Report No. 22040-CHA CHINA AGENDA FOR WATER SECTOR STRATEGY FOR NORTH CHINA VOLUME 2: MAIN REPORT April 2, 2001 Project Sponsors: Ministry of Water Resources P.R.C., the World Bank and AusAID. Joint Report prepared by the World Bank, Sinclair Knight Merz and Egis Consulting Australia, the General Institute for Water Resources Planning (MWR), the Institute of Water and Hydropower Research ( Beijing), the Institute of Water and Hydrology Research, (Nanjing), and the Chinese Research Academy for Environmental Sciences (Beijing). CURRENCY EQUIVALENTS (As of January 1, 2001) Currency Unit = Yuan (Y) US$1.00 = Y 8.3 Y 1.00 = US$0.12 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System Vice President : Jemal-ud-din Kassum, EAPVP Sector Director : Mark D. Wilson, EASRD Country Director : Yukon Huang, EACCF Task Manager : Daniel Gunaratnam, EACCF CONTENTS Acronyms and Abbreviations Used...................................................................................................viii 1. INTRODUCTION ......................................................................................................................1 A. General..............................................................................................................................1 B. Objectives and Scope of the Action Plan..............................................................................1 C. Work Program...................................................................................................................2 D. Methodology and Structure of Report..................................................................................2 E. Why Focus on the 3-H Basins?............................................................................................1 2. CHANGING ECONOMY AND SOCIETY AFFECTING THE WATER SECTOR ..................5 A. The Changing Economy......................................................................................................5 B. Social Trends Affecting Water Resources............................................................................8 C. The Changing Economy....................................................................................................12 D. Social Trends Affecting Water Resources, Future...............................................................17 3. WATER RESOURCES AND ISSUES......................................................................................19 A. Introduction .....................................................................................................................19 B. Water Shortages, Droughts and Water Conflicts.................................................................19 C. Floods and Flood Control in China ....................................................................................33 D. Water for Agriculture .......................................................................................................37 E. Water Pollution................................................................................................................47 F. Depleted Groundwater Resources......................................................................................57 G. Present Situation of Water Sector Management..................................................................64 H. Private Sector Participation in Infrastructure......................................................................69 4. SUFFICIENT WATER FOR ALL ...........................................................................................74 A. Introduction .....................................................................................................................74 B. Water Demand Projections................................................................................................75 C. Water Supply Projections..................................................................................................91 D. Water Balances in the Future .......................................................................................... 101 E. Coastal Zone Impacts ..................................................................................................... 108 F. Economic Value of Water............................................................................................... 110 G. Economic Value of Water Shortages............................................................................... 112 H. Action Plan for Balancing Supply and Demand................................................................ 115 5. FLOODS AND FLOOD DAMAGE........................................................................................125 A. Summary of Current Strategy.......................................................................................... 125 B. Level of Protection (Flood Standard) ............................................................................... 126 C. Developing Appropriate Standards for Flood Protection.................................................... 129 D. Development of a Methodology...................................................................................... 133 E. Action Plan for Flood Control.......................................................................................... 136 6. SUFFICIENT FOOD FOR ALL.............................................................................................142 A. Introduction ................................................................................................................... 142 B. Implications of Less Water and Land............................................................................... 143 - ii - C. Implications of WTO Accession...................................................................................... 147 D. Implications for Food Security ........................................................................................ 153 E. Irrigation with Improved Institutional, Technological Water-Saving and Water Price Measures ............................................................................................................... 154 F. Action Plan.................................................................................................................... 170 7. CLEAN WATER FOR ALL...................................................................................................179 A. Water Pollution Control in 3-H Basins and Problems with Current Approach..................... 179 B. The Need for Modeling with a Knowledge-Based System................................................. 182 C. Prioritizing cities............................................................................................................ 185 D. Projected Load Generations Under the "Business as Usual" Scenario ................................ 185 C. Options to Further Reduce Pollution Loads ...................................................................... 187 D. Coastal Zone Water Quality............................................................................................ 196 E. Cost of Government Program and Action Plan.................................................................. 199 8. WASTEWATER REUSE.......................................................................................................209 A. Introduction ................................................................................................................... 209 B. The Situation in China and the 3-H Basins ....................................................................... 210 C. Potential Wastewater Reuse Applications......................................................................... 213 D. Planning Water Reclamation Project............................................................................... 221 E. Industrial Wastewater Control Program from the WWTP Operator Perspective .................. 221 F. Industrial Waste Data Management System...................................................................... 225 9. GROUNDWATER.................................................................................................................226 A. Options to Improve Groundwater Resources and Management.......................................... 226 B. Action Plan for Improved Groundwater Management....................................................... 226 C. Action Plan for Wastewater Reclamation ......................................................................... 236 D. Action Plan for Groundwater Improvement...................................................................... 243 10. INSTITUTIONAL MANAGEMENT.....................................................................................246 A. Introduction ................................................................................................................... 246 B. Water Resource Management in China ............................................................................ 247 C. Allocation and Efficiency................................................................................................ 250 D. Demand Management: Financing and Price Incentives ..................................................... 260 E. Organizational Issues and Service Delivery...................................................................... 266 F. Recommendations........................................................................................................... 270 11. PROPOSED ACTION PLANS...............................................................................................273 A. Introduction ................................................................................................................... 273 B. Action Plan for Water Resources..................................................................................... 275 C. Action Plan for Flood Control......................................................................................... 279 D. Action Plan for Agriculture............................................................................................. 286 E. Action Plan for Pollution Control..................................................................................... 292 F. Action Plan for Wastewater Reuse................................................................................... 303 G. Action Plan for Groundwater Management...................................................................... 305 H. Action Plan for Institutional Management........................................................................ 308 TABLES Table 1.1: Volume of Water/Capita for Different Countries...................................................................2 Table 1.2: 1994-98 Mean Values of Runoff, Groundwater, Outflows to the Sea and Beneficial and Nonbeneficial Uses of Water in the 3-H Basins ........................................................................2 - iii - Table 1.3: Percentage of River Lengths over Class IV and V.................................................................3 Table 2.1: Urban and Rural Domestic Daily per Capita Water Consumption in the 3-H Basins and China (lcd) Compared with Urbanization (%).....................................................................8 Table 2.2: Forecasted Total, Rural and Urban GDP Growth Rates for the 3-H Basins............................14 Table 2.3: Forecasted Industrial GDP Growth Rates for the 3-H Basins................................................14 Table 2.4: China's Economic Structure in 2050..................................................................................15 Table 2.5: Water Demand for the 3-H Basins for 2000-50 for Different Scenarios.................................17 Table 2.6: Forecasted Total, Rural and Urban Population....................................................................18 Table 3.1: Beneficial and Nonbeneficial Uses.....................................................................................21 Table 3.2: Utilization of Surface Water in China, 1998........................................................................21 Table 3.3: Utilization of Groundwater in the 3-H Basins .....................................................................22 Table 3.4: Withdrawals, Consumptive Use, and Return Flows.............................................................24 Table 3.5: Current (2000) Shortages under Different Runoff Probabilities............................................25 Table 3.6: 2000 Irrigation Demand and Supply Under P75 Runoff.......................................................26 Table 3.7: Grain Production for Different Runoff Probabilities, 2000...................................................27 Table 3.8: Water Supplies to Sectors, 2000, by Runoff Probability.......................................................27 Table 3.9: Economic Value of the 2000 Solutions ...............................................................................28 Table 3.10: Average Economic Value of Water in the 2000 Solutions ..................................................29 Table 3.11: Marginal Values of Water from 2000 Solutions.................................................................30 Table 3.12: Flood Damage Losses in the Main Provinces of 3-H Basins...............................................34 Table 3.13: Most Flood-Affected Provinces .......................................................................................37 Table 3.14: Grain Production Increases and Production Growth Rates, 1979-98....................................38 Table 3.15: Output of Major Crops in the 3-H Basins as Percentage of China's Output .........................38 Table 3.16:The Characteristics of Precipitation for Three Irrigation Zones in China .............................39 Table 3.17: Normalized, Actual, and Potential Production, 3­H Basins, 1997.......................................40 Table 3.18: Groundwater and Surface Water Irrigation Area ...............................................................41 Table 3.19: Multiple Cropping Index in 3-H Area...............................................................................42 Table 3.20: Yield Difference between Irrigated and Unirrigated Farmland............................................42 Table 3.21: Grains Production in 3-H Basins and China in 1998..........................................................43 Table 3.22: Marginal Value of Irrigation Water Applied to Various Crops, by Basin .............................43 Table 3.23: Average Growth Rates in Agricultural Subsectors, 1978-98...............................................44 Table 3.24: Nonpoint Source and Point Source Pollution Definitions ...................................................50 Table 3.25: TVEs in Provinces of the 3-H Basins................................................................................55 Table 3.26: Long-Term Mean Groundwater Resources of the Basins in China ......................................58 Table 3.27: Long-Term Mean Groundwater Recharge, Surface Runoff and Their Ratios of Major Basins..................................................................................................................................59 Table 3.28: Seawater Intrusion in China .............................................................................................62 Table 3.29: Groundwater Quality Assessment for Some Provinces in the 3-H Basins (%).....................62 Table 3.30: Groundwater Resources and Use in 3-H Areas..................................................................63 Table 3.31: Government Departments Involved in Groundwater Management......................................63 Table 3.32: Breakdown of PPI Transactions by Developer...................................................................70 Table 3.33: PPI Transactions per Province/Municipality......................................................................70 Table 3.34: List of Known Active PPI Ventures in China ....................................................................72 Table 3.35: Benefits/Disadvantages of Various PPI Models.................................................................73 Table 4.1: 1980, 1998, and Alternative Projections of Withdrawals......................................................76 Table 4.2: 1980 Withdrawals and Projections to 2000.........................................................................77 Table 4.3: Total Withdrawals, Actual and Projected by IWHR in 1993.................................................79 Table 4.4: Alternative Projections of Withdrawals for Nonagriculture..................................................80 Table 4.5: Future Price and Price Growth Rates Used to Derive Water Demand Projections ..................83 Table 4.6: Price Elasticity of Demand (1999 Comparable Prices).........................................................83 Table 4.7: Income Elasticity of Demand (1999 Comparable Prices).....................................................83 - iv - Table 4.8: Demand Structure for Different Sectors for P75 year ..........................................................86 87Table 4.9: Water Consumption for Urban Domestic and Rural Household ........................................88 Table 4.10: Projected Irrigation Demand for P75 (Average), P95 (Minimum) and P25 (Maximum) Year for the Hai, Huai and Yellow Basins ..............................................................................89 Table 4.11: Assumptions of GDP/Prices and Growth for Demand Consumption ...................................90 Table 4.12: Water Demand Sensitivity to Growth, Prices, etc..............................................................90 Table 4.13: Demand Changes under Different Scenarios .....................................................................91 Table 4.14: 1980 Reliable Water Supplies and Projected Increases from the IPPDI Study......................92 Table 4.15: IWHR (1993) Projections of Future Water Supply.............................................................93 Table 4.16: Sources of Increase in Water Supply, 1993-2010...............................................................94 Table 4.17: IWHR (1993) Future Supply-Demand Balances................................................................94 Table 4.18: Sources of Water Supply for the Hai, Huai and Yellow Basins for P75 Year.......................95 Table 4.19: Total Supply for 95 Percent Probability under Base Case Without S-N Transfer .................98 Table 4.20: S-N Water Transfer Capacity...........................................................................................98 Table 4.21: Total Supply for 95 Percent Probability with S-N Transfer.............................................. 100 Table 4.22: Optimal Water Supply to Sectors for P75 year with S-N Transfer .................................... 100 Table 4.23: Future Supply-Demand Balances and Shortages for the 3-H Basins for Base Case Scenario (P75).................................................................................................................... 101 Table 4.24: 3-H Water Shortages under Different Scenarios .............................................................. 104 Table 4.25: Effectiveness of Each Water Shortage Reduction Measure .............................................. 104 Table 4.26: Water Supply Shifting from Irrigation to Priority Uses.................................................... 108 Table 4.27: Flows to the Sea for All Probabilities for the Hai, Huai and Yellow Basins ....................... 108 Table 4.28: Economic Value of Water Used in 3-H Basin Modeling System....................................... 110 Table 4.29: Economic Value of Water Supplied to Different Sectors for the 3-H Basins from 2000 to 2050 for P95 and P75 (With Other Demand/Supply Management Without Interbasin Transfers) .......................................................................................................................... 111 Table 4.30: Water Shortage Simulation for Base Case....................................................................... 113 Table 4.31: Annual Losses and Discounted Values of Water Shortages for Different Measures ........... 113 Table 4.32: Costs of Various Shortage Reduction Measures (undiscounted)........................................ 115 Table 4.33: Shortage Reduction Discounted Benefits and Costs......................................................... 115 Table 4.34: Potential Wastewater Generation.................................................................................... 118 Table 4.35 Water Tariff Assumptions for Base and High Price Cases in Real Terms........................... 120 Table 4.36: Unit Costs of Main Components of Supply Augmentation Used in Action Plan Calculations ....................................................................................................................... 121 Table 4.37: Total Investment for Water Supply Augmentation in 3-H (Without South-North Transfer) 121 Table 4.38: Yellow River Withdrawals and Allocation Limits............................................................ 122 Table 5.1: Government Strategy for Flood Control in 3-H Basins....................................................... 125 Table 5.2 Typical Problems and Solutions ........................................................................................ 126 Table 5.3: Design Standards for Rivers in Hai Basin ......................................................................... 127 Table 5.4: Cities with Low Level of Flood Protection........................................................................ 141 Table 6.1: Short-Run Elasticity for Input Factors.............................................................................. 143 Table 6.2: Elasticities for Research and Irrigation Stock.................................................................... 144 Table 6.3: Long Run Water Elasticity of Agricultural Output for Different Flow Probabilities in the 3-H Basins.................................................................................................................... 144 Table 6.4: Total Production Value for the 3-H Basins for Different Probabilities from 2000 to 2050 .... 147 Table 6.5: Binding Import Tariff Rates Effective by 2004 Proposed by China for WTO Accession ...... 148 Table 6.6: Tariff Rate Quota for Commodities Grown in the 3-H Basins ............................................ 148 Table 6.7: Total Crop Production With WTO and Without WTO Accession....................................... 149 Table 6.8: Changes in Present Value of Crop Production in the 3-H Basins with Non-WTO and WTO Accession ................................................................................................................. 152 Table 6.9: General Conditions of Large-Scale Irrigation Districts....................................................... 155 - v - Table 6.10: Investment in Farmland Improvement in 1988-99............................................................ 161 Table 6.11: Comprehensive Agriculture Development (SOCAD) in 1988-99...................................... 161 Table 6.12: Government Proposal on Low-Yield Farmland Improvement Program............................. 162 Table 6.13: Water Saving Development in 1998-99........................................................................... 163 Table 6.14: Government Proposal on Water Saving Irrigation Program.............................................. 163 Table 6.15: MWR Irrigation Water-Saving Criteria ........................................................................... 164 Table 6.16: Problems of Existing Engineering Facilities in Large Irrigation Schemes.......................... 165 Table 6.17: Government Proposal on Large Irrigation Schemes Rehabilitation.................................... 166 Table 6.18: 1999 Price:Cost Ratios for Some Irrigation Districts........................................................ 167 Table 6.19: Current Prices of Water for Agriculture in Selected Provinces and Cities in China............. 169 Table 6.20: Additional Investment to Existing SOCAD, Water-Saving and LIS Programs Proposed by Action Plan..................................................................................................... 170 Table 6.21: Resulting Total Land Improvement (SOCAD and Water Saving) ..................................... 170 Table 6.22: Resulting Total Land Improvement (LIS) ....................................................................... 170 Table 6.23: Gross Water Use Efficiency........................................................................................... 171 Table 6.24: Changes of Full, Partial, Low Irrigated Area under Different Scenarios P75 ..................... 177 Table 6.25: Action Plan for Irrigated Agriculture: Increased Commitment to Current Government Programs and Implementation of Integrated Approach.......................................................... 178 Table 7.1: WWTPs in the Hai and Huai basins in 1997...................................................................... 180 Table 7.2: Major Components of the Chinese Water Environment Regulatory System......................... 181 Table 7.3: Major Issues in Reducing Water Pollution from Identified Sources.................................... 183 Table 7.4: Prioritizing Criteria Used to Select Cities/Regions for the Action Plan................................ 185 Table 7.5: Hai and Huai Basins' Overall Priority Cities..................................................................... 185 Table 7.6: Possible Intervention Programs to Reduce COD Pollution Loads in the Hai and Huai Basins................................................................................................................................ 187 Table 7.7: Types of Intervention to Reduce Pollution Discharge ........................................................ 188 Table 7.8: COD Loads to the Sea from the Hai and Huai Basins ........................................................ 199 Table 7.9: Unit Costs of Treatment and PPP Used in Calculations of Investment ................................ 199 Table 7.10: Hai Basin Pretreatment Requirements............................................................................. 201 Table 7.11: Huai Basin Pretreatment Requirements........................................................................... 201 Table 7.12: Hai Basin Structural Pollution Control Investment (2000-2020) ....................................... 203 Table 7.13: Huai Basin Structural Pollution Control Investment (2000-2020) ..................................... 204 Table 7.14: Proposed Action Plan for Nonstructural Pollution Control............................................... 206 Table 8.1: Categories of Municipal Wastewater Reuse and Potential Issues/Constraints in ICs Compared to China and Other Similar DCs.......................................................................... 214 Table 8.2: Selected Irrigation Water Quality Requirements to GB5084-1992...................................... 216 Table 8.3: Suggested Guidelines for Nonpotable Municipal Reuse..................................................... 217 Table 8.4: Urban Industrial and Municipal Wastewater Volume of Priority Cities in Hai Basin (from WPM-DSS Model).................................................................................................... 219 Table 8.5: Urban Industrial and Municipal Wastewater Volume of Priority Cities in Huai Basin (from WPM-DSS Model).................................................................................................... 220 Table 8.6: Suggested Guidelines for the Preparation of Ordinances for the Regulation of Sanitary and Industrial Waste Discharged into Municipal Sewerage Systems in China ......................... 223 Table 9.1: Types of Information Contained in a Groundwater Database ............................................. 231 Table 9.2: Extent of Licensing for Different Users in 1998 ................................................................ 233 Table 9.3: Licensing Percentage of All Use in 3-H Basins ................................................................. 233 Table 9.4: Some Existing Artificial Recharge Systems in China......................................................... 238 Table 9.5: Volumes of Water Required to Address Groundwater Problems in 3-H .............................. 240 Table 9.6: Volumes of Water Required for Water Supply Problems in Some Cities............................. 240 Table 9.7: Groundwater Quality Assessment for Some Provinces in the 3-Basins................................ 241 Table 9.8: Volumes of Water to Address Groundwater Problems in Some Cities................................. 241 - vi - Table 9.9: Recharge Potential Between River Levees--Yellow and Hai Rivers................................... 242 Table 11.1: Cities with Low Level of Flood Protection...................................................................... 282 Table 11.2: Measures of Rehabilitation and Water Saving Improvement in Large Irrigation Scheme.... 288 Table 11.3: Possible Intervention Programs to Reduce COD Pollution Loads in the Hai and Huai Basins................................................................................................................................ 292 Table 11.4: Types of Intervention to Reduce Pollution Discharge ...................................................... 293 Table 11.5: Proposed Action Plan for Nonstructural Pollution Control............................................... 297 FIGURES Figure 1.1: Structure of the Report.......................................................................................................4 Figure 1.2: 3-H Basins % Contribution to National GDP in 1997...........................................................1 Figure 2.1: Growth Rates in Total, Industry and Domestic Urban Water Supply......................................9 Figure 2.2: Percentage of Labor Force in Three Sectors According to Official Figures ............................9 Figure 2.3: China's GDP Growth Trend in International Perspective....................................................14 Figure 3.1: Percent of Cultivated Area damaged.................................................................................35 Figure 3.2: Average losses (Yuan/ha) and area affected (`000 ha)........................................................36 Figure 3.3: GDP and Percent Flood Losses for Provinces....................................................................36 Figure 3.4: Gross Value of Agricultural Output (1985=100) ................................................................44 Figure 3.5: Farmers' Income Changes in Ningxia Province .................................................................46 Figure 3.6: Farmers' Income Changes in Hebei Province.....................................................................46 Figure 3.7: Water Quality Classification in the Hai River Basin in 1995...............................................48 Figure 3.8: Water Quality Classification in the Huai River Basin in 1998 .............................................49 Figure 3.9: Pollution Sources in the Hai and Huai Basins ....................................................................50 Figure 3.10: COD Load Percentage by Various Industries in Hai Basin (1995) .....................................52 Figure 3.11: COD Loads Percentages of Various Industries in Huai Basin (1997) .................................52 Figure 3.12: 2000 COD Pollution Loads for Priority Cities in the Hai Basin under the Base Case ..........53 Figure 3.13: 2000 Toxic COD Pollution Loads for Priority Cities in the Hai Basin under the Base Case....................................................................................................................................54 Figure 3.14: Mean Annual Precipitation in China from 1956 to 1979....................................................58 Figure 3.15: Difference between Shallow Groundwater Levels in 1958 and 1998 in the Hai Basin Plains...................................................................................................................................60 Figure 3.16: Difference between Deep Groundwater Levels in 1958 and 1998 in the Hai Basin Plains ...61 Figure 3.17: Surface and Groundwater Withdrawals in 3-H Basins ......................................................62 Figure 3.18: Degree of Foreign Involvement in Operation and Management.........................................71 Figure 4.1: Water Resources Constrained Optimization Model............................................................82 Figure 4.2: Changes in Proportion of Total Demand for Different Sectors for P75 Year........................87 Figure 4.3: Relative Contribution of Water Supply Sources in the 3-H Basins for 2000, 2030 and 2050..97 Figure 4.4: South-North Water Transfer.............................................................................................99 Figure 4.5: Total Supplies and Demand for Different Probability Flows for the Hai Basins.................. 103 Figure 4.6: Existing and Proposed Integrated Water and Wastewater Utilization for Urban Areas, Agriculture and Rural Towns............................................................................................... 105 Figure 4.7: Water Demand and Supply Sources under Different Scenarios ......................................... 107 Figure 4.8: Water Shortages of Hai, Huai and Yellow Basin under Different Scenarios ....................... 109 Figure 4.9: Economic Value of Water Supplied for 1997 for a P75 Year............................................ 111 Figure 4.10: Economic Value of Water Supplied for 2050 for a P75 Year .......................................... 112 Figure 4.11: Economic Losses Due to Water Shortage under Different Scenarios................................ 114 Figure 4.12: Total Discounted Value of Water Shortages for 2000-2050............................................. 114 Figure 4.13: Priority Water Shortage in 3-H Basin, P95, Base Case ................................................... 116 Figure 4.14: Priority Water Shortage in 3-H Basin, P95, with South-North Transfer ........................... 116 Figure 5.1: Map Showing 31 Protection Areas in the Hai Basin ......................................................... 134 - vii - Figure 5.2: AAD (Actual) for Flood Depths over 1.5m but Below 4m ................................................ 135 Figure 6.1: Projected Water Supply, Demand and Shortages to Irrigated Agriculture in the 3-H Basins for a P75 Year with no Major Interbasin Transfers .............................................. 142 Figure 6.2: Changes in Fully Irrigated, Partially Irrigated and Rainfed Areas in the 3-H Basins............ 146 Figure 6.3: Total Irrigation Area in 3-H in 2000, P75, Base Case....................................................... 147 Figure 6.4: WTO Impact on Winter Wheat and Rice Production under Different Scenarios and Runoff Probabilities............................................................................................................ 150 Figure 6.5: Crop Production Values under WTO and Non-WTO Conditions in Huai Basin.................. 152 Figure 6.6: SIDD Arrangement in the Tarim Basin Project................................................................ 159 Figure 6.7: Price:Cost Ratio of Domestic Water for Selected Cities in China ...................................... 166 Figure 6.8: Price:Cost Ratio of Industrial Water for Selected Cities in China ...................................... 167 Figure 6.9: Winter Wheat Production Per Cubic Meter Water Use with Efficiency Improvement, P75.. 171 Figure 7.1: COD Intensity Reduction ............................................................................................... 186 Figure 7.2: Urban Municipal Action Plan......................................................................................... 189 Figure 7.3: Proportion of COD Load from Major Pollution Sources of Various Programs in Hai Basin ........................................................................................................................... 193 Figure 7.4: Proportion of COD Load from Major Pollution Sources of Various Programs in Huai Basin ......................................................................................................................... 194 Figure 8.1: Schematic Drawing of Integrated Water Use/Reuse Management System......................... 211 Figure 9.1: Components for Development of Effective GW Management Plan................................... 227 Figure 9.2: Steps of GW Management Units Foundation ................................................................... 229 Figure 9.3: Areas Suitable for Surface Artificial Recharge in Hai River Basin .................................... 239 Disclaimer The maps in this report have been prepared exclusively for the convenience of the reader and the denominations used and the boundaries shown on the map do not imply any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries. - viii - ACRONYMS AND ABBREVIATIONS USED 2-H Hai and Huai River Basins MAC Marginal Abatement Cost 3-H Hai, Huai and [Huang] Yellow River MCI Multiple Cropping Index Basins Mcm Million Cubic Meters 3-HMS 3-H Modeling System mm Millimeters AAD Accumulated Annual Damage MOC Ministry of Construction ARI Average Recurrence Interval MWR Ministry of Water Resources ASR Artificial Storage Recovery NGWT National Guidelines on Water Tariffs AusAID Australian Agency for International NIHWR Nanjing Institute of Hydrology and Water Development Research Bcm Billion Cubic Meters NPC National People's Congress BOD Biological Oxygen Demand O&M Operation and Maintenance BOO Build-Operate-Own P25 25 percent probability of flow (wet year) BOT Build-Operate-Transfer P50 50 percent probability of flow (median CAD Comprehensive Agricultural Development year) COD Chemical Oxygen Demand P75 75 percent probability of flow (dry year) CPPCC Chinese People's Political Consultative P95 95 percent probability of flow Conference PPP Pollution Prevention Program CRAES Chinese Research Academy for RBCM River Basin Commission Environment Systems SDPC State Development Planning Commission DCs Developing Countries SEPA State Environmental Protection EIA Environmental Impact Assessment Administration EPB Environmental Protection Bureau SIDD Self-Financing Irrigation and Drainage FPF Fisheries, Pasture, Forestry District GAMS Generalized Algebraic Modeling System S-N South-North [Water Transfer] GDB Groundwater Database SOCAD State Office of Comprehensive Agricultural GDP Gross Domestic Product Development GIIP Guanzhong Irrigation Improvement Project SOE State-Owned Enterprise GIWHP General Institute for Water and SS Suspended Solids Hydropower Planning SSP Surface Spreading GMP Groundwater Management Plan SW Surface Water GMU Groundwater Management Unit SY Sustainable Yield GW Groundwater TDS Total Dissolved Solids IC Industrialized Country TFP Total Factor Productivity ID Irrigation District TRQ Tariff Rate Quota IMS Information Management System TVE Township and Village Enterprise IPPDI Irrigation and Power Planning Design UNESCAP United Nations Economic and Social Institute Commission for Asia Pacific IRI Irrigation Requirement Index WB World Bank IWHR Institute of Water and Hydropower WHO World Health Organization Research WPM-DSS Water Pollution Management Decision JV Joint Venture Support System KBA Knowledge-Based Approach WRB Water Resources Bureau km2 Square kilometers WRMS Water Resources Management Station lcd Liters per capita per day WSC Water Supply Company LIS Large Irrigation Scheme WTO World Trade Organization LW Local Water (Runoff) WUA Water User Association m3 cubic meters WWTP Wastewater Treatment Plant m3/s Cubic Meters per Second YRCC Yellow River Conservation Commission M&E Monitoring and Evaluation 1. INTRODUCTION A. GENERAL China's current population and economic growth resulting from past and present government policies and natural conditions combine to create intense pressures on the environment including water resources. These are particularly acute in the northern provinces within the Hai, Huai and Yellow (3-H) basins. There is hardly a sector in which water does not play an important role, and given its scarcity it may therefore appear very surprising that there is so little correlation between growth and water conditions. But analogy with other poorly endowed countries and regions in East Asia and elsewhere suggests that neither land nor water constraints need be decisive. Rather, it is a question of how well a country or region adapts to its resource endowment that determines whether land and water constraints impact seriously on economic development. In this sense, natural resources are no different from the other factors that help determine comparative advantage, and alarmist conclusions to the contrary are very misleading. It is the conclusion of this report that economic growth in the 3-H region (see map next page), including agricultural growth, can be sustained and that water may not impede this growth provided immediate attention is directed to finding real solutions to current water pollution and water scarcity problems. The action plan described in this report proposes timely structural, nonstructural, and institutional intervention measures to help create an environment where water can play its vital role in the 3-H basins' long term development without being itself exploited unsustainably. B. OBJECTIVES AND SCOPE OF THE ACTION PLAN The action program for the water sector focuses on the 3-H basins and aims to : "Provide an integrated set of recommendations to the World Bank, [Ministry of Water Resources] MWR, and the riparian provinces for addressing (water) problems at the level of the river basin. The recommendations will include, but not be limited to, identification of structural changes in the management and use of water resources, propose recommendations of the policy and regulatory framework for water resources development and management mechanism, procedure and regulatory policy, pricing of water to enhance sustainability of water resources management identification of key projects in the water sector to enhance water supply capability and improve efficiency of water resources utilization(Concept paper, September 1998). Key issues shaping the water sector were investigated in order to formulate the present action program and these include (a) flood damage prevention and mitigation, (b) water pollution management, (c) water supply augmentation, (d) water demand management, and (e) water conflict resolution and integrated basin management. 2 Chapter 1. Introduction N PROVINCES AND RIVER BASIN BOUNDARIES North INNERMONGOLIA LIAONING GANSU BEIJING SHI TIANJIN SHI HEBEI SHANXI NINGXIA QING HAI SHANDONG SHAANXI HENAN JIANGSU ANHUI TIBET SICHUAN HUBEI LEGEND Basin boundary 0 100 200 300 400 FIGURE No. 4-1 CAD File:C APS 2-043. dwg Scale C. WORK PROGRAM The present action plan was jointly sponsored by the World Bank (WB), the Ministry of Water Resources (MWR) and the Australian Agency for International Development (AusAID). The work was carried out by consultants (Sinclair Knight Merz, Egis Consulting Australia and Hassell International) working closely with staff of MWR's research institution, the Institute of Water and Hydropower Research (IWHR), the General Institute for Water and Hydropower Planning (GIWP)in Beijing and the Nanjing Institute of Hydrology and Water Research (NIHWR) coordinated by WB task manager Daniel Gunaratnam. The WB supplemented the consultants with teams of experts for specific tasks and issues who were also responsible for producing this executive summary report. D. METHODOLOGY AND STRUCTURE OF REPORT Numerous reports have been prepared on China's water sector as a whole, and on individual subsectors and regions. They provide a broadly consistent diagnosis of water resources problems and associated issues, and prescribe comparable broad strategies and policies. Two recent reports in particular, taken together, furnish a framework for the present study: the first providing consistent long-term water demand and supply projections (IWHR 1999 in Chinese) and the second addressing strategic options for the water sector (Hydrosult & IWHR 1999). Both cover the whole of China. In particular, the "Strategic Options for the Water Sector" report analyzed the context surrounding the water sector (the external environment) and its impacts on the water sector itself (the internal environment). This approach was adopted here to provide a framework for the structure of the present report so as to mesh the separate Chapter 1. Introduction 3 substudies and their individual recommendations to formulate the integrated action plan. The analytical component of the study was developed to investigate water pollution and water resources. It must be recognized that both components are extremely complex in the 3-H basins and required extensive data searching of historical trends for hydrology and the economy/society to establish a base from which algorithms could be developed to project the future under base case conditions and under various management scenarios to quantify the impact of the proposed Action Plan. The present report builds on these and earlier reports in respect of the 3-H region in four main ways: 1. Information Base. By developing an updated and consistent water resources database for the 30 Level II and Level III basins and provinces that comprise the 3-H region. 2. Analytical Tools. By developing a set of analytical tools to support the analysis of impacts that China's changing society has on water resources in the 3-H basin. In particular: (a) water demand projections are based on a generalized demand model utilizing results of a regional economic growth and development model for the 3-H region that includes parameters for population changes, urbanization, rising incomes and income disparity, higher consumption of goods and services and changing productivity base from agriculture to industry; (b) alternative management options for river water quality are based on a water and waste estimation model that links water use such as urban, rural, domestic and industrial and irrigated agriculture to waste generation such as domestic and process wastes and return flows; and (c) components of the Action Plan are ranked based on the refinement of the Yellow River Basin Model (first constructed in 1992)1 and its extension to the Hai and Huai basins. More detailed descriptions of the analytical tools along with assumptions are presented in Chapter 4 (water resources) and Chapter 7 (water pollution). In addition, a full description of each model is developed in Annex 3.1 (water resources) and Annex 7.1 (water pollution).Analysis of Issues. By revising and refining the analysis of the key issues facing the 3-H Basins, reflecting the detailed data base and utilizing the analytical tools developed under the study; and 3. Components of the Action Plan. By suggesting a range of policy and tentative project options, bearing in mind current government programs, that constitute a more detailed plan for action than contained in previous reports, combined with the institutional changes and financial arrangements required to ensure that the plan is effective. Figure 1.1 shows the structure and information basis of the report. 1 The basin level models provide a consistent framework for the evaluation of different components of the Action Program. The Yellow River Basin Level Model was first constructed for the Yellow River Investment Planning Study, and was later used as the primary tool of analysis for the Xiaolangdi and Wanjiazhai projects. 4 Chapter 1. Introduction FIGURE 1.1: STRUCTURE OF THE REPORT The driving forces promoting this The implementation of these reforms transition consists mainly of political and create social trends that include : macroeconomic reforms implemented China is undergoing a dual transition through policy and that affect:(1) (1) Changes in population growth from a rural to an urban/industrial State Owned Enterprises (2) Urbanization society and from a command to a (2) Finance (3) Rising incomes & income disparity market economy in order to integrate (3) Decentralization (4) Rising consumption of goods & into the global economy and promote (4) Labor markets services domestic economic growth (5) Government (6) Trade Chapter 2. Chapter 2 Recognizing the need to address these impacts, the These social trends, combined with natural These programs will be comple- government continues to implement water sector conditions, impact on water resources & mented by the proposed action programs, described and analyzed along with managing institutions in various ways: plan described in this report. recommended improvements in these chapters (1) Water shortages (Chapter 3B) Proposed Action Plan (Chapter (1) Sufficient water for all (Chapter 4) (2) Floods and flood damage (Chapter 3C) 11) (2) Addressing flood issues (Chapter 5) (3) Agriculture and food security (Chapter 3D) (3) Sufficient food (Chapter 6) (4) Water Pollution (Chapter 3E) (4) Clean water for all (Chapter 7) (5) Depleted Groundwater(Chapter 3F) (5) Maximizing wastewater reuse (Chapter 8) (6) Water Sector Management (Chapter 3G) (6) Sustainable groundwater use (Chapter 9) (7) Private Sector Participation (Chapter 3-H) (7) Institutional and policy development (Chapter 10) Chapter 1. Introduction 1 E. WHY FOCUS ON THE 3-H BASINS? (i) Introduction China has experienced unprecedented growth since the onset of the reforms in 1978.Water has been a key resource upon which this growth has been dependent. Between 1980 and 1993, urban water consumption increased 3.5 times and industrial water consumption doubled. Even agriculture seemed immune to water constraints: From 1978 to 1996 agriculture in gross terms grew at an average rate of 6.1 percent, with grain production growing at 2.8 percent--more than double the population growth rate. Even in the water-stressed 3-H region of northern FIGURE 1.2: 3-H BASINS% CONTRIBUTION China, with per capita supplies of about 6 percent the world average (500 cubic meters--m3--per capita), TO NATIONAL GDP IN 1997 economic performance has broadly followed, and agricultural growth has if anything exceeded, national 64.9 performance. Indeed, in the most water-short basin of all, the Hai basin, with less than 5 percent of world 7.3 water supplies per capita (340 m3 per capita), including as it does the metropolises of Beijing and Tianjin, 15.3 economic growth has if anything exceeded the national 12.6 rate. The population in the 3-H basins is currently 424 million people with 35 percent urban residents. In Hai Huai Yellow Rest of China 1997, the 3-H basins accounted for just over 35 percent of national gross domestic product (GDP) (Figure 1.2). Yet despite water having kept up with continued growth up to now, water-related problems such as water shortages, pollution, falling groundwater tables and flood/drought damages are becoming more frequent and severe. These problems have developed due to a combination of fast economic growth, natural geomorphological, climatic and social circumstances including historical settlement patterns and government population policies. MWR, which is responsible for overall development of water resources in China, is finding it increasingly difficult to manage water-related problems due in part to limited authority particularly over provincial governments and overlapping jurisdiction with other ministries.2 The following sections describe the main water related problems facing the 3-H basins and compares these for the whole of China (or the world) to highlight the importance of the region to national prosperity and the contribution of the water sector. (ii) Uneven Rainfall Distribution in 3-H Basins In China, water resources are temporally and spatially unevenly distributed. Rainstorms are associated with the subtropical high pressure ridge that moves north across China from April to August with peak rainfall events in the 3-H basins occurring July-August. In the Hai River Basin, the peak is abrupt, signifying sudden rains around August and hardly any rains from October to April. In the Huai and Yellow River Basins, the peaks also occur around July-August but there is still some rain at other times of the year (see Volume 3, Annex 1, Figures A1-1 and A1-2). This variable natural distribution does not necessarily coincide with the current and changing demographic distribution or the areas with growing economic activity; thus the government has for many 2 The Chinese call this "too many mothers-in-law." 2 Chapter 1. Introduction decades adapted to this situation by allocating significant financial and human resources to boost multipurpose storage and inter/intrabasin transfer capacity. (iii) The 3-H Basins have Low Water Per Capita Compared to the World and China While China's total water resources rank among the top nations in the world, the available water resources per capita is just over one quarter of the world's average as shown in Table 1.1. The 3-H basins occupy only 6.6 percent of China's total surface area, yet have almost 35 percent of China's population TABLE 1.1: VOLUME OF WATER/CAPITA FOR DIFFERENT COUNTRIES Country Water % of world Country Water % of world (m3/cap) average (m3/cap) average World 8,336 100.0 India 2,167 26.0 China 2,282 27.4 Bangladesh 19,065 228.7 3-H basins 500 5.9 Australia 18,508 222.0 Brazil 42,459 509.3 Japan 4,338 52.0 Russia 30,168 361.9 Germany 2,084 25.0 Indonesia 12,625 151.5 Canada 95,785 1,149.1 Pakistan 3,256 39.1 USA 9,259 111.1 Source: WDI 1999. with about 13 percent of its water resources. Thus on a per-capita basis, and on world standards, water is a very scarce resource in the 3-H basins. For 1994-98, 59 percent of net withdrawals was consumed for consumptive or lost to nonbeneficial uses in the 3-H basins. Efficiency of use is higher for the Hai-Luan (68 percent) Basin where water is more scarce. If consumptive use is to be somehow increased, then this must come from either reducing nonbeneficial losses from current withdrawals or from finding alternative water sources. Table 1.2 shows that groundwater withdrawals have almost reached sustainable limits for the 3-H basins with 59.5 billion cubic meters (Bcm) mean annual recharge versus 55.2 Bcm mean annual withdrawals. In the case of the Hai Basin, these figures are 17.3 Bcm and 24.7 Bcm, implying that groundwater overpumping is widespread in the Hai Basin. Figures for the Huai and Yellow River Basins appear sustainable but increases in groundwater withdrawals in the last few years have continued unabated as surface water is diverted for urban centers and industry and localized overpumping causing land subsidence is also a concern. TABLE 1.2: 1994-98 MEAN VALUES OF RUNOFF, GROUNDWATER, OUTFLOWS TO THE SEA AND BENEFICIAL AND NONBENEFICIAL USES OF WATER IN THE 3-H BASINS (Bcm) Hai-Luan Huai Yellow 3-H 1. Rainfall 171.9 274.7 330.4 777.0 2. Runoff 23.9 60.7 50.8 135.3 3. Groundwater 17.3 24.0 18.2 59.5 5. Withdrawals of runoff 11.3 32.7 43.3 87.3 6. Groundwater withdrawals 24.7 17.6 12.9 55.2 7. Transfers 5.4 9.5 -8.9 6.0 8. Net withdrawalsa 41.4 59.8 47.3 148.5 9. Consumptive & Nonbeneficial 28.1 37.8 22.2 88.1 10. Implied return flows 13.3 22.0 25.1 60.4 11. Efficiency of use 68% 63% 47% 59% a (Net Withdrawals = 5+6+7) Efficiency of use = Consumptive use and nonbeneficial use as percent of Net Withdrawals. Chapter 1. Introduction 3 (iv) Floods and Droughts a. Flood The uneven distribution of rainfall geographically and during the year, topographic and geomorphologic factors have combined to make the 3-H basins one of the most flood-prone areas in the world. Provincial boundaries are more closely related to the delineation of the plains/mountains areas. From 1991 to 1997, economic damage in the 3-H basins is estimated to be 28.3 percent of national damage resulting from flooding, while the 3-H basins represent only 6.6 percent of national surface area and have 13.2 percent of national water resources. Furthermore, 85 percent of the damage reported in the 3-H basins occurs in the plains where there is higher population density supported by more infrastructure and agriculture. b. Drought Uneven climatic patterns have also caused droughts and water shortages affecting industry, domestic requirements and agriculture. Since the government allocates water to industry and municipalities ahead of agriculture, the latter is the residual water user and water shortages affect agriculture more seriously on a regular basis. According to Chinese definition a drought is declared when grain loss exceeds 30 percent of normal production. The 3-H basins have a larger percentage (7.8 percent) area affected by drought than other basins, with the Yellow Basin being most affected. Given the extent of water transfers and thus dependence between the Yellow and Hai/Huai Basins, water shortages in the Yellow Basin is sure to affect the other two in the 3-H basins. NIHWR and IWHR conducted a study to identify cities in China with various degrees of water deficiency for the years 1993-2010. The study first identified key cities in China with water shortages and then assigned classified weighed evaluation factors (such as water resource/capita, population density, industry, irrigation and domestic consumption, etc.) to each city to calculate its current and projected degree of deficiency in water supply. All the severely water-deficient cities and 55 percent of the other water-deficient cities are in the 3-H basins, which clearly demonstrate that the 3-H basins are and will continue to be water-stressed areas compared to other areas in China. (v) Agriculture Despite low water per capita resources in the 3-H basins, the area still manages to produce a remarkable percentage of the agricultural food for China. Sixty-seven percent of wheat, 44 of corn, 72 of millet, 65 of peanuts, 64 of sunflower, 50 of sesame and 42 of cotton are grown in the 3-H plain. The 3-H basins account for 35 to 37 percent of national GDP (see Volume 3, Annex 1, Table A1-1). (vi) Water Pollution Surface and ground waters in the Hai, Huai, and Yellow Basins have been seriously depleted and polluted by rapid urbanization and industrial development. TABLE 1.3: PERCENTAGE OF RIVER Surface water quality in the 3-H basins is such that most rivers LENGTHS OVER CLASS IV AND V fail to meet the standards required for the designated beneficial uses of the water. The decline in water quality in each of the 1980 1991 1995 three basins to 1995 was alarming, with all registering in excess Hai 28.4 69.3 80.5 of 80 percent of their lengths classified as polluted (Table 1.3) Huai 45 72.6 88.1 Yellow 36 71.3 80 (Class IV or worse to Chinese National Surface Water Standard GB3838-88). 4 Chapter 1. Introduction The major polluting industries in the 3-H basins include paper-making, brewing, chemical and textile. The entire industry output value in the 3-H is estimated at 31 percent of national output value, making the 3-H basins a key area in terms of industrial output. However, investment in industrial wastewater treatment to GDP ratio for eight major polluting provinces in the 3-H basins3 has only started to rise since 1997 after declining through the 1990s. Thus, the use of polluted waters for irrigation, has become a common practice because of the polluted nature of the rivers and the need to irrigate with whatever water is available in dry times. Health effects of such practices have not yet been evaluated nor have the effects on shallow groundwater quality. 3 Beijing, Tianjin, Hebei, Shanxi, Jiangsu, Anhui, Shandong, Henan; from State Environmental Protection Agency (SEPA) Yearbooks 1992-98. 2. CHANGING ECONOMY AND SOCIETY AFFECTING THE WATER SECTOR China is currently undergoing a dual transition from a rural to urban/industrial society and from a command to market economy in order to integrate into the global economy and promote economic growth. Forces promoting this transition are political and macroeconomic reforms implemented through policy and legal decrees in the areas of (a) state-owned enterprises (SOEs); (b) finance; (c) decentralization; (d) labor markets; (e) government and (f) trades. The implementation of these reforms create social trends including (i) changes in population growth; (ii) urbanization; (iii) rising income and income disparities; (iv) rising consumption of goods and services. Those social trends and economic reforms combined with natural and historical conditions impact on water resources and the institutions that manage water resources in different ways. Requiring complex technical, social and management solutions to address growing water shortages and pollution. This section describes key aspects of the Chinese economy and society (the external environment) in order to understand external pressures that impact on water resources and their management. A. THECHANGING ECONOMY (i) Macroeconomy China's GDP substantially increased in the early 1990s and industry and manufacturing contributed a large proportion of this growth. GDP growth rates were recorded at 6.5 percent in 1960-70 period, 9.7 percent in 1977-85 and 8.7 percent in the 1996-97 period.4 Foreign trade growth rate has been equally impressive, being 14.3, 15.2 and 7.6 percent during the same periods.5 However, China's growth since reforms in 1978 has also been cyclical, marked by periodic overheating and contractions and overheating again. Cyclic changes in real GDP growth rates varying from 5 to 14 percent occurred in China from 1977 to 1999. The growth rate in agriculture (2 to 5 percent) is consistently lower than services and industry (8 to 22 percent), confirming the government's policy of industrialization and urbanization. Thus, water consumption patterns will continue to reflect the government economic focus with lower allocations to agriculture and higher allocations to industry and urban domestic centers. (ii) Industrialization The first wave of industrialization took place after the establishment of the People's Republic and was concentrated on SOEs. In the 3-H basins the major SOEs affecting water pollution and use include paper-making, textile, food, brewing, chemical and fertilizer. SOEs in industry are allocated generous water quotas even in water-short areas, resulting in inefficient use of the resource. Both air and water pollution levels from SOEs are higher than for privately owned factories due to higher pollution 4 State Statistical Bureau; various years. 5 State Statistical Bureau; various years. 6 Chapter 2. Changing Economy and Society Affecting the Water Sector abatement costs and diseconomies of scale but the government is reluctant to impose stricter levies or even enforce existing ones because of increased costs of production to SOEs, although this is changing. Nonstate industries account for only 20 percent of private sector activity, the rest being in catering and retail. Economic reforms will shift the balance of industrial production to markets and this alone should have a beneficial impact on water pollution as abatement costs for large private factories are lower than SOEs (Dasgupta et al.). These issues are discussed further in Chapters 3 and 7. (iii) Decentralization Centralized control of production is incompatible with a modern industrialized market economy. Thus the rapid transition under way has also been accompanied by decentralization of decision-making, (including fiscal and administrative) leaving the provincial and local governments more autonomy in the management of their economic assets and structure, social services and natural resources. On the positive side, decentralization has encouraged private sector initiatives, and more participatory decision-making as well as allowing more tailored solutions to address local problems resulting in more efficient use of limited funding. However, fiscal decentralization also had important undesirable effects, especially in relation to the central government's inability to manage the economy and public spending and reduce growing regional economic disparities. There are two aspects of decentralization that are important for the water sector. First, fiscal decentralization has made available large financing capacity for provinces to find their own individual public works programs without having to pass through central government planning process if the works are kept below a certain budget or capacity level. This has made basinwide planning difficult because each province can get on with its "internal" matters without having to consider how such infrastructure might affect water resource access for neighboring provinces. Second, administrative decentralization has promoted localized and arbitrary decision-making by officials at province and county levels. The "principled laws" that guide the activities of the ministries in water resource management or environmental protection are based on well-established scientific doctrines and China's own blend of water administration law, enforcement and jurisdiction. These well-meaning principles (such as water allocation based on watershed or polluter-pays principles) increasingly conflict with the economic interests of the provinces and those administrative bodies (whose financial viability depends on provincial budgets) empowered by the laws to enforce the legislation often tend to act to the detriment of sound water or environmental resource management and planning. Thus, vertical relationships between ministries, departments, bureaus, etc. have been challenged by the stronger alliances between the local governments and these local administrative bodies. (iv) Trade Prior to reforms (pre-1978) production targets were set by the state so that, for example in the agricultural sector, each area would attempt to meet these targets utilizing factors of production such as water, labor and land. There were no pricing mechanisms or tariffs to regulate supply and demand since planning was based on quantity decisions rather than behavioral responses to prices. Gradual reform of China's economy and reform in international trade have gathered momentum since early 1980. However export growth rates have fluctuated since then and observations show that during periods of strong economic growth, (real GDP growth rates) export growth rates have tended to decline, suggesting that export have been used by the government as a means to stimulate the domestic economy. Once China enters the World Trade Organization (WTO), it is expected that in order to Chapter 2. Changing Economy and Society Affecting the Water Sector 7 compete globally it will increasingly rely on its natural advantage, which is primarily in labor-intensive industry and agriculture such as horticulture, livestock, and orchards rather than land and water-intensive agriculture. In fact, a shift in income base has already happened in agriculture where farmers are deriving more income from sideline activities, orchards, vegetables and rural industries rather than traditional grain farming. The government is promoting this shift because land and water are scarce in north China, and revenue from nongrain farming is generally higher, ensuring higher-value use of precious water resources. Trade is also affecting industry, which is modernizing its manufacturing process through the adoption of better and more recent technology that is generally less polluting of both air and water. This is reflected in lower chemical oxygen demand (COD) production per Y 1,000 of production for most rural and urban industry. Restructuring of industry and livestock operations into bigger units resulting from the need to compete globally with economies of scale also means lower marginal cost of pollution abatement, which is also beneficial for water use and pollution. Thus trade has a beneficial impact on water resources because it results in overall lower water consumption and pollution per unit of production. (v) Legal and Regulatory Framework The legal and regulatory framework serves an essential purpose in the management of water resources. Not only are laws necessary to achieve desired outcomes but the ability to enforce laws and independently process legal matters are essential aspects of market economies. China's laws have made a comeback since the 1970s but many issues remain to be addressed. These include (a) relation of the government at various levels and the courts; (b) financing of the courts for provincial governments, possibly allowing interference in legal decisions; (c) authority of the courts is limited to elements of bureaucracy that are within their jurisdiction and at lower government levels; i.e., no authority on coequal government bodies; (d) environmental laws tend to be applied at the discretion of local officials; (e) the use of monitoring data in courts for prosecution is not widely accepted because water quality data serve more for "state of the environment" purposes; and (f) there are no known ordinances to control the discharge of industrial effluent into municipal sewerage collection systems. (vi) Public Finance The extent of investment in public infrastructure such as water intakes and treatment, transfers, wastewater treatment plants (WWTPs), etc. is dependent on the level of recorded short debt judged sustainable given interest rates and economic growth. Fiscal expenditure in the form of policy lending by banks at different levels of government should be included in this budget to avoid "rogue" public infrastructure projects that do not fit into an overall water resources master plan carried out at the basin level. More recently, public infrastructure is financed by private interests; however, at this stage the government prefers joint ventures. One of the major reasons for provincial governments seeking foreign partners is the ability to get access to finance independently of central government channels provided works remain under a certain limit in terms of monetary value and capacity/size of plant, etc. Again, such practice should be reviewed in light of the requirement for coherent basinwide planning, which necessitates master planning across several provinces. This is particularly relevant for water transfers, water intakes and treatment. Wastewater treatment is more a matter for the municipalities 8 Chapter 2. Changing Economy and Society Affecting the Water Sector but unfortunately does not feature high on the list of priority public works at this stage due to water services tariffs. B. SOCIAL TRENDS AFFECTING WATER RESOURCES Changes in the economy described above resulting from reforms have had considerable impact on society. Social changes affecting water resources include (a) population growth; (b) demographic changes and urbanization; (c) rising incomes and increasing income disparities; (d) higher consumption of goods and services. (i) The Impact of Population Growth, Demographic Changes and Urbanization on Water Consumption Total population in China is estimated at 1.3 billion people. Increasingly stringent family programs have managed to slow urbanization growth rates and fertility rates are now below replacement (2.1-2.2 children per family) but the population is expected to continue to grow for the next 40 years. In addition, there continues to be a shift from rural areas to urban areas despite limitations imposed by the government to continue this immigration. Table 2.1 is derived from MWR and shows the differences in daily per capita water consumption in the 3-H basins and for China. These data show that water consumption for urban centers in the 3-H basins and for China are consistently higher than for rural areas. As people have moved to urban centers, consumption of water has been increasingly concentrated in cities and city administrations have responded by increasing real annual municipal expenditure per capita by 11 percent in the last decade.6 High water consumption in urban centers has been attributed to low prices in relation to rising urban income. Since urban centers have attracted industries also, water pollution from municipalities and industries have combined in concentrated areas to create urgent requirements for WWTP infrastructure and pollution management. Pollution of water around urban centers is reported to increase costs of water supply by an average of 7 percent7 due to the need to reposition intakes farther away from urban centers and increased treatment costs. TABLE 2.1: URBAN AND RURAL DOMESTIC DAILY PER CAPITA WATER CONSUMPTION IN THE 3-H B ASINS AND CHINA (LCD) COMPARED WITH URBANIZATION (%) Basins Urban/Total Urban daily domestic per capita Rural daily domestic per capita Population (%) water consumption (lcd) water consumption (lcd) 1980 1993 % 1980 1993 % 1980 1993 % Hai 22 24 9.1 115 192 40.1 54 54 0.0 Huai 9 17 88.9 105 141 25.6 53 69 30.2 Yellow 17 22 29.4 120 125 4.0 41 54 31.8 Average 3-H 16 21 31.2 113 153 26.1 49 59 20.4 China 16 24 50.0 117 178 34.3 71 73 2.8 Source: NIHWR and IWHR, China's Water Supply and Demand in the 21st Century, China Water and Hydropower Publisher, June 1999. 6 Proceedings of 21st Century Urban Water Management in China, International Seminar, Ministry of Construction, PRC September 1999. 7 Proceedings of 21st Century Urban Water Management in China, International Seminar, Ministry of Construction, PRC September 1999. Chapter 2. Changing Economy and Society Affecting the Water Sector 9 Since reforms began in 1978, urban water consumption has changed from being dominated by consumption for industry to consumption for domestic needs. Changes in industry consumption are attributed to increasing importance of the services sector, shifts to high tech/electronics industry that consume less water and increasing reuse practices. Demand management in the form of price increases may also be having an effect. Domestic consumption grew from 7Bcm to 17.5 Bcm and industry grew from 19.2 Bcm to 25.2 Bcm. But the percentage of industry's share to total supply has declined in favor of domestic consumption (including institutional and household) attributed to rising population and consumption per capita as discussed above. Household overtook industry around 1995. In addition industry use of water has declined FIGURE 2.1: GROWTH RATES IN TOTAL, per ton of production with inplant conservation techniques INDUSTRY AND DOMESTIC URBAN WATER being adequate to ensure supplies during this of shortages. SUPPLY Figure 2.1 shows growth rates in urban water 20% supply for industry and domestic compared with growth 15% rates for total urban supply. Industry growth rates seem to 10% follow total growth rates much more closely than domestic 5% 0% growth rates reflecting a shift in industry's structure and -5% associated shift in water allocation, while domestic growth -10% rates are slightly out of cycle. Over the period plotted on -15% the graph, average growth rate in domestic water -20% consumption was 8 percent compared with 2 and 5 percent 1986 1988 1990 1992 1994 1996 1998 for industry and total urban supply. Total Water Supply Domestic Industrial It must be noted that in China, water allocation or supply is identical to demand or consumption so that once water is allocated for a particular end use, it is deemed to have been consumed for that purpose. While price effects on demand are starting to take effects to curb consumption, water allocation is still practiced and remains an important aspect of water management in China that is closely associated with government economic policies. As noted above, migration accounts for a significant but changing portion of urban population growth. Income differential in favor of urban centers and more industrialized provinces are the main reasons for migration. FIGURE 2.2: PERCENTAGE OF LABOR FORCE IN These issues are discussed in the next section on THREE SECTORS ACCORDING TOOFFICIAL rising income and income disparity. FIGURES (ii) Changes in Employment 80.0 As the structure of different sectors 60.0 changed due to economic reforms, so has employment patterns. Figure 2.2 shows declining % 40.0 labor force for agriculture and rising labor for 20.0 industry and services. Employment in agriculture has shifted to more labor intensive production of 0.0 horticulture and orchards and livestock away 1978 1983 1988 1993 1998 from grain. The government has promoted the Agriculture Industry Services use of scarce water for higher paying crops. WTO accession is expected to continue this trend. Migration of workers to urban centers in Source: State Statistical Bureau, various years. 10 Chapter 2. Changing Economy and Society Affecting the Water Sector search of employment and general trends in urbanization are also causing changes in consumption of water requiring larger urban supplies. Employment in western provinces remains an important issue. Some regions especially in the mountain areas have such weak resource base that farming can barely contribute sufficient food for consumption let alone selling surplus production. The poorest households find it difficult to take advantage of work opportunities elsewhere by migrating. Obstacles include difficulties in raising the funds needed to cover the costs of transportation and job search, low literacy levels and limited information regarding job opportunities. Lack of access to credits to pay for inputs or necessary initial investments in water control, land improvement and animal stocks and lack of information, training and weak marketing support. Poor households have been held back from taking advantage of new employment opportunities both in agriculture and nonagriculture by the fact that their labor time is often absorbed by necessary low income tasks such as traveling long distances to fetch water, especially in the dry season in mountain areas. Similarly, in mountainous or hilly areas, it is not uncommon for workers to travel several hours a day to reach plots on steep slopes with skeletal soils that yield low quantities of crops per unit labor inputs. Thus they have no time or energy left for higher income activities. Under such conditions, investment in water supply, land terracing and other forms of basic infrastructure can have positive effects on employment and income. At higher income levels, the main factors inhibiting labor migration is the difficulty of migrants to qualify for health, education and housing facilities which are tied to SOE employment. Permanent or temporary permits to work in urban centers are difficult to obtain and the legal status of many rural workers is ambiguous which can sometimes result in illegal work practices. Other restrictions on migration include the possibility of a household losing farm land if it is not worked for agricultural production. Land is a form of social security and even in situations where income from the land is minimal compared to wages from industries, households still allocate labor input to keep their rights to the land. This is discussed further in the section on rising incomes. Densely populated areas with low land availability and large numbers of enterprises show the highest emigration rate. In the case of rural workers, shifts in income components away from grain to more sideline and rural industry continue the changing nature of the agricultural sector and urbanization trends. Higher incomes in urban centers in part explains higher consumption of water per capita in urban centers compared with rural areas. Other reasons include increased access to water supply facilities, private toilets, larger hospitality and retail sectors. However, a large migrant population also live in many urban centers as discussed in the section on migration and these workers are not registered as urban dwellers or as nonagricultural despite the fact that they live in cities. Their consumption of water therefore increases the per capita consumption of those registered in cities. There are both upper and lower limits of water consumption. People on low incomes are more sensitive to price change but at the lower limit of consumption patterns of use can hardly change due to minimum requirements. As the income curve shifts, the upper limit of consumption is reached whereby no matter how high the income, only a certain quantity of water can be consumed. At lower income water is thus a necessity but at higher incomes, it becomes a luxury. Price of water and income both affect consumption patterns and one of the key message of this report with respect to demand management is that water prices are too low in comparison to income and willingness to pay. This is the case for industry and household consumers. Chapter 2. Changing Economy and Society Affecting the Water Sector 11 (iii) Rising Income and Income Disparity The components of rural income consist of (a) rural income which is income derived from farming activity, (b) income from labor consisting mostly of contract work with industry or township and village enterprises (TVEs), and (c) transfers which is income derived from other sources including remittance from family members working as described in (b). The rural community thus diversifies its activities to take full advantage of economic growth in other sectors (see Volume 3, Annex 2, Figures A2-1 and A2-2). The farm income varies between Y 1,000 and Y 2,000 a year for all provinces and the labor income as discussed above supplements this to varying degree depending on a number of factors including (i) proximity to industry, (ii) access to industrial centers, (iii) contacts, (iv) economic activity in the nearby industrial centers, etc. The farm income stays as the basic income and represents a security for the household as discussed before. Rural populations can maximize their income by moving off the farm, but they normally tend to keep some links with the land because if government policy should change and they lose their job in the centers, they can go back to the farm and at least be self-sufficient. Moreover, the current government policy is that if the land is not worked, the household loses the lease and so despite marginal income derived from the farm, rural household keep working on the land. Higher incomes in urban centers in part explains higher consumption of water per capita in urban centers compared with rural areas. Other reasons include increased access to water supply facilities, private toilets, larger hospitality and retail sectors. However, a large migrant population also live in many urban centers as discussed in the section on migration and these workers are not registered as urban dwellers or as nonagricultural despite the fact that they live in cities. Their consumption of water therefore increases the per capita consumption of those registered in cities. The substudies estimate that the income elasticity of demand for water ranges between ­0.48 to -0.54. Experiences in other countries shows that as income rises, consumption of water also rises but income elasticity of demand tends to decrease as income rise. In other words, people on low incomes are more sensitive to price changes and are more likely to modify their consumption of water when faced with price changes. As income rises, income elasticity of demand tends to increase and people are less likely to modify their consumption patterns. Data from the Urban Water Supply Association Yearbook showed that in 1987 more than 80 percent of cities had domestic tariffs less than Y 1.0/m3. Domestic (big life, which includes institutional water supply) water use averaged about 190 liters per capita per day (lcd). Household use (small life) averaged about 122 lcd. The proportion of household expenditure on water charges was less than 1.0 percent, and mostly less than 0.5 percent. Analysis of data from the 1997 Commodity Prices and Urban Household Incomes Yearbook showed that, in the provinces of the 3-H basins, expenditure on water increased as income increased, but the proportion of expenditure reduced. Even in the low-income households the proportion of income spent on water is mostly less than 0.5 percent. Regional disparities in income tend to promote regional differences in water consumption patterns. In poorer counties, access to water needs to be improved promoting increased consumption to ensure basic health and income generation while in the urban access is generally good and demand management is needed to lower consumption per capita. Areas with higher GDP/capita have better ability to pay for improved services and generally get this improved service while poorer areas have weak service provision. 12 Chapter 2. Changing Economy and Society Affecting the Water Sector In 1988, the provinces in the 3-H basins8 recorded 49.8 percent of the national rural poor. This percentage increased to 52.3 percent and 60.1 percent in 1989 and 1991 but fell to 43.4 percent by 1996.9 The poor that have mostly benefited from China's surge in economic growth have been those living in the rural floodplains who had ready access to markets, the possibility to diversify their income base (as described above) and where provincial economic growth allowed benefits to "trickle down" to rural areas. Thus access to natural resources, primarily arable land and water, along with support infrastructure such as roads and access to markets play an important part in determining poverty and income. As incomes rise and living standards improve, the demand for goods and services will increase also. Private consumption per capita growth rate increased from 8.1 percent in 1980-90 to 8.8 percent in 1990-97 periods. By comparison, countries at similar levels of development in East Asia and the Pacific showed growth rates of 1 and 2.6 percent for similar periods (World Development Indicators, 1999). The development of such huge markets is an opportunity for strong economic growth but the associated increase in industrial activity and the increased reliance on natural resources such as water, soil, forests, and animal products will be a challenge for China's natural resource managers. C. THECHANGING ECONOMY Future water use in China will depend heavily on the growth and structure of the economy, and China's recent rapid pace of change is expected to continue for some time before gradually slowing. Reasons for optimism include fairly high literacy, genuine efforts to learn from international experience, a reasonably development-oriented government, high savings and investment rates, a policy of opening to outside trade and direct investment, and the potential for a large domestic market. Nevertheless, many challenges inherited from the prereform planning era will make sustained development more difficult. In particular, internal trade barriers and inefficiencies in fiscal, financial and enterprise governance systems threaten to continue a pattern of wasteful resource use. In a related vein, the relatively fragile basis for maintaining reasonable patterns of income and consumption inequalities will continue to result in widespread nonmarket solutions to problems of unemployment and labor mobility. Three approaches have been applied in the present studies to develop a vision of China's economy in the year 2050 as well as estimate the likely economic conditions in the 3-H regions. The IWHR has applied input-output modeling calibrated against national population projection targets and nationally accepted GDP growth targets. The results imply very little movement of population into, or out of, the level two subbasins over the next 50 years. GDP per capita in 2050 is estimated to be about US$8,500 at 1998 constant prices. Urbanization in 2050 is suggested to be about 52 percent. (IWHR, "Industrial and Domestic Water Demand Forecasts," 1999, project working paper.) A second approach adapted the Solow growth model, applying World Bank parameters for China (Ref. World Bank, China 2020, 1997; Cleland G., "Sectoral Growth Model," 1999, project working paper). This model relates capital and labor in the various sectors and applies a consumption-saving rule and a capital accumulation equation to project income and structural changes. Applied to the whole of China, the model suggested a GDP per capita of about US$14,100 in 2050, and an urbanization level of about 64.6 percent. This second approach went on to formulate demand projections taking account of income and price, but used the population projections of IWHR, and the overall GDP projections of the 8 Beijing, Tianjin, Hebei, Shanxi, Jiangsu, Anhui, Shandong, Henan, Inner Mongolia, Shaanxi, Gansu, Qinghai, Ningxia. 