Addressing China S Water Scarcity

This report reviews China's water scarcity situation, assesses the policy and institutional requirements for addressing it, and recommends key areas for strengthening and reform. It is a synthesis of the main findings and recommendations from analytical work and case studies prepared under the World Bank Analytical and Advisory Assistance (AAA) program entitled 'Addressing China's Water Scarcity: from Analysis to Action.' These studies focus on several strategically important thematic areas for China where additional research was needed, as identified by the research team and advisory group based on a review of pressing issues. These areas are governance, water rights, pricing, ecological compensation, pollution control, and emergency response. The approach has been to evaluate Chinese and international experience to identify policy and institutional factors that have proven effective in promoting the adoption of water conservation and pollution reduction technologies. The research was based on literature reviews, qualitative and quantitative policy analyses, household surveys, field trips, and case studies to develop feasible recommendations for a plan of action based on realities on the ground.

"China has experienced a wide-scale and rapid transformation from an agricultural based economy to the manufacturing workshop of the world. The associated relocation of the population from relatively low density rural areas to very high density urban areas is having a significant impact on the quantity and quality of water available as inputs into the production and consumption process, as well as the ability of the water system to absorb and neutralize the waste byproducts deposited into it. Water shortages are most severe in the north of the country, where surface water diversion is excessive and groundwater is being depleted. In addition, the quality of water is deteriorating because of pollution, thereby aggravating existing water shortages. The biggest challenge ahead will be for national and local governments to craft policies and rules within China's complex cultural and legal administrative system that provide incentives for users to increase efficiency of water use, and for polluters to clean up the water they use and return clean water to stream flows. Using a standard public economics framework, water requirements for public goods-such as ecosystem needs-should be set aside first, before allocating property rights in water (to enable water markets to function and generate efficient allocation signals). Even then, water markets will have to be regulated to ensure public goods, such as public health, are not compromised. Until water markets are implemented, staying the course on increasing water and wastewater prices administratively and encouraging water conservation are necessary to reduce the wasting of current scarce water resources, as well as the new water supplies to be provided in the future. "--World Bank web site.

Although accounting for about 20% of the global population, the People’s Republic of China (PRC) is endowed with only 7% of the world’s water resources. The country faces severe water scarcity, high levels of urbanization and population growth, and climate change. For the PRC’s continuing development, it must protect and develop its freshwater resources. This publication provides recommended policy initiatives to ensure the PRC’s 13th Five-Year Plan (2016–2020) contributes to significant improvements in national water security, particularly in extreme water-scarce provinces. Some actions proposed for increased water security are better water resources management, more cross-sector planning, deeper reform of the water pricing system, and creation of water markets.

China's water resources are scarce and unevenly distributed. It has the sixth largest amount of renewable resources in the world, but a per capita availability that is only one-fourth the world average and among the lowest for a major country. The country is under serious water stress, and its problems are made more severe by the fact that resources are unevenly distributed, both spatially and temporally. Per capita water availability in northern China is less than one-fourth that in southern China, one eleventh of the world average, and less than the threshold level that defines water scarcity. A monsoonal climate also means that China is subject to frequent droughts and floods, often simultaneously in different regions, as precipitation varies greatly from year to year and season to season. The complexity of water resource management in China requires a transition from a traditional system with the government as the main decision making entity toward a modern approach that relies on a sound legal framework, effective institutional arrangements, transparent decision making and information disclosure, and active public participation. This will require that laws are straightforward and not contradictory, with mechanisms and procedures for enforcing them. It also should entail the creation of a new multi-sectoral state agency tasked with overseeing water management policy at the national level.

China has experienced a wide-scale and rapid transformation from an agricultural based economy to the manufacturing workshop of the world. The associated relocation ofthe population from relatively low density rural areas to very high density urban areas is having a significant impact on the quantity and quality of water available as inputs into the production and consumption process, as well as the ability of the water system to absorb and neutralize the waste byproducts deposited into it. Water shortages are most severe in the north of the country, where surface water diversion is excessive and groundwater is being depleted. In addition, the quality of water is deteriorating because of pollution, thereby aggravating existing water shortages. The biggest challenge ahead will be for national and local governments to craft policies and rules within China's complex cultural and legal administrative system that provide incentives for users to increase efficiency of water use, and for polluters to clean up the water they use and return clean water to stream flows. Using a standard public economics framework, water requirements for public goods - such as ecosystem needs - should be set aside first, before allocating property rights in water (to enable water markets to function and generate efficient allocation signals). Even then, water markets will have to be regulated to ensure public goods, such as public health, are not compromised. Until water markets are implemented, staying the course on increasing water and wastewater prices administratively and encouraging water conservation are necessary to reduce the wasting of current scarce water resources, as well as the new water supplies to be provided in the future.

As China transitions to a market economy, municipal utilities are evolving into commercially viable companies under government oversight. Great challenges confront the reform process for China's water utilities, including rapid urbanization and emerging inequality, coupled with severe water scarcity and degradation. Cities and their water utilities must provide services within a complex mosaic of policies and regulations provided by national and provincial governments. In China, as throughout the world, water is also a sensitive political issue. Governments are keen to provide good water service, but also attuned to the need to ensure that tariffs are socially acceptable. This report presents a strategic framework and set of recommendations for addressing these challenges and accelerating improvements in China's urban water utilities. Drawing upon the World Bank's experience in China, as well as the Bank's global knowledge, the report provides a comprehensive assessment of urban water services, including policy, regulatory, institutional, financial, and technical issues. The report will prove a valuable resource for policy makers, utility companies, and anyone interested in the development of the world's largest water market.

Chinese investigative journalist Ma details the extent to which China faces a major water crisis brought on by an unchecked use of resources in order to fuel economic expansion. He explores how dams and other water control projects have led to a situation in which the Yellow River and other water courses literally drying up. He also details the effects of deforestation on the Yangtze river and discusses the impact of other ecological problems facing water resources in each of China's water basin regions.