with agriculture, energy, and urbanisation
policies. China does not have enough water to fuel its power expansion plans unless it implements
aggressive water efficiency targets, particularly for the coal industry. The focus should not just be on
‘using less water’, but on ‘saving energy’ - as using less energy also saves water.
Recommendations
There are many potential areas for Europe-China collaboration on water issues. The analysis in this
report has identified five main areas where European and Chinese research and cooperation could
improve water governance and address some of China’s imminent challenges.
River basin management
Europe’s experience of river basin management, in particular the development and implementation
of the European Union’s ambitious Water Framework Directive (WFD) can serve as a model for the
institutional management of water in the Chinese context.
The WFD promulgates a system of water management based on the river basin rather than
administrative or political boundaries, and emphasises the importance of spatial planning and
sectoral integration in water resources management. Member states have to define River Basin
Districts (RBDs), which serves to improve cross-border co-operation and could be useful in China,
where water management system is poor and fragmented.
The directive requires member states to rethink domestic water policies on both quality and
quantity. By formulating general, long-term goals and leaving many choices down to member states,
it offers more flexibility than previous directives.
The Danube River - Europe's second longest river shared by 19 countries - provides some useful
lessons in international river basin cooperation. The political history of the river includes riparian
states in conflict, hostile blocs and intense national disputes. Conflicts in the basin have been
frequent, complex and difficult to resolve. Today the riparian states of the Danube River operate an
integrated program for basin-wide water quality control which is the most active and successful of
its scale. The Environmental Programme for the Danube River is the first basin-wide international
body that actively encourages public and NGO participation throughout the planning process. By
defusing confrontation, the programme is aimed at helping to prevent future conflicts. The Danube
basin has a long history of hydropower and flood control, and one quarter of the delta has been
artificially dyked to improve navigation. The Danube River Protection Convention (DRPC),
established in 1994, offers lessons in how to involve stakeholders from industry, agriculture,
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environment and consumer organisations, private industry and local and national authorities to
reduce pollution that can usefully be adapted for the Himalayan watershed.127
Europe can collaborate with China by encouraging exchange between European Basin Commissions,
such as the Danube and Black Sea Commission, with Chinese river basin commissions, and direct
collaboration between European and provincial authorities.
Previous initiatives such as Brahmatwinn, which twins the Danube and the Brahmaputra river basins,
have tried to use the European experience as a resource for IWRM implementation in the South
Asian River basin.128
The European Union has previously worked on a regional basis with the Liaoning provincial
government on integrated water management in the Liao river basin. The EU-China Liaoning
Integrated Environmental Programme (LIEP) aimed to improve the environmental quality of the Liao
River and prevent pollution. An institutional framework was established to manage water in the
basin, reform water prices and establish a monitoring network.129 The project also built wastewater
infrastructure to prevent and control pollution in the basin. 130 As a result, pollution fell by 60%.131
This case show the potential impact of collaboration, but how feasible such projects would be across
river basins involving multiple provincial authorities is unclear.
European collaboration on trans-boundary rivers is likely to be challenging, given the regional
political tensions and securitisation of water in Asia. While attempts to initiate dialogue and
discussions about hydropower projects in international river basins are likely to meet resistance, at a
policy and expert level, there is scope to initiate constructive dialogue on benefit-sharing within river
basins: for example, on flood control, biodiversity or food security. Europe could also play an
important role in supporting research that assesses the economic value of rivers beyond
hydropower and irrigation – in terms of ecosystem services and livelihoods.
Water pricing
For China, water pricing and market-based instruments will be essential to control water demand
and boost efficiency. European experience in promoting market mechanisms provides useful
experience for China. In particular, the European experience of introducing innovative water pricing
systems, under which the costs of water services have to be recovered taking account of the polluter
pays principle for the recovery of costs for water services and incentives for efficient water use,
could provide useful guidance.132
Open data and public participation
European experience of environmental transparency is useful in the Chinese context. In particular
127
ICPDR presentation: “International Cooperation in Water Management and Pollution Control in the Danube River Basin”
Danube countries adopted the European Water Framework Directive (WFD) in 2000 for integrated water management,
establishing the Danube River Basin Management Plan (DRBMP). The WFD operates on a polluter pays principle, and
principles of cost recovery in water pricing, and policies are designed to internalise environmental and resource costs,
though the specifics of this are mostly left to national bodies to implement and enforce. 127
128 Brahmatwinn report Field Trip Tibet 2006
129 UN Water Status Report on IWRM 2009, p.25 http://www.unwater.org/downloads/UNW_Status_Report_IWRM.pdf
130
UNESCO
2009,
Integrated
Water
Resources
Management
in
Action,
p.16
http://books.google.co.uk/books?id=1UEqA80aKhcC&dq=EU+liaoning+river+basin&source=gbs_navlinks_s
131 UN Water Status Report
132 Liefferink, D., Wiering, M., Uitenboogaart, Y., 2011. The EU Water Framework Directive: A multi-dimensional analysis of
implementation and domestic impact. Land Use Policy 28, 712-722.