9 The State Statistical Bureau's "annual sample survey of rural households income" in China: Overcoming Rural Poverty, UNDP/World Bank, May 16, 2000. Chapter 2. Changing Economy and Society Affecting the Water Sector 13 IWHR for each of the level two subbasins (Ref. Cleland G., "Water Demand Projections in the 3-H Basins," 1999, project working paper). A third approach applied regional growth and investment models to each of the level two subbasins. The models relate income, investment,10 employment, population movement, natural population growth and structural changes, to project future rural and urban populations, and GDP growth in the agriculture, urban and rural sectors. Overall, this model suggests similar urbanization and GDP outcomes for the total of the 3-H basins as did the Solow Growth Model for all of China. Urbanization for 2050 is projected to be 63 percent, and average GDP per capita projected to be about US$15,000. There are differences, however, within the subbasins, and the population projections for the basins and subbasins are different to that of the IWHR approach. The regional models imply a little more outmigration than inmigration for the Huai and Yellow river basins, and a little more inmigration than outmigration for the Hai basin and Shandong peninsula. Overall, for the three basins, population does not grow at the same rate as expected for China in total. This suggests the models imply a little outmigration from the 3-H region to other parts of China. (i) Economic Growth Growth rate potential for China over such a long period of time can only be estimated by looking at the growth of other countries in the past that have modernized from a base similar to China's and with resources and market opportunities China can also hope to share. China at the end of the twentieth century still had per-capita GDP well under US$1,000. In purchasing power parity terms--that is, valued at international prices--this was over US$3,000, a level of income lower than Japan's in the 1950s. The growth experience of several Asian economies in the past indicates that while growth may surge over 7 percent for an extended period of time, as per-capita incomes climb to levels of three or four times China's current level, growth rates inevitably decelerate. See Figure 2.3. However the growth experience of other economies, like that of Brazil in Figure 2.3, shows that sustained high growth of the East Asian variety is by no means guaranteed. China, however, exhibits many characteristics of previously successful East Asian Economies--land reform, widespread literacy, heavy investment in public infrastructure, and a high savings rate, for example--that at this point it appears to be following the East Asian path, rather than some other. This is the basic assumption made here. Few analysts project GDP growth as far out as 2050. The World Bank's 2020 Report used an average of 6 percent annual growth through 2020. Most other estimates are somewhat higher. This report uses average growth rates of between 6.5 and 7.5 percent for the 2000-to-2020 period and just under 6 percent for 2030 to 2050. In other words, projected annual growth rates for the 50-year period are between 6.0 and 6.5 percent. As a result, at 1999 constant prices and exchange rate, this report's estimates for China's per-capita GDP in 2050 is US$16,000 and US$20,000. That is, China's per-capita GDP in 2050 is projected to lie somewhere between 1998 levels for Spain and Australia, respectively.11 Total, rural, urban and industrial growth rates used in the Generalized Algebraic Modeling System (GAMS) modeling are shown in Tables 2.2 and 2.3. 10 The regional model relates investment (private savings, foreign direct investment, government investment, and overseas development assistance) in various sectors (agriculture, urban infrastructure, and rural infrastructure) and applies incremental capital output ratios and labor participation relationships, to project changes in economic structure, incomes, and population within a region (see Annex 10). 11 WDR 2000/2001, Annex Table 1, pp. 230-231. 14 Chapter 2. Changing Economy and Society Affecting the Water Sector FIGURE 2.3: CHINA'S GDP GROWTH TREND IN INTERNATIONAL PERSPECTIVE Real Growth GDP/capita (5-year Rolling Average) 12 China S. Korea 1986 10 China 1995 Thailand Japan 1986 1989 1961 8 Taiwan Taiwan 1990 6 1981 S. Korea 1990 4 Japan Brazil 1972 2 1984 0 Per Capita GDP (1992 PPP Dollars) - 2,000 4,000 6,000 8,000 10,000 -2 Japan S. Korea Taiwan Province Brazil Thailand China Japan Trend S. Korea Trend Taiwan Trend Brazil Trend Thailand Trend China Trend TABLE 2.2: FORECASTED TOTAL, RURAL AND URBAN GDP GROWTH RATES FOR THE 3-H BASINS Basins 1998 2000 2010 2020 2030 2040 2050 Hai Rural 3.1 2.9 3.0 4.0 4.6 4.3 4.0 Urban 8.1 7.8 7.3 6.6 6.0 5.4 5.0 Total 7.3 7.1 6.8 6.4 5.9 5.4 4.9 Huai Rural 3.2 2.9 2.8 3.7 4.7 4.9 4.7 Urban 7.9 7.6 7.2 6.7 6.1 5.5 5.0 Total 7.1 6.9 6.7 6.4 6.0 5.5 5.0 Yellow Rural 3.1 2.8 2.5 3.4 4.4 4.4 4.1 Urban 8.9 8.6 7.9 7.1 6.3 5.7 5.1 Total 7.7 7.5 7.3 6.8 6.2 5.6 5.1 TABLE 2.3: FORECASTED INDUSTRIAL GDP GROWTH RATES FOR THE 3-H BASINS Basins 1998 2000 2010 2020 2030 2040 2050 Hai 7.4 7.1 6.5 5.7 5.0 4.3 3.7 Huai 7.1 6.8 6.3 5.7 4.9 4.3 3.7 Yellow 8.5 8.2 7.3 6.3 5.3 4.5 3.9 Most casual observers consider a GDP of US$20,000 per capita in 2050, at today's prices, is not attainable in China. Is it unattainable? From a GDP per capita of about US$850 to US$16,000 or US$20,000 in 50 years represents an annual average increase of about 6 and 6.5 percent respectively. Many of the East Asian economies have shown that decades of strong growth, from a low base, is achievable. It should also be born in mind that the developed economies, with GDP per capita now about US$20,000 expect their GDP per capita to be approaching US$50,000 at 2 percent growth rates. Even with strong growth in China, the gap between China and the high-income countries in 2050 will be greater than now, in absolute terms. Hence, this report considers the global economic environment to be favorable for sustained long-term Chinese growth at relatively high levels. (ii) Economic Structure With economic growth will come change in the relative balance of agriculture, industry and services. This is a natural and historical transformation experienced by all modernizing economies. This is already happening in China. Economies with per-capita GDP above US$5,000 have less than 10 percent Chapter 2. Changing Economy and Society Affecting the Water Sector 15 of output from agriculture, and most have less than 5 percent. Furthermore, with higher GDP per capita levels, the share of service-sector output in total GDP generally rises to over 60 percent--and even over 70 percent--while industrial output typically settles in the 25-to-40-percent range. A legacy of the planned economy in China is a very high proportion of GDP from industry and agriculture, supported by a very small service sector. The service sector graph shows that no country with services contributing less than 40 percent to GDP has a GDP per capita greater than US$1,000. A strong service sector is essential if agricultural and industrial production and trade is to grow successfully. This same structural transformation will run its course in China as well. Projections by the World Bank, and independent analysis in this study, concur that by 2020, agriculture in China will be contributing about 7 percent of GDP, compared to about 20 percent in 1998. Projections to the year 2050 made for this report show that by 2050, the share of GDP from agriculture will have declined to 4 percent (see Table 2.4). Similarly, agriculture's GDP share in the Yellow, Hai and Huai River basins will have fallen to the 3-to-6 percent range. In all basins, and throughout China, services will dominate GDP, accounting for 55 to 65 percent of the total. In sum, the economies of these regions and of all of China will be very different from what they are today. Instead of half or more their labor force in agriculture, they will have only roughly 10 to 15 percent. Furthermore, with the exception of the Huai River Basin, these populations will be largely urban. For all regions, 60 to 80 percent of GDP will be produced in urban areas. Overall, China's expected healthy growth and normal structural changes indicate a very different economic environment in 2050 than that at the turn of the century. These changes form the backdrop for understanding expected changes in volumes and patterns of water usage. TABLE 2.4: CHINA'S ECONOMIC STRUCTURE IN 2050 1997 2050 China Total China Total Yellow River Hai Basin Huai Basin Population/Labor Force (Percent) Total 100 100 100 100 100 Urban 29 60 65 63 55 Rural 71 29 35 37 45 GDP Structure (Percent) Total GDP 100 100 100 100 100 Agriculture 19 4 3 6 3 Nonagriculture 81 96 97 94 97 Industry 44 36 33 34 41 Services 37 61 64 60 56 Nonagriculture 81 96 97 94 97 Urban 71 78 83 70 61 Rural 10 19 14 24 36 GDP/capita (1998 US$) 729 16,062 12,180 19,311 9,932 Source: SKM Substudies. Reference GDP/capita in 1997 729 470 1,063 351 GDP average growth rate (%) 6.3 6.8 6.0 6.7 Casual observers in the water resource sector, and those concerned with food security, are often worried at what appears to be a declining importance of agriculture. The apprehension is not warranted. Looking only at the economic structure disguises the fact that agriculture is still growing. The long-term projections by independent analysis in this study suggest that agricultural GDP in 2050 could well be about Y 10,000 billion (at 1998 comparable prices), compared to Y 1,500 billion in 1998. Without a proper balance of economic structure, such growth in agriculture would not be achievable. One aspect 16 Chapter 2. Changing Economy and Society Affecting the Water Sector that may threaten growth in agriculture in China is insufficient attention to the need for continued strong agricultural research as discussed in Chapter 6. (iii) Employment The structure of employment will also change with economic growth. At present nearly half the employment in China is said be in agriculture. This suggests that a population of about 600 million people in China rely on agriculture for their livelihood. However, virtually no country in the world with more than 20 percent of its population in agriculture has an income per capita above US$3,000 and if China is to reach this level of per capita income by 2020, the population in agriculture will have to halved (see Volume 3, Annex 2, Figure A2-3). A challenge for China is to provide every opportunity for the agricultural population to move into other sectors. This can come with appropriate land tenure arrangements and more services; improved education, health, transport, communication, marketing, and strong agricultural research. Employment in services will increase as dramatically as employment in agriculture will decline. The World Bank 2020 projections and independent analysis for this study expect that employment in services by 2020 will be of the order of 40 percent to 45 percent respectively. (iv) Economic Growth and Water Use Despite improved efficiency of water use from higher technology manufacturing processes, economic growth, economic restructuring and market forces will play a greater role in allocation, and these will lead to increased water use by industry in China. Urban and rural water consumption are also set to increase with higher incomes. A comparison of the results are shown in Table 2.5 (and Figure A2-4 in Annex 2, Volume 3) for different scenarios of GDP, urbanization, price, population, income and industrial output. All the trends indicate an increase in water demand at least up to 2030-40 after which there is some leveling off to constant demand. This is consistent with experience in most other countries in the developing world. The figures were derived assuming constant price and income elasticity parameters over a very long time period across all the subbasins and this may not reflect reality. However changes in elasticity over time, especially in the future, are difficult to determine and the use of elasticity values for the current period represents a "best guess" approach. (v) Land Use Economic growth, changing economic structure, lead to increased urbanization with more low- density suburban development and increased peri-urban development, increased transport infrastructures, and additional electricity, gas and water pipeline easements. Economic growth will continue to take land out of agriculture. It is common in heavily populated agricultural regions such as in Java, Indonesia, and the Red River Delta region of Vietnam, that agricultural land, including irrigation land, is reduced at about 1 percent per year. This change in land use does not threaten agriculture or food security. With strong economic growth agriculture will also continue to grow. With improvements in transport, communications, agricultural research, and in intranational and international trade, it is expected that agriculture GDP will grow at a much faster rate than the population. The loss of agricultural land, including irrigation land, to urban development should not be viewed with alarm. In water-short areas such as in Hebei province, the natural changes in land use accompanying economic growth can provide an opportunity to reduce irrigation water use. In virtually all of the Hai river basin, there is some cause to consider that new Chapter 2. Changing Economy and Society Affecting the Water Sector 17 irrigation development should not be contemplated, not even to replace irrigation land being taken out of agriculture. TABLE 2.5: WATER DEMAND FOR THE 3-H BASINS FOR 2000-50 FOR DIFFERENT SCENARIOS 3-H Totals (Bcm) 2000 2010 2020 2030 2040 2050 As estimated case 37.64 45.17 55.02 65.10 71.36 72.00 High GDP growth 38.43 49.57 63.98 76.82 80.88 81.00 Low GDP growth 36.88 41.22 47.09 53.48 58.55 61.00 High urbanization 37.80 46.22 57.22 67.20 71.27 72.00 Low urbanization 37.48 44.22 53.06 62.74 70.47 73.67 No real water price increase 39.16 52.41 71.20 95.53 120.30 139.87 Low real water price increase 37.95 46.62 58.25 71.29 81.72 85.62 High real water price increase 37.49 44.45 53.40 62.19 67.19 65.27 High urban income growth 37.69 45.65 57.84 74.53 91.75 98.32 Low urban income growth 37.60 44.77 53.17 60.66 64.75 64.00 High population growth 37.69 45.47 55.79 66.98 75.46 77.70 Low population growth 37.59 44.88 54.28 63.56 68.77 70.00 High Income growth 37.67 45.63 57.19 71.85 86.35 94.86 Low Income growth 37.61 44.76 53.30 60.84 64.27 65.00 High rural income growth 37.65 45.40 55.93 68.09 79.19 86.06 Low rural income growth 37.63 44.97 54.32 63.49 68.68 67.02 High industry production growth 37.73 46.80 60.83 78.68 96.12 107.18 Low industry production growth 37.55 43.85 51.24 58.41 62.50 60.94 High urban price growth 37.64 45.12 54.57 63.18 65.72 66.00 Low urban price growth 37.64 45.22 55.39 66.71 75.79 79.33 High rural price growth 37.64 45.15 54.88 64.61 69.96 70.00 Low rural price growth 37.64 45.21 55.23 66.00 74.01 76.09 High Industry price/domestic price factor 37.52 44.62 53.83 63.13 68.85 67.70 Low industry price/domestic price factor 37.73 45.60 55.95 66.93 74.66 75.71 High rural loss/urban loss factor 42.46 49.85 59.83 71.06 79.30 80.37 Low rural loss / urban loss factor 36.79 44.34 54.17 64.20 70.75 70.54 Note: Numbers in italic for 2050 are estimated. D. SOCIAL TRENDS AFFECTING WATER RESOURCES, FUTURE (i) Population China has been very successful in its efforts to bring population growth under control. Natural growth rates have been declining significantly for a number of years. Only in the western provinces do natural population growth rates exceed 1 percent per year. In the major cities natural growth rates are about zero, or negative. Nonetheless, overall population will continue to grow. With a population now of about 1.25 billion, opinions differ as to where and when it might peak. A common expectation is that it will peak at about 1.6 billion in 2040 or 2050 (Table 2.6). Independent analysis for this study concludes that it may reach 1.45 billion. Whatever the outcome, the large population, and its continued growth, place a high demand on water. With population increasing, and incomes increasing, the impact on water demands could be alarming. However, it is inevitable 12 that prices charged for water will increase in an effort to recover some of the costs of meeting increased water demand. This will temper the increase in water demands that might be expected with continued growth of population. 12 Quotas could become the norm if a decent system is not developed and applied. In any event, with high prices, cutoffs will become an integral part of the system discipline. 18 Chapter 2. Changing Economy and Society Affecting the Water Sector TABLE 2.6: FORECASTED TOTAL, RURAL AND URBAN POPULATION (Unit: `000 people) Basins 1997 2000 2010 2020 2030 2040 2050 Hai Urban 38 39 61 78 88 95 101 Rural 86 89 80 73 68 64 58 Total 123 128 141 150 156 159 159 Huai Urban 44 46 77 105 122 133 140 Rural 150 157 148 135 127 121 114 Total 194 203 225 240 250 254 254 Yellow Urban 32 34 57 77 89 94 97 Rural 75 79 72 63 59 56 52 Total 107 113 129 140 147 150 149 3H total Urban 114 119 195 259 298 322 338 Rural 311 325 301 271 254 241 225 Total 424 443 495 531 553 563 562 3H total High 424 445 502 543 571 587 593 Low 424 442 489 518 535 539 533 (ii) Urbanization Official statistics in China suggest that 30 percent of the population is urban. This is based on the population of classified cities. In China, there are thousands of townships, many with populations in excess of 100,000 that are classified as rural population. They are in all respects an urban environment. The proportion of population receiving piped water supply in an urban environment is not known. It may well exceed 50 percent. The nature of urbanization in China is just as much a consequence of reclassification of townships to city status as it is a migration from rural areas to city areas. It is a target in China that every county capital will ultimately become a city. The increase in urbanization therefore will be spread throughout China and may not have as great an effect on the location of increased water demands as might be expected. With increased incomes and urbanization, the impact on water demands may be similar in nearly all areas of China. It is commonly thought that increased urbanization leads to increased water demands. The correlation may indeed by high, but the cause of both urbanization and increased water demand is more likely to be increased economic growth and increased income. Water demand projections undertaken by the action program consultants projected the level of urbanization to reach about 60 percent by 2050. The water demand projections, based on income and price, using different methodologies, were not sensitive to the level of urbanization assumed. It is expected that urbanization will continue to increase in China as economic growth and restructuring continues, but the level of urbanization will not greatly affect the water demand. 3. WATER RESOURCES AND ISSUES A. INTRODUCTION Chapter 2 investigated the external environment and how such factors as population growth, GDP growth, decentralization, etc. are likely to affect water resources demand and management. This chapter investigates the current water resources situation in the 3-H basins and exposes existing problems in the water sector. In order to investigate the current situation in the water sector, the following aspects are addressed: · The water resources balances in the 3-H basins, presented with past and present withdrawals and water consumptive uses, and current water shortages estimates and their consequences such as dry mouths, droughts and water conflicts. · Past floods and flood damages, reviewed for each province in the 3-H basins and the current Chinese flood control strategy discussed. · Water supply to agriculture in the 3-H basins and the importance of current irrigation to crop production in China and the 3-H basins. The effects of changing structure of the economy and the agricultural sector on incomes and employment resulting from declining water allocation. · Water quality status in the Hai and Huai basins rivers, sources of water pollution including urban industrial and municipal, rural point sources and rural domestic. · Groundwater resources in the 3-H basins, the major groundwater problems in the 3-H basins, the feasibility of artificial recharge in the 3-H basins, current groundwater management. · Current water planning in the 3-H basins, interministerial coordination and the successes/failures of existing river basin management with current degree of decentralization. This chapter provides the basis for the analysis presented in Chapters 4-10 where the action plan will be developed. B. WATER SHORTAGES, DROUGHTS AND WATER CONFLICTS (i) Water Resources and Withdrawals (a) Population growth and lower runoff in recent years diminish water availability per capita. That water in the 3-H basins is very limited is beyond dispute. In 1993, the per capita availability of water resources was only 522 m3 a year--15.4 percent of that for the rest of China. In 1999 it is estimated to have been 499 m3 a year--6 percent that of the rest of the world--based on increased 20 Chapter 3. Water Resources and Issues population but assuming similar water resource availability. However, lower runoff since 1993 compared to long-term averages indicate that water availability may be as low as 440 m3 a year. It is unclear whether this decline reflects an unusual sequence of years, a secular decline, or an overstatement in the original assessment. Two factors suggest that a secular decline may indeed have taken hold: (a) increased competition for scarce water resources may have led to widespread underreporting of withdrawals, and (b) extensive terracing, small-dam building and afforestation in the upper reaches of most rivers to control erosion and sediment discharge may well be reducing runoff. It has also been suggested that global warming may be negatively impacting rainfall. (b) Most runoff is actually floodwater that is difficult to capture. Runoff is highly variable both within years and from year to year. In the six years 1993-98, runoff ranged from 12 to 36 Bcm in the Hai basin, from 40 to 104 Bcm in the Huai basin, and from 38 to 57 Bcm in the Yellow basin. Most of the annual runoff in a wet year (P25) is generated from rainfall occurring between June and October (76 percent), while in a dry year (P75) rainfall and runoff generated during those months account for a diminishing percentage of water resources (47 percent for the 3-H). During a wet year, only part of the flows can be captured for withdrawals, and often it is heavily laden with silt (see Volume 3, Annex 3.2, Table A3.2-1). (c) Low runoff to outflow to the sea ratio shows that water resources are taxed to their limits. Insufficient data are available to provide a complete water balance for the main river basins in China. However, data on outflows to the sea are included in the Water Bulletins. In general, most runoff in each of the 3-H basins is generated in the western mountainous or hilly regions, the rivers flow generally eastward, and terminate in the Bohai Sea (Hai-Luan and Yellow) or the Yellow Sea (Huai). Thus outflows to the sea, relative to runoff, provide a measure of the intensity of water use within the basins.13 Table 3.1 reports runoff, outflows to the sea, and the difference, which is equal to all beneficial and nonbeneficial uses. On average, since 1994, about 38 percent of runoff reaches the sea, and 62 percent is consumed or lost to nonbeneficial uses (mainly evaporation and groundwater recharge). As noted above, much of the annual runoff is generated by floods, and must be discharged to the sea to prevent complete flooding of vulnerable areas in the basins such as lowlands. Even in a normal (median) year, between 66 percent and 74 percent of runoff is generated during the flood months. In dry years, this falls to below 50 percent, but still involves substantial volumes of water. This implies that a figure of 62 percent for beneficial and nonbeneficial uses is not only impressive, but is strong evidence that the water resources in 3-H are virtually taxed to their limit. If consumptive use is to be somehow increased, then the increase must come from either reducing nonbeneficial losses from current withdrawals, or finding alternative sources of water. 13 For several reasons, runoff less outflows to the sea do not equal consumptive use: (a) interbasin transfers within the 3-H and from the Yangtze to the Huai, (b) groundwater consumption does not equal groundwater recharge, and (c) evaporation from rivers, lakes, and canals prior to the point of measured withdrawals. Chapter 3. Water Resources and Issues 21 TABLE 3.1: BENEFICIAL AND NONBENEFICIAL USES (Bcm) Hai-Luan Huai Yellow Total 3-H 1. Runoff 1994 25.6 41.6 56.5 123.7 1995 27.6 39.7 49.5 116.8 1996 35.1 78.7 54.9 168.7 1997 11.8 39.8 37.8 89.4 1998 19.3 103.5 55.3 178.1 Mean 1994-98 23.9 60.7 50.8 135.3 2. Outflows to Sea 1994 4.3 14.8 21.7 40.8 1995 5.9 18.5 13.7 38.1 1996 12.4 31.4 17.0 60.8 1997 1.4 22.9 1.5 25.9 1998 5.4 77.1 10.2 92.7 Mean 1994-98 5.9 32.9 12.8 51.7 3. Beneficial and Nonbeneficial Uses (Runoff less Outflows to the Sea) 1994 21.3 26.8 34.8 82.9 1995 21.7 21.2 35.8 78.7 1996 22.7 47.3 37.9 107.9 1997 10.4 16.9 36.3 63.5 1998 13.9 26.4 45.1 85.4 Mean 1994-98 18.0 27.7 38.0 83.7 Table 3.2 puts 3-H's surface water utilization rate in 1998, a relatively wet year in most of China, in perspective. Whereas 3-H's rate was 46 percent, the average for all of China was only 13 percent. No region outside of 3-H withdrew more than 33 percent of runoff. TABLE 3.2: UTILIZATION OF SURFACE WATER IN CHINA, 1998 (Bcm) Runoff Surface Ground Total % Surface I Northeast 254.7 34.0 28.4 62.4 13 II Hai-Luan 19.3 16.3 26.1 42.4 84 III Huai 103.5 39.2 17.5 56.7 38 IV Yellow 55.3 26.8 12.7 39.5 48 V Yangtze 1,300.4 159.3 7.0 166.3 12 VI Pearl 510.8 79.7 4.0 83.7 16 VII SE China 256.9 30.0 0.8 30.8 12 VIII SW China 628.6 8.0 0.2 8.2 1 IX Inland 143.1 47.6 6.0 53.6 33 China Total 3,272.6 440.9 102.7 543.6 13 3-H Total 178.1 82.3 56.3 138.6 46 Note: Interbasin transfers excluded. Apart from 3-H sources, only 1 Bcm was transferred from the Yangtze to the Huai in 1998. (d) Increasing dependence on groundwater to meet demands indicates surface water supply constraint. If there has been no marked increase in the withdrawal of surface water, the same cannot be said of groundwater. From total groundwater withdrawals in 3-H of 41.5 Bcm in 1980, each year has seen an 22 Chapter 3. Water Resources and Issues increase, almost without interruption, until 1997 (Table 3.3). In fact, virtually all of the increases in withdrawals in 3-H since about 1990 can be attributed to increased reliance upon groundwater. TABLE 3.3: UTILIZATION OF GROUNDWATER IN THE 3-H BASINS (Bcm) Hai-Luan Huai Yellow 3-H Total Utilization of Groundwater in 3-H 1980 20.2 12.9 8.4 41.5 ... ... ... ... ... 1993 21.5 15.6 12.0 49.1 1994 23.4 18.1 12.3 53.8 1995 23.8 17.8 13.1 54.7 1996 23.8 16.5 12.7 53.0 1997 26.4 17.9 13.8 58.1 1998 26.1 17.5 12.7 56.3 Pumping capacity in 1993 (IWHR). 21.9 15.8 12.2 49.9 Estimates of long-term exploitable groundwater: 1. Long-term average annual recharge (WRA) 26.5 39.3 40.6 106.4 2. IWHR long-term maximum withdrawals 21.0 22.0 15.0 58.0 3. River Basin Commission estimates 21.5 24.0 22.2 67.7 4. World Bank (3-HMS) estimates 17.3 22.0 15.2 54.5 According to the data presented in Table 3.3, it does not appear that groundwater recharge has been much affected by the low runoff in recent years, except in the Yellow, where average annual recharge has been about 9 percent lower than the long-term average. This is probably a result of sharply increased withdrawals for consumption since the long-term series ended in 1979. Recharge of shallow groundwater is more quickly dependent on surface runoff and will therefore be influenced by surface withdrawals in the short term. For this reason, diminished recharge of shallow groundwater may not be as critical because with appropriate management, increased recharge can replenish groundwater tables in a matter of decades or even quicker. Technically, water flowing in the rivers is made up of base flow and surface runoff. As surface runoff decreases, the flow in the river is made up of mostly base flow which is groundwater hydraulically connected to the river. Likewise, as surface flow augments, say during flood periods, shallow aquifers are being recharged. Deep groundwater, however, is recharged over decades or centuries. The effect of lower recharge (e.g. increased withdrawals, lower rainfall, etc.) from diminished runoff may not be apparent for many decades and even deep injection wells can replenish groundwater only at local scale but have little effect regionally. Another dimension to the problem of recharge is that it occurs selectively over areas with different geological characteristics. Withdrawals of groundwater, especially in the case of deep groundwater, may be excessive in one area while the recharge zone to this particular aquifer occurs in other parts of the country where land use or increased runoff withdrawals may change the recharge regime. Thus an aquifer may be overdepleted by excessive withdrawals and also affected by reduced recharge. So looking at the gross recharge over, say, the entire Hai basin hides spatial variations in sustainable withdrawals. So while recharge may be an indication of long-term replenishment of aquifers used for the purpose of hydrologic balancing, in reality the total sustainable withdrawals of groundwater or exploitable groundwater cannot approach this figure for reasons outlined above. This is why despite withdrawals being about equal to recharge in the Hai in 1997, the aquifer is being overexploited and groundwater levels have dropped dramatically (up to 90 m in the deepwater aquifer) in the last decade. Chapter 3. Water Resources and Issues 23 Exploitable groundwater is estimated by the consultants to be 56 percent of gross recharge after the resource is factored down to allow for management and technical factors (e.g., discharge back to the rivers). These estimates are lower than those made earlier by the river basin commissions, except for the Huai, where they match. In total, they are very close to IWHR's numbers, although there are significant interbasin differences. Regardless of which set of estimates is closer to the truth, it is clear the Hai-Luan region in the aggregate is mining groundwater, and has been doing so since about 1980 and in 1997 up to 8 Bcm a year of groundwater was mined. Various parts of the Yellow and Huai basins also are mining groundwater at rates far exceeding recharge. The result has been sharply falling water tables and incidences of land subsidence. These phenomena are most severe in large and medium-size cities, such as Taiyuan and Jinan in the Yellow River basin, and Tianjin in the Hai. By 1993, 50 cones of depression covering 20,000 square kilometers (km2) had appeared throughout north China. The most severe effects are found in Tianjin where land subsidence covers 2,300 km2.14 In 1998 (again, a year of relatively high runoff in the 3­H region), groundwater accounted for 62 percent of net withdrawals (surface + groundwater + transfers--Table 3.4) in Hai-Luan, 31 percent in Huai, and 32 percent in the Yellow basin. These figures contrast sharply with that of the rest of China: 13 percent. Given the paucity of surface water resources in Hai-Luan and Yellow compared with demands, there is no other water source available in the short term. It is potentially noteworthy that groundwater withdrawals dropped in each of the 3-H basins in 1998. This coincides with a drop in urban domestic and municipal consumption in 3-H for the first time in recent history (see Chapter 4). These declines may be the result of higher prices charged to urban consumers or merely a reflection that in wet years surface water is more cheaply accessible while in dry years users must rely on groundwater to meet their demands. Thus consumer behavior with respect to surface vs. groundwater consumption may show that groundwater withdrawals can be viewed as a substitute good. [In 1995, the last year for which such details were published in the Water Bulletins, groundwater supplied 58 percent of urban "life" (domestic + institutional) demands in 3-H.] (ii) Consumptive Use Gross withdrawals go toward consumptive use, irrecoverable losses (nonbeneficial use) and return flows. Since 1994, the Water Bulletins have published estimates of net use (net consumptive) and implied return flows. These are given in Table 3.4 allowing for the effect of transfers (return flows being accounted for in the receiving basin). It is assumed that implied return flows include both aquifer recharge and return surface flows. If so, then net use (the difference between net withdrawals and return flows) comprises the sum of consumptive use and nonbeneficial use (irrecoverable losses). Much of irrecoverable losses in 3-H are due to evaporation since average evaporation rates are three times average precipitation. Implied return flows have risen broadly in line with gross withdrawals and comprise a major potential source of water, in particular in the receiving basins (Hai and Huai). Between 1994 and 1998, they were in total equivalent to 25 percent of long-term renewable water resources, 39 percent of gross withdrawals and 31 percent of average runoff. Such return flows are not always readily accessible for use and are almost always of inferior water quality given low incidence of waste water treatment for both 14 China: Water Resources and Their Use (ESCAP, United Nations, 1997). Produced by NIHWR. 24 Chapter 3. Water Resources and Issues municipal and industrial waste (refer to Section F). Despite potential health risks of utilizing contaminated wastewater, farmers make use of return flows wherever possible for irrigation. Not only is there extensive reuse of urban wastewater but drainage water is diverted wherever feasible. As a result, rivers often dry up for extended periods. Moreover, reuse itself generates further return flows so that these estimates may understate their full potential contribution. TABLE 3.4: WITHDRAWALS, CONSUMPTIVE USE, AND RETURN FLOWS (Bcm) Hai-Luan Huai Yellow Total 1. Gross Withdrawals 1994 34.2 49.6 54.1 137.9 (GW) 1995 34.9 46.1 53.9 135.0 1996 35.8 47.9 55.3 139.0 1997 37.6 55.1 54.1 152.2 1998 37.2 52.1 58.5 147.8 2. Net Transfers 1994 5.7 12.2 -9.1 8.8 (NT) 1995 5.2 12.7 -8.9 9.0 1996 5.5 8.5 -9.0 5.0 1997 5.6 9.6 -9.2 6.0 1998 5.1 4.4 -8.5 1.0 3. Net Withdrawals (NW) 1994 39.9 61.7 45.0 140.1 (NW= GW + NT) 1995 40.2 58.8 45.0 144.0 1996 41.3 56.4 46.3 144.0 1997 43.2 65.7 49.9 158.2 1998 42.3 56.7 50.0 148.8 4. Net Use (NU) 1994 28.1 42.5 21.3 91.9 (= Consumptive Use + 1995 27.2 36.2 22.0 85.4 Nonbeneficial Uses) 1996 28.1 34.4 22.6 85.1 (= NW ­ IRF) 1997 29.1 41.3 22.9 93.3 1998 28.1 34.7 22.0 84.8 5. Implied Return Flows 1994 11.8 19.3 23.7 54.8 (IRF) 1995 13.0 22.6 23.0 58.6 1996 13.2 22.0 23.7 58.9 1997 14.1 23.8 27.0 64.9 1998 14.2 21.8 28.0 64.0 6. Net use/Net withdrawals 1994 70% 69% 47% 62% 1995 68% 62% 49% 59% 1996 68% 61% 49% 59% 1997 67% 63% 46% 59% 1998 66% 61% 44% 57% Source: IWHR Water Bulletins. For the 3-H region as a whole, consumptive use accounts for 59 percent of withdrawals (65 percent for Hai, 38 percent for Huai and 34 percent for Yellow), with relatively large differences among basins and across sectors. It is not clear why the ratios for domestic use are so high since, worldwide, they are typically much lower, e.g., 10-15 percent. We speculate that this is due to a combination of limited wastewater collection, and the fact that a significant part of urban consumption has been used to irrigate vegetable gardens since prices have been low. In contrast, irrigation typically utilizes a relatively high proportion of withdrawals in evapotranspiration and unrecoverable seepage losses. The low ratios for agricultural use in the Yellow basin presumably reflect the large inefficient irrigation systems in the middle and upper reaches while the high figures for the Hai basin may reflect water constraints and the spread of modernized irrigation techniques. Low ratios for industry are not atypical but highlight the potential for increased recycling. Chapter 3. Water Resources and Issues 25 (iii) Current Water Shortage Estimates Estimates of current (and future) water shortages are produced by the 3-H Modeling System (3-HMS) as described in Volume 3, Annex 3.1. That system of basin model is solvable for 1997, the latest year for which actual data are available, and future years from 2000 to 2050. It provides estimates of shortages in the priority sectors (urban and rural "life," and industry), and agriculture, which is primarily irrigation. Because the 1997 solutions are keyed to 1997 data, they do not provide a good estimate of the current water shortages for two reasons. First, 1997 was an unusually dry year in terms of surface water runoff (about P95 in Hai and Yellow, and P75 in Huai). Second, withdrawals of groundwater in 1997, as in most of the past decade, far exceeded long-term sustainable levels as described earlier in this chapter. Because of these overextractions of groundwater, the 3-HMS does not show any priority sector shortages in 1997.15 The models did show substantial shortages in irrigation in 1997, as should be expected: the models compute irrigation demand based on rainfall probability, cropping pattern, and full crop water requirements for that rainfall probability, and attempt to meet as much of that demand as possible, after meeting priority sector demands. The 2000 version of the 3-HMS provides a TABLE 3.5: CURRENT (2000) SHORTAGES method of estimating current shortages. This UNDER DIFFERENT RUNOFF PROBABILITIES version restricts groundwater withdrawals to (Bcm) estimates of long-term sustainable levels, and can be solved for four different surface water runoff Basin Priority Irrigation under: Sectorsa P25 P50 P75 P95 probabilities. The results are summarized in Table Hai 2.31 4.95 9.45 14.97 22.31 3.5 and shown in Volume 3(Annex 4.1; Table A4.1- Huai 2.24 0.17 1.70 7.99 28.65 1) Yellow 1.80 6.65 7.41 9.50 11.02 3-H Total 6.35 11.77 18.56 32.46 61.98 With groundwater restricted, priority aPriority shortages are the same for all runoff probabilities. shortages appear, mainly in Beijing, but also in the lower reach of the Yellow (regions IV-7A--Henan-- and IV-7B--Shandong). These shortages are invariant with respect to surface water runoff because its use has been restricted due to high pollution content. In the absence of such restrictions, sufficient water would be available to meet all priority demands. Irrigation shortages are highly dependent on surface water runoff, which varies substantially over the probabilities.16 Under the wettest scenario, P25, there are about 11.77 Bcm in irrigation shortages in total, of which about 4.95 Bcm are in the southern Hai, and about 6.65 Bcm in the middle reaches of the Yellow. There are negligible irrigation shortages in the Huai basin. Under the median runoff scenario, P50, irrigation shortages appear throughout the Hai (except region II-1, the Luanhe basin) and amount to about 9.45 Bcm in total. Huai shortages of 1.70 Bcm are confined to region III-5, the area around Nansi Lake, which is one of the areas targeted for the South-North transfer Eastern Route. Shortages in the Yellow increase to about 7.41 Bcm, again concentrated in the middle reaches. The most severely short region is IV-5B, which is mostly that part of Shanxi province lying within the Yellow basin. Under P75 runoff, irrigation shortages nearly double to about 32.46 Bcm, with the same regions affected, albeit much 15 Because the 1997 solution of the 3-HMS is mainly a model validation exercise, the appearance of priority sector shortages would in fact be evidence that the models failed to replicate the actual situation. 16 Irrigation demands are also inversely related to surface water runoff because the latter is correlated with effective rainfall. Thus the lower the runoff, the higher the irrigation demands since effective rainfall is also lower. 26 Chapter 3. Water Resources and Issues more severely. Under P95, 3-H total shortages amount to 61.98 Bcm, 22.31 of which is in the Hai, and 11.02 in the Yellow. Very large shortages appear in the Huai, particularly in regions III-2 and III-5 (see Volume 3, Annex 3.2, Table A3.2-2). Given that the Chinese water sector authorities plan for P75 water availability, it is well to question why shortages appear in the P75 simulations. Table 3.6 looks at the data in more detail. The first answer is that not all plans have been TABLE 3.6: 2000 IRRIGATION DEMAND AND SUPPLY UNDER P75 RUNOFF realized. As described Hai (II) Huai (III) Yellow (IV) TOTAL earlier, there has been Demands (Bcm) 36.51 54.36 43.32 134.19 substantial slippage in Supplies (Bcm) 22.65 44.87 34.67 102.19 the completion of water Shortages (Bcm) 13.86 9.49 8.65 32.00 sector projects, particu- % Shortage 38% 17% 20% 24% larly those affecting Maximum Grain Production (million tons) 47.21 62.6 30.85 140.66 irrigation. Second, it is Grain Production (million tons) 37.31 56.51 27.51 121.33 likely that the irrigation % Shortfall 21.0% 9.7% 10.8% 13.7% demands used in the 3-HMS are higher than % EFIA* Partially irrigated 70.0% 20.0% 26.0% 38.0% those used by Chinese % EFIA Rainfed 15.0% 7.0% 14.0% 11.0% Note: EFIA: Effective Irrigation Area. planners. We have estimated crop water requirements at maximum production. In practice, in China, full production is seldom attained, and it is probable that some degree of crop stress is assumed. Third, water sector projects tend to be evaluated in isolation, without full regard to the basin-level water supply capability. Each of these reasons is probably valid to a greater or lesser extent. From the table, it is seen that the 24 percent irrigation water shortage led to a relatively lower decline in grain production of 13.7 percent. This is because the models (and presumably the Chinese farmers) react to water shortages in a manner designed to minimize the economic impact. Those crops with the lowest marginal returns to irrigation water are stressed (by switching from "full" to "partial" irrigation techniques, and those crops that can produce a profitable yield without any supplemental irrigation are allowed to be rainfed. Although not reported in the table, the higher-valued vegetable and rice crops tend to receive full irrigation supplies even under conditions of shortage. Also shown in the table is the percentage of irrigated cropped area that only receives partial irrigation (41 percent in total) and that receives no irrigation (15 percent in total). The crops receiving full irrigation form only 45 percent of the total. The differences among basins are sharp. Irrigation in the Hai is most affected, with the 38 percent shortage leading to 70 percent of irrigated cropped area being stressed, and 15 percent relegated to rainfed. This level of water shortage leads to grain production 21 percent less than obtainable with full water supplies. Next in line of severity of irrigation water shortages is the Yellow, where water supplies are 20 percent short, and grain production has been reduced by about 11 percent. The Huai, which normally has plentiful rainfall in most of its area, is least affected by shortage: 17 percent water shortage, and less than 10 percent reduction in grain output. Table 3.7 shows the effects of different levels of shortage, as measured by runoff probabilities, on grain production. The column "Maximum" is that which would be obtained, under the assumptions of the model, if full water were supplied to every crop in every region. Under P25 runoff, the difference is only about 4 percent in total, mainly because P25 irrigation requirements are relatively small. Huai is not affected at all, but Hai and Yellow do show losses. Under P50, Huai suffers little, but the losses in the others, particularly Hai, are large. Under P75 and P95, the losses are significant in all basins, amounting to a reduction of grain production of 13.7 percent and 19 percent respectively. Chapter 3. Water Resources and Issues 27 TABLE 3.7: GRAIN PRODUCTION FOR DIFFERENT RUNOFF Table 3.8 shows water supplies PROBABILITIES, 2000 by sector for the various probabilities (million tons) under the 2000 solutions. Note the priority sectors do not vary with runoff. Maximum P25 P50 P75 P95 Hai 47.21 43.95 41.32 37.31 35.24 This is because they have first call of Huai 62.60 62.60 61.50 56.51 51.52 both surface and groundwater, and there Yellow 30.85 28.26 28.02 27.51 27.22 is always enough from these sources to Total 140.66 134.81 130.84 121.33 113.98 meet priority demands--unless surface Percentage loss -4.2% -7.0% -13.7% -19.0% water is too polluted. Livestock is almost always fully supplied, except for a small shortage in Huai under P95. FPF is also always fully supplied in Hai and Yellow, but does show shortages in Huai. As expected, irrigation suffers the brunt of water shortages. TABLE 3.8: WATER SUPPLIES TO SECTORS , 2000, BY RUNOFF PROBABILITY (Bcm) Urban Urban Rural Rural Irrigation Livestock FPF Total Life Industry Life Industry Hai P25 2.70 4.72 1.85 1.49 25.54 0.51 1.87 38.68 P50 2.70 4.72 1.85 1.49 23.85 0.51 1.87 36.99 P75 2.70 4.72 1.85 1.49 20.79 0.51 1.87 33.93 P95 2.70 4.72 1.85 1.49 18.85 0.51 1.87 31.99 Huai P25 2.52 8.64 2.40 2.28 37.69 1.08 3.70 58.31 P50 2.52 8.64 2.40 2.28 41.15 1.08 3.62 61.69 P75 2.52 8.64 2.40 2.28 41.57 1.08 3.31 61.80 P95 2.52 8.64 2.40 2.28 42.09 1.02 2.23 61.18 Yellow P25 1.61 5.65 1.05 0.84 31.84 0.54 1.54 43.06 P50 1.61 5.65 1.05 0.84 32.53 0.54 1.58 43.80 P75 1.61 5.65 1.05 0.84 33.10 0.54 1.58 44.37 P95 1.61 5.65 1.05 0.84 34.05 0.54 1.58 45.32 3-H Total P25 6.83 19.01 5.30 4.61 95.07 2.12 7.11 140.05 P50 6.83 19.01 5.30 4.61 97.53 2.13 7.07 142.48 P75 6.83 19.01 5.30 4.61 95.46 2.13 6.76 140.10 P95 6.83 19.01 5.30 4.61 94.99 2.07 5.68 138.49 The impacts of shortages on the economic value of water supply are shown in Table 3.9. These values are based on the following values per cubic meter of water supplied: urban and rural life, 3.0; urban industry, 6.0; rural industry, 4.0; livestock, 2.0; fishery, pasture and forestry (FPF), 1.5 and environment, 1.5. The values for irrigation water are determined endogenously depending on yield, but generally range from Y 0.5/m3 to Y 1.5/m3. Under the hypothetical "no shortage" case, the economic value of water consumption is about Y 324 billion, of which 32 percent is generated in Hai, 44 percent in Huai, and 23 percent in the Yellow. As shortages increase, Hai's percentage drops slightly to 30 percent because it has a relatively greater reliance on irrigation because of lower rainfall. The Yellow's share increases marginally, both because of relatively more rainfall than Hai, and because of the large storage facilities on its main stem. As the probabilities increase (and surface water runoff and rainfall decline) the economic value of water in each region and in total declines, but not at rates which might be expected. This is because agriculture, as the residual user, has the lowest economic returns. Even when we compare the "wet" scenario of P25 to the "very dry" P95, the difference in economic value is only 6 percent. 28 Chapter 3. Water Resources and Issues TABLE 3.9: ECONOMIC VALUE OF THE 2000 SOLUTIONS (billion Yuan) Hai Huai Yellow Total % 1. No Shortages Urban Life 8.70 7.56 4.86 21.12 7 Urban Industry 34.06 51.84 34.81 120.71 37 Rural Life 5.53 7.20 3.14 15.87 5 Rural Industry 6.00 9.12 3.27 18.39 6 Irrigation 46.15 60.43 26.62 133.20 41 Livestock 1.01 2.16 1.06 4.23 1 FPF 2.80 5.70 2.38 10.88 3 Total 104.25 144.01 76.14 324.40 100 % 32% 44% 23% 100% 2. Under P25 Urban Industry 28.36 51.84 33.86 114.06 36 Rural Life 5.53 7.20 3.14 15.87 5 Rural Industry 6.00 9.12 3.27 18.39 6 Irrigation 43.76 60.43 25.13 129.32 41 Livestock 1.01 2.16 1.06 4.23 1 FPF 2.80 5.55 2.30 10.65 3 Total 95.59 143.86 73.61 313.06 100 % 31% 46% 24% 100% 3. Under P50 Urban Life 8.13 7.56 4.86 20.55 7 Urban Industry 28.36 51.84 33.86 114.06 37 Rural Life 5.53 7.20 3.14 15.87 5 Rural Industry 6.00 9.12 3.27 18.39 6 Irrigation 41.94 59.67 24.92 126.53 41 Livestock 1.01 2.16 1.06 4.23 1 FPF 2.80 5.43 2.38 10.61 3 Total 93.76 142.98 73.49 310.23 100 % 30% 46% 24% 100% 4. Under P75 Urban Life 8.13 7.56 4.86 20.55 7 Urban Industry 28.36 51.84 33.86 114.06 38 Rural Life 5.53 7.20 3.14 15.87 5 Rural Industry 6.00 9.12 3.27 18.39 6 Irrigation 38.95 55.65 24.59 119.19 39 Livestock 1.01 2.16 1.06 4.23 1 FPF 2.80 4.97 2.38 10.15 3 Total 90.78 138.49 73.16 302.43 100 % 30% 46% 24% 100% 5. Under P95 Urban Life 8.13 7.56 4.86 20.55 7 Urban Industry 28.36 51.84 33.86 114.06 39 Rural Life 5.53 7.20 3.14 15.87 5 Rural Industry 6.00 9.12 3.27 18.39 6 Irrigation 35.65 51.97 24.37 111.99 38 Livestock 1.01 2.03 1.06 4.10 1 FPF 2.80 3.33 2.38 8.51 3 Total 87.48 133.06 72.94 293.48 100 % 30% 45% 25% 100% 6. Economic Cost of Shortages by Runoff Probability P25 8.66 0.15 2.53 11.34 P50 10.49 1.03 2.65 14.17 P75 13.47 5.52 2.98 21.97 P95 16.77 10.95 3.20 30.92 Chapter 3. Water Resources and Issues 29 Despite its lower average and marginal returns, agriculture (including livestock and FPF) produces 41 percent of economic value in P25, down to 38 percent in P95. Close to agriculture in the drier scenarios, and exceeding it in dry years, is urban industry. In total, the two urban sectors account for between 43 percent and 46 percent of total economic value, and this percentage will go up over time. The water supplies and economic values generated by the 3-HMS permit the calculation of average economic values of water, as shown in Table 3.10.17 Except in P25, average values of water in 3-H are about Y2.2/m3. They are generally highest in Hai, and lowest in Yellow--a function of the degree of urbanization. TABLE 3.10: AVERAGE ECONOMIC VALUE OF WATER IN THE 2000 SOLUTIONS (Billion yuan) Hai Huai Yellow Total 1. Total Water Supplied No shortage 55.31 85.43 55.81 196.55 P25 38.68 58.31 43.06 140.05 P50 36.99 61.69 43.80 142.48 P75 33.93 61.80 44.37 140.10 P95 31.99 61.18 45.32 138.49 2. Total Economic Value of Water Supplied No shortage 104.25 144.01 76.14 324.40 P25 95.59 143.86 73.61 313.06 P50 93.76 142.98 73.49 310.23 P75 90.78 138.49 73.16 302.43 P95 87.48 133.06 72.94 293.48 3. Average Economic Value (Yuan/m3) P25 1.88 1.69 1.36 1.65 P50 2.47 2.24 1.65 2.16 P75 2.53 2.32 1.68 2.18 P95 2.68 2.47 1.71 2.24 Finally, the 3-HMS produces marginal values of water for each region and runoff probability, as shown in Table 3.11.18 Zeroes imply a unconstraining water situation. The values for Beijing, 6.0 in all cases, depend on the fact that there are shortages in urban industrial water supply. The values of 3.0 in IV-7A and IV-7B derive from a shortage of rural industrial water in these areas of the lower Yellow river. The remaining values, ranging from a low of Y 0.65/m3 to Y 1.75 are marginal values in irrigation. They derive a host of factors within the model, including the cropping patterns, irrigated yields, costs of production, and relative weight of irrigation to total crop water requirement. (iv) Dry Mouths Of increasing concern is the fact that outflows to the sea have been dropping sharply, particularly in the Hai and Yellow. There has been a noticeable decline in the flows since about 1980, although year- to-year variations sometimes mask the trend. Concomitant environmental effects that have been observed 17 Because other things (mainly rainfall) are not the same across runoff probabilities, the data in this table cannot produce meaningful marginal values of water. 18 These values are the shadow prices on the annual groundwater constraints because groundwater, unlike other water sources, can be used by all sectors. 30 Chapter 3. Water Resources and Issues TABLE 3.11: MARGINAL VALUES OF WATER include destruction of coastal fish populations, FROM 2000 SOLUTIONS reduction of estuarial flora, seawater intrusion, and a (Yuan/m3) buildup of sediment in alluvial and manmade channels. The year 1997 served as a wakeup call as outflows in P25 P50 P75 P95 Hai both the Hai and Yellow dropped to record lows of just II-1 -0- -0- -0- -0- 1.4 Bcm and 1.5 Bcm respectively for the entire year. II-2A -0- 0.73 0.69 0.67 During that year, the Yellow was dry from Lijin (about Beijing 6.00 6.00 6.00 6.00 70 km from the sea) to the Bohai Sea for 182 days. At Tianjin -0- 0.70 0.68 0.67 times, the river was completely dry from Shunkou to the II-2B -0- 0.73 0.69 0.72 II-3A -0- 0.69 0.68 0.68 sea, a distance of 450 km. II-3B -0- 0.65 0.70 0.68 II-3C -0- 0.70 0.68 0.67 That the situation has changed drastically from II-3D -0- 0.65 0.70 0.67 the historic record is clear from the results of analysis II-3E -0- 0.65 0.70 0.67 conducted for the appraisal of the Xiaolangdi reservoir. II-3F 0.84 0.71 0.70 0.73 A monthly simulation model of the Yellow River, run II-4 0.68 0.79 0.67 0.58 over 70 years of runoff data under conditions reflecting Huai projected water demand (desired withdrawals) in 2000, III-1 -0- -0- -0- 2.28 found only 13 months out of 910 in which the river III-2 -0- -0- 1.56 1.74 went dry in the last reach, from Lijin to the mouth.19 III-3 -0- -0- -0- 1.75 This total was almost reached in the last two years III-4 -0- -0- -0- -0- III-5 1.50 1.63 1.68 1.58 alone. III-6 -0- -0- -0- -0- III-7 -0- -0- -0- 1.74 In addition to environmental degradation, dry river mouths cause economic damage. Approximately Yellow 75 million people in Henan, Shandong, and Hebei IV-2 -0- -0- -0- -0- provinces currently depend on flows in the lower reach IV-3A -0- 1.07 1.04 1.40 IV-3B -0- 1.04 1.20 1.25 of the Yellow River for much of their water. A dry river IV-4 1.20 1.31 1.29 1.37 means no diversions for irrigation and rural life, and IV-5A -0- -0- -0- 1.00 that cities in the area must rely on groundwater. Low IV-5B 1.38 1.35 1.36 1.40 flows also mean that silt deposition increases in the IV-6 1.50 1.43 1.45 1.53 IV-7A 3.00 3.00 3.00 3.00 canals and rivers thereby reducing flood protection.20 IV-7B 3.00 3.00 3.00 3.00 The Yellow River Conservation Commission (YRCC) made a careful analysis of water required to flush silt from the lower reach, and concluded that, on average, flows to the sea of 20-24 Bcm is needed. Not since 1994 has this much been available; the average annual flow to the sea since then has been 10.6 Bcm. The impacts were clearly seen last year. In July 1996, a minor 7,000 cubic meters per second (m3/s) flood caused a stage (river level) equal to what had previously been estimated by YRCC as a 22,000 m3/s (1 in 60 years) flood at Huayankou, the major gauging station on the Yellow near Zhengzhou City. 19 "Economics of Xiaolangdi Multipurpose Reservoir" (working paper, Xiaolangdi Appraisal Mission, World Bank, 1995). The model also showed that the dam could be operated such that the river never dried up, given the same input data. 20 Low flows also imply that less sediments are brought down from the mountains. NIHWR, 1999 estimate that in the Yellow River, annual flow has reduced from 48.1 Bcm in the 1950s to 14.9 Bcm in the 1990s (69 percent reduction) but at the same time sedimentation has reduced from 1.34 billion tons to 0.42 billion tons (69 percent reduction). Thus threats to flood control from low flows may also be influenced locally by differences in river/canal morphology. Chapter 3. Water Resources and Issues 31 (v) Water Conflicts Instream Conflicts. Even in the absence of water shortages, competing demands can lead to conflicts among different economic objectives and population groups. Most can be characterized by instream demands versus offstream demands. Instream demands, e.g. hydropower generation and navigation, can be at odds with offstream demands because they may alter the pattern of seasonal flows such as those required by irrigation. If reservoirs are operated to maximize hydroelectric output, they will be kept as full as possible year-round, and release water only when needed by the electric power industry. But the irrigation sector requires deliveries to peak in November and April-June, when rainfall is low but winter wheat and the summer crops require additional water. Flood control considerations imply that reservoirs be kept virtually empty at the onset, and through the flood season (generally June-October), objectives which conflict both with power and irrigation. Urban water supply requirements would desire that reservoirs deliver guaranteed volumes throughout the year. Navigation needs imply that minimum flows be met throughout the year, and throughout the length of the river. Most, but not all, large reservoirs in 3-H are multipurpose in nature. They are operated in a manner that compromises competing objectives, but maximizes none. An exception is Longyangxia, located in the far upper reach of the Yellow River. At 24.7 Bcm gross storage, it is large by any standard. Its live storage can contain about one third of the entire average runoff of the Yellow. It is owned by the Ministry of Energy, and operated by them with some input from YRCC. It is operated mainly for power generation (i.e., it is kept as full as possible year-round). Thus it does not contribute to the objectives of water supply for irrigation and keeping the river flowing to the mouth. It does serve an additional purpose, one to which YRCC agrees: long-term drought insurance. A severe 11-year drought in the 1920s and 1930s occurred in the Yellow Basin, and planners greatly fear its recurrence. Presumably, Longyangxia's massive volume of stored water could be released to alleviate the hardship from such an event. Many medium- and small-size reservoirs are operated for a single purpose, whether it be power, local water supply, or flood control. Many are owned and operated by provinces, counties, or other local entities, each with its own objectives and concerns. Where several such dams are located on same stretch of river, it is easy to see how the operation of any one can conflict with the needs of the others, to the detriment of the local and downstream populations. When runoff decreases during dry years, withdrawals for irrigation increase and diminished flows downstream reduce silt flushing and flood protection. Ambient water quality also greatly suffers as pollution loads are maintained despite less water to flush rivers. Water Shortage Conflicts. According to the landmark Irrigation and Power Planning Design Institute (IPPDI) study, water shortages21 first appeared in parts of 3-H in the dry periods of 1971-72 and 1980-83.22 The Hai Basin was most affected, in particular the cities of Tianjin and Beijing. A 1982 survey reported that, of 236 cities, 180 had "run short of water supply," and 40 of them, mostly in the 3-H, "were utmost in short of water."23 Most likely, these shortages were due to inadequate supply facilities that failed when runoff was low. Table 1.3 in Chapter 1E shows similar results of a recent study by MWR on 21 We use the term "shortages" to refer to the gap between desired withdrawals (gross consumption) and supply at prevailing water prices. Until recently, water prices, particularly for farmers, were zero or very low, and sometimes negative where pumping costs were subsidized. 22 The IPPDI and IWHR studies referred to are referenced and described in more detail in Chapter 4. 23 China's Water Resources Development, p. 139. 32 Chapter 3. Water Resources and Issues water-short cities. Since the 1980s, a combination of surface water transfer projects (such as the Luan-Jin to supply Tianjin from the Luan River) and increased reliance on groundwater by cities partially alleviated the urban water supply problem--at least for a few years. The IPPDI study, produced in the early 1980s based on 1980 data, did not note a crisis in aggregate water supply, but they were concerned that existing volumes of runoff and inadequate storage and conveyance systems could lead to increased shortages in irrigation. They implicitly assumed that the then current supplies to urban and rural life, and industry, were adequate apart from occasional supply disruptions. They were most concerned that guaranteed supplies to irrigation were inadequate then, and would be increasingly so. They estimated that, if runoff in 1980 had been of a P75 level, irrigation plus rural life demands throughout 3-H would be 121.0 Bcm, compared to 113.7 withdrawn in that year for those purposes. They estimated shortages were more or less evenly distributed among the basins: Hai- Luan 2.6 Bcm, Huai 2.2 Bcm, and Yellow, 2.1 Bcm. IPPDI then forecasted irrigation demand for 2000. As in most subsequent such exercises, they projected irrigated area, cropping patterns, crop water requirements, and system efficiencies. Their result was about 129 Bcm for 3-H combined. Since 1998 withdrawals by irrigation was about 102 Bcm, the implied current shortage is about 27 Bcm, or 21 percent. The stated and practiced water allocation policy in China gives human needs top priority, followed by industrial requirements, with irrigation last. If shortages have appeared, they would have first shown up in irrigation. There have been a number of forecasts of irrigation demands. All are basically irrelevant, because all far exceed the supply available in any realistic scenario. One of the most comprehensive was done by IWHR based on 1993 data. IWHR did find shortages appearing in 1993 amounting to 14.6 Bcm, or about 12 percent of irrigation demands. Total "demand" was estimated at 154 Bcm, while supply was 139.4 Bcm. The results of these shortages are that much irrigated area often receives no water, particularly in dry years, and that most grain crops are grown under stress. In most years farmers cannot get the water they desire, and each year sees them losing more to competition from the urban sectors as well as rural industries. Shortages also appear in urban areas. Severe as they may be in cities like Taiyuan and Jinan, they are not the result of a shortage of aggregate water supply to the basins, but to management, allocation, and infrastructure deficiencies. Irrigation shortages have understandably led to intense competition among political entities--provinces, counties, irrigation districts. Entities situated in the upper or middle reaches generally get first call on runoff, to the chagrin of downstream entities. In an attempt to avoid conflicts among provinces within the Yellow River basin, YRCC devised, and the State Development Planning Commission (SDPC) sanctioned, an allocation plan that limits withdrawals by each province and ensures sufficient water for negotiated deliveries to the Hai and northern Huai basins, and the above-mentioned 20 Bcm to the sea. Not all upstream provinces adhere to the limit, and the result has been downstream shortages, particularly in Shandong, and the above- described environmental degradation of the lower reach channel and estuary. Numerous other localized examples could be mentioned. The phenomenon is not unique, and not confined to China. It is a natural result of a valuable economic resource being allocated in a nonoptimum manner at a very low price. Conflicts have also arisen between groups of farmers and urban and industrial entities. Cities relying on runoff for their water supplies sometimes find that the flow is inadequate or nonexistent because of the activities of upstream irrigators. In places this problem has been resolved peacefully and to the mutual benefit of all. Where farmers have been permitted to sell water (long prohibited in China), they Chapter 3. Water Resources and Issues 33 do so at a price presumably above the marginal returns they get from irrigation, but that price is willingly paid by cities or factories because it is lower than their alternatives. Unless such forms of water markets are sanctioned and promoted, intersectoral, interjurisdictional, and interpersonal conflicts can only worsen. In particular, farmers are most likely to feel discriminated against as their share of total withdrawals continue to decline. In 1980, irrigation accounted for 84 percent of total withdrawals in 3-H. By 1993 it had fallen to 75 percent, and in 1998, to 73 percent. C. FLOODS AND FLOOD CONTROL IN CHINA (i) Introduction A combination of climate and topography makes China prone to widespread, prolonged and devastating floods and Chinese people have a long history of struggle against flood disasters. While flooding event probabilities remain outside society's control, protection against damages can be enhanced. Unfortunately, this is no easy task in China due in part to the type of climate and topography and in part to the historical patterns of settlement in the plains and the extreme population density requiring extensive infrastructure. This chapter investigates climatic factors that cause major flooding events, describes the major historical floods in each basin and assesses resulting damages. Flood-producing storms are typically tropical thunderstorms producing high-intensity rainfall over relatively short durations in the south, fueled by the warm water mass of the Pacific Ocean (China Sea). Further north, storm activity is associated more with frontal systems. These can lead to longer-duration heavy rainfall on occasions when depressions from typhoon systems penetrate farther north. Landform plays an important role in the regional distribution of storms. Floods in the 3-H basins are caused by different combinations of factors. Severe floods are usually caused when the subtropical high-pressure ridge that moves across China from April to August slows or becomes stationary (e.g., the 1931 and 1954 floods in the Yangtze). Soil erosion and sedimentation also play an important role in floods. As the rivers descending from the steep mountainous areas bordering the vast floodplains enter the plains, they drop the heavier part of the sediment load (average 35 kg/m3) and in many cases cause the riverbed to rise above the surrounding land (most famously in the Yellow River). Most major rivers are now confined by dikes and are seldom breached. However, tributary flows and direct rainfall behind the dikes can still cause widespread and damaging floods. Ice floods occur when ice melts in the upper river sections before lower river sections. Damage caused by floods varies greatly depending on the type of flood and location of flooding. Flood types depend on location (soil erosion, mountains) and type of storm (time of the year and location and other climatic factors) as discussed above. In addition, flood protection structures such as dikes and detention basins play an important role in protecting key assets. Based on statistics collected from IWHR (1991-97) for this study, most damage from flooding in the 3-H occurs in Beijing, Tianjin, Hebei, Shandong, Henan, Jiangsu and Anhui. Other indicators of flooding include (a) areas damaged, (b) population affected, (c) deaths (see Volume 3, Annex 3.2, Figures A3.2-1 and A3.2-2). Table 3.12 shows major flood damages in the 3-H basins. It can be concluded that despite significant efforts in flood control in recent decades, unit value of damage for the 3-H basin and China in real terms has increased six times. 34 Chapter 3. Water Resources and Issues TABLE 3.12: FLOOD DAMAGE LOSSES IN THE MAIN PROVINCES OF 3-H BASINS Basin Province Comprehensive losses (yuan/mu, at current year prices) (or tributary basins) 1950-59 1960-69 1970-79 1980-89 Yellow Whole basin 1,500 3,600 6,000 9,000 Hai Henan Province 1,500 3,600 6,000 9,000 Jiangsu Province 1,350 2,250 6,000 10,500 Huai Henan Province 1,500 3,600 6,000 12,000 Anhui province 2,250 - - 9,450 Yishusi Basin 1,350 2,250 6,000 10,500 3-H Basins average 1,538 3,300 6,000 9,538 Whole Country (yuan/ha): 2,190 3,255 5,880 12,120 Another type of damage is caused by drainage and waterlogging. For example, two-thirds of the Huai basin is made up of plains, lowlands and lakes. Extensive areas near the coast have very poor drainage. The drainage network of the 3-H basins in the plains is very complex, especially when additional engineering works are taken into account. Significant areas in the alluvial plains of the 3-H basins are prone to waterlogging. Waterlogging is due to lack of drainage capacity and this can be a natural feature or caused by human activity or, as is often the case, a combination of both. In the alluvial plains areas of the 3-H, natural waterlogged areas were common in the lowlands, marshes and wetlands that no doubt used to exist but have been altered for many centuries to make way for growing population, cities and agricultural lands. These natural waterlogged areas used to act as buffer zones during high rainfall seasons and droughts and would have expanded and contracted depending on water levels, thereby regulating drainage and sedimentation. It is difficult to guess to what extent these would have been important in flood control. No doubt that given the scale of flood events in this region of China and the population and land use intensity, additional engineering-based flood control has been necessary. However, the impact of extensive alterations to natural drainage combined with interventions to numerous other aspects of environmental processes have led to difficult situations, especially during extreme weather conditions such as floods and droughts. For centuries now, the Chinese have been changing the natural landform of the plains in the 3-H basins, blocking and diverting rivers for irrigation and water supply, interrupting drainage patterns with entire cities, levees and dikes to gain protection from the devastation of flooding, encroaching on wetland areas and lakeshores by draining these areas for agricultural production, creating "lowlands" by overpumping groundwater, thus causing land subsidence beneath cities and rendering these areas prone to waterlogging. Thus not all waterlogging is the direct result of floods. Some waterlogging is related to land subsidence, especially in the cities, or related to irrigation and the use of "lowlands" for agriculture or flood control works that generally impede the drainage capacity of the plains. However, flooding itself is the major cause of waterlogging, especially in flood detention basins. Policies in the 1960s in the Huai basin for example actually promoted the removal of flood control works to improve drainage, thus lowering flood protection in favor of improved drainage. Areas prone to waterlogging in the Yellow basin include the irrigation areas of the Guanzhong Plains, the Hetao Plains, Tianran, Wenyan channels, the Jindi River area and the Fen River basin. Works to improve drainage include dredging of channels, pumping of water from lowlands, drilling well fields to lower water tables, unbedded pipes or mole drainage. Chapter 3. Water Resources and Issues 35 In the Huai basin, the plain areas remain at risk from waterlogging. Much of this risk stems from flood protection structures that impede drainage. Waves of different strategies have seen the removal of these structures and the installation of pumping stations, river training, construction of drainage channels, installation of mole drains and buried agricultural pipes. Similar strategies have been developed in the Hai basin to correct the damage caused by waterlogging. Between 1950 and 1990, the mean surface area prone to waterlogging for the Hai, Huai and Yellow represented 30, 51 and 9 percent, respectively. (ii) Flood Losses in Each Province There is a huge amount of data available in China but it is not always available in the format that allows for easy comparison. For instance data are collected at the city and prefecture levels and then summated to the provincial level. However, provinces do not sit neatly within catchment boundaries. For comparison at this strategic level, we have mostly used provincial data from those provinces that fall predominately within the 3-H boundaries. We have also used data in specific areas for indications of further details. The data that have been chosen in the Flood Annex to assess flood damage for each province is as follows: (a) total land area, (b) total economic loss, (c) economic loss per ha, (d) income of the province, (e) losses as a percentage of income, (f) loss of life, (g) houses destroyed. Selected data from the Annex are presented below based on eight-year data, from 1991 to 1998. Affected Land. Figure 3.1 shows the average area flooded and the percentage of cultivated land. It can be seen that Anhui Province has an average of over 20 percent of its cultivated land damaged annually and eight of the Provinces have more than 5 percent damaged. Of course in a severe flood a far higher percentage is damaged. FIGURE 3.1: PERCENT OF CULTIVATED AREA DAMAGED Percent of Cultivated Area Flooded 8000.0 25.0% 7000.0 20.0% 6000.0 5000.0 15.0% 1000) x Cult (hax1000) 4000.0 (ha Percent affected Area 10.0% 3000.0 2000.0 5.0% 1000.0 0.0 0.0% Beijing Tianjin Hebei Shanxi Anhui Jiangsui Henan Shaanxi Ningxia Neimenggu Shandong Province Total Economic Loss. It can be seen that generally the annual losses are in the range of Y20 billion but can be much higher in wet years. The plains area include Beijing, Tianjin, Hebei, Jiangsu, Anhui, Shandong and Henan. The mountain areas include Shanxi, Shaanxi, Gansu, Qinghai, Ningxia. Average Losses and Area Affected. The average losses and average area of damage have been combined in Figure 3.2 to show the combined effect of flood area and flood loss rate. No attempt has 36 Chapter 3. Water Resources and Issues been made to update the flood losses data to present values and so the average is likely to be an underestimation of the true average annual losses (also see Volume 3, Annex 3.2, Figure A3.2-1). This figure shows that the most flood-prone area is Anhui Province with a large area inundated and a high damage rate per hectare. The next worse areas are Jiangsu and Shandong Provinces. They are all on the floodplains and suffer flooding from both the Yellow River and Huai River. The figures for Anhui and Jiangsu Provinces are partially raised due to the floods in 1991 which caused massive damage in these two provinces. FIGURE 3.2: AVERAGE LOSSES(YUAN/HA) AND AREA AFFECTED (`000 HA) Average losses/Ha and Area Affected 14000 1200.0 12000 1000.0 10000 (1000Ha) 800.0 8000 Affected Yuan/Ha)( 600.0 area 6000 Losses 400.0 Average 4000 2000 200.0 0 0.0 Beijing Tianjin Hebei Shanxi Neimenggu Jiangsui Anhui Shandong Henan Shaanxi Ningxia Province Flood Losses as Compared to GDP. Comparison of the flood losses compared to GDP is instructive in understanding the impact of flooding. Figure 3.3 shows the GDP and the corresponding average percent losses. Again it can be seen that Anhui Province has a high level of flood damage with an average flood loss of nearly 3 percent of GDP. Neimenggu also has a high percentage of flood loss based on a small GDP. FIGURE 3.3: GDP AND PERCENT FLOOD LOSSES FOR PROVINCES GDP (1998 by Province and Percent Annual Losses 8000.0 3.50% 7000.0 3.00% 6000.0 2.50% 10^8) x 5000.0 2.00% GDP (Yuan 4000.0 Losses 1.50% 1998 3000.0 GDP 1.00% 2000.0 1000.0 0.50% 0.0 0.00% Beijing Tianjin Hebei Shanxi Anhui Jiangsui Henan Shaanxi Ningxia Neimenggu Shandong Province Loss of Life. In addition to economic and area indicators, the loss of life in a flood is a very serious consideration in deciding where flood management works should be constructed. The largest loss of life was in the Huai floods in 1991 in Anhui Province when 843 people lost their lives. In the average deaths from flooding for the provinces, again Anhui tops the list with nearly an average of 14 deaths per year per million population (see Volume 3, Annex 3.2, Figure A3.2-2). Chapter 3. Water Resources and Issues 37 Summary of Flood Impact TABLE 3.13: MOST FLOOD-AFFECTED PROVINCES Results. The above agricultural, economic and social indicators Criteria First Second Third Fourth Affected Land Anhui Jiangsu Shandong Mongolia identify the areas where the most Percent of land damaged Anhui Jiangsu Mongolia Shaanxi serious flood damages are occurring. Total Economic losses Anhui Hebei Jiangsu Shandong These data are summarized below in Losses per Ha Beijing Anhui Jiangsu Shanxi Table 3.13 where the four highest Percent of GDP losses Anhui Mongolia Hebei Shaanxi damage provinces in each criteria are Annual loss of life Anhui Jiangsu Shaanxi Shanxi Loss of life/million population Anhui Jiangsu Mongolia Beijing shown. Houses destroyed Anhui Hebei Jiangsu Mongolia Review of this list shows that the three worst provinces for flooding are in order Anhui, Jiangsu and Neimenggu and Hebei. However Neimenggu covers a large area outside the 3-H basin and the impact just in the 3-H basin would be much smaller than for the whole of Neimenggu. Therefore it can be stated that the damages, for just the 3-H basin, will not be as severe. The next ranked provinces that suffer significant damage are Shandong, Shaanxi and Shanxi. Beijing suffers large losses per hectare but the area affected is not large compared to the other provinces. Looking a little more closely, it can be seen that Anhui suffers the greatest loss in terms of affected area, economic loss and loss of life. The statistics for Anhui are inflated due to the 1991 flood in the Huai but nevertheless the flood losses in other years were also very significant. In summary, based on the concepts of risk assessment, the consequences of flood damage are most serious in Anhui, Jiangsu and Hebei Provinces. This is not surprising as the provinces are on the floodplain toward the bottom of the catchments and tend to act as detention basins due to limited flood capacity of outlets to the sea. It is not possible to conclude from statistical data presented whether flood damage is increasing or is static. Flood damage areas are fairly well documented but these depend on the types of storm and flood and many smaller catchments can produce very locally damaging floods. On average Jiangsu, Anhui, Shandong, Shanxi, Hebei and Beijing seem to incur the highest economic losses from flooding. It is therefore also difficult to conclude if past flood control strategies provide appropriate protection; however, there is no doubt that without previous flood control efforts, China would have been much worse off than it is now. Other damages result from waterlogging due to lack of drainage, which is a naturally occurring problem but exacerbated by manmade constructions and alterations to the landform. The question is, is this protection cost-effective and what opportunities are there (a) to develop a methodology to prioritize flood control projects so that key assets have the highest protection and (b) to augment flood protection with nonstructural measures. Current flood control standards are summarized in Chapter 5 along with recommendations pertaining to prioritization and the action plan. D. WATERFOR AGRICULTURE (i) Introduction Given that the population increased to 1.25 billion by 1998, increases in crop production have been a remarkable achievement brought about by economic reforms (particularly the Household Responsibility System), liberalization of commodity markets, increased irrigation and fertilizer use and a very effective agricultural research system. While the focus of the past two decades to expand output was remarkably successful, the lack of attention to quality has resulted in overproduction of low-quality 38 Chapter 3. Water Resources and Issues grains, cotton, etc. Over the next two decades the agricultural sector faces the task of expanding production and improving quality to meet the needs of a population expected to reach 1.45 billion by 2020 (1.6 billion by 2050). Food supplies will need to increase by 16 percent to provide only for the increased population. Rising incomes are also causing changes in dietary patterns and consumers are now demanding better quality products, outside of season. This is requiring adjustments from the agricultural sector to improve its responsiveness to domestic markets but also international markets, especially when China accesses WTO. (ii) Agricultural Output in the 3-H Basins Relative to National Output The contribution of the 3-H basins to national agricultural output is quite significant. The 3-H basins produce 35 to 37 percent of China's GDP and income and contain about 36 percent of the rural population and agricultural labor. Grain production increases in China and in the 3-H basins are shown in Table 3.14 while the output of the major crops in the 3-H basins relative to China are shown in Table 3.15. TABLE 3.14: GRAIN PRODUCTION INCREASES AND TABLE 3.15: OUTPUT OF MAJOR PRODUCTION GROWTH RATES, 1979-98 CROPS IN THE 3-H BASINS AS PERCENTAGE OF CHINA'S OUTPUT Production Increases (%) Yield Growth Rates (%) Crop National 3­H basins National 3­H basins Crop Percent Crop Percent Rice 31 67 1.92 2.13 Wheat 67 Corn 44 Wheat 96 117 3.10 3.41 Rice 14 Millet 72 Winter Wheat 90 113 1.98 2.43 Sorghum 28 Soybean 27 Corn 120 116 2.90 2.77 Rapeseed 20 Peanuts 65 Soybeans 97 51 2.63 2.75 Sesame 50 Sunflower 64 Rapeseed 247 207 1.46 1.78 Cotton 42 Peanuts 229 252 2.96 2.93 Cotton 66 16 2.11 2.60 The 3­H basin produces much of the nation's grain; it is clearly the nation's wheat basket and ranks second to the Northeast region in the production of corn; but is a relatively modest producer of rice. It is an important producer of oilseeds and cotton as well. While production of all grains (expect millet and sorghum) and oilseeds have increased substantially over the past decade, the proportions of crop output produced in the 3­H basins has altered only marginally, except for the proportion of cotton output which has declined dramatically (due primarily to large increases in Xinjiang). In the 3-H basins, the increases in yields have been achieved despite declining water supplies, pointing to other factors of production such as fertilizers, investment in technology and multiple cropping. However, increases in irrigation areas in China and 3-H are also partly responsible for increased production (see Volume 3, Annex 3.2, Figures A3.2-4 and A3.2-5). Volume 3, Annex 3.2, Figure A3.2-6 shows the changes in effective, actual and stable irrigation areas in the 3-H basins and China are almost negligible. The definition of the various irrigation areas in China is shown in Volume 3, Annex 3.2, Figure A3.2-7. In 1998, irrigation still accounted for 66 percent of total water use in the 3-H basins; however in the last decades reduced demands for agriculture have been recorded due to (a) water scarcity and (b) government policy to allocate water to industry and urban municipal uses. Volume 3, Annex 3.2, Table A3.2-2 shows this shift in allocation quite clearly for the period 1994-98 for the 3-H basins. In the next two sections we examine the importance of water for crop production in more detail. Chapter 3. Water Resources and Issues 39 (iii) Importance of Water for Agricultural Production in China and the 3-H Basins Based on historical climatic data and agricultural experience, the territory of China can be divided into a perennial irrigation zone, unsteady irrigation zone, and a supplementary irrigation zone (Table 3.16). In the perennial irrigation zone, annual precipitation is less than 400 millimeters (mm) covering northwestern inland and partial region of the middle reaches of the Huang river. The irrigation requirement index (IRI--the percentage of the irrigated water volume accounting for the crop consumptive uses) is generally over 50-60 percent because the annual precipitation and its seasonal distribution cannot meet the demand for normal growing crops in this zone. TABLE 3.16: THECHARACTERISTICS OF PRECIPITATION FOR THREE IRRIGATION ZONES IN CHINA Irrigation Regions Location of Annual Precipitation in different periods (mm) zones rainfall precipitation from Jun from Mar from Oct stations (mm) to Sep to May to Feb Perennial Northwest China inland Jiuquan 84 56 18 10 irrigation zone and the middle reach of Yinchuan 202 146 36 20 Yellow River Unsteady Huang-Huai-Hai Plain Dezhou 573 446 73 54 irrigation zone Northeast China Huaiyang 879 514 203 162 Harbin 559 431 75 53 Shenyang 702 509 110 83 Supplementary Middle and lower reaches Yichang 1,145 509 286 186 irrigation zone of Yangtze River, Pearl Guangzhou 1,648 902 508 238 and Minjiang River, Yibin 1,169 777 206 186 partial southwest China In dry years, the IRI for the 3-H basins might be as high as 70-80 percent but decrease to about 30 percent during wet years. However for winter wheat, the IRI is stable at around 50 percent and this is similar for paddy in northeast China. Although rainfall is abundant, the paddy fields IRI is still between 30 to 60 percent owing to the uneven nature of the rainfall distribution. Upland crops require irrigation in dry years when their IRI ranges between 10-30 percent but require no irrigation in wet years. The drainage control requirements are generally higher in this zone than in the unsteady irrigation zone and the drainage modulus is between 20 to 50 mm. While the irrigation requirements as described above for different regions give a fairly good picture of the water requirements for agriculture, it is more difficult to estimate the impact of lower water availability on crop production mainly due to incomplete data sets. As part of this study, provincial production data were mapped into the water regions and disaggregated into irrigated and unirrigated (rainfed) data subsets. This delineated 3­H basins data and permitted 3­H basins crop production and income to be estimated and related to basin water use. While crop yield data can be estimated for the subbasins, and time series data are available for rainfall in the various basins and subbasins, time series data for irrigation water use is lacking. This makes it difficult to accurately estimate the impact of water deficits on future crop production. The 1997 rainfall, irrigation and crop yield data can be used as a benchmark for assessing future crop yields, but the uncommonly dry conditions of that year--particularly in the Hai and Huang basins--makes interpretation and future projections quite difficult as crop yields were abnormally low. Doubtlessly factors other than reduced water supplies (e.g. temperature) contributed to the low crop yields, but the low rainfall and general lack of water supplies were major contributors to reduced 40 Chapter 3. Water Resources and Issues yields. Yields of the major summer grain crops, except fully irrigated rice, were 15 percent below long- term trends--the largest deviation from yield trends during the reform period. The drought was particularly devastating to yields of (solely) rainfed crops such as millet and sorghum, which were 25 to 30 percent below long-term trends. Furthermore, the drought contributed to the declines in autumn- planted crops that were harvested in 1998--rapeseed and wheat yields were 18 and 6 percent below trend, respectively. Table 3.17 illustrates the importance of irrigation water and the impact of reduced rainfall on crop yields in 1997/98. Normalized production refers to the statistical estimation of yield trends and the application of those yield coefficients to areas planted. The derivation of yield growth coefficients normalizes all factors of production and implicitly assumes a consistent growth rate in their use/ application, and includes technology, pest control, fertilizer and other input use (including water). Thus if there has been a consistent decline in water use (not just a one-year drought), that impact is factored into the yield trend. TABLE 3.17: NORMALIZED, ACTUAL, AND POTENTIAL PRODUCTION, 3­H BASINS, 1997 (`000 tons) Crop Normalized Actual Difference (Impact No Irrigation Difference (Impact Production Production of drought) Productiona of no Irrigation) Rice 26,795 26,795 0 0 -26,795 Wheat 79,270 74,387 -4,883 52,175 -22,212 Corn 53,349 44,587 -8,762 35,463 -9,124 Soybeans 4,850 4,114 -736 4,666 552 Tubers 11,913 10,209 -1,704 8,636 -1,573 Peanuts 7,081 6,127 -954 3,959 -2,168 Rapeseed 2,065 1,692 -373 1,424 -268 Cotton 1,777 1,904 127 1,424 -480 Sesame 283 261 -22 261 0 Millet 2,248 1,687 -561 1,687 0 Sorghum 1,367 1,043 -324 1,043 0 a "No-irrigation production" was estimated by assuming the pattern of rainfed crop areas prevailing in 1997 would apply to total cultivated area including those currently irrigated and multiplying those areas by estimated yields of rainfed crops. The impact of the drought (reduced rainfall and associated reduction in irrigation supplies) is the difference between normalized and actual production. This indicates that cereal grain production was reduced by about 14.5 million tons, oilseeds (including soybeans) by 2.0 million tons, and tubers by 1.7 million tons. Thus the drought marginally impacted on food security. The total reduction in gross value of farm crops (not net income) was about Y 20 billion. The impact of the irrigation water supplied (113.3 Bcm) can be estimated by comparing the actual production with production estimates based on rainfed yields--which would eliminate all rice production. Had production relied solely on rainfall, cereal production would have been 58.1 million tons less than actually produced (a reduction of 45 percent); oilseeds 1.9 million tons less and tubers 1.5 million tons less. And gross farm value would have been reduced by a further Y 77 billion. In terms of food security, the 58 million ton reduction in cereal production represents 12 percent of national production (in 1997). Clearly, supplemental irrigation water is very important to the cereal and agricultural economy of the 3­H basins. Of course, the economy would not actually face such extreme situation as certainly not all of the irrigation water would be diverted to alternative uses; diversions that occur will be gradual with very modest (about 1 percent) declines and annual production impacts. Given the rate of productivity growth of land and water over the past two decades, with essentially constant supplies of land and water, further marginal declines in irrigation Chapter 3. Water Resources and Issues 41 supplies would unlikely reverse the production trend--assuming continued on-farm investment in water saving technology and continued public investments in agricultural research and technology transfer. It is significant to note that according to Table 3.18, 83 percent irrigated land from groundwater sources are in the 3-H basins while irrigated land from surface water in the 3-H basin accounts for only about one third of national irrigation area. Thus groundwater plays a much more critical role in irrigation in the 3-H basins compared to other irrigation areas in the rest of China. This is discussed further in TABLE 3.18: GROUNDWATER AND SURFACE WATER IRRIGATION AREA (`000 ha) Province 1989 1990 1991* 1992 1993 1994 1995 1996 1997 Groundwater Beijing 257 237 247 256 253 260 262 266 264 Tianjin 131 131 157 182 182 183 186 185 189 Hebei 3,161 3,213 3,298 3,382 3,408 3,460 3,526 3,618 3,690 Jiangsu 933 790 841 891 849 817 816 795 801 Anhui 381 423 469 514 542 573 611 635 697 Shandong 2,698 2,762 2,964 3,166 3,193 3,224 3,256 3,328 3,393 Henan 2,502 2,415 2,480 2,545 2,626 2,703 2,807 2,956 3,091 3-H-a 10,063 9,971 10,454 10,936 11,053 11,220 11,464 11,783 12,125 Shanxi 518 524 534 543 548 555 563 571 581 Neimenggu 627 722 793 863 897 929 914 959 1,038 Shaanxi 485 500 476 451 472 403 425 428 437 Gansu 221 232 233 234 239 243 249 258 269 Qinghai 5 5 5 5 5 5 5 5 5 Ningxia 25 28 21 14 19 19 19 19 20 3-H-b 1,881 2,011 2,061 2,110 2,180 2,154 2,175 2,240 2,350 3-H 11,944 11,982 12,514 13,046 13,233 13,374 13,639 14,023 14,475 National 14,673 14,823 15,441 16,058 16,264 16,326 16,703 17,348 17,348 % of 3-H to National 81.4 80.8 79.9 81.2 81.4 81.9 81.7 80.8 83.4 Surface Water Beijing 107 135 121 107 107 102 103 100 106 Tianjin 223 231 212 193 194 195 194 196 194 Hebei 721 750 748 745 763 783 805 827 859 Jiangsu 3,088 3,193 3,129 3,065 3,097 3,137 3,140 3,173 3,162 Anhui 2,177 2,213 2,238 2,262 2,297 2,323 2,350 2,366 2,383 Shandong 1,900 1,960 1,869 1,777 1,818 1,828 1,844 1,819 1,799 Henan 1,423 1,152 1,207 1,262 1,272 1,260 1,278 1,283 1,297 3-H-a 9,639 9,634 9,523 9,411 9,548 9,628 9,714 9,764 9,800 Shanxi 621 631 638 644 646 653 659 656 664 Neimenggu 1,120 1,127 1,125 1,123 1,158 1,144 1,185 1,225 1,302 Shaanxi 771 776 826 876 870 951 947 956 961 Gansu 761 767 787 807 823 842 857 873 881 Qinghai 299 307 316 325 330 338 339 343 345 Ningxia 322 334 350 366 372 376 387 393 400 3-H-b 3,894 3,942 4,042 4,141 4,199 4,304 4,374 4,446 4,553 3-H 13,533 13,576 13,564 13,552 13,747 13,932 14,088 14,210 14,353 National 36,056 36,117 36,260 36,403 36,717 36,895 37,116 37,397 37,630 % of 3-H to National 38 38 37 37 37 38 38 38 38 Note: In the above tables, "groundwater irrigation area" = "irrigation area by pump-well + irrigation area by mobile motors + spray & drip irrigation area," in fact, it includes some areas where conjunctive irrigation both by surface and ground water is used. "Surface water irrigation area" = "total effective irrigation area" ­ "groundwater irrigation area". * The data of corresponding irrigation area is not available for 1991, while an average value of 1990 and 1992 is used for 1991. Source: Water Resources Yearbook, 1990-98. 42 Chapter 3. Water Resources and Issues Chapter 3D and Chapter 9. It is likely that the large increases in crop production described above have been facilitated by increased groundwater pumping and that this level of exploitation is not sustainable (see Chapter 9). Thus, in order to continue with current level of crop production or current increase in crop production alternative water sources may have to be developed. As implicated in Chapter 3B and Chapter 4 on water resources, the 3-H basins have already probably reached a supply constraint with surface water hence the heavy reliance on groundwater over the last two decades. Given that this level of exploitation is not sustainable it is likely that supply to agriculture will decline (especially with urban/industrial preference in allocation policy). Agricultural productivity is dependent on (a) land productivity; (b) water productivity, (c) labor productivity, (d) energy (e.g. mechanical, human, animal); (e) fertilizers and other chemicals (f) research and technology, and (g) climate, e.g. sunlight. Overall yields in the 3-H basins compares favorably with the national average. The productivity of land benefits from longer and less cloudy summer days but the shorter growing seasons reduces the potential for multiple cropping. The cropping area in China and the 3-H basins is estimated at 1.7 billion mu and 0.78 billion mu with 0.55 million mu being in the 3-H-a and 0.23 billion in 3-H-b. The 3-H basins are the cropping area (58 percent in the 3-H-a alone). The multiple cropping index TABLE 3.19: MULTIPLE CROPPING INDEX IN 3-H AREA (MCI) as an important indicator for measuring the advance of agriculture Area Provinces (munici- Multiple cropping index Change development. From 1994 to 1998, the palities, regions) 1994 1998 rate Beijing 137.0 156.9 14.5 MCI increased 3.5 to 14.5 percent in Tianjin 130.0 136.1 4.7 3-H-a (28 percent in Shanxi Province in Hebei 132.6 140.3 5.8 3-H-b area alone.). See Table 3.19. 3-H Plain Area (3-H-a) Henan 177.0 183.9 3.9 Shandong 161.9 167.5 3.5 Agriculture plays a key role in Jiangsu 176.0 189.4 7.6 the continuing economic development Anhui 190.1 201.4 5.9 Shanxi 109.6 92.4 -15.7 of China. However variable rainfall Middle & upper Neimenggu 92.8 83.4 -10.1 patterns (refer to Chapter 1) both stream area of Shaanxi 140.5 142.2 1.2 spatially and temporally in the 3-H Yellow River Gansu 106.6 108.0 1.3 basins especially where much of the (3-H-b) Ningxia 113.8 78.8 -30.8 good quality land is situated has Qinghai 96.1 93.7 -2.5 required large investment in irrigation Source: China Agriculture Yearbook, 1999. infrastructure over the last several centuries. In the middle east areas, rainfall cannot meet the TABLE 3.20: YIELD DIFFERENCE BETWEEN crops requirements totally but in the northern IRRIGATED AND UNIRRIGATED FARMLAND areas with dry to semidry zones, agriculture is Yield on Irrigated Yield on Unirri- basically dependent on irrigation. At the present, Area Farmland (kg/mu) gated Farmland water use for agricultural irrigation is 73.4 Rice Dry crops (kg/mu) percent of total water supply in China. Due to the 3-H-a 487.0 405.0 147.0 climatic conditions in north China, 1.23 m3 of 3-H-b 313.0 203.5 74.5 water needs to be supplied by irrigation to grow Country wide 486.0 300.0 140.0 1 kg of grain while for example in Canada only 0.07 m3 is needed. However, without such irrigation network the productivity of the land (which is also a limiting factor) would be far less. (See Table 3.20). Irrigation development greatly improves agriculture production conditions. Irrigated land, which is less than one-half of total farmland area, supplies 65 percent grains, 60 percent cash crops and 80 percent vegetables in China. Therefore, improving irrigation efficiency is an important goal to meet the challenge of population and food security. Chapter 3. Water Resources and Issues 43 However, competition use of scarce water in North China continues to cause declining supplies to agriculture. The main grain crops in 3-H basins include wheat, corn, millet and soybean, main cash crops are cotton, peanut and sesame. The productions of such crops in 3-H basins area in 1998 are basically more than 45 percent of that of whole country. Moreover, 3-H area is the main area for summer grains production, with a production output accounting for 74 percent that of China. The 3-H plain area (3-H-a) accounts for 62 percent of the total. Therefore, it plays an important role in food security of China. The production percentages of 3-H-a, 3-H-b and whole 3-H area to the country production are shown in Table 3.21. TABLE 3.21: GRAINS PRODUCTION IN 3-H BASINS AND CHINA IN 1998 (10,000 tons) Crops 3-H-a 3-H-b 3-H China Grains 17,647.30 34% 5,254.80 10% 22,902.10 45% 51,229.30 Rice 4,145.70 21% 234.30 1% 4,380.00 22% 19,871.20 Early rice 193.00 5% 0% 193.00 5% 4,052.30 Wheat 6,883.20 63% 1,694.10 15% 8,577.30 78% 10,972.60 Corn 4,547.90 34% 2,156.80 16% 6,704.70 50% 13,295.50 Millet 130.40 42% 137.40 44% 267.80 86% 311.30 Soybean 486.50 32% 184.60 12% 671.10 44% 1,515.20 Tuber crops 1,102.00 31% 438.80 12% 1,540.80 43% 3,603.30 Chinese sorghum 52.70 13% 98.30 24% 151.00 37% 408.70 Cotton 217.10 48% 64.60 14% 281.70 63% 450.10 Oil crops 1,085.20 47% 243.40 11% 1,328.60 57% 2,313.90 Peanut 844.10 71% 11.80 1% 855.90 72% 1,188.60 Rape seed 188.10 23% 74.80 9% 262.90 32% 830.00 Sesame 35.90 55% 4.60 7% 40.50 62% 65.60 Yellow & red linen? 14.30 58% 0% 14.30 58% 24.80 Sugar crops 77.30 1% 504.70 5% 582.00 6% 9,790.40 Sugar cane 56.10 1% 0.30 0% 56.40 1% 8,343.80 Beet 21.30 1% 504.30 35% 525.60 36% 1,446.60 Flue-cured tobacco 47.40 23% 12.30 6% 59.70 29% 208.80 Sources: China Agriculture Yearbook, 1999, China Agriculture Press. Marginal values of irrigation TABLE 3.22: MARGINAL VALUE OF IRRIGATION WATER water for various crops are shown in APPLIED TO VARIOUS CROPS, BY BASIN Table 3.22 and indicate that the value (Y/m3) of water in most cases in agriculture is greater than Y 1/m3. Crop Water Deficit (%) Hai Huai Huang Rice 0 1.39 1.49 1.41 Winter Wheat 20 1.26 1.23 1.24 (iv) Changing Agricultural Spring Wheat 20 -- -- 1.69 Sector and Employment Spring Maize 30 1.36 -- 1.95 Summer Maize 30 1.79 1.58 1.88 The diminishing volumes of Cotton 20 0.96 0.96 0.96 water available to agriculture as Soybean 30 0.63 0.86 0.80 shown in Figure 6.1 are occurring in Rapeseed 20 -- 1.32 -- Peanut 20 1.01 1.16 1.04 parallel to changes in the Potato 20 0.45 -- -- composition of the agricultural sector Note:The marginal values were estimated at optimum water levels only and the relative importance of the for rice, the marginal values for other crops were estimated at 20- agricultural sector relative to other 30 percent deficit levels. developing sectors such as industry and services where water has a higher marginal value. These changes in the agricultural sector are also causing and caused by parallel changes in employment within the agricultural sector. Changes in income are a reflection of the changing structure of agriculture which in 44 Chapter 3. Water Resources and Issues turn responds to increased influence of markets that promotes China's natural endowment in labor and favors labor intensive farming activities. The changing structure of agriculture over the last 15 years is shown in Figure 3.4 from "Accelerating China's Rural Transformation." FIGURE 3.4: GROSS VALUE OF AGRICULTURAL OUTPUT (1985=100) Source: Accelerating China's Rural Transformation, Nyberg and Rozelle, 1999. The relative importance of agriculture has declined--not only in its contribution to GDP but in terms of rural incomes and employment. This characteristic is common to most countries. Secondary and tertiary industries (manufacturing- TABLE 3.23: AVERAGE construction and services) grew at more than twice the rate of agriculture GROWTH RATES IN and in 1998 comprised 49 and 33 percent of GDP, respectively. Similar AGRICULTURAL statistics apply to the 3­H basins. But, structural changes also are occurring SUBSECTORS, 1978-98 within the agricultural sector; Table 3.23 indicates the average growth rate Component Percent in the agricultural subsectors. GVAO 4.4 Crop 2.8 Projections to 2050 forecast that this trend will continue and that by Livestock 7.6 Fishery 13.9 2050, agriculture's share of GDP will decline from the present 20 percent to Forestry 4.4 about 4 percent. The structure of agriculture has also changed in the last 20 GVAO=Gross Value of Agricul- years since the reforms. The changing structure of the agricultural sector is tural Output. the result of (a) shifting diets,24 (b) higher incomes in urban areas; (c) production liberalization, e.g. household responsibility system and (d) increasing export opportunities. Growth in agricultural output has increased at annual rate of 4.3 percent a year in the last two decades. The agriculture sector's share of GDP has declined in that same period and will continue to decline in the next 50 years for the present 20 percent to about 4 percent according to economic modeling. The proportion of people employed in agriculture has declined in the last several decades from 70 percent in 1978 to 49 percent in 1998 (see Volume 3, Annex 3.2, Figure A3.2-8). However, employment in off- 24 See International Institute of Applied Systems Analysis. Chapter 3. Water Resources and Issues 45 farm work including rural industries (such as TVEs) as accounted for up to 25 percent of the rural labor force although TVE employment started to decline in 1997. The structure of labor has also changed in the last decade. More employment has been created in labor-intensive agricultural activities such as fruit, horticulture and livestock/aquaculture. This rural labor has moved toward higher-return activities and it is anticipated that WTO accession will accentuate this trend. Research shows that national trends in agricultural employment have varied among regions depending on (a) natural resource endowment and geographic location, (b) ability of workers to migrate to seek off-farm employment, (c) lack of credits for initial investments. Some regions, especially in the mountain areas, have such a weak resource base that farming can barely contribute sufficient food for consumption let alone selling surplus production. The poorest households find it difficult to take advantage of work opportunities elsewhere by migrating. Obstacles include difficulties in raising the funds needed to cover the costs of transportation and job search, low literacy levels and limited information regarding job opportunities. Lack of access to credits to pay for inputs or necessary initial investments in water control, land improvement and animal stocks and lack of information, training and weak marketing support. Poor households have been held back from taking advantage of new employment opportunities both in agriculture and nonagriculture by the fact that their labor time is often absorbed by necessary low-income tasks such as traveling long distances to fetch water, especially in the dry season in mountain areas. Similarly, in mountainous or hilly areas, it is not uncommon for workers to travel several hours a day to reach plots on steep slopes with skeletal soils that yield low quantities of crops per unit labor inputs. Thus they have no time or energy left for higher income activities. Under such conditions, investment in water supply, land terracing and other forms of basic infrastructure can have positive effects on employment and income. At higher income levels, the main factors inhibiting labor migration are the difficulty of migrants to qualify for health, education and housing facilities, which are tied to SOE employment. Permanent or temporary permits to work in urban centers are difficult to obtain and the legal status of many rural workers is ambiguous, which can sometimes result in illegal work practices. Other restrictions on migration include the possibility of a household losing farmland if it is not worked for agricultural production. Land is a form of social security and even in situations where income from the land is minimal compared to wages from industries, households still allocate labor input to keep their rights to the land. This is discussed further in the section on rising incomes. Densely populated areas with low land availability and large numbers of SOEs show the highest emigration rate. Despite rural labor migration to city fringes, urban labor markets remain rigid mainly due to SOE-linked employment and social benefits structure. While SOE productivity could remain constant even with an estimated 15-20 percent less employed labor, rising unemployment which is estimated at 7 percent (WB: China 2020) remains a key concern for the government. In order to promote nonstate sector employment, retraining programs operate but demand for services is high and funding is often inadequate. Nevertheless, some shifts in labor occur in rural areas where TVEs are being sold to private enterprises that are soaking up some excess labor from state owned TVEs as noted above. Agriculture also picks up unemployed workers retrenched from state TVEs, while in urban areas, reemployment is more difficult and unemployed workers retrenched from SOEs have to queue up at state retraining centers as described above. There is also a tendency for managers of SOEs to replace urban workers with rural workers because they are cheaper (no social baggage) and better workers. The diversification of income over the last 10 years is shown in Figures 3.5 and 3.6. Overall income has increased but the share of income derived from agricultural activities has decreased in favor 46 Chapter 3. Water Resources and Issues of rising labor, services and income transfers. However, income diversification has not been a possibility for all rural people especially those in inland provinces for reasons discussed above. FIGURE 3.5: FARMERS' INCOME CHANGES IN NINGXIA PROVINCE Ningxia Farm income per person 4500.0 4000.0 116.9 3500.0 974.2 3000.0 2500.0 584.5 2000.0 35.2 42.2 1247.0 1500.0 214.6 265.5 28.2 157.6 176.0 1000.0 29.2 110.6 80.4 102.7 376.0 419.3 43.0 246.9 500.0 147.7 1013.2 732.5 688.1 534.8 580.8 0.0 1990 1995 1998 1999 2020 Year Farm Income Sideline On Farm Industry Off Farm Income Other FIGURE 3.6: FARMERS' INCOME CHANGES IN HEBEI PROVINCE H e b e i F a r m i n c o m e p e r p e r s o n 4500.0 217.6 4000.0 3500.0 1568.4 3000.0 2500.0 902.0 2000.0 55.1 65.1 1500.0 49.1 440.7 517.1 775.1 258.5 32.1 131.8 278.7 323.0 1000.0 171.4 168.3 239.1 220.9 63.8 500.0 1065.2 137.2 784.5 795.3 702.4 490.4 0.0 1990 1995 1998 1999 2020 Year Farm Income Sideline On Farm Industry Off Farm Income Other Chapter 3. Water Resources and Issues 47 Those farmers able to diversify their income away from farming activities are less dependent on water supply for irrigation in comparison to those in mountain provinces for whom water supply is critical for their livelihood since their opportunity to rely on other forms of income are more limited. Thus income diversification patterns within different provinces provide information on water dependence to maintain livelihood. Income disparities is also discussed in greater detail in Chapter 2. In Volume 3, Annex 3.2, Figures A3.2-9 to A3.2-11 also show projected income components changes to 2020 for Henan, Shandong and Jiangsu. These provinces are representative of coastal (Shandong and Jiangsu), inland (Hebei and Henan) and mountain areas (Ningxia) with different income diversification opportunities. Volume 3, Annex 3.2, Table A3.2-4 shows the changes in cropping patterns expected to 2020 for provinces in the 3-H basins as a result of changing agricultural sector. The table is a summary of both cropping patterns changes and income component changes. Higher urban incomes have created shifting demands and new domestic markets for better-quality products such as fish, livestock and fruit. International markets have also developed, especially in other Asian countries, and WTO accession will create further opportunities to diversify agriculture from the traditional grain-focused production. However as noted above, not all rural population have the capacity to take advantage of this changing structure. One of the challenges for the government is to improve opportunities for inland/western provinces to take advantage of the shifting structure of agriculture. Thus it can be concluded from income figures above and crop pattern changes shown in Volume 3, Annex 3.2 that, while irrigated agriculture has decline in importance both within the sector and as a source of income, it still represents a major component of farmers income and this is likely to continue for several decades. It is unlikely that all farmers will have the same opportunity to diversify their income and so many will stay dependent on water for their basic livelihood. Western mountainous provinces are areas where this dependence is likely to be greater than floodplain provinces. E. WATER POLLUTION (i) Water Quality Surface and ground water quality in China has been seriously degraded due to the lack of effective pollution control, combined with rising population and industrial operations (including export business), especially in the last two decades. Causes of pollution from point sources include rapid urbanization, industrial development, rising population and the growth in the number of TVEs and livestock operations in rural areas. Diffuse release of nutrients and pesticides from agriculture are also becoming important sources of shallow groundwater and surface water contamination. Pollutants of concern recorded by the State Environmental Protection Administration (SEPA) from point sources include parameters for organics such as COD and biological oxygen demand (BOD), phenols, ammonia nitrogen and inorganics such as heavy metals while nonpoint source pollutant parameters include nonionic ammonia, total phosphorus, total nitrogen and COD. Figures 3.7 and 3.8 show the current status of water quality according to SEPA classification standards. The current surface water quality status in the 3-H basins is such that most rivers and lakes fail to meet the standards required for the designated beneficial uses of the water. The decline in water quality in each of the three basins to 1995 was alarming, with all registering in excess of 80 percent of their lengths being classified as polluted (Class IV or worse to Chinese National Surface Water Standard GB3838-8825). 25 It is argued later that this classification needs to be revised along with environmental standards because it does not reflect current treatment technology and China's development status. 48 Chapter 3. Water Resources and Issues FIGURE 3.7: WATER QUALITY CLASSIFICATION IN THE HAI RIVER BASIN IN 1995 Luan River Liaoning Chengde Zhangjiakou Miyun Reservoir Panjiakou Reserv oir Sanggan River Daheiding Reservo ir Guanting Reservoir vier Datong ChYuq iao Reservoir haRZunhua Cetian Reservoir S SangganRiver Beijing aobaiRiv Qinghuangdao er Juma River Zhuozhou rve er Ri JinCanal Rvi Tangshan LuanRiver Gaobeidi h ou Shuozhou rto D Hutuo River Langfang N Fengnan Tianjin Baiyangd ian Lake Bazhou Baoding Yukuai Reservo ir Xidayang Reservoir renqiu Ri ver Beidagang Reservoir River Dingzhou Ziya New Bo Hai Bay Xinzhou Gangnan Reservo ir Anguo HejianZiya Hebei Province Huang bizhuang Reservoir Cangzhou Gaocheng Botou Shijiazhuang Shenzhou Xinji Yangquan Shanxi Hengshui Province Dezhou DehuiNewR ive r Binzhou Xingtai River aj ai M Wu'an Handan T uhaiRiver Jinan Zhangze Reservoir Zhang River Liaocheng Yuecheng Reservoir Changzhi Anyang Hebi e r Shandong Province Henan Wei Riv Puyang Province 0 150 Kilo meter s Jiaozuo Xinxiang Approximate Scale LEGEND N CHINA WATER SECTOR ACTION PRO GRAM WORLD BANK-MINISTRY O F WATER RESOURCES Water quality class II Water quality class III Water quality class IV FIGURE No. Water Quality Water quality class V Classific ation in the Water quality class > V Hai River B asin in 1995 1 This dramatic decline in surface and groundwater quality continues despite efforts by regulatory authorities including SEPA, Environmental Protection Bureaus (EPBs) and MWR to arrest and reverse the trend with improved control of obvious sources of pollution such as SOEs and attempts to close small highly polluting TVEs. Water quality has continued to decline especially during periods of low flow around December/January in the lower reaches of most rivers where the cumulative effects of upstream discharges and runoff tend to concentrate. Chapter 3. Water Resources and Issues 49 FIGURE 3.8: WATER QUALITY CLASSIFICATION IN THE HUAI RIVER BASIN IN 1998 Yantai Wei hai III-7 Weifang Zibo Jinan Taian 'W Tian zhu ang Reserv oir Qingdao Bas han Re servo ir 'W Qin gfe ngling Re serv oir Xiao shiy ang Re servo ir And iRes ervoir na g uf Si Gu Nisha n Reserv oir Rizh ao R eservo ir Tan gcu n Rese rvo ir Rizha o New Zh uzhao JiningXiwe iRe servo ir BaiMah eRe serv Yan ma Do ush an Rese rvo ir ma Rese rvoir i oir Y u Heze Wa ng fu Qufu Xu jia ya Res ervoir Liny i hZ Yan zh ou Zou che ng Huiba lin g Rese rvoir Xiaotash an Re servo ir Zh eng zh ou III-5 Te ng zh ou Kaife ng Weish Za oz hu ang Sh ilian gh eRe serv oir Yingy an g Tongh an III-6 Liany un gan g Xinmi 'WDeBaish ngfe ng Huij i ui Lake a Reserv oir Xin zh eng Anfen gsh an Re servo ir Jialu Dasha Gus ong Xiny i Ya n Beiru Lu Chan gg e Xuz hou Kui om aLak New yi River e OldYellow Suqia n Xu ch ang Zha op ingtai Re se rvo ir Wo u Hua ib ei Ru zh ou Baigu ishan Reserv oir XianSghachen g Tuo Xinsu i Tan g g Hu aiyin Pin gd ingsh an Ying Bo zho u III-2 Suz ho u Zho uk ou Baohui Xianbian hSnaye Hu ai'a n Gush itan Reserv oir Lu oh e H ong xi Yan ch eng III-4 Hong Hei Qu ang III-3 JIesho u Ru X ifei Su ya hu Res ervoir Banq ia o Rese rvo ir Fuy ang Hu ia Ben g bu Ga oy ou Min gg ua ng Tia nch ang Bo shan Reserv oir Ch i Ming III-1 Taizh ou Hu ain an Yang zh ou Nan yan g Huai Shi Na nwan Reserv oir Xiahouang Hua gn Sh ish an ko u Rese rvoir Hu asha n Rese rvo ir 'W Shi Wuy ue Reserv oir iPLiu'a n Poh eR eserv oir 0 100 Kilometers Niany us ha nRe servo ir Meisha n Reserv oir Xian gh on gdian Reserv oir Foz iling Re servo ir Approximate Scale Mozitan Res ervo ir LEGEND Water quality class II N CHINA WATER SECTOR ACTION PROGRAM WORLD BANK-MINISTRY OF WATER RESOURCES Water quality class III Water quality class IV FIGURE No. Water quality class V Water Quality Classi fication in the Huai Ri ver Basin in 1998 Water quality class > V This trend tends to indicate that there are many sources generating pollutants (identified with COD as the primary water quality indicator for degradable organics) in addition to obvious sources like large enterprises. These other sources include (a) agricultural runoff, (b) TVEs, (c) livestock operations, (d) urban and rural life. However, the extent of their impact on water quality is not certain and assessment must often rely on anecdotal evidence. This is because the information necessary to document water quality changes is patchy, sometimes unreliable and often difficult to obtain from the ministries concerned with monitoring. Similarly, monitoring data of effluent discharge is not comprehensive which makes it difficult to relate pollution loads to ambient water quality. In addition, given current SEPA/EPB capabilities and policy, only obvious major industrial sources tend to be monitored and many smaller sources are overlooked despite their large collective contribution to the total pollution load. (ii) Sources of Water Pollution One major reason for this is the classification of point sources and nonpoint sources that the government has been using which includes all TVEs, livestock and rural municipal sources as diffuse. Thus, almost all monitoring/regulatory effort has excluded rural pollution and has concentrated on major pollution sources such as urban industry and large municipalities. However, as can be seen in Figure 3.9, the contributions from these unregulated so-called nonpoint sources is significant and we contend that water quality has degraded over the last decades in part because of incomplete regulation of pollution sources. These small sources are difficult to monitor and regulate however and constitute a major problem in many developing countries (DCs) but, it is nevertheless necessary to recognize their contributions and 50 Chapter 3. Water Resources and Issues to bring these sources into the planning process in order to make a start on managing severe water pollution. The classification shown in Table 3.24 is used to develop the analysis presented in this section of the report on pollution. FIGURE 3.9: POLLUTION SOURCES IN THE HAI AND HUAI BASINS Pollution Sources in Hai basin (1000 Pollution sources in Huai basin tons/y) for 2000 (1000 ton/y) for 2000 Rural Rural Livestock municipal Livestock municipal 663 (13%) 254 (5%) 481(7%) Urban 1091(16%) Urban municipal municipal 488 (9%) 622 (9%) Urban Industry Rural Rural Urban 2467 (42%) industry industry Industry 1607 (31%) 2287 (33%) 2213 (42%) TABLE 3.24: NONPOINT SOURCE AND POINT SOURCE POLLUTION DEFINITIONS Point Sources Urban / Industrial Industries 100 tons (m3) wastewater/day per year Industries 100 Tons (m3) wastewater /day Municipalities Rural TVEs Livestock ( Feedlot) Rural life Nonpoint Sources Agriculture (grazing) Acid rain Legacy pollution The analysis of the current water pollution status began with the examination of the SEPA Survey of large industries (100 m3/day+) carried out in 1995 in the Hai and 1997 in the Huai basins. This survey monitored COD concentrations and wastewater volumes at the outlet of 2,144 and 1,562 enterprises throughout the Hai and Huai basins respectively. However, there were no such survey carried out to show contributions from other pollution sources as explained above and so a spreadsheet model was programmed to serve as an expert system with the purpose of compiling all available information on water pollution sources into a single model capable of representing current and future pollution loads. The Water Pollution Management Decision Support System (WPM-DSS) provides a systematic compilation of water use data consistent with basin wide water assessments, calculates COD loads and wastewater quantities for major sources. The model was run by the Chinese Research Academy for Environment Systems (CRAES), the World Bank and the General Institute for Water and Hydropower (GIWHP) in a "forward" usage where pollution from urban and rural industry and municipal and livestock sources were subjected to intervention (called Program 1, 2 and 3) from WWTP, reuse and pollution prevention programs and the resulting water quality improvements were determined. The model design was developed based on observations in many countries that as water consumption increases, so does wastewater generation and this required a link between wastewater generation and water consumption. The water consumption data for industry and municipalities were derived from IWHR. These projections of water demand were developed in parallel with the water demands derived in the substudy and link expected social and economic trends to wastewater productions Chapter 3. Water Resources and Issues 51 providing a more realistic view of future load generations and resulting pollution problems. This view of the future is in turn subjected to a number of intervention scenarios that show how pollution could be gradually lowered given a certain level of investment. Thus, water demand strategies can be also assessed in terms of their impact on wastewater generation and pollution levels. The WPM-DSS was deemed necessary: (a) due to the absence of monitored data capable of quantifying COD contributions from these major sources, and (b) to enable forecasting possible changes in contributions from these sources due to changes in the economy including population growth, urbanization, rising income and water demand etc. and due to implementation of possible intervention scenarios such as regulatory intervention and/or pollution treatment infrastructure. In Volume 3, Annex 3.2, Maps A3.2-3 and A3.2-4 show 2000 pollution loads from major pollution categories at basin II level using Arc Info GIS. The strength of the WPM-DSS is that it can project COD loads from identified key pollution sources to 2020 based on pertinent parameters and those loads can be calculated at different scales including individual cities, Level I and II basins and control sections of major rivers. The model itself is derived from local knowledge (i.e. knowledge-based approach) of water resources, water pollution, water use etc. and so the results presented below for 2000 base case scenario represent our understanding of the contributions from major pollution sources. Calibration of the model relied on reports and data made available to the study team including (a) the Huai River Basin City and Township Effluent Monitoring Report (1998) by the Huai River Committee and (b) water flow and water quality data for the corresponding years and locations. The model duplicated actual loads calculated for Fuyang station, Bengbu station and various other stations in the Huai basin with a reasonable degree of accuracy. In the case of comparison with the above-mentioned report, the WPM-DSS was on the high side and this may be due to the nature and methodology adopted for the survey by the Huai River Committee. A full discussion of these two calibrations is included in the annex. (a) Urban Industrial Sources The study confirmed paper-making as the single largest COD contributor in both the Hai and Huai basins (Figures 3.10 and 3.11). Those surveys monitored only enterprises discharging 100 m3/day or more wastewater but urban areas also have many industries discharging less than 100 m3/day wastewater and so the WPM-DSS accounted for these by adding their contribution to the urban industry sources category.26 The classification of industries for modeling purpose was based on the SEPA survey for the Hai and Huai basins. The list includes (a) paper-making, (b) fertilizer, chemical, pharmaceutical; (c) food, brewing; (d) textile, leather and tanning; (e) power, steel metallurgy, oil, machinery, light industry, mining, coking construction and (f) others. Figure 3.12 and Map A3.2-1 in Annex 3.2, Volume 3 show total COD loads for priority cities respectively in the Hai and Huai basins in 2000, from 95 percent of all the industrial load in the basin. These loads are based on the SEPA survey but calculated by the WPM-DSS which also added the 100 m3/day- industries as noted above. 26 The calculation of load contribution from 100 m3/day- industries was achieved using IWHR total industry demands, converted to wastewater loads from which 100 m3/day+ industries were subtracted 52 Chapter 3. Water Resources and Issues FIGURE 3.10: COD LOAD PERCENTAGE BY FIGURE 3.11: COD LOADS PERCENTAGES OF VARIOUS INDUSTRIES IN HAIBASIN (1995) VARIOUS INDUSTRIES IN HUAIBASIN (1997) TextileOthers Pharmaceutica Textile Others 10% 3% 2% 4% Food 3% Miscellaneous 4% 3% Brewing/ Distillation Chemical 5% 4% Pharmaceutical Food 5% Paper Making 8% Paper Making Miscellaneous 58% 57% 5% Brewing/ Distillation Chemical 19% 10% The SEPA survey provide a very important base for the development of the WPM-DSS. However the COD loads reported in this survey say nothing about toxic loads generated by industries. Which are by far the most health threatening aspect of industrial point source pollution. Therefore, a methodology has developed to estimate toxic load pollution from the six most polluting industry classes defined in the model. These toxic loads are calculated for major cities in the Hai and Huai basins for 2000 by (a) referring to the Chinese Standards (SEPA 1979-97) which list mercury, cadmium, chromium, arsenic, lead, nickel and phenol as Class A (toxic) pollutants,27 (b) identifying the type of industries that discharge such pollutants (e.g. tanneries are know to produce toxic chromium); (c) locating these cities where these industries exist (from SEPA Survey information). Examples of the results shown for major cities in the Hai basin are shown in Figures 3.12 and 3.13. (b) Urban Municipal The WPM-DSS calculated loads and wastewater from municipal sources (i.e. sanitary sewage) based water consumption and population and COD generation rate/person (0.04 kg/person/day). Maps A3.2-3 and A3.2-4 in Annex 3.2, Volume 3 show the contribution of COD at level II basin from urban municipal sources in 2000 as calculated by the WPM-DSS. Total Basin level I contribution amounts to 0.5 and 0.6 million tons a year or 9 percent of the total load of COD. However this proportion varies at level II basin as shown in Maps A3.2-3 and A3.2-4 in Annex 3.2, Volume 3. In addition, Figure 3.12 below and Map A3.2-1 in Annex 3.2 of Volume 3 show the COD loads from industry and municipal sources for major cities in the Hai and Huai basins. At the moment (2000), the loads of COD to water bodies from urban industry represents major source of pollution, especially in the Nansi Lake catchment (III-5) and Lower Yishusi (III-6) while for major cities in the Hai basin such as Beijing and Tianjin for example, the major contribution of COD comes from municipal sources. (c) Rural Nondomestic Pollution Major rural sources are shown in Table 3.24. Livestock COD generation can be reasonably well documented. The procedure involved (a) consultation of relevant statistical publications such agricultural yearbooks to determine livestock number for different provinces in the Hai and Huai basins, (b) apportion 27 No mention is made of other toxic inorganics, toxic synthetics in these standards despite their known toxicity and so only these elements/compound were used to calculate toxicity. However it is acknowledged that this is incomplete. Chapter 3. Water Resources and Issues 53 these based on area ratio for each level II basin; (c) assign COD generation rate for pigs (and pig equivalent). The COD loads calculated by this method for the Hai and Huai basins amounts to 0.66 and 1.09 million tons a year. The model assumes that 10 percent of the COD generated will make its way to the river or water body and that at the moment given the generally small size of livestock operators, little treatment is installed to lower COD loads to rivers. However the industry will change over the next two decades and so it is assumed that while at the present time 25 percent of animals are bred in intensive breeding operations, this will increase to 80 percent by 2050 thus the level of treatment is likely to improve due to restructuring of the industry. FIGURE 3.12: 2000 COD POLLUTION LOADS FOR PRIORITY CITIES IN THE HAI BASIN UNDER THE BASE CASE (tons/day) II-1 Luanhe and East Coast Hebei II-2 North Hai II-3 South Hai II-4 Tuhaimajia II-1 185 # Chengde 144 # Zhangjiakou II-2 105 # Datong 526 # Beijing 58 # Qinghuangdao 613 # 43 # Ta ngshan 69 # Langfang Shuoz hou 951 # Tianjin Baoding 158 # 40 # Xinzhou 83# Cangzhou Shijiazhuang 475 # 61 # Yangquan 101 # Hengshui II-3 467 # Dezhou 133 # Binzhou 151 # Xingtai II-4 224 # 29 # Handan Jinan 521 # Liaocheng 259 # Changzhi 347 # Anyang 63 # Hebi 77 # Puyang 0 150K ilometers 350 # 409 # Xinxiang Jiaozuo Approxima te Scale LEGEND N CHINA WATER SECTOR ACTION PROGRAM WORLD BANK-MINISTRY OF WAT ER RESOURCES Total Industry COD Load Total Municipal CO D Load River 2000 COD Pollution Loads( tons/day FIGURE No. Lake& Reserv oir forPriorityCi tiesi n the Hai Basin Under theBase case(Prg1) 1 54 Chapter 3. Water Resources and Issues FIGURE 3.13: 2000 TOXIC COD POLLUTION LOADS FOR PRIORITY CITIES IN THE HAI BASIN UNDER THE BASE CASE (tons/day) II-1 Luanhe and EastCoast Hebei II-2North Hai II-3South Hai II-4Tuhaimajia II-1 29 Chengde 38 Zhangjiakou II-2 27 Datong 91 Beijing 4 Qinghuangdao 105 1 Tangshan 28 Langfang Shuozhou II-3 289 Tianjin Baoding 63 7 Xinzhou 17 Cangzhou 241 Shijiazhuang 24 Yangquan 46 Hengshui 4 Dezhou II-4 3 Binzhou 18 Xingtai 17 2 Handan Jinan 41 Liaocheng 105 Changzhi 86 Anyang 23 Hebi 28 Puyang 0 150 Kilometers 106 23 Xinxiang Jiaozuo Approximate Scale LEGEND N CHINAWATER SECTOR ACTION PROGRAM WORLD BANK-MINISTRY OF WATER RESOURCES Toxic COD Pol luti on Load for 2000 Ri ver FIGURE No. Lake & Reservoir 2000 Toxic CO D Pollution Loads(tons/day) for PriorityCitiesin the Hai Basin Under the Base case 8 Chapter 3. Water Resources and Issues 55 The number of rural TVEs in the 3-H basins TABLE 3.25: TVES IN PROVINCES OF THE 3-H is estimated to be around 9,560,000 as shown in BASINS Table 3.25. According to TVEs Yearbook (1998) Provinces in 3-H basins No of TVEs % of total types of TVEs include (a) nonmetal (21 percent); (b) Qinghai 52,402 0.5 food/drink (8 percent); (c) textile (6 percent); (d) Beijing 78,686 0.8 unnamed (may include paper) 36 percent; (e) Tianjin 115,504 1.2 mechanical (3 percent); (f) chemical (2 percent); (g) Ningxia 122,170 1.3 metal (4 percent). According to the TVEs Yearbook Gansu 201,398 2.1 Shanxi 323,404 3.4 nearly half of China's TVEs are in the 3-H basin. In Anhui 675,776 7.1 1997, the government issued regulations controlling Shaanxi 832,864 8.7 TVEs in terms of numbers, type of production and Neimenggu 841,262 8.8 proposed planning rules for TVEs "industrial park" to Hebei 854,341 8.9 help control wastewater. The success of these Henan 868,793 9.1 Jiangsu 892,062 9.3 regulations are difficult to gauge due to their Liaoning 897,361 9.4 relatively recent implementations but in principle, the Sichuan 1,211,826 12.7 laws make a lot of sense despite some unrealistic Shandong 1,588,377 16.6 time frames which decree that by 2000 TVEs will not Total 9,556,226 100.0 exceed prescribed standards.28 A full discussion of Source: TVE Statistical Yearbook, 1998. these regulations is developed in Chapter 7. The current situation with regards to TVEs is that their contribution to water pollution varies in different provinces or even counties, but that in aggregate they represent a major threat to water quality, especially in the floodplains provinces of the 3-H basins such as Shandong, Anhui, Hebei, Henan, etc. According to the WPM-DSS, current TVEs (or rural industries excluding livestock) reuse is set at 0 percent because these small industries have more primitive production process that do not permit water reuse. Industries are characterized as paper and nonpaper because as for larger industries, paper-making seems to be the most polluting TVE. Maps A3.2-3 and A3.2-4 in Annex 3.2, Volume 3 show TVE contributions at basin level II. At basin level I for the Hai and Huai basins, their COD load contribution is thought to account for 31 percent (1.6 million tons a year) and 33 percent (2.3 million tons a year) of total COD loads. Thus, there is a need to include these sources of COD into the planning process in order to achieve noticeable improvements in water quality. (d) Rural Domestic Sources Rural domestic COD29 sources are also significant as shown in Figure 3.9 for the Hai and Huai basins. Typically rural villages have no infrastructure for sanitary waste disposal. Homes use dry latrines with excreta going to the pits. These pits are often of insufficient capacity, so stormwater often washes away excreta. In addition, the pits are often in low permeability soil or below groundwater level and so do not stabilize the sludge that is washed away by surface runoff and ends up in the drainage channels and eventually in the river during rainfall periods. 28 In Los Angeles, regulations of small air pollution sources is achieved by "community banks" maintained by a regulatory body for the LA basin. The community bank discharge permits cannot be traded and the rights are issued from the Community Bank are free of per ton costs but require payment of processing fees. The licensing process ensures that the regulatory body can track the pollution sources and, if later necessary, can effectively control them. 29 BOD should really be used here because it represents the quantity of oxygen in the biochemical oxidation/organic matter under standard laboratory procedure in 5 days at 20°C in mg/liter. This is the correct measure for sanitary waste. 56 Chapter 3. Water Resources and Issues In higher-level towns, piped water is available at homes, pour-flush toilets are usually initialized. These use a small amount of water, which is very important because (a) it enables users to wash their hands and prevent disease transmission and (b) the sludge from the pits is much safer. Some degree of reduction in COD load occurs between the pit latrines and the river. Absorption of COD occurs probably in the drainage channels that act as "sewage treatment plants." It is likely that some 50 percent of COD loads are reduced from the source to the river. The WPM-DSS calculated that some 0.25 million tons a year and 0.48 million tons a year in the Hai and Huai come from rural municipal sources . Nonpoint source contributions (grazing) were investigated by CRAES which carried out a study in Chengde and Zhangjiakou. They report that nonpoint source contribute 20 and 49 percent respectively of total COD loads from rural areas. These areas are somewhat atypical of usual rural areas because they have more grazing type land use and so nonpoint source is likely to be larger. The WPM-DSS model did not include nonpoint sources into its calculation. At this stage it is suggested that addressing identified rural and urban point sources will produce better results in terms of water quality improvements. Rural point sources contribute about 48 percent of total COD loads in the Hai basin and 56 percent in the Huai basin and rural point sources therefore remain an important issue to address in the 3-H basins and in China generally. The other aspect of these data that needs to be highlighted is that while we have produced numbers that quantify COD production from various sources, nothing is said about how much of this makes its way to the water bodies. Thus while livestock in these two counties account for significant production of COD, the contribution that this load makes to water quality degradation is not entirely clear because nothing is known about transport mechanisms, the location of the sources, the soil type, topography, etc. For example, excreta from homes not connected to municipal sewers, which includes thousands in rural China, is worked into the river by storm runoff. It is estimated that 50 percent of the produced BOD from this source of excreta is stabilized along the way to the river (at the expense of polluting drainage channels along the way) with 50 percent reaching the river.30 The issue of solid waste management has a significant role in the quality of both surface and groundwater, which is not currently covered by pollution control plans. Lack of management of solid wastes will lead to degradation of water. In order to calculate the contribution from landfills, more data would be required than is available in this study. The potential for water pollution from solid waste is however substantial and requires consideration in pollution control planning. The previous section identified the major sources of pollution in both the Hai and Huai basins and these included (a) urban industry, (b) urban municipalities, (c) rural industry (i.e. TVEs), (d) rural towns, and (e) livestock. As noted earlier, it is difficult to predict how these sources will affect water quality because pollutants loads may be lowered on the way to the river due to the environment's assimilative capacity. The case of BOD from low-income urban or rural towns which may be adsorbed in drainage channels by up to 50 percent was cited as an example. Hence it is difficult also to determine (a) the accuracy of the waste generation model and (a) if all pollution sources are accounted for. Traditional Chinese thinking seems to have concentrated on larger pollution sources such as major cities and industries because of bias from monitoring network design and even in specific surveys, such as the 30 Ludwig (personal communication, 2000). Chapter 3. Water Resources and Issues 57 SEPA survey in Hai and Huai used in this study (1995, 1997) and the Huai Basin Survey (1998), monitoring of these sources seems to be favored. One reason could include that enforcement of regulation is more achievable than for smaller point sources such as TVEs and rural towns and livestock operations. International experience suggests that the coverage of pollution sources identified in the previous sections is representative of the real situation. Regardless of where the pollutants end up, they are released into the environment and need to be reduced either through pollution prevention or end-of-pipe treatment. Compare the results of the WPM-DSS with other studies that have calculated COD loads (by measuring concentration and effluent volumes) in order to "calibrate" the WPM-DSS and suggest reasons why the model seems to produce reasonable results. However, given limited data sources and the complexity of the pollution situation in the 2-H basins, some error margin will occur and these are also discussed further in Chapter 7. The Huai River Basin City and Township Effluent Monitoring Report (1998) (Huai River Committee 1998) is discussed further in Chapter 7 in the "calibration" section. Pollution control planning is an integral part of the five-year planning cycles. The ninth five-year plan, currently approaching its end, proposed, inter alia (a) the total amount of discharged pollutants such as cyanide, arsenic and heavy metals in industrial wastewater should be lower than 1995 levels;(b) industrial discharges of COD and oil in wastewater should be maintained at the same levels as 1995; (c) poor environmental quality should be improved in key areas including the Huai River, the Hai River, the Liao River, Dianchi Lake, Chao Lake and Tai Lake; (d) surface water quality in municipalities directly under the central government, provincial capitals, cities in special economic zones, coastal open cities and key tourism cities should meet national standards; and (e) ecological benefits of forestation should be strengthened and control of soil erosion should be improved Similarly the tenth five-year plan also proposed to improve water quality degradation through legislative changes, implementation of phase II of the trans-century green project, additional research and development, production of pollution prevention programs (PPPs). In addition the government undertakes specific studies on pollution assessment and planning. For example, the current report reviewed the Hai and Huai pollution control plans. Both plans propose a large investment program to achieve the proposed standards, including investments in cleaner production, factory restructuring, domestic wastewater treatment to complete standards, and significant wastewater reuse. In both cases, the scale of the effort and the timeframe proposed are very ambitious and preliminary indications are that progress to 2000 has been far less than planned. Provincial expenditures on industrial water pollution control have not kept pace with the growth in GDP of industrial output. While it has not been possible in this study to make a definitive evaluation of the adequacy of the total sum allowed in the investment plan, it is apparent that at least in respect to the construction of WWTPs both plans are greatly underfunded and the Huai plan in particular was undercosted. F. DEPLETED GROUNDWATER RESOURCES (i) Groundwater Resources in 3-H Basins Groundwater resources in the Hai, Huai and Yellow basins account for only 3.2, 4.7 and 4.9 percent of China's total groundwater resources. (The average for the rest of China's basins is 14.5 percent) (Table 3.26). However, when compared to total water resources, in these same basins, groundwater represents 48, 38, and 35 percent of total water resources in these same basins compared to 19 percent for the rest of China. This highlight the relative importance of groundwater in the 3-H basins. 58 Chapter 3. Water Resources and Issues TABLE 3.26: LONG-TERMMEAN GROUNDWATER RESOURCES OF THE BASINS IN CHINA (Bcm) Basins Mountainous Plain area Repeat Total % of Total area calculated 1 Songhua-Liao River 31.9 33.0 2.4 62.5 7.6 2 Hai River 12.5 17.8 3.8 26.5 3.2 3 Huai River 10.7 29.7 1.1 39.3 4.7 4 Huang River 29.2 15.7 4.3 40.6 4.9 5 Yangtze River 221.8 26.1 1.5 246.4 29.7 6 Pearl River 102.8 9.3 0.5 111.6 13.5 7 Southeast rivers 56.2 5.2 0.1 61.3 7.4 8 West-east rivers 154.4 154.4 18.6 9 Inland rivers 56.7 50.6 21.1 86.2 10.4 Total 676.2 187.4 34.8 828.8 Repeat Calculated = groundwater flow from mountainous area to plain area (i.e. double counted). The aquifer containing groundwater can be divided into (a) mountain and plains (by the depositional environment), and (b) shallow and deep aquifers. The older mountain aquifers are generally in karstic environments or fractured rocks of Cambrian/Ordovician age and generally represent fewer resources (20 percent of total) than the younger Pleistocene alluvial deposits in the plains areas. Within the plains, the western aquifers (Piedmont) have coarser alluvial and higher transmissivities (around 500- 2,000 m2/d) while the eastern aquifers in the central and coastal plains have transmissivities in the order of 100-500 m2/d and 50-300 m2/d respectively. (Figure 3.14). FIGURE 3.14: MEAN ANNUAL PRECIPITATION IN CHINA FROM 1956 TO1979 Hai Yellow Huai LEGEND N CHINA WATER SECTOR ACTION PROGRAM WORLD BANK-MINISTRY OF WATER RESOURCES Bound ary of Three Basins FIGUR E No. Average Annual Precipi tation in Yellow, Huai, Hai River Basins Chapter 3. Water Resources and Issues 59 The deeper aquifers contain better-quality water and are recharged by horizontal processes while the shallow aquifers with generally higher salinity (especially in coastal areas) are recharged by vertical processes, i.e. infiltration of rainfall from directly above. Groundwater recharge is an important process that dictates in part exploitable resources (along with aquifer characteristics such as transmissivity). The vertical recharge process of alluvial aquifers in the plains (especially the shallow aquifer) are much faster than the horizontal recharge processes of the deeper aquifers. Therefore overexploitation of deeper aquifers is a more serious long-term problem. Exploitable resources are much lower than recharge because of technical and management considerations. (ii) Major Groundwater Problems in 3-H Basins In the 3-H basins, the average ratio of groundwater use to exploitable groundwater seems to indicate that over the entire 3-H basin area, there is some kind of equilibrium and sustainable usage. However this picture is misleading as shown in Table 3.27 by the use exploitable groundwater ratio for level II basins. (Cities with unsustainable groundwater use and shown in Volume 3, Annex 3.2, Table A3.2-5). Ratios less than 1 imply unsustainable use. The physical evidence of unsustainable groundwater use is obvious and simple: falling groundwater and pressure levels. This phenomenon has been occurring in many areas in the 3-H basins especially the Hai Plains. Figure 3.15 shows that in some areas, shallow groundwater level differences between 1958 and 1998 is up to 50 m while deep groundwater level differences in the some period is up to 90 m. This occurs in very isolated areas but there are still vast areas where the water levels in the aquifers have dropped 50 m. Volume 3, Annex 3.2, Table A3.2-5 shows the severity of falling shallow and deep groundwater levels for major cities in the 3-H basins. The worst affected cities include Shangqiu, Zibo, Zhumadian, Zhengzhou, Xuzhou, Suxian, Heze, Qingdao, Linyi and Jining. TABLE 3.27: LONG-TERMMEAN GROUNDWATER RECHARGE, SURFACE RUNOFF AND THEIR RATIOS OF MAJORBASINS Basins Surface runoff Groundwater Ratio (G/S) Ratio (G/total) Hai River 28.8 26.5 0.92 47.9 Huang River 66.2 40.6 0.61 38 Huai River 74.1 39.3 0.53 34.7 Inland River 116.4 86.2 0.74 42.5 Songliao 165.0 62.5 0.38 27.5 Yangtze 951.3 246.4 0.26 20.6 Southwest China 585.3 154.4 0.26 20.9 South China 468.5 111.6 0.24 19.2 Southeast China 255.7 61.3 0.24 19.3 Total 2712.0 829.0 0.31 23.4 Data Source: Wu Yiao, et al., Water Resource Exploitation of China, Water Resource and Hydropower Publishing Press, 1986. While surface water withdrawals have reached a possible supply constraint and therefore have not increased since the early 1990s, groundwater withdrawals on the other hand have continued to increase in each of the 3-H basins during the same period of time (Figure 3.16). Falling groundwater levels due to overpumping cause (a) water quality degradation, (b) seawater intrusion and (c) ground subsidence. Groundwater quality degradation refers to the migration of poorer quality groundwater into good-quality aquifers as a result of the decrease in pressure/water level within the exploited aquifer. This process is documented for Cangzhou and Dezhou (Figure 3.17). By similar process, seawater intrusion in coastal aquifers is common in many coastal cities including Dalian, 60 Chapter 3. Water Resources and Issues Qinhuangdao, Laizhou, etc. (see Table 3.28). There are up to 72 areas where seawater intrusion has occurred in Hebei, Shandong and Liaoning provinces covering an area of 143 km2 in 1992). FIGURE 3.15: DIFFERENCE BETWEEN SHALLOW GROUNDWATER LEVELS IN 1958 AND 1998 IN THE HAI BASIN PLAINS Beijing Tangshan Langfang Tianjin Baoding Cangchou Shijiazhuang Hengshui Xingtai Handan Anyang 0 150 Kilometer s Xinxiang Approximate Scale LEGEND N CHINA WATER SECT OR ACTION PROGRAM WORLD BANK-MINISTRY OF WATER RESOURCES -50 ~ -40 m -40 ~ -30 m -30 ~-20m -20 ~ -15 m -15 ~ -10 m FIGURE No. -10 ~ -5 m 1958-1998 CV of Groundwater -5 ~ 0 m at Shallow Layer in Hai River Basin Plain 1 Chapter 3. Water Resources and Issues 61 FIGURE 3.16: DIFFERENCE BETWEEN DEEP GROUNDWATER LEVELS IN 1958 AND 1998 IN THE HAI BASIN PLAINS Tangshan Langfang Tia njin Ba nding Ca ngzhou Shi jiaz huang Hengs hui Xingtai Handan 0 150Kilometers Approxima te Scale LEGEND N -90 ~ -80 m CHINA WATER SECTOR ACTION PROGRAM -80 ~ -70 m WORLD BANK-MINISTRYOF WATER RESOURCES -70 ~ -60 m -60 ~ -50 m -50 ~ -40 m -40 ~ -30 m -30 ~ -20 m FIGURE No. -20 ~ -15 m 1958-1998 CV of Groundwater -15 ~ -10 m at Deep Layer in Hai River Basin Plain -10 ~ -5 m -5 ~ 0 m 2 62 Chapter 3. Water Resources and Issues FIGURE 3.17: SURFACE AND GROUNDWATER WITHDRAWALS IN 3-H BASINS 160 110 60 BCM/Annum 10 -401994 1995 1996 1997 1998 Surface withdrawals Groundwater withdrawals TABLE 3.28: SEAWATER INTRUSION IN CHINA Location Type of Area of sea Velocity of Distance from Period of aquifer water intrusion intrusion coastline occurrence (km2 ) (m/a) (km) Dalian city, Liaoning Province Karst 224 11.5 1975-1998 Qinhuangdao city, Hebei Province Sand 50 22 12.0 1970-1995 Laizhou gulf, Shandong Province Sand and clay 202 177 Longkou city, Shandong Province Sand and clay 78 Yantai city, Shandong Province Sand and clay 34 170 1970-now Qingdao city, Shandong Province Sand and clay 39 Beihai city, Guangxi Municipality Clay and sand 4 5.0 1980- now Pollution is the other major problem affecting groundwater in the 3-H basins. Shallow groundwater is particularly at risk from contamination by nonpoint source pollutants used in agriculture including nitrogen and pesticides. Other processes that cause shallow groundwater pollution include interaction between (polluted) river water and groundwater, the use of raw sewage for irrigation and point source contamination from municipalities/ towns, industries, TVEs and livestock operations. Loads of COD and toxic COD from these sources TABLE 3.29: GROUNDWATER QUALITY ASSESSMENT have been documented in detail in FOR SOME PROVINCES IN THE 3-H B ASINS (%) Chapters 3F and 7. Table 3.29 shows groundwater quality for different cities in Province/city Class I Class II Class III Class IV Class V the 3-H basins. Once groundwater is Beijing 2 50 0 45 3 unacceptable for drinking due to Tianjin 0 14 0 21 65 Hebei 4 27 0 35 34 pollution, it becomes restricted to lower Henan 9 40 0 36 15 beneficial uses. Thus deeper groundwater Shanxi 3 28 16 49 3 (or aquifers further away) need to be Inner Mongolia 0 29 24 12 25 increasingly exploited, exasperating Ningxia 0 0 0 0 100 Gansu 0 0 42 33 25 unsustainable use of the resource after a Qinghai 0 0 0 0 100 period of time because not only are more Source: Department of Hydrology, Ministry of Water Resources, Water people relying on the resource but the Quality Assessment of China, 1997. size of the resource itself is diminishing. This is a common pattern in the 3-H basins which highlights the link between increasing pollution and diminishing resource availability (Table 3.30). Chapter 3. Water Resources and Issues 63 TABLE 3.30: GROUNDWATER RESOURCES AND USE IN 3-H AREAS (Mcm) River Basin No. Sub area Exploitable Use of Use/ fresh groundwater exploitable groundwater in 1997 for 1997 Hai Basin 2-1 Luanhe and East Hebei coastal area 1,238 1,494 1.21 2-2 Hai river north system 3,227 5,667 1.76 2-3 Hai river south system 9,791 15,953 1.63 2-4 Tuhai and Majia river system 3,036 4,254 1.40 2 Basin total (or average) 17,292 27,368 1.58 Huai Basin 3-1 Upper area of Wangjiaba lake 2,272 1,693 0.75 3-2 Between Wang and Beng area 6,639 6,787 1.02 3-3 Between Bang and Hong lake 3,031 914 0.30 3-4 Lower reaches of Huai river 1,765 591 0.33 3-5 Southern four lakes area 3,620 3,051 0.84 3-6 Yi and Shu river 2,590 1,392 0.54 3-7 Shandong peninsula 4,071 4,011 0.98 3 Basin total (or average) 23,988 18,439 0.77 Huang Basin 4-1 Between the river source and Lonyang gorge Uncalculated 22 Uncalculated 4-2 Between Lonyang gorge and Lanzhou city 878 508 0.58 4-3 Between Lanzhou and Hekou 3,201 4,020 1.26 4-4 Between Hekou and Longmen 1,304 1,031 0.79 4-5 Between Longmen and Sanmen gorge 6,841 5,093 0.74 4-6 Between Sanmen gorge and Huayuankou 2,076 1,066 0.51 4-7 Downstream of Huayuankou 3,127 2,028 0.65 4-8 Inland area 815 106 0.13 4 Basin total (or average) 18,242 13,874 0.76 Total 59,522 59,681 1.003 Ground subsidence is by far one of the most costly and dangerous effects of overpumping. Whole areas of Tianjin and Beijing suffer from subsidence causing settlement of structures, bridge collapse, stormwater drainage problems and reduction in flood protection due to lower levels of structures such as dikes. The cost of subsidence is estimated at about Y 1.4 billion since 1985. Cities affected by this problem include Taiyuan, Shijiazhuang and Shanghai. (iii) Current Groundwater Management At the national level, the departments concerned with groundwater are listed in Table 3.31. As noted in other chapters (see above) on institutional aspects of water resources management, the principles upon which the national legislation are based are sound TABLE 3.31: GOVERNMENT DEPARTMENTS INVOLVED IN but the local application of the GROUNDWATER MANAGEMENT law at the province/county Ministry of Water Resources (MWR) Water Resources Management & well levels can create conflict of permit ( 300 m deep) interest because sustainable Ministry of Land Resources (MLR) Investigation & assessment of groundwater groundwater management can Ministry of Construction (MOC) Development and utilization of groundwater (urban) sometimes be in opposition State Environment Protection Water pollution monitoring and control with the pro-local government Authority (SEPA) interests of the bureaus who Ministry of Agriculture (MOA) Well permits ( 300 m deep) administer the law. In addition, people need groundwater to sustain their income and to maintain their quality of life and local government officials cannot deny the population this basic right. 64 Chapter 3. Water Resources and Issues The allocation mechanisms and licensing of groundwater extraction relies on a permit system that requires individuals who plan to use groundwater to disclose standard information such as (a) duration of extraction, (b) water use objectives, (c) allowable water volumes, (d) location, (e) means of extraction, (f) means of water saving, (g) wastewater treatment means, etc. Having considered existing water allocation commitments as described above, the local Bureaus will study the individual's application and accept, modify or refuse the application. Due to a large population, heavy dependence on irrigation in agriculture and fast industrialization, groundwater management has become an urgent matter. While groundwater regulations are covered in the Water Law (1998) and the Water License System Implementation Methods (1993) at the Ministerial Level, their implementation occurs at the provincial/county levels. This devolution of responsibilities to local agencies promotes local solutions to problems using national guidelines. For example, groundwater extraction criteria investigated in an application for a groundwater license include volumes, objectives, location of wells, etc., which are all essential parameters of a groundwater management plan. However, the major issues arising with current groundwater management include (a) possible interference in the planning process from realities of economic development and the need to find some water, (b) multiple responsibilities by different government agencies and (c) insufficient monitoring of both groundwater extraction and groundwater quality. These factors prevent the application of an effective groundwater management program needed to address the issues raised in this chapter. G. PRESENT SITUATION OF WATER SECTOR MANAGEMENT (i) Introduction Water has played a pivotal role in promoting the development of the Chinese economy. Owing to difficult climatic and topographic conditions, water resources management has always had to rely heavily on engineering structures for flood control, power, irrigation, municipal/industry supplies and navigation for grain transport and other goods. Uncontrolled water in the form of flooding and more recently waterlogging has also been China's great tragedy, causing untold damage to the economy over the centuries. More recently, uncontrolled wastewater discharge is also challenging economic growth although this is more difficult to quantify. The issue of flooding is foremost in the minds of many officials and major decisions have been taken in the light of the devastating 1998 experience to contain damage during future floods. A second vital issue, as signaled by the 1997 drought and dramatized by the drying up of the Yellow River, is that of water scarcity in northern China. A major study of future prospects by the Water Resources and Hydropower Planning and Design General Institute suggests that, when the South-North Transfer project is constructed and sound policies and strategies are in place, the water supply deficits can be contained. The institute's projections conclude that a satisfactory balance between supply and demand can be anticipated by the middle of the next century. However, the facts are the timing of the transfer remains uncertain and localized problems have to be faced now--the water supply situation is critical. Water pollution is another obvious and growing problem. It was highlighted by the 1996 pollution crisis in the Huai Basin, and is receiving widespread media and political attention. Less visible are the extreme groundwater problems in the 3-H Basins. Finally, soil and water conservation in the upper watersheds, and its implications for sedimentation of rivers, reservoirs and estuaries, is another major issue which is being addressed by projects such as that supported by the World Bank on the Loess Plateau along the Yellow River. Chapter 3. Water Resources and Issues 65 With respect to institutional and financing issues, the major deficiencies identified were as much to do with implementation as with current policy or legislation. Unified administration and management of water and associated land resources at national, provincial and local levels, across administrative and hydrological boundaries, is called for in the water law and other related laws and policies. However, this remains a crucial and elusive objective. Water planning management has been in the forefront of government concerns throughout China's long history and especially in the last two decades due to population growth and increasing intensity of natural resource use. This was reaffirmed soon after the founding of modern China in 1949 by the creation of the Ministry of Water Resources (MWR) with a mandate that focused in particular on flood control and irrigation. Other ministries took the lead in water supply, hydropower, navigation and other subsectors pursuant to special laws or delegation of authority by the State Council. Initial policies focused on individual development and project management. But, as natural resource use intensified, the need for a more coordinated approach among the ministries especially with respect to hydrologic planning became essential in order to attempt to satisfy specific and often conflicting uses for water. Thus, as the need for greater integration and coordination in resource and environmental management became recognized, five primary laws were adopted: (a) the 1984 Water Pollution Control Law (revised in 1996), (b) the 1988 Water Law (reviewed in 1999), (c) the 1989 Environmental Protection Law, (d) the 1991 Water and Soil Conservation Law, and (e) the 1997 Flood Control Law. Of these, the 1988 Water Law is the fundamental "umbrella" law for water management, with MWR designated to implement the law. Seven interprovincial basin commissions have been created within MWR and numerous organizational initiatives have been taken at national, provincial and local levels. The 1988 government reorganization included the consolidation of authority for water matters within MWR. As the different ministries in the water sector were given mandates by the State Council and funding to carry out infrastructure projects, the natural resource laws described above greatly improved planning of the water sector. However, the growing importance of extrabudgetary funding has given provincial/county governments increasing opportunities to finance regional public infrastructure programs that do not have to go through ministerial planning, provided the scale of the works remain below a certain level. Moreover, as noted above, water resource management in China is also carried out to a large extent by local government employees of provincial and county bureaus through the operation of existing infrastructure such as reservoirs for hydropower, water storage and flood control, transfers for irrigation and gates for water allocation. There are two important conclusions from these observations to keep in mind in the following discussion on the water sector management. The first is that past and present investments in water infrastructure reflect the government's water resource planning and management priorities over time which typically fluctuate between drought and flooding. The second is that multiple sources of funding for infrastructure (from central, provincial and county governments) can reveal valuable information on regional priorities with regards to planning and management of water and highlight possible inconsistencies between macro and micro planning and management in the context of highly intensive resource use. (ii) Decentralized Government Structure Government in China is structured at four levels: national, provinces (including municipalities directly under the central government and autonomous regions), county/city and township/village. Prefectures may exist for administrative purposes intermediate between the province and county but only 66 Chapter 3. Water Resources and Issues in autonomous regions do they have a formal governmental status (Volume 3, Annex 3.2, Figure A3.2-12). The highest organ of the government is the National People's Congress (NPC), whose functions between its annual and special sessions are carried out through its Standing Committee. Of nine special committees established by the NPC, two are of particular concern to the water sector: the Environment and Resources Protection Committee, and the Agricultural and Rural Affairs Committee. The Chinese People's Political Consultative Conference (CPPCC) is the highest advisory body in the country, meeting on an annual basis and consisting of more than 2,200 representatives from all social sectors. Its primary function are political consultation, democratic supervision and participating in and deliberating on State Affairs. Executive power is exercised by the State Council. Under the State Council are the 29 recently (1998) reorganized functional organizations such as ministries and commissions. Volume 3, Annex 3.2, Figure A3.2-13 shows the main functional organizations following the 1998 government reorganization whose mandates directly affect the water sector. Administrative reform at the provincial (local government) levels began in 1999 in a manner similar to the reform of central government in 1998. Comparable people's congresses and people's governments exist at provincial and prefectural (administrative/autonomous), county/city and township levels. But in contrast to constitutionally federal countries, provinces and municipalities directly under central government have no inherent powers under the Constitution; only those "prescribed by law." In contrast, autonomous provinces have a constitutionally specified autonomous status of "self-government" and to this extent China is indeed a federal country. According to official government structure, departments and bureaus of water conservancies at the provincial levels and water conservancy stations and water users associations at the community level are vertically integrated with MWR (similarly with the Ministry of Communications and the Ministry of Agriculture--see Volume 3, Annex 3.2, Figure A3.2-13) with their mandates corresponding to those of the line ministries in relation to the implementation of legislation. However, they also report and depend on the provincial governments especially in relation to administration of laws and importantly for funding. In Volume 3, Annex 3.2, Figure A3.2-13, the dotted vertical lines represent planning and technical functions defined by the ministries and passed on to local government bureaus for implementation at the local/regional levels. According to Litvack31 this form of decentralization may be defined as "delegation" where the central government transfers responsibilities for decision-making and administration of public functions to local governments. The local agents (in this case the bureaus at the provincial/county/prefecture levels) have a great deal of discretion in decision-making. In fact, the bureaus do exert considerable influence over planning at the local/regional level, allowing responsive, tailored solutions to local problems. This is because the laws are normally broad in their application and allow variations (subject to agreement with the ministry concerned) to suit local conditions. Implicit in the definition of delegation is that the local agents are not only controlled by the central government but are accountable to it. In the case of bureaus at the local government levels in the water sector, the line of responsibility in terms of function lies clearly with the ministries but since the bureaus are employees of the provincial or county governments (full lines in Volume 3, Annex 3.2, Figure A3.2-13 representing financial/employment relations), the focus of their activities remains with the provincial/county government and thus management planning activities may be scaled or modified to suit local government imperatives. Litvack further notes that the risk with delegation is that local agents (bureaus) may lack incentives to act as closely as possible in accordance with the wishes of the central government. 31 Litvack et al., "Rethinking Decentralization at the World Bank," 1998. Chapter 3. Water Resources and Issues 67 The "principled laws" that guide the activities of the ministries in water resource management or environmental protection are based on well-established scientific doctrines and China's own blend of water administration law, enforcement and jurisdiction. These well-meaning principles (such as water allocation based on watershed or "polluter pays" principles) increasingly conflict with the economic interests of the provinces and those administrative bodies (whose financial viability depends on provincial budgets) empowered by the laws to enforce rules and regulations at the local level (such as water bureaus) are often under pressure to act in the interest of the local government to the detriment of sound water or environmental resource management and planning. Thus, vertical relationships between ministries, departments, bureaus, etc. have been challenged by stronger alliances between the local governments and these local administrative bodies. (iii) Interministerial Coordination Mechanisms In an effort to improve holistic planning for water resources, coordination among ministries, commissions and lower level government entities is effected through "leading groups" (coordination committees) or through interdepartmental agreements. In the past, several coordinating groups have dealt with water resources, including the National Leading Group for Water Resources and Soil Conservation Works, a high level interministerial and interregional body established in 1988 and chaired by the Vice Premier. Similar bodies were created at lower levels of government The main functions of the Leading Groups are to (a) examine and approve the comprehensive planning of large river basins, (b) examine and approve the important principles and policies of national water and soil conservation work as well as the important problems of key control projects, (c) resolve major water resource allocation problems among various sectors and (d) handle and coordinate major water affair conflicts between provinces. However, the National Leading Group (for the water sector at least) ceased to function some years ago when it lost high-level support, and the 1998 government organization reform further downplayed the role of such groups. The only standing interministerial committee in the water sector at the national level is the State Flood and Drought Control Relief Headquarters. At times of emergency the Office of this Headquarters reports directly to the responsible Vice-Premier. A temporary coordinating committee may be established for a particular purpose (e.g. relating to a specific basin or program or issue), and if so, is chaired by the appropriate ministry. Provinces may also establish leading groups for specific programs or issues within their jurisdiction, although again this practice may now be discouraged. As at the central level, provincial planning commissions have responsibility for review and approval of programs and projects, and may play an important role in resolving wider coordination difficulties. In practice there is considerable overlap between the different ministries and inconsistent and fragmented responsibilities are a major issue. While the primary legislation discussed above calls for integrated and comprehensive management, in practice different ministries and agencies are primarily responsible for implementation of specific acts of legislation and inconsistencies and conflicts arise between different agencies in the exercise of their respective mandates. This is probably why resource conflict mediators and interprovincial water allocation planners such as Leading Groups were set up in the first place, but the political process of decentralization (which has no doubt helped propel China's economic growth) has taken away this high-level planning perhaps because it was viewed as being too centralized. In addition, as competition intensified between provinces due to (a) increasing economic activity, (b) population growth and (c) new imperatives of regional responsibility systems, local governments have had to acquire de facto planning/management rights of natural resource to sustain economic growth. Micro planning and management at the regional level limited by administrative boundaries is thus the current reality in the water sector. No doubt ministries have retained significant 68 Chapter 3. Water Resources and Issues input into planning and management but as central government revenue and public expenditure have shrunk, it is constantly constrained by limited resources for public investment in national priorities and nationwide externalities such as large water transfers, WWTPs, etc. These key projects may have far more significant impact on growth across provinces than their counterparts in each province. In addition, given the nature of water resources as a unitary good, multiple planning and regional management may have negative effects on economic growth. (iv) River Basin Management Aside from interministerial Leading Groups, other mechanisms designed to improve water resources management include the river basin management groups. These are described in the following sections. The water law recognizes the basin as the logical context for devising solutions to water resource management problems. However, land is fixed with site-specific characteristics and land-use dominates how water is used and/or abused. Integrated management of water and associated land resources must therefore be achieved within a defined geographical area. How best to coordinate activities based on hydrological boundaries with those based on administrative boundaries is a perennial issue in water resources management. Issues that have arisen include the following: 1. The River Basin Commissions (RBCMs) are commissions only in name, having no separate governing board or corporate status. The RBCMs are departments of MWR and perform those functions that MWR delegates to them (Volume 3, Annex 3.2, Figure A3.2-13). The RBCMs find it difficult to enforce provisions of basin plans on other sector ministries and provincial governments, and the functions that they perform overlap with activities undertaken at a provincial and local level. 2. RBCMs in principle help resolve conflicts between jurisdictions and sectors, and ensure that multiple uses are served according to established priorities. But these functions are hampered by an absence of formal agreements on interprovincial water allocation, pollution limits, and other matters. Only for the Yellow River has water been allocated among the provinces and, even in this case, provisions for varying river conditions are inadequate. The RBCMs may propose and (to the extent they manage multipurpose facilities' real-time management) enforce allocations but most storage and diversion facilities are controlled by local or sectoral entities and these may be operated in ways that are inconsistent with the provisions of RBCM plans. Only at times of flood do the RBCMs exercise predominant authority over other entities under the State Flood Control and Drought Relief Headquarters. 3. Administration of land, groundwater and water quality is typically handled by agencies at the provincial and local levels. The transfer of aspects of groundwater administration to MWR and the provincial water resource bureaus may facilitate integration of groundwater and surface water, but conjunctive management, and integration of land and water, and water quantity and quality, all remain illusive within the basin context. Little effort is made to consolidate plans covering each aspect within comprehensive county, provincial or basin plans. 