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the European Environment Agency’s successful environmental data sharing network, Eye on Earth,
could serve as a model for developing a trusted, independent guardian of water data for China and
its downstream neighbours.
The achievements of Europe in promoting effective public participation in water governance are also
useful. Public participation has been the key factor for successful implementation of the WFD.
Mechanisms have been established, and measures carried out, to fulfil the requirements of the WFD
for public participation and stakeholder involvement in EU countries. For example, in the UK, river
basin liaison panels have been established by the Environment Agency as forums to discuss draft
river basin management plans, and to be involved in monitoring and enforcement.
At a civil society level, Europe has valuable experience of the legal infrastructures, institutional
mechanisms and practical skills that can help create more effective public participation in
environmental decision-making. Chinese civil society organisations (CSOs) play an increasingly
important role as environmental watchdogs. CSOs such as Green Hunan’s “mother river network” 133,
the Qingyuan action network in Jiangsu 134and the Qingyi River network in south Anhui, which use
volunteers to monitor local pollution, would benefit from European expertise to strengthen common
monitoring resources and methods, including crowd mapping technologies.135
Shale gas
Both China and the EU are in the early stages of shale gas development and many risks and
uncertainties exist. Minimising the negative environmental and health impacts of shale gas
development is a key concern for both China and the EU. The Chinese government has put forward
supportive policies to encourage and promote international cooperation on shale gas development.
There is great potential for cooperation between China and the EU in the field of technological
research and strengthening regulation.
Wastewater and technical innovation
The EU can also provide China’s water sector with technical assistance by encouraging small
European enterprises to move into Chinese markets. Innowater is a European water innovation
partnership that has been promoting technology transfer on water management from innovative
SMEs to industries in Europe, and has been exploring potential opportunities for European SMEs in
in China.136
Innowater has identified strong potential in several water areas, including water monitoring and
control systems, point-of-use water treatment systems, and water saving technology. They
emphasise in particular the potential for wastewater treatment investment (particularly de-
133
http://pacificenvironment.org/partner-profile-green-hunan Green Hunan’s “mother river network”: founded in
Changsha, Hunan, focused on protecting the Xiang River through citizen monitoring network called the “Mother Xiang
River Volunteer Network” who check river’s water quality and pollutants. The group made a significant victory in 2012
when volunteer photos of red chemical wastewater in the river went viral on weibo, leading to the EPB closing the factory
and an apology from the factory owner. Green Hunan is currently in partnership with the Pacific Environment on a CSR
project to target Hunan companies on China’s stock exchange.
134 China’s Water Watchdogs, ChinaWaterRisk, http://chinawaterrisk.org/opinions/chinas-water-watchdogs/“Qinyuan
action” network, Jiangsu, part of the Green Stone group: Volunteer association discovered several illegally polluting
chemical and textile factories at the Qinglong Industrial Park in Nantong. Findings were reported to the EPB and local
media, resulting in EPB punishing five illegal pollutions and implementing clean up of 16 pollution discharge points
135 http://chinawaterrisk.org/opinions/chinas-water-watchdogs/
136 http://innowater.eu/wp-content/uploads/2013/03/INNOWATER-Scouting-Mission-Report-China_ExecutiveSummary1.pdf
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nitrification and phosphorus removal), sludge treatment and disposal, and wastewater reuse and
recycling (particularly membrane) systems.
The Chinese government does not provide financial incentives for European companies to enter the
water sector, but the EU can support European companies and SMEs in private sector markets
through cash-from-home sponsorship, and encourage technology transfer and development of
water treatment and technologies in China.
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