4. The 1988 Water Law allows for the designation of special controlled areas so that they can be subject to specific plans and management measures. This has particular relevance for overexploited groundwater resources. However, as far as is known, no coordinated approach has been adopted under the 1988 law to the issue of groundwater overexploitation on the 3-H Plain, and the three RBCMs have had only limited success in conjunctive management. Chapter 3. Water Resources and Issues 69 5. In principle, RBCMs prepare basin development and operating plans, and undertake other tasks, in full consultation with the provinces, sectoral ministries and other stakeholders. In practice, there are few formal consultation mechanisms, and the main directives and decisions affecting RBCM activities are received vertically from MWR. Comparable issues to those outlined above are encountered in basins and subbasins that fall wholly within provincial boundaries. Jurisdictional disputes and coordination issues may arise between prefectures, counties and enterprises at every level. Subbasins within large interprovincial river basins, may also be poorly coordinated with RBCM development and operating plans for the main stem. Provinces have also made limited use of powers under the 1988 water law to designate areas under particular pressure, e.g. for overexploited aquifers. H. PRIVATE SECTOR PARTICIPATION IN INFRASTRUCTURE32 This section provides a review of the current situation of private sector participation in infrastructure (PPI) in the Chinese Water Sector. This form of public/private partnership is important because it can facilitate (a) the injection of capital investment, (b) the optimization of operating capital expenditures; (c) the introduction of new technology; (d) the improvement of customer services; (e) the insulation of public services from short-term political changes; and (f) the reduction/redirection of public subsidies, reduction of payrolls, etc. Of all the public services, the provision of piped water (and sewerage) is the one with which the private sector is the least involved. This is especially true in China where, as indicated below, the private sector is involved in less than 10 percent of the installed municipal water supply capacity with negligible involvement in wastewater treatment and water and wastewater networks. The current situation of PPI in the Chinese water market is summarized in Table 3.34. Information on PPI in China is rather difficult to obtain because (a) SDPC, i.e. central government, does not have records of small transactions involved and (b) the sensitive nature of the information restricts access. In addition, PPI in China is still experimental but the rapidity of change in the degree of private sector participation shows that this will become an important form of services provision. However, the role of PPI as a financing vehicle has been limited up to now (see Table 3.34) and accounted for only 4 percent of total water supply investment between 1992 and 1998 (7.5 percent prior to 1997 and 3 percent thereafter, probably due to lower investor confidence from the Asia financial crisis). The major private companies involved in the water sector in China are listed in Table 3.32. The regional distribution of PPI ventures show that existing ventures are almost entirely located in the eastern and western provinces with only four ventures located in Chengdu (Sichuan), Xian (Shaanxi) and two in Guiyang (Guizhou). Table 3.33 shows that Guangdong province and the large municipalities are under central government control. Table 3.34 lists known PPI ventures in China. Many different forms of private sectors participation are being experimented ranking from operation and management contracts, municipal and joint venture BOT to concessions. In addition, degree of municipal ownership further distinguishes ventures in China. See Figure 3.18. The majority of contracts in existence today in China are the build- operate-transfer (BOT) type below US$30 million, which do not require SDPC approval. Table 3.35 32 This section is derived mostly from China PPI Framework Initiative-Water Sector Final Report, SOGREAH, June 2000. 70 Chapter 3. Water Resources and Issues summarizes some advantages and disadvantages of the various private sector participation schemes in operation in Chine today. TABLE 3.32: BREAKDOWN OF PPI TRANSACTIONS BY DEVELOPER Foreign Developer No. Capacity (m3/day) Foreign Investment (US$) Sino-French 9 3,260,000 111,160,000 Cathay International 5 1,890,000 196,500,000 China Water 4 450,000 32,400,000 Vivendi Water 3 1,150,000 141,000,000 Thames Water International 1 400,000 73,000,000 Saur International 1 225,000 15,000,000 Cheung Kong Infrastructure 1 400,000 8,575,000 Giantmost 1 250,000 8,000,000 Total 25 8,025,000 585,635,000 Source: China PPI Framework Initiative-Water Sector Final Report, SOGREAH, June 2000. TABLE 3.33: PPI TRANSACTIONSPER PROVINCE/MUNICIPALITY Province/Municipality No. Capacity (m3/day) Value (US$) % total province urban water supply capacity Guangdong 5 1,500,000 113,160,000 9.0 Liaoning 3 1,900,000 24,100,000 21.5 Shandong 4 1,390,000 136,500,000 23.3 Guizhou 2 250,000 2,400,000 32.6 Heilongjiang 1 225,000 15,000,000 7.1 Sichuan 1 400,000 106,500,000 12.3 Fujian 1 250,000 8,000,000 6.0 Shanghai 1 400,000 73,000,000 5.6 Hebei 1 260,000 23,400,000 7.2 Zhejiang 1 100,000 15,000,000 2.1 Shaanxi 1 250,000 15,000,000 14.2 Hunan 1 400,000 8,575,000 8.0 Tianjin 1 500,000 19,500,000 25.4 Henan 1 300,000 19,000,000 5.9 Jiangxi 1 50,000 5,500,000 2.1 Source: China PPI Framework Initiative-Water Sector Final Report, SOGREAH, June 2000 The major issues facing increased private sector involvement in water supply and wastewater treatment actually also affect both sustainable water resources development and the financial viability of local operators. · These services are highly subsidized and the current tariffs barely cover operational expenses so that: (a) insufficient resources are available for maintenance or capital expenditures and (b) low cost of service encourages wasteful consumption which is contrary to the requirements of north China. As a result, consumer confidence in service provision is low and so is willingness to pay for the service. On the basis of this arguments it would appear that improved management techniques which could initially be obtained from a lower level if PPI (for example operation and management contracts) could bring about consumer confidence in the service, improve willingness to pay and along with public awareness campaigns this could ensure that more financially viable prices could be charged to consumers. · From an international investor perspective, there is a need for the existing water treatment or wastewater treatment operators to improve their knowledge/transparency of fixed assets valuation and depreciation techniques and of international accounting and reporting methods. Chapter 3. Water Resources and Issues 71 FIGURE 3.18: DEGREE OF FOREIGN INVOLVEMENT IN OPERATION AND MANAGEMENT 20 18 16 14 12 Number 10 8 6 4 Concession (inc. Network) 2 BOT/ROT/TOT 0 100% O&M JV 0% Municipal Ownership Source: China PPI Framework Initiative-Water Sector Final Report, SOGREAH, June 2000. · Institutional issues have been raised in previous chapters in relation to resource management. However broadly similar issues are relevant for increased PPI these include (a) decentralizations, (b) overlapping ministerial responsibilities; (c) investment decisions that focus on new infrastructure rather than maintenance of existing areas; · Inconsistent implementation of the water law and other relevant laws from the ministry to the local government level as discussed in Chapter 2 and lack of guideline for application of the appropriate law. · Existing decrees and regulations in relation to foreign direct investment (FDI)33 (a) prohibit foreign investment in water supply, drainage, gas and heat power supply networks in urban areas; (b) specify BOT projects as experimental; i.e., allow foreign involvement in water and wastewater treatment and (c) possibly allow foreign involvement in conveyance systems. The effect of these decrees is to effectively limit foreign investment.34 In the case of wastewater treatment, the lack of a clear tariff is the major impediment. In addition, limited opportunities currently exist for local operators to improve their knowledge on how to operate WT or WWT plant effectively by exposure to foreign expertise. · Financial issues include (a) the inability of foreign enterprise to borrow in Renminbi; (b) inadequate credit support; (c) small size of water projects to attract financiers who have little interest in projects under US$100 million; (d) the desire to limit returns on investment to 10-12 percent through misinterpretation of the new tariff regulations. 33"Interim provisions on Guiding Foreign Investment Direction" and "Catalogue for the Guidance of Foreign Investment Industries" by SDPC; SEPC and MOFTEC. 34Water treatment represents only about 30 percent of capital expenditure and 20 percent of operating costs. 72 Chapter 3. Water Resources and Issues TABLE 3.34: LIST OF KNOWN ACTIVE PPI VENTURES IN CHINA Date Name Plant Type Cost % Duration of Raw Water Bulk water Domestic Developer (signa- Capacity (US$ private contract Tariff tariff water tariff ture) (m3/day) million) (years) Y/m3 Y/m3 Y/m3 1992 Tanzhou Water Supply 50,000 Concession $13 M 58 35 na na 1.3 Sino-French 1994 Harbin Water Supply 225,000 JV (BOT) $30 M 50 30 0.62 1.0 SAUR International 1995 Nanchang Water Plant 50,000 JV (ROT) $11 M 50 30 na 1.05 0.8 Sino-French 1995 Shenyang Water Supply 1,800,000 Initially BOT now $32 M 0 30 na 1.09 1.3 Sino-French O&M Contract 1996 Shanghai Da Chang Water Treatment 400,000 BOT $73 M 100 22.5 - - 0.7 Thames Water/ BOVIS 1996 Nanhai Water Supply 250,000 JV (BOT) $16 M 50 20 - - - Giantmost Ltd. 1997 Tianjin Water Supply 500,000 JV (ROT) $30 M 65 30 1.2 - - Vivendi 1997 Lianjiang Water Supply 100,000 JV (BOT) $15 M 60 30 na 1.25 1.13 Sino-French 1998 Zhongshan Water Supply 500,000 JV (ROT) $27 M 66 22 na 0.77 c 1.2 Sino-French 1998 Zongshang Water Supply 200,000 JV (ROT) $30 M 66 22 na - - Sino-French 1999 Chengdu Water Supply 400,000 BOT $106.5 M 100 20 - 0.98 0.65 Vivendi/Marubeni Waterworks Company Ltd. 1999 Changtu, Liaoning 0 JV (BOT) $13 M 70 30 - 1.1 - Sino-French 2000 Baoding, Hebei 260,000 JV (BOT) $26 M 90 30 not 0.61 Sino-French applicable 2000 Zhengzhou, Henan 300,000 JV (ROT) $38 M 50 30 not 0.84 1.0 Sino-French applicable - Shenyang 100,000 - - 50 - - - - China Water - Xiaoqing, Zhejiang 100,000 - - 50 - - - - China Water 1997 Jinan Water (Dongjiao, Nanjiao, Xijiao 900,000 JV $90 M* 80 25 Cathay International plants) 1997 Jianan Water, Dayang Plant 400,000 JV (BOT) $30M* 60 25 Cathay International Binzhou Dongiao 40,000 JV (ROT) $9.9M* 60 20 Cathay International Binzhou Cathay Water Plant Ltd. 50,000 JV (ROT) $6.6M* 80 20 Cathay International Jiangmen Water 500,000 JV (ROT) $60 M* 80 - - - - Cathay International Xuzhou Wastewater Treatment Plant Cathay International 1997 Xian Water Supply 250,000 JV (BOT) $30 M 50 Berliner Wasser 1998 Yueyang Water Supply 400,000 JV (ROT) $140 HK 49 18 Cheung King Infrastructure 1998 Zhongcao WTP, Guiyang, Guizhou 150,000 JV (ROT) $24 M 50 China Water 1998 Beijiao WTP, Guiyang, Guizhou 100,000 JV (BOT) $24 M 50 China Water WTP = Water Treatment Plant JV = Joint venture Chapter 3. Water Resources and Issues 73 TABLE 3.35: BENEFITS/DISADVANTAGES OF VARIOUS PPI MODELS Advantages Disadvantages Examples 1. Joint Venture approach (JV) 1.1 "Shell" type 1.1 An provide finance for limited part of water supply system. 1.1 JV created a shell to permit foreign 1.1 Harbin Enables municipal governments to supplement funding from investment of increase central government state budgets and grants resolving debt-financing problems. risk, high returns on equity are not favored by central government. 1.2 Joint Venture 1.2.1 Financing and technical and managerial expertise provided 1.2 Water resources planning can become 1.2 Harbin (BOT type) and Tianjin "active" type as package more difficult because of lower central (ROT type) government planning involvement. 1.2.2 Foreign management techniques allow optimum operational costs while maintaining high standard of treated water. 1.2.3 Technical and operational improvements permit plants to operate continuously while other plants using same resource have suffered from intermittent shutdowns. 1.2.4. Creates local-foreign partnership creating cofinance between partners and technology trusts 2. Wholly-owned Allow significant finding via equity and debt financing May be more expensive way to finance Chengdu BOT (not yet operational) Foreign BOT because return on equity is applied to entire Shanghai Dachang BOT equity rather than on foreign portion as per Beijing No. 10 WTP (not yet JV. operational) 3. Concession of 3.1 Allow finance to upgrade treatment plant and existing Tanzhou entire network network to treat water to high standard Macao 3.2 Unaccounted for water reduced (e.g. in Taizhou 40 percent to 17 percent) 3.3 Improves profitability allowing future investment funded by debt financing based on positive revenue streams 3.4 Improved overall planning of water supply system, improved investment distribution between treatment and distribution elements. 3.5 Improvement of safety of drinking water 4. IPOs Difficult to discuss advantages at this stage. Local debt financing is more feasible, current Shenyang Public Utility Company poor performance 4. SUFFICIENT WATER FOR ALL A. INTRODUCTION The primary concern of Chinese water authorities has been the provision of water supplies in quantities sufficient to sustain human life, permit continuing growth in the industrial sector, and maintain an adequate supply of food production. Over the past several decade, these objectives have been increasingly difficult to meet in much of the 3-H region. Demand, as interpreted by Chinese planners, has consistently outpaced water supply, leading to severe shortages in some areas and some sectors. As was shown in Chapter 3, withdrawals for consumption have probably reached their maximum levels given the seasonality of river flows and high silt content of flood-season flows. In addition, current levels of consumptive use (the sum of beneficial consumption and irrevocable losses) within 3-H are undoubtedly unsustainable given the environmental concerns of groundwater sustainability, river channel morphology, and estuarial protection. In efforts to understand the dynamics of supply-demand balances, and assist in planning to minimize the impacts of future imbalances, various institutions have projected water demand into the future, tabulated the likely increases in water supply forthcoming from water sector projects, and suggested ways to deal with probable future shortages. In Section B we review the more significant of the demand projections, noting that each successive exercise results in lower overall demand for comparable future years, yet projected shortages remain. We suggest that more realistic projections of demand in the true sense of the meaning (i.e., as a schedule of volumes of water desired over a range of water prices given other contributing factors), would be more useful to policy makers than a projection of withdrawals, without regard to price, which are in fact unsustainable with respect to likely future water supplies. Such demand projections are then derived from economic forecasts and econometric studies of the behavior of firms and households in the face of GDP, income, and price changes. The econometric projections, assuming that the real price of water will increase substantially from low, sometimes subsidized levels to reflect the full cost of supply, showed that household and municipal demands will be about 18.5 Bcm, rural nonagricultural demands (including rural life and industry) 15.8 Bcm, and industrial demands 33.1 Bcm, all by 2050. The total of 67.4 Bcm compares with a 1997 figure of 32.8 Bcm for these sectors (for details of water demand by sectors and supply by sources under different runoff probabilities see Annex 4.1, Volume 3). In Section C we review the water supply projections previously made for the 3-H region. Successive projections of water supply have not shown decrease, as do the demand projections, but do show successive delays in the achievement of the underlying plans. What increases that had been planned for 2000 probably will not be realized until 2010 or later. But the primary conclusion regarding future water supply in 3-H is that only minimal increases can be expected from non-3-H sources. Total withdrawals will probably never be able to exceed 150 Bcm/year, compared with about 140 at present unless extrabasin sources are greatly expanded. The main extrabasin source is envisaged to be South- North transfer scheme, bringing perhaps 15-25 Bcm/year from the Yangtze River. Chapter 4. Sufficient Water for All 75 As does Chinese water allocation policy, we view agriculture in 3-H as the residual water- demanding sector. The biological requirements of the current cropping pattern in 3-H far exceed current and future levels of withdrawals. In short, irrigation "demands" can never be met. Given the water allocation policy, and increasing nonagricultural demands, water supplies to agriculture have been in a slow but steady decline over the last decade. We fully expect this to continue, but not with the disastrous consequences that some have predicted. Agricultural output has continued to increase in 3-H despite decreasing supplies of irrigation water, and there is no reason why this trend should not continue into the foreseeable future. Much higher economic and social returns for water are found outside of agriculture, and a policy which attempts to maintain or increase water supplies to agriculture will certainly restrict overall economic progress. Section D argues for a shift in focus away from planning to reduce water shortages by supply augmentation, to an emphasis on water demand management which includes, price, water savings and wastewater reuse. This does not imply that there are not many economically viable water supply projects to be undertaken. It does imply that, no matter what increases in supply are forthcoming, there will always be shortages, inefficiencies, and misallocations unless demand in managed. The most effective tool in demand management is price. Prices, particularly to urban and industrial users, have been rising in the last few years, and there is increasing evidence that demand increases are slowing as a result. But prices need to rise much more in order to recover the full costs of water supply, and restrain demand to manageable levels. The agricultural sector must also pay higher prices. This will provide the badly needed funds for system rehabilitation and maintenance, and the market signals that higher prices send will help guide the sector toward badly needed adjustments (see Chapter 5). On the supply side, there are several elements to the Action Program. · The water licensing system needs to be made fully effective in reducing groundwater extractions to sustainable levels to prevent further environmental and urban infrastructure damage through salinization, water quality degradation and ground subsidence. · Managed expansion of groundwater capacity expansion in rural areas can promote conjunctive use of surface and ground supplies: in wet years, farmers could rely on surface water and allow groundwater to recharge; in dry years when river flows are low, groundwater could be pumped to maintain minimum irrigation supplies. · Rehabilitation of the irrigation system can reduce losses and permit more timely water supplies. · The treatment, distribution and reuse of urban wastewater, for use both in industries and agriculture (see Chapter 8). B. WATER DEMAND PROJECTIONS (i) Brief Review of Existing Estimates of Future Water Demands As noted above, the primary concern of Chinese water authorities has been the provision of water supplies in quantities sufficient to sustain human life, permit continuing growth in the industrial sector, and maintain self-sufficiency in food production. By the early 1980s, sporadic shortages were appearing in parts of northern China as withdrawals of water began to increase substantially. Since then there have been several attempts to project water demand (more precisely, water withdrawals). The more important 76 Chapter 4. Sufficient Water for All of these are summarized in Table 4.1 for the 3-H basins, divided into nonagricultural and agricultural uses. TABLE 4.1: 1980, 1998, ANDALTERNATIVE PROJECTIONS OF WITHDRAWALS (Bcm) 1980 1998 2000 2010 2020 2050 Nonagriculture IPPDI (1992) 19.7 36.2 46.9 UNESCAP (1997) 45.0 75.7 IWHR, NIHWR (1999) 46.9 67.5 IWHR (1999) 74.2 87.6 IWHR Action program studies 39.9 54.0 68.4 88.7 World Bank 37.3 43.1 52.7 59.1 Agriculture IPPDI (1992) 106.4 102.5 128.7 UNESCAP (1997) 125.9 129.1 IWHR, NIHWR (1999) 116.5 118.3 IWHR (1999) 109.5 106.5 Penman/FAO Approach 141.1 141.0 138.1 140.1 TOTAL IPPDI (1992) 126.1 138.7 175.6 UNESCAP (1997) 170.9 204.8 IWHR, NIHWR (1999) 163.4 185.8 IWHR (1999) 183.7 194.1 Sources: 1. Planning & Design Institute of Water Conservancy & Hydropower, MWR, China's Water Resources Development, 1992. 2. UNESCAP, China: Water Resources and Their Use, 1997. 3. NIHWR, IWHR, China Water Supply and Demand in 21st Century, 1999. 4. IWHR, Strategic Options for the Water Sector, 1999. 5. IWHR, "Industrial and Domestic Water Demand Forecasts," project working paper, 1999. The two most striking aspects of these results are (a) they all exceed likely future water supply capacity (discussed in the following section) by a wide margin, and (b) each successive projection resulted in lower future demands than its predecessors. For example, IPPDI (probably writing in the early 1980s) projected demand to total 175.6 Bcm for the entire 3-H region in 2000. The United Nations Economic and Social Commission for Asia Pacific (UNESCAP), based on analysis done by NIHWR about 1996, reduced this to 170.9 Bcm. IWHR, working on the Action Program in 1999, came up with 163.4 Bcm. The years beyond 2000, where estimated, show similar trends. The Australian Consultant, using an entirely different approach,35 came up with lower numbers still. As argued in Chapter 2, the 3-H region has probably hit a "brick wall" supply constraint, which in the absence of alternative water supplies, will constrain withdrawals to something near 140 Bcm per year. (a) The Landmark IPPDI Study Perhaps envisioning that the economic growth expected after the redirection of the economy in 1978 might lead to water shortages that could impede these objectives, the first comprehensive study of water demands and supplies was undertaken in the early 1980s by the Irrigation and Power Planning 35 As described below, all of the various Chinese approaches essentially involve projecting consuming populations, water use quotas for each, and multiplying the result. Prices and incomes do not directly enter their calculations anywhere. In the Australian Consultant's econometric approach, the main variables are population and projected prices and incomes, augmented by international comparisons. Chapter 4. Sufficient Water for All 77 Design Institute (IPPDI), based on 1980 benchmark data.36 We will term this the "IPPDI" study. Those data, shown in the top part of Table 4.2, revealed a China that was overwhelmingly agricultural in terms of water use. Agriculture in 1980 accounted for 84 percent of withdrawals in the 3-H region, and nearly 82 percent nationwide. The "urban" sectors (urban "life" and industry), accounted for only 11 percent of withdrawals in 3-H, and 12 percent nationwide.37 The IPPDI study then projected withdrawals to the year 2000 (bottom part of Table 4.2) using what was essentially a "bean-counting" method: first the various water-consuming populations were projected into the future, then consumption rates by each group were projected, and the products added up to achieve projected withdrawals. These numbers then, as well as today, are termed "demand" in Chinese parlance, although neither the notion of price, nor a demand curve for water, are to be found. The distinction between "withdrawals" and "consumptive use" was also absent from the IPPDI study. It was only introduced in the water statistics in 1994. Thus all references to water "demand" and water "use" prior to 1994 refer to withdrawals. Nevertheless, the projections made in 1980 are of interest as they show (a) how the ensuing pattern of development caught many people by surprise, and (b) how the level of optimism regarding the water sector found in that study has tempered over time. TABLE 4.2: 1980 WITHDRAWALS AND PROJECTIONS TO2000 (Bcm) Water Region Urban Rural Industry Agric. Total 1980 Actuals I Northeast 1.0 3.9 6.4 24.2 35.4 II Hai-Luan 1.1 1.7 4.9 30.8 38.4 III Huai 0.5 3.3 3.8 45.4 53.1 IV Yellow 0.6 1.5 2.8 31.1 35.9 V Yangtze 2.2 8.2 20.9 104.0 135.3 VI Pearl 0.8 5.4 4.6 55.1 65.9 VII Southeast China 0.2 0.9 1.6 16.6 19.3 VIII Southwest China 0.0 0.4 0.1 4.0 4.5 IX Inland 0.2 4.1 0.7 50.9 55.9 China Total 6.3 29.3 45.7 362.0 443.7 3-H Total 2.2 6.4 11.5 107.3 127.5 2000 Projections I Northeast 3.1 15.2 17.4 37.5 73.2 II Hai-Luan 2.3 4.6 10.0 35.3 52.2 III Huai 2.0 3.7 14.4 62.3 82.4 IV Yellow 1.1 3.3 7.9 31.1 43.4 V Yangtze 9.9 14.9 57.8 169.0 251.6 VI Pearl 2.5 8.9 12.8 75.2 99.4 VII Southeast China 0.6 2.8 6.8 22.4 32.6 VIII Southwest China 0.1 0.6 0.4 5.8 6.9 IX Inland 0.4 18.8 2.8 46.1 68.1 China Total 21.9 72.8 130.2 484.7 709.6 3-H Total 5.4 11.6 32.3 128.7 178.0 36 China's Water Resources and Their Use (in Chinese), no date. Published in English as China's Water Resources Development, China Science and Technology Press, 1992. 37 In Chinese usage, "urban life" includes household consumption ("small life"), municipal and institutional consumption and, until recently, consumption by urban vegetable gardens. The sum is known as "big life," but does not include consumption by the services sector, commerce, and construction, all of which are included in "industry." Similarly, "rural" includes consumption of rural households, as well as livestock. 78 Chapter 4. Sufficient Water for All The authors of the IPPDI study correctly predicted that the urban and industrial sectors would expand at unprecedented rates: they expected 3-H urban life withdrawals to increase by 145 percent by 2000, and industrial withdrawals by 180 percent. In 2000, they expected these two sectors to account for 21 percent of withdrawals in 3-H, up from 11 percent in 1980. They also expected the agricultural sector to withdraw 20 percent more water in 3-H in 2000. What happened, of course, is that the rate of urbanization, and the growth of industry both in 3-H and all of China, outpaced all predictions. Whereas 5.4 Bcm was projected for 3-H urban "demand" in 2000, by 1993 the actual had exceeded 7.7 (no data were reported in the intervening years). Although the projection of total population was not far off (1.25 billion by 2000), the projected rate of urbanization was projected at 26 percent for 2000 in 3-H; the rate probably reached 36 percent in 1998.38 Industrial output was projected to grow at about 7 percent a year from 1980 to 2000, but because of expected increases in efficiency and recycling, withdrawals by industry were projected to grow at a slower rate, 5.3 percent a year. In fact, industrial output has grown nearly 10 percent a year since 1980, but withdrawals by industry in 3-H have grown only at 3.7 percent from 1980 to 1998. In 1998, industrial usage in 3-H first exceeded 22 Bcm; the 32.3 Bcm figure projected for 2000 most certainly will not be met. In part, this has been the result of a relative shift away from water-intensive heavy industry toward services and commerce. But mostly it has been a response to localized but severe water shortages in northern China, and, in recent years, a trend toward higher prices paid by industry for water, which has dampened increases in consumption. Perhaps the most surprising result is the performance of the agricultural sector since 1980. In dry northern China, about 50 percent of agricultural land is irrigated, and by some estimates, irrigation accounts for 75 percent of total crop production.39 The IPPDI study authors hoped that, with improvements in irrigation technology and investments to improve the efficiency of the water distribution system, agriculture could keep pace with food demand with only a 20 percent increase in water supplies by 2000. What happened is remarkable: agricultural output for all of China quadrupled from 1980 to 1993, with no increase in water supplies. In 3-H, withdrawals by agriculture actually declined to 102.4 Bcm in 1998, compared with 107.3 Bcm in 1980, yet agricultural output more than quadruple. Just as the managers of industries have not only coped, but managed to grow at healthy rates in the face of water shortages, so have farmers. (b) The IWHR 1993 Study In 1993, a nationwide survey of water use was undertaken that provided a great deal of detailed data. IWHR, in collaboration with NIHWR, then undertook another major study of water "demand and supply," based on the 1993 data and lessons learned since the availability of the IPPDI study.40 In 1980, the IPPDI study authors envisaged the possibility of future water shortages. By 1993, shortages were evident in much of northern China, and the IWHR authors paid much more attention to how future demand could be reduced to be in approximate balance with expected supplies (discussed in the next section). Still, their projection methods amounted to "bean-counting." Their projected "demands" were 38 See Bohai Area Urbanization Study (1999). Although the English translation of the 1980 study refers to "urban" population, the underlying data undoubtedly refer to "nonagricultural" population. 39 "Water Resources and Food Potential," background paper for China: Long-Term Food Security (World Bank Report, 1998). 40 Published (in Chinese) as China Water Demand and Supply in the 21st Century (1998). Chapter 4. Sufficient Water for All 79 again projected withdrawals, at unspecified prices, taking into account expected shortages of ever- increasing severity. The basic results of the 1993 projections are given in Table 4.3. Using 1993 as a base, IWHR projected total withdrawals in the 3-H to increase from 138.3 Bcm in 1993 to 170.6 Bcm in 2000, and 194.4 Bcm in 2010. Note that the 2000 figure is lower than the 1980 study's comparable projection of 178.0 Bcm for 2000. Also shown in Table 4.3 are the 1998 actual withdrawals, which amounted to 138.6 Bcm, hardly different from the 138.3 Bcm total managed five years earlier in 1993. Again, it is most certain that withdrawals in 2000 will fall far short of projections, despite those projections being lower. The main reason is that agriculture has not only failed to meet projections, but has failed to increase at all. Indeed, a slight decline in withdrawals by agriculture since 1980 seems to be evident. IWHR's projection of rural life withdrawals seem to be right on track, but the projections for urban life are falling behind. IWHR expected urban "demands" to grow in excess of 5 percent until 2000; they actually fell from 1993 to 1998. Industrial withdrawals in 3-H did increase modestly from 1993 to 1998 (from 19.5 Bcm to 22.0), but certainly not on a pace to reach nearly 27.0 Bcm in 2000. TABLE 4.3: TOTAL WITHDRAWALS, ACTUAL AND PROJECTED BY IWHR IN 1993 (Bcm) 1980 1993 1998 2000 2010 (actual) (actual) (actual) (IWHR) (IWHR) Total Withdrawals Hai-Luan 38.3 40.9 42.4 47.5 52.7 Huai 53.1 56.8 56.7 77.3 89.3 Yellow 35.8 40.6 39.5 45.8 52.4 3-H Total 127.2 138.3 138.6 170.6 194.4 Urban "Life" Withdrawals 7.8 6.5 11.2 16.4 Rural "Life" Withdrawals 7.3 7.6 8.8 11.3 Industry Withdrawals 19.5 22.0 26.9 39.8 Agriculture Withdrawals 103.8 102.4 123.7 126.8 If urbanization and industrialization are still proceeding at rapid rates, why are withdrawals by these two sectors not keeping pace? And why, if irrigation is so important to farming in northern China, have withdrawals for irrigation (the main water consumer in agriculture) actually declined a bit? These are questions of critical importance to understanding the role of water in the future development of China, to which this study will return. For now, we posit two explanations. First, the increases in water prices that have taken hold since about 1993 and may in fact be restraining withdrawals. Second, the 3-H region as a whole may have hit a "brick wall" supply constraint, the subject of the next section. (c) Action Program Projections Recognizing the limitations and age of the IWHR (1993) demand projections, the Action Program requested a new set of projections from IWHR, assisted by the consultants. It was not deemed necessary to project irrigation demands as before: no matter what the result, irrigation demands would far outstrip any realistic future supplies. The result of the new demand projection efforts was two entirely different sets of estimates, based on radically different approaches. IWHR continued to practice their familiar method of projecting water-consuming populations and water-consumption quotas, and multiplying the results to achieve total demand. Quotas continue to fall 80 Chapter 4. Sufficient Water for All over time due to implicit, but unspecified, improvements in efficiency and higher prices.41 Unfortunately, IWHR continued to use the agricultural/nonagricultural population distinction, which distorts their results as urban populations are much higher than nonagricultural registrations. IWHR's results for nonagricultural demands are shown in Table 4.4. From 33.8 Bcm actual nonagricultural withdrawals in 1997, IWHR's totals grow steadily to 37.6 Bcm in 2000, 51.1 in 2010, 64.7 in 2020 and 87.2 in 2050. In the final year, urban (including urban industry but excluding urban vegetables) demands are about 61 percent of the total nonagricultural demands. TABLE 4.4: ALTERNATIVE PROJECTIONS OF WITHDRAWALS FOR NONAGRICULTURE (Bcm) A. IWHR Projections for the Action Program 1997 2000 2010 2020 2030 2040 2050 Urban Hai-Luan 7.0 7.7 9.9 12.1 13.8 15.0 16.1 Huai 8.6 9.5 13.1 16.7 19.1 20.6 21.9 Yellow 5.7 6.4 8.7 11.0 12.6 13.9 14.9 3-H Total 21.3 23.6 31.8 39.8 45.5 49.6 52.9 Rural Hai-Luan 3.9 4.2 5.6 7.0 8.2 8.8 8.9 Huai 6.0 6.7 9.4 12.0 14.2 15.3 15.7 Yellow 2.6 3.0 4.3 5.9 7.6 8.8 9.6 3-H Total 12.6 14.0 19.4 24.9 30.0 32.9 34.3 Total Nonagriculture Hai-Luan 10.9 11.9 15.5 19.1 22.0 23.8 25.0 Huai 14.6 16.3 22.5 28.7 33.3 35.9 37.6 Yellow 8.4 9.4 13.1 16.8 20.2 22.8 24.6 3-H Total 33.8 37.6 51.1 64.7 75.5 82.5 87.2 (ii) Analytical Approach for Water Resources Assessment and Model Assumption The analysis of water resources seeks to define a perspective plan for policy recommendations and investments in the water sector of the 3-H basins over the next 50 years. In doing so, it is critically important that the program should be based on a quantitatively consistent picture of future water supplies and demands. The review of the previous studies presented above showed that the current approach could not produce realistic and consistent sets of demands from which to calculate supplies. This supply and demand picture is complex because of the high degree of uncertainty in determining (a) surface water runoff, (b) sustainable groundwater resources, (c) usability of polluted water for consumption, (d) the efficiency of the water storage, allocation and delivery system, (e) future water prices and water demands for different sectors, and (f) the future structure of the north China economy. Partial analyses (e.g., spreadsheet) have limited value in water resources analysis because they cannot take into account simultaneously (a) the interaction of the numerous elements comprising a water system, and (b) they have no "guiding hand" to steer the results toward some "best" outcome. Simulation models are far more useful where uncertainty is prevalent. Thus they are particularly relevant to water sector analysis. However, their results depend on built-in decision rules that do not necessarily produce an 41 Although not explicit, IWHR's efficiency improvements operate on consumptive use, implying that the same level of benefit can be obtained from less withdrawals. Chapter 4. Sufficient Water for All 81 optimum solution (from an economic perspective). Nor do they have the ability to produce marginal valuations (shadow prices) of key resources. In this study, a constrained optimization approach is pursued for the basin level models because it is assumed that the relevant Chinese authorities wish to obtain the maximum economic benefit from the operation of the system as well as maximize the returns to investments in the system, subject to a variety of hydrologic, physical, and agronomic constraints. Additional constraints related to equity or distributional issues can be imposed. A linear programming (LP) structure is employed because it the most common and most efficient means of solving linear models, and permits the attainment of the optimum economic solution. The main groups of data fields used in the 3H basin Modeling System are presented in Figure 4.1. Important aspects of water demand and supply are discussed in the following sections. (iii) World Bank Study Estimates of Future Water Demand (a) Future Economic and Social Structure That Affect Water Demand While the basic results on urban household consumption derived by IWHR are credible, their results (shown in Table 4.4) implied a very low rate of increase in water prices, and they were asked to redo the forecasts given the Government's stated objective of increasing water prices to reflect full costs of supply. The results, termed "World Bank Study Estimates" are shown in Table 4.8. The projections were based on forecasted economic structure as described in Chapter 2, Sections C and D, and summarized below. Future Economic Growth and Structure. Future economic growth and structure that will affect demand were investigated with three approaches including (a) input-output modeling calibrated against national population projection targets and nationally accepted GDP growth targets, (b) the Solow growth model relating capital and labor in the various sectors with a consumption saving rule and capital accumulation equation to project income and structural changes, (c) a regional growth and investment model applied to each level II subbasin relating income, investment, employment, population movement and national population growth and structural changes to project future population (urban and rural) and GDP growth in agriculture, urban and rural sectors. While the agriculture sector share of GDP is low in developed countries, it is still a strong sector. The GDP value of agriculture in developed countries generally exceeds the value of agriculture of any similar size population in the developing countries. The development pattern implies that if strong agriculture and industrial sectors are to be achieved, a very strong service sector is required. As incomes increase, and the economic structure changes, the demand for water changes. Increasing levels of urbanization put pressure on water supply and wastewater services, increasing costs significantly. A large proportion of industrial demands are met from urban water utilities. The increasing costs of water encourage industries to adopt water-saving technologies. The economic restructuring leads to a growth in commercial activities. With increasing incomes, and restructuring, the domestic and commercial demands come to dominate the overall urban water demand. The rates of growth and restructuring are primarily a function of investment and mathematical relationships modeling public and private investment at different levels of growth are used in the regional growth model to reflect this. 82 Chapter 4. Sufficient Water for All FIGURE 4.1: WATER RESOURCES CONSTRAINED OPTIMIZATION MODEL SOCIAL & ECONOMIC INFORMATION GAMS INPUT GAMS OUTPUT LAND, WATER RESOURCES, AND DEMAND ,ECONOMIC, ENVIRONMENT FORECASTS INFORMATION INFORMATION Definitions: Demands/supply sources - Sub Regions - Node (GW/LW/SW/Transfer) - Connecting - Transfer balance by sub-regions Hydrology input Priority demand by sectors (Monthly Flows:) by Level 2 and 3 regions Population forecast -controlled Level II and III, by year -uncontrolled -local -regional Priority shortage by sectors by Level 2 and 3 Economic structure Reservoirs storage elevation curves Irrigation water supply by Level II and III, by year month and shortage Reservoir flood operation rules/dead Supply by sources of water GDP forecast by sector storage including transfer Level II and III, by year Crop production by Level Flow routing 2 and 3 Urbanization forecast by sector, by Level II and III, by Demand forecast by sector/Levell II, Full/Partial/Rainfed year by year, Base Case irrigation areas by Level 2 GAMS water resources and 3 -Urban life -Rural life constrained optimizition model Present cropping pattern -Urban industry -Rural industry Economic value of Level II and III, by year -Livestock -FPF -Environment production by crop by Level 2 and 3 Cultivated area by year Water price Income elasticity of Economic value of water Level II and III, by year demand Present cropping pattern supplied by sectors and by Level 2 & 3 regions Urban loss reduction Diversion, return flow, Level II and III, by year ETP, ETO, CF for each crop recharge and evaporation Urban and rural Income Price elasticity of Input/Output price of crop WTO and demand non WTO prices GW recharge by sectors System/field efficiency by region Flow to sea by Level 2 & 3 regions and by ** Efficiency change Water balance by nodes by months Consumption forecast by sectors/regions Shadow prices of water by node, by month, by sector GW sustainable limits and by region GW pumping limits Crop budgets by crop, Level 2 & 3 regions Value of water by sectors excluding agriculture Water supplied to wheat Reuse of water Price change Supply Sources including S-N Transfer Chapter 4. Sufficient Water for All 83 GDP growth rates, GDP growth rates are expected to decline from past levels of 10 percent a year to around 4.9-5.0 percent by 2050 (see Tables 2.2 and 2.3 in Chapter 2) with GDP/capita growth rates declining from about 6.5-7.0 percent to around 5 percent. As China's economy develops, changes in the relative contribution of agriculture, industry and services sectors will alter the demands for water with agriculture withdrawals expected to continue to decline in the next several decades. Urban and Rural Populations. The regional growth model projections for urban and rural population in the 3-H basin are presented in Table 2.6. Population is likely to be a major factor influencing water demands and this is discussed in greater detail in Chapter 2. Income and Price. These factors are used in the regional growth model as they affect demand. In most water demand studies, the examination of recent trends has been the traditional method used to project demands for water supply projects. It is common experience that these projections invariably overestimate the eventual demand. It is only in recent years that increasing attention has been given to the role of income and price, particularly price, in determining future demand. The traditional methods, based on recent trends, indirectly take account of recent impacts of income and price, but they do not necessarily reflect the impacts of future income and price movements. In the section below, we discuss how future demand might respond to expected changes in price and income. In the projection undertaken by the Australian consultant, future income and price movements, and the response of demand to changes in income and price, together with population, determine the future demand estimates. (b) Household Response to Price and Income Changes Price and price and income elasticity figures used in the regional growth model to derive household water demand are shown in Tables 4.5-4.7. TABLE 4.5: FUTURE PRICE AND PRICE GROWTH RATES USED TO DERIVE WATER DEMAND PROJECTIONS 1997 2000 2010 2020 2030 2040 2050 Real Water Price (yuan/m3) 1.00 1.12 1.46 1.87 2.40 3.04 3.71 Price Growth Rate (%) 3.9 2.7 2.5 2.5 2.4 2.0 TABLE 4.6: PRICE ELASTICITY OF DEMAND (1999 COMPARABLE PRICES) Price (Y/m3) 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 Price elasticity -0.20 -0.27 -0.33 -0.38 -0.43 -0.47 -0.50 -0.53 -0.55 -0.57 -0.59 -0.61 -0.63 -0.64 TABLE 4.7: INCOME ELASTICITY OF DEMAND (1999 COMPARABLE PRICES) Household income (Y/month) 500 1,000 1,500 2,000 3,000 4,000 5,000 7,500 10,000 Income elasticity 0.78 0.75 0.72 0.69 0.63 0.58 0.53 0.43 0.35 The price elasticity of demand for water tends to increase as price increases. At very low prices, the responsiveness to price change is relatively small. At very low prices, demand is relatively inelastic. A 10 percent increase in price might only reduce demand by, say, 1 percent. At high prices, the demand for water is quite responsive to a change in price. At high prices, a 10 percent increase in price might reduce 84 Chapter 4. Sufficient Water for All demand by 8 percent (this is unusual as very high prices are rarely charged for domestic water supply). Commonly, where appropriate prices are being charged, the price elasticity is around -0.5. For the demand projections, a generalized demand model was applied that has proven remarkably reliable in forecasting impacts of price and income changes on water demand in developing countries. The model, and its demand curve relationships, have been derived for examination of demand for a broad range of incomes and tariffs in many cities across the world, and the Asia and Pacific region in particular. It has also been tested against the time series data for a number of cities in China, including the time series data for cities used in the econometric studies, demonstrating a good fit with observed data for China (ref: Action Program Studies, "Water Pricing Report," 1999). A brief description of the derivation and logic underlying the model is given in Annex 10 of that report. The income elasticity of demand is the responsiveness of the quantity demanded to a change in income. Income elasticity is measured by the percentage change in quantity demanded divided by the percentage change in income. The income elasticity of demand for domestic water supply tends to diminish as household incomes increase. At very low household incomes the responsiveness of demand for water to a change in income is relatively high. A 10 percent increase in income might lead to an 8 percent increase in demand. At very high household incomes, demand is relatively income inelastic. A further 10 percent increase in income might increase demand by only 2 percent. Parameters of income elasticity of demand that are incorporated in the generalized demand model, and that appear to fit the situation in China are indicated in Table 4.6. The World Bank Study estimates of total nonagricultural demand, in 2050, of 68.2 Bcm, is about 5 Bcm higher than the Consultants' figure of 63.8. There are other differences between the urban/rural composition, differences within basins, and in the time trend. Response of nondomestic demand to income is different. International comparisons suggest that, in large cities, where total nondomestic water requirement exceeds total domestic water requirement, nondomestic demand is far more responsive to price than to income. Average price elasticity of industrial water demand was estimated to be about ­1.2, income elasticities were estimated to range around 0.2. (c) Industry Response to GDP and Price Changes Response of nondomestic demand to price change is different. While there is a limit to how much water a household can consume, industries, and commercial enterprises can consume very large amounts of water, and do consume large amounts when the price is very low. International comparisons suggest that, in large cities, where total nondomestic water requirement exceeds total domestic water requirement, nondomestic demand is far more responsive to price than to income (based on GDP/capita). This is supported by a study using data from about two thousand industrial enterprises for different industrial sectors in China. (Ref: Hua Wang, Somik Lall, Marginal Value of Water: a Case Study of Chinese Industrial Firms, March 1999). The results show that the marginal value of water in industrial production vary among sectors with an average of Y 5/m3. Average price elasticity of industrial water demand was estimated to be about ­1.2, income elasticities were estimated to range around 0.2. The econometric work undertaken as part of the Water Pricing Study (ref: Shepherd L., "Econometric Analysis," 1999, project working paper) was not very conclusive with regard to price and income elasticity parameters for industry, but cross-sectional analysis suggested a price elasticity of ­0.6 Chapter 4. Sufficient Water for All 85 and an output elasticity (as distinct from income elasticity) of 0.8. The parameters of ­0.6 price elasticity, and 0.8 output elasticity, were applied in the second approach to the demand projection studies, The results could in no way be related to, or calibrated against, the observed data from the time series studies. The single result does not reflect the complex relationship that is described above. (d) Agricultural Response to Price Change The price of water supplied to agriculture is discussed in Chapter 6 of this report. While there has been much government policy discussion about raising prices to cover the costs of operation and maintenance (O&M) since the 1960s current prices still hovers around Y 0.01/m3 to 0.20/m3. As part of the World Bank Study a farm modeling methodology was developed to provide a basis for analyzing the impact of increasing the price of irrigation water on water use (Cleland 1999). The methodology starts from a set of representative individual farms, in each river basin, determining the optimum crop pattern for the farm by maximizing net farm income using linear and nonlinear programming. The methodology responds to the price of water, the quantity of irrigation water available, and to other factors, such as input and output prices, which will affect the demand for irrigation water. The results are limited because no rainfed alternatives are included in the potential cropping patterns. Nonetheless, the results do show a consistent pattern of water demand response, per unit area, up to a price of about Y 0.40/m3 in the 3-H basins. Up to a price of Y 0.20/m3, demand response per mu, or per hectare, is relatively inelastic with price elasticities of -0.0 to ­0.2. From Y 0.20/m3 to Y 0.40/m3 response is a little more elastic with price elasticity of ­0.3 to ­0.5. Price elasticity of demand for irrigation water per unit area, over the range of Y 0.10/m3 to Y 0.50/m3, averaged about ­0.3. (When agricultural output prices are reduced, the response of irrigation water demand to a change in water price is more elastic. Even with reduced commodity prices, the response in demand for irrigation water is likely to be relatively inelastic up to a price about Y 0.10/m3.) The results do show that on a per hectare (or per mu) basis, increasing the price per cubic meter beyond, say, Y 0.15/m3, will reduce consumption per unit area. That is if the price is clearly related to the quantity used by the farmer, and if the price signal is not distorted by other charges lumped on the farmer. For prices up to Y 0.15/m3, however, the response in water demand may be negligible. (e) Future Demand by Sectors Based on the economic and social parameters described above, the World Bank Study produced demand projections for the 3-H basins from 1997 to 2050 for different sectors including urban life and industry, rural life and industry and agriculture which comprises irrigation, livestock, fisheries, PF (Pastures and Forestry). The results are presented in Table 4.8 and shown in Figure 4.2. The changing economy and changing society as described in Chapter 2 will continue to impact on the different sectors of the economy such as industry and agriculture and their water requirements are likely to reflect these changes. This is also the case for domestic water requirements. Water consumption by different sectors are discussed briefly in the following sections. Urban Domestic and Rural Household Consumption. Urban domestic and rural household consumption in liters/capita/day were calculated using a spread sheet based economic model which incorporated the effects of the price of water and income. The results are shown in Table 4.9. Total domestic consumption described in Table 4.9 includes institutional consumption plus household plus losses. While at the moment, household and institutional consumption is roughly similar, this is projected to change in the coming decades and household consumption will become more 86 Chapter 4. Sufficient Water for All important proportion of the total domestic consumption. As water prices increase, losses will become lower as well. These consumption figures were used in the 3-H modeling system with factors to increase or lower the base case values according to different scenarios. Overall, the water consumption by urban domestic consumers will nearly triple from 6-5 Bcm to 18.5 Bcm a year in the 3-H basins. However, as for other sectors, the rate of growth will continue to decline but still remain higher than other sectors in the case of urban life. TABLE 4.8: DEMAND STRUCTURE FOR DIFFERENT SECTORS FOR P75 YEAR (Bcm) Demand Structure 75% Probability Growth Structure Hai Basin 1997 2000 2010 2020 2030 2040 2050 2000 2030 2050 Urban Life 2.61 2.90 3.85 4.87 5.82 6.69 7.49 6% 10% 13% Urban Industry 5.28 5.68 6.78 7.49 7.84 7.90 7.92 11% 14% 14% Rural Life 1.84 1.84 2.00 2.12 2.21 2.11 2.02 4% 4% 3% Rural Industry 1.35 1.50 1.88 2.12 2.19 2.24 2.28 3% 4% 4% Irrigation 37.48 37.55 37.83 38.13 38.13 38.13 38.13 75% 67% 65% Livestock 0.48 0.54 0.54 0.53 0.52 0.50 0.47 1% 1% 1% Fisheries/ Pasture 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0% 0% 0% Total 49.05 50.00 52.87 55.26 56.71 57.57 58.30 100% 100% 100% Huai Basin Urban Life 2.40 2.52 3.24 4.20 5.04 6.00 6.96 4% 4% 5% Urban Industry 7.68 8.64 12.00 14.52 15.12 14.76 14.64 12% 16% 18% Rural Life 2.40 2.40 2.54 2.64 2.74 2.80 2.88 3% 3% 3% Rural Industry 1.68 2.28 2.88 3.60 4.08 4.20 4.68 3% 4% 4% Irrigation 51.21 51.18 51.40 51.40 51.40 51.40 51.40 71% 66% 63% Livestock 1.08 1.08 1.08 1.20 1.44 1.44 1.68 2% 1% 1% Fisheries/ Pasture 3.10 3.80 4.20 4.50 4.80 4.80 4.80 5% 5% 5% Total 69.55 71.90 77.34 82.06 84.62 85.40 87.04 100% 100% 100% Yellow Basin Urban Life 1.48 1.62 2.10 2.60 3.10 3.61 4.07 3% 4% 5% Urban Industry 5.21 5.80 7.67 9.39 10.28 10.63 10.56 12% 15% 17% Rural Life 1.16 1.05 1.15 1.30 1.32 1.45 1.53 2% 2% 2% Rural Industry 0.69 0.82 1.21 1.65 2.00 2.24 2.44 2% 2% 3% Irrigation 35.70 35.45 35.67 35.75 35.75 35.75 35.75 76% 70% 66% Livestock 0.46 0.53 0.58 0.68 0.79 0.89 0.99 1% 1% 1% Fisheries/ Pasture 1.25 1.59 2.27 3.04 3.04 3.04 3.04 3% 4% 6% Total 45.95 46.86 50.65 54.41 56.28 57.61 58.38 100% 100% 100% Total Demand 75% Probability Growth Rates 3-H Basin 1997 2000 2010 2020 2030 2040 2050 "2000- "2010- "2030- "2050- 2010" 2030" 2050" 1997" Urban Life 6.49 7.04 9.19 11.67 13.96 16.30 18.52 2.70% 2.11% 1.42% 2.00% Urban Industry 18.17 20.12 26.45 31.40 33.24 33.29 33.12 2.77% 1.15% -0.02% 1.14% Rural Life 5.40 5.29 5.69 6.06 6.27 6.36 6.43 0.73% 0.48% 0.12% 0.33% Rural Industry 3.72 4.60 5.97 7.37 8.27 8.68 9.40 2.63% 1.64% 0.65% 1.76% Irrigation 124.39 124.18 124.90 125.28 125.28 125.28 125.28 0.06% 0.02% 0.00% 0.01% Livestock 2.02 2.15 2.20 2.41 2.75 2.83 3.14 0.23% 1.13% 0.66% 0.84% Fisheries/ Pasture 4.35 5.39 6.47 7.54 7.84 7.84 7.84 1.84% 0.96% 0.00% 1.12% Total 164.55 168.76 180.86 191.73 197.61 200.58 203.72 0.69% 0.44% 0.15% 0.40% Chapter 4. Sufficient Water for All 87 FIGURE 4.2: CHANGES IN PROPORTION OF TOTAL DEMAND FOR DIFFERENT SECTORS FOR P75 YEAR Hai Demand Structure 2000 Hai Demand Structure 2050 (TotalDemand50.00bcm) (TotalDemand58.30bcm) 0% 0% 6% 1% 13% 1% 11% 4% Urban Life 14% 3% Urban Industy Urban Life Rural Life Urban Industy Rural Industry 3% Rural Life Irrigation 4% Rural Industry Livestock 65% Irrigation 75% Fisheries/ Pasture Livestock Fisheries/ Pasture Huai Water Demand Structure 2000 Huai Water Demand Structure 2050 (TotalDemand71.90bcm) (Total Demand 87.04 bcm) 2% 5% 4% 12% 1% 5% 5% 18% 3% Urban Life 3% Urban Life Urban Industy Urban Industy RuralLife Rural Life 3% RuralIndustry Rural Industry 4% Irrigation Irrigation Livestock Livestock Fisheries/ Pasture Fisheries/Pasture 64% 71% Yellow Water Demand Structure 2000 Yellow Water Demand Structure 2050 (Total Demand 46.86 bcm) (Total Demand 58.38 bcm) 1%3% 3% 1% 6% 5% 12% 17% Urban Life 2% Urban Life 2% UrbanIndusty Urban Industy Rural Life 2% Rural Life Rural Industry 3% RuralIndustry Irrigation Irrigation Livestock Livestock Fisheries/ Pasture Fisheries/Pasture 66% 77% 88 Chapter 4. Sufficient Water for All TABLE 4.9: WATER CONSUMPTION FOR URBAN DOMESTIC AND RURAL HOUSEHOLD (lcd) Hai Huai Huang Total H'H Water Institutional Losses Total Total Urban 1997 167-61 108-31 108-32 33-19 161-89 166-83 2010 213-96 159-51 141-45 20-14 242-112 259-62 2020 245-127 199-70 161-56 20-14 292-127 294-75 2030 244-150 208-86 152-63 20-14 365-127 294-83 Rural 1997 37-49 na na na 56-38 66-24 2010 60-71 na na na 90-56 104-45 2020 100-119 na na na 157-88 170-68 2030 172-200 na na na 200-100 200-112 Urban Industry. Urban industry demands were calculated in the same spreadsheet based economic forecast model. The urban demands consider changes in Gross Value of Industrial Output (GVIO), industry GDP, population and water price to calculate water consumption. Urban industry demands will continue to grow and will represent about 13, 18 and 17 percent in the Hai, Huai and Yellow river basins respectively by 2050. In terms of actual volumes, urban industry demands will nearly double from 18 Bcm to about 33 Bcm a year in the 3-H basins. Rural Industry. Rural industry demands were based on similar parameters to urban industry. These are (a) changes in GVIO, (b) industry GDP, (c) population and (d) water price to calculate water consumption. Overall, the consumption of water from rural industry will increase from 3.7 Bcm to 9.40 Bcm based on these factors. Similarly, livestock and fisheries/pasture demands will also increase as shown in Table 4.9. Agricultural Demands. The demands for agriculture water were calculated using a different approach to either industry or household demands. Water supply to agriculture is very low relative to demand and so it is difficult to estimate the response to supply because the usage of water is well below the demand curve and the use of water is dictated more by shortage management than price. The projections of net and gross monthly irrigation water demand in Bcm were calculated from the 3-H modeling system developed for the present World Bank study. The model uses the following parameters: 1. known current effective irrigated areas at level II basin, 2. present cropping patterns and 3. monthly water requirements for different crop types in the 3-H basins including grains, orchards, vegetables and pastures, 4. present total irrigation efficiency factors which reflect government programs (see Chapter 6), 5. price of crops and value of irrigation water, 6. rainfed, partially irrigated and fully irrigated areas within level II basin areas and their respective water requirements for present crop types, 7. different rainfall probabilities including 25 percent, 50 percent, 75 percent and 95 percent to calculate irrigation water demands. The model optimizes crop area grown and resulting yield of crops in order to maximize the value of irrigation water. Thus, as the price of the crops and irrigation water change, cropping pattern, irrigated areas, crop production and their value will also change reflecting optimum water allocation. The results are presented for different probability years in Table 4.10. Chapter 4. Sufficient Water for All 89 Overall, the changing structure of demand depicted in Chapter 2 shows that agricultural demand's proportion of total demand will continue to decline as agriculture shifts away from irrigated agriculture to less water intensive production such as orchards and vegetables and as water saving technology is introduced to a greater extent. Agriculture's share of total demand will decline from about 70-77 percent to 65 percent in the 3-H basins. The actual value of demand will remain static around 125 Bcm a year. It must be noted that while demand for water by urban domestic and rural households and by urban and rural industry remain static for different flow probabilities, the demands for water from irrigation will change depending on the probability. In a wet year, overall demands for irrigation will be lower than for a dry year. This is illustrated in Table 4.10. The changes in overall water demand have important implications for supply and resulting shortages and this is discussed in the sections below. TABLE 4.10: PROJECTED IRRIGATION DEMAND FOR P75 (AVERAGE), P95 (MINIMUM) AND P25 (MAXIMUM) YEAR FOR THE HAI, HUAI AND YELLOW BASINS Basin 1997 2000 2010 2020 2030 2040 2050 Hai (P75) 37.50 37.60 37.80 38.10 38.10 38.10 38.10 Hai (P95) 44.16 44.13 44.63 44.94 44.94 44.94 44.94 Hai (P25) 32.55 32.90 33.20 33.50 33.50 33.50 33.50 Huai(P75) 51.20 51.20 51.40 51.40 51.40 51.40 51.40 Huai (P95) 66.95 65.61 66.02 66.05 66.05 66.05 66.05 Huai(P25) 38.08 38.15 38.09 38.11 38.11 38.11 38.11 Yellow(P75) 35.70 35.50 35.70 35.80 35.80 35.80 35.80 Yellow(P95) 38.15 38.16 38.49 38.60 38.60 38.60 38.60 Yellow(P25) 31.89 31.70 31.90 31.94 31.94 31.94 31.94 (f) Demand Sensitivity to Social and Economic Parameters Changes The demand was estimated initially based on medium/median growth rates of GDP, population, industry, and urbanization. The growth rates followed the path of the Bank's 2020 study and many Chinese studies. However most studies only had figures going as far as 2020 but not much further. This study had to project growth beyond 2020 to 2040 and 2050 along the trends that were forecasted for 2020 studies. In addition the study tried to determine low and high scenarios for all the parameters and used these variations to determine their impact on the overall water demand. The growth forecast needed to stretch to 2050 in order to map out a sufficiently long term planning horizon to guide investment due to the long-term nature of strategic planning in the water resources sector, This is especially the case with respect to large infrastructure projects such as south- north transfer and the wastewater treatment plants required throughout the 3-H basins. Long-term forecast is also desirable to reflect the impact of possible high or low growth paths on water demand, supply and shortages. Thus the demand sensitivity analysis presented in this section attempts to provide guidance on determining the effects of economic and social growth scenarios. A typical set of assumptions on GDP, Industrial GDP and Water Price for the sensitivity study on demand is provided in Table 4.11. Projection for total and urban population are also presented in Table 2.6 in Chapter 2. Detail analysis on the demand using the price and output elasticities indicate the following variation in demand as presented in Table 4.12. 90 Chapter 4. Sufficient Water for All TABLE 4.11: ASSUMPTIONS OF GDP/PRICES AND GROWTH FOR DEMAND CONSUMPTION Industrial GDP Growth Rate (%) GDP Growth Rate (%) Water Prices (Y/m3) 2005-2020 2020-2040 2005-2020 2020-2040 2020 2020 onward* Hai Basin Low Increase 6.4 2.7 4.4 0.7 1.10 4.00 Median 7.4 3.7 5.9 2.7 1.10 4.62 High Increase 8.5 4.8 6.5 2.8 1.10 5.32 Huai Basin Low Increase 6.0 2.7 4.0 0.7 1.04 3.80 Median 7.1 3.7 5.6 2.7 1.04 4.38 High Increase 8.2 4.7 6.2 2.7 1.04 5.05 Yellow Basin Low Increase 7.4 2.8 5.4 0.8 0.93 3.38 Median 8.5 3.9 6.5 2.9 0.93 3.90 High Increase 9.6 4.9 7.6 2.9 0.93 4.49 * Prices are built up over 18 years at a growth rate of 6-8 percent a year. TABLE 4.12: WATER DEMAND SENSITIVITY TO GROWTH, PRICES, ETC. Water Flow Total Water Demand for 3-H Basins (Bcm/Yr) Probability 1997 2000 2010 2020 2030 2040 2050 Diff. with medium Effect of GDP Growth High 25% 164.5 168.8 181.2 192.5 199.3 203.7 209.2 5.4 Medium 75% 164.4 168.8 180.9 191.7 197.6 200.6 203.7 - Low 95% 164.5 168.7 180.6 191.0 196.0 197.8 199.0 -4.8 Effect of Industrial Growth High 25% 164.5 169.1 183.0 197.2 206.9 213.3 218.8 15.1 Medium 75% 164.4 168.8 180.9 191.7 197.6 200.6 203.7 Low 95% 164.5 168.5 179.0 187.7 191.6 192.9 194.5 -9.2 Effect of Urbanization Growth High 25% 164.55 168.80 181.07 192.17 198.15 201.09 204.15 0.43 Medium 75% 164.42 168.76 180.86 191.73 197.61 200.58 203.72 Low 95% 164.55 168.75 180.79 191.43 196.86 199.81 202.95 -0.78 Effect of Population Growth Low 25% 164.5 168.8 181.2 192.5 199.3 203.7 209.2 5.43 Medium 75% 164.4 168.8 180.9 191.7 197.6 200.6 203.7 High 95% 164.5 168.7 180.6 191.0 196.0 197.8 199.0 -4.76 Effect of Water Price Changes High 25% 164.55 168.61 180.09 190.05 194.71 196.21 197.37 -6.35 Medium 75% 164.42 168.76 180.86 191.73 197.61 200.58 203.72 Low 95% 164.55 168.92 181.63 193.40 200.50 204.96 210.12 6.40 As noted previously, the most important parameters that affect water demand are the changes in growth in GDP, industrial growth, population and water prices. Other parameter such as urbanization have little effect on water demand. The urbanization changes are made within a fixed urban GDP. The most significant effect on water demand is the change in the growth of industry. A +10 percent change in industrial growth rate from the base case causes a 15 Bcm increase in demand. A similar change in growth rates of all other parameters including GDP, population and water prices produce an average 5.5-6.3 Bcm increase in demand. It is important to note that most of these increases in demand can be offset by sufficient water tariff increases. A 6-10 percent water tariff increase will completely offset similar increases in growth rate of GDP or population or industrial growth rate changes. The variation in demand for different probabilities of flow caused by positive and negative changes in GDP, population, water prices etc is shown in Figure A2-4 in Annex 2, Volume 3. It should be Chapter 4. Sufficient Water for All 91 noted that hydrologic variations in rainfall have much more significant impact on demand than all the other parameters. (g) Demand Changes with Efficiency Improvement, Reuse and Price Increase Since it is rather difficult to anticipate the sensitivity of changes to GDP, industrial growth, population and other changes indicated in Table 4.12, it was decided to use the base case demand and to determine how best to manage the demand with the base case. There were two measures that could be taken specially to manage the demand. The first could be to improve the efficiency of supply of irrigation systems which are the largest consumers of water (60 percent). There is already inbuilt into the base case an efficiency program for urban and rural priority supplies to improve unaccounted for water from 30-35 percent to 10-15 percent from 2000 to 2030. The details of improvements for irrigation efficiency would achieve real water saving are described in Chapter 6. These would increase the efficiency of system by about 10 percent above the existing government program to improve efficiency (see Chapter 6). The second most important parameter to contain demand would be to increase prices by 10 percent per year over an above the price increases as indicated in base case in Table 4.5. Another parameter, reuse, was also considered but it really made no changes to the demand since reuse was really part of the supply function and not the demand. The net effects of each were worked out using the GAM model and are reproduced in Table 4.13. TABLE 4.13: DEMAND CHANGES UNDER DIFFERENT SCENARIOS 1997 2000 2010 2020 2030 2040 2050 Base Case 95% Probability 190.59 192.46 205.20 216.34 221.82 224.73 228.03 75% Probability 166.62 168.74 180.96 192.03 197.51 200.42 203.72 50% Probability 153.34 155.73 167.76 178.83 184.31 187.22 190.52 25% Probability 144.75 147.31 159.25 170.65 175.78 178.69 181.99 Efficiency 10% Improvement 95% Probability 190.59 192.46 200.94 206.74 208.39 211.30 214.60 75% Probability 166.62 168.74 177.44 184.00 186.44 189.35 192.65 50% Probability 153.34 155.73 164.49 171.54 174.18 177.09 180.39 25% Probability 144.75 147.31 156.23 164.02 166.52 169.43 172.73 Efficiency 10% Improvement + Reuse 95% Probability 190.59 192.46 200.94 206.74 208.39 211.30 214.60 75% Probability 166.62 168.74 177.44 184.00 186.44 189.35 192.65 50% Probability 153.34 155.73 164.49 171.54 174.18 177.09 180.39 25% Probability 144.75 147.31 156.23 164.02 166.52 169.43 172.73 Efficiency 10% Improvement + Reuse + Price Increase 95% Probability 190.59 192.46 199.70 204.83 205.50 206.86 207.84 75% Probability 166.62 168.74 176.20 182.09 183.55 184.91 185.89 50% Probability 153.34 155.73 163.25 169.63 171.29 172.65 173.63 25% Probability 144.75 147.31 154.99 162.08 163.63 164.99 165.97 C. WATER SUPPLY PROJECTIONS Water supply capability depends not only on available water resources, as described in chapter 3B, but on the capacity of the physical structures which capture, store, and convey it to consumers. As seen in chapter 3B, there is definitely a resource constraint in northern China, which is hovering not far above recent levels of withdrawals, at least in the Hai and Yellow basins. Both the above-described studies by IPPDI and IWHR (1993) also projected water supply capacity. Both also compared projected "demand" with projected supply capacity and concluded that future shortages must be met from some combination of demand curtailment and supply augmentation. The latter is achieved through investments in transfers, dams, canals, pumping stations, etc. The following section describes current estimates of future water supply. 92 Chapter 4. Sufficient Water for All (i) Existing Estimates of Future Water Supply (a) IPPDI Study Water supply capacity from river flows depends in part on the level of those flows. Because of the wide variability in annual rainfall and hence river flows, IPPDI adopted the design standard of "P75" for its calculations. "P75" refers to a probability of achieving at least the desired value 75 percent of the time. In the case of river flows, the value is that which can be expected to be exceeded in three out of four years. This standard has been widely used since. The left part of Table 4.14 reports the values of surface water supply capacity for P75 case of river flows given the physical works in place in 1980. Coupled with the estimates of exploitable (sustainable) groundwater supplies, these estimates yield total exploitable, reliable water supply capability. In 1980, it amounted to 473.5 Bcm for the entire country, and about 120 Bcm for 3-H. Recall from Chapter 3B that average annual water resources are estimated to be about 2,812 Bcm for the entire country, and about 213 Bcm for the 3-H basins. There are two reasons why reliable, exploitable supplies cannot approach the levels of average annual resources. First, P75 river flows are far less than mean river flows. In the Yellow River basin, mean flows are about 56 Bcm, but P75 flows only 40 Bcm. Second, seasonal variation in rainfall and river flows means that it is uneconomical--if not physically impossible--to attempt to capture all flows. Again using the Yellow River as an example, fully 67 percent of average annual flows occur in the flood season, and are typically heavily laden with silt. Nevertheless, one objective of water sector planners is to increase exploitable, reliable supplies relative to the absolute limits imposed by the resource constraint. TABLE 4.14: 1980 RELIABLE WATER SUPPLIES AND PROJECTED INCREASES FROM THE IPPDI STUDY (Bcm) 1980 Reliable Supplies 2000 Projected Supplies Increase, 1980 - 2000 P75 Exploitable Total P75 Exploitable Total P75 Exploitable Total Surface Ground Supply Surface Ground Supply Surface Ground Supply I Northeast 29.5 9.5 39.0 49.2 18.6 67.8 19.7 9.1 28.8 II Hai-Luan 19.5 15.4 34.9 22.4 17.6 40.0 2.9 2.2 5.1 III H/S 40.6 11.9 52.5 58.5 16.0 74.5 17.9 4.1 22.0 IV Yellow 24.0 8.4 32.4 32.0 9.0 41.0 8.0 0.6 8.6 V Yangtze 160.9 5.1 166.0 236.2 7.6 243.8 75.3 2.5 77.8 VI South 69.7 0.3 70.0 95.0 0.4 95.4 25.3 0.1 25.4 VII SE China 21.3 0.7 22.0 31.5 1.0 32.5 10.2 0.3 10.5 VIII SW China 4.3 0.0 4.3 6.5 0.0 6.5 2.2 0.0 2.2 IX Inland 44.6 7.8 52.4 54.8 11.5 66.3 10.2 3.7 13.9 China Total 414.4 59.1 473.5 586.1 81.7 667.8 171.7 22.6 194.3 3-H Total 84.1 35.7 119.8 112.9 42.6 155.5 28.8 6.9 35.7 Source: IPPDI study and IWHR (1993) Study. Taking into account the numerous water sector projects planned to come on line between 1980 and 2000, IPPDI projected 2000 supplies as shown in the middle part of Table 4.14, with the associated increases shown on the right of the table. Those projects were expected to add about 194 Bcm nationwide, and nearly 36 Bcm in the 3-H basins. Those expectations will fall short, and by a wide margin. 1997 showed the highest levels of withdrawals in Chinese history, but those only amounted to about 557 Bcm nationwide, an increase of 113 Bcm nationwide over 1980 levels, but fully 111 Bcm behind the expected supply capacity in 2000. In 3-H, withdrawals in 1998 were only about 12 Bcm over 1980 levels, and 17 less than the 2000 projections. There are several reasons for the shortfall. First, many projects were delayed for various reasons. In the Yellow River, both Xiaolangdi reservoir and the Wanjiazhai water transfer scheme, which together will increase reliable water supplies by about 8 Bcm, were planned to be Chapter 4. Sufficient Water for All 93 completed before 2000. Both will come into full operation shortly after 2000. Second, IPPDI could not foresee that, due largely to a shortage of operations and maintenance funds, the physical capacity of many water supply works would deteriorate. Canals have silted up, pumps have worn out, and dams have become unsafe, so that they cannot be filled to design capacity for fear of failure. IWHR (1993) updated IPPDI's earlier projections of supply, computed them for several scenarios including mean as well as P75 surface water flows, and extended them to 2010. Their basic results are summarized in Table 4.15. The most significant difference from IPPDI's results, for 2000, is a marked lowering of expectations. IPPDI projected P75 supplies nationwide to be about 668 Bcm; IWHR lowered this to about 582 Bcm. For 3-H, the total P75 projection only dropped from 155.5 to 154.1 Bcm. In 2010, IWHR does reach IPPDI's projection 668 Bcm, although ten years late. Mean water supplies from surface water sources (runoff) are of course lower in all scenarios. Groundwater withdrawals are limited to long- term exploitable levels. This assumption requires groundwater withdrawals to be reduced from recent levels, but the Huai and Yellow show increases, as pumping capacity expands. TABLE 4.15: IWHR (1993) PROJECTIONS OF FUTURE WATER SUPPLY (Bcm) Surface Water Groundwater Interbasin Transfers Other Total I Northeast 37.7 37.0 17.8 17.9 0.2 0.2 0.0 0.0 55.7 55.1 II Hai-Luan 12.6 10.5 22.0 22.0 3.6 5.1 2.1 2.1 40.3 39.7 III Huai 33.5 39.6 18.4 18.9 12.4 13.3 0.3 0.3 64.6 72.1 IV Yellow 29.5 28.5 13.3 13.3 0.0 0.0 0.4 0.5 43.2 42.3 V Yangtze 163.5 180.1 10.7 10.7 0.0 0.2 0.2 0.2 174.4 191.2 VI South 74.1 73.7 3.8 3.7 0.1 0.1 0.1 0.1 78.1 77.6 VII SE China 31.0 31.6 2.0 2.0 0.0 0.0 0.0 0.0 33.0 33.6 VIII SW China 7.3 7.5 0.4 0.3 0.0 0.0 0.0 0.0 7.7 7.8 IX Inland 53.1 52.7 8.8 8.9 0.6 0.6 0.3 0.3 62.8 62.5 China Total 442.3 461.2 97.2 97.7 16.9 19.5 3.4 3.5 559.8 581.9 3-H Total 75.6 78.6 53.7 54.2 16.0 18.4 2.8 2.9 148.1 154.1 mean P75 mean P75 mean P75 mean P75 mean P75 I Northeast 45.5 45.1 19.8 19.8 0.4 0.4 0.6 0.6 66.3 65.9 II Hai-Luan 12.7 10.9 21.1 21.0 7.9 9.3 4.3 4.4 46.0 45.6 III Huai 37.6 42.3 21.6 22.0 16.9 18.3 0.5 0.5 76.6 83.1 IV Yellow 33.3 32.6 14.8 15.0 0.0 0.0 0.6 0.5 48.7 48.1 V Yangtze 187.1 203.1 12.4 12.3 0.1 0.3 0.4 0.4 200.0 216.1 VI South 87.7 86.9 4.3 4.3 0.1 0.1 0.3 0.3 92.4 91.6 VII SE China 36.1 36.6 2.3 2.3 0.0 0.0 0.1 0.1 38.5 39.0 VIII SW China 8.8 8.7 0.5 0.5 0.0 0.0 0.0 0.0 9.3 9.2 IX Inland 55.6 55.6 10.7 10.7 1.4 1.4 0.5 0.5 68.2 68.2 China Total 504.4 521.8 107.5 107.9 26.8 29.8 7.3 7.3 646.0 666.8 3-H Total 83.6 85.8 57.5 58.0 24.8 27.6 5.4 5.4 171.3 176.8 IWHR did not always identify the projects or other means of achieving the increases in supply. But they did provide enough information to identify which sources of water will be affected. These are shown in Table 4.16.42 Increases in surface water supplies would come from new dams, enlarged canals, and other diversion or within-basin transfers. These total 4.65 Bcm by 2000, and another 7.2 Bcm after 2000, mostly in the Huai and Yellow. IWHR expected expansion of groundwater extraction capacity also in the Huai and Yellow, but reduced pumping in the Hai by 2000, then increased it marginally. "Others" includes recycling and reuse, and a small volume of seawater. These sources were used minimally in 42 The base from which IWHR projected supply increases is not actual water resources in 1993, but estimated supplies available from P75 runoff under 1993 physical conditions. Actual water resources for 1993 are not available. 94 Chapter 4. Sufficient Water for All 1993, but have grown substantially since. Recycling and reuse do not increase withdrawals, as IWHR's table implies, but instead increase consumptive use for the same level of withdrawals. For this reason, the category of "others" is removed from the water balance discussion to follow. TABLE 4.16: SOURCES OF INCREASE IN WATER SUPPLY, 1993-2010 (Bcm) Surface Water Groundwater Interbasin Trans Total Increase 1993-00 2000-10 1993-00 2000-10 1993-00 2000-10 1993-00 2000-10 Hai-Luan 0.15 0.40 0.50 -1.00 0.65 4.20 1.30 8.36 Huai 2.30 2.70 3.30 3.10 1.85 5.00 7.45 10.80 Yellow 2.20 4.10 1.30 1.70 0.00 0.00 3.50 10.80 3-H Total 4.65 7.20 5.10 3.80 2.50 9.20 17.25 25.20 Source: IWHR. Apart from South-North (S-N) transfers, the projections total about 10 Bcm additional supplies until 2000 and another 10 in the following decade. About 60 percent will come from surface water, and 40 percent from groundwater. About 40 percent of the 3-H total increase will go into the Huai basin, and most of the rest into the Yellow. If Hai groundwater withdrawals are reduced, the only increases there will be small amounts of surface water. As best as can be determined, IWHR's characterization of the S-N plans (as of September 2000) are relatively modest versions of the Eastern Route (by 2000), and the Middle Route (by 2010). IWHR's Eastern Route will add 0.65 Bcm to the Hai and 1.85 Bcm to the Huai. The Middle Route will add another 4.2 to the Hai and 5 to the Huai. Given these considerations, IWHR's supply-demand balances for 2000 and 2010 are shown in Table 4.17. Year 2000 demands are 156 Bcm compared to supplies of 145.3, yielding a deficit of 10.7. In 2020, demands increase to 180 Bcm, supplies to nearly 165, and the deficit is 14. TABLE 4.17: IWHR (1993) FUTURE SUPPLY-DEMAND BALANCES 2000 2010 Demand Supply Short Demand Supply Short Hai-Luan 45.2 38.2 7.0 50.1 41.7 8.4 Huai 65.7 64.3 1.4 78.9 76.1 2.8 Yellow 45.1 42.8 2.3 51.1 48.1 3.0 3-H Total 156.0 145.3 10.7 180.1 165.9 14.2 Notes: Including S-N East and Middle. Excludes "other" water supplies. (ii) World Bank Supply Projections (a) Supply Options without S-N Water Transfer Following much discussion with Chinese water resources specialists and consultations of other studies described above, the World Bank Study incorporated findings to date into the 3-H modeling system developed for water resources allocation for this study.43 The water supply results of the modeling are summarized in Table 4.18. It is noteworthy that the total supply for the 3-H basins is projected to increase from the 1997 level of 128.4 Bcm to 145.7 Bcm in 2050 from surface, local and groundwater which is only about 17 Bcm in addition to current supplies. In effect, there is very limited scope for additional water supply from sources within the 3-H basins according to the World Bank Study projections if sustainable groundwater withdrawals are respected. 43 See Annex 3.1 for more details on the model. Chapter 4. Sufficient Water for All 95 TABLE 4.18: SOURCES OF WATER SUPPLY FOR THE HAI, HUAI AND YELLOW BASINS FOR P75 YEAR 1997 2000 2010 2020 2030 2040 2050 2000 2030 2050 Hai SW Supply 10.78 10.93 11.40 11.71 11.89 12.01 12.06 33% 31% 32% LW Supply 1.79 1.90 2.04 2.10 2.14 2.14 2.14 6% 6% 6% GW Supply 15.94 15.94 16.06 16.11 16.13 16.19 16.18 48% 44% 44% Transfer 3.71 4.22 6.79 6.79 6.79 6.79 6.79 13% 19% 18% Total Supply 32.22 32.99 36.29 36.72 36.95 37.14 37.17 100% 100% 100% Huai SW Supply 9.63 9.45 9.91 10.60 10.83 11.07 11.50 15% 15% 16% LW Supply 24.13 24.70 23.91 24.70 24.70 25.22 25.46 39% 36% 36% GW Supply 18.14 18.61 21.38 21.40 21.52 21.52 21.50 30% 32% 31% Transfer 9.35 9.79 11.25 11.63 11.71 11.72 11.72 16% 17% 17% Total Supply 61.24 62.55 66.45 68.32 68.75 69.52 70.18 100% 100% 100% Yellow SW Supply 6.45 7.05 7.61 7.81 8.02 8.18 8.25 19% 20% 20% LW Supply 16.03 13.96 15.68 16.39 16.65 16.58 16.99 39% 41% 42% GW Supply 12.50 15.22 14.82 15.12 14.99 15.22 15.22 42% 39% 38% Transfer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0% 0% 0% Total Supply 34.98 36.24 38.12 39.32 39.66 39.98 40.46 100% 100% 100% 3-H basins SW Supply 26.86 27.43 28.92 30.12 30.74 31.26 31.81 21% 21% 22% LW Supply 41.95 40.56 41.63 43.19 43.49 43.94 44.59 31% 30% 31% GW Supply 46.58 49.77 52.26 52.63 52.64 52.93 52.9 38% 36% 36% Transfer 13.06 14.01 18.04 18.42 18.5 18.51 16.39 11% 13% 11% Total Supply 128.44 131.78 140.86 144.36 145.36 146.64 145.67 100% 100% 100% The structure of water supply for the 3-H basins is shown in Figure 4.3. Surface water (SW) is derived from runoff in the mountain areas, local water (LW) is runoff from local mountains and groundwater (GW) is both shallow and deep groundwater mix. It is noticeable that in the case of the Hai, groundwater is the major current source of water supply and this will stay the case to 2050 according to the World Bank Study projections despite only slight increases in groundwater withdrawals. The same observation can be made for surface and local water supply. Transfers are projected to become more important, contributing from 13 percent in 2000 to 18 percent in 2050 for the Hai and 16 percent in 2000 to 17 percent in 2050 for the Huai. In the case of the Huai basin, local water supply is much more important than in the Hai basin sharing about a third of total supply with groundwater. In the Yellow basin, transfers contribute nothing to water supply, but groundwater and local sources make up the bulk of water supply. While within the 3-H basins, different sources contribute different volumes of water supply, the relative contribution from the different sources will stay almost the same as today's. According to projections made with the 3-H basins modeling system, the total water supplied in 2000 in the 3-H basins is calculated at 131.8 Bcm and this is projected to increase to 145.6 Bcm. This volume represents an additional 3 Bcm in the Hai, 6.7 Bcm in the Huai and 4.2 Bcm in the Yellow available in the base case scenario and add up to a mere 13.9 Bcm. This supply is still very far from the demands which could vary from 186 Bcm to 228 Bcm under different scenarios for 2050 (see Table 4.13). The base case scenario represents limited additional supplies from local and surface water, groundwater, and "small" transfers. Furthermore this supply is based on a 75 percent probability of flows which is the design probability for irrigation. For all priority supplies which include urban supplies we need to think of the 95 percent probability to give a greater reliability. The maximum supplies for the 95 percent probability is equal to 133.5 Bcm. (see Table 4.19). This seems to indicate that all sources are being tapped to the maximum and very little change can be expected in the future. Thus the conclusion that the 3-H basins have reached a "brick wall" supply constraint is indeed valid. The question now is "what will be the water balance in the future under this base case scenario? Given growing demands and limited possible supply increase, it is likely that current shortages will continue to grow. This important issue is discussed in the next section. 96 Chapter 4. Sufficient Water for All Chapter 4. Sufficient Water for All 97 FIGURE 4.3: RELATIVE CONTRIBUTION OF WATER SUPPLY SOURCES IN THE 3-H B ASINS FOR 2000, 2030 AND 2050 Hai Basin Water Supply Projections for P75 Year 40 35 3.71 4.22 6.79 6.79 6.79 6.79 6.79 30 25 16.18 20 15.94 15.94 16.06 16.11 16.13 16.19 15 2.1 2.14 2.14 2.14 BCM/Year 1.79 1.9 2.04 10 5 10.78 10.93 11.4 11.71 11.89 12.01 12.06 0 1997 2000 2010 2020 2030 2040 2050 SW Supply Lw Supply GW Supply Transfer Huai Basin Water Supply Projections for P75 Year 80 70 9.79 11.72 11.72 60 9.35 11.25 11.63 11.71 50 21.38 21.4 21.52 21.52 21.5 40 18.14 18.61 BCM/Year 30 20 24.13 24.7 23.91 24.7 24.7 25.22 25.46 10 9.63 9.45 9.91 10.6 10.83 11.07 11.5 0 1997 2000 2010 2020 2030 2040 2050 SW Supply Lw Supply GW Supply Transfer Yellow Basin Water Supply Projections for P75 Year 50 40 30 14.82 15.12 14.99 15.22 15.22 12.5 15.22 20 BCM/Year 16.03 13.96 15.68 16.39 16.65 16.58 16.99 10 6.45 7.05 7.61 7.81 8.02 8.18 8.25 0 1997 2000 2010 2020 2030 2040 2050 SW Supply Lw Supply GW Supply 98 Chapter 4. Sufficient Water for All TABLE 4.19: TOTAL SUPPLY FOR 95 PERCENT PROBABILITY UNDER BASE CASE WITHOUT S-N TRANSFER (Bcm/year) 1997 2000 2010 2020 2030 2040 2050 Hai 31.17 31.95 32.67 32.33 33.15 32.89 32.63 Huai 54.57 55.37 59.69 60.07 60.41 60.62 60.48 Yellow 36.40 36.95 38.59 39.27 39.68 39.99 40.18 Total 122.13 124.27 130.94 131.67 133.24 133.50 133.28 (b) Supply Options with S-N Water Transfer Since all sources of local surface and groundwater resources are exhausted the only other source of water is the interbasin (South-North) transfers. The East transfer moves water along an Eastern Route via Jiangsu, Anhui, Shandong, eastern Hebei to Tianjin. The middle transfer will move water through Hubei, Henan, Hebei, Beijing and Tianjin (see Figure 4.4). The total capacity of transfer is as shown in Table 4.20. TABLE 4.20: S-N WATER TRANSFER CAPACITY (Bcm/year) 2000 2010 2020 2030 2040 2050 Middle Transfer 0 7.01 11.95 11.95 11.95 11.95 East Transfer 0 5.21 7.49 7.49 7.49 7.49 Total 0 12.22 19.44 19.44 19.44 19.44 The transfer would add a maximum 19.4 Bcm44 of water, which will be used totally for meeting priority shortages for urban and rural domestic, industrial, livestock and FPF shortages. The total supply for each river basin will therefore increase as indicated in Table 4.21. The transfer would increase Hai Basin water supply from 33 Bcm to 43 Bcm per year and Huai Basin from 60.5 Bcm to 67.5 Bcm per year. The Yellow Basin will not receive any additional supplies. Priority supplies to major sectors with the S-N transfer for P75 year are presented in Table 4.22 below. These supplies were calculated by the 3-HMS and allocated in order to minimize shortages and the economic value of these shortages. Priority supplies do not include agriculture as noted above because the sectors listed in Table 4.22 have first priority according to government policy and the 3-HMS allocates water to meet demands from these sectors first. 44 This is the design capacity that has to take into account peaking requirements under very extreme drought events. It is not necessarily the transferred volumes. This is why supplies without S-N plus S-N capacity do not match supplies with S-N. Chapter 4. Sufficient Water for All 99 FIGURE 4.4: SOUTH-NORTH WATER TRANSFER Eastern S-N Transfer Route Middle S-N Transfer Route Langfa ng Hohhot Shi Zhangjiakou Baotou Da lia n huozhou Tia njin Tianjin Qinhuangdao Datong Beijing Shi Tangshan Wuhai Langfang Dingx ing Shuozhou Tianjin Cangz hou Shizuishan Tangxian Shijiaz huang Wei hai Ya ntai Yinch uan Shi Taiyua n Ya ngquan # Dongying Shij iazhuang Taiy uan Yangquan Dongying Zibo We ifang Xingtai Lingqing Zi bo Weifang Jinan Jinan Handa n Handan Qingda o Tai'an Ta i'a n Changzhi Anyang Changzhi Anyang Hebi Puyang Ri zhao Hebi Puyang Jincheng Jining Riz ha o Xinxi ang Ji aozuo J ining Jinc he ng Tongchuan Zaozhuang Lianyungang Xinxiang Sanmenxi a Zhengzhou Kaifeng Jiaoz uo Luoyang Xuzhou Zaozhua ng Baoji Xianyang Lia nyunga ng Xi'an Ka ifeng Xuchang Huaibei Zhengz hou Huaiyi n Luoya ng Pingdingshan Luohe Xuz hou Fangche ng Bengbu Huaibei Xuchang Nan yang Huaiyin Huainan Yangzh Shiyan Pingdingsha n Ya nc he ng Zhenji Luohe Nanjing Xiangfan Hefei Ma'anshan Bengbu Wuhu Huaina n Ya ngzhou Tongling Ji ngmen Zhenjia ng Nantong Yichang Anqi ng Wuhan Shi Na njing Ezhou Changzhou Shash i Huangshi ngfa n Hefe i Ma'a ns han Wuxi Huangshan Jiujiang LEGEND N LEGEND N CHI NA WATER SECTO R ACTI ON PROGR AM CHIN A WATER SECTOR ACTION PR OGRAM WO RLD BANK-MINISTR Y OF WATER RESOURCES WOR LD BANK-MINISTRY OF WATER RESOURCES Pumpi ngStat ion Pumpl ine TheDiversion Route for the Near Fut ure Ri ver TheDiversion Route for the Far Future Rail FIGURE No. River FIGURE No. Lake & Reservoi r Rail Boundary of Yelow,Huai ,Hai Basin Lak e& Res ervoir WaterSupply Region Sketch of t heSchemeof ERP. Sketch Planof MRP. Boundary of Yellow,H uai,Hai Basin 3 Water Supply Region 2 100 Chapter 4. Sufficient Water for All TABLE 4.21: TOTAL SUPPLY FOR 95 PERCENT PROBABILITY WITH S-N TRANSFER (Bcm/year) 1997 2000 2010 2020 2030 2040 2050 Hai 31.17 31.95 33.67 41.00 42.85 42.87 42.77 Huai 54.57 55.37 64.07 66.98 67.07 67.20 67.46 Yellow 36.40 36.95 37.77 37.31 37.92 38.31 38.32 Total 122.13 124.27 135.50 145.29 147.85 148.39 148.55 TABLE 4.22: OPTIMAL WATER SUPPLY TO SECTORS FOR P75 YEAR WITH S-N TRANSFER (Bcm) 1997 2000 2010 2020 2030 2040 2050 Hai URBLIFE 2.06 2.27 3.77 4.73 5.53 6.22 6.74 URBIND 3.77 4.00 5.03 6.67 7.36 7.18 6.87 RURLIFE 1.72 1.84 1.96 2.06 2.10 1.97 1.81 RURIND 1.35 1.50 1.84 2.05 2.08 2.08 2.06 LIVSTOCK 0.48 0.51 0.54 0.53 0.52 0.50 0.47 FPF 0.00 0.00 0.00 0.00 0.00 0.00 0.00 IRRIGATION 22.60 22.59 24.28 26.12 25.68 25.56 25.51 TOTAL 31.97 32.71 37.42 42.15 43.27 43.50 43.46 Huai URBLIFE 2.40 2.52 3.12 3.96 4.80 5.40 6.12 URBIND 5.57 6.40 10.50 13.65 14.20 13.66 13.29 RURLIFE 3.00 2.40 2.52 2.52 2.52 2.52 2.52 RURIND 1.68 2.28 2.64 3.48 3.96 3.96 4.08 LIVSTOCK 1.08 1.08 1.08 1.20 1.44 1.44 1.68 FPF 3.50 3.80 4.20 4.80 4.80 4.80 4.80 IRRIGATION 44.91 43.70 43.16 41.32 39.85 39.85 39.67 TOTAL 62.15 62.18 67.22 70.92 71.57 71.63 72.15 Yellow URBLIFE 1.41 1.55 2.06 2.52 2.98 3.39 3.72 URBIND 3.71 4.76 6.78 8.64 9.26 9.17 8.74 RURLIFE 1.16 1.05 1.13 1.27 1.26 1.37 1.39 RURIND 0.70 0.84 1.18 1.61 1.93 2.10 2.21 LIVSTOCK 0.45 0.54 0.57 0.69 0.78 0.89 0.98 FPF 1.25 1.58 2.27 3.04 3.04 3.04 3.04 IRRIGATION 25.94 25.21 24.02 21.66 20.60 20.15 20.17 TOTAL 34.62 35.53 38.01 39.43 39.85 40.11 40.25 3H Total URBLIFE 5.87 6.34 8.95 11.21 13.31 15.01 16.58 URBIND 13.05 15.16 22.31 28.96 30.82 30.01 28.90 RURLIFE 5.88 5.29 5.61 5.85 5.88 5.86 5.72 RURIND 3.73 4.62 5.66 7.14 7.97 8.14 8.35 LIVSTOCK 2.01 2.13 2.19 2.42 2.74 2.83 3.13 FPF 4.75 5.38 6.47 7.84 7.84 7.84 7.84 IRRIGATION 93.45 91.50 91.46 89.10 86.13 85.56 85.35 TOTAL 128.74 130.42 142.65 152.50 154.69 155.24 155.86 Chapter 4. Sufficient Water for All 101 D. WATER BALANCES IN THE FUTURE (i) Base Case Water Balance We may now look at the future water-supply balances given action plan projections of future nonagricultural and agricultural demands, and the supply projections described above. No additional supplies or demand management is assumed in the calculation of water balances for the 3-H basins in the base case scenario presented in Table 4.23 other than ongoing government programs. The base case includes: · efficiency improvements in irrigation (7-8 percent); · reduction in unaccounted for water in urban and rural industrial and domestic supplies (from 30-25 percent to 10-15 percent); · real price charged to consumer increases for water at about 2 percent per year in real terms; · water pollution reduction in urban areas so that at least 5 percent of the local water supply can be reused for urban purpose. TABLE 4.23: FUTURE SUPPLY-DEMAND BALANCES AND SHORTAGES FOR THE 3-H B ASINS FOR BASE CASE SCENARIO (P75) (Bcm) 1997 2000 2010 2020 2030 2040 2050 Hai Total Demand 49.0 50.0 52.9 55.3 56.7 57.6 58.3 Total Supply 32.2 33.0 36.3 36.7 36.9 37.1 36.0 Priority Shortage 2.1 2.3 3.1 3.7 4.1 4.4 4.7 Shortage Irrigation 14.6 14.7 13.5 14.8 15.6 16.0 17.6 Total Shortage 16.7 17.0 16.6 18.5 19.8 20.4 22.3 Huai Total Demand 69.6 71.9 77.3 82.1 84.6 85.4 87.0 Total Supply 61.2 62.5 66.4 68.3 68.7 69.5 69.2 Priority Shortage 2.1 2.2 3.4 5.3 5.7 5.6 6.1 Shortage Irrigation 7.4 7.9 7.5 8.7 9.2 9.3 10.1 Total Shortage 9.5 10.1 11.0 14.0 14.9 14.9 16.3 Yellow Total Demand 46.0 46.9 50.7 54.4 56.3 57.6 58.4 Total Supply 35.0 36.2 38.1 39.3 39.7 40.0 40.5 Priority Shortage 0.8 1.0 1.0 2.0 2.7 3.1 3.9 Shortage Irrigation 10.2 9.6 11.5 13.1 13.9 14.5 14.0 Total Shortage 11.0 10.6 12.5 15.1 16.6 17.6 17.9 3-H Basin Total Demand 164.5 168.8 180.9 191.7 197.6 200.6 203.7 Total Supply 128.4 131.8 140.9 144.4 145.4 146.6 145.7 Priority Shortage 4.9 5.6 7.6 10.9 12.5 13.1 14.8 Shortage Irrigation 32.2 32.1 32.5 36.7 38.7 39.8 41.7 Total Shortage 37.2 37.7 40.1 47.6 51.2 52.9 56.5 According to the results of the 3-H modeling system for the base case scenario, shortages will continue to occur as demand for water outpaces supply. Given government policy of satisfying urban municipal and industrial needs first, supplies to agriculture will not increase beyond current levels. Urban shortages will continue to grow due to high demand in comparison to supply under the base case scenario. As shown in Annex 4.1 of Volume 3, the effect of different flow probability years on agriculture is significant. For example in the Huai basins, shortages to agriculture are reduced dramatically for a P25 year compared to a P95 year. By comparison, despite preferential allocation, urban shortages tend to 102 Chapter 4. Sufficient Water for All remain constant most strikingly in the Hai basin and this is because even during wet years when more surface and local water is available, water pollution prevents the use of this water and so the shortages remain constant. Urban centers are forced to use groundwater instead. Overall, shortages in dry years will show up in the agricultural sector first and then industry and municipalities last. In wet years, the shortages will decline in agriculture but remain relatively constant in the urban centers at least in the Hai basin. The trend in urban shortages in the Huai and Yellow basins suggest that additional flows may be available to dilute polluted waters so that it may become acceptable raw water supply with the current level of treatment technology. In addition, given the spatial and temporal variability of water supply and despite preferential allocation for urban industry and municipal consumers, it may be impossible to satisfy priority needs ahead of agriculture if the water cannot be transferred to the parts of the basin where the water shortages exist. Thus, urban water shortages will still exist, at least in the base case scenario, as shown in Table 4.23 and in Annex 4.2, Volume 3. Total shortages will continue to increase for all three basins from the present time to 2050 under the base case scenario. In addition, total shortages (from 37.2 Bcm to 56.5 Bcm/year) also increase during drier years compared to wet years. Figure 4.5 show total shortages for the Hai basin. The priority shortage forms about 15 Bcm (25 percent) of the total shortage in a P75 flow year. In the Hai basin, urban shortages remain constant during different probability years but increase over time. This is because water supply remains constant despite additional water in wet years because water is severely polluted and cannot be used for raw water supply for municipal use45 as discussed above By comparison, in the Huai basin, wet years provide some additional usable water and so urban shortages are different in wet and dry years. This is similar to the situation in the Yellow basin. The full water balance calculated for different probability flows to year 2050 for the 3-H basins is presented in Annex 4.2, Volume 3. (ii) Water Balance with Efficiency Improvement in Irrigation, Additional Reuse and wastewater treatment, Additional Price Increase and S-N Transfer Even with government program demand management measures described in items (1) to (3) and supply enhancement measures as in (4) below the demand/supply differences (i.e. shortages) are 56.7 Bcm/year for P75 moderately dry year and 95 Bcm/year for P95 for a very dry year. Those deficits are not tolerable as will be seen in the following sections. It is therefore necessary to look into further demand management and supply enhancing measures, these include: (1) Increasing the efficiency of irrigation system by a further 10 percent, i.e. to 17-18 percent; (2) Increasing reuse from 5 to 15 percent for priority supplies; (3) Increasing prices by a further 10 percent per year over the existing price increases in real term, i.e. to 12 percent; (4) Increasing the supply by the South-North East and Middle transfer by about 19.7 Bcm/year. These form the basis for the action plan for water resources in the 3-H basins and the resulting total shortage reductions are shown in Table 4.24 below. 45 However, as discussed in the pollution chapter, severely polluted water is often used for irrigation. According to the previous discussion, base case supply will not be able to meet projected demands for 2000-2050 creating huge deficits in water for agriculture and priority use purposes. Chapter 4. Sufficient Water for All 103 Figure 4.6 shows the prepared integrated water and wastewater utilization plan for urban areas, agriculture and rural farms and the existing situation. It can be seen that wastewater treatment, reuse, recycling and artificial recharge are integral components of the proposed action plan and that water quality improvements will reduce water scarcity. The action plan recommends 5 to 15 percent wastewater reuse at the basin level; however reuse cannot be implemented without increased wastewater treatment. Thus the action plan recommends that 95 percent of industrial wastewater should be treated by 2020 and secondary municipal treatment plants should be operating in P1 and P2 cities also by 2020. As noted in Chapter 7, wastewater reuse at the city level may have to be much higher than this--up to 30 percent for domestic wastewater while industrial reuse will be up to 50 percent in 2020. FIGURE 4.5: TOTAL SUPPLIES AND DEMANDFOR DIFFERENT PROBABILITY FLOWS FOR THE HAI BASINS Total Water Balance Hai Basin 70.0 60.0 50.0 40.0 MCM 30.0 100 20.0 10.0 0.0 Year 1997 2000 2010 2020 2030 2040 2050 Supply 95% Prob Shortage 95% Supply 95% prob Demand 95% Prb Demand 75% Prob Supply 75% Prob Demand 50% Prob Supply 50% Prob Demand 25% Problem Supply 25% Prob HAI Water Balance for Urban and Priority Needs 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Year 1997 2000 2010 2020 2030 2 0 4 0 2050 Supply 95% Shortage 95% Supply 95% Demand Supply 75% Prob Supply 50% Prob Supply 25% Prob 104 Chapter 4. Sufficient Water for All TABLE 4.24: 3-H WATER SHORTAGES UNDER DIFFERENT SCENARIOS (Bcm) 3-H Basins Priority Water Shortages under P95 1997 2000 2010 2020 2030 2040 2050 Base Case 5.81 6.21 9.19 12.96 14.64 15.74 17.46 Efficiency 10% 5.81 6.21 9.19 12.96 14.64 15.74 17.46 Efficiency 10% + reuse 5.81 6.21 7.84 10.04 10.72 11.72 12.85 Efficiency 10% + reuse + price increase 5.81 6.21 7.40 9.03 9.52 10.06 10.14 Efficiency 10% + reuse + price increase + S-N-E 5.81 6.21 5.42 5.52 5.87 6.41 6.54 Efficiency 10% + reuse + price increase + S-N 5.81 6.21 4.21 2.23 1.73 2.03 2.06 3-H Basins Irrigation Water Shortages under P75 1997 2000 2010 2020 2030 2040 2050 Base Case 32.13 32.49 32.39 36.66 38.74 39.82 41.08 Efficiency 10% 32.13 32.49 29.94 30.99 30.94 32.05 33.23 Efficiency 10% + reuse 32.13 32.49 31.80 33.43 33.72 34.89 36.15 Efficiency 10% + reuse + price increase 32.13 32.49 31.42 32.87 32.69 33.30 33.49 Efficiency 10% + reuse + price increase + S-N-E 32.13 32.49 30.47 30.48 30.60 31.20 31.38 Efficiency 10% + reuse + price increase + S-N 32.13 32.49 29.97 28.11 28.08 28.66 28.91 3-H Basins Total Water Shortages under P75 1997 2000 2010 2020 2030 2040 2050 Base Case 37.88 38.84 40.73 48.35 52.14 54.32 56.70 Efficiency 10% 37.88 38.84 38.28 42.68 44.33 46.54 48.84 Efficiency 10%+ reuse 15% 37.88 38.84 38.54 41.64 42.46 44.54 46.82 Efficiency 10%+reuse 15% +price increase 37.88 38.84 37.86 40.46 40.50 41.53 42.02 Efficiency 10% + reuse + price increases + S-N-E 37.88 38.84 35.26 35.18 35.37 36.38 36.78 Efficiency 10%+ reuse 15%+ price increases + S-N 37.88 38.84 33.56 29.60 28.87 29.68 30.06 S-N: East + Middle routes S-N-E: East Route only. It should be noticed that the priority shortages can be reduced from 17.5 Bcm/year in 2050 to 2.1 Bcm/year. Total shortages are reduced from 56.7 Bcm to 30.1 Bcm for all measures. Priority water shortage and effectiveness of each measure to reduce water shortages is as is shown in Table 4.25. TABLE 4.25: EFFECTIVENESS OF EACH WATER SHORTAGE REDUCTION MEASURE Shortage Reduction Irrigation Shortage Priority Shortage Total Water Shortage Base Case - - - Efficiency 10% Improvement 19% - 14% Reuse increase 15% -7% 26% 4% Price increase by 10% 6% 16% 8% S-N East Transfer 5% 21% 9% S-N Middle Transfer 6% 26% 12% Total Reduction 30% 88% 47% Priority shortages in 3-H have to be significantly reduced (almost to zero if possible). Improving irrigation efficiency has no effect on reducing priority shortages because all water savings will be absorbed by agriculture however reuse of treated water reduces shortage by 26 percent and S-N transfers of water will reduce it by a further 47 percent. Price on urban water will reduce shortages by a further 16 percent. Overall the priority water shortages are reduced by 88 percent by these measures from 17.5 Bcm/ year in 2050 to 2.10 Bcm/year. The further 2.10 Bcm shortage is essentially in the Yellow River Basin and the only solution to reduce this shortage is through the West Transfer Project. Chapter 4. Sufficient Water for All 105 FIGURE 4.6: EXISTING AND PROPOSED INTEGRATED WATER AND WASTEWATER UTILIZATION FOR URBAN AREAS, AGRICULTURE AND RURAL TOWNS Industry Recycling GW Wastewater providing production Inplant water wastewater supply to Disinfection Artificial recharge of GW for treatment urban conjunctive use or specific Intrabasin areas environmental problems transfer Municipality plant treatment Wastewater Water Sewage discharge Agriculture production flows Acceptable industrial wastewater to municipal WWTP Municipal Reuse Artificial treatment recharge of GW Transfer River Dam S-N Latrines/ return flows settling ponds containing non-point source pollution Latrines/ settling ponds Village GW Agriculture providing Disinfection water Water supply to treatment Stablization ponds + rural areas plant Rural towns appropriate treatment technology Existing wastewater/return flow discharge Wastewater Existing water intake production Discharge/recharge or intake to be implemented under Action Plan Disinfection TVEs/ Discharge to be abandoned under proposed Action Plan Livestock Urban area Village and agriculture Rural towns 106 Chapter 4. Sufficient Water for All The net impact of these measures is to reduce agricultural shortages from 41 Bcm/year to 28.9 Bcm/year (30 percent reduction). The efficiency improvement measure reduces shortages by 19 percent and is the most effective overall. The reuse of water for priority supplies tends to deprive agriculture of water and hence shortages increase by 7 percent. The S-N transfers also seems to reduce shortage by 11 percent since the provision of priority supplies tend to release more local supplies for agriculture. Overall shortages are reduced by about 26 Bcm (47 percent reduction). The most effective measures for shortage reduction are (a) the transfer (21 percent), (b) efficiency improvement (14 percent) (c) and price increases (8 percent). It is important to note that inherent in the process of modeling demand, supply and water shortages, the model routines will attempt to maximize the net economic output of water for urban, rural, industrial and agricultural sectors by (a) allocating water from different sources including surface water, groundwater, local water and intra-basin transfers (Table 4.18 above). and (b) shifting water from low- priority sectors (agriculture) to high-priority sectors (life and industry). Thus, a substantial percentage of water initially allocated to agriculture becomes a source of water for priority uses. Figure 4.7 below shows how the optimization model shifts water from the different supplies available into priority uses. The priority supplies of 35.2 Bcm are calculated for a P95 year and guaranteed through to 2050. Additional supplies come from intrabasin and local supplies including groundwater and from irrigation. In the base case, the volume of water shifted out of agriculture to reach optimum economic efficiency is 2.5 Bcm in 2000 increasing to 16.1 Bcm in 2050. Priority shortages remain however at 6.2 Bcm, growing to 17.5 Bcm in 2050. Shifting additional water out of irrigation is not the solution to the remaining shortages since this will result in suboptimum conditions with respect to net economic output from water. Under the base case scenario and with the constraints imposed, the optimization calculations show that tolerating the priority shortages at the level shown (17.5 Bcm in 2050) assures maximizing of economic benefits from water distributed across urban and rural life, industry and irrigated agriculture uses. Fortunately, other options to further reduce priority shortages are available as investigated in the previous paragraphs. The implementation of water use efficiency improvement in irrigation districts and reuse of wastewater in urban centers combine to increase water supply to priority uses. Thus, 21 Bcm is shifted out of agriculture in 2050 and priority shortages are reduced to 12.9 Bcm also in 2050. Similarly, higher prices for urban water in addition to the aforementioned measures will further reduce priority shortages (by lowering demand) to 10.1 Bcm in 2050 although less water will be shifted out of agriculture because less water is needed to optimize overall economic benefits from all sectors. Thus, over the next 50 years and depending on the measures adopted as shown in Table 4.26 below, up to 22 to 31 percent of total water supplied to irrigation in 2050 should be shifted out of irrigation and allocated to priority shortages to maximize economic benefits derived from water. The optimization model recommends that this shift should start at about 3 percent of total supply in 2000. At the same time, irrigation supplies will decline under all three successive management measures in the next 50 years. Note that this shift should occur even without the implementation of the S-N transfer and so is not a substitute measure to the S-N transfer but rather an intersectoral transfer of water that should occur in order to maximize economic benefits derived from water in addition to further supply augmentation measures recommended. Chapter 4. Sufficient Water for All 107 FIGURE 4.7: WATER DEMAND AND SUPPLY SOURCES UNDER DIFFERENT SCENARIOS Base Case 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1997 2000 2010 2020 2030 2040 2050 Priority Shortage 5.8 6.2 9.2 13.0 14.6 15.7 17.5 Intra-basin+ local suppliesetc 0.0 0.6 6.8 8.0 9.6 9.9 9.7 Supply Shift from Irrig 2.5 4.8 10.5 12.8 14.3 16.1 Priority Supply 35.2 35.2 35.2 35.2 35.2 35.2 35.2 Priority Supply Supply Shift from Irrig Intra-basin+ local suppliesetc Priority Shortage Efficiency 10% + Reuse 8 0 . 0 70.0 6 0 . 0 50.0 4 0 . 0 3 0 . 0 2 0 . 0 10.0 0 . 0 1997 2 0 0 0 2010 2 0 2 0 2 0 3 0 2 0 4 0 2050 P r i o r i t y S h o r t a g e 5.8 6.2 7.8 10.0 10.7 11.7 12.9 Intra-basin+ local supplies etc 0 . 0 0.6 5.9 6 . 9 8 . 9 9 . 0 9 . 4 Supply Shift from Irrig 0 . 0 2.5 7.1 14.6 17.4 19.2 21.0 Priority Supply 35.2 35.2 35.2 35.2 35.2 3 5 . 2 3 5 . 2 Priority Supply Supply Shift from Irrig Intra-basin+ local supplies etc Priority Shortage Efficiency 10% Improvement + Reuse + High Price 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1997 2 0 0 0 2010 2020 2 0 3 0 2 0 4 0 2050 Priority Shortage 5.8 6.2 7.4 9.0 9.5 10.1 10.1 Intra-basin+ local supplies etc 0.0 0.6 5.5 7.3 8.6 8.7 8.9 Supply Shift from Irrig 0.0 2.5 6.6 13.3 16.0 16.7 17.4 Priority Supply 35.2 35.2 35.2 35.2 35.2 35.2 35.2 Priority Supply Supply Shift from Irrig Intra-basin+ local supplies etc Priority Shortage 108 Chapter 4. Sufficient Water for All TABLE 4.26: WATER SUPPLY SHIFTING FROM IRRIGATION TO PRIORITY USES (Bcm) 1997 2000 2010 2020 2030 2040 2050 Base Case Total Irrigation Supply (IS) 88.4 85.9 83.6 77.9 75.6 74.1 72.3 Water Shifting to Priority Uses (SPU) 0.0 2.5 4.8 10.5 12.8 14.3 16.1 Irrigation Shortage 61.2 62.0 65.6 71.7 74.0 75.5 77.3 % (IS/SPU) 0 3 6 14 17 19 22 Efficiency 10% Improvement + Reuse Total Irrigation Supply (IS) 88.4 85.9 81.3 73.8 71.0 69.3 67.4 Water Shifting to Priority Uses (SPU) 0.0 2.5 7.1 14.6 17.4 19.2 21.0 Irrigation Shortage 61.15 61.98 63.58 66.15 65.13 66.91 68.74 % (IS/SPU) 0 3 9 20 24 28 31 Efficiency 10% Improvement + Reuse + High Price Total Irrigation Supply (IS) 88.4 85.9 81.8 75.1 72.4 71.7 71.0 Water Shifting to Priority Uses (SPU) 0.0 2.5 6.6 13.3 16.0 16.7 17.4 Irrigation Shortage 61.15 61.98 63.12 64.92 63.78 64.42 65.15 % (IS/SPU) 0 3 8 18 22 23 25 The detailed impact of all the four measures in the separate basins is indicated in Figure 4.8. It will be noticed that these measures will significantly reduce shortages in the Hai and Huai Basins in 2020, 2030 and 2050. For the P50 case the shortages in Huai are reduced to zero. However for the Yellow River Basin the shortages will reduce to 11.4 Bcm/year because the Yellow River never receives any of the interbasin transfer water. Overall it is clear that all four measures are needed to ensure that the water shortages can be reduced significantly. E. COASTAL ZONE IMPACTS The action plan proposed 10 percent efficiency improvement, reuse, high water prices and the implementation of the S-N transfer to improve water shortages and the effect of this water shortage alleviation program is to (a) make more water available via the S-N transfer and the reuse program and (b) reduce demand via higher prices and efficiency improvement (Table 4.27). Thus, in 2020 more water should be available to drain to the Bohai and Huanghai Seas than would otherwise be available under the base-case scenario. This extra water will help dilute pollutants discharged to the sea; however the loads may increase if nothing is done about the quantities of COD generated by each level II basin. Thus, the pollution action plan discussed in Chapter 7 needs to be adopted in parallel with water shortage reduction measures discussed in this section to ensure some degree of success in reducing total loads to the sea. TABLE 4.27: FLOWS TO THE SEA FOR ALL PROBABILITIES FOR THE HAI, HUAI AND YELLOW BASINS Hai 2000 Base Case 2020 Base case 2020 Action Plan II-1 1.9 1.8 1.8 II-2 0.5 0.4 0.6 II-3 2.3 1.0 1.6 II-4 1.2 1.0 1.2 Hai basin total 5.9 4.2 5.3 Huai Base 2000 Base 2020 P3 2020 III-4 21.0 22.3 24.2 III-6 7.9 7.0 7.8 III-7 7.7 7.6 7.5 Huai basin total 36.6 36.9 39.5 Yellow Base 2000 Base 2020 P3 2020 IV-7 26.5 19.4 19.2 Chapter 4. Sufficient Water for All 109 FIGURE 4.8: WATER SHORTAGES OF HAI, HUAI AND YELLOW BASIN UNDER DIFFERENT SCENARIOS 110 Chapter 4. Sufficient Water for All F. ECONOMIC VALUE OF WATER The economic value of water has been estimated from several projects including the Wanjiazhai Water Transfer Project using input output analysis and although there is considerable variation in the value of water between regions, those values summarized in Table 4.28 were considered reasonable for the 3-H basins: TABLE 4.28: ECONOMIC VALUE OF WATER USED IN 3-H BASINMODELING SYSTEM Water for different sectors Value (Y/m3) Irrigation water (Irrig) 0.8 - 1.6* Urban Industry (Urbind) 6.0 Rural Industry (Rurind) 4.0 Urban Domestic (Urblife) 3.0 Rural Domestic (Rurlife) 3.0 Livestock (Livestock) 2.0 Fisheries/pasture/Forestry(FPF) 1.5 * Endogenously determined from the model. The value of water to urban domestic consumes was estimated based on willingness to pay and long-term elasticities, consumption, water supply and the cost of the project. The price calculated from this data was Y 3.66/m3, and Y 3.00/m3 was adopted for this project because of the need to average the values over the entire 3-H basins. Vendor water for both rural and urban areas is valued at Y 10/m3 and so a similar economic value was adopted for rural areas. In the case of industry, input/output models were used because they provide a consistent accounting framework, they recognize the interconnectedness of most economic activity and they can easily be linked to more rigorous analytical techniques such as linear program to yield marginal value for water. The Chinese Input-Output model formed the basis for the industry analysis of water value. Shanxi province was used for the analysis and the results are interpreted for the 3-H basins in the current study. Based on that study, the value of water was determined at Y 5.8/m3 and the value of Y 6/m3 adopted for the 3-H basins. Rural industry value was estimated at Y 4/m3 based on urban industry values described above. Economic value of water to livestock was based on values derived from animal budget and analysis. The economic value of water presented in Table 4.29 was calculated from the values per m3 for different sectors as described above and summarized in Table 4.28 and the projected water supplies to the different sectors (See Table 4.22). The supplies assume base case government program summarized in Section D (1). The 3-H basins model computes optimal water allocation for the three basins as indicated in Table 4.28. Irrigation accounts for 33-34 percent of the total value of the water supplied for 2050 while urban industry accounts for 45 percent and all other sectors account for 22 percent of the water supplied in 2030/2050. Table 4.29 also shows that the value of water supplied rises from Y 254 billion in 1997 to Y 343 billion in 2030-50 in the case of a P75 year based as the demand. There will be a 0.6 percent a year increase in the value of water as more and more water is allocated for nonirrigation purposes. In 1997 the total amount of water supplied to irrigation was 75 percent of the total resources and it accounted for 48 percent of the value of water while in 2030-50 the total amount of water supplied to irrigation as computed by the models is 66 percent and accounts for 33 percent of the value of water. Similarly, industry will require only about 14-18 percent of the total water in 2050 but its economic value is estimated at 45 percent of total supply. Chapter 4. Sufficient Water for All 111 TABLE 4.29: ECONOMIC VALUE OF WATER SUPPLIED TO DIFFERENT SECTORS FOR THE 3-H BASINS FROM 2000 TO2050 FOR P95 AND P75 (WITH OTHER DEMAND/SUPPLY MANAGEMENT WITHOUT INTERBASIN TRANSFERS) (Billions of Yuan) 1997 2000 2010 2020 2030 2040 2050 % P95 Urban Life 17.8 19.2 24.6 31.1 36.7 42.3 47.2 15 Urban Industry 69.4 80.9 95.0 100.9 105.3 101.2 96.3 30 Rural Life 17.6 15.9 17.4 18.2 18.5 18.6 19.3 6 Rural industry 14.9 18.4 23.9 29.5 33.1 34.7 37.6 12 Irrigation 112.0 111.0 112.5 109.7 108.7 108.1 107.3 33 Livestock 3.9 4.1 4.4 4.7 5.2 5.2 5.7 2 FPF 6.8 7.8 9.4 11.1 11.0 10.9 10.7 3 Total 242.3 257.3 287.1 305.1 318.4 320.9 324.0 100 P75 Urban Life 17.8 19.2 24.7 31.2 36.8 42.4 48.3 14 Urban Industry 69.5 80.9 101.2 110.2 111.7 108.5 101.7 30 Rural Life 17.6 15.9 17.4 18.2 18.5 18.6 19.5 6 Rural industry 14.9 18.4 23.9 29.5 33.1 34.7 38.2 11 Irrigation 121.8 120.0 122.8 121.2 120.2 119.7 116.4 34 Livestock 4.0 4.2 4.4 4.8 5.5 5.7 6..3 2 FPF 8.8 10.2 12.0 14.2 14.2 14.1 12.6 4 Total 254.5 268.7 306.4 329.2 339.9 343.6 343.0 100 The value of water rises during wet years (i.e. from a P75 to a P95 year) because more water is supplied to agriculture and to industry. This occurs despite more rainfall being available for crops in a wet year because agriculture is perpetually short and so there is still a demand for additional water even in wetter years. Industry is also short of water and so likewise in wetter years, more demand raises the value of water. Figures 4.9 and 4.10 compare the change distribution of the total value of water among different sectors for a P75 year in 1997 and 2050. The key points here are that the value of irrigation water expressed as a percentage of total value will decline from nearly half to a third and the percentage value of water sold to rural and urban industry will rise. Thus water will be increasingly directed to higher marginal value. FIGURE 4.9: ECONOMIC VALUE OF WATER SUPPLIED FOR 1997 FORA P75 YEAR (Net Value Y 254 Billion) Livestock FPF Urban Life 2% 4% 7% Urban Industry Irrigation 30% 44% Rural Life 6% Rural industry 7% 112 Chapter 4. Sufficient Water for All FIGURE 4.10: ECONOMIC VALUE OF WATER SUPPLIED FOR 2050 FORA P75 YEAR (Net Value Y 343 Billion) 3-H basins 2050 FPF Livestock 4% 0% Urban Life 14% Irrigation 35% Urban Industry Rural 30% industry 11% Rural Life 6% G. ECONOMIC VALUE OF WATER SHORTAGES (i) Assessment of Shortage Losses The 3-H basin models generate the value of water under optimal allocation of water resources. The decrease in the total value of water supplied due to water shortages are also reflected by the model calculations and these decreases appear to be very similar to those observed in the basins under different drought conditions. For example in 2000 there was a drought that affected almost all of China and in the 3-H Basin it was estimated to be a P90 year. The water shortages observed were estimated to be about 60 Bcm, which compares favorably with the model estimates of shortages of 67 Bcm for a P95 year. The model estimates the shortages by comparing the supplies with demands. However shortages losses have to be estimated by subtracting the value of the output with shortage from the value of the output with full supply. Table 4.30 shows simulation of shortages and losses for the base case over the entire range of hydrologic conditions. According to Table 4.30, the shortages over the whole hydrologic regime increase from 28.6 Bcm in 1997 to 46.1 Bcm in 2050. Losses due to shortages during the same period increase from Y 57.8 billion in 1997 to Y 111.4 billion 2050. The discounted present value of losses over the entire economic horizon are about Y 645.5 billion. The shortage losses (over all probabilities) to water shortages fits to a power function very well and gives a relationship as shown below: Shortage losses in Yuan = 0.564 * (shortage in m3)1.38 R2 = 0.99 The average value for one cubic meter of water shortage is Y 2.0-2.4. Chapter 4. Sufficient Water for All 113 TABLE 4.30: WATER SHORTAGE SIMULATION FOR BASE CASE 1997 2000 2010 2020 2030 2040 2050 Value of Water in billion Yuan No shortage 297.8 312.6 366.5 412.9 435.4 444.7 454.5 P95 228.2 241.0 277.0 299.2 311.8 315.4 316.4 P75 237.0 249.0 290.9 317.1 329.9 333.6 337.7 P50 240.2 252.2 294.4 322.1 335.8 339.7 344.2 P25 241.5 253.6 296.1 324.3 338.7 342.9 347.5 Losses due to Shortage in Billion Yuan P95 69.6 71.6 89.5 113.7 123.6 129.3 138.1 P75 60.8 63.6 75.6 95.8 105.5 111.1 116.7 P50 57.5 60.4 72.1 90.8 99.6 105.0 110.2 P25 56.3 59.0 70.4 88.7 96.7 101.7 107.0 Losses over all hydrologic regimes in billion yuan Total 57.8 60.3 72.7 91.9 100.5 105.7 111.4 Discounted Value of losses (Billion Yuan)* 645.5 51.6 53.9 23.4 9.5 3.4 1.1 0.4 Billion Yuan Shortages in Bcm 95% Probability 67.0 68.2 74.8 84.7 88.6 91.2 94.7 75% Probability 37.9 38.8 40.7 48.4 52.1 54.3 56.7 50% Probability 23.3 24.5 29.4 35.5 38.2 40.1 42.0 25% Probability 16.8 17.4 22.4 27.7 30.8 32.7 34.5 Shortages over all hydrologic regimes Total 28.6 29.4 33.3 39.4 42.3 44.1 46.1 Value of water in Y/ m3 2.0 2.0 2.2 2.3 2.4 2.4 2.4 \Discount Rate 12% (ii) Economics of Shortage Reduction As indicated water shortages can be reduced by demand management through efficiency improvements or price increases or through supply enhancements through reuse of water or by transfer of water. For each case the model generates the shortages and the value of water supplied. The four measures for shortage reduction were considered and benefits for each measure is the reduction of losses as shown in Table 4.31. It will be noticed that shortages losses for the base case increase from Y60 billion/year in 2000 to Y 110 billion/year in 2050 (see Figure 4.11). These levels of losses cannot be tolerated. A combination of improvement in efficiency in irrigation, reuse of water and high prices for water will keep the losses constant at Y 57-59 billion/year, but these losses are still very high. The two S-N basin transfers will reduce the losses to Y 20 billion/year and these losses will be incurred mainly in agriculture. In fact the S-N should be speeded to reduce the shortage losses as fast as possible and therefore an advanced S-N case was considered (see Figure 4.12). TABLE 4.31: ANNUAL LOSSES AND DISCOUNTED VALUES OF WATER SHORTAGES FOR DIFFERENT MEASURES (Billion yuan) Discounted Annual Losses due to Water Shortages for Different Cases Value* 1997 2000 2010 2020 2030 2040 2050 Base Case 645.5 57.8 60.3 72.7 91.9 100.5 105.7 111.4 Effy 10% 618.3 57.8 60.3 68.7 83.4 88.6 93.8 99.2 Effy 10%+ reuse+High price 536.2 57.8 60.3 56.3 57.7 55.6 57.4 58.6 S-N-E 483.3 57.8 60.3 47.3 41.5 39.7 41.8 42.9 S-N-E advanced 475.7 57.8 60.3 44.8 41.5 40.5 42.6 43.9 S-N 440.4 57.8 60.3 42.0 25.6 19.6 20.9 21.7 S-N advanced 412.3 57.8 60.3 33.2 25.6 19.6 20.9 21.7 Net Gains by all measures 233.2 0.0 0.0 39.5 66.3 80.9 84.7 89.7 * 12% Discount Rate 114 Chapter 4. Sufficient Water for All FIGURE 4.11: ECONOMIC LOSSES DUE TOWATER SHORTAGE UNDER DIFFERENT SCENARIOS (Billion Yuan/Year) 120.0 100.0 80.0 Yuan 60.0 Billion 40.0 20.0 0.0 1990 2000 2010 2020 2030 2040 2050 2060 Year base case Efficiency 10% Effy 10%+reuse+Hprice S-N-E Transfer S-N-E advanced transfer S-N transfer S-N advance transfer FIGURE 4.12: TOTAL DISCOUNTED VALUE OF WATER SHORTAGES FOR 2000-2050 900.0 800.0 700.0 600.0 Y 500.0 400.0 Billion 300.0 200.0 100.0 0.0 Base Case Effy 10% Effy 10%+ S-N-E S-N-E S-N S-N advanced reuse+High advanced price 10% discount rate 12% discount rate 15% discount rate Table 4.31 shows that the losses due to shortages can be significantly reduced from Y 645 billion (discounted value) to Y 412 billion by implementing the recommended measures. The benefit from all the measures of prices increases, efficiency improvements, reuse increase, and S-N water transfer will reduce losses by about Y 233 billion (discounted value). The question is then whether these measures are worth the costs of implementation. Hence an initial estimate of costs indicates the following costs for the various measures (Table 4.32): Chapter 4. Sufficient Water for All 115 TABLE 4.32: COSTS OF VARIOUS SHORTAGE REDUCTION MEASURES (UNDISCOUNTED) Total Costs Billion Yuan Percent Price Increases 0.0 0 Reuse and Pollution Con. 149.0 18 Efficiency Improvement 417.2 51 Interbasin Transfer (east) 43.2 9 Interbasin Transfer (middle) 131.0 21 Total 811.2 100 Almost half of the costs will be for efficiency improvements. Only 30 percent of the cost are for S-N transfers and the rest for reuse. The discounted costs and benefits as a percentage are given in Table 4.33. TABLE 4.33: SHORTAGE REDUCTION DISCOUNTED BENEFITS AND COSTS Shortage Reduction Shortage Reduction Action Shortage Reduction (%) Benefits (%) Costs (%) Price increases 17 11.7 0 Reuse and pollution control 9 23.5 18 Efficiency improvements 30 11.7 51 S-N East transfer 19 26.0 9 S-N Middle Transfer 26 27.1 21 Total 100 100.0 100 Discounted in Billion Yuan 233 217 Prices increases have a zero cost but have a 17 percent impact on shortage reduction and account for 11.7 percent benefits. Reuse effects only a 9 percent reduction in shortage but accounts for 23.5 percent of the benefits because it reduces shortages to priority users (urban and rural nonagricultural which have the highest value water). Efficiency improvements have a very large impact on shortage reduction (30 percent) but since it only affects agriculture with low value water the net benefits are only 11.7 percent. The S-N transfers have a 45 percent impact on shortages but account for over half of the benefits of shortage reduction. Overall it is clear that even with a 12 percent discount factor the shortage costs are less than the discounted benefits and there is a need to implement all measures above including the interbasin transfers to ensure that shortages for priority supplies are reduced substantially and losses are also decreased (see Figures 4.13 and 4.14 for shortage reduction). In addition these measures would contain the shortages for agriculture to tolerable limits. H. ACTION PLANFOR BALANCING SUPPLY AND DEMAND From the exercise reported in Section D, we may conclude that future domestic, municipal, and industrial water demands can never be fully met at the level of aggregation of the basin. However due to spatial and temporal variations in rainfall and the fact that neither surface or groundwater is fully mobile within basins, some areas will have water surpluses and others may have shortages. (i) Management Scenarios But with demand managed by the annual real increase in prices we have assumed for the action plan, and with the package of investments in additional supply, reuse and irrigation efficiency improvements described above, the reduced long term supplies to agriculture can be tolerated. However, S-N East and Middle combined would cost at least Y 245 billion. This would undoubtedly make it the 116 Chapter 4. Sufficient Water for All most expensive water project in the history of the world. China would do well to investigate fully, and test on trial bases, alternatives to such a massive undertaking. FIGURE 4.13: PRIORITY WATER SHORTAGE IN 3-H BASIN, P95, BASE CASE I0.000 -1 2.126 Huh eho t IV-3B 0.000 0.000 0.065 II-2 A Be ijing II-2 B 1.284 0.002 II-3 A 0.587 Tia njin IV-8 II-3 C 0.132 Sh ijiazh uan g 0.000 Ta iy uan 0.240 0.407 IV-4 II-3E 0.000 2.145 II-3 B 0.000 I-4 0.531 II-3D II-7 IV-3A 0.324 Jin an 0.757 IV-7B Qingd ao Lanzh ou II-3 F IV-5A 1.001 0.846 IV-2 0.645 0.193 1.030 III-6 1.432 IV-7A II-5 IV-5 B IV-1 IV-6 Zhen gz hou Xuzh ou Xi' an 0.000 0.988 III-4 2.309 III-3 II-2 Bengb u 0.415 III-1 LEGEND N CHIN A WATER SECTOR ACTIO N PROGRAM WOR LD BANK-MINISTRY O F WATER RESOURCES UNIT:BCM P95_1997 P95_2020 P95_2050 FIGUR E No. Cit y Percent 95Priorit y Shortages f orBas eCase National Boundary int heYel low Huai Hai Riv erBas ins FIGURE 4.14: PRIORITY WATER SHORTAGE IN 3-H BASIN, P95, WITH SOUTH-NORTH TRANSFER II-1 0.000 Huh eho t 0.000 IV-3B II-2A 0.000 0.000 Beijin g I0.000 -2 B 0.000 II-3A 0.000 0.000 Tianjin IV-8 II-3C 0.000 Sh ijia zhu ang Taiyua n 0.000 IV-4 0.000 II-30.000 E II-30.000 0.000 B II-4 II-3 D 0.324 II-7 0.003 IV-3 A 0.000 Jinan 0.290 IV-7 B Qingd ao Lan zho u IV-5 A II-3F0.254 0.555 IV-2 0.268 0.010 III-6 0.000III-5 0.056 IV-7 A IV-5 B IV-1 IV-6 Zhe ngz ho u Xuzh ou Xi' an III-4 0.000 0.300 III-3 0.000 III-2 Ben gb u 0.000 III-1 LEGEND N YE LLOW----HU AI -----HAI CHINA WATER SECTOR ACTI ON PROGRAM WORLD BANK-MINISTR Y OF WATER RESOUR CES UNIT: BC M P95_1997 P95_2020 P95_2050 FIGURE No. City Percent 95 Priority Shortages with S-N Transfer Nat ional Boundary (with Ef ficiency Improvement + Reuse+High Price) Chapter 4. Sufficient Water for All 117 As noted in Chapter 3, withdrawals of surface and groundwater combined have probably reached or exceeded maximum sustainable levels, again at the level of the basin. Furthermore, the small volumes of water reaching the sea, especially in the Hai and Yellow and in dry years, implies that aggregate consumptive use is also at or near a sustainable maximum. If S-N is the only option available to increase withdrawals, alternatives must examine ways of making consumptive use more equitable, more efficient, and more economically productive. The options investigated in previous sections form the basis of the action plan and these are summarized in turn in the next section. 1. Increasing the efficiency of irrigation system by a further 10 percent, 2. Increasing reuse from 5 to 15 percent for priority supplies; 3. Increasing prices by a further 10 percent per year over the existing price increases in real term, 4. Increasing the supply by the South-North East and Middle transfer by about 19.7 Bcm/year. Additional options include: 5. intrabasin water allocation; 6. intersectoral water allocation. (ii) Increased Efficiency of Irrigation and Municipal Water Supply Networks If withdrawals and consumptive use have approximately reached maximum levels given within- 3-H water resources, the alternative to increasing economic benefits from water is to make consumptive use more efficient. There are two components to this. First, the beneficial use component of consumptive use can be increased at the expense of the nonbeneficial component. Second, the economic returns to beneficial consumption can be increased. The largest components of nonbeneficial use are evaporation and seepage. Nothing can be done about evaporation from reservoirs and river channels, but many things can be done about the rest. For example, canals and watercourses can be designed to decrease surface area and permit faster water flow. Fields can be leveled to reduce ponding and hence evaporation. The use of plastic film can be increased to reduce evaporation and retain available soil moisture. Reducing seepage losses can immediately increase the supply of water for consumptive use relative to withdrawals. But this is a two-edged sword. A large part of groundwater recharge comes from seepage losses, and reducing them in areas where groundwater is fresh and exploitable not increase overall consumptive use. Where groundwater is saline or otherwise not exploitable, reducing seepage to an economic minimum is warranted. For example, surface water channels can be replaced with pipelines.46 The government has recognized the need for higher efficiency use of water and in the last few years has implemented the State Office of Comprehensive Agricultural Development (SOCAD), large irrigation scheme (LIS) and water-saving technology programs. The action plan calls for increased commitment to these fundamental programs to lift efficiency of supply to 18 percent. This is described more fully in the section on agriculture. Above, we described how increases in allocative efficiency might be increased. Benefits from consumptive use, have, and can continue to, increase as well. Efficiency measures in agriculture and industry are well known, e.g., grain production, agricultural output value, industrial output value, etc. per 46 Pipelines also greatly reduce the risk of pilferage, and if buried, can help increase the supply of irrigable land. 118 Chapter 4. Sufficient Water for All cubic meter of water. Such measures of efficiency have been increasing rapidly in north China as farmers and other entrepreneurs alter production techniques and technologies in the face of scarce water, and political pressures to adapt. Again, the market can be relied upon, not only to motivate continuing increases in efficiency, but to insure that those increases are economically justified, and go toward producing more of the goods and services society wants. In other words, as the economy continues to develop, it will do so in directions dictated by market demands47 and in recognition of resource scarcities and regional comparative advantages. Under "market socialism" China is clearly developing in directions influenced by domestic and international markets. It is producing more of the goods and services local and international consumers want, and few of those that are not wanted. If water continues to be priced below economic costs, the wrong signals will be sent to producers. North China has several clear economic advantages including location, infrastructure, and a vibrant and educated population. It does not have a comparative advantage in water resources. To allow a development pattern which gives price signals implying that it does will not only impede development, but lead to more of the same in the water sector: shortages, pollution, and unsatisfied water consumers. (iii) Wastewater Reuse In 1997, urban water consumption was about 24.8 Bcm in 3-H, which generated about 17.6 Bcm of wastewater (Table 4.34). According to the Water Bulletin, no more than 0.67 Bcm (4 percent) was collected and reused.48 The remainder evaporated, was returned to the rivers, or recharged local groundwater. Anecdotal evidence suggests that some was collected and used by irrigators, which is verified by reports that the use of untreated sewage and industrial effluent has led to illness. TABLE 4.34: POTENTIAL WASTEWATER GENERATION (Bcm) 1997 2000 2010 2020 2030 2040 2050 Total Urban Water Demand Hai-Luan 8.1 8.9 11.4 13.7 15.2 15.7 16.2 Huai 10.1 11.2 15.2 18.6 20.1 20.6 21.5 Yellow 6.7 7.4 9.8 12.0 13.4 14.2 14.6 3-H Total 24.8 27.5 36.4 44.2 48.7 50.6 52.4 Assumed Wastewater Generation Rate: 71% 71% 69% 68% 67% 65% 64% Urban Wastewater Volumes Hai-Luan 5.7 6.3 7.9 9.3 10.1 10.3 10.4 Huai 7.1 7.9 10.5 12.6 13.4 13.5 13.8 Yellow 4.7 5.2 6.8 8.2 8.9 9.3 9.4 3-H Total 17.6 19.4 25.2 30.1 32.4 33.0 33.5 By 2010, we project urban wastewater volumes will be about 25 Bcm in 3-H, and by 2050, 33.5 Bcm. If properly collected, treated, and distributed, this represents a large volume of potential water supplies--nearly one-third of current consumption. With the growth of cities will come increased demands for locally produced vegetables, and these water supplies can be made available locally. Sales of 47 For example, current trends in China for cleaner food free of chemical residues. 48 IWHR Water Bulletin, 1997. Under "Withdrawals" is a category termed "Others" which includes reuse and seawater; 0.67 Bcm is the total of "Others." Chapter 4. Sufficient Water for All 119 treated wastewater could well offset much of the costs of treatment; marginal returns to vegetable farming are at least Y 2/m3. The downside, of course, is that the wastewater sold to nearby farmers is not available for either river flow augmentation or groundwater recharge. Municipal governments may well decide that maintaining stable groundwater tables is more important than sales of water, and would choose artificial recharge schemes instead. Again these issues are discussed in Chapter 8. The action plan proposes to augment priority supplies by recovering wastewater generated in urban areas from municipal and industrial consumers. The technical, infrastructure, financial and institutional requirements of this aspect of the action plan were discussed in full in Chapter 7 (Pollution) and Chapter 8 (Wastewater Reuse). Wastewater reuse rate should increase from the current government base case of 5 to 15 percent in order to achieve the proposed reductions in shortage. (iv) Water Pricing Water prices, particularly to urban and industrial consumers, have been increasing rapidly in the last few years in northern China. The influence on water demand has not yet been fully felt, in part because it takes time for consumption habits and technology to adjust, and in part because alternative water sources, e.g., groundwater, have been priced at lower or zero rates so that consumers can shift to these lower priced substitute goods. Water pricing is a powerful tool to restrain water demand, if it is applied to all supply sources of water, and at levels where water consumers begin to take notice. If water continues to be priced below costs of supply without opportunity cost and water resource scarcity component and water scarcity component and it was demonstrated in the previous sections on shortages, and some sources continue not to be priced at all, then north China's water shortage will continue to worsen, and no combination of water supply projects can rectify it. If water management agencies continue to be underfunded and thus unable to maintain and rehabilitate water facilities, then the system will continue to deteriorate and be unable to deliver available water in timely fashion. A rational water pricing schedule for north China would be solely based on volumetric deliveries and would include: · O&M charges, · System depreciation costs, · Resource fees, · Scarcity surcharge, · Treatment costs (nonagricultural uses), · Wastewater collection and treatment costs (nonagricultural uses), and/or · Environmental tax. Water price assumed in the modeling studies indicate that the Base Price and high price tariffs for urban and rural priority supplies should follow mean/average prices as indicated below in Table 4.35. It will be noted that these price represent average price for all priority water supplies and these will vary from region to region depending on the cost of source development, transmission, treatment and distribution. For example the mean/average value assumed for the base case in 2000 is Y1.12/m3 but it must be noted that the 2000 prices are based on the discussion presented in Section E and increase by 5 percent annually. 120 Chapter 4. Sufficient Water for All TABLE 4.35 WATER TARIFF ASSUMPTIONS FOR BASE AND HIGH PRICE CASES IN REAL TERMS Year Base Case Tariff High Tariff Low Mean High Low Mean High 2000 0.9 1.1 2.9 0.9 1.1 2.9 2010 1.1 1.5 3.8 1.4 1.9 4.8 2020 1.4 1.9 4.9 1.7 2.3 5.9 2030 1.8 2.4 6.2 2.1 2.8 7.2 2040 2.3 3.0 7.9 2.8 3.7 9.6 2050 2.8 3.7 9.6 3.6 4.7 12.3 (v) South-North Water Transfer Despite possible/feasible price increase, efficiency gains and reuse improvements, the 3-H will continue to be short of water as demonstrated in Chapter 4. Therefore it can be concluded that proposed demand management programs (efficiency improvement and price increases) and supply enhancement (reuse) will not be sufficient to ensure some kind of equilibrium between supply and demand. The only feasible addition to the proposed action plan, one that has been already extensively investigated by the Chinese government, is the S-N Transfer whereby water would transferred from the Yangtze River to the Hai and Huai basins. The action plan recommends further investigations of the S-N transfer. Preliminary costs are estimated at Y 245 billion (Y 70.9 billion for the eastern route and Y 174.1 billion for the middle route) representing almost 30 percent of total action plan costs. Shortage reductions resulting from the S-N Transfer are approximately 45 percent of total but account for about 53 percent of the total Y 233 billion expected benefits while costing about 30 percent of the total Y 217 billion (discounted value) in implementation costs for the entire action plan. Supply Augmentation Infrastructure Needed to Complement the S-N Transfer. The route of the S-N Transfer was described in Figures 4.3 above. There will be many cities along the route receiving water from this new source and it is likely that many existing water supply systems will need to be modified and rehabilitated to maximize the use of this new water. Table 4.35 below shows approximate investment needed for new water and for rehabilitating existing systems. The new sources will be derived from (a) local water, (b) groundwater, (c) surface and/or S-N transfer. In the Huai basin, all three sources will be utilized while in the Hai basin, most of the new water will be derived from the S-N transfer because the other sources are already fully or overcommitted as discussed in Chapter 3 on water resources. In the Yellow basin, there will be no new water from the S-N transfer but most of the new supplies will be derived from groundwater and local water resource expansion. The main components of the additional supplies are (a) source development and transmission, (b) water treatment, (c) network rehabilitation, (d) others (including design, supervision, contingency). Items (a) to (d) were calculated on per cubic meter and percentage basis from previous water supply augmentation projects recently completed in north China including Beijing, Shijiangzhuang, Tangshan, and Handan and are shown in Table 4.36. These ratios were used to produce the expected costs in supply augmentation for the proposed action plan as shown in Table 4.37. Existing system rehabilitation is a major program which needs to be undertaken since a large number of urban water supply networks are old and the unaccounted for water would be up to 40 percent or more. Many treatment plants also do not exist or are very simple (disinfection processes only). There may be some source and transmission line upgrading to cope with additional water supply. Some Chapter 4. Sufficient Water for All 121 upgrading will be associated with the south north transfer (mainly the Huai and Hai basins) and some will be independent (Yellow basin). TABLE 4.36: UNIT COSTS OFMAIN COMPONENTS OF SUPPLY AUGMENTATION USED IN ACTION PLAN CALCULATIONS Component Yuan/cubic meter Percentage of total cost Source development + transmission 0.46 34 Water treatment 0.38 28 Network rehabilitation 0.24 18 Others 0.26 20 TABLE 4.37: TOTAL INVESTMENT FOR WATER SUPPLY AUGMENTATION IN 3-H (WITHOUT SOUTH-NORTH TRANSFER) 2000-10 2010-20 2020-30 2030-40 2040-50 Total Hai Urban 6.91 7.00 2.63 0.88 0.38 17.8 Rural 2.05 1.89 0.07 0.00 0.00 4.01 Environmental 0.26 0.24 0.00 0.00 0.00 0.5 Subtotal 9.21 9.14 2.69 0.88 0.38 22.3 Huai Urban 9.73 8.78 1.88 0.08 0.47 20.9 Rural 2.38 2.67 0.39 0.00 0.10 5.5 Environmental 2.11 2.24 0.10 0.00 0.10 4.5 Subtotal 14.21 13.68 2.37 0.08 0.66 31.0 Yellow Urban 6.60 6.23 1.89 0.56 0.00 15.3 Rural 1.23 1.39 0.33 0.29 0.14 3.4 Environmental 1.10 1.19 0.05 0.06 0.05 2.4 Subtotal 8.93 8.81 2.27 0.91 0.18 21.1 Urban total 23.24 22.01 6.40 1.52 0.85 54.0 Rural total 5.66 5.95 0.78 0.29 0.23 12.9 Environmental total 3.47 3.67 0.14 0.06 0.14 7.5 3-H Total 32.36 31.64 7.33 1.87 1.23 74.4 Source Development + Transmission 7.91 7.49 2.18 0.52 0.29 18.4 Treatment 6.59 6.24 1.81 0.43 0.24 15.3 Network Rehabilitation 4.18 3.96 1.15 0.27 0.15 9.7 Network expansion 13.69 13.95 2.18 0.65 0.54 31.0 3-H Total 32.36 31.64 7.33 1.87 1.23 74.4 (vi) Intrabasin Water Allocations As a natural consequence of multiple, often conflicting objectives, and fragmented control, intrabasin water allocations are far from optimal. In Chapter 3 the problem of conflicting objectives and managerial control was described as it related to instream demands vs. offstream demands. Within basins, the allocation among users at different points on the basin needs to be optimized as well. The problem is most acute in the Yellow River basin, which is essentially a linear system. This means that upstream users have first call on the resources, and downstream users get any remainder. This remainder is often 122 Chapter 4. Sufficient Water for All uncertain, untimely, and almost always polluted. In an effort to address this problem, and make the distribution of Yellow River water more equitable, YRCC devised allocation limits to be imposed on each of the nine provinces in whole or in part lying within the Basin, to be effective during medium-dry (P75) years and dryer. The limits were sanctioned by the State Council, but have not been enforced. Table 4.38 shows these limits aggregated by reach, and the actual withdrawals since 1993.49 TABLE 4.38: YELLOW RIVER WITHDRAWALS AND ALLOCATION LIMITS (Bcm) Allocation Withdrawals 1993 1993 1994 1995 1996 1997 1998 : Upper 12.7 21.9 21.3 21.8 22.1 22.4 22.8 Middle 9.5 13.4 12.9 13.6 13.3 13.7 12.8 Lower* 14.8 ? 13.3 13.3 13.3 13.2 12.3 Total 37.0 ? 47.5 48.7 48.6 49.2 47.8 Over/Under Upper 9.2 8.6 9.1 9.4 9.7 10.1 Middle 3.8 3.3 4.0 3.7 4.1 3.2 Lower ? -1.5 -1.4 -1.5 -1.6 -2.5 Excess Withdrawals ? 10.5 11.7 11.6 12.2 10.8 *Includes transfers from Lower Reach to Hai and Huai basins. It is clear that provinces within the upper reach in particular and those in the middle reach have been consistently and widely exceeding the limits. The results have been chronic shortages in the downstream areas, and drying up of the lower reach of the river. The year 1997 was an exceptionally dry year (about P90), yet the upper-reach provinces withdrew nearly 10 Bcm in excess of their allocation. Virtually all of the upper and middle reach withdrawals go for irrigation. Clearly, these withdrawals are uneconomic at the margin, given the wide disparity in application rates. In 1997, irrigation rates, in m3/mu, were 809 in the upper reach, 249 in the middle reach, and 304 in the lower reach.50 Nearly 12 percent of upper-reach irrigation supplies go to paddy, while the marginal returns to irrigation water in the middle and lower reaches are very high. Similar, although not as dramatic, situations can be found in the Hai and Huai. Some irrigation districts appear to have ample water, but many cities are lacking. Within Hai, which has a relatively uniform climate and thus similar patterns of irrigation water requirements, application rates in 1997 varied from 259 m3/mu in subbasin II-3 to 373 m3/mu in subbasin II-1. The southern Huai has sufficient water resources, while the northern parts, particularly the Shandong peninsula, are perennially short. Nevertheless, 1997 application rates ranged from just 206 m3/mu in the Shandong peninsula (subbasin III-7) to 521 in the southern subbasin III-4. 49 The lower reach allocations refer to Henan and Shandong provinces, parts of which lie outside the Yellow River catchment area, and projected future transfers of 2.0 Bcm to Hebei province and Beijing. YRCC reserved 20-24 Bcm/year for environmental purposes: flushing sediment and estuarial preservation. The total allocations exhaust long-term Yellow River mean runoff.50 IWHR unpublished data. Chapter 4. Sufficient Water for All 123 Although average rates of irrigation will naturally vary widely due to climate, rainfall, and cropping pattern, such discrepancies cannot be justified, and clearly point to the opportunity for achieving higher agricultural output and incomes from a more equitable water distribution which cannot occur under the current river basin management system. Despite formal allocation authority such as those of YRCC, it is clear that ad hoc negotiations between riparian provinces play an important role in water allocation within the basins. Such allocations merely react to past hydrologic conditions and there is a clear need for real-time river forecasting using real-time flow monitoring, hydrologic modeling and optimization techniques similar to those developed for the present study. (vii) Intersectoral Water Allocations North China's water sector managers have been playing a delicate balancing act in recent years, attempting to satisfy human needs for water, give enough water to industry to allow continued rapid growth, and at the same time, give enough water to agriculture to maintain food production at near self- sufficiency levels and give farmers adequate incomes. These are all virtually impossible tasks under a system where allocations are made essentially without the aid of market mechanisms. Instead, how much water a consumer has access to depends on what type of consumer he is, where he is located, and whether he has access to groundwater. An optimal economic allocation of water over time, space, and sectors is simply not possible to calculate, and would be impossible to enforce were it calculable. Fortunately, such a calculation is not necessary. A wide body of economic theory emphatically tells us that market mechanisms, if allowed to operate, will move us in the direction of optimal allocations of scarce resources such as water, and correspondingly lead to higher welfare of the market participants. Where two or more parties enter into an exchange agreement, they do so to the mutual benefit of each, and to the benefit of the society as a whole. Several examples of spontaneous water markets have appeared in north China. Typically, these involve groups of farmers selling water to industries or cities. It has also involved cities selling treated wastewater to nearby farmers. When such transactions occur, the implication is clear: the buyer has a higher marginal benefit than the seller. The equalization of marginal benefits tends toward a higher overall benefit. Although water resources in China are owned by the state, and water trading has been illegal, ad hoc rights to the use of water have clearly been established. The recently imposed water licensing system legalizes and quantifies these rights. To gain the benefits from market mechanisms, China only needs to sanction and promote water trading among the various groups holding these rights. The result will be that water flows from the lower economic uses to the higher, to the benefit of all. The 3-HMS has defined optimal priority and irrigation water allocations based on market mechanisms and the resulting supplies to different sector groups were shown in Table 4.23. However, shortages will remain for key sectors such as urban industry and urban life and these will vary according to rainfall or dry versus wet conditions. As noted in section C (ii) b, optimal allocation among sectors will minimize the economic value of water shortages. The 3-HMS developed for this study played a key role in setting broad allocation scenarios at the Basin 2 level by replicating market mechanisms which maximize the value of water and it is recommended that further work be done to refine the suite of models used here both for the 3-H basins and for other basins in China. (viii) Need for Environmental Impact Assessment (EIA) Detailed EIAs need to be undertaken especially for S-N transfer prior to implementation to ensure all negative impacts on the environment and society are identified, internalized and offset. For example, it is estimated that some 190,000 people will need to be resettled by raising of the Danjiangkou Reservoir, 124 Chapter 4. Sufficient Water for All and another 30,000 people along the S-N middle route. Although the Eastern route is well defined and the canal is located along existing canals, there might be a few people who might have to move at the pumping stations where more land will be required for the new stations. For the eastern route, schistosomiasis maybe one of the public health impacts because the snails are found in the Yangtze River, if adequate control measures not taken. The Eastern transfer would also have problems of water quality since there are a large number of cities located along the Grand Canal. Preliminary EIAs have been completed for all the routes, and the offsetting measures and cost have been included in the preliminary cost estimates to internalize the environmental effects. The cost for resettlement included in these preliminary estimates is about Y 10 billion. Additional costs have been included for environment protection measures for schistosomiasis and other public health effects of the Eastern route up to Y 5 billion. The water pollution control measures are being taken by the Government and by external funding (World Bank, Japan Bank for International Cooperation and others) to dramatically reduce the waste load into the Grand Canal. If these measures are not adequate, the Government will have to invest in additional interceptors and treatment plants to ensure all wastes are collected, treated and disposed of properly. In addition, increased volumes of water supplied to cities along the S-N route will necessitate improved wastewater treatment infrastructure and the institutional mechanisms to support sustainable operation. The pollution control action plan described in Chapter 7 is based on increased water supply from S-N transfer and the additional wastewater produced. Chapter 5. Floods and Flood Damage 125 5. FLOODS AND FLOOD DAMAGE Following the description of past flood damages in the 3-H basins and in China in Chapter 3, this chapter summarizes the government's current approach to flood protection and existing flood protection standards. A discussion of appropriate flood protection standards with structural and nonstructural methods is then presented and this is followed by the development of a methodology for assessing and ranking proposed flood protection projects. Finally, a list of proposed priority projects is presented based on the methodology developed and on current government strategy. A. SUMMARY OF CURRENT STRATEGY The current flood management strategy focuses on protecting (a) regions at risk of flooding (including lowlands between levees, tributaries and estuaries, flood areas and detention basins), (b) reservoir and levees requiring major repair works, (c) increasing discharge capacity of rivers and (d) improving flood control standards. Table 5.1 below summarizes overall government strategy to address flood issues in the Yellow, Hai and Huai basins. TABLE 5.1: GOVERNMENT STRATEGY FOR FLOOD CONTROL IN 3-H BASINS Key problems Strategy policy Actions required Yellow basin 1. Sedimentation averages 1.6 billion tons/ Complete Xiaolangdi reservoir; soil and year, especially Kekou-Longmen section; water conservancy programs; Guxiao 2. Reduced peak discharge capacity; reservoir (Luo River); Luhun reservoir 3. Scouring beneath new dams (Yi River), Sanmenxia reservoir Huai basin Upper basin reservoirs and detention (1) Increase discharged capacity of the Proposed Zhengyangguan reservoir basins only contain one-third of 41.3 Bcm Huai river to the sea; (2) reach flood (1:100 years) of the 30-day flood of 1:100 years. control standards of 1:20 years for Reservoirs scattered on tributaries and fail upstream and important tributaries; (3) Strengthening safe construction of flood to reduce flood and peak discharge. reach flood control standards of 1:100 area and detention basin; years for the main stream of the middle Blocked flood drainage in middle reaches reaches; (4) reach flood control protection Combine abandonment and reservation, of Huai and backflushing into tributaries. of 1:300 years or greater for downstream offsetting completely/partially flood Land use issues related to floodplains and and 1:100 years or greater for large areas areas, changing some of these into deten- detention basins. of subject to waterlogging. tion areas and dredging river courses, reinforcing levees Low flood control standard of levees at Major projects planned by government to Hongze Lake achieve these objectives include (1) 1. Raise flood discharge capacity to construction of waterways out to the sea, 1:100 (2) the construction of Yanshan and 2. Widen waterway Liyun river; Bailanya reservoirs; (3) improvement of 3. Enlarge irrigation canals, widening waterlogging and flood drainage control; Huai water diversion by-pass to the Yi (4) dredging of the river and estuary. River, 4. Create new waterways to the sea 5. Improve drainage to the sea from Nansi Lake by widening the Xinshu and Xinyi River 6. Widen Hanzhuang, Zhongyunhe canals 7. Construct of Huxi levee and Luomahu. 126 Chapter 5. Floods and Flood Damage Key problems Strategy policy Actions required Hai Basin 1. Centralized rainfall pattern and so; 1. Transfer water from the Luan via 2. No single reservoir controlling Tianjin to sea; converging areas causing difficult basin 2. Improve storage capacity of wide flood control strategy; Panjiakou; 3. Decreased carrying capacity of the Jia 3. Construct diversion canals after gates River, hence tides affect flow; to control tides; 4. Infrequent use of detention basins due 4. Dredge; to population living there 5. Monitor construction of structure in 5. Land subsidence, which decrease flood detention basin; protection 6. Construct Panshitou and Zhangfang reservoirs Table 5.2 shows typical issues and government measures that are being undertaken to protect reservoirs, levees, river training works and soil conservation TABLE 5.2 TYPICAL PROBLEMS AND SOLUTIONS Flood Control Measure Issue/Problem Government Strategy Flood control reservoir Dam safety; foundation; seepage; earthquake Focus on rehabilitation of existing reservoir; accelerate damage; abutment slippage; embankment construction of storage and detention basins; harness river settlement; inadequate spillway design courses; increase flood drainage capacity Sediment management Dams for sediment control (e.g. Xiaolangdi, upper tributaries of Yongding River); Scouring Design/operation modifications Multipurpose use Revise balance between: 1. Flood control 2. Hydropower 3. Water-supply 4. Sediment management Using improved flood forecasting and improved standards downstream Levees Failure, low engineering standards; lack of 1. Strengthening levees; raising levees; dams for sediment maintenance; subsidence; sediment deposi- control; warping; gated penstocks or outfall structures within tion; waterlogging/poor drainage behind levees; levees 2. Drainage systems to drain local runoff to the nearest outfall; 3. Excavated sumps behind the levees near the outfalls. River training works, river 1. Instability of river course protecting from 1. Change in river courses engineering erosion; 2. River channel enlargement 2. Restricted capacity of river 3. River diversion channels 3. Falling ocean outfall capacity due to lower 4. Ocean outfall maintenance and dredging tidal barrages flows, high silt content Soil conservation Natural erosion of Loess Plateau Planting field crops and orchards on high yielding terraces and plant trees/shrubs grasses on sloped land for fuel, timber, fodder; small dams in gullies B. LEVEL OF PROTECTION (FLOOD STANDARD) The economic data identify the areas that are most affected by flooding and the magnitude of the losses but do not provide a clear picture of the frequency of damage. In the Flood Appendix there is a detailed description of the flood standard for reservoirs, levees, detention storage and river system in the 3-H Basins. Review of flood standards of flood control works shows that there are a number of areas that will have very low flood security. Flood damages would decrease if the flood standard for major works was increased. The data on flood standards have been combined with the location of the flood losses to provide a rationale for flood management priority projects. The flood control works in the Yellow River, Huai and Chapter 5. Floods and Flood Damage 127 Hai River Basins include reservoirs, levees, river training works, major flood diversion channels, flood detention storages and construction of safety facilities in temporary detention areas. In the following sections, the Average Recurrence Interval (ARI) flood control standard for the major flood control projects in each basin is reviewed. Flood Control in Hai River Basin There are 1,860 reservoirs in the mountainous region in Hai river basin, of which 30 are large reservoirs, the area of which is 97 percent of the total area controlled by all reservoirs. A large reservoir is one with full capacity exceeding 108 m3. Among these reservoirs, nine are very large-scale reservoirs (i.e. >10 Bcm): Yuecheng, Huangbizhuang, Gangnan, Wangkuai, Xidayang, Guanting, Miyun, Yuqiao, and Panjiakou reservoir. These nine reservoirs have a total storage capacity of 10.214 Bcm. Only four of these have reached the 1990 standard enacted by MWR (PMF), they are: Panjiakou, Miyun, Guanting and Yuqiao reservoir. There are 21 large-scale reservoirs, of which 12 have reached the 1990 standard. There are 23 detention areas in Hai river basin. Four of them are on Beisan River; two are on Yongding River; six are in Daqing River system; three are in Ziya River; eight are in southern Zhangwei canal system. The frequency of use of the detention areas in each river system for flood control is quite variable, from one in two years to one in 50 years Of these 23 detention basins, only 7 reach a flood standard of 20 years. In other words they are not required to be used unless the flood is at least a 20-year ARI event. The design standards for the main rivers TABLE 5.3: DESIGN STANDARDS FOR RIVERS are listed in Table 5.3. However it should be IN HAI BASIN noted that the design standard is only as high as the lowest or weakest section of levee. Many of River System ARI of Waterway Ju River 20 the rivers also rely on upstream detention basins Zhou River 20 or reservoirs to operate as designed. Jiyun River 20 Chaobai River 20 (50 yr Emergency standard) After the flood of August 1963, in order Beiyun River 20 to upgrade the discharge capacity of the river Yongding River 50 course of each river system, many floodways Daqing River. 50 years (1963 flood) Ziya river 50 years (1963 flood) were constructed. However, in the past 40 years, The southern Zhangwei canal 50 years (1963 flood) because of droughts with low river flows and sedimentation, river courses have seldom been used to capacity, and the real discharge capacity has been reduced due to siltation. Flood Control Standards in the Yellow River There are 15 large reservoirs in the Yellow River basin, of which 10 have a design flood safety of less than 10,000-year ARI. Of these reservoirs, those that have greater influence on flood control are the Longyangxia and Liujiaxia reservoirs in the upper reaches of the Yellow River, Sanmenxia Reservoir in the middle reaches of the Yellow River, Luhun Reservoir on the tributary Yi River, and Guxian Reservoir on the Luo River. There are six detention basins in the Yellow River Basin of which the three Dongpinghu basins would be required to function more often than every 20 years on average. From 1949 to 1958, the Dongpinhu detention area was used five times. In order to reduce the inundation loss as much as possible, a three-layer use scheme was adopted. The first layer uses only the old lake to detain flood when there is flood only from the Wen River or this flood meets with an average flood in the Yellow River; the second 128 Chapter 5. Floods and Flood Damage layer, when a big flood on the Wen River meets a medium flood from the Yellow River, and the old lake cannot meet the detention requirement, then the Dongpinghu detention area will be opened up for use; the third layer, when there is a big or very big flood from the Yellow River, Liangshan detention area No. 2 will be used, and when there is a big flood from both the Yellow River and Wen River, then all detention areas need to be used for storing water. Sedimentation in the Yellow River is the single biggest problem as the flood capacity is significantly reduced each year by the deposition of sediment. The priority for works in the Yellow River is in the lower reaches. Since 1949 when new China was established, the river course downstream of Mengjin in Henan province was leveed. Since the founding of new China, the Yellow River levee has been rebuilt three times. After rebuilding 278.19 km, the levee has reached the design flood control standard of 20-year ARI. Flood Control Standard in the Huai River Basin There are 5,100 reservoirs in the mountain and hilly area of Huai River Basin, among which 35 are large-scale reservoirs. Of these dams, 15 do not reach a 10,000-year ARI standard. The use of detention areas is one of the most important components of the flood control project system in the Huai River Basin. There are nine detention areas in the Huai River Basin with a total storage capacity of 8.61 Bcm. There are 19 floodways, and their use can increase the safe discharge of the Huai River downstream. During the 42 years from 1950 to 1991, detention areas and floodways were used in 26 years. The basins are required to be used very frequently. About half are used every two to three years and the other half at least every ten years. The river systems have a variable standard. The major tributaries of the Huaibei River vary between 5- and 40-year ARIs. Four out of nine tributaries have design standards that are less than a 20- year ARI. Urban Standards for Flood Control According to 1997 statistics, there are 639 cities with flood control requirements in the whole country of which, 193 cities are located in the 3-H basins and 188 cities located in Yangtze basin. The definition of a city is one that has an industry and agriculture annual output at more than 50×108 yuanand the nonagriculture population is more than 200,000. We chose 94 cities from those 381 cities mentioned above as major cities. For these cities the standard is: · 16 cities with standards higher than once in 50 years or 17 percent; · 6 cities with standards between once in 20 years and once in 50 years or 6 percent; · 72 cities with standards equal to or lower than once in 20 years or 77 percent. So most of the cities' flood control protection is lower relatively. Generally speaking, the urban flood control standard should be higher than river flood control standards. The low urban standard reflects the situation of river control standard, which is very serious. Chapter 5. Floods and Flood Damage 129 C. DEVELOPING APPROPRIATE STANDARDS FOR FLOOD PROTECTION Structural Measures Investments required for flood protection are large and demand careful consideration of the state's (all people's) ability to pay and the level of protection required. Not all areas need to be protected to the same extent and the standard of protection will vary depending on the value of the assets protected by works or other nonstructural measures combined with the risk of flooding for that area. Thus, for example, flood detention basins have a higher risk of flooding and if these contain valuable assets such as large industries, hospitals, roads, etc. (as is often the case in China and in the 3-H basins especially) then the level of protection should also be higher. In order to develop appropriate standards, knowledge of past damage in the area combined with flood probability is required. The accuracy of the data is an important factor to consider. For example, there is a tendency to overestimate damaged area because funding for flood protection is dependent on degree of damage. The estimation of flood control benefits is very difficult in the 3-H basins because of the level of development and intensity of land use. Techniques now used to estimated damages and prepare investment primary include mathematical modeling and GIS-based modeling that use meteorological data, elevation, land use (such as types and cropping patterns), the location of assets protected, loss of life and impact on production value afforded by flood protection. Economic analysis of proposed project can then be carried out. In theory, economic analysis provides a basis for optimizing flood protection interventions at each location. Project optimization aims to maximize economic measures that may be achieved in a particular case by selecting a standard that is higher or lower than a general recommendation. In some past instances, flood protection works have been approved based on general policy objectives and standards rather than on a consideration of the specific conditions faced in a particular project. This may lead to economic distortions and suboptimum investments. However, it is understood that feasibility studies are now normally required before a project can be approved and therefore methodological improvements in damage estimation can in principle be generally adopted. An indicative guide to the standards appropriate to the type of area protected (e.g. rural areas, small towns, large town, cities, etc.) can, however, provide a check on uncertain economic assumptions and promote equity between different regions. They can also be an aid to the economic analysis itself and to the design of subsequent regulatory measures. This arises in two main ways: 1. Choice of flood protection works can only be finalized within an overall river basin context. Reservoir operating rules that favor flood protection may be at the expense of other and alternatives need to be evaluated within a comprehensive river basin planning framework. While in theory models could be developed that simultaneously optimize both river basin planning and flood protection interventions, in practice they are normally analyzed separately. Flood investments are ranked based on flood routing and damage estimation techniques of the type discussed in the previous section. These are then evaluated within the framework of basin optimization models such as that discussed in the Flood Management Annex. Limits need to be placed on the range of options to be considered in the latter analysis and in practice this may be best developed to reflect minimum and/or desirable standards. 130 Chapter 5. Floods and Flood Damage 2. Effective floodplain management identifies areas at risk, evaluates the level of risk, and then attaches regulations to the use of that land compatible with the defined risk. But risk itself is a variable. The issue in this context is what level of protection should be provided. This in turn determines the types of development to be permitted. Again, optimization could in principle be achieved in respect of each separate location, with the beneficiaries incurring any risk over and above that provided for in the project design. Nevertheless, in practice, regulations need to be framed within a consistent legal framework. Given the pressures on land in China, and limitations on the alternative location of assets and economic activity, this is no doubt best based on general standards depending on the type of land protected. The specification of standards should nevertheless be reconsidered in the light of the results of general economic analysis and the regularization of land use to reflect systematic integrated land use management. As development proceeds and incomes rise, (typically) both capacity-to-pay and willingness-to-pay for flood control services increase. Other things being equal, this suggests that flood protection standards over time tend to increase. However, internationally, this has not always proven to be the case. Given the very high cost of flood protection works, it has been found that official standards have often exceeded implicit willingness-to-pay and have been reduced to more affordable levels once a connection is made between costs and the beneficiaries. Moreover, as land use planning limits and controls potential damage, standards can be adjusted so as to reflect what is affordable under the new conditions. It is, for instance, noticeable that flood protection standards for rural areas in China outside some detention basins are very much higher than those typical in developed countries for agricultural land. This reflects the fact that rural areas in China are densely populated and it is not just a question of protecting agricultural land but also villages and settlements. Even so, given the high costs of flood protection works, it is debatable whether rural inhabitants would be willing to pay for standards as high as those set out in Table 5.1. Rainfall behind the levees still causes inundation and rural inhabitants have generally adapted to some level of risk. As land use is regularized, for instance as population moves to higher ground or flood-proofing spreads, it may be feasible to modify standards selectively so that those in rural areas correspond more closely to implicit willingness-to-pay criteria. In urban areas, on the other hand, the demand for flood protection services may well increase; implying that protection over the minimum standards might increase. It is thus recommended that a full review of flood protection standards be undertaken to ensure that they correspond to implicit willingness-to-pay in different contexts. Given limitations on resources, feasibility studies should still be used to rank potential projects, with alternatives evaluated in relation to other purposes within the context of comprehensive river basin planning. Over time, as standards and land use regulations are adjusted, it can be expected that the economic assessment of damages in rural areas in particular may result in significant savings in flood protection costs. A worldwide debate has developed in recent years on strategic approaches to flood control. Some practitioners now question the historical emphasis on structural measures of flood control. The severity of damage experienced on some of the world's great rivers has thrown into question the performance of flood control works and the strategies underlying their design. It has been argued that rivers should not be confined because this eliminates the floodplains that can act as natural flood control reservoirs. Critics also observe that dikes can be harmful to flora and fauna, and deprive farmland of sediment. Chapter 5. Floods and Flood Damage 131 Nonstructural Measures Nonstructural measures have received less emphasis than structural measures in the history of flood management in modern China. Nevertheless this is changing, and progress has been made in providing safety measures in high-risk detention areas, in implementing flood forecasting and monitoring networks, and in preparing flood warning systems and flood emergency response plans. Moreover, the 1997 Flood Control Law provides a basis for evolving a better balance of engineering and nonengineering measures in the future. In many cases it can be shown that nonstructural measures are extremely cost-effective in reducing flood losses. Measures such as house-raising, flood warning, flood forecasting and land use zoning can substantially reduce losses. As proposed by the government's recent strategies, there is a need to focus nonengineering solutions to areas of high risk of flooding such as where loss of crops and housing damage can be substantial. The occupation of the floodplain between levees remains problematic, but given land use and population pressure, little can be done other than implementing damage mitigation strategies. These include the construction of polders, river training works, flood zoning/regulations on land use and resettlement assistance. Detention basins are widely inhabited and for these reasons their use is also controversial. Thus removing people from these areas is hardly an option and the government needs to: 1. Introduce up-to-date technology in flood forecasting and flood warning; 2. Carry out works to reduce the frequency of use of the basins 3. Give priority to achieving a high standard of safety for residents with respect to buildings, refuges, evacuation routes etc.; 4. Ensure that emergency response plans are effective and regularly tested; 5. Educate the community to raise and maintain awareness of the flood risk and ensure that the populations at risk are prepared and respond during flood emergencies; and 6. Explore options for compensation, flood insurance and other measures. Appropriate measures to improve protection for people in detention basins include elevated floors of houses, temporary refuge, evacuation routes. Effective land use planning is another key aspect of nonstructural control. Effective floodplain management identifies areas at risk, evaluates the level of risk and then attaches regulations to the use of that land compatible with the defined risk. Floodplain management plans include the following: (a) hydrological analysis; (b) topographic survey; (c) field survey; (d) hydraulic modeling; (e) mapping flood extent; (f) consultation with local government, community. Flood forecasting and flood warning already exist for the main rivers in the 3-H basins. Advice received from local experts suggest that the following improvements are needed: 1. Networks for data monitoring need to be expanded; 2. The technologies of data acquisition and data transmission require updating; 3. Computational techniques for forecasting should be reviewed; 132 Chapter 5. Floods and Flood Damage 4. Technologies used in disseminating warnings should be updated; 5. Institutional and social networks for effective dissemination of warnings should be reviewed; 6. Telecommunications should be improved to maintain communication with all villages during severe storms and floods. Other aspects of this type of nonstructural protection measure include emergency response programs and awareness and preparedness. In addition, flood insurance has been considered but this is a difficult issue because those who are most at risk are usually low-income communities that can least afford such expense. There is little hope that commercial insurance operators will take part in such schemes and so it is up to the government to consider whether this type of nonstructural approach is viable for China at this stage. The United States' experience is noteworthy where government-sponsored schemes help promote better floodplain management. The option of reverting land back to unprotected floodplain was forgone centuries ago in China. Dikes in place on most of China's rivers protect vast areas of land and huge populations from normal floods let alone during extreme events. No doubt extensive damage arises from direct rainfall behind the dikes. The intense storms to which China is prone mean that farmers have had to learn to live with some level of intermittent floods and damage but, without the dikes and other protective works, cultivation and life itself would be impossible. The historical focus on flood control with structural measures has been the linchpin of the government's strategy for many decades. As established in the previous section this strategy has no doubt been successful and, given the complex circumstances in China, it is unrealistic to expect any profound change in flood control strategy on environmental, economic, social or engineering grounds. Thus, the first element of the proposed action plan recommends sustaining past achievements with structural works. These are summarized in the action plan section below. However physical works are insufficient and China has progressively adopted nonstructural measures that complement the physical protection afforded by dikes and storage reservoirs. This has helped contain damages and reduce lives lost during flood events. Countries increasingly move from sectoral programs and structural solutions that mitigate particular (flood-related) problems toward integrated planning. This expands the range of options, resulting in a balance of structural and nonstructural solutions that often increasingly favors nonstructural approaches focusing on improved efficiency, anticipation and prevention, especially as the best structural (construction) sites are exploited (Hydrosult 1999). A second element of any strategy must be to determine the optimum balance between structural and nonstructural measures that is attuned to China's evolving situation, and to move toward comprehensive floodplain management approaches. Such integrated planning expands the range of options, creating a balance between structural and nonstructural solutions. Nonstructural aspects of flood management tend to focus on improved efficiency, anticipation and prevention, especially as the best structural construction sites are exploited. Thus the action plan proposes to determine the optimum balance between structural and nonstructural measures that is attuned to China's evolving situation, and to move toward comprehensive floodplain management approaches. However given the intensity of economic/social development in the floodplain and detention basins in the 3-H area, there is little choice but to continue developing structural intervention programs in parallel with proposed nonstructural solutions. Chapter 5. Floods and Flood Damage 133 The potential costs associated with such programs are far in excess of government funding capacity. Thus, as for the pollution standards, the action plan calls for a review of current flood protection standards to ensure that key assets in the 3-H basins are adequately protected, along with appropriate mechanisms for cost-sharing and investment financing D. DEVELOPMENT OF A METHODOLOGY The ultimate purpose of developing a methodology is to minimize flood damages to key assets by assigning higher protection levels to these areas and lower protection levels to areas with lower-valued assets. It is economically profitable to protect areas with a higher potential damage, such as cities like Tianjin, with a higher safety level than areas with a lower potential damage such as rural areas, hence the concept of zones. Some 31 protection areas or zones were identified in the Hai basin as part of the WL/ Delft Hydraulics study which proposed this approach (see Figure 5.1 below). Therefore the development of a methodology for the analysis of flood risk should be based on the concept of flood risk management units.51 These units recognize that flood risk management concepts can only be applied successfully to areas with similar safety levels. These spatial units include protection areas, dike sections and river sections. While pertinent information on these spatial units is available, considerable gaps exist and data need to be strengthened as noted in recommendations below. The safety levels within each dike section and protection areas can be determined by comparing design safety levels and actual safety levels. These can be determined using local knowledge of the situation, available data, and best estimates as proxies for missing data. Flood damage assessments, in terms of economic losses or more appropriately the loss rate52 for each protection area, depend on the total monetary value present within that area, including fixed assets and production values. Based on the loss rate, the total economic value in the protection area and the return time of floods in years, the accumulated annual damage (AAD) can be calculated and represents the "benefit" side of the cost-benefit analysis. Flood loss rates were determined for three different flood depths including (a) below 1.5m depth (flood is considered serious but not life threatening), (b) above 1.5m depth but under 4m (flood is considered disastrous and there will be casualties), (c) above 4m depth, a flood is likely to be catastrophic and it is assumed that economic losses will approach 100 percent, i.e. loss of all assets and the value of one year of production. Such an AAD map is shown for the Hai basin for a flood above 1.5m but below 4m depth (Figure 5.2). The estimation of the costs of each strategy can be calculated from unit costs such as strengthening of 1 km of dike, raising a 1 km dike by 1m, early warning and evacuation costs for 1 km2 of detention area, dredging of 1 m3 of sediment, relocation of 1,000 inhabitants and construction of 1km dike 5m high, etc. 51 This methodology has already been developed as part of the Water Management Study of the Hai River carried out by the WL/Delft Hydraulic Institute (February 2001), GIWP/HWCC and the following paragraph is derived from that study. 52 Monetary loss expressed as a percentage of total value is usually more constant and therefore a better indicator. 134 Chapter 5. Floods and Flood Damage FIGURE 5.1: MAP SHOWING 31 PROTECTION AREAS IN THE HAIBASIN Hai River Basin Flood Management Study N W E S BEIJING P8 P9 P5 P6 P3 P14 P12 P4 P11 P7 P13 P12 P1 P10 P2 P18 P4 P15 P16 P17 P19 P22 TIANJIN P20 P23 P21 P20 P27 P28 P24 SHIJIAZHUANG P25 P26 P31 P29 Topographic Map of Hai Basin River P30 Highways Railroads Rivers Protection areas Reservoirs Detention areas 0 300 600 km World Bank Chapter 5. Floods and Flood Damage 135 FIGURE 5.2: AAD (ACTUAL) FOR FLOOD DEPTHSOVER 1.5M BUT BELOW 4M Hai River Basin Flood Management Study N W E S BEIJING P9 P8 P5 P6 P14 P12 P4 P3 P11 P7 P13 P12 P1 P10 P18 P4 P2 P15 P16 P17 P19 P22 P20 TIANJIN P23 P21 P20 P27 P28 P24 SHIJIAZHUANG P25 P26 P31 P29 Highways Railroads Rivers AAD for disastrous floods (>1.5m), actual safety levels P30 0 -5 5 -10 10 - 15 15 - 20 20 - 25 25 - 30 30 - 35 35 - 40 40 - 45 >45 0 300 600 km World Bank 136 Chapter 5. Floods and Flood Damage The cost-benefit analysis based on the methodology described above can be used to identify fundamental strategies or combinations of projects. Such projects are described below in the proposed action plan. E. ACTION PLANFOR FLOOD CONTROL (i) Background Proposed flood control works need to be assessed on technical, economic, social and environmental grounds with proposals consistent with the policy objectives of government. In the Flood Management Annex, details are provided of the economic and social cost of flooding in the 3-H basins. Some summary details are presented here. One of the key desired outcomes of the flood study is to identify, at a strategic levels, where funds should be expended on flood management works in order to be most effective. There are many projects that are being considered for funding but do they fit an overall master plan that will ensure the most cost-effective outcome? In a simple river system with only a few problems, one can develop a series of options or alternatives and then carry out some benefit:cost, social and environmental analyses to determine the recommended strategy. The next sections assess where funds should assigned, based on (a) locations with the highest historical flood losses and (b) which areas seem to have low ARIs (e.g. where the risk are greatest) and then assessing which projects seem to best respond to these requirements. (ii) Recommended Priority Projects (a) Principles of Flood Management for the 3-H Basins The 3-H basins are huge catchments but there is a need for a holistic approach to flood management for the whole basin. It is necessary to consider all the effects of any proposed works on the whole basin, not just the local effect. This requirement also extends across other disciplines and sectors. For instance the cheapest solution to a problem of, say, high risk of flooding is to raise levees. However it may be preferable to build a dam to reduce the peak flow, which would also have an added benefit of providing increased water supply for towns and irrigation. While the pressure is high to solve problems downstream with physical works, it is beneficial to ask why it is necessary and try to move up the catchment to solve the problems. More and more, hydrologists, planners and hydraulic engineers are trying to solve hydrological problems at the source rather than "end-of-pipe" solutions. This suggests that it is important to look to source control as the primary focus. Of course there are many problems that cannot be solved immediately by source control but "end-of-pipe" solutions should be seen as a last resort, not the optimal solution. Consider, for instance, sedimentation. It causes huge problems downstream, particularly in the Yellow River. It does seem that more should be done to try to hold this silt in the upper parts of the catchment from whence it came. Ideally this will be via reforestation but can also be via check dams, detention basins, silt dams, etc. If allowed to be carried downstream, there will be a constant maintenance battle to maintain waterway capacity. Ultimately levees will need to be so high that if they should fail, the consequences would be catastrophic. Chapter 5. Floods and Flood Damage 137 Detention basins are a vital part of the flood control system of the 3-H basins. They will need to function as storage from time to time and there is a need to minimize damage caused by such floods. This can take the form of land-use control to restrict development in the basins but that idea may not be practical. Another suggestion is to build elevated roads of at least 20 meters wide. They can be used as internal check dams to limit flooding but more importantly to provide a safe refuge and means of egress from the basins in times of flood. (b) Priority Projects Priority projects have been selected and are described in this section. They are based on the following considerations more fully explained in the Flood Management Annex: · Floodplain management principles discussed in Annex 5.1, Volume 3 · Existing levels of protection as discussed in Section 5B · Proposed works that have been identified for the 3-H basin in Annex 5.2, Volume 3 · Flood losses and consequences discussed in Chapter 3 part C. In this strategic-level flood study, it is not possible to investigate each potential project in detail and so the Priority Projects have been selected based on preliminary information using the criteria developed and explained in this report. It is recommended that further investigation be undertaken to assess the validity of the projects and their status. For the 3-H basins, there are discrete projects proposed but it is difficult to see which projects will be most effective and whether they are complementary or will duplicate one another. There is a very urgent need to develop comprehensive master plans for each basin so that each proposed project can be assessed against the master plan. Projects in each basin have been selected for further consideration and are described below. Hai River Basin. Flooding in the Hai Basin occurs in the southern part of the basin and around Tianjin and Beijing. Flood losses are quite high in Hebei Province and in Beijing itself. It is therefore economically justified to spend considerable funds to improve the situation. The priority projects are as listed below. 1. There is considerable flooding along the southern border of the Hai River basin which is shown on the flood maps. The inundation area commences on the Wei floodplain. The detention basins of Liangxiangpo, Changhongqu and Baisipo are required to be used every two to three years. This clearly is too frequent and needs to be reduced. It is suggested to upgrade these detention basins so that the necessity to construct a dam upstream may be avoided. 2. It is proposed to construct the Panshitou Reservoir on the Qi River to be used for flood storage. Storage capacity will be 6.20 x108 m3. This would seem to be a very worthwhile project. It may provide some water resource storage and can be used to reduce the dependency on the use of the detention basins in the area. It may also be able to reduce the flows in the Wei and thereby reduce flooding in the downstream areas. While the dam will be in Henan Province the downstream benefits will also accrue to Hebei and Shandong Provinces where there is considerable flood damage each year. 138 Chapter 5. Floods and Flood Damage 3. Beijing suffers considerable flooding and drainage problems and, as the nation's capital, should have a very high level of protection. It is proposed to construct a dam on Yonding River upstream of Beijing called Chengxiazhuang Reservoir. It will have a capacity 0.63 x108 m3. However in terms of cost per stored cubic meter, it is far more expensive than Panshitou Reservoir. It is recommended that further work be undertaken to determine a cost-effective site for a dam. If constructed it will reduce flooding in Beijing, reduce the need to use the Yongding detention storage, and reduce the need to transfer water to the Daqing system. If this dam is found not to be cost-effective, then another scheme needs to be designed in order to protect Beijing from flooding. 4. It would be desirable to improve the flood capacity of rivers, channels and estuaries close to the cities of Beijing and Tianjin. Rivers such as New Yongding, Jiyun, Duliu, New Zhangwei, Feng, Beiyun and the Hai should be upgraded by dredging and/or raising levees to ensure that the floods can be safely carried to the sea and protect Beijing and Tianjin. 5. As discussed in Section 5C, four major storages have very low safe ARIs. These are Yuecheng, Huangbizheung, Gangnan and Xidayang. These dams should have risk assessments to determine if the ARI of the safe flood should be increased. 6. There are a number of other river systems that have been upgraded but may not now have the design capacity due to sedimentation. They should be assessed to determine if they should be rehabilitated to their old standard. 7. Improvements are required for all aspects of the flood forecasting and flood warning system for the Hai River Basin. This includes expansion of the instrument monitoring network, updated data transmission technology, forecasting techniques and telecommunications for issuing warnings and maintaining contact during flood emergencies. 8. The safety of the detention areas should be improved by construction of elevated roads above flood level that can be used for evacuation and temporary sanctuary during floods. The roads should be at least 20 meters wide to accommodate people sheltering from floods. 9. A hydrodynamic flood model for the major rivers should be developed that will provide information to determine which rivers should be upgraded and which reservoirs should be built. Yellow River Basin. The major flood damage and losses in the Yellow River Basin are in Shandong Provinces which conforms with the areas flooded in the flood inundation maps for the basin. Undoubtedly the biggest problem in the Yellow River Basin is the sediment because it reduces the capacity of the channels and rivers to convey floodwaters. The ideal solution would be revegetation of the catchment but this will take too long and may not be practical. The proposed solution is the construction of dams with the main purpose of collecting silt. These dams seem to be required and are described below along with other priority projects. 1. Construction of the Qikou water conservancy project is one of the major projects on the Yellow River. The dam site is located on the middle reaches of the Yellow River in Shanxi province. The project will trap large amounts of silt. The dam is designed as an earthfill dam having a maximum height of 143.5m. The project will have a small design discharge and large storage capacity. Its main task is to retain 14.4 billion tons of silt and also reduce 2.44 billion tons of sand to be accumulated in the Xiaobei main river course. The project is aimed at removing the need to continue to raise levees in the lower areas of the Yellow River to counter the aggradation of the channel bed. In addition power Chapter 5. Floods and Flood Damage 139 supply will be guaranteed for agriculture and industry along the river banks within Shanxi and Shaanxi provinces. While this project seems to be very valuable in maintaining flood capacity, careful consideration will need to be made as to the effects of sediment deficit downstream of the dam. The river will erode until a stable sediment balance is reestablished. This may provide problems of erosion near the dam and deposition continuing downstream. 2. The Guxian water conservancy project is also one of the primary projects on the Yellow River stem. The dam site is located on the middle reaches of the Yellow River in Xiangnin of Shanxi province and Yichuang of Shaanxi province. The total storage capacity is 160 x 108 m3 and the sediment- retaining capacity is 11.35 Bcm. The dam has a maximum height of 186m and is designed as an earth-/rockfill dam. Its main task is to control flood and silt and to regulate runoff. It will retain 16 billion tons of silt. After completion of the Guxian and Qikou reservoirs the lower-reach levees of the Yellow River will not need to be raised. 3. The Dongping Lake reservoir should be upgraded to have an operating water level of 44.5m, storage capacity of 3.04 Bcm, of which the old lake comprises 880 Mcm and the new lake comprises 2.16 Bcm. 4. Downstream of the Dongping detention area, levees in the delta area, and levees that protect the left bank of the lower Qin River and the adjoining irrigated plains will need to be raised and strengthened. 5. Extension work needs to be done to assist small communities in implementing and maintaining sound soil and water conservation measures, improved monitoring of conditions and of water and sediment yield, expansion of project areas by 12,000 km2 a year, ongoing efforts in existing management areas, construction of 5,000 gully dams (by year 2010), research, development and training. 6. As for the Hai, there is a need to develop a hydrodynamic flood model for the major rivers that will provide information to determine which rivers should be upgraded and which reservoirs should be built. Huai River Basin. Flood losses are most severe in Anhui and Jiangsu Provinces where annual damage and deaths from flooding are very high. The flood-prone area for the Huai Basin includes the main branch of the Huai River. This corresponds well to the low ARI of rivers in this area.. In addition, flooding can occur from the right bank breakout downstream of Zhengzhou from the Yellow River (see the flood map for the Yellow River). The overflow follows the old Yellow River, which can flood large areas of Anhui and Jiangsu Provinces that have very large flood damage every year. Works on the Yellow River will reduce flooding in this area. Flooding on the main branch of the Huai River can be reduced by the following works, which can be considered priority projects: 1. Construction of a dam on Kanjing River, a tributary of the Sha-Ying River, for flood detention. This will reduce the frequency of flooding of the Nehewa detention area, which is used on average every two years. 2. Construction of the Bailianya Reservoir to reduce flooding downstream in the Pi River, which only has a capacity of a 7-year ARI. It will also reduce flooding in the main branch of the Huai River. 140 Chapter 5. Floods and Flood Damage 3. There are two major dams (greater than 1 Bcm) that have low ARIs, below 10,000 years). These are the Meishan and Suyahu dams and should have risk analyses carried out to determine if they should be upgraded. 4. An improved main floodway should be constructed flowing directly to the sea to reduce flooding and the duration of flooding in the flood areas of Anhui and Jiangsu Provinces. 5. A major project to be undertaken is the Linhuaigang project. This involves construction of a large, gated regulator on the Huai River upstream of the Ying confluence, and levee embankments surrounding a large depression area adjoining the Huai River. It would enable an on-stream regulated flood storage to be used to better control flood discharges from the upper Huai and Hong-Ru into the middle river reach from Zhengyangguan to Hongze Lake. 6. The Huaibei levee, or north bank levee of the Huai River from Zhengyangguan to Hongze Lake, should be raised. This is a very strategic levee protecting a densely populated area of 12,000 km2, including over 8,000 km2 of intensively cultivated land, and more renovation and raising is required to achieve satisfactory standards throughout. 7. A high degree of operational management and intervention is necessary during large floods to divert floodwaters into detention areas for temporary storage and to distribute flood flows in original river channels and new river diversions through the operation of regulators. Very good forecasting accuracy was achieved in the 1991 flood, which greatly aided management of the situation. Flood forecasting therefore assumes great importance in flood management of the Huai River system. Upgrading to the latest technology and maximizing flood warning time is very important, and has been identified as an objective in long-range planning to year 2010. 8. As for the Hai and the Yellow River Basins, there is a need to develop a hydrodynamic flood model for the major rivers that will provide information to determine which rivers should be upgraded and which reservoirs should be built. (c) Secondary Priority Projects Other projects that should be considered further in the 3-H basin are listed in Annex 5.2, Volume 3. It may well be that there are some very important projects in these lists and it is recommended that further work be undertaken to review at least the basic facts of the each project so that they can be assessed. City Protection. Table 5.4 shows major cities in the 3-H basins which have an ARI of no higher than 10 years. This is a very low standard for major cities and further review should be carried out to assess if their level of protection should be upgraded. Chapter 5. Floods and Flood Damage 141 TABLE 5.4: CITIES WITH LOW LEVEL OF FLOOD PROTECTION Ref. Nonagricul- Total output of Flood control Flood loss in 1997 No Province City River tural pop. standard (year (1995) (104) 1995 (108) ARI) (Yuan 108) 2 Tianjin Tianjin Haihe 477.56 2363.94 10 1.2 5 Hebei Xiangtai Qilihe 36.06 86.64 5 16 Jiangsu Nanjing Changjiang 229.85 764.50 10 17 Jiangsu Xuzhou Old Huang river 100.20 277.00 10 22 Jiangsu Dongtai Taidonghe 22.55 150.00 10 35 Jiangxi Jingdezhen Changjiang 30.57 110.45 5 36 Jiangxi Xinyu Yuanhe 24.11 112.47 10 0.03 37 Jiangxi Pingxiang Pingshuihe 47.26 177.30 10 0.8 39 Shandong Laizhou Nanyanghe 31.09 235.00 10 43 Shandong Zibo Xiaofuhe 141.78 719.00 10 44 Shandong Gaomi Xiaokanghe 20.57 180.60 10 48 Shandong Feicheng Kangwanghe 31.36 100.36 10 49 Shandong Rizhao 32.65 195.10 10 0.28 50 Shandong Rongcheng Chuanchenghe 20.81 204.00 10 0.04 53 Shandong Tengzhou Chenghe 46.49 110.80 10 54 Shandong Zoucheng Nanshahe 33.14 120.00 10 55 Shandong Heze Dongyuhe 29.23 58.20 10 56 Shandong Dongying Guanglihe 47.10 179.36 10 61 Henan Jiaozuo Qunyinghe 50.91 81.44 10 0.31 62 Henan Xinxiang Weihe 55.93 111.72 13 0.2 63 Henan Xuchang Qingyihe 25.37 59.56 10 64 Henan Luoyang Yiluohe 95.29 133.20 5 66 Henan Kaifeng Huijihe 55.17 76.68 5 68 Hubei Jingzhou Changjiang 70.41 54.57 10 71 Hubei Yichang Changjiang 45.93 61.79 10 72 Hubei Xiantao Hanjiang 39.81 65.25 10 74 Hubei Qianjiang Hanjiang 30.55 104.50 10 81 Chongqing Chongqing Changjiang 281.11 694.45 5 3.01 82 Sichuan Chengdu Minjiang 205.05 907.89 10 84 Sichuan Yibin Minjiang 27.43 74.89 6.5 86 Guizhou Zunyi Xiangjiang 32.70 53.25 10 0.03 93 Qinghai Xining Huangshuihe 58.67 57.36 10 0.712 142 Chapter 6. Sufficient Food for All 6. SUFFICIENT FOOD FOR ALL A. INTRODUCTION Chapter 3 established that during the last two decades, despite only marginal increases in inputs of water and land, there have been large increases in agricultural production including crops, livestock, fishery and forests. Increases in crop production have been made possible due to higher uses of fertilizers, increased irrigation, agricultural research and technology transfer. The growth rates of the different components in agriculture were not even, with livestock and fisheries showing the highest rates at 7.6 percent and 13.9 percent respectively during 1978 and 1998. This marginal increase in water supply for agriculture is expected to continue in the future, even with possible additional interbasin transfers, because the biological requirement of current cropping pattern far exceed current and future levels of withdrawals, implying that agricultural requirements can never be met. In addition, the government's policy has promoted preferential supply to industry and municipalities in urban centers and so agriculture is likely to continue to have less water allocated. Thus shortages to agriculture will continue into the future. (Figure 6.1) FIGURE 6.1: PROJECTED WATER SUPPLY, DEMAND AND SHORTAGES TOIRRIGATED AGRICULTURE IN THE 3-H B ASINS FOR A P75 YEAR WITH NO MAJOR INTERBASIN TRANSFERS 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 1990 2000 2010 2020 2030 2040 2050 2060 Irrigation Shortage Irrigation Demand While agricultural productivity is also dependent on investment in total factor productivity (TFP) including research, the use of fertilizers, labor, energy input, etc., water remains the single most important input factor; so other factors can improve production only if a minimum of water is provided for crop growth. As argued in Chapters 3 and 4, the 3-H basins have reached a supply constraint at about 133 Bcm (P95) or 145 Bcm (P75), which will not change. Data indicate that government investment in some of these TFPs, particularly research, has declined in the last two decades with predictable effects on agricultural productivity. With improved protection of intellectual property rights, private investment should be encouraged to fill the gap as is the trend worldwide. Labor productivity in agriculture is very low in China, generally because of the low Chapter 6. Sufficient Food for All 143 land/labor ratio, which is unlikely to change until significant numbers of workers find employment in other sectors. Rural incomes in the 3-H basins were found to be more dependent on crops than the national average and thus households would be relatively more affected by a decrease in water availability. Declining government investments in irrigation affect the operation and maintenance of irrigation infrastructure and new forms of institutional management have evolved to increase community participation to improve the efficiency of management. Increasing the use of water-saving technology is also an effective way to compensate for declining water availability and the government has renewed interest in this since more severe water shortages have occurred. B. IMPLICATIONS OF LESS WATER AND LAND As established in Chapter 4, it is likely that agriculture will have to cope with a decreasing or at best static water supply in the coming decades. This is because (a) the growing population will increase competition for water; and (b) government policy allocates water for urban municipal and industrial use in preference to agriculture due to higher marginal returns. This trend has already existed in the 3-H basins for the last decade at least. Despite this decreasing water supply, crop production has managed to increase or at least be maintained for most years in the 3-H basins. The reasons for this are not entirely certain because there are many variables that can influence productivity including (a) water, (b) fertilizers, (c) energy, (d) labor, (e) land, etc. According to some studies, yields may be more responsive to these than irrigation and so this explains why it has been possible to increase crop production even with a diminishing water supply. In order to determine whether this is the case, researchers have devised various ways of quantifying the contribution of each input to total yield including short- and long-run elasticities for input factors. An aggregate agricultural production function estimated by Fan53 regressed labor, cultivated land, fertilizer, energy, irrigation (irrigated land), and agricultural research stock on the farm value of agricultural production (constant prices) and derived elasticity coefficients for the production inputs. This analysis was based on national agricultural data and thus does not apply specifically to the 3­H basins but is, nevertheless, indicative. Table 6.1 shows the study's input factor short-run elasticities for China. TABLE 6.1: SHORT-RUN ELASTICITY FOR INPUT FACTORS Factor Elasticity Labor (no. of person equivalents) 0.25 Cultivated land (no. of hectares) 0.05 Mechanical & animal power (hp) 0.39 Fertilizer (tons of nutrients applied) 0.27 Irrigation (irrigated area) 0.08 Research (stock of knowledge) 0.20 The elasticities indicate that as an input factor increased by 1 percent, agricultural output increased by the amount of the coefficient (e.g. 0.27 percent in the case of fertilizer or 0.08 percent in the case of irrigated area). Increasing the irrigated area is important in increasing production, but a singular 53 Fan, Shenggen. "Research Investment, Input Quality, and the Economic Returns to Chinese Agricultural Research," Paper presented for the Post-Conference Workshop on Agricultural Productivity and R&D Policy in China; Melbourne, Australia, August 29, 1996. 144 Chapter 6. Sufficient Food for All increase in the stock of irrigated land has a modest long-term growth impact on agriculture. The increase in complementary inputs (new seeds, fertilizer, labor, etc.) after irrigated land is increased, produces a larger impact after irrigation, although the analysis did not estimate interaction effects. The low production response to changes in irrigation area can be explained in part by the difficulty of measuring irrigation. Irrigated area captures only one quantitative characteristic of irrigation investments and ignores various qualitative improvements. Furthermore, the relatively small year-to-year changes and overall change in irrigated area during the reform period (there was no change in the irrigated area between 1979 and 1989) make it difficult to statistically capture the impact of change. Huang and Rozelle54 evaluated grain output from a supply and supply-shift perspective (instead of a production function analysis) and, in their growth decomposition analysis of grain production in northern China, determined that agricultural research was overwhelmingly the most important factor that shifted the supply function. Their analysis included agricultural research stock, irrigation stock (measured in terms of undepreciated investments), and institutional innovation as supply shifters. Agricultural research accounted for most of the growth in wheat and maize output increases between 1984 and 1995 with irrigation stock accounting for the balance--10 and 20 percent for wheat and maize, respectively. Also, they estimated both short- and long-run elasticities for research and irrigation stock for maize and wheat, which are listed in Table 6.2. Their analyses also indicated that investment in agricultural research produced a higher output response than irrigation investment. TABLE 6.2: ELASTICITIES FOR RESEARCH AND IRRIGATION STOCK Agricultural Research Stock Irrigation Stock Wheat Maize Wheat Maize Short run 0.59 1.05 0.17 0.18 Long run 0.43 1.04 0.34 0.19 The elasticities shown in Tables 6.2 were calculated using irrigated area and investment in irrigation stock as proxies for water and thus do not directly give an indication of the importance of water in agricultural production. The assumption seems to have been that water would be available in unrestricted quantities. However, in the 3-H basins, many irrigation districts have irrigation infrastructure with little or no water, especially during dry periods, and this could explain why area or infrastructure by themselves contribute little to agricultural production, i.e., because water is not present in optimum quantities. The present study used a combined economic/hydrologic model (the 3-H basins modeling system, described in Annex 3.1, Volume 3) to determine the impact of changes in water availability on crop production in the 3-H basins. The results are shown in Table 6.3. TABLE 6.3: LONG RUN WATER ELASTICITY OF AGRICULTURAL OUTPUT FOR DIFFERENT FLOW PROBABILITIES IN THE 3-H BASINS 95% Probability 75% Probability 50% Probability 25% Probability 0.30 0.30 0.30 0.22 54 Huang, Jikun and Scott Rozelle, "Technical Change, Reform and Agricultural Growth in China," Working Paper, mimeo. 1997. Chapter 6. Sufficient Food for All 145 While increased irrigated area was shown to contribute only marginally to increased productivity, it is evident that in the 3-H basins, water is the single most important input factor to maintain productivity. Other inputs contribute more on irrigated land compared to unirrigated land, which seems to indicate that these other factors of production are effective in improving yields provided a minimum of water is available. As water supplies decline, these factors of production also decline in their contribution to productivity. These results also show that increasing irrigated area will not increase productivity significantly but that maintaining existing areas with adequate water supply and combining other input factors such as fertilizers, research etc. should be the focus of agricultural policy in the 3-H basins. The results of the modeling exercise undertaken to investigate the impact of water for the 3-H basins crop production reveal interesting but predictable trends. More surface agricultural area will be going to rainfed agriculture (Figure 6.2). In the 3-H basins, for a very dry year, the 93.5 million mu (21 percent of cultivated area) in 2000 that rely on rainfed agriculture will increase to some 129 million mu by 2050 (28 percent). The trend is similar for a wet year (P25) where 14.6 million mu (3 percent) will increase to 32.6 million mu (7 percent). In the case of partially irrigated agriculture, the trend is that the current 240 million mu (52 percent) will decline to some 220 million mu (48 percent) by 2050 for a very dry year (P95) and from 90 (20 percent) to 84 million mu (18 percent) for a wet year (P25). As expected, fully irrigated areas will decline from 125 million mu (27 percent) to 113 million mu (24 percent) for a P95 year and from 355 (77 percent) to 345 million mu (75 percent) for a wet year. These results are shown in full in tables and in graphics in Annex 6.1, Volume 3. Figure 6.3 shows the current mix of full, partial and low irrigated areas in the 3-H basins. Notable features of this map include the fact that the Huai is almost entirely fully irrigated and this will continue in the foreseeable decades. By comparison, the Hai basin comprises a mix of the three irrigation types but partial irrigation predominates. In the next decades, full irrigation areas will almost disappear in the Hai replaced by low or partial irrigation. Some land may also be taken out of agriculture altogether. The Yellow Basin is unlikely to change. Maps showing 2020 and 2050 scenarios are shown in Annex 6.1, Volume 3. As water resource availability declines, the models show that total grain production and total production value also decline. In addition, due to changes in the structure of agriculture discussed in Chapter 3, grain production is likely to decline (particularly in the Yellow basin) between now and 2050, even with constant flow probability. The models predict that total crop production in the 3-H basins will decline from Y 111 billion in 2000 to Y 108 billion in 2050 for a dry year and from Y 131 to Y129 billion for a wet year between 2000 and 2050 (see Table 6.4). Grain production will also decrease from some 110 million tons in 2000 to 106 million tons in 2050 for a very dry year (P95) and should remain the same for a wet year (P25) at around 131 million tons for the 3-H basins. 146 Chapter 6. Sufficient Food for All FIGURE 6.2: CHANGES IN FULLY IRRIGATED, PARTIALLY IRRIGATED AND RAINFED AREAS IN THE 3-H B ASINS 30% 25% 20% Percent Rainfed Area in 3 H 15% Basins 10% 5% 0% 95% 75% 20502040 2030 50% 2020 25% 2010 Probabili Year 2000 1997 ty 95% 75% 50% 25% 80% 70% 60% 50% Percent Full Irrigation Area in 40% 3 H Basins 30% 20% 10% 0% 25% 50% 1997 20002010 75% 2020 95% 2030 Year 2040 Probabili 2050 ty 95% 75% 50% 25% 60% 50% 40% Percent Partial Irrigation Area in 30% 3 H Basins 20% 10% 0% 95% 75% 2050 2040 50% 2030 2020 25% 2010 Probabil Year 20001997 ity 95% 75% 50% 25% Chapter 6. Sufficient Food for All 147 FIGURE 6.3: TOTAL IRRIGATION AREA IN 3-H IN 2000, P75, BASE CASE II-1 Hu heh ot IV-3B I-2 A Beijing I-2 B II-3A Tia njin IV-8 II-3C Sh ijia zhu ang Ta iyu an IV-4 I-3E II-3 B II-3D I-4 II-7 IV -3A Jinan IV-7 B Qin gd ao La nzh ou I-3 F IV -5 A II-6 IV-2 IV-7A III-5 IV-5 B IV-1 IV -6 Zh en gzh ou Xuz ho u Xi'an II-3 III-4 III-2 Ben gb u II-1 LEGEN D N CHINA WATER SECTOR ACTION PROGRAM UNIT:Mm u WORLD BANK-M INISTRY OF WAT ER RESOURCES Full Irrigation Areas Partial Irrigati on Areas Low Irrigation Areas FIGURE No. Ci ty Percent 75 Total Irrigation Area for Base Case i n 2000 National Boundary in the Yell ow Huai Hai River Basins TABLE 6.4: TOTAL PRODUCTION VALUE FOR THE 3-H BASINS FOR DIFFERENT PROBABILITIES FROM 2000 TO2050 (Y billion) 1997 2000 2010 2020 2030 2040 2050 95% probability 112.0 111.1 112.9 110.5 109.5 108.9 107.8 75% probability 121.9 120.1 123.0 121.3 120.3 119.8 119.2 50% probability 127.5 125.9 127.6 126.6 126.1 125.7 125.4 25% probability 130.8 129.5 131.2 130.5 130.0 129.7 129.4 C. IMPLICATIONS OF WTO ACCESSION The relaxation of various international trade constraints will permit greater integration with foreign agricultural markets. The issue surrounding China's accession to WTO is when, and the precise conditions of entry; China is such an important trading country that it is in all countries' interest to ensure entry. Details of conditions of China's entry into WTO have not been fully disclosed, but several general conditions have been released, some of which impact on the agricultural economy of the 3­H basins. Certain elements relating to WTO accession will require phasing out of various licenses and trade subsidies and allowing greater private sector participation--including the reallocation of unused State Trading Enterprise quotas to the private sector. Currently domestic rice and wheat prices are similar to international prices, but domestic corn and soybean prices are considerably above international prices (US Gulf). International prices are expected to 148 Chapter 6. Sufficient Food for All be more volatile in the future than in the past but the general declining trend in real prices is expected to continue. Given the size of the tariff rate quota (TRQs), and that private traders will have access to a portion of them, China will be well integrated into the international grain markets and domestic prices will automatically follow international prices--perhaps with a slight lag. Therefore, China's grain farmers will face a declining trend in real grain prices over the next several years, encouraging them to improve production efficiency at a rate similar to that achieved internationally--which includes, of course, improved water use efficiency. In its submission to WTO, China offered binding import tariff rates (to be effective by 2004) for the following agricultural commodities (Table 6.5). While these appear to be rather high (except for barley and other grains) they represent considerable reduction in most favored nation (MFN) rates and are generally lower than in other developing countries. Nevertheless, these binding rates imply price protection for domestic farmers by permitting domestic grain prices to be 40 to 65 percent above the international price equivalent. However, China has agreed to establish an import TRQ system for land- extensive agricultural commodities. Under a TRQ, a nominal tariff (1­3 percent) would be levied on imports up to the quota level. Quotas will increase annually from accession until 2004 (2005 for soybean oil). Above-quota imports would be charged the binding tariff rate--but the initial TRQs are considerably above current import levels. TABLE 6.5: BINDING IMPORT TARIFF RATES EFFECTIVE BY 2004 PROPOSED BY CHINA FOR WTO ACCESSION Commodity Binding Rate (%) Cotton 39.9 Rice 62.5 Wheat 65.0 Corn 64.9 Barley 9.0 Other grains 2.2 Soybeans and other oilseeds 64.5 Animal products (average) 24.2 Horticultural products (average) 10.8 The TRQs apply to nine agricultural commodities, five of which are produced in volume in the 3-H basins (others are wool, sugar, palm oil, and rapeseed oil). The commodities and their TRQs are listed below in Table 6.6. TABLE 6.6: TARIFF RATE QUOTA FOR COMMODITIES GROWN IN THE 3-H BASINS Commodity TRQ (million metric tons) Cotton 0.743 rising to 0.894 Rice 2.6 rising to 5.3 Wheat 7.3 rising to 9.3 Corn 4.5 rising to 7.2 Soybean Oil 1.7 rising to 3.3 (by 2005) The effect of WTO accession on crop production and prices was projected using the 3-H basin modeling system. Total crop production includes winter and summer wheat, spring and summer maize, rice, soybean and millet. The calculated present value includes the same crops plus cotton, vegetables and peanuts. The results show that WTO accession would accentuate existing trends in decline of prices and crop production in the 3-H basins (Table 6.7 and Figure 6.4). In the case of total production the drop will Chapter 6. Sufficient Food for All 149 be marginal, with a percentage change of around 3 percent for the Hai, less than 1 percent in the Huai and about 2 percent in the Yellow. The average change for the 3-H basins is around 1.6 percent over the next 50 years. The current and projected trends in the 3-H basins are the result of external pressures on the agricultural sector including water scarcity, water allocation practices, urbanization and industrialization. In addition, changes in labor practices will see a drop in income derived from grain and increases in off- farm incomes as discussed above. Thus, WTO accession will ensure that Chinese agriculture eventually specializes in production where it has a comparative advantage. TABLE 6.7: TOTAL CROP PRODUCTION WITH WTO AND WITHOUT WTO ACCESSION (Millions of Tons) 2000 2010 2020 2030 2040 2050 Hai Non-WTO 39.21 37.90 36.92 36.30 36.10 35.96 WTO 39.21 36.80 35.84 35.24 35.02 34.86 % change 0.0 3.0 3.0 3.1 3.1 3.2 Huai Non-WTO 56.50 55.78 54.69 54.30 54.20 53.70 WTO 56.50 55.27 54.68 54.18 53.98 53.58 % change 0.0 0.9 0.0 0.1 0.3 0.2 Yellow Non-WTO 26.68 25.36 24.83 24.60 24.20 24.15 WTO 26.68 24.67 24.24 23.96 23.75 23.69 % change 0.0 2.8 2.4 2.5 2.0 1.9 3-H Non-WTO 122.40 119.00 116.40 115.20 114.50 113.80 WTO 122.40 116.70 114.80 113.40 112.80 112.10 % change 0.0 2.0 1.5 1.6 1.5 1.5 Figure 6.4 shows WTO vs. non-WTO production for rice and winter wheat for different hydrologic probabilities for the base case and for the intervention case. The main points to note in the case of winter wheat are: 1. production is raised and sustained in all probabilities compared to base case; 2. WTO is less than Non-WTO production in all cases. In the case of rice, the main points to note are: (a) in a dry year (P95) there is a large difference between WTO and non-WTO production while in a wet year, the difference between WTO and non-WTO diminishes dramatically (i.e. P50); and (b) WTO production of rice is higher than non-WTO production, which is the opposite the winter wheat. This is confirmed in Figure 6.5 which shows the rice production value increasing (from 20 percent to 26 percent of total production value) after WTO accession while winter wheat decreases from 36 percent of total down to 20 percent of total production value. Peanut's production value is likely to rise substantially accounting for 12 percent of total production value by weight compared to 4 percent pre- WTO case. Other increases will be cotton and vegetables. The changes in the present value of production are shown in Table 6.8 and Figure 6.5. The table and figures show that the percent change in value of crop production is more substantial, averaging about 19 percent for the Hai, 11 percent for the Huai and 23 percent for the Yellow, with the 3-H basins averaging about 16 percent. Prices would drop because the current protection afforded by government import restrictions would be lowered. The Huai basin would be least affected by WTO accession. In terms of water withdrawals, it is clear that WTO accession will not make such a large difference because production itself will not change significantly. Only the value of the crops will change. 150 Chapter 6. Sufficient Food for All FIGURE 6.4: WTO IMPACT ON WINTER WHEAT AND RICE PRODUCTION UNDER DIFFERENT SCENARIOS ANDRUNOFF PROBABILITIES WTO Impact on Winter Wheat Production, Base Case 55.00 50.00 45.00 tons million40.00 35.00 30.00 1990 2000 2010 2020 2030 2040 2050 2060 WTO Price, P95 Non-WTO Price, P95 WTO Price, P75 Non-WTO Price, P75 WTO Price, P50 Non-WTO Price, P50 WTO Impact on Winter Wheat Production, Without S-N (Efficiency 10% Improvement + Reuse + High Price) 55.00 50.00 45.00 tons million40.00 35.00 30.00 1990 2000 2010 2020 2030 2040 2050 2060 WTO Price, P95 Non-WTO Price, P95 WTO Price, P75 Non-WTO Price, P75 WTO Price, P50 Non-WTO Price, P50 Chapter 6. Sufficient Food for All 151 WTO Impact on Rice Production, Base Case 19 16 tons million 13 10 1990 2000 2010 2020 2030 2040 2050 2060 WTO Price, P95 Non-WTO Price, P95 WTO Price, P75 Non-WTO Price, P75 WTO Price, P50 Non-WTO Price, P50 WTO Impact on Rice Production, Without S-N Case (Efficiency 10% Improvement + Reuse + High Price) 19.00 16.00 tons million 13.00 10.00 1990 2000 2010 2020 2030 2040 2050 2060 WTO Price, P95 Non-WTO Price, P95 WTO Price, P75 Non-WTO Price, P75 WTO Price, P50 Non-WTO Price, P50 152 Chapter 6. Sufficient Food for All FIGURE 6.5: CROP PRODUCTION VALUESUNDER WTO AND NON-WTO CONDITIONS IN HUAIBASIN Huai 2050 Value of Crops Production WTO conditions +SN SOYBEANRAPE WWHEAT 5% 4% 20% PEANUT WWHEAT 12% SUMAIZE RICE VEGET COTTON 7% SUMAIZE VEGET 16% PEANUT COTTON SOYBEAN 10% RAPE RICE 26% Huai 2050Value of Crop Production (Non WTO Conditions) + SN SOYBEAN RAPE 5% 5% PEANUT 4% VEGET WWHEAT WWHEAT 6% 36% SUMAIZE RICE COTTON COTTON 7% VEGET PEANUT SOYBEAN RICE RAPE 20% SUMAIZE 17% TABLE 6.8: CHANGES IN PRESENT VALUE OF CROP PRODUCTION IN THE 3-H BASINS WITH NON-WTO AND WTO ACCESSION (Y billion) 2000 2010 2020 2030 2040 2050 Hai Non-WTO 63.7 62.8 61.5 60.7 60.2 59.9 WTO 63.7 52.5 51.6 51.0 50.8 50.5 % Change 0 20 19 19 19 19 Huai Non-WTO 96.3 97.5 96.1 95.5 95.4 94.8 WTO 96.3 87.6 86.5 85.9 85.7 85.3 % Change 0 11 11 11 11 11 Yellow Non-WTO 40.3 39.2 38.6 38.2 37.8 37.7 WTO 40.3 31.4 31.3 31.1 30.9 30.8 % Change 0 25 23 23 22 23 3-H Basins Non-WTO 200.3 199.5 196.2 194.4 193.4 192.4 WTO 200.3 171.5 169.4 168.0 167.3 166.5 % Change 0 16 16 16 16 16 Chapter 6. Sufficient Food for All 153 D. IMPLICATIONS FOR FOOD SECURITY Over the past 20 years total cereal production increased by 164 million tons--of which 75 million tons was contributed by the 3­H basins area. Given the estimates of cereal requirements for 2020, production will need to increase by an additional 100-150 million tons if current self-sufficiency ratios are retained. However, agricultural production efficiency would be improved and farmer incomes would be greater by applying a broader definition of food security and permitting trade to balance supply and demand rather than focusing on production. A widely accepted definition of household food security is; "access to food (and nutrition) required for a healthy and productive life"--meaning the ability to grow and/or purchase food as needed.55 This implies access to a variety of foods (not just food staples) that will provide a balanced nutritious diet. Similarly, national food security means the country has the ability to meet food requirements through production and imports. Thus, a broad interpretation of food security goes beyond production to include incomes and income distribution/redistribution, domestic and international market infrastructure and institutions, and foreign exchange access. China is certainly food secure by this broader definition. Over the past decade China's total food trade balance has remained highly positive (although the trade balance of some food categories--animal and vegetable fats and oils--have been continuously negative), and the overall trade balance has been positive every year except one. Even considering China's fertilizer imports (China is the world's largest fertilizer importer, importing an annual average during the 1990s of 1.6 million tons or US$2.6 billion) as a proxy for food imports still leaves an average annual net food export balance of about US$1.4 billion. National food security would imply full integration into the international grain markets­which would be automatic when China assumes WTO membership. Furthermore, most analysts agree, based on computable general equilibrium (CGE) models, that over the next 20­25 years worldwide grain production will increase sufficiently to meet all importing country requirements and continue their long- term, real price decline.56 Maintaining and improving household food security will depend substantially upon household income levels and whether farmer households are net producers or consumers of grain. Conceptually, lower grain prices imply that households and the nation will improve their capacity to purchase food and thereby improve food security. Farmer households will continue to produce much of their food needs, even in an open domestic and external market environment, but they will allocate more of their productive resources to nonsubsistence, higher-value commodities to improve income. Given expected declining grain prices, agricultural households must become more efficient producers; otherwise their incomes will decline along with their ability to purchase nonsubsistence food items. Poverty households will remain food insecure and malnourished, until incomes can be increased to levels sufficient to purchase adequate calories and protein--unless supplemented by consumption programs. A broader definition of food security that includes the ability to grow and/or purchase food would be more useful than the current one which focuses only China's production capacity. Thus a broader definition of food security goes beyond production to include incomes and income distribution and 55 Shah, Mahendra and Maurice Strong, "Food in the 21st Century: From Science to Sustainable Agriculture." CGIAR Secretariat, Washington DC, 1999. 56 Pinstrup-Andersen, et al. "op. cit." 154 Chapter 6. Sufficient Food for All redistribution, domestic and international market infrastructure and institutions and foreign exchange access. China is certainly food secure by this definition. E. IRRIGATION WITH IMPROVED INSTITUTIONAL, TECHNOLOGICAL WATER-SAVING AND WATER PRICE MEASURES (i) Background As discussed in previous sections of this chapter and in other chapters of this report, the Chinese government is now turning to demand management because of the limited supplies of water to irrigation and the almost certain static supplies in the future. The objective will still be to ensure that each cubic meter of water produces more agricultural output. In this respect, the impact of water saving is known to be potentially significant. Based on results generated using the 3-H basins modeling system, the conclusion is that increases in both irrigation area and economic value are likely to result from the implementation of water-saving technology. The policy implication of the changes that will occur in the agricultural sector discussed above are reasonably clear: improved water saving and more efficient institutions are needed to ensure crop production continues to meet the challenges facing the 3-H basins. The key issues related to sustainability in the irrigation subsector are how to: (a) pay for irrigation and drainage improvements and O&M; (b) achieve more efficient management of the irrigation system to ensure increased water saving; (c) increase local participation and "ownership" of irrigation systems; and (d) design, implement, operate and maintain irrigation systems to the highest technical, institutional and financial standards. In addition to improvements in the physical irrigation infrastructure there is a recognized need for irrigation management reforms to ensure sustainability of the improved systems. Thus current efforts in irrigated agriculture focus on (i) institutional management reforms, (ii) structural engineering measures and (iii) water demand management through pricing. These are addressed in turn below. (ii) Institutional Management Reform There are large potential gains from rehabilitation and completion of irrigation and drainage systems (i.e. low-yield land improvement) that may remain unfinished. Ensuring a more reliable and equitable water supply would reduce the risk of crop failure, increase aggregate agricultural production and improve rural income distributions. Also, rehabilitation would provide more equitable irrigation water supply to farmers by increasing deliveries to water-deficient areas within schemes, primarily farms located in the lower reaches of tertiary and quaternary canals. Consideration should be given to installation of control structures and water-measuring devices to facilitate trading among members of water user associations (WUAs) or among WUAs (see below). The need for irrigation management reforms has been strongly supported by MWR. As a result, China has taken a lead in implementing management reform and over the past decade has instituted innovative irrigation management reform programs allowing greater decentralization of decision-making in large-scale irrigation projects in several provinces. Several management models have been tried in large-scale irrigation projects (see Table 6.9). The responsibility for water resources at the provincial or regional level rests with the Water Resources Bureau (WRB). The Bureau has offices in each prefecture and county and Water Management Stations at the township level. The Regional headquarters is responsible for planning, design, construction, procurement, management of major works, research and Chapter 6. Sufficient Food for All 155 training. At the prefectural level, WRB responsibilities are similar, but restricted to planning and design of reservoirs below 50 Mcm irrigation schemes with command areas of less than 66,667 ha, or costing less than Y 2 million (US$241,000) and hydropower schemes with an installed capacity of below 25 megawatts. At the county level, WRB is responsible for system management for main canals (except where these are common to more than one county), canal lining activities and supervision of the Township Water Resources Management Stations (WRMS). The latter are responsible for maintenance and management of canals and gates and, through staff in the villages, for water scheduling and collection of water charges. MWR employs a total staff of around 1.5 million, of which 93 percent are under the provincial WRB. Overall staffing of WRB at all levels is between 6 and 9 officers per 1,000 ha. Although previously the lack of adequately trained staff was seen as an important constraint, the problem appears to be less severe than earlier. TABLE 6.9: GENERAL CONDITIONS OF LARGE-SCALE IRRIGATION DISTRICTS Area Name of Site Irrigation area Water sources work and Irrigation Management Model tried Located Irrigation Design Effective water diversion form commenced Districts `000 ha `000 ha year China- Hetao Neimenggu 733.3 431.7 Gravity water diversion at the Since 1999, set up 357 North Area left bank of Sanshenggong WUAs, contract 42 canals Key Water Project on Yellow River Fenhe Shanxi 87.9 87.9 Water diversion downstream 1n 1999, 4 villages contract Fenhe reservoir lateral below works to individuals for water diversion, distribution, protection, irrigation and charges collection Shijin Hebei 166.7 166.7 Gravity water diversion from 1950 Since 1996, set up WUAs the downstream of Huangbi- with irrigation stations zhuang reservoir on the Hutuo managed by farmers (on River pilot basis) Zhangfuhe Hebei China-East Weishan Shandong 288.0 173.3 Gravity water diversion from 1959 Villages construct and Area Yellow River manage works below lateral canal. In 1999, set up WUAs at pilot branch main canals. Panzhuang Shandong 140.0 89.7 Gravity water diversion from 1972 Yellow River Xiashan Shandong 102.0 69.3 Water diversion from Xiashan 1965 reservoir on the Weihe River Lijia'an Shandong 89.3 54.4 Gravity water diversion from 1971 Yellow River Pishihang Anhui 683.7 467.3 Water diversion from the 1959 downstream of Fuziling, Muozitan and Xianghongdia reservoirs on Pihe River, Meishan reservoir on Shihe River and Longhekou reservoir on Hangbu river respectively Simashan Anhui 243.6 40.7 Water lifted from Yangtze 1973 River (with 1.56 MW of installed capacity) 156 Chapter 6. Sufficient Food for All Area Name of Site Irrigation area Water sources work and Irrigation Management Model tried Located Irrigation Design Effective water diversion form commenced Districts `000 ha `000 ha year Central & Wenhuang Plain Zhejiang 70.0 69.5 Water diversion from 1962 South Area Changtan reservoir on the Yongning River Yahekou Henan 140.0 101.0 Water diversion from 1969 14 WUAs set up in downstream of Yahekou Fangcheng County area, reservoir on the Baihe River contract of 20 lifting stations and 37 various canals Yindan Hubei 137.3 84.5 Water diversion from 1973 Danjiangkou reservoir on the Hanjiang River Zhanghe Hubei 173.7 161.4 Gravity water diversion from 1962 One of the two earliest the Downstream of dam of SIDDs financed by WB Zhanghe reservoir Tiannan changqu Hubei 85.3 83.9 Gravity water diversion from 1960 the Han River Shaoshan Hunan 44.0 66.7 Gravity water diversion 1966 downstream Shuifumiao reservoir on the Shihe River Tieshan Hunan 63.58 1982 One of the two earliest SIDDs financed by WB Hedi Guangdong 133.4 105.6 Water diversion from 1960 downstream of Hedi reservoir on Jiuzhou River Songtao Hainan 148.0 68.5 Water diversion from the 1963 downstream of Songtao reservoir on the Nandu river Northwest Baojixia Shaanxi 197.7 195.6 Gravity water diversion from Downstream Area Weihe River (with dam) 1937, upstream 1971 Jinghuiqu Shaanxi 90.3 87.3 Gravity water diversion from 1932 Management/use/operation the Jinghe river (with dam) of 468 lateral canals (total 538) are auctioned to employees of Irrigation District Administration Bureau or users Jiaokouchouwei Shaanxi 80.0 78.9 Water lift from Weihe river 1st stage Contract, lease and auction (9.8 MW of installed capacity) 1963, 2nd 97 lateral canals, and set up stage 1970 WUAs Fengjiashan Shaanxi 90.7 83.0 Water diversion from Gengjiashan reservoir on the Qianhe river Qingtongxia Ningxia 388.0 182.7 Water diversion from downstream of dam of Qingtongxia reservoir on Yellow River Kuytun River Xinjiang 253.3 106.7 Water diversion from Kuytun 1955 River and other rivers on north slope of Tianshan Mountains Manasi River Xinjiang 253 200.0 Gravity water diversion from 1959 Manasi River (with dam) Weigan River Xinjiang 240.3 110.9 Gravity water diversion from 1963 Weigan River Kaxhe Xinjiang 120.0 89.3 Water diversion from the 1967 Kaxhe River East/West bank of Xinjiang 86.7 68.3 Gravity water diversion from 1960 Yarkant Yarkant River Southwest Dujiangyan Sichuan 724.3 578.1 Gravity diversion from the Area Minjiang River (with gates across the river) Chapter 6. Sufficient Food for All 157 At the provincial level local governments have supported management reform as they realize greater participation of farmers in the management of irrigation systems is needed if they are to strengthen financial efficiency and overall sustainability of irrigation investments For example, in Guanzhong (Guanzhong Irrigation Improvement Project, GIIP) about 1,000 laterals have already been reformed under six different models. Management reform models being used are still evolving in China, and have slightly different characteristics in the nine irrigation districts (IDs), but in general they are as follows. Contracts. Management contracts transfer management responsibility to the contractors with the IDs retaining property rights for the infrastructure. For a fixed time period (10-30 years) the contractor is given the right to operate and maintain the system; he can establish irrigation service fees within an agreed range checked by the ID; he can decide the management principle and is responsible for profits or losses of the contract. In most cases the contractor is required to invest a specified amount of funds to improve, for example through lining, the laterals and sublaterals as well as contract to deliver a fixed volume of water (or pay a penalty for the difference if he does not meet the stated volume). The contractor hires staff as required and collects a "local" water fee on top of the ID water fee. He also must collect the ID water fees and pass them on to the Irrigation Management Station. IDs operating under this kind of arrangement include Fen River ID in Shanxi, Luohuiqu, Jinghuiqu and Jiaokouchuoqei IDs in Shaanxi, and Qunan ID in Jiangsu. Lease. A lease is a slight modification from the contract system with the main difference being that the leased lateral irrigation system infrastructure is usually in much better shape at the time of leasing. Therefore, Management Stations can lease out the right to operate and maintain the system without requiring significant investment. Since the investment required is not as large and the expected repayment period is less, leases tend to be much shorter, 5-10 years, in contrast to "contracts" that can be for as long as 30 years. WUAs. Water User Associations were established to benefit farmers receiving irrigation water from the laterals. The WUA signs a contract with the Irrigation Management Station (usually for 3-5 years) that clearly establishes the rights and responsibilities of both parties. In most cases a Representative Council is elected by the members and farmer groups. This is the decision-making organization for the WUA. It in turn elects an Executive Committee as well as a Chairman and one or two Executive Chairmen. The Chairman and Executive Chairmen are responsible for irrigation system operation using hired staff as well as farmer groups. As the Executive Committee and leadership are elected by the farmers, this model is most responsive to local needs. IDs that have chosen this model for their pilot reforms include: Shijin ID in Hebei, Yahekou ID, Renmin ID and Shengli ID in Henan; Hetao ID in Neimenggu; Dongping Pump ID in Gansu; Shuangpai ID in Hunan; Dongfeng ID in Hubei; Rizhao Reservoir ID in Shandong and Hongchaojiang ID in Guangxi. For example, in Yahekou ID, Henan Province, one of the WUAs organized its members to maintain one lateral and one farmland channel, restore eight farmland channels in the first half-year of its establishment, which improved irrigation of 1,500 mu and expanded irrigation of 500 mu. In Hetao ID, Neimenggu Autonomous Region, one of the WUAs called for its members to finance the construction of two control gates and dredging of canals at a cost of Y 7,000, which greatly improved water transfer. In Tieshan ID, Hunan Province, one WUA's members volunteered to pool Y 100,000 and 20,000 laborers for the construction of three small branches to improve and expand irrigation of 500 mu. Auction. The auction model is used extensively in Jinghuiqu ID. It is a variation of the contract model where the Irrigation Management Station prequalifies three to four contractors to bid on the O&M responsibility for the lateral canal. A base bid standard is established (usually Y 2 per meter of canal) and then a date is established for the contractors to publicly bid on the contract. The bid amount is paid to the 158 Chapter 6. Sufficient Food for All ID which in turn places it in a pool of funds from which contractors can borrow for canal improvements. With auction contracts contractors are usually not required to invest a fixed amount or line a specified length of canal but they do have to agree to intake a fixed volume of water. This volume increases by a specified amount, such as 3 percent annually. Consequently, contractors are encouraged to make investments to expand their service area and use additional water. Management is by the contractor, with staffing and all O&M activities his responsibility. Joint Stockholders. This model converts communal ownership to shares. Proportions of the irrigation system are divided into shares and these are sold to farmers, local residents, irrigation section staff and other local officials. Property rights belong to the individuals but the operation of the system is collective. The shareholders elect a 5-7 member Board of Directors including a Chairman of the Board, as well as selecting a manager by inviting interested parties to apply for the position. The manager and hired staff are responsible to operate and maintain the system as well as collect the irrigation fees. Part of the funds from the sale of shares are used to improve laterals and sublaterals as well as expand the service area. In addition to paying O&M costs, a percentage of the irrigation water fees are used to pay a return on the investment to shareholders. Water Supply Companies (WSCs). In contrast to the above five models that are primarily focused on one or two laterals, WSCs cover a branch or a subbranch and therefore serve all the laterals that take water off that branch. This can include up to 20 laterals. In most cases to date WSCs have used the Joint Stockholder model in order to raise the larger investments that are required to improve the multiple laterals as well as the branch. Shares are usually sold to farmers, staff of the irrigation station, and local government officials with some restriction on the number of shares that any investor can hold, to prevent individual control of the company. In a number of cases these companies are assuming responsibility for the entire area previously managed by an Irrigation Section. As a result, these sections are phased out, although often their staff end up working for the WSC. These companies end up covering much larger areas, often more than 10,000 mu, than the lateral reform models and consequently are operated with more staff. In some cases the head of each lateral is a paid employee but also owns a share in the company. Self-Financing Irrigation and Drainage Districts (SIDDs). The government's strategy is to transform irrigation management agencies into self-financing, independent legal entities. One of several experimental institutions, the self-financing irrigation and drainage district (SIDD) has been successfully piloted for several years and it, or similar institutions, will increasingly be responsible for holistic water management. The structure comprises a WSC (as described above) and a WUA (as described above). Figure 6.6 shows the relations between the WSC and the WUA in the SIDD arrangement for irrigation water supply management as developed in the Tarim Basin with World Bank assistance. The SIDDs negotiate water use licenses and agreements with prefectures, WRBs and water management departments and assume sole responsibility for their profits and losses. SIDDS have also been established in Hunan and Hubei and in the recently negotiated Tarim Basin II project in Xinjiang Uygur Autonomous Region. Evidence of water saving from SIDD arrangements or other management reforms are difficult to come by. The WB has initiated a project in Guanzhong (GIIP) and in the irrigation management reform component of that project, it is proposed to initiate a monitoring and evaluation (M&E) program aimed at measuring the performance of the management reform process. The M&E program will: (a) record progress of the lateral system turnover program, (b) assess development and changes in lateral systems, (c) identify strengths, weaknesses and constraints of the various reform or turnover models used, and (d) use this information to formulate modifications as required for the management reform models throughout the GIIP implementation period. Chapter 6. Sufficient Food for All 159 FIGURE 6.6: SIDD ARRANGEMENT IN THE TARIM BASIN PROJECT Prefectures, Water Resources Bureau, Water Management Department, PMO Office Kashgar Bayinguolen Aksu WSC Kerzilseu-Kirghiz WSC WSC WSC Contracts: Contracts: Contracts: Contracts: WUAs WUAs WUAs WUAs The project began in late 1999 and data are not available at this stage to comment on water saving resulting from management reforms. It is anticipated that through restructuring of organizations, the cost of delivery may rise from current subsidized levels and this would have the effect of lowering consumption. However, it is difficult to separate the effect of management reform on consumption because the latter is dependent on a number of interlinked factors including price, rainfall, crop types, employment opportunities elsewhere, price of crops being cultivated, current government policy with respect to production quotas (if any), prices, labor, etc. Thus the Cobb-Douglas function type of analysis may be required to single out the effect of management reform. Finally, it should be noted that institutional reform of irrigation water delivery is already promoting the diversification of clients. WUAs for example will purchase water during the irrigation/ growing season but demand will be lower at other times of the year. In some IDs, winter and summer crops may be grown so demand may be maintained all year-round. Thus, depending on the region, climatic factors and type of agriculture, some excess water may be available for sale by contractors (for example) who manage the water supply system for irrigation. In such cases, given the continuous need for revenue for O&M of the system, some operators are already selling water to other organizations outside the agricultural sector. These clients include (a) hydropower generators, (b) municipalities, (c) industry/ mines. According to the literature, this may be a solution to boosting revenue to meet O&M costs for the operators. However, many of these clients are willing to pay higher prices for water than irrigators and so there may be tendency for operators to sell water to the highest bidder all the time and forget about the irrigators entirely to maximize profits. Such practice would be in line with market-based incentives unless stipulated in contracts that a minimum of water must be supplied to irrigation or for conjunctive use and that this quantity should be regularly checked by the authorities. (iii) Water-Saving Measures Engineering measures can be divided in (a) water-saving technology focusing on reducing nonbeneficial evapotranspiration and nonbeneficial outflows to the oceans and (b) supply augmentation. Numerous projects are proposed to increase water supplies and these are discussed in detail in the section on water resources in Chapter 4. However, the large investments into infrastructure required to augment supplies in the 3-H basins, such as the recently completed Xiaolangdi and Wanjiazhai multipurpose 160 Chapter 6. Sufficient Food for All projects and the proposed S-N transfers, prevent this expensive water from being used as additional supply for irrigation. The water is designed instead to meet urban (industry and municipal) shortages. Thus it is likely, as discussed in Chapter 4 and in relevant parts of Chapter 3, that irrigated agricultural supplies will not increase dramatically from its current levels. Small quantities of water may be available from reuse or conjunctive use schemes for local agricultural activities such as vegetables or orchards near urban centers. Thus, without significant additional supplies forecasted, the solution to the irrigation water shortages is clearly focused on water savings and demand management as well as institutional management improvement as described more fully in the next sections. The Chinese Government has implemented on-farm water-saving projects, discussed below in the section on comprehensive agricultural development (CAD) and water-saving technology (a and b). In addition, the government has also focused on improving canal efficiency and this is discussed in the section on LISs (c). (a) Comprehensive Agricultural Development (CAD) CAD is a strategic measure that aims to support and protect the development of Chinese agriculture, specifically to (a) improve agricultural production; (b) improve farmers' incomes; (c) improve the economic and ecological benefits of agriculture; (d) use a wider resource base and (e) minimize constraints to agricultural development. CAD was developed in 1988 by the State Council which decided to implement large-scale comprehensive agricultural development in key areas like the 3-H basins, the Sanjiang Plain and Songliao Plain. The reasons for the CAD initiative included (a) the fact that the population had increased for years while cultivated land area decreased gradually, and (b) the poor condition of large areas of farmland has reduced yield, particularly related to lack of irrigation and lack of drainage. According to the government's reasoning, the total grain output for China has remained static at around 800 billion kg and if this figure cannot be increased, the food security of China could not be guaranteed. So drawing on experience from other countries with extensive agricultural experience and institutions such as the World Bank, the state began to implement CAD Program in 1988. During the ninth five-year plan, the key concerns have been (a) to enhance agricultural infrastructure construction; (b) improve the essential production conditions; (c) increase the comprehensive production capability of the main products (such as grain and cotton); and (d) increase farmers' incomes. The main contents of the CAD programs include (a) soil improvement and (b) multi- operation and "dragon-head" items as follows: 1. engineering works in water conservancy construction projects, such as the small-scale reservoir, drainage and irrigation canal system, drainage and irrigation station, transformer station, pumped well, agricultural power lines; underground drainage or irrigation pipelines, etc.; 2. engineering works in agricultural construction, such as farmland leveling, soil improvement, farmland road, fine varieties spread, sunning ground and warehouse, etc. (Table 6.10); 3. engineering works in pasture constructions, such as grassland surrounding, grassland improvement, grassland with groundwater irrigation, water storage pit, etc.; 4. equipment construction in agricultural mechanics construction, such as the equipment for excavation, leveling, cultivation, sowing, planting, crop gathering, transportation, agricultural product processing, etc.; and Chapter 6. Sufficient Food for All 161 5. the spread of advanced and practical technologies for the construction of agriculture, forestry, animal husbandry and fishery. Multi-operation and "dragon head" items include: vegetable project of agriculture; forests, fruits, tea, and mulberry project; livestock raising project of animal husbandry; aquaculture in fishery; products processing and service projects. For total investment of SOCAD during past years, see Table 6.11. TABLE 6.10: INVESTMENT IN FARMLAND IMPROVEMENT IN 1988-99 (Unit: 10,000 yuan) Investment by Counterpart Specialty Loan Total Central investment by by Bank of Self- Year investment Government Local Government Agriculture financing Other financing 1988 87,486 22,456 5,747 11,248 31,528 1,436 1989 211,278 57,067 18,048 3,4,625 56,596 374 1990 323,971 88,787 28,285 66,268 77,999 2,166 1991 342,873 87,573 28,443 76,045 75,139 6,013 1992 349,721 97,156 31,547 69,011 76,053 7,043 China 1993 380,007 113,088 33,586 77,107 78,435 5,672 1994 382,399 102,109 47,961 76,882 80,546 5,881 1995 465,862 120,062 71,632 75,359 98,513 7,632 1996 734,944 178,301 98,477 138,670 167,096 21,163 1997 753,333 202,228 212,868 63,134 270,610 4,493 1998 823,976 465,099 52,663 296,619 9,595 1999 1,040,174 310,473 3-H(88-96) 1,462,394 377,581 362,721 275,890 440,931 5,271 3-H 3-H(97) 298,495 84,433 88,384 24,670 100,942 66 3-H(98) 274,398 154,827 20,751 97,346 1,474 3-H(99) 362,774 104,914 TABLE 6.11: COMPREHENSIVE AGRICULTURE DEVELOPMENT (SOCAD) IN1988-99 (Unit: 10,000 yuan) Improvement Grassland construction Irrigation development of medium & Reclamation Grass New in- Improved low produc- of unculti- Shelter- planting by creased irri- irrigation Year tion land vated land forests Subtotal Enclosure manpower gation area area 1988 737.7 130.2 82.0 58.2 19.1 17.1 414.4 333.5 1989 2,187.7 327.1 211.9 68.3 14.7 29.0 1,119.8 877.8 1990 3,039.0 390.5 385.8 110.5 24.2 49.7 1,476.5 1,206.8 1991 2,836.5 303.4 374.4 88.1 27.0 29.2 1,216.9 1,212.7 1992 2,491.8 321.8 441.1 220.9 79.7 62.6 1,099.5 1,088.4 China 1993 2,573.4 235.8 364.2 223.4 119.8 53.2 1,146.9 1,277.8 1994 1,649.8 144.0 287.2 180.3 57.6 39.0 533.2 784.3 1995 2,007.3 166.5 311.2 196.6 109.6 47.7 763.3 933.9 1996 2,664.7 252.1 338.5 296.5 164.8 74.7 1,105.7 1,271.5 1997 2,770.1 369.4 318.5 626.4 152.4 471.0 1,000.2 1,497.3 1998 2,772.0 217.0 252.0 141.0 29.0 62.0 158* 1999 3,235.6 89.6 928.4 1,828.4 1988-96(3-H) 9,794.2 815.7 1,000.2 839.2 297.7 227.5 5,327.9 4,261.9 3-H 1997(3-H) 1,133.2 93.5 134.9 550.5 111.9 435.6 504.7 734.9 1998(3-H) 1,042.0 48.0 113.0 89.0 11.0 43.0 1999(3-H) 1,180.1 25.9 928.4 1,828.4 * For sprinkle and drip irrigation. 162 Chapter 6. Sufficient Food for All The CAD program is financed from a farmland occupation tax submitted to the central government since 1988 (see Table 6.12). In 1990, the fund was renamed the Comprehensive Agricultural Development Fund and listed in the national budget. Following the conference presented by the State Council, the State Office for Comprehensive Agricultural Development (SOCAD) has been operating under the Ministry of Finance. Offices also operate at the provincial and municipal levels. Since its inception in 1988, SOCAD programs have grown to include 1,310 counties and 270 state-owned farming or pasture plants all over the country. TABLE 6.12: GOVERNMENT PROPOSAL ON LOW-YIELD FARMLAND IMPROVEMENT PROGRAM 100 million yuan 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai 22.3 12.2 10.4 12.2 11.6 68.7 Huai 30.4 17.6 15.1 17.7 16.7 97.5 Yellow 21.5 10.7 9.1 10.7 10.1 62.1 Total 74.2 40.4 34.7 40.6 38.4 228.3 1,000 ha 2000* 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai 2,255.7 494.5 249.9 199.0 203.8 171.3 1,318.4 Huai 3,313.1 676.4 361.0 287.4 294.3 247.3 1,866.3 Yellow 1,583.9 478.2 218.7 174.1 178.3 149.8 1,199.1 Total 7,152.7 1,649.0 829.6 660.6 676.3 568.4 4,383.8 * The completed area of low-yield farmland improvement up to 2000. The data in the above table are based on the provincial administration area instead of the basin catchment area. The basic target of the CAD program in the tenth five-year period is to improve 182 million mu of medium/low-yield farmland, of which 100 million mu are through water-saving irrigation; and increase an additional 100 billion kg of production of good-quality agricultural products, which will increase Y 54 billion output value. CAD Investment in the Tenth Five-Year Period. For the whole of China, in the tenth five-year period, the farmland improvement component of CAD will need Y 100 billion; multi-operation projects will need Y 44 billion; the technology spread will need Y 16 billion; specific projects will need Y8 billion. In total, the investment will be approximately Y 168 billion. The financial sources include (a) Y 48 billion from central government's finance, (b) Y 48 billion from local governments' finance, (c) Y 48 billion from bank loans, and (d) Y 24 billion from collectives and farmers themselves (see Table 6.12 for cost-sharing arrangements). In the case of 3-H basins, the Government plans to invest Y 228.3 million in 3-H for the CAD program during 2001-2025, to improve 4.38 million ha of low-yield farmlands (see Table 6.12, details see Annex 6.2, Volume 3). (b) Water-Saving Technology Since 1996, the government has renewed interest in water-saving development due to increasing water shortages. In 1996-97, about 50 million mu of water-saving irrigation were developed, including 30 million mu by canal lining, 14 million mu by low pressure plastic pipes, 6 million mu by sprinklers, drip irrigation, drip under plastic film and micro-sprinkler irrigation. By the end of 1997, irrigated areas receiving water with some form of water-saving technology totaled 200 million mu. The government plans to increase this area to 300 million mu by 2010. Given that agriculture accounts for some 80 percent of water requirements in China, and that 30 to 40 percent of this water is lost to nonconsumptive uses, there is ample incentive to improve Chapter 6. Sufficient Food for All 163 consumption patterns in China. Water-saving incentives will increase with higher prices for irrigation water and this is discussed in the next section under water demand management. Much literature is available in China on water saving technology and most techniques have been tried since the early 1970s. Field data on effectiveness of water saving technology are not readily available because over the last 20 to 30 years, the emphasis has been on water supply rather than water conservation. Despite major investments in infrastructure, only about 80 percent of the agricultural water requirements are satisfied and in the last decades in the water scarce areas of the north including the 3-H basins, agriculture has become the default user where municipal and industry uses are satisfied first. Faced with this declining water supply scenario, management of water for irrigation is beginning to focus again seriously on water- saving technology. However, improving efficiencies of local schemes will result in only modest water savings for the entire water basin. This is because most of the losses from inefficient irrigation schemes return to the hydrologic (surface or groundwater) system and are available to downstream users. The actual water savings (available for incremental use) within a water basin, is derived only from reduced amount of nonbeneficial evapotranspiration and nonbeneficial outflow to the ocean. Actual water saving can be generated only through agronomic and irrigation management measures that improve water use efficiency and reduces nonbeneficial evapotranspiration; for example, improved crop genetics, plastic and organic mulching, irrigation scheduling and farm best management practices. These are described in the following sections. The benefits of the water-saving development measures described above are tabulated for 1998 and 1999 in Table 6.13 (details refer to Annex 6.2, Volume 3). Planned investment for the tenth five-year plan and beyond are shown in Table 6.14 (details refer to Annex 6.2, Volume 3). In order to increase the use of the water-saving measures/technologies described above to more IDs, a total of Y 25 billion was invested from 1996 to 1998 for water-saving irrigation projects all over China. Some Y 7 billion came from local governments, Y 5.3 billion from the loan of National Agriculture Development Bank and Chinese Agriculture Bank and Y 12.7 billion was pooled by communities. TABLE 6.13: WATER SAVING DEVELOPMENT IN 1998-99 (Unit: 10,000 mu) Province Water Saving Irrigation Area up to 1998 Water Saving Irrigation Area up to 1999 Canal Pipeline Spray Micro- Subtotal Canal Pipeline Spray Micro- Subtotal lining irrigation irrigation irrigation lining irrigation irrigation irrigation Total China 13,051 6,814 2,260 171 22,295 14,573 7,451 3,395 309 25,728 3-H 4,342 5,603 1,232 144 11,321 4,907 6,000 1,830 193 12,930 3-H-a 2,858 4,830 936 84 8,708 3,189 5,137 1,318 114 9,757 3-H-b 1,484 773 296 60 2,613 1,718 862 512 80 3,173 TABLE 6.14: GOVERNMENT PROPOSAL ON WATER SAVING IRRIGATION PROGRAM 100 million yuan 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai 35.7 62.7 51.7 45.2 49.8 245.0 Huai 46.1 62.2 59.9 52.8 58.2 279.2 Yellow 34.8 37.0 36.4 33.7 37.0 178.8 3-H Total 116.6 161.8 148.0 131.6 144.9 703.0 1,000 ha 2000* 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai 3,421.1 528.9 835.4 626.1 523.9 553.0 3,067.3 Huai 2,672.1 683.6 829.3 726.7 612.1 646.1 3,497.9 Yellow 1,643.8 515.1 492.9 441.1 390.2 411.2 2,250.6 3-H Total 7,737.0 1,727.6 2,157.7 1,793.9 1,526.2 1,610.3 8,815.7 * The completed area of low-yield farmland improvement up to 2000. 164 Chapter 6. Sufficient Food for All MWR has defined a number of water-saving indicators (Table 6.15) and assigned values to each class reflecting water delivery methods and water-saving technology. It is not sure whether these numbers were derived empirically from field measurements or estimated using other methods. The data are tabulated below. These are probably interpreted as guidelines for operation of water delivery infrastructure however it is difficult to imagine that the figures will be adhered to, primarily because there are no institutional mechanisms in place to ensure that it does. Only market-based self-motivation can improve water efficiency of water delivery. TABLE 6.15: MWR IRRIGATION WATER-SAVING CRITERIA Coefficient Description Value Irrigation Water Use Coefficient Ratio of water flowing into farmland > 0.50 (large scale IDs) (IWUC) from sublateral canal minus deep > 0.60 (medium scale IDs) permeated water to water diverted at > 0.70 (small scale IDs) canal head > 0.80 (well IDs) > 0.85 (spray IDs) > 0.90 (drip IDs) Farmland Water Use Coefficient Ratio of net water demand to water >0.90 (FWUC) flowing from the sublateral canals Canal System Water Use Coefficient Ratio of water flowing from the > 0.55 (large scale IDs) (CWUC) minimum channel to water diverted out> 0.65 (medium scale IDs) from the canal head > 0.75 (small scale IDs) > 0.90 (well IDs with antipermeable treatment) > 0.95 (well IDs with pipes) (c) Water-Saving Improvement Projects in Large Irrigation Schemes (LISs) In 1996, there were 220 large irrigation schemes with a total irrigation area of 160 million mu comprising at least 300,000 mu of effective irrigation area. Both cotton and crops grown in these LISs comprise 20 percent of China's total capacity. These large schemes have required large investments for O&M which have not always been forthcoming and over the last several decades many have developed problems related to water source, canal lining, drainage and structures along the canals. These problems are summarized in Table 6.16. In 1996, the government proposed a program to rehabilitate LISs at the Chinese People's Political Consultation Conference. Following the conference, MWR's department of agricultural water was put in charge of this program with responsibilities for progress identification, inspection and appraisal. The initial estimation of funds required came to Y 35 billion over 15 years to rehabilitate 220 LISs. In 2000, MWR identified 399 LISs for rehabilitation and water-saving improvement (Table 6.17, details refer to Annex 6.2, Volume 3). Out of there, 32 of them have an irrigation area over than 1.5 million mu (Class I), 110 between 0.5 and 1.5 million mu (Class II), and 257 between 0.3 and 0.5 million mu. Chapter 6. Sufficient Food for All 165 TABLE 6.16: PROBLEMS OF EXISTING ENGINEERING FACILITIES IN LARGE IRRIGATION SCHEMES Region Water Source Works Canal System & Structures Drainage Works On-farm Works Huabei Region (North Operation is good, but with Canal System: serious leakage and water loss during Ration of good & China Region) outstanding conflicts of water use transfer; Structures: out of date, serious damages complete on-farm works: among different sectors 40%. Upper & in General Canal head works: outdated, Canal: low lining ratio, 30-50% low standard for low standard, low ratio of Middle leakage at gates, insufficient damaged due to freezing, serious drainage; collapse or on-farm works, low land Stream of water withdrawal capacity, water loss due to leakage & siltation of drainage leveling; low lining ratio Yellow inflexible lifting during water transfer; Structure: trench of on-farm ditches, 40% Basin 30-40% outdated or damaged; outdated or inadequate poor regulation capacity in maintenance of all kinds gravity irrigation areas with low of structures and facilities; irrigation guarantee rate; outdated outdated irrigation & serious damaged electric technology, mainly flood facilities irrigation or series irrigation Ningxia & extensive irrigation, serious flood & series irrigation, bad drainage conditions, incomplete drainage works, strong Neimenggu evaporation, soil salinization and alkalization (total 40.5% if including the salinization & alkalization at various degrees, light, medium and heavy) Lifting overrunning of electric units at pump station, serious erosion, inadequate water supply, low efficiency and high energy Irrigation consumption; canal head works influenced lot by the winding of the main stream and the sand, difficult water diversion; areas subsidence and cracks of canal and structures; high cost in case of high lifting water diversion which can not be affordable by people; low water price cannot maintain the normal running of the irrigation schemes. Fen & Wei diffident water resources, lack of water diversion or regulation works, low water supply guarantee rate and serious over- River exploitation of groundwater in some areas Irrigation Areas Middle and lower high sand content cause serious only 6% length of canal is lined, deposition, bank incomplete on-farm works, reaches of Yellow siltation, insufficient water some of which is even damaged collapse, not smooth low land leveling degree, Basin diversion capacity; serious already; totally there are about drainage; incomplete backwards irrigation corrosion of the gates structures; 20,000 structures along the canal drainage system in manner, poor outdated facilities at pump system; only 40-60% of key some of irrigation management, flood & station, and outdated canal head works are in good and complete schemes series irrigation is still works conditions; low design standard existing. or poor construction quality or unseasonal operation; outdated, serious damaged facilities causes insufficient water transfer capacity of some canal systems; out of control structures causes water waste for irrigation. Huai Basin insufficient water storage in water 40% of structures is outdated. low drainage standard, incomplete on-farm works, sources projects, demand is over Deformation, cracks, deposition, poor operation usually use same system than supply; serious water loss etc. cause more water loss or less condition for both irrigation & due to the outdated works. Most water transfer capacity of the drainage; lack of on-farm of storage and detention works or canal system; local leakage is water transfer facilities as facilities are not in good running serious in some main or branch well as the water conditions canals which cause increase of measurement measures. GW and bring waterlogging damages to farmland 166 Chapter 6. Sufficient Food for All TABLE 6.17: GOVERNMENT PROPOSAL ON LARGE IRRIGATION SCHEMES REHABILITATION 2001-2005 2006-2010 2011-2015 Total 3-H (100 million yuan) 184.8 205.0 182.6 572.3 2000 2001-2005 2006-2010 2011-2015 Total Present( Newly(3) Improve- Newly Improve- Newly Improve- Newly Improve- Newly Improve- 2) ment(4) ment ment ment ment 3-H (1,000 ha) 5,199.7 331.9 871.1 145.2 909.9 167.9 728.0 271.0 507.0 584.1 2,144.9 Note: (1) Large Scheme Rehabilitation since 1996; (2) Present: Existing large Scheme Irrigation Area in 2000; (3) Newly: Large Scheme Irrigation Newly Increase Area From 1996 To 2000; (4) Improvement: Large Scheme Improvement Irrigation Area From 1996 To 2000. (iv) Water Demand Management Pricing. Chapter 4 argued for a shift in focus away from planning to reduce water shortages by increasing consumption, to an emphasis on water demand management. This does not imply that there are not many economically viable water supply projects to be undertaken. It does imply that, no matter what increases in supply are forthcoming, there will always be shortages, inefficiencies, and misallocations unless demand is managed. The most effective tool in demand management is price. Prices, particularly to urban and industrial users, have been rising in the last few years, and there is increasing evidence that demand increases are slowing as a result. But prices need to rise much more in order to recover the full costs of water supply, and restrain demand to manageable levels. Figure 6.7 shows that the price:cost ratio for domestic water supply has remained mostly below unity for four selected cities in the late 1980s to early 1990s but that for Hefei and Taiyuan, cost recovery has been very much on the agenda since the mid-1990s. In the case of Taiyuan, this would be related to the Wanjiazhai project. On the other hand, Figure 6.8 shows that the price:cost ratio for industries in the same cities has been continuously above unity since the mid-1980s. The price:cost trend for Xian has been declining continuously indicating declining revenue for the water supply authority and a need to increase the price of water to authority due to increased cost of supply. The agricultural sector must also pay higher prices. This will provide the badly needed funds for system rehabilitation and maintenance, and the market signals that higher prices send will help guide the sector toward necessary adjustments. As noted earlier, almost all the IDs price their water below cost recovery and some examples of price:cost ratios are tabulated in Table 6.18. FIGURE 6.7: PRICE:COST RATIO OF DOMESTIC WATERFOR SELECTED CITIES IN CHINA 2.00 1.50 Ratio Cost: 1.00 0.50 Price 0.00 1986 1988 1990 1992 1994 1996 1998 Tianjin Dom. Xian Dom. Taiyuan Dom. Hefei Dom. Chapter 6. Sufficient Food for All 167 FIGURE 6.8: PRICE:COST RATIO OF INDUSTRIAL WATER FOR SELECTED CITIES IN CHINA 3.50 3.00 Ratio 2.50 2.00 Cost: 1.50 1.00 Price 0.50 0.00 1986 1988 1990 1992 1994 1996 1998 Tianjin Ind. Xian ind Taiyuan Ind. Hefei Ind TABLE 6.18: 1999 PRICE:COST RATIOS FOR SOME IRRIGATION DISTRICTS Irrigation District Price:Cost ratio Yahekou (Henan Province) 0.25 Ganfu Plain (Jiangxi Province) 0.32 Fen River (Shanxi Province) 0.56 Donggang (Liaoning Province) 0.37 Source: New Concept of Water Saving, www.waterpub.com.cn. As argued above and in several other parts of this report including Chapters 3G and 4 , the low price of water for agriculture, industry and domestic uses is preventing efficient use of the resource. Pricing is the most efficient demand management tool and while water prices are starting to reflect the true cost of supply for some sectors, this is still not the case for many IDs supplying water for agriculture. The reasons for this are justifiable in some cases but because irrigation is the biggest user of water in the 3-H basins as in other parts of China, pricing water to reflect delivery costs and resource utilization costs would have significant impacts on overall water resources sustainability. Various procedures and guidelines relating to water charges and financial viability of water institutions have been issued over the past several years. Legally, water charges are to cover all water supply costs. Water charges in many provinces remain below the costs of supply and account for only a fraction of the opportunity cost of water during critical periods. Studies on the Yellow River indicated a price elasticity of demand for irrigation water of the order of -1.0, indicating that increasing water charges would be likely to result in significant economies of water use.57 More recent analyses associated with this study derived a price elasticity of about ­0.3. Water charges for farmers are calculated either according to the quantity of water supplied, the beneficial area, or a mixture of basic water charge plus a metered water charge (increasing block tariff). When shortages occur, water allocation is "rationalized" and dissuasive charges are applied to extra volumes of water. Recovery of water charges from farmers is generally very high. However, since the charges are below costs, they are, by definition, inadequate. Farmers payments are in three forms: a professional management fee to the WRB, a mass management fee paid at the township level for O&M of the farmer operated on-farm distribution system, and direct labor contribution (corvee labor) by farmers. Generally, farmers are estimated to pay about 8 percent of agricultural net returns, higher than in most 57 Gunaratnam, D.J., Gary Kutcher, and S.J. McGurk, "Application of a Basin Level Model to the Yellow River." World Bank Technical Paper No. 249. Water Policy and Water Markets, Washington DC. 1992. 168 Chapter 6. Sufficient Food for All countries which are in the range of 3 to 6.5 percent.58 Farmers are faced with an increasing number of levies and fees and their capacity to pay is under government review. Although the level of charges for irrigation water are significantly lower than for industry, they are still significant. In 1995, typical rates ranged from Y 150 to Y 300 per ha (US$17.96 to US$35.92 per ha).59 Irrigation water measurement is becoming steadily more widespread. However, in many systems the measurement is undertaken at major offtakes and branches and the farmer pays a flat rate per mu for each type of crop, the cost calculated according to standard amounts water delivery for each individual irrigated crop. In more sophisticated schemes, water is measured at the field turnout, which permits the farmers to be charged according to actual water use--and provides a strong incentive for careful water management. Considerable discussion continues on the matter of setting the level of water charges. In general it seems to be accepted that the cost of water for use in irrigating grain crops should be set according to actual cost of water supply. Cost of water for more financially attractive crops would then be set at a level that captured some of the higher profitability of such crops. However, despite this fairly clear indication for the future, water charges on most schemes are below the O&M cost. As part of the current study, five years of water quantity and price data from 24 irrigation schemes were examined. Water charges ranged from Y 0.01/m3 to Y 0.20/m3, and water use ranged from 80 m3/mu to 1,200 m3/mu. Average water consumption at the laterals was about 320 m3/mu. Average water price in 1984 was about Y 0.04/m3 (at 1998 constant prices), and in 1988 was about Y 0.07/m3. However, analysis of the data is inconclusive because the data are insufficient to separate effects of rainfall and varying constraints on water delivery. Moreover, the prices actually paid by farmers often incorporate other taxes and charges, distorting the price signals to farmers and making it impossible to separate the response to changes in water price. The IWHR's Nanjing Institute of Hydrology and Water Resources carried out a study of current water prices in China and concluded that while the price of water for agriculture varied in different regions and for different crops reflecting (a) the unevenness of regional distribution of water resources, (b) the difference in level of economic development between regions, (c) the cost discrepancy between development and utilization of water resource, and (d) uneven government policies in water price formulation and decision-making, the data suggested that price did reflect scarcity and willingness to pay. The data are not adequate, however, to derive price elasticity coefficients The current price of water for agriculture for selected provinces and cities in China is shown in Table 6.19. In the 3-H basins overall, raising the price of irrigation water would probably not reduce the aggregate demand for irrigation water. Nonetheless, it could be very beneficial. It would (a) encourage more efficient water use and enable a more efficient allocation of water, (b) provide funds to irrigation companies enabling improved maintenance and repairs, (c) enable more land to be irrigated, and overall could result in increased production. While it may not be intuitively obvious, the efficiencies brought about by increasing the price of irrigation water can lead to both an increase in the value and the quantity of agricultural production. Alternatively, with increased efficiency of water use, water allocations to 58 Sum, P. (editor), Multipurpose River Basin Development in China. EDI Seminar Series, Economic Development Institute of the World Bank. Washington DC. 1994. 59 In comparison, the average cost for sprinkler irrigation development in 1995 was around Y 6,000 per ha ($720/ha) and the one for micro-irrigation was Y 18,000 per ha ($2,200 per ha). Chapter 6. Sufficient Food for All 169 irrigation companies can be reduced, and diverted to other uses, without necessarily reducing the value of agricultural production to the nation. TABLE 6.19: CURRENT PRICES OF WATER FOR AGRICULTURE IN SELECTED PROVINCES AND CITIES IN CHINA Region Document Water price No. Grain crops Other crops Hebei [1997]183 1.3~2.6 yuan/mu + 7.5 fen/m3 The same as grain crops Shanxi [1996]357 0.14 yuan/m3 for GID, 0.18 yuan/m3 for PID 0.18 yuan/m3 for GID, 0.23 yuan/m3 for PID Liaoning [1996]9 3 fen/m3 3 fen/m3 Jilin [1996]95 2.34 fen/m3 for RID, 3.45 fen/m3 for REID, The same as grain crops 2.21 fen/m3 for PID Heilongjiang [1997]8 20 yuan/mu for IF, 10 yuan/mu for NF 15 yuan/mu Jiangsu [1995]66 4~8 yuan/mu for IF, 0.5~2 yuan/mu for NF 4~8 yuan/mu Zhejiang [1996]246 7.5 kg paddy/mu/yr for RGID 10 kg paddy/mu/a Anhui [1995]68 3.4 kg paddy/mu + 3 kg paddy/100 m3 3.4 kg paddy + 3.6 kg paddy/100 m3 Shandong [1987]61 3 fen/m3 for DWRE, 2.8 fen/m3 for DWYR, 2.5 The same as grain crops fen/m3 for DWRI, 1.2 fen/m3 for DWYFS Henan [1997]91 4 fen/m3 + 2.6 fen/m3 Based on output value proportion of economic crops to wheat Hubei [1990]13 2 kg paddy/mu + 3~5 kg paddy /100 m3 for The same as grain crops REID, 2 kg paddy/mu + 2 kg paddy/100 m3 for DID, 2 kg paddy/mu + 2 kg paddy/100 m3/m for PID Hunan [1990]41 1~2 kg paddy/mu +1.5~2.5 kg paddy/100m3 The same as grain crops Guangdong [1993]10 50~70% of water supply cost Water price for grain crops + 30% 13.7~14.5 fen/m3 for vegetable, watermelon, Shaanxi [1997]37 adjusting from 0.071 yuan/m3 to 0.11 yuan/m3 on the average of whole province medicinal materials, etc. 28.7~29.5 fen/m3 for orchard Gansu [1995]9 0.03 yuan/m3 or 1~2 yuan/mu + 3~4 yuan/mu, The same as grain crops time Qinghai [1996]27 2~4 kg wheat/mu or 2 kg wheat/100 m3 3 times of water price of grain crops for orchard Ningxia [1994]96 0.6 fen/m3 for GID, 5 fen/m3 for PID The same as grain crops Note:* All currency in Yuan (1 yuan=100 fen). GID ­ Gravity Irrigation District, PID ­ Pumping Irrigation District, RID ­ River Irrigation District, REID ­ Reservoir Irrigation District, RGID ­ Reservoir Gravity Irrigation District, DID ­ Diverting Irrigation District, IF ­ Irrigated Farmland, NF ­ Nonirrigated Farmland , DWRE ­ Diverting Water from Reservoir, DWYR ­ Diverting Water from Yellow River, DWRI ­ Diverting Water from River, DWYFS ­ Diverting Water from Yellow River and Fertilizing Soil with Silt. The irrigation farm modeling study attempted to examine income (output) elasticity of demand for irrigation water. It indicated that increasing farm income, or increasing commodity prices, has a tendency to lead to increasing demand for irrigation water per hectare. It is difficult to be specific, however, as the relative profitability of different crops, and the differences in their water needs, can lead to different demand responses. If the commodity price for a low water using crop increases significantly, farm incomes will increase, but the response in water demand may be a reduction as farmers adjust the cropping pattern to include more of the profitable low water using crop. Conversely, if the commodity prices of low water using crops should fall, incomes will decline, but demand for water may increase as farmers increase the proportion of high water using crops in their crop mix. Crop pattern shifting to higher value crops due to water scarcity, not pricing. So farmers will adjust their activities based on water allocation not too much on pricing because water scarcity dictates behavior more than price. Output prices of crops will dictate much more the mix of crops produced rather than water. 170 Chapter 6. Sufficient Food for All F. ACTION PLAN (i) Continued and Enhanced Commitment to Existing Program The current government program comprising comprehensive agriculture development, water- saving technology promotion and large irrigation schemes feature prominently in the action plan because of its sound basis and the fact that it addresses fundamental problems in irrigated agriculture in a realistic way. The action plan recommends an accelerated and increased commitments to achieve the goals and objectives of these three main programs. Table 6.20 shows recommended additional investment and resulting surface area gains for the 3-H basins (details refer to Annex 6.2, Volume 3). TABLE 6.20: ADDITIONAL INVESTMENT TO EXISTING SOCAD, WATER-SAVING AND LIS PROGRAMS PROPOSED BY ACTION PLAN (108 Yuan) 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total SOCAD 106.0 57.8 49.5 45.1 40.4 298.8 Water Saving 166.6 231.2 211.4 146.3 152.6 908.0 LIS 264.0 292.8 280.9 837.7 TABLE 6.21: RESULTING TOTAL LAND IMPROVEMENT (SOCAD AND WATER SAVING) (1,000 ha) 2000* 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total SOCAD 7,152.7 2,355.7 1,185.1 943.7 751.4 598.3 5,834.2 Water Saving 7,737.0 2,468.0 3,082.4 2,562.7 1,695.8 1,695.1 11,504.0 TABLE 6.22: RESULTING TOTAL LAND IMPROVEMENT (LIS) (1,000 ha) 2000 2001-2005 2006-2010 2011-2015 Total Present(2) Newly(3) Improve- Newly Improve- Newly Improve- Newly Improve- Newly Improve- ment(4) ment ment ment ment LIS 5,199.7 331.9 871.1 207.4 1,299.9 239.9 1,039.9 416.9 780.0 864.20 3,119.82 Note: (1) Large Scheme Rehabilitation since 1996; (2) Present: Existing large Scheme Irrigation Area in 2000; (3) Newly: Large Scheme Irrigation Newly Increase Area From 1996 To 2000; (4) Improvement: Large Scheme Improvement Irrigation Area From 1996 To 2000. The proposed enhanced commitment should result in a 10 percent increase in water use efficiency as shown in Table 6.23 (details refer to Annex 6.2, Volume 3). This improvement in water use efficiency was achieved by improving efficiency of canal systems and by on-farm work. The model clearly indicates that the efficiency improvement will significantly improve the efficiency of grain production. From Figure 6.9, it will be seen that for Huai basin, the efficiency production increased from 1.5 to 1.7 kg/m3. Chapter 6. Sufficient Food for All 171 TABLE 6.23: GROSS WATER USE EFFICIENCY Government Proposed Irrigation Water Use Efficiency 1998 2000 2005 2010 2015 2020 2025 Hai 0.46 0.46 0.48 0.50 0.51 0.53 0.54 Huai 0.46 0.47 0.48 0.51 0.54 0.56 0.57 Yellow 0.45 0.46 0.45 0.49 0.51 0.53 0.53 Total 3-H 0.46 0.46 0.48 0.50 0.52 0.54 0.55 Action Plan Proposed Irrigation Water Use Efficiency 1998 2000 2005 2010 2015 2020 2025 Hai 0.46 0.46 0.50 0.54 0.58 0.58 0.58 Huai 0.46 0.47 0.51 0.56 0.63 0.63 0.63 Yellow 0.45 0.46 0.45 0.53 0.57 0.58 0.58 Total 3-H 0.46 0.46 0.50 0.54 0.59 0.60 0.60 FIGURE 6.9: WINTER WHEAT PRODUCTION PER CUBIC METER WATER USE WITH EFFICIENCY IMPROVEMENT, P75 2.00 1.70 1.40 3 kg/m 1.10 0.80 0.50 1990 2000 2010 2020 2030 2040 2050 2060 Hai, effy 10% Huai, 10% Hai, base case Huai, base case Such improvement appears to be from developing on-farm works efficiency such as (a) land leveling; (b) standardizing the size of farmland; (c) partial irrigation for dry crops; (d) shallow and watering irrigation for rice; (e) adjustment of agricultural cropping structures; (f) promotion of growth of water-saving crops including antidrought varieties; (g) soil improvement and soil moisture retention; (h) sprinkler irrigation and micro-irrigation. Additional gains will be derived from canal system improvements including (i) canal lining and pipeline irrigation; and (ii) plastic film. The commitment of the government to improve both on-farm water efficiency and canal system efficiency explains the high expected growth between 2000 and 2020. Beyond 2020 more modest gains are still predicted. In addition to enhanced commitments to the CAD, water-saving and LIS programs, the Action Plan recommends an integrated comprehensive approach as described below in order to achieve water use efficiency targets and irrigated area targets. 172 Chapter 6. Sufficient Food for All (ii) Integrated Comprehensive Approach This is different from the present National Irrigated Agriculture Water-Saving Program, which mainly focuses on engineering measures to save water. Such savings from engineering measures alone may not result in water savings from the standpoint of the hydrological system. We will propose the three sets of integrated measures that when taken together will result in water savings. The three sets of measures are: (a) physical improvements to canal and on-farm irrigation and drainage systems; (b) agronomic measures; and (c) irrigation management measures. The physical improvements included: (a) canal lining; (b) low-pressure pipes for small distribution systems; (c) facilities for groundwater recharge and conjunctive use of surface and groundwater; (d) drainage system and reuse of return flows; (e) improved surface irrigation systems on- farm; (f) sprinkler systems; and (g) micro-irrigation systems. Experiments and practice has shown in China and elsewhere that significant improvements in irrigation reliability and quality can be achieved through these types of the measures. Canal Lining. Despite limited basinwide gains, lining the base of canals to reduce water loss through infiltration can have some benefits including (a) in areas where losses are high while recovery through groundwater pumping are limited or where groundwater is saline, (b) for canals supplying irrigation districts by uplifting expensive water too precious to allow infiltration. Experience shows that using various antipermeable treatment materials, 50-95 percent of water loss can be reduced. Up to 1998, China had lined 3 to 4 million km of irrigation canals to prevent infiltration, covering a total 8.7 million ha of farmland. An alternative to lining canals includes the use of pipelines to transfer water. Investigations show that transferring water by pipeline can prevent nonconsumptive losses by reducing evaporation and infiltration, saving 30 percent over common canals and 5-15 percent over treated canals.60 Concrete is the most common form of canal lining because of its good seepage control, ease of construction and long service life. However, various other materials are used including masonry, asphalt, asphalt-felt, and plastic film. In some northern locations, including considerable areas within the 3­H basins, canals have been replaced with pipelines, which inhibit seepage and evaporation, and in addition if the pipeline is buried the land area previously occupied by canals can be cultivated. FAO reports that pipeline conveyance efficiency reaches 95 percent (FAO Desk Study). Improved Surface Irrigation Techniques. In rice-growing regions, there has been research into water-saving and yield-increasing techniques including surface soil moist irrigation, wastewater use, dry sowing, dry culture and paddy nurseries. With the use of hybrid seed, yields have been greatly increased, together with water saving, energy saving, lodging resistance and good quality. Based on surface soil moisture irrigation methods, the efficiency of water use is reported in some instances to have increased fivefold. Alternative Irrigation Techniques. If auxiliary movable valves systems are installed on farmland and advanced irrigation technology (such as spray irrigation and micro-irrigation) is used also, the overall saving in water could be as high as 30 percent. By 1998, some 5.1 million ha of farmland were irrigated using pipelines. Spray irrigation was tested for water-saving efficiency back in the 1970s and the 60 Losses in irrigation water by canal seepage has been a problem for many centuries. During the Han Dynasty, in Xinjiang Uygur Autonomous Region, snowmelt from the high mountains was a main source water for irrigation and in order to lower seepage and evaporation from the canal, locals had dug underground rivers with regular infiltration shafts so that the water would be diverted underground to the irrigation area by means of tunnels. These diversions are called Kanats in local terminology. Chapter 6. Sufficient Food for All 173 results show that from 20 to 78 percent of water can be saved over flood irrigation techniques. By 1998, spray irrigation was used to irrigate 0.867 million ha farmland in China but accounts for 2.2 percent of the total northern irrigation areas. Trickle and micro-sprinkler irrigation is used to irrigate cash crops including cotton, peanuts, tea, sugarcane, tobacco, vegetables, fruit trees, wheat and other grain crops, but remains in limited use--about 13,300 ha. Similarly, seepage irrigation techniques have become widespread, albeit in limited amount, and are applied to high-value cash crops, including ginseng, medicinal crops and vegetables. Automated irrigation techniques have been applied to citrus, tea, edible fungi, flowers and forestry nurseries. Tests in mountain areas in China show that drip irrigation uses 50 to 70 percent less water than normal irrigation and 15 to 20 percent less than spray irrigation. High-Rate, In-Flow Systems (Surge Flow). If plots are precision leveled , further water saving can be achieved by using surge-flow irrigation systems. This technique permits adequate wetting by providing water in a cyclical manner that reduces surface infiltration rate, increases the speed of irrigation water advance, and virtually avoids runoff. Management and operation of surge flow systems are more complex than are conventional surface irrigation systems, but are a useful technique for conserving irrigation water and further adaptation should be promoted. Plot shape and position relative to turnout are important elements of surge flow irrigation. Some experiments in northern China determined that water saving of 450-600 m3 per hectare might be achieved by reducing the length of plot borders. Also, where strip planting (maize/wheat and maize/soybean) is practiced, double-border irrigation (dividing the large border into two borders, according to the direction of the planting strip) has effectively reduced water consumption. Conjunctive Use of Surface and Groundwater. Conjunctive use of surface and groundwater (both canal system and well system available in one ID), improves the reuse of surface water and reduces the ineffective evapotranspiration. This kind of measure is mainly used in north river reservoir IDs where surface water resources are limited. Also some new IDs choose this system of management. The idea is to utilize excess surface water in high rainfall periods (or flood periods if feasible) to recharge depleted aquifers, which can then be used for irrigation in times of droughts or inadequate rainfall. In north China, Weizhen (1999) estimates that 55 million mu are irrigated by conjunctive uses of surface and groundwater representing 17 percent of total irrigated area. There appears to be limited historical hydrologic information and documentation of institutional arrangements that promote/allow conjunctive use in China. Some information focuses on "planned expansions of irrigated fields" and give numbers on extraction of groundwater, available groundwater resources and areas to be irrigated. Thus, conjunctive use schemes may be informal in the sense that shallow tubewells used for irrigation rely on seepage from irrigation canals but there does not seem to be intentional use of surface water during high rainfall periods for the specific purpose of groundwater recharge to be used during dry periods. Geophysical surveys can detect seepage along canals and perhaps this should be done in the main areas where conjunctive use is already informally practiced or where conjunctive use is planned such as Henan, Shanxi, Shandong, Hebei, etc. Agronomic measures include leveling, nontillage in the dry season, deep plowing in the rainy season, soil fertility improvements, organic and plastic mulching, seeds improvements and development of drought resistant varieties, balanced fertilization, improvements of planting cultivation techniques, changes in cropping patterns .etc. In addition, forestry shelter belts around fields will slow wind velocity and help reduce evaporation. Precision Land Leveling is not a particularly new technology but application in China has been limited. Precision land leveling involves laser guidance and control of mechanized leveling equipment and has increased leveling accuracy by a factor of 10, with impressive efficiency and production results. 174 Chapter 6. Sufficient Food for All Laser leveling both decreases irrigation water requirements (and costs) and increases yields. Precise water saving and yield increases varies widely depending on the previous irrigation method and crop. Generally, water savings of 10-25 percent and yield gains of 30-50 percent are achieved. However, unless water fees are based on volume of water used, there is no incentive to save water and the value of increased yield would likely not repay the cost of leveling. Cost internationally is around US$0.75/m3 for preliminary leveling and about US$0.23/m3 for final precision leveling. Cropping Patterns. As the supply of irrigation water declines in future decades, cropping patterns in the 3­H basins will change. Crop water requirement is an important determinant of future cropping patterns, but several other factors also are influential and include; the proportion of water requirements that can be met from rainfall during the crop's growing season, the impact of water deficits on yield, and particularly commodity prices. Those crops requiring less water and those whose temporal water requirements more closely fit natural rainfall patterns, and therefore require only modest irrigation supplementation even if water requirements are significant, would ceteris paribus, have more prominence in future cropping patterns. But everything else is not equal; these factors combined with production costs, yields, and output prices will determine future cropping patterns. Vegetables are grown during all periods of the year and have relatively high water requirements--of which less than 50 percent is met by rainfall (except in the Huai basin). But high vegetable prices imply they will receive water priority and become more important in the cropping patterns if overproduction does not create large price reductions. Currently, domestic prices of the two major summer crops, soybeans and corn, are considerably above international prices; consequently, they would be less profitable when border prices are applied. Nevertheless, they are likely to become increasingly important because of their relatively low water requirement and relatively high proportion of water that is met by rainfall (65-70 percent) in the Hai and Huai basins; in the Yellow basin only 55 percent of their water needs are met by rainfall. Peanuts follow corn and soybeans in terms of water requirement and the proportion of water requirements met from rainfall, and with a relatively favorable price have a higher marginal value of water and are likely to become increasingly important. Rice and cotton are generally appropriately priced, but their high water requirements--of which less that 50 percent is met from rainfall (except cotton in the Huai basin) means that they are likely to become less important in the future. The wide variety of agroclimatic conditions represented in the 3­H basins implies that a wide variety of cropping patterns should be practiced to utilize those conditions optimally. As government discontinues policy interventions in agricultural production, marketing and pricing farmers will likely alter production patterns by producing more higher-value crops and livestock products, including fruits, vegetables, and oilseeds. While this transition to higher-value commodities is in process, grain crops will remain the primary group of crops produced because large and rapid changes in high-value crop production would result in excess supplies and reduced market prices. It is the winter crops, winter wheat and rapeseed (Huai basin), that may be most affected by reduced water supplies as their seasonal water requirements are incongruent with rainfall patterns--thus are quite dependent on supplemental irrigation (75 percent or more in the Hai and Yellow river basins). Nevertheless, high marginal responses to water and favorable prices results in relatively high marginal values of water, making it probable they will continue to form as much of the winter season cropping area as water availability will allow--particularly given the lack of other winter crop alternatives. Plastic Film Mulch. Plastic film mulching to reduce evaporation from the soil surface is more widely used in China than any other country. It has been the subject of considerable research with attention given to crop root development, photosynthesis, yield formation, nutrient absorption, evapotranspiration and the comprehensive effects of field micro-climate, etc. and has been applied to Chapter 6. Sufficient Food for All 175 numerous crops, primarily in the dryer northern areas with remarkable results. Despite the volume of research and widespread use of plastic film there are few systematic research data available to assess its water saving efficiency. Anecdotes suggest that water use efficiency can reach 90 percent, and water savings have reached 72 percent on cotton in Xinjiang. (FAO Desk Study) Anecdotal evidence indicates the use of plastic film improves yield in a variety of ways, including increases in soil temperatures (permitting early planting), reduces soil water evaporation, and assists in weed control. Lu61 reports several anecdotes of increased yields and improved economic benefits on grains, other field crops, fruits and vegetables and positive effects in controlling/reducing salinization-- particularly in cotton production. Plastic film use has grown very rapidly and the technology was applied to over 9 million ha nationwide in 1997. In addition, greenhouses use another 0.5 million tons annually. Plastic film technology is most widely used in Xinjiang where it is applied to 38 percent of the planted area. Although statistically unmeasured, this technology is thought to have been a major factor in promoting output growth while water availability remained constant or declined. This is likely the most efficient on-farm input investment of the 1990s and will continue to grow rapidly. Stubble Mulching. In Hebei, Gansu, Shanxi and Shaanxi provinces, mulching the soil with wheat straw during the fallow and crop growing periods has decreased evaporation and saved 23, 14 and 30 percent of water for winter wheat, summer maize and cotton, respectively. This indicates that alternative agricultural practices such as minimum or zero tillage on crop fields might be both labor and water saving. Input Substitution. The long-term trend of substituting capital and technology for land and water will continue. In this context it will become increasingly important to rapidly disseminate new technologies developed by the research community. The elapsed time between development and on-farm adoption of new varieties, new fertilizer and agrochemical applications, and new husbandry practices must be reduced. Improved crop varieties that have greater drought tolerance, increased yield potential, and higher yield responses to fertilizer and other inputs are under continuous development. Similarly new fertilizers, agrochemicals, agricultural equipment, etc. are continually being developed but the transfer of these technologies also require the transfer of information on application and use techniques to be optimally effective. Although nongovernment enterprises will undertake an increasing share of research and development, improved management and incentive programs are needed to ensure the government extension service performs their technology transfer function more rapidly. However plastic films create major environmental problems. The plastic applied to the field is reported to break up only after one year and its usefulness for water conservation is dramatically reduced but the plastic material remains in the fields shredded over time and is incorporated into the top soil. This is a big problem in Xinjiang and many other counties where this technology is utilized. Ideally, the plastic sheddings need to be removed from the field. Management measures can be broken down into types: (1) irrigation and drainage system management improvement; and (2) on-farm irrigation management improvements. Irrigation management improvement include water measurement, volumetric water price, and institutional development. On-farm 61 Lu Rongsen, "The Application of Plastic Film Technology in China," International Center for Integrated Mountain Development, Katmandu, Nepal, 1994. 176 Chapter 6. Sufficient Food for All irrigation management improvements include soil moisture control and management through irrigation scheduling with help of improved irrigation methods. Water Prices The effect of increased water prices on the efficiency of water use is unlike most places where there is a surplus of water. The demand for water is a derived demand and its use is totally dictated by crop output prices. Farmers cropping choices are based on the output prices of the crops that prevail the WS modeling system seems to depict the farmers choices during their lives. The combined effects of increased efficiency, reuse and higher prices on irrigated land for a P75 year in the 3-H basins were investigated using the 3-HMS. In the Hai basin, for the base case (which has no efficiency improvement, reuse and price increase) full irrigated area will decrease between 2000 and 2050 by nearly 40 percent, partially irrigated area will stay the same and non or low irrigated areas will increase slightly. By comparison, with the implementation of a program of higher prices, higher efficiency of water and reuse it is clear that fully irrigated area actually increased by about 40 percent while partial and low irrigated areas decrease slightly. This trend is even more pronounced with the construction of the S-N water transfer in the Hai Basin (Table 6.24). In the case of the Huai, changes in fully irrigated area from implementation of efficiency increases, reuse and price increases are not significant, partially irrigated area will decrease and low irrigated area will hardly change. If the S-N transfer is introduced only low irrigated areas will decrease while other areas will increase slightly. In the case of the Yellow Basin, the S-N transfer mares no difference to irrigated area because there is no additional supply for the Yellow Basin however fully and partially irrigated area will decrease but by not as much with the implementation of remedial measures listed above. The action plan recommends that water prices to farmers be increased in accordance with current government policy. As discussed in the text these prices should be disconnected from other administrative charges to reflect clearly opportunity cost and source scarcity, O&M of supply systems etc. and to achieve more sustainable demand for water. Higher clearer prices will also allow the market to direct water to its highest value use. The Action Plan is summarized in Table 6.25. Chapter 6. Sufficient Food for All 177 TABLE 6.24: CHANGES OF FULL, PARTIAL, LOW IRRIGATED AREA UNDER DIFFERENT SCENARIOS P75 (million mu) Scenarios 2000 2050 Changes Area Area of % Full 10.4 6.2 -41 Hai Partial 82.3 81.8 -1 Low 23.5 25.6 9 Full 105.6 107.3 2 Base Case Huai Partial 41.3 36.2 -12 Low 9.2 11.8 29 Full 25.8 23.9 -7 Yellow Partial 42.7 34.3 -20 Low 18.6 20.2 9 Full 10.4 17.7 70 Hai Partial 82.3 76.0 -8 Low 23.5 20.7 -12 Efficiency 10% Improvement + Full 105.6 107.2 2 reuse + High price Huai Partial 41.3 37.9 -8 Low 9.2 10.2 11 Full 25.8 24.3 -6 Yellow Partial 42.7 37.9 -11 Low 18.6 17.9 -4 Full 10.4 36.8 253 Hai Partial 82.3 65.6 -20 Low 23.5 13.2 -44 Efficiency 10% Improvement + Full 105.6 108.5 3 reuse + High price + S-N Huai Partial 41.3 42.5 3 Low 9.2 4.4 -52 Full 25.8 24.3 -6 Yellow Partial 42.7 37.9 -11 Low 18.6 17.9 -4 178 Chapter 6. Sufficient Food for All TABLE 6.25: ACTION PLANFOR IRRIGATED AGRICULTURE: INCREASED COMMITMENT TO CURRENT GOVERNMENT PROGRAMS AND IMPLEMENTATION OF INTEGRATED APPROACH Problem/Issue Proposed Action Action Plan and Description/Action Areas of Focus for Action Proposed Financial through Current Plan Commitment to 2020 (108 integrated Government Yuan) approach Program SOCAD Water LIS Addressing Saving Problems Water supply to agriculture will not Physical LIS, Water Saving Canal lining/control structures, low Water saving: increase and so water saving measures Improvements and SOCAD pressure pipes for small distributions Hai: South Hai 196 44 55 will be the major way to address water systems, facilities for groundwater Tuhaimajia 60 28 78 shortages to agriculture recharge and conjunctive use of surface Huai: Wangjiabu to Bengbu and groundwater; drainage system and Shandong Peninsula 116 32 80 reuse of return flows, improved surface Lower Yishusi 50 28 44 irrigation systems on-farm sprinkler Yellow: 103 system, micro irrigation systems Longmeng to Sanmenxia 98 39 158 Lanzhou to Hekouzhen 57 21 128 Agronomic SOCAD Precision land leveling, cropping Water saving: measures pattern, plastic film mulch, stubble Hai: South Hai 196 mulching, input substitution Tuhaimajia 60 Huai: Wangjiabu to Bengbu Shandong Peninsula 116 Lower Yishusi 50 Yellow: Longmeng to Sanmenxia 98 Lanzhou to Hekouzhen 57 Irrigation Institutional Irrigation and drainage system No specific area targeted but management management improvement: water applied throughout North measures measurement, volumetric water price; China. institutional development; On-farm irrigation management improvement, soil moisture control, management of irrigation schedule Previous central planning policy for water Institutional Institutional Investigating at local level best mix of No specific area targeted but allocation and water management management irrigation network management or applied throughout North ostracize local initiative preventing reform transfer including contracts, lease, China. "ownership" of management policies. In WUA, auction, joint stockholders, water addition, current financial arrangements supply companies and SIDDs. prevent appropriate levels of operation and management causing infrastructure to become sufficient. Current prices of water to irrigation do not Water demand Pricing reform Increase prices to irrigators, separate No specific area targeted but allow cost of supply recovery, proper management resources charges from other applied throughout North maintenance of system and promote administration changes to ensure direct China. wasteful consumption link to reflect degree of scarcity of water at the 3-H basin level. Chapter 7. Clean Water for All 179 7. CLEAN WATER FOR ALL Chapter 3E reviewed the current water quality situation in the 3-H basins and concluded that while some progress has been made in controlling industrial pollution, many sources of pollution remain uncontrolled and the result is that water quality has been declining in the last decades in almost all rivers in the 3-H basins. This chapter reviews current attempts to control pollution and proposes an action plan to improve the effectiveness of the current Chinese government strategy. A. WATER POLLUTION CONTROL IN 3-H BASINS AND PROBLEMS WITH CURRENT APPROACH Structural control of pollution in the 3-H basin is achieved by building sewage treatment plants and associated collecting and disposal pipes. Some urban areas in China are sewered but not all. In Chinese cities, some of the areas are sewered but many are not and excreta is discharged to pits similar to rural towns as discussed above. The sewers which collect sanitary waste mostly from the more effluent areas of the cities take the sanitary wastewater to sewerage treatment plants which are essentially BOD removal systems. These can remove BOD such as excreta and other natural organics which are degradable but not toxics such as (a) toxic inorganics (phenols, sulfides etc. from factories); (b) toxic nondegradable and (c) synthetic toxic organics like DDT. Existing WWTP infrastructure is shown in Table 7.1. The WWTP is usually a big septic tank which removes one-third of BOD and two-thirds of suspended solids (SS) with the reminder going to the river or is also sometimes the conventional activated sludge plant which produces effluent of 20 mg/L BOD and 30 mg/L SS. Many homes/buildings use holding tanks to remove settleable solids with only "clear" effluent flowing to sewer to prevent sewer from clogging. Investment in WWTP infrastructure was around 0.22 percent GDP in 1997. However as noted above, many WWTP are connected only to more affluent areas, leaving the rest of the urban areas essentially unconnected and relying on pit and septic tanks. Industrial treatment of wastewater is presented in Figure A7.4-2 Annex 7.4, Volume 3, which shows that currently the paper industry produces by far the largest COD load/Y 10,000. Other industries of concern are food, pharmaceuticals, chemicals and tanning. However those industries are dwarfed by the paper industry. This is a reflection of the manufacturing process, the age of equipment, raw materials etc. used for making paper and pulp in China. Ownership such as private or state and size of the enterprise have a lot to do with the end of pretreatment and cleaner production used in all industry categories. The WPM-DSS proposes that industrial wastewater treatment and wastewater volumes will start to improve in the next 10 years. At the present time, industrial WWTP does exist to some extent and the model reflects this because the SEPA survey (on which the WPM-DSS model is based) sampled effluent from 100 m3/day+ industries at the outlet which discharges to the channels, rivers or sewers and so any industry treatment would have been accounted for in the recorded values. 180 Chapter 7. Clean Water for All TABLE 7.1: WWTPS IN THE HAI AND HUAI BASINS IN 1997 Cities WWTPs Estimated WW produced % treated No. Capacity (Ml/d) Beijing 30 666 1,159 57.46 Tianjin 2 670 606 110.56 Shijiazhuang 1 160 151 105.96 Tangshan 3 220 184 119.57 Qinhuangdao 2 60 73 82.19 Handan 1 100 124 80.65 Baoding 2 160 68 235.29 Gaobeidian 1 1 53 1.89 Hebei 10 701 2,155 32.53 Datong 1 29 81 35.80 Changzhi 1 20 34 58.82 Shuozhou 1 5 35 14.29 Shanxi 3 54 240 22.50 Anyang 3 67 53 126.42 Puyang 1 43 55 78.18 Henan 4 110 270 40.74 Hai basin total 49 2,201 4,592 47.93 Xuzhou 1 100 87 114.94 Huaiyin 2 39 32 121.88 Yangzhou 1 12 90 13.33 Gaoyou 1 0.2 51 0.39 Jiangsu 5 151.2 556 27.19 Jinan 1 220.2 166 132.65 Zaozhuang 1 7 186 3.76 Shandong 2 227.2 1,133 20.05 Zhengzhou 2 35 29 120.69 Dengfeng 1 5 56 8.93 Kaifeng 1 28 72 38.89 Wugang 2 7 101 6.93 Pingdingshan 1 21 521 4.03 Henan 7 96 1,176 8.16 Huai basin total 14 474 3,500 13.54 Source: MOF data (1999) and WPM-DSS (current study). Recent State Council Circulars show that the government recognizes the need for significant development of wastewater treatment capacity in urban areas. On July 18, 2000 the Ministry of Construction (MOC), SEPA and the Ministry of Science and Technology (MOST) jointly issued a document on "Technical Policy on Urban Wastewater Treatment and Pollution Control." It is stated in this national policy paper that up to 2010, the wastewater treatment rate in all cities should not be lower than 60 percent, and for key cities not lower than 70 percent. For cities, secondary treatment facilities must be built and for enclosed or semi-enclosed water bodies, enhanced secondary treatment with phosphorus and nitrogen removal facilities should be provided. State Council Circular No. (2000) 36 issued on November 7, 2000 states that up to year 2005, the wastewater treatment rate for all cities with more than 0.5 million population should be higher than 60 percent. For 2010, the wastewater treatment rate should not be lower than 60 percent, for cities directly under the administration of central government, provincial capital cities, cities separately listed in the national plan and the key tourist cities, not lower than 70 percent. From now on, at the same time cities build new water supply facilities, they also must plan to build corresponding wastewater treatment facilities. For water-shortage regions, at the same time as planning to construct urban wastewater treatment facilities, wastewater reuse facilities should also be provided. For large urban public buildings Chapter 7. Clean Water for All 181 and self-supplied water source units outside of the public water supply distribution network, wastewater reuse systems should be built. Moreover, wastewater reuse systems in residential quarters should be expanded on the basis of pilot projects. Monitoring and management of the operation of urban wastewater treatment facilities and reuse facilities should be strengthened. However, implementation of such State Council decrees are still difficult for reasons discussed in the Institutional Chapter (Chapter 11). Current control for rural point sources was described above in the section on Sources of Pollution. The basic situation is that livestock, rural towns and rural TVEs remain largely uncontrolled apart from very basic public health engineering structures like pit latrines for the rural population and natural attenuation processes in channels which might remove some BOD prior to the load discharging into the rivers. Similarly, TVEs and livestock currently have very little pollution control infrastructure apart from the attenuation process of the environment, i.e. assimilative capacity. Many factors intervene to produce the final load that eventually ends up in the river including (a) topography, (b) rainfall; (c) soil type and (d) proximity of discharge (from point sources) to the drainage channels, etc. Thus overall, the current structural pollution control measures applied in the 3-H basins are essentially restricted to urban centers and focus on municipal and large industrial sources. In addition to these structural measures however, the government also has in place a number of nonstructural components which form the basis of the environmental regulatory system. These are shown in Table 7.2. TABLE 7.2: MAJOR COMPONENTSOFTHE CHINESE WATER ENVIRONMENT REGULATORY SYSTEM Command and control instruments Pollutants discharge limits, based on allowable pollutants concentrations; Monitoring of water quality and effluents by EPBs. Mass-based controls on total provincial discharges, with pilot application to municipalities Environmental impact assessments (EIAs) Mandatory EPB certification before new production lines operate, affirming that agreed pollution controls are installed and functioning (three synchronizations program- santongshi) For existing factories out of compliance with discharge limits, a program of mandatory pollution controls/treatment within specified time or plant closing Economic incentives Pollution levy fee Noncompliance fines Environmental taxes on wastewater and sulfur discharges Public management instrument A managerial goal-responsibility system of environmental protection, fixing on individual leaders the responsibility for meeting overall environmental targets Public disclosure instruments Comprehensive evaluation system for city environmental quality, including citizen complaint bureaus; environmental awareness; clean up campaign Source: Adapted from Hai River Basin Wastewater Management And Pollution Control Project, final draft, August 2000, BB&V. The main points of importance to note from the current regulatory system are the following: (a) the major regulatory/monitoring groups do not exist in the control of small rural point sources such as TVEs and livestock operations; (b) there is adequate legislation to control pollution sources; however performance suffers; it reflects local choice or interpretation of the law rather than legal tools; (c) discharge limits are expressed in terms of concentrations and the fines (or environmental levies) are calculated only based on the worst pollutant, (d) mass-based control has been applied in some circumstances and areas but not everywhere and this possibly confuses regulators and polluters because other areas have kept the concentration-based control; (e) environmental impact assessments (EIAs) are carried out by SEPA-appointed institutes but it is the EPBs that generally lack the skills and staff to fulfill 182 Chapter 7. Clean Water for All their role in this important process ; (f) the standards applied for water quality are generally not affordable for China, being replications of Western standards and very few water bodies meet their currently designated beneficial uses; (g) monitoring of water quality is undertaken by both SEPA and MWR and there is little coordination between the two bodies; (h) the production licensing or three synchronous program which focuses on pollution prevention has had limited impact due to selective application at the local level as explained in part (b) above. Water quality was discussed in Chapter 3E and the overall conclusion is that water quality as measured by COD content has worsened over the last years to the extent that in 1995, over 80 percent of the lengths of major rivers in the 3-H basins were classed as polluted, which means they ranked Class IV or V (refer to Maps 7.1 and 7.2 further on for overview). It is probable that the advances in controlling SOE pollution have caused some improvement in water quality in some areas of the North China Plains but according to available data, the overall pollution picture remains bleak. Controlling water pollution is a complex task for governments in most countries, but DCs usually have more difficulties because, as well as the need to address all "primary" problems that the industrialized countries (ICs) have largely already dealt with such as reduction of gross pollution, provision of water supply to all populations, and development of water resource potentials for irrigation and power, DCs have to achieve this when urbanization, population growth and economic development including industrialization are all occurring at much faster rates. In addition, limited finance and local technology and the need to "catch up" with IC technology further restrains DCs' ability to incorporate the environmental parameter into development planning and implementation. In China, despite significant improvements in many aspects of environmental control (particularly of large industry and urban population through modernization of manufacturing process, end-of-pipe treatment and municipal treatment of wastewater) water quality has continued to deteriorate as explained above. Thus, the government's current strategy to control pollution seems to be insufficient to halt or reverse general worsening water quality trends. Reasons for this are analyzed in the next sections of this chapter using modeling of present and likely future scenarios. This assessment addresses structural adjustments for urban and rural industrial and domestic sources and agricultural sources focusing on livestock as explained in Chapter 3F. Table 7.3 summarizes the main issues with pollution control in China based on knowledge of the 3-H basins where pollution is most severe and has wide implications. B. THENEEDFOR MODELING WITH A KNOWLEDGE-BASED SYSTEM Generally speaking, a model can potentially forecast the impact of proposed management scenarios prior to implementation, offering guidance to planners and saving planning agencies from making costly mistakes. However, choosing a model can be difficult. This is because (a) the algorithms used do not always represent the chemical, physical or biological system being modeled since they may have been derived from site-specific information that is not necessarily transferable, (b) the input data required to drive the model may not be available or reliable, (c) the level of uncertainty associated with the modeling process is often restricted to sensitivity analyses without considering overall uncertainty inherent in items (a) and (b) above, and (d) the modeling process and output of the model may require too much foreign expert involvement, leaving the local agency without "ownership" of the recommended management strategy. Chapter 7. Clean Water for All 183 TABLE 7.3: MAJOR ISSUES IN REDUCING WATER POLLUTION FROM IDENTIFIED SOURCES Pollution source Main problems in reducing pollution from these sources Large industry (100 m3/day or SOEs usually have older manufacturing process than non-SOEs and are more polluting and less more) SOEs or non-SOEs. efficient; imposing PPP or end-of-pipe treatment may make SOEs less financially viable causing loss of employment, social security, etc. On the other hand, SOEs are reported to be easier to monitor and enforce than non-SOEs according to WB studies because management is likely more responsive to government directives. Some industries are projected to be phased out in the next decade or so as China enters WTO and continues to integrate into global economy or are not on the government's list of strategic industries and so costly pollution prevention may not be justified despite the fact that they may be very polluting right now, e.g. paper/pulp. Discharge to municipal treatment plants requires knowledge of wastewater characteristics and pretreatment which may not be feasible for some SOEs as noted above. In addition, wastewater reclamation is dependent on treatment although some current practices use wastewater without treatment. Discharge to municipal treatment also requires complex institutional arrangements between WWTP operators, industries and regulators such as EPBs and these are not currently sufficiently developed in China. These include lack of institutional mechanisms to allow wastewater reclamation schemes to operate successfully including legal backing of WWTP operator, industry self-regulation, laboratory analytical techniques, legal contracts enforcement as adjudicated by an independent court system. Current monitoring is based on knowledge of industrial effluent concentration which is costly and largely beyond current capacity of EPBs so limited coverage of monitoring means patchy information for selected industries. Enforcement is also selective due to devolution of responsibilities at provincial government level. In addition, there is a lack of knowledge and training at the local provincial/county level of officials in EPB, WRBs. General water quality standards are higher than they need to be and appear to be difficult to achieve given available technology and financing level.a Small industry (less than 100 These have also more primitive manufacturing processes that are much less efficient and more m3/day, TVEs) polluting than larger enterprises described above. Small industries are usually unable to cope with PPP and rudimentary end-of-pipe treatment. Marginal cost of pollution abatement is more expensive than for larger-scale non-SOE, for example. Many TVEs are projected to be phased out due to natural industry restructuring occurring due to globalization process. However closing them down has social and economic implications at the local level and these are difficult to address without comprehensive economic adjustment. Many previous attempts to close polluting TVEs result in TVEs restarting unless social programs are designed to allow alternative employment. Monitoring, enforcement and water quality/effluent standards issues are as above. Urban population Pollution from urban population needs to be treated at WWTPs. Currently there is insufficient investment in infrastructure (collection- interceptors and treatment-disposal) to treat loads from urban population. Reasons include institutional arrangements which (a) do not allow cost recovery and allow profit (although this is changing), (b) do not require provinces/cities to be responsible for the load they generate, (c) lack of financing. In turn inadequate pricing of services restrains investment and causes excessive consumption of water which generates large wastewater quantities. Rural population Urban infrastructure in small towns in China is usually inadequate or even nonexistent with severe shortages of sustainable development infrastructure including sewage treatment systems. Much of excreta is washed away by rain and solid waste is usually dumped into natural channels. Main reason is lack of investment due to (a) slow progress in price restructuring to allow market operation. Currently, financing depends on self-financing of township governments or fund raising from enterprises and farmers. Due to government decrees to ease financial burdens on farmers, township governments find it difficult to raise necessary finance for infrastructure.b Thus sewage from rural population remains an important contribution to total pollution loads although existing pit latrines (1 or 2-pit systems) contain some of the COD load. 184 Chapter 7. Clean Water for All Pollution source Main problems in reducing pollution from these sources Livestock The projection for the livestock industry indicates continued rapid growth. At the moment, most livestock operations remains at individual farmer level. The extent of pollution from these sources is not known but suspected to be serious because of limited reuse of waste. The trend is for amalgamation of these operations into larger ones whose propensity to pollute is greater and becomes point source. In 2020, model predictions are that some 85% of operations will have 10,000 or more animals. Pollution from these in terms of COD is already very significant (but not accounted for) but remains unchecked because of their "nonpoint source" status and because they fall under the jurisdiction of the Ministry of Agriculture. Nonpoint source Return flows from irrigation and runoff from nonirrigation containing nitrogen, phosphorus and pesticides are difficult to address in most countries. Nonpoint sources are reported to contribute 25% of COD loads in the 3-H basins although at the same time irrigation is also suspected of being a COD "sink" capable of lowering the loads to rivers. a SEPA has reviewed its water quality standards in the new GHZB 1-1999 and these were put into practice in January 2000. These are presented in Chapter 3F. b Rural people have no background of experience with town infrastructure so they do not even know they need it. The normal situation includes (a) latrines where excreta washes to channels, (b) taking water from rivers to use in homes and (c) no attention at all to solid waste. One type of modeling approach that serves equally well as a predictive technique and that can avoid the potential failures of the conventional models described above is the "knowledge-based" approach (KBA). According to Ongley62 et al. (1999), this type of approach acknowledges uncertainty by relying on local available data and expertise and creates models that recognize uncertainty from the beginning. In addition, KBAs recognize that policy decisions are driven by confident, affordable and realistic management solutions that will cause a desirable shift of water quality from Class V to Class IV for example, with minimum uncertainty. In addition, through ownership of the model development process, local agencies gain improved confidence in the proposed management scenarios. Following discussions with MWR, a simple spreadsheet pollution load forecast model based on the KBA as described above was judged more appropriate than commercially available water quality models such as MIKE BASIN or SWMM and AQUALM because (i) it provided greater accessibility to the model and allowed future modification, (ii) it assisted with data in disparate form, (iii) it reflected current practices and data types in China, and (iv) it allowed integration of investment with future scenario analysis. The model needed to be capable of (a) tracking gross water usage by sector, (b) evaluating water demand strategies, (c) calculating gross waste production in terms of COD and volume by sector, (d) calculating waste discharge and loads to rivers with provision for various waste treatment and reuse scenarios, (e) calculating investment cost accumulation for municipal/industrial waste treatment and collection system and (f) summarizing results at a city, control unit, subarea or level-2 basin degree of detail. The WPM-DSS spreadsheet model is presented in the Annex to Chapter 7. The model provides a systematic compilation of water use data consistent with basinwide water assessments, calculates COD loads and wastewater quantities for major sources identified in Figure 3.9. The model was run by CRAES, WB and GIWHP in a "forward" usage where pollution from urban and rural industry and municipal and livestock sources were subjected to intervention (called Program 1, 2 and 3) from WWTP, reuse and pollution prevention programs and the resulting water quality improvements were determined. 62 E. Ongley and W. Booty; 1999. "Pollution Remediation Planning in Developing Countries: Conventional Modeling Versus Knowledge Based Prediction," Water International, 24, 31-38. Chapter 7. Clean Water for All 185 C. PRIORITIZING CITIES The construction of pollution prevention infrastructure is one of the components of the proposed action plan. But as noted above, pollution is not the only issue facing the 3-H basins. As pollution levels increase, the resource available for water supplies decreases also. WSCs have to find cleaner intakes farther away from the pollution discharge sources, which are usually located around the towns and cities. Alternatively, groundwater has been increasingly relied on in the last decades to supplement declining surface water availability. In addition, heavily polluting cities upstream from intakes for irrigation and urban uses impact much more on the public health of downstream citizens. Thus, pollution is linked to water shortages and declining groundwater tables etc. and in order to maximize the effect of pollution abatement measures in the shortest timeframe at least-cost, there is a need to acknowledge these links and propose a priority list of cities that overall have the worst environmental problems; i.e., not just pollution problems. The WPM-DSS produced a list of cities with high COD and toxic pollution generation and further prioritizing of these cities was done by selecting those with the highest loads. Overall priority for the action plan was determined by scoring cities on the basis of (a) public health, (b) environment, and (c) sustainable water resource use, with public health protection being the most important in the hierarchy of needs. The priorities and assigned weights are shown in Table 7.4 below and the overall selection of priority cities are shown in Table 7.5. TABLE 7.4: PRIORITIZING CRITERIA USED TO SELECT CITIES/REGIONS FOR THE ACTION PLAN Issues Priorities Weight Environment / Public Health Cities with most toxic waste discharge 10 Environment / Public Health Cities with highest COD load 7 Public health Cities located upstream of water supply intakes 6 Resource / Public Health Cities with highest degree of water shortage 5 Public health Cities located upstream of irrigation intakes 4 Resource / Environment Cities with most unsustainable groundwater pumping 4 Resource/Environment Cities with highest potential for artificial recharge 3 TABLE 7.5: HAI AND HUAI BASINS' OVERALL PRIORITY CITIES Beijing Tangshan Zhangjiakou Changzhi Chengde Xinzhou Anyang Shijiazhuang Xinxiang Tianjin Cities in Hai Basin Jiaozuo Handan Datong Xingtai Baoding Puyang Binzhou Cangzhou Dezhou Yangquan Qinhuangdao Liaocheng Shuozhou Hengshui Hebi Langfang Jinan Jining Linyi Zhumadian Suzhou Xuzhou Heze Pingdingshan Bengbu Kaifeng Shangqiu Cities in Huaiyin Fuyang Lianyungang Yancheng Zhengzhou Zibo Zhoukou Zaozhuang Taizhou Yangzhou Huai BasinLiuan Xuchang Luohe Xinyang Huaian Taian Huainan Huaibei Suqian Rizhao Chuzhou Nanyang Qingdao D. PROJECTED LOAD GENERATIONSUNDERTHE "BUSINESS AS USUAL" SCENARIO The base case or business as usual scenario, also called Program 1, represents our understanding of the current situation with respect to pollution management in the Hai and Huai basins and projected trend of government programs and aspects of economic growth that impact on wastewater production and pollution loads as measured by COD. In the case of large industry, indications are that trends are 186 Chapter 7. Clean Water for All favorable from an environmental perspective. Industries have already began to reduce their COD intensity63 due to modernizing of manufacturing processes and internal reuse of wastewater encouraged to a great extent by water scarcity in addition to favorable reaction to regulatory enforcement. This is shown in Figure 7.1 with pollution data derived from SEPA and statistical data on industrial GDP. FIGURE 7.1: COD INTENSITY REDUCTION COD Intensity for Industries 60.0 50.0 output 40.0 30.0 kg/Y10,000 in 20.0 COD 10.0 0.0 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Years TotalIndustrialProd Large Indust. Prod. TVEProduction LargeIndust.CleanProd. TVE Clean In the case of livestock and urban and rural municipal sources, future trends may not be favorable. Thus the "base case" scenario or the "business as usual" scenario reflects a mixture of favorable and unfavorable trends. The input data is compiled from available information for the four models including livestock, rural municipal, rural domestic and urban industrial and municipal. The conclusion is that overall water quality should improve as a result of (a) increased monitoring and enforcement of pollution from large industry by the government, (b) changes to large industry manufacturing process resulting from modernization of equipment (c) increased treatment of wastewater from large industry and (d) increased incidence of reuse of wastewater for large industry. However, other sources of pollution such as livestock are predicted to continue to grow despite sector restructuring resulting from globalization and other economic trends. Urban and rural municipal sources will also increasingly contribute to COD pollution loads in the Hai and the Huai basins with existing treatment levels. These trends are shown in Figures 7.3 and 7.4 below. However, under the current government program, pollution load reductions are likely to be insufficient to improve water quality to restore beneficial uses of water bodies. Maps A7-1 to A7-6 in Annex 7.3 of Volume 3 summarize WPM-DSS modeling results presented in ArcView GIS for major cities and for basins level II for 2020 under the "base case" scenario or government program. The figures show the level of pollution likely to results under the current government program in 2020. " COD intensity is COD kg/10,000 Yuan of production Chapter 7. Clean Water for All 187 C. OPTIONS TO FURTHER REDUCE POLLUTION LOADS The following sections--(i) and (ii)--discuss possible structural options available to the government to reduce pollution loads in the Hai and Huai basins and their forecasted impact on load and water quality along with implementation time frame of key programs. Augmenting current government programs and economic activities that benefit the environment can be achieved in an infinite number of combinations of activities in many locations and sectors. However limited resources available require prioritizing hence the WPM-DSS has been designed to distill key elements of a rational achievable program that could lead to dramatic reductions in pollution loads in the Hai and Huai basins within a realistic time frame and at realistic cost. The rationale for these elements have been discussed in Chapters 3F, 7, 8, 9 and their annexes (Volume 3). Table 7.6 summarizes indicative programs (called program 1, 2 and 3) which can be seen as markers in a continuum of possible action programs. Thus with the help of the WPM-DSS, Chinese experts can explore the effects of more customized programs that may suit economic or regional constraints. Nonstructural options are viewed as relevant for China and are also discussed in section (iii). TABLE 7.6: POSSIBLE INTERVENTION PROGRAMS TOREDUCE COD POLLUTION LOADS IN THE HAI AND HUAI BASINS (A) Urban Industry + Municipal (B) Rural Industry (C) Rural Domestic (D) Livestock (6 scenarios, see Tables 7A.2 & (4 scenarios, see Table 7A.4 for (2 scenarios, see Table 7A.5 for (4 scenarios, see Table 7A.6 for 7A.3 for Hai, Tables 7B.2 & 7B.3 Hai and Table 7B.4 for Huai in Hai and Table 7B.5 for Huai in Hai and Table 7B.6 for Huai in for Huai in Annex 7.2, Volume 3) Annex 7.2, Volume 3) Annex 7.2, Volume 3) Annex 7.2, Volume 3) 1 Base Case or current government Base Case or current government Base Case or current government Base Case or current government program: program: some treatment and some program: Scenario 1: Reuse=10%, program: Scenario 1: 6% weighed attention to PPP pit latrines treat to 180 mg/L annual runoff coefficient for intensive pigs and 10% for nonpigs. 2 Treatment Intervention focusing on treatment Scenario 2: Reuse=10%, pit Scenario 2: 50% reduction of with some PPP latrines treat to 80 mg/L runoff in Beijing, Hebei & Shandong ( for the Hai) and Henan & Shandong (for the Huai) 3 RevE-3: Cleaner Production Only Scenario 3: Intervention focusing Scenario 3: 50% reduction of (PPP) on PPP runoff in all provinces 4 RevE-4: Treatment + PPP Scenario 4: Treatment & PPP Scenario 4: 75% reduction of runoff in 2010 and 90% in 2020 for all provinces 5 RevE-5: Treatment + Reuse only 6 RevE-6: Treatment + PPP + Reuse Note: Program 1 consists of A1+B1+C1+D1,Program 2: A4+B4+C2+D2 and Program 3: A6+B4+C2+D4. Program 1 is the current government program also known as the "base case scenario" or the "business as usual" scenario. It represents our understanding of government commitment to improve water quality through structural programs. Nonstructural programs also exist although these are not modeled but discussed and assessed in the last part of Chapter 7. The effects of the government program are modeled using the WPM-DSS for the present and for future years to 2020. The model is described in detail in Annex 7.1. Program 2 is an intermediary program consisting essentially of similar components as program 3 except for reuse. Program 3 also consists of structural investments and should produce the maximum load reductions. (i) Structural Pollution Control Measures for Urban Industrial and Domestic Sources Structural options available to reduce industry pollution loads include (a) industrial wastewater treatment, (b) cleaner production technology, and (c) reuse of treated wastewater. These options have been discussed in more detail in other parts of the report and Table 7.7 summarizes chapters where the reader can find pertinent sections on these types of intervention. Industrial wastewater treatment is projected to increase as noted above but under the accelerated intervention programs 1 and 2, this level of treatment should increase more dramatically to achieve 188 Chapter 7. Clean Water for All significant improvement in water quality and the WPM-DSS input data reflects this by assigning 80 percent and 95 percent proportion of wastewater volume treatment in 2010 and 2020 respectively in the Huai basin and 90 percent and 100 percent in the Hai basin. The difference is due to the more critical water pollution status in the Hai basin. TABLE 7.7: TYPES OF INTERVENTION TO REDUCE POLLUTION DISCHARGE Option to reduce pollution discharge Chapter/Annex of this report where this is discussed Industrial wastewater pretreatment and internal reuse of process water Chapter 8, Annex 8.1 of Volume 3 Pollution prevention programs including cleaner production Chapter 7 and Annex 7.4 of Volume 3 Municipal WWTP and combined industrial and municipal WWTP Chapter 3E and Chapter 8 Wastewater reclamation Chapter 8 Wastewater reclamation: Irrigation with wastewater Chapter 9 Wastewater reclamation: Artificial recharge with wastewater and Chapter 9 floodwatera aUse of floodwater for this purpose is common in California. Urban industry wastewater volume reduction under programs 2 and 3 should result in 90 percent and 80 percent of volumes of wastewater being generated for the Hai and Huai basins in 2010 and 2020 respectively compared with 2000 volumes. Similarly, programs 2 and 3 should accelerate wastewater strength reduction in 2010 and 2020 to 30 percent and 20 percent respectively compared to 50 percent and 40 percent for the same year under the current "business as usual" scenario or program 1. Programs 2 and 3 also suggest that 20 percent and 30 percent of wastewater should be reused in 2010 and 2020. The most polluting industries in terms of COD were identified in Chapter 3E and include paper- making, brewing/distillation, chemical, pharmaceutical and food processing. In addition, the section on priority cities (P1, P2, P0) above identified toxic waste industries including steel and metallurgy, leather/tanning and textile determined according to current Chinese pollution standards. These industries are represented in the WPM-DSS above. Programs 2 and 3 propose different intervention scenarios with a mix of wastewater treatment, pollution prevention and reuse to address pollution but they apply reuse and pollution prevention programs to all industry types 1 to 6 without difference. Programs 2 and 3 do differentiate between industries in terms treatment levels however requiring the paper industry to lower COD content of effluent by 90 percent and toxic industries by 30-50 percent by 2020. Other industries are equally targeted but to different levels reflecting their initial COD effluent as determined by the SEPA survey of 1995 and their anticipated capacity to invest in treatment technology to meet the requirements of stricter environmental control. These treatment levels are shown in Tables A7.2A-2 and A7.2B-2 in the Annex 7.2, Volume 3. Further discussions of large and small industry are presented in Annex 7.4 of Volume 3. The results are presented here for toxic industries separately as well as for total industry because of the serious impact on the environment and public health that result from these types of industries. Urban domestic wastewater for programs 2 and 3 are shown in Tables A7.2A-3 and A7.2B-3 in Annex 7.2, Volume 3. Cities are typically composed of affluent areas and low-income areas. Treatment and associated collection systems would be proposed initially to service affluent areas with appropriate leaching systems for low income areas. The combined effect of these programs require that P0 cities should have a combination of primary and secondary treatment combined with a level of collection system in affluent areas and leaching systems in low income areas which result in 25 percent and 65 percent of municipal COD removal by 2010 and 2020 respectively. Similarly, P2 cities should have primary and secondary treatment causing 65 percent and 80 percent municipal COD removal by 2010 and 2020 respectively. Higher removal rates in P2 cities would be achieved by more treatment plants and higher levels of connections. P1 cities should have secondary treatment with 80 percent and 95 percent removal by 2010 and 2020 respectively. Similarly, higher reductions of municipal COD should be Chapter 7. Clean Water for All 189 achieved by more secondary treatment plants and higher levels of connection in addition to higher efficiencies of operation. The rationale here is that since P1 cities were identified as top-priority cities64 with P2 and P0 ranking next, they should have an accelerated and expanded program to reduce COD loads. See Figure 7.2. FIGURE 7.2: URBAN MUNICIPAL ACTION PLAN Sewer connections by 2010 Sewer connections by 2020 Primary treatment by 2010 (reduction 33% BOD) Primary + Secondary treatment plants by 2020 (reduction 85% BOD) City boundary Onsite treatment units with disposal by subsurface leaching Low income area serviced by onsite units Affluent Area Total Total COD COD Affluent Area load to load to river river reduced reduced by 25%, by 65%, 65% and 85% and 80% for 95% for P0, P2 P0, P2 Low income area serviced and P1 and P1 by onsite units cities cities respectiv respectiv ely by ely by 2010 2020 by from impleme impleme ntation ntation of action of action plan. plan COD pollution from domestic sources will be larger than industry in 2010 and 2020 under the base case scenario and so program 3 reduces this growth by allocating resources to boost treatment capacity especially in P1 cities because of environmental and public issues as discussed in the section on prioritizing location of cities above. Treating industrial and municipal wastewater in combined systems should offer large cost savings and this is investigated in Chapters 8 and below in the section on costing of the priority program. (ii) Structural Pollution Control Measures for Rural Industry65 Rural industry contribution to the total basin load in both the Hai and Huai will continue to grow. In 2020, load from rural industry is projected to account for 18 percent and 22 percent of the total load in the Huai and the Hai basins under the base case scenario. According to program 3, this contribution should decrease by about 60 percent by 2020 for the Hai and Huai Basins. This is achieved with an ambitious program of end-of-pipe treatment and pollution prevention which will reduce the paper 64 Based on a number of key criteria as explained in section on locating priority regions in this Chapter. 65 Rural industry here implies TVEs in rural areas. 190 Chapter 7. Clean Water for All industry wastewater concentration to 20 percent and 12 percent of its original strength by 2010 and 2020 and nonpaper industry wastewater concentration to 45 percent and 30 percent of its original strength in the same time frame for both the Hai and the Huai basins. As explained in Chapter 3F, rural industry restructure resulting from economic changes combined with tighter regulation will be the main causes of change. (iii) Structural Pollution Control for Rural Towns Homes and other buildings in rural towns may dispose of excreta by use of any latrines flushing from toilets to leaching pits. If latrines are not well designed, surface runoff will work excreta into the waterways. If urban leaching pits function properly, with proper periodic desludging, there is no escape of excreta into local drainage. But if the pits are in impermeable soils or below groundwater level, they do not function properly and the excreta in the pits is not stabilized, hence tends to overflow during raining periods and these reach the waterways. Program 3, proposes to improve use of onsite units, including improved design and improved facilities for desludging of leaching pits and disposal of the desludged materials through community programs for urban low income communities. Thus the effluent concentration of stormwater runoff should improve to 120 and 80 mg/l in 2010 and 2020. There is an option to increase municipal wastewater reuse in the model however this function is set to 10 percent from 2000 to 2020 because it not anticipated that infrastructure will be developed enough in the foreseeable future to allow formal reuse schemes in rural towns (see Tables A7.2A-5 and A7.2B-5 in Annex 7.2, Volume 3). (iv) Pollution Control for Livestock The basic intervention scenario for livestock consists of stabilization ponds installed in a large number of livestock operations producing a 50 percent reduction in direct COD runoff to the river. It is accepted that such technology can reduce COD by 80-90 percent however initial limited adoption rates and less efficient operation and construction may reduce this reduction rate to 50 percent. With continued community programs to improve the design and operation and with more widespread adoption, load reductions can be increased to 75 percent by 2010 and eventually 90 percent by 2020. This is modeled as program 3. It can be seen from the base case scenario that Shandong and Henan are the largest producers of livestock COD and so the first scenario investigates COD load reduction from intervention in only those two provinces leaving the others without intervention (Program 1). The next scenario investigates the effect of all provinces adopting the intervention program (Program 2) and the last scenario investigates a more widespread program where 75 percent of runoff is reduced in 2010 and 90 percent in 2020 (Program 3). The weighed coefficient accounts for wet and dry climate (4:8 months) and the nonpigs include all large animals except for pigs (cattle, sheep, etc.) The model reflects expected rationalization of the livestock industry due to globalization (e.g. WTO access) where most operators will be large scale (50 percent in the model in 2020) in 2020 while the current status is that most operators are small scale "backyard" producers (22 percent in the model in 2000). (v) Projected Pollution Levels under the Proposed Action Plan (Programs 2 and 3) Using WPM-DSS for the Hai and Huai Basins (a) General The results of program 2 and 3 are shown in full in Annex 7.2, Volume 3. Under program 3, total basin COD load is reduced from some 6.9 million tons in 2000 to just under 1.9 million tons by 2020 for Chapter 7. Clean Water for All 191 the Huai basin and from some 5.2 million tons in 2000 to just over 1.2 million tons in 2020 for the Hai basin. Arc View GIS maps show the expected reduction in load in the priority cities and at level II basin. (b) Urban Industrial and Domestic Sources Current government programs (Program 1) combined with market forces should reduce annual loads for P1, P2 and P0 cities by (a) increasing level of treatment, (b) through cleaner production caused by modernization of manufacturing processes and (c) increased reuse (both internal and external) due to water scarcity and increased prices of water and wastewater services and tighter pollution discharge control. However this encouraging trend makes insufficient impact to improve overall water quality because the combined annual COD loads from urban centers as well as rural sources will continue to exceed the environment's assimilative capacity as explained in previous sections of Chapter 7 and Chapter 3F. Thus, program 3 investigated the effects of additional intervention for urban municipal and industry sources as described in the previous sections. The proposed action plan for urban system is described more fully in Chapter 8 and consists of combined treatment of sanitary sewage discharged into municipal treatment plants along with degradable BOD from industry to provide economy of scale. Revenue from industries greatly help finance WWTP because the latter can remove BOD much more cheaply than industry could with its own inplant treatment. Tables A7.2A-11 and A7.2B-11 in Annex 7.2 of Volume 3 show COD load reduction targets achievable from the implementation of Program 3 for total industry (TIR), total municipal (TMR), toxic load and for the paper industry in Priority 1 and 2 cities. COD and toxic COD load reductions are also show in Figures A7.2A-1 to A7.2A-5 in the Annex 7.2 for P1 and P2 cities and Figures in GIS format in Annex 7.3, Volume 3. (c) Livestock In the Huai basin, the region from Wangjiaba to Bengbu (basin III-2) shows very high loads from livestock, rural industry and rural domestic sources under the base case scenario. In particular, Henan and Shandong provinces produce higher COD at least from livestock and rural municipal. Thus program 2 compared the effect of a 50 percent reduction66 in runoff from livestock for Shandong and Henan only and 50 percent reduction for all provinces in the basin. The results showed that for the whole basin, livestock generated COD could be reduced from 1.4 million tons in 2020 under the base case scenario to 1.2 million tons in 2020 by implementing runoff control for intensive producers in only Shandong and Henan (Volume 3 Annex 7.2, Table A7.2B-8). If this intervention is promoted over the entire basin, estimated COD to rivers would be 0.97 million. Program 3 shows that livestock COD can be reduced to 0.6 million tons per annum with 75 percent reduction in runoff throughout 2010 and 90 percent reduction to 2020 in all provinces (Volume 3 Annex 7.2, Table A7.2B-8). Similarly, in the Hai basin, South Hai (II.3) contributes the highest load from livestock with 0.32 million tons from a basin total of 0.66 million tons coming from Hebei, and Henan. Shandong in Tuhaimajia also contributes a significant 0.13 million tons (Volume 3, Annex 7.2, Table A7.2A.-.8). Program 3 proposes to reduce livestock to 0.35 million tons basin wide by the same means as the Huai basin by 2020. Refer also to Figures 7.3 and 7.4. Thus, the 66 As discussed earlier, 80-90 percent COD reductions are achievable with this kind of intervention however, limited initial adoption of the technology and less efficient designs are thought to reduce this to 50 percent. Under program 3, wider dissemination/acceptance and better designs are modeled with 75 percent and 90 percent reductions by 2010 and 2020. 192 Chapter 7. Clean Water for All action plan for livestock industry calls for the implementation of stabilization ponds to reduce COD loads discharged to the environment. (d) Rural Industries Under program 3, rural industry contributions would be reduced from the base case 2.3 million tons in 2000 and 0.97 million tons in 2020 to 0.38 million tons in 2020. In the Hai basin, the South Hai basin level II produces the largest quantities of COD with 1.1 million tons in 2000 forecasted to drop to 0.58 million tons in 2020 under the base case scenario. While this is encouraging, improvements in water quality and public health will not be significant until the loads are reduced much more dramatically. For this reason, program 3 proposes to reduce loads to 0.21 million tons in 2020 in the South Hai sub basin. In the Huai basin, the Wangjiaba to Bengbu level II basin are responsible for discharging large quantities of COD loads to rivers (0.9 million out of total 2.5 million for the Huai basin) and while this will be reduced to 0.39 million by 2020 under the base case scenario, program 3 proposes further reductions to 0.15 million in 2020. Tables A7.2A-9 and A7.2B-9 in Annex 7.2 of Volume 3 quantify load reductions expected under various programs for Level I and II basins. Refer also to Figures 7.3 and 7.4. Natural reductions in loads would occur from industry restructuring as noted above in the base case scenario and program 3 proposes to accelerate this trend. This would be achieved by a combination of appropriate treatment and pollution prevention programs for those rural industries capable of affording such technology and those financed by government programs. (refer to discussion on costing of the action plan below.) Thus waste concentration would be reduced to 20 percent and 12 percent for the rural paper industry and 45 percent and 30 percent for the nonpaper in 2010 and 2020. These reduction factors are shown in Tables A7.2A-4 and A7.2B-4 in Annex 7.2, Volume 3. The regulation is correct in calling for termination of some TVEs which simply cannot compete on an environmentally sound basis, namely those that use and discharge toxic substances which cannot be removed by small scale industries because the treatment required for removal of these toxics in the waste discharge can be afforded only by large-scale industries because of their economies of scale. As was done in the Los Angeles County, United States, by the South Coast Air Quality Management District (SCAQMD) in 1990s for the control of air pollution from small enterprises, the initial step would be to require registration of all TVEs to improve knowledge of operators and their location.67 There would be no initial pollution fees other than administrative costs of registration and once sufficient knowledge is acquired about operators then permits would be imposed in line with an overall action plan. Thus, the first part of the action plan addressing rural point sources should categorize TVEs on the basis of pollution control costs, to show clearly which TVEs will likely not be able to afford to furnish the needed environmental protection, even with due attention to use of cleaner protection technologies by means of a registration system. 67 Refer to Mass Load Control and Tradable Permits, June 2000; World Bank report, p 23. Chapter 7. Clean Water for All 193 FIGURE 7.3: PROPORTION OFCOD LOAD FROM MAJOR POLLUTION SOURCES OF VARIOUS PROGRAMS IN HAI BASIN (1,000 tons/year) P1 in 2000, total COD load= 5225 P1 in 2010, total COD load= 4361 P1 in 2020, total COD load= 3935 Rural Rural Rural Livestock municipal Livestock municipal Livestock municipal (P1)1 663 (13%) 254 (5%) 730 (17%) 848 (22%) Urban 276 (6%) 292 (7%) municipal Urban Urban 488 (9%) municipal municipal 656 (15%) 713 (18%) Urban Program Urban Industry Urban Rural industry Industry Rural industry 1225 (31%) Industry 1607 (31%) Rural industry 1435 (33%) 1266 (29%) 858 (22%) 2213 (42%) P2 in 2000, total COD load= 5225 Rural P2 in 2010, total COD load= 2076 P2 in 2020, total COD load= 1721 Rural Livestock municipal Rural Livestock municipal Livestock municipal 663 (13%) 254 (5%) (P2)2 Urban 518 (25%) 184 (9%) 625 (36%) 130 (8%) municipal Urban Urban 488 (9%) municipal municipal 398 (19%) 358 (21%) Rural Rural industry Rural industry industry Program Urban Urban 1607 (31%) Urban Industry 473 (23%) 308 (18%) Industry Industry 503 (24%) 2213 (42%) 300 (17%) P3 in 2000, total COD load= 5225 P3 in 2010, total COD load= 1766 P3 in 2020, total COD load=1240 Rural Rural Rural Livestock municipal Livestock municipal Livestock municipal 663 (13%) 254 (5%) Urban 316 (18%) 352 (29%) 130 (10%) (P3)3 184 (10%) municipal 488 (9%) Urban Urban municipal Urban municipal 357 (20%) Urban 284 (23%) Industry Industry 437 (25%) Program Rural 167 (13%) Urban Rural industry Rural Industry 1607 (31%) industry industry 2213 (42%) 473 (27%) 308 (25%) P1: Business as usual for urban industry & municipal + some treatment & some PPP for rural industry + reuse=0.1 & septic tanks treat to 180 mg/l for rural municipal + 0% reduction in COD load for livestock; all livestock data came from IWHR without poultry which is consistence with water demand data (same as following); P2: WWTP & PPP for urban industry & municipal + remediation focusing on treatment & PPP for rural industry + reuse=0.1 & septic tanks treat to 80 mg/l for rural municipal + 50% reduction in Hebei, Beijing & Shandong for livestock; P3: WWTP + PPP+ reuse for urban industry & municipal + remediation forcusing on treatment & PPP for rural industry + reuse=0.1 & septic tanks treat to 80 mg/l for rural municipal + 75% reduction in 2010 & 90% reduction in 2020 in all provinces for livestock. 194 Chapter 7. Clean Water for All FIGURE 7.4: PROPORTION OFCOD LOAD FROM MAJOR POLLUTION SOURCES OF VARIOUS PROGRAMS IN HUAI BASIN (1,000 tons/year) P1 in 2000, total COD load= 6947 P1 in 2010, total COD load= 5758 P1 in 2020, total COD load=5341 Rural Rural Rural Livestock municipal Livestock municipal 516 (9%) Livestock municipal 1091 (16%) 481 (7%) 1210 (21%) Urban 1463 (28%) 544 (10%) Urban municipal Urban municipal 622 (9%) municipal 999 (17%) 1138 (21%) Urban Industry Urban Rural 2467 (42%) Industry industry 1497 (26%) Rural industry Urban Rural 2287 (33%) 1536 (27%) Industry industry 1223 (23%) 974 (18%) P2 in 2000, total COD load= 6947 P2 in 2010, total COD load= 2948 P2 in 2020, total COD load=2602 Rural Rural Rural municipal municipal Livestock municipal 344 (12%) 242 (9%) 1091 (16%) 481 (7%) Livestock 933 (31%) Urban Urban Urban Livestock municipal municipal municipal 1167 (46%) 440 (17%) 622 (9%) 466 (16%) Rural Urban Rural industry Industry Rural Urban Urban industry 377 (14%) 2467 (42%) industry Industry 2287 (33%) Industry 608 (21%) 376 (14%) 597 (20%) P3 in 2000, total COD load= 6947 P3 in 2010, total COD load= 2434 P3 in 2020, total COD load=1890 Rural Rural Rural Livestock Livestock municipal municipal municipal 528 (22%) 1091 (16%) 481 (7%) 344 (14%) Livestock 242 (13%) Urban Urban 617 (32%) Urban municipal municipal municipal 622 (9%) 422 (17%) 354 (19%) Urban Urban Rural Industry Industry industry Urban Rural 2467 (42%) 531 (22%) Rural 2287 (33 %) industry industry Industry 377 (20%) 608 (25%) 300 (16%) P1: Business as usual for urban industry & municipal + some treatment & some PPP for rural industry + reuse=0.1 & septic tanks treat to 180 mg/l for rural municipal + 0% reduction in COD load for livestock; all livestock data came from IWHR without poultry which is consistence with water demand data (same as following); P2: WWTP & PPP for urban industry & municipal + remediation focusing on treatment & PPP for rural industry + reuse=0.1 & septic tanks treat to 80 mg/l for rural municipal + 50% reduction in Hebei, Beijing & Shandong for livestock; P3: WWTP + PPP+ reuse for urban industry & municipal + remediation forcusing on treatment & PPP for rural industry + reuse=0.1 & septic tanks treat to 80 mg/l for rural municipal + 75% reduction in 2010 & 90% reduction in 2020 in all provinces for livestock. Chapter 7. Clean Water for All 195 The regulation calls for all TVEs to comply with waste discharge standards by year 2000, which as noted above and in previous sections of this report is an unrealistic and unachievable goal. Reasons for polluters' inability to meet the standards set by SEPA as explained in more detail in section C above are that they are derived mostly from ICs and thus do not reflect the level of development and affordability of a country such as China because treatment technology required to meet these standards is beyond the current financing capability of even some large operators such as SOEs let alone small operators such as TVEs. The second part of the action plan on rural point sources is thus a review of water quality standards and strengthening of monitoring and enforcement procedures appropriate for the rural sector. This in fact forms part of the second element of the general water pollution control action plan described in the introduction of this chapter. While the legislation makes the local government and the mayor responsible for environmental quality improvements and reduction of discharge through administration of the law, there is a fundamental lack of knowledge about planning, design, operation and maintenance of TVEs appropriate for developing countries and despite calls by the government for institutes and universities to help in these matters, little has been achieved to date that has resulted in any improvement to water quality as a result of lower discharge of waste from TVEs. Third then, the action plan calls for the preparation of a manual of guidelines on planning, design, operation and monitoring of production TVEs appropriate for developing countries. This would require the adaptation of similar manuals produced for industrialized countries including attention to technical design criteria, costs for installation and for O&M, financing and cost recovery, and for environmental monitoring, for each and every type of TVE to be considered, for a range of production sizes covering smaller family to medium scale operations, including production technologies, using appropriate environmental standards.68 Such manual would give very useful information to EPBs and local governments on how to evaluate TVE proposals and whether to approve them or to specify improvements needed for approval. Since the regulations calls for exactly this type of process, producing such a manual should be high on the list of priorities in the water sector action plan. With appropriate strengthening of SEPA's role in the planning process, the impact of such technology transfer (which would include expatriate demonstration workshop) could improve water quality significantly with minimal investment. TVEs in construction, mining, industry, agriculture and commerce would all be subject to the requirements of the manual adapted for their particular activity. This is already implemented by the regulation and so all that is really required is to develop the guidelines and disseminate the information to the appropriate government agencies. Other advantages of such a manual would be (a) to show government regulatory and TVE investors and managers minimum size of plant that can be both profitable and environmentally sound, (b) to help determine requirement for clustering of small operations in order to meet economies of scale for the use of cleaner production technology, (c) to define environmental responsibilities for potential TVE investors, (d) to give clear guidelines to government financing units on which to base approval or rejection of requests for funding from TVE investors. (e) Rural Towns Sources Further options to reduce rural domestic or rural municipal loads in the Hai and the Huai basins focus on increased treatment levels from 180 mg/l in 2000 to 120 mg/l and 80 mg/l for 2010 and 2020. 68 "Keynote address on good governance for environmental management for production SMEs in Developing Countries" for EXPO 2000 Symposium on Efficiency through Management of Resources: Green Productivity Programs in SMEs, Hannover, Germany, September 2000. By Kasem Snidvongs, Permanent Secretary, Ministry of Science, Technology and Environment (Retired). 196 Chapter 7. Clean Water for All The action plan does not propose major treatment works for rural areas comparable to the urban investment program. As explained earlier, rural homes use latrines and pits but in impermeable soils and where groundwater is above the pit level, these leaching systems do not work properly and excreta does not stabilize and the pit gets filled up and spreads undigested sludge all over the place, into drains and eventually to the rivers. Most rural towns have no environmental engineering infrastructure for sewage or solid waste which is another major source of BOD in towns.69 Thus, the 0.25 million tons COD produced in 2000 in the Hai basin should be reduced to 0.13 million tons in 2020 with lower wastewater concentration. In the Huai Basin, the reduction should be from 0.5 million to 0.24 million tons a year. (f) Estimations of Water Quality Improvement Resulting from Implementation of Program 3 (the Action Plan) As explained in Annex 7.1 of Volume 3 and in 7B (v), (vi), the WPM-DSS does not calculate ambient water quality. In order to estimate the impact on water quality in the Hai and Huai basins, the following procedure was adopted: 1. Using available water quality data for the Hai and Huai basins, calculate a mean water quality (CODcr) for each subbasin or as many subbasin as data permits; 2. Relate this ambient COD concentration to calculate loads from the WPM-DSS under Program 1 (government's current program); 3. Assign water quality classes based on current ambient water quality standards. Refer to Maps 3.1 and 3.2, which show current water quality classes in 1995 and 1998 for the Hai and Huai basins respectively. 4. The WPM-DSS can calculate the COD loads resulting from the implementation of Program 3 in 2020 and using a simple ratio with the data derived in steps (a) and (b), estimates of water quality were estimated along with resulting water quality classes. These are shown in Maps 7.1 and 7.2. The most striking benefit from implementation of Program 3 is the disappearance of class V and V+ water bodies. D. COASTAL ZONE WATER QUALITY The 3-H basins rivers spill into the Huanghai Sea and the Bohai Sea. As a result of pollution generated in the basins and the fact that the rivers drain to these seas, both seas are moderately to highly polluted. According to a 1999 CEY survey 70 percent of sampled points were classified Class III or above with inorganic nitrogen and phosphate and oil being the most common pollutants. As noted in the Environmental Sector Update Report (WB, 2000), the incidence of red tides caused by algal blooms (resulting from excess nutrients entering the sea over a short period of time) has increased dramatically in the 1990s when 380 incidences were reported compared to 74 in the 1980s and 9 in the 1970s. 69 Even in many urban municipalities, many homes are not connected to sewers and rely on pit systems for sewage disposal with similar results. In western countries, regulations require sewer services for every home/building within the service areas no matter what the cost. In DCs including China, where money is scarce, the sewer usually serve only the affluent areas in the city. Often, only the affluent areas of cities are sewered and other areas are not. Chapter 7. Clean Water for All 197 MAP 7.1: PROJECTED WATER QUALITY CLASSIFICATION FOR THE HAI RIVER BASIN IN 2020 UNDER PROGRAM 3 Luan River Liaoning Chengde Zhangjiakou Miyun Reservoir Panjiakou Reservoir Sanggan RiGuanting ver re Daheiding Reservoir Reservoir Datong Cetian Reservoir ChYuqiao ReservoirSha Zunhua Rvi Qinghuangdao SangganRiver Beijing aobaiRver Canal Juma River Luan Zhuozhou riveRi Jni ivre Ru Tangshan River Gaobeidi Shuozhou Hutuo River Langfang hrtNo oD Fengnan Baiyangdian Lake Tianjin Bazhou Baoding BeidagangReservoir Yukuai Reservoir Xidayang Reservoir renqiu River Dingzhou Hejian ZiyaRZiya New iver Bo Hai Bay Xinzhou Gangnan Reservoir Anguo HuangbizhuangReservoir Hebei Province Cangzhou Gaocheng Botou Shijiazhuang Shenzhou Yangquan Xinji Shanxi Hengshui Province Dezhou DehuiNewRiver Binzhou MajiaRivRiver er Xingtai Wu'an Handan Tuhai Jinan Zhangze Reservoir Zhang River Liaocheng YuechengReservoir Changzhi Anyang Hebi Henan WeiRiver Shandong Province Puyang Province 0 150Kilometers Jiaozuo Xinxiang Approximate Scale N LEGEND CHINA WATER SECTOR ACTIONPROGRAM WORLD BANK-MINISTRY OFWATER RESOURCES Water quality class II Water quality class III Projected W ater Quality FIGURE No. Water quality class IV Classif ication for the Hai RiverBasin in 2020 Under Program3 2 198 Chapter 7. Clean Water for All MAP 7.2: PROJECTED WATER QUALITY CLASSIFICATION FOR THE HUAI RIVER BASIN IN 2020 UNDER PROGRAM 3 Yantai Wei hai III-7 Weifang Zibo Jinan Taian 'W Tia nz huang Re servoir Qingdao Bashan Re se rvoir 'W Qingfengling Re servoir Xiaos hiyang Rese rvoir AndiRe s ervoir guf una Si G Nisha nRe servoir Riz ha oRes ervoir Tangc un Rese rvoir Rizhao Ne w Zhuzhao JiningXiwe DoushanRe servoi r BaiMahe Re servoir ma iRe servoir Ya nma Re servoir i Y u He ze Wa ngfu Qufu Xujia ya Res ervoir hZ Yanz hou Linyi Huiba lingRes e rvoir Zouc he ng Xiaotashan Rese rvoir Zhe ngzhou III-5 W Te ngzhou Kaifeng Zaoz huang Shilia nghe Res ervoir Yingyang To eish an ngh III-6 Lianyunga ng Xinmi 'WDeBaisha ngfeng Huiji ui Lak e Re servoir Xinzheng Anfengsha nRe servoir Dasha Gusong Luo ma X inyi Ya n Be Jial u yi iru Ne w River Changge Xuzhou Kui Lak e Yellow Old Suqia n Xucha ng Zhaopingtai Re se rvoir Wou Hua ibei Ruzh ou Xiangcheng Xinsui H ua iyin n g Baiguishan Rese rvoir Sh Tuo a Ta ng Pingdingshan Yin e ay g Bozhou Suz hou S h III-2 Zhoukou Hua i'a n Gushitan Rese rvoir Luohe Xian bian Ya nc heng Hongxi Baoh ui III-3 III-4 Ru Hong Hei Quang J Ieshou Xifei Suya huR eservoir Banqiao Res ervoir Fuya ng ia Hu B engbu G aoyou Minggua ng Tia nc ha ng Boshan Res ervoir Chi Ming III-1 Ta izhou Huainan Ya ngzhou Na nyang Huai Shi Nanwan Res ervoir Xiaohuang aung H Shis ha nkou Rese rvoir Huashan Rese rvoir 'W Shi Wuyue Re ser voir P iLiu'an Pohe R eservoir 0 100Kilometers NianyushanRe s ervoir Meishan Rese rvoir XianghongdianRe servoir Approximate Scale FozilingRe s ervoir Moz ita nR eservoir LEGEND N CHINA WATER SECTOR ACTION PROGRAM WORLD BANK-MINISTRYOF WATER RESOURCES Water quality class II Water quality class III FIGURE No. Projected Water Quality Cla ssificatio n for the Huai River Basin Water quality class IV in 2020 under Program3 2 The current study has calculated COD load generations for 2000 and 2020 under base case (business as usual) and action plan (treatment, pollution prevention and reuse in urban areas; treatment and pollution prevention for rural industry; reuse and latrines for rural domestic sources; and settling ponds for livestock operations). The effect of the implementation of the action plan pollution program (program 3) is to reduce loads generated within the Hai and Huai basins. As discussed above, the freshwater quality improvements resulting from the implementation of this program show that for an average year, water quality will move up by one class e.g. from class IV to III by 2020, which means that COD will reduce from 20 mg/liter to 15 mg/liter. Flows available for the sea were shown in Table 3.1. Without measures implemented in the action plan, water to the sea in 2020 will be minimized and concentrations of pollutants will be high. There is a need to dilute these concentrations as well as reduce the loads generated in order to minimize the pollution impacts to the sea. The estimated combined effect of the flow augmentation and pollution reduction components of the action plan on COD loads to the sea is shown in Table 7.8 below. It can be seen from Table 7.8 that loads will be substantially reduced from the implementation of the action plan. Once flow augmentation measures are implemented, there will be a need for corresponding waste generation reduction program as advocated in the proposed pollution action plan. Chapter 7. Clean Water for All 199 TABLE 7.8: COD LOADS TO THE SEA FROM THE HAI AND HUAI BASINS (`000 Tons/year) Base 2000 Base 2020 P3 2020 Hai Basin II-1 116.0 71 27 II-2 95 76 47 II-3 679 402 121 II-4 93 844 24 Total 982 633 220 Huai Basin III-4 525 446 117 III-6 197 141 117 III-7 192.0 152 113 Total 914 739 347 E. COST OF GOVERNMENT PROGRAM AND ACTION PLAN As noted earlier, the structural component of the Action Plan addressing water pollution focuses on pollution prevention programs (PPPs) and wastewater treatment to reduce COD loads and improve water quality in water bodies in the 3-H basins. Projected load reductions to 2020 for major pollution sources have been estimated in the previous section and are the result of the ongoing Government Program and the proposed Action Plan. In this section, costs for the implementation of the action plan have been calculated for (a) urban industry (divided into paper and nonpaper), (b) urban municipal, (c) rural industry (TVEs), (d) rural livestock and (e) rural domestic at the level II basin. In addition, the costs of the action plan for the urban component (i.e. urban industry and urban municipal) have also been calculated for P1 and P2 cities. The costs were based on the target 2020 COD loads and allocated back to the tenth, eleventh, twelfth and thirteenth Five-Year Plans according to estimated proportions shown in all cost tables. These proportions were weighed qualitatively to allow sufficient funding within each planning period to produce the proposed load reductions. The total costs for each pollution source (a) to (e) above are based on "unit" costs derived from a study of current treatment technology in China for different classes of industries. This study is presented in Annex 7.4, Volume 3 and the unit costs used for the cost tables presented below are summarized in Table 7.9. TABLE 7.9: UNIT COSTS OF TREATMENT AND PPP USED IN CALCULATIONS OF INVESTMENT Pollution control measure Pollution Source Unit cost Unit Treatment (urban ) Paper Industry a 14,580 Y/ton COD/Year Paper Industry b 6,690 Y/ton COD/Year Nonpaper Industry 9,500 Y/ton COD/Year Municipal 2,500,000 Y/ML/Day Treatment (Rural) Paper Industry 14,950 Y/ton COD/Year Paper + Nonpaper Industry 9,500 Y/ton COD/Year Livestock 189 Y/Head Rural towns 220 Y/Person Pollution Prevention Program (urban) Paper 19,000 Y/ton COD/Year Nonpaper 9,500 Y/ton COD/Year a: Excluding 50 percent TVE closure; : Including 50 percent TVE closure; b The following paragraphs identify the costs of the Government Program (the "base case") and the Action Plan for items (a) to (e) for level II basins and then for P1 and P2 cities. 200 Chapter 7. Clean Water for All (i) Urban Industry The paper industry produces nearly 60 percent of COD pollution in both the Hai and the Huai basins as discussed in Chapter 3E and so the action plan and associated costs have been calculated for the paper industry separately. All other industry types have been amalgamated into "nonpaper." Nonpaper is further divided into toxic and nontoxic industries. The proposed action plan relies on combined industry and municipal treatment systems to lower costs of treatment as well as PPP to achieve COD reduction. In addition, the effect of reuse of wastewater on COD loads is investigated although costs have not been estimated because treatment is necessary prior to reuse of wastewater. Costs were identified with each reduction method including PPP, treatment and pretreatment (see Volume 3, Annex 7.5, Tables A7.5-5 to A7.5-14). The costs of pretreatment to reduce loads prior to discharge to municipal sewers will be the responsibility of industry and this is discussed further in the next section on financing. Industry should take responsibility for reducing COD loads discharged to municipal sewers because (a) some materials are explosive, corrosive or can cause clogging and thus can damage sewer pipes and (b) slugs of high COD loads can disrupt treatment process at the municipal treatment plant70 as discussed in more detail in Chapter 8. And (c) toxic material can pass through treatment plant and end up in the rivers and damage aquatic life and pass through to the water supply system for cities and irrigation. Current standards are estimated in Tables 7.10 and 7.11 which shows that in the Hai basin, the paper industry needs to reduce COD concentration by an average 50 percent (47 percent in the Huai) prior to discharge to municipal treatment plants. Industry type 2 and 5 are toxic industries which will require 20 percent concentration reduction (20 percent and 32 percent respectively in the Huai basin) while industry type 3 will require 34 percent (66 percent in the Huai basin). Leather/tanning and textile and small urban industry will not require pretreatment according to the data produced by the WPM-DSS. In the Hai basin, toxic COD load (industry 2 and 5) account for 46 percent (2+5/(1:6)-1) of total nonpaper COD load while Brewing and Food account for 13 percent (3/(1:6)-1) of total nonpaper COD load. Thus, the proportion of wastewater COD concentration to be reduced by the nonpaper industry (Industries 2, 3, 5) by pretreatment is 4.5 percent (34 percent X 13 percent) for Industry 3 and 9.5 percent (46 percent X 20 percent) for industries 2 and 5 or 14 percent in total. By the same procedure using data in Table 7.8, toxic COD load in the Huai basin accounts for 11 percent of total nonpaper COD load while Brewing and Food account for 24 percent of total nonpaper COD. Thus, Brewing and Food (Industry 3) needs to pretreat 2 percent of COD load and the toxic industries (2 and 5) need to pretreat 16 percent of their load prior to discharge into municipal sewers. In total, 18 percent pretreatment of COD load will be necessary for the nonpaper industry in the Huai. In Volume 3, Annex 7.5, Tables A7.5-5 and A7.5-6 show the costs associated with municipal treatment and pretreatment for level II basins in the Hai and Huai basins for the paper and nonpaper industries. The same costs are shown in Volume 3, Annex 7.5, Tables A7.5-7 and A7.5-8 for P1 and P2 cities. The balance between treatment and PPP was estimated to be 67 percent in favor of PPP and 33 percent treatment. This is based on analysis of results from the WPM-DSS where reductions achieved from PPP alone were subtracted from reductions achieved by treatment and PPP and the difference allocated to treatment. The ratio of PPP alone to treatment combined with PPP averaged 67 percent over all the basins in the 2H basins. The WPM-DSS favors PPP as a pollution control measure in terms of load reductions effectiveness reflecting modernization of manufacturing processes currently taking place as a result of government policies and globalization. In addition, PPP is also beneficial for air quality. The costs of sewerage71 were estimated from data retrieved from the original 70 Where this is likely, the design of pretreatment should ensure holding tanks to stabilize flows before actual sludge treatment. 71 Sewerage here means collecting sewers, interceptor-delivery and disposal. Pumping and treatment are excluded. Chapter 7. Clean Water for All 201 pollution substudy (Stapleton-Ludwig-Foerster, 1999). According to this study, sewerage for municipal treatment plants receiving both industrial and municipal sewage are equivalent to the costs of the treatment plants. TABLE 7.10: HAIBASIN PRETREATMENT REQUIREMENTS Industry type 1 2 3 4 5 6 Modeled as toxic No Yes No No Yes No COD (mg/L) 2,006 520 1,524 525 228 200 COD Load in 2000 (base case, tons/day) 2,900 839 412 197 626 1,089 Estimated standard for sewers (mg/L) 1,000 500 1,000 1,000 500 500 % treatment required by industry 50 20 34 0 20 0 1: Paper; 2: Pharmaceutical, Chemical, Fertilizer; 3: Brewing, Food; 4: Leather, Tanning, Textile; 5: Construction, Coking, Mining, Machinery, Oil, Steel, Metallurgy, Power, Miscellaneous; 6: Small Urban Industry (less than 100 ton/day wastewater). TABLE 7.11: HUAIBASIN PRETREATMENT REQUIREMENTS Industry type 1 2 3 4 5 6 Modeled as toxic No Yes No No Yes No COD (mg/L) in 2000 Base Case 1,880 277 2,947 708 731 200 COD Load in 2000 (base case, tons/day) 2,495 337 1,148 166 220 3143 Estimated standard for sewers (mg/L) 1,000 500 1,000 1,000 500 200 % treatment required by industry 47 20 66 0 32 0 1: Paper; 2: Pharmaceutical, Chemical, Fertilizer; 3: Brewing, Food; 4: Leather, Tanning, Textile; 5: Construction, Coking, Mining, Machinery, Oil, Steel, Metallurgy, Power, Miscellaneous; 6: Small Urban Industry (less than 100 ton/day wastewater) Costs for urban industry were allocated to the Government Program as well as to the Action Plan. The Government Program is modeled as the "base case" or "business as usual" scenario and was described in more detail in the previous section along with different scenarios of the action plan. The Government Program is the ongoing pollution control program encompassing current treatment both for municipal and industry and PPP for industry. According to the WPM-DSS, if these efforts are sustained to 2020, pollution reduction under the base case scenario should significantly improve water quality in the Hai and the Huai basins as discussed in the previous section. Costing of this Government Program was achieved using the forecasted load reductions from the WPM-DSS and the unit costs identified in Table 7.10 above. These investments are estimated to be necessary to sustain the government's current effort in pollution control. However, reductions in loads will not be sufficient to improve water quality to the extent needed for public health and environmental improvements and so the Action Plan proposes additional load reductions as explained in previous sections of this chapter. Together, investments in pollution control in the Government Program and the Action Plan to 2020 should achieve significant water quality improvements as shown in Maps 7.1 and 7.2 above. The costs of the urban industry component amount to Y 32 billion for the Hai basin and Y 33.8 billion for the Huai basin. Costs were also defined for P1 and P2 cities as shown in Volume 3, Annex 7.5, Tables A7.5-5 to A7.5-14. (ii) Urban Municipal The costs associated with treatment of municipal wastewater were based on wastewater quantity generated rather than the COD load as for industry72 because (a) treatment for removal of BOD is the only predictable pollution reduction option for municipal sources, (b) wastewater quantity is the overriding 72 The WPM-DSS separates industry and human wastewater in the analysis and so loads and costs are also separated. 202 Chapter 7. Clean Water for All consideration for costing treatment plants while wastewater strength is not as important, (c) wastewater generated is a function of population and water consumption. The Government Program and the proposed Action Plan are costed together and so the "base case" scenario (the largest wastewater generation) is used to define costs. These are shown for level II basins in Tables 7.12 and 7.13. The costs of sewerage works (as defined below) were estimated at 100 percent the cost of treatment as for urban industry and so the final costs come to Y 45.5 billion in the Hai basin and Y 44.8 billion in the Huai basin. (iii) Rural Industry73 Rural industry was separated into paper and nonpaper categories for the load analysis as well as for the cost analysis because the structure of small industry is estimated to be roughly similar to larger SOEs. The calculation of load reduction was carried out in a similar way to the urban industry. This is based on analysis of results from the WPM-DSS where reductions achieved from PPP alone were subtracted from reductions achieved by treatment and PPP and the difference allocated to treatment. In the case of the Action Plan, the lower costs of treatment reflect the emphasis placed on PPP. Sewerage was estimated to be 50 percent of the costs of treatment and unit costs of treatment were derived from Annex 7.4. In the case of the Government Program, only PPP was costed because there are no current treatment programs being implemented. Tables 7.12 and 7.13 show that at level II basin, Y 19.6 billion will be needed for the Hai basin and Y 31.1 billion for the Huai to address rural industry pollution. (iv) Rural Towns The costs associated with the rural municipal part of the Action Plan were based on population and water consumption. An estimate of the unit cost was derived from DFID's North China Rural Water Environmental Project (1995) which suggests that the costs for treatment of municipal loads in rural areas using technology described in section C (iii) above is in the order of Y 220 per capita. Thus, based on population growth figures from 1997 to 2020 derived from IWHR, treatment costs were estimated for level II basins as shown in Tables 7.12 and 7.13. These are expected to be Y 31.9 billion for the Huai basin and Y 17.1 billion for the Hai basin. (v) Rural Livestock A similar approach was adopted to calculate the costs associated with livestock treatment infrastructure. Again, DFID's North China Rural Water Environmental Project (1995) provided an estimate of the unit cost of treatment and IWHR figures were used for livestock population in the 2H basins. All treatment costs for large animals are referred to pigs74 which were reported at Y 189 per head in the DFID project. Treatment for livestock wastewater will require Y 4.8 billion and Y 8.3 billion for the Hai and Huai basins over the next 20 years. As for all other pollution sources discussed above, these costs have been allocated to different Five-Year Plans (see Tables 7.12 and 7.13). 73 Note on Rural Industry definition: TVEs had traditionally been small industries with production to support agriculture In the 1980s, the Chinese government relaxed grain production quotas and encouraged rural population to diversify investment. Many TVEs started to diversify production for the rural population markets. Thus TVEs are defined as rural industries producing diversified goods including agroindustry (but not livestock which is analyzed separately). 74 Pigs were used as reference because the DFID projects provided treatment costs for pigs only. Thus, COD generation rates of other large animals such as cattle were compared to pigs and treatment costs were calculated by ratio. It should be noted however that this is an approximation because from a public health perspective, pig waste is far more dangerous with higher risks of infectious diseases than cattle or sheep for example and so should also be more complex to treat. This is why Jewish and Islamic communities have not accepted pigs into their diets. Chapter 7. Clean Water for All 203 The nonstructural component of the action plan is an equally important aspect of the proposed program. There are two sides to this component and these include (a) the government's environment regulatory system whose major components were shown in Table 7.3 and (b) the wider reforms undertaken by the government to promote China's transition. In the section discussing current water pollution control in the 3-H basins above, we assessed the major components of the regulatory system in terms of their ability to reduce pollution and noted issues of concern. Government reforms have had a major beneficial impact on industrial pollution by changing sectoral composition of output, the size distribution of factories, their ownership and their sensitivity to economic incentives in the form of pollution levies. TABLE 7.12: HAIBASIN STRUCTURAL POLLUTION CONTROL INVESTMENT (2000-2020) (Y`000) Government Program and Action Plan Pollution Control Measure Municipal Treatment Sewerage PPP Pretreatment Industry Paper Nonpaper Paper Nonpaper Paper Nonpaper Luanhe & East Coast Hebei 498,881 153,735 652,616 2,159,105 542,322 498,881 25,027 Industry North Haihe 75,872 343,502 419,374 341,261 1,240,222 75,872 55,919 South Haihe 1,364,219 1,611,084 2,975,303 5,818,208 4,313,606 1,364,219 262,270 Tuhaimajia 930,366 157,486 1,087,852 3,680,768 421,399 930,366 25,637 Urban Hai Basin 2,869,339 2,265,806 5,135,145 11,999,341 6,517,548 2,869,339 368,852 Subtotal 32,025,370 Government Program and Action Plan combined Pollution Control Measure Treatment Sewerage Luanhe & East Coast Hebei 1,825,211 1,825,211 North Haihe 7,011,252 7,011,252 Urban South Haihe 13,243,576 13,243,576 Municipal Tuhaimajia 653,710 653,710 Hai Basin 22,733,749 22,733,749 Subtotal 45,467,497 Government Program and Action Plan Pollution Control Measure Treatment Sewerage PPP Luanhe & East Coast Hebei 222,926 111,463 1,164,921 North Haihe 398,902 199,451 2,291,734 Industry South Haihe 1,803,126 901,563 11,098,436 Tuhaimajia 224,916 112,458 1,102,865 Rural Hai Basin 2,649,869 1,324,934 15,657,956 Subtotal 19,632,759 Government Program and Action Plan combined Pollution Control Measure Treatment Luanhe & East Coast Hebei 1,572,120 North Haihe 2,596,000 Rural South Haihe 10,572,540 MunicipalTuhaimajia 2,402,620 Hai Basin 17,143,280 Subtotal 17,143,280 Government Program and Action Plan combined Pollution Control Measure Treatment Sewerage Luanhe & East Coast Hebei 357,342 178,671 North Haihe 625,476 312,738 South Haihe 1,589,788 794,894 Livestock Tuhaimajia 631,021 315,511 Hai Basin 3,203,627 1,601,814 Subtotal 4,805,441 Hai Basin Total 119,074,347 204 Chapter 7. Clean Water for All TABLE 7.13: HUAIBASIN STRUCTURAL POLLUTION CONTROL INVESTMENT (2000-2020) (Y`000) Action Plan + Government Program Pollution Control Measure Municipal Treatment Sewerage PPP Pretreatment Industry Paper Nonpaper Paper Nonpaper Paper Nonpaper Upstream of Wangjiaba 124,214 47,806 172,020 498,103 184,559 110,152 10,494 Wangjiaba to Bengbu 749,609 813,895 1,563,503 3,202,944 2,603,280 664,747 178,660 Bengbu to Hongze lake 279,342 337,194 616,535 1,170,866 971,632 247,718 74,018 Industry Lower Huaihe, Hongze lake to Huang Sea 209,856 326,557 536,413 895,448 1,155,400 186,099 71,683 Urban Nansi Lake 676,957 610,168 1,287,125 2,876,918 1,867,327 600,320 133,939 Lower Yishusi 376,662 379,919 756,580 1,567,133 1,063,124 334,021 83,397 Shandong peninsula 55,351 419,039 474,390 242,711 1,635,550 49,085 91,984 Huai Basin 2,471,990 2,934,577 5,406,567 10,454,122 9,480,871 2,192,142 644,176 Subtotal 33,584,445 Government Program and Action Plan combined Pollution Control Measure Treatment Sewerage Upstream of Wangjiaba 1,390,820 1,390,820 Wangjiaba to Bengbu 9,706,529 9,706,529 Bengbu to Hongze lake 2,291,173 2,291,173 Lower Huaihe, Hongze lake Municipal to Huang Sea 1,515,681 1,515,681 Nansi Lake 2,881,335 2,881,335 Urban Lower Yishusi 1,861,277 1,861,277 Shandong peninsula 2,722,260 2,722,260 Huai Basin 22,369,074 22,369,074 Subtotal 44,738,148 Government Program and Action Plan Pollution Control Measure Treatment Sewerage PPP Upstream of Wangjiaba 204,735 102,367 1,383,919 Wangjiaba to Bengbu 1,144,630 572,315 9,602,330 Bengbu to Hongze lake 458,651 229,326 4,675,220 Lower Huaihe, Hongze lake Industry to Huang Sea 318,719 159,360 3,311,456 Nansi Lake 348,576 174,288 3,709,807 Rural Lower Yishusi 233,606 116,803 2,466,095 Shandong peninsula 204,501 102,250 1,626,448 Huai Basin 2,913,418 1,456,709 26,775,275 Subtotal 31,145,402 Government Program and Action Plan combined Pollution Control Measure Treatment Upstream of Wangjiaba 2,426,380 Wangjiaba to Bengbu 10,228,240 Bengbu to Hongze lake 3,388,220 Lower Huaihe, Hongze lake Municipal to Huang Sea 2,942,500 Nansi Lake 4,702,500 Rural Lower Yishusi 3,949,440 Shandong peninsula 4,336,200 Huai Basin 31,973,480 Subtotal 31,973,480 Government Program and Action Plan combined Pollution Control Measure Treatment Sewerage Upstream of Wangjiaba 393,758 196,879 Wangjiaba to Bengbu 1,817,617 908,808 Bengbu to Hongze lake 587,984 293,992 Lower Huaihe, Hongze lake to Huang Sea 482,346 241,173 Livestock Nansi Lake 1,053,047 526,523 Lower Yishusi 632,998 316,499 Shandong peninsula 562,242 281,121 Huai Basin 5,529,990 2,764,995 Subtotal 8,294,985 Huai Basin Total 149,736,459. Sectoral changes include a shift away from "dirty industries" such as coal mining, building materials, transport equipment, chemicals and metals. Generally, factories have become larger and thus benefit from lower abatement costs newer technology and economies of scale not available to generally older and smaller SOEs. (Dasgupta et al. 1997). Despite decreases in real levy rates in some locations such as Beijing which would have increased pollution in the last 5 to 10 years, concurrent government Chapter 7. Clean Water for All 205 reforms have managed to counteract this negative impact and overall pollution loads are reported to have dropped. The conclusion here is that as government reforms take effect, an increasing share of industrial pollution moves to large non-SOEs and the marginal abatement cost (MAC) for industry decreases significantly. This is reflected in the WPM-DSS through decreased wastewater volume generated over the next 20 years, lower strengths of wastewater, higher degree of treatment and reuse. These trends are partly due to government program (but also due to industry restructure as the process of globalization takes place which subjects industry to increased international competition and a higher degree of exposure to more modern manufacturing processes and technology. Manufacturing processes from IC have generally higher degree of cleaner production and are more efficient users of raw materials because of both IC environment requirements and the necessity to lower cost of production. Similarly, rural industries and livestock operation will be subject to increasing international competition which will restructure these many small industries into fewer bigger ones with more economics of scale in pollution abatement. Again this is reflected in model inputs and so the overall benefits shown in terms of projected load reduction in Program 1 are a combination of (a) government environmental regulations and (b) natural restructuring of industries (urban and rural) resulting from modernization and international exposure. It is difficult to determine the extent to which the government program will contribute to the projected pollutant load reductions. Natural restructuring of industries may be promoting a significant proportion of these benefits. Regardless, it is proposed here that there is room for further improvement of the government program and so Program 3 discussed above identified areas sources where additional strengthening would help reduce loads from each main pollution sources identified. This program assumes that nonstructural control measures (other than natural industry restructuring as discussed above) need to be applied in parallel to ensure sustainability of the structural program. Thus Table 7.14 summarizes further improvements in the regulatory system needed to ensure that the structural program is viable. 206 Chapter 7. Clean Water for All TABLE 7.14: PROPOSED ACTION PLANFOR NONSTRUCTURAL POLLUTION CONTROL Type of Component Issue/Problem Proposed Action Plan regulation Command 1. Pollutants dis- Discharge limits are expressed in terms of · Concentration based standards must be replaced by mass based standards and control charge limits, concentration and the fines (or environ- expressed in terms of pollutant mass (e.g. COD-kg) per unit of output, such as instruments based on allow- mental levies) are calculated only based on kg. Of product; able pollutants the worst pollutant, in addition, the levy is · Review environmental standards by (a) establishing current water quality concentrations; too low and applied too infrequently and situation in water body of concern; (b) evaluating sources of pollution loading; selectively to be real deterrent; (c) evaluate effectiveness of government's regulatory system to control these sources; (d) collate and evaluate current IC standards for comparison only (e) The standards applied for water quality are compile experiences in other DCs to review standards e.g. Thailand, and (f) use generally not affordable for China being (a) to (e) to set tentative standards that match the reality of China's development replications f western standards and very situation. few water bodies meet their currently · Review effluent standards by (a) determining treatment level (TL) for specific designated beneficial uses. industrial waste to achieve significant reduction in pollution at relatively low cost (TL/1) using appropriate technology; (b) Examine downstream environ- mental situation to assess essential beneficial water uses (BWUs) existing or projected. Irrigation/water supply for urban consumption/hydropower recharge/ boating; (c) compare (a) and (b) to determine the particular additional removals which must be achieved to protect BWUs (TL/1+2) for each pertinent pollution parameter; (d) compare effluent values for pertinent pollution parameters for TL/1 and TL/1=2 with any existing established national or regional effluent standards and with standards published by ICs and by international assistance agencies; (v) based on (a), (b), (c) and (d), set appropriate TL which is not less than TL/1 and which exceeds TL/1 only to extent needed for essential environmental protection 2. Monitoring of Monitoring of water quality is undertaken Monitoring program needs to be revised to contain (a) minimum data base needed water quality by both SEPA and MWR and there is little to relate cause and effect, e.g. reflect improvement in pollution control measures; and effluents by coordination between the two bodies. (b) combine MWR and SEPA monitoring program; (c) link monitored parameters EPBs to objectives such as public health, regulatory or descriptive "State of the environment" data. The latter is current design of monitoring system; (d) design monitoring program to allow tracking of mass load including behind gates, prior major confluence; (e) parameters to include toxic pollutants known to be generated by industries or mining upstream; (f) include river/lake sediment sampling on annual basis to determine toxic accumulation bound in sediments (legacy pollution); (vii) allow upgrade of laboratory analytical techniques for analysis of samples. This requires abolishing the current analysis standards which "lock" monitoring agency into outdated techniques Translate the latest version of "Standards Methods for Analysis of Water and Wastewater"; (g) increase EPB input into design of monitoring network to promote more decentralized design; (h) retrain EPBs staff to focus on environmental outcomes rather than enterprise specific pollution loads. 3. Mass-based con- Mass-based control has been applied in Proceed to apply mass based regulatory system as quickly as possible with due trols on total some circumstances/areas but not every- attention to increased ambient monitoring data requirements and modeling. Apply provincial dis- where and this possibly confuse regulators mass-based system to pollution hot spots first but follow through without delay to charges, with and polluters because other areas have kept all other areas to avoid dual regulatory system for prolonged periods which pilot application the concentration based control increases the difficulty of enforcement for the regulator and can promote confusion to municipalities for the regulated. 4. Environmental EIA are carried out by SEPA appointed The EIA process is focused on industrial pollution, leaving many other sources impact assess- institutes but it is the EPBs who generally (such as TVEs and small livestock operations) with little planning. The first part of ments (EIAs) lack the skills and staff to fulfill their role the action plan addressing rural point sources should categorize TVEs on the basis in this important process. of pollution control costs, to show clearly which TVEs will likely not be able to afford to furnish the needed environmental protection, even with due attention to use of cleaner protection technologies by means of a registration system. Second is a review of water quality standards and strengthening of monitoring and enforce- ment procedures appropriate for the rural sector. This in fact forms part of the second element of the general water pollution control action plan. Thirdly, is the preparation of a manual of guidelines on planning, design, operation and monitor- ing of production TVEs appropriate for developing countries. This would require the adaptation of similar manuals produced for industrialized countries or other developing countries including attention to technical design criteria, costs for installation and for O&M, financing and cost recovery, and for environmental monitoring, for each and every type of TVE to be considered, for a range of production sizes covering smaller family to medium-scale operations, including production technologies, using appropriate environmental standards. Chapter 7. Clean Water for All 207 Type of Component Issue/Problem Proposed Action Plan regulation 5. Mandatory EPB There are adequate legislation to control The action plan calls for strengthening permit allocation process by EPBs with certification pollution sources however where perform- improved transparency. Proceed to apply mass based regulatory system as quickly before new pro- ance suffers, it reflects local choice or as possible with due attention to increased ambient monitoring data requirements duction lines interpretation of the law rather than legal and modeling. Apply mass-based system to pollution hot sports first but follow operate, affirm- tools; through without undue delay to all other areas to avoid dual regulatory system for ing that agreed prolonged periods which increases the difficulty of enforcement for the regulator pollution con- The production licensing or three synchro- and can promote confusion for the regulated. The problem of the extent of devolu- trols are in- nous program which focuses on pollution tion or decentralization of responsibilities goes beyond the water sector and is a stalled and func- prevention has had limited impact due to complex issue which impacts of all aspects of Chinese society. It reflects the tioning (three selective application at the local level as relationship between central and provincial government. Thus it is not appropriate synchronization explained in part or useful to suggest possible adjustments. In addition the legal system and its program- implication at the local level, the dependence of the court system on finding from santongshi) provincial government are also issues that go beyond the water sector but that have great impact on resource management. 6. For existing The production licensing or three synchro- The action plan calls for strengthening permit allocation process by EPBs with factories out of nous program which focuses on pollution improved transparency. Proceed to apply mass based regulatory system as quickly compliance with prevention has had limited impact due to as possible with due attention to increased ambient monitoring data requirements discharge limits, selective application at the local level as and modeling. Apply mass-based system to pollution hot sports first but follow a program of explained in part through without undue delay to all other areas to avoid dual regulatory system for mandatory pol- prolonged periods which increases the difficulty of enforcement for the regulator lution controls/ and can promote confusion for the regulated. The problem of the extent of treatment within devolution or decentralization of responsibilities goes beyond the water sector and specified time or is a complex issue which impacts of all aspects of Chinese society. It reflects the plant closing relationship between central and provincial government. Thus it is not appropriate or useful to suggest possible adjustments. In addition the legal system and its implication at the local level, the dependence of the court system on finding from provincial government are also issues that go beyond the water sector but that have great impact on resource management. Economic 7. Pollution levy There are adequate legislation to control Review pollution levy system with the intention to increase by 5-10% annually for incentives fee pollution sources however where perform- example, in order to ensure behavioral changes by polluters. Levy system to be ance suffers, it reflects local choice or base don mass loads as discussed in part 1 above. interpretation of the law rather than legal tools; Discharge limits are expressed in terms of concentration and the fines (or environ- mental levies) are calculated only based on the worst pollutant, in addition, the levy is too low and applied too infrequently and selectively to be real deterrent 8. Noncompliance There are adequate legislation to control As for Part 6. fines pollution sources however where perform- ance suffers, it reflects local choice or interpretation of the law rather than legal tools; 9. Environmental There are adequate legislation to control Proceed to apply mass based regulatory system as quickly as possible with due taxes on waste- pollution sources however where perform- attention to increased ambient monitoring data requirements and modeling. Apply water ance suffers, it reflects local choice or mass-based system to pollution hot sports first but follow through without undue interpretation of the law rather than legal delay to all other areas to avoid dual regulatory system for prolonged periods which tools; increases the difficulty of enforcement for the regulator and can promote confusion for the regulated. Permit issuance in a mass based regulatory system needs to (a) consider the economic ramifications of limits to permit issues, (b) allow entrepre- neurship and new entries into the market to develop while maintaining total maximum loads, (c) allow new technology which cleaner production methods to replace old more polluting SPEs. Allocation of permits through auction offers efficiency gains but if there are restrictions on water intake such as in the 3-H basins, then there will be limits to discharge and these circumstances, nonmarket- based method of allocating allowances directly to existing polluters (or grand- fathering) should be the preferred choice although this method is biased against new firms and slows the introduction of new technologies. China needs to be especially weary of this problematic aspect of permit allocation because the replacement of older highly polluting enterprises with newer, and larger enterprises with improved manufacturing processes is an important aspect of industrial policy and China's global competition. The action plan calls for training for EPBs and SEPA in the form of TA project. 208 Chapter 7. Clean Water for All Type of Component Issue/Problem Proposed Action Plan regulation Public man- 10. A managerial The standards applied for water quality are As for part 1. agement goal-responsi- generally not affordable for China being instrument bility system of replications f western standards and very environmental few water bodies meet their currently protection, fix- designated beneficial uses ing on individ- ual leaders the responsibility for meeting overall environ- mental targets Public dis- 11. Comprehensive Improve system by adopting modern information technology such as setting up a closure evaluation sys- web page for citizens complaints bureaus. instruments tem for city environmental quality, includ- ing citizen com- plaint bureaus; environmental awareness; cleanup cam- paign Chapter 8. Wastewater Reuse 209 8. WASTEWATER REUSE A. INTRODUCTION The practice of wastewater reclamation from industry and municipalities was initiated in Industrialized Countries (ICs) as a result of increased effluent treatment requirements from governments who were responding to community pressures for a cleaner environment and in some areas such as California also as a result of water scarcity. Thus while the initial impetus for the operation of sewers was to improve public health by removing pathogen-containing wastewater from areas where people were living, the construction of interceptor/delivery and treatment/disposal infrastructure was primarily as a response to the need for preserving the environment in the receiving water bodies. Growing industrial wastewater production in urban centers added another source of wastewater and the practice of combining wastewater treatment of industrial and municipal origins grew out of opportunities for tremendous cost savings. However such practices also required the development of industrial wastewater control programs and in particular are (a) industrial wastewater permit system and (b) industrial pretreatment to ensure that industrial effluent discharging to municipal treatment facilities was compatible with process trains designed for municipal effluent. This is the first aspect of wastewater management discussed in this chapter. Continued decrease in government funding over the last two decades and more recently a shift toward private sector involvement have emphasized the importance of cost recovery for water and wastewater treatment utilities. At the same time, stricter environmental controls have promoted a conceptual shift from legal disposal toward resource recovery. The large sums of money spent on treatment gradually increased the value of the wastewater so that currently, reuse schemes for potable consumption are common in water scarce areas in ICs (for example in Southern California) where the development of alternative sources of water is either comparatively uneconomic or just not feasible. This is the second aspect of wastewater management discussed in this Chapter While ICs had the luxury of addressing public health, environmental and scarcity issues in turn over many decades allowing gradual adaptation of structural, nonstructural, technological and institutional aspects of management, China and other DCs have to contend with all these issues in a much smaller time frame. Population growth, urbanization, industrialization and degradation of the environment are all creating water shortages while difficulties in financing the necessary infrastructure, reforming institutional relations and providing appropriate technological solutions continue to slow progress in implementing solutions. Industrial/domestic combined wastewater treatment: Experience in many DCs over the past two decades has shown that while many have attempted to control industrial wastes by use of an industrial wastewater permit system, these efforts have generally not been successful because of (a) the necessary technical expertise as not been available in DCs; (b) inappropriate environmental standards and technology of wastewater treatment adopted former ICs which are both essentially not applicable/usable in DC circumstances and makes it virtually impossible for industry to comply; (c) inappropriate monitoring capability and enforcement capabilities which lowers incentives for industries to comply and promotes evasion; (d) lack of consideration of the location of industries with respect to the needs/cost for environmental pollution control; (e) the belief that imposing wastewater pollution control on industries will have competitive advantage. 210 Chapter 8. Wastewater Reuse Wastewater Reuse: the main driving force promoting wastewater reuse schemes in the 3-H basins is the need to conserve water resources in urban/rural areas. Factors affecting timely implementation of solutions include (a) lack of infrastructure/finance for conventional waste disposal including collecting sewers, interceptors/delivery and WWTP/disposal and infrastructure for reuse schemes including pretreatment, dual systems for urban uses or urban uses or water delivery programs such as trucks, (b) subsidized prices of water and wastewater services, (c) knowledge of appropriate technology relating to design of WWTP, industrial treatment, monitoring and chemical analysis, (d) inflexibility and lack of government departments cooperation, (e) lack of industry restructuring where fewer larger plants produce for the entire market with considerable economies of scale in pollution abatement. Figure 8.1 shows a schematic drawing of a generic integrated water management system first proposed for the Wanjiazhai Project for optimal integrated water importation/use/reuse/waste management and water pollution control. It shows that there are two essential components to integrated water management system to maximize raw water supply for water short cities. The first essential component is need to combine the treatment of industrial wastewater and municipal wastewater so as to (a) benefit from economies of scale from the joint treatment which reduces the cost to the municipalities and (b) collect the maximum volume of wastewater which when treated will become suitable raw water supply for the city's industry and irrigators. This component requires not only suitable infrastructure such as collection interceptors and treatment disposal systems but a very important permit system consisting of ordinances for regulating sanitary and industrial waste discharges. The second essential component is the implementation of a reuse scheme such as the one shown in Figure 8.1 where integrated urban infrastructure provide raw water supply for (a) environmental flow; (b) industry raw water supply; (c) groundwater recharge. (Aquifer storage for water supply recovery, spreading basins or groundwater mounds for environmental purposes such as the prevention of water quality degradation or salinity intrusion); (d) irrigation of crops. This chapter investigates these two essential components. B. THESITUATION IN CHINA AND THE 3-H BASINS Many cities in the 3-H basins and in China are unsewered; where sewers exist, they often discharge untreated wastewater to the nearest drainage channels or water course. Collecting the wastewaters for treatment is a formidable and expensive task. But formal reclamation cannot begin until collecting sewers, interceptors / facilities for delivering the untreated flows to the treatment plants and treatment plants and final disposal facilities are built. As alternative low cost sources of water are generally not available for irrigation of high value market crops near cities, the common practice is to use raw wastewater directly or to withdraw from nearby streams that are usually polluted with raw wastewater. The consequent contamination of foodstuffs to be eaten raw maintains a high level of enteric disease in the area not to mention unknown long term consequences from toxic substances in the municipal sewage derived from industries and also from homes. Thus, improving protection of public health, as well as the provision of additional water supply, present incentives to the initiation of agricultural reuse projects near cities. As noted above, in ICs, the impetus for the development of reclamation schemes was more restricted to water scarcity and resource recovery and not so much to improve public health because almost all cities and towns have been fully serviced by sewers/WWTPs for many decades. Any irrigation for agriculture using reclaimed Chapter 8. Wastewater Reuse 211 water has been strictly controlled since the early stages of development and irrigation using untreated wastewater has not been permitted for public health reasons unlike the situation in DCs where this practice is routinely used to supplement frequent shortages. FIGURE 8.1: SCHEMATIC DRAWING OF INTEGRATED WATER USE/REUSE MANAGEMENT SYSTEM Industry Wastewater In-Plant Production Treatment (e) To River (a) Imported or Common Existing Treatment Plant Water Supply Serving Group of Industries Industrial Water Supply (b) or municipal reuse Municipality Sewage Municipal Production Treatment Plant (3) Groundwater Recharging (c) ASR or SS No additional Treatment Irrigation (d) Notes: (1) Symbols: (a) Treatment to meet prescribed standard. The "20/30 BOD/Suspended. Solids is recommended. (USA Standard is 20/30). (b) Any additional treatment needs furnished by industry. (c) Water pumped from aquifer useful for all purposes including drinking water supply. (d) No additional treatment needed. (e) In-plant treatment, pursuant to permit system, removes all toxics and other objectionable substances which cannot be removed by conventional sewage treatment plants. (2) All technologies noted above already well developed commonly used in Southern California and other arid regions of Southwestern United States, wherever water is precious/expensive. All are affordable even in developing countries where water is precious/expensive. While these technologies are not well known in China, it is timely and feasible now to begin using them in parched regions of China, beginning with WWTP. Shanxi Province has already carried out some measures and seems ready and willing to utilize them with maximum effectiveness. (3) These are the same treatment plant where industry is authorized to use the municipal sewage system. Almost all water reuse in DCs is for agricultural purposes where wastewater is applied either without or only partial treatment. To that extent, water reuse is already widely practiced everywhere especially with irrigators who withdraw water previously used by upstream consumers, the only issue being that these are informal reuse schemes where lack of treatment causes public health problems. There is a large number of publications addressing wastewater reuse quality standards including the World Health Organization (WHO) guidelines however these are not always followed as noted above. The US EPA's guidelines for wastewater reuse acknowledges that the WHO guidelines are controversial and that for the many instances where raw sewage or rivers heavily polluted with raw sewage are used for irrigation, any treatment would be an improvement. If ponds are feasible and WHO guidelines can be attained that would be a major public health advance. If ponds are not feasible, the standards may be approached in stages but certainly should not be perceived as a constraint to any improvements that are affordable. Reclamation of wastewater for urban use is now widely practiced in the southern United States and other arid and semi-arid regions of the world where water is scarce. In metropolitan Los Angeles, 30 percent of municipal wastewater is used as industrial water supply, some farm irrigation including 212 Chapter 8. Wastewater Reuse irrigation of public parks and reclamation by spreading on permeable soils to replenish groundwater thus adding to freshwater supply which when pumped up is used for all urban purposes including raw water for water treatment plants. The incentives include (i) urban markets for reuse are often closer to the points of origin than agricultural markets, (ii) the value of reuse water for urban consumption is generally far greater than for agriculture and cost recovery is much more readily achievable because consumption can be metered and there is higher willingness to pay. The constraints to implementation of urban potable reuse schemes in ICs differ mainly in the sense that DCs are not in positions to pay for high levels of risk protection (in the form of standards and infrastructure, etc.) in comparison to ICs who have established complex procedures for risk assessment inherent in water reuse programs especially those involving reuse of municipal wastewater in densely populated urban areas (potable/nonpotable) and reuse for irrigation. These procedures include (a) hazard identification, (b) dose-response assessment, (c) exposure assessment, (d) risk characterization, (e) setting standards based on risk, (f) performing cost/benefit analysis of control measures, (g) evaluating existing and new technologies for removal or control of pathogens, (h) comparing risks, i.e. chemicals vs. microbial; and (i) communicating risks to government regulatory agencies and the public. As noted previously, the current practice is to reuse untreated wastewater and so any degree of treatment will reduce risks to public health which is a step in the right direction. Thus, the inability to reach ICs standards or WHO standards should not discourage the implementation of reuse schemes. Firstly, the reuse standards should be revised to bring them in line with China's conditions and treatment can be improved as basic systems bring benefits to society. (i) Collection Interceptors The typical situation with respect to collection systems in Chinese cities was described in Chapter 3F and again in Chapter 7 and summarized in Figure 7.2 which proposes that only some (usually affluent) areas in cities are connected to sewage treatment and that the rest of the population uses 1 pit or 2 pit latrines with some septic tanks being used also. Thus depending on the level of design of these systems, much excreta still makes its way to drainage channels where it eventually ends up in rivers. Industry typically discharges to drainage channels either untreated wastewater or with some pretreatment. Chapter 3F also investigated the level of pretreatment of industrial wastewater for the Hai and Huai basins. (ii) WWTP Current structural pollution controls in cities in China and the Hai and Huai basins were discussed in Chapter 3E. The current number of sewage treatment plants in the 3-H basins is shown in Table 7.1 in Chapter 7. The conclusion is that only 13.5 percent and 48 percent of domestic wastewater in the Huai and Hai basins is treated at municipal treatment plants. Industrial wastewater treatment investment represents roughly 50 percent of investment in industrial pollution control. Most investment is the result of water scarcity rather than environmental control. There is an increasing number of examples of wastewater reuse schemes in full operation today. One such example is the wastewater reclamation project an advanced wastewater treatment plant at Huifeng industrial area located in the southern suburbs of the City of Changzi, Shanxi Province.75 The area is extremely deficient in water such that the water has to be rotated between the residential areas and the factory due to this water scarcity. The infrastructure of this area is typical of many Chinese cities. The domestic wastewater, industrial waste, and runoff are collected by a combined sewer, and discharged 75 "A Pioneer Project of Wastewater Reuse In China" (1995), Jiang Peng, David K Stevens, and Xinguo Yiang in Water Resources Vol. 29, N0. 1 pp 357-363. Chapter 8. Wastewater Reuse 213 through an open channel into the Hucheng River, which passes a recreation area of the city of Changzi, and finally flows to its destination, the Zhangze Reservoir. The industrial effluent of the Huifeng industrial area amounts to one seventh of the total wastewater discharge of the city. The city initiated the construction of a full-scale advanced wastewater treatment plant including a primary sedimentation tank, two-stage aerated submerged biological filters with a sedimentation tank following each bioreactor, and sand filtration. A storage tank is used to equalize the substrate concentration and control the flow rate of the influent. A sand filter is used to lower the turbidity. Chlorination of the final effluent was tested in order to provide safe water to the industry. Forty percent of the effluent from the secondary treatment is discharged to the river. The other 60 percent goes to industry. The reuse of water essentially resolved the water shortages of the area and the rotation of water supply is no longer necessary. After appropriate treatment, about 5,000 m3/day of the treated wastewater is recycled for reuse including 4,000 m3/day for factory uses such as industrial cooling, washing, boiler supply, and air pollution control, and 1,000 m3/day for nonindustrial uses such as washroom flushing, landscape irrigation and construction. In addition another 1,000 m3/day treated wastewater is to be reused in the treatment plant. The project, as the first full-scale wastewater renovation and reuse project in China (in 1995), demonstrated that water shortage and environmental pollution can be resolved efficiently and economically even in the developing countries, such as China, where in many cases, municipal wastewater is discharged to rivers without treatment. However, the general situation is that there is currently insufficient infrastructure in the Hai and Huai basins to support extensive wastewater reuse schemes from industry on a large scale. The action plan projects that during the next 20 years some Y 8.5 billion in the Hai basin and Y 11 billion in the Huai basin should be invested for municipal treatment and sewerage. Refer to Tables 7.12 and 7.13. Planning a wastewater reclamation project in a DC context requires a different approach than in an IC. These differences are in the area of (a) existing infrastructure, (b) cost of labor and equipment, (c) level of training in operating schemes, (d) level of institutional capacity /integration. The key element in a successful water reclamation project is to initiate a permit system to specify directly what industry must do and pay to be permitted to discharge to municipal system. Such permit system has been administered by the Regional Water Quality Board of California since the 1950s and has performed very satisfactorily. An adaptation of this permit system for Indonesia was produced by H. Ludwig and is an excellent starting point for China to begin implementing the first essential step for wastewater reuse program.76 In ICs, most cities are generally already sewered and have WWTP facilities. The funds needed for reclamation are therefore limited to providing some additional treatment, storage and distribution of the reclaimed water. In the case of cities in DCs, those areas that are sewered would need almost complete interceptor-delivery and treatment-disposal infrastructure as well as storage and distribution infrastructure for the reuse water. The magnitude of upfront capital costs requires that the planning provide for implementation in stages, but with each stage contributing a benefit while fitting in with the ultimate plan. Design of infrastructure for water reclamation in DCs must minimize the use of expensive imported technology where it can reasonably and efficiently be replaced by local source of material or labor. C. POTENTIAL WASTEWATER REUSE APPLICATIONS Table 8.1 shows categories of municipal wastewater reuse compiled for ICs and DCs circumstances. 76 UNDP "Guidelines for the preparation of ordinances for regulating sanitary and industrial waste discharges for municipalities in Indonesia." H. Ludwig 1984. 214 Chapter 8. Wastewater Reuse TABLE 8.1: CATEGORIES OFMUNICIPAL WASTEWATER REUSE AND POTENTIAL ISSUES/CONSTRAINTS IN ICS COMPARED TO CHINA AND OTHER SIMILAR DCS Wastewater reuse categories Issues/constraints in ICs Issues/constraints in China 1. Agricultural irrigation 1.1 Surface water & groundwater pollution if 1.1 Pollution of GW already happening due to irrigation Crop irrigation not controlled properly, with untreated wastewater so any treatment prior to reuse is Commercial nurseries 1.2 Marketability of crops & public an improvement to GW pollution situation acceptance, 1.2 Crops are already marketed/sold/accepted by the 1.3 Effect of water quality, particularly salts, community with raw wastewater irrigation so initial on soils & crops, treatment can only improve this situation. 1.4 Public health concerns related to 1.3 A/a pathogens (bacteria, viruses and parasites), 1.4 A/a 2. Landscape irrigation 2.1 Use for control of area including buffer 2.1 In China, land is too scarce to allow use of buffer zones Parks zone, in addition, land use planning policies are not as developed School yards 2.2 May result in higher user costs. as in ICs. Freeway medians 2.2 Higher user cost is a real issue in China since normal Urban greenbelts/trees water supplies are highly subsidized by government. Cost Residential recovery issues of reuse schemes need to be addressed. 3. Industrial recycling and reuse Constituents in reclaimed wastewater relating The reclaimed water sent to industry is raw water supply for Cooling water to scaling, corrosion, biological growth and industry. Industry must further treat it to meet its particular Boiler feed fouling, needs. This is true even when industry uses municipal water Process water supply as its raw water. Industry often has to treat this to Heavy construction adapt it for the industry's operations Public health concerns. 3.2 Controlled by chlorination 4. Groundwater recharge by spreading on areas with permeable soils 4.1 with treated wastewater 4.1.1 Build up of TDS by continuous 4.1.1 Same as for ICs except lower TDs standards may be recycling. needed. 4.1.2 Toxicity in wastewater used for 4.1.2 Same as for ICs except lower toxicity standards may spreading be needed 4.1.3 Pathogens not of concerns because 4.1.3 Same as ICs filtration in soil removes these 4.2 with flood runoff 4.2.1 may need to remove SS from flood 4.2.1 Same as for ICs water 5. Groundwater quality protection 5.1 To protect salinity intrusion in 5.1 Same as for ICs by establishing salinity intrusion groundwater barrier mounds 5.2 Wastewater used for irrigation must have 5.2 Same as for ICs tertiary treatment to have very low turbidity 6. Recreational/environmental uses, Health concerns of bacterial & viruses, As for 5.1 above lakes and ponds, marsh Eutrophication due to nitrogen (N) & enhancement, streamflow phosphorus (P) in receiving water Eutrophication is an environmental problem considered not augmentation, fisheries quite as urgent as the public health/economic aspects although the two are related of course. In any case, the implementation of WWT and reuse schemes in conjunction with improved water resource management through institutional reform of operation of water distribution/allocation at provincial level should improve WQ and flows in rivers which will reduce risk of eutrophication. Toxicity to aquatic life. 6.3 Limited aquatic life remains in rivers/lakes in the 3-H basins. All fish stocks are bred in aquaculture ponds. Wastewater from ponds contains high ammonia levels which need to be treated prior to discharge to rivers. In addition, fish kills occur frequently due to uncontrolled flooding with highly polluted floodwaters in the flood plain areas of the provinces. (most fish ponds are situated in naturally occurring lowlands which were initially wetlands) thus treatment will improve this situation. 7. Nonpotable urban uses Public health concerns on pathogens As for 5.1 above Fire protection transmitted by aerosols, Air conditioning Effects of water quality on scaling, corrosion, As for 3.1 above Toilet flushing biological growth, and fouling, Cross-connection As for ICs Chapter 8. Wastewater Reuse 215 Wastewater reuse categories Issues/constraints in ICs Issues/constraints in China 8. Augmenting urban water supply Potable reuse by spreading to 8.1.1 Problems of increasing TDS due to 8.1.1 As for ICs augment groundwater continuous recycling 8.1.2 Problems of toxics in wastewater 8.1.2 As for ICs 8.1.3 No problem with pathogens (all 8.1.3 As for ICs removed by filtration through soils) Potable reuse by blending in 8.2.1 Problems of cross connection 8.2.1 Not recommended for China freshwater reservoir (now in 8.2.2 Concern about disease hazard 8.2.2 As for ICs experimental stage in USA) Dual piping systems ­ one for 8.3 Cross connection hazard 8.3 Not recommended for China (too many cross connection drinking and one for other uses hazards) Source: Adapted from Tchobanoglous G. "Appropriate Technologies for Wastewater Treatment & Reuse" in WaterTech, 1996 and modified by H.F. Ludwig and J. Foerster. Groundwater Recharge. Overuse or mining of groundwater has occurred in the 3-H basins, particularly in the Hai basin (Evans and Zaisheng, 1999). Potential therefore exists for treated wastewaters to be used to alleviate problems caused by this practice. The two main types of recharge are (a) groundwater mounds to prevent water quality degradation from saline water intrusion or lower quality aquifers77 and (b) surface spreading (SSP) for shallow aquifer recharge. The potential for these practices is however quite limited given the many competing uses for the relatively small quantity of water available. The previous chapter provided information on the groundwater situation in China and in the 3-H basins, the use of groundwater, the extent of pollution of groundwater, groundwater degradation, subsidence and an overview of current government management. It also investigated the role of aquifer storage recovery schemes and surface spreading which can potentially address the problems listed above. River Flow Augmentation. Ecological values in the river systems in the 3-H basins have been substantially altered or lost as a result of polluted water flows and low to zero natural flows. Water shortages caused by demand outstripping supply will dictate that all available water, including recycled wastewater, will be required for human needs in both urban and rural pursuits. Consequently, at least in the foreseeable future, any wastewater discharged to the rivers system will be mostly extracted for human purposes and "low flow augmentation" should be viewed in this context. It seems doubtful that use of fresh water for low flow augmentation will be feasible in China, especially in north China where water shortages are severe. The standard required for any such flows discharged to the rivers would be dependent upon the required beneficial use downstream. Agricultural Reuse. The biggest issue with reuse of wastewater for agriculture relates to the quality of the water. Current water quality standards for agricultural use are shown in Table 8.2. These standards seem hardly related to the reality of the situation in China in all water shortage areas including all of north China where priority for use of water is given to the urban/industrial sectors so farmers commonly use very polluted river water or even raw sewage and feel "lucky" to get this. The most important water quality parameters for inspection is coliform, then others such as total dissolved solids (TDS) and toxics such as cadmium and BOD/COD or SS. The standards should include measures to protect farmer's health. The biggest health risk is the uptake of cadmium into the plants. However with good activated sludge effluent and chlorination the level of risk is completely minimized. Reuse of wastewater will not generally contribute "new" water to the 3-H basins since little dry weather flow passes to the sea and water is already being reused. However, significant environmental and 77 In the United States, groundwater mounds are also used to contain polluted aquifers and prevent contamination of higher quality aquifers. 216 Chapter 8. Wastewater Reuse health benefits may be gained by the reuse of treated wastewater in conjunction with water conservation measures, such as improved irrigation efficiencies and reduction of groundwater overdrafting. TABLE 8.2: SELECTED IRRIGATION WATER QUALITY REQUIREMENTS TO GB5084-1992 Parameter Unit GB5084-1992 Requirement (maximum) Paddy Crops Dry Condition Crops Vegetables BOD mg/L 80 150 80 COD mg/L 200 300 150 Suspended Solids mg/L 150 200 100 Look at : Control Standard for Urban Wastes for Agricultural Use (GB 8172-87). Source: Working Paper "Water Pollution in the 3-H Basins." Apart from health risks to humans, there is a risk that the pollutant loading in the wastewater may adversely affect the soil, particularly over a long period of time. Since most of the urban WWTPs will treat a mixture of wastewaters, including industrial wastewaters, the potential exists for long term contamination. The TDS concentration in wastewater will determine the potential for causing soil salinity problems that may affect crop growth and yield. A typical urban wastewater may contain between 250 and 850 mg/L of TDS, plus the concentration originally in the water supply, which may be up to 1,000 mg/L. Water classified as "nonsaline" may contain about 200 mg/L of TDS and at an annual irrigation application rate of 1 m/ha will deposit 2 tons of salt to the soil. This must be removed by crop uptake and leaching. TDS are not removed in normal treatment processes and consequently, treated wastewater can contain high concentrations. Crops have differing tolerances to salinity as discussed in CSWRCB (1984). The sodicity of a soil is a measure of the sodium content which, if high, leads to a reduction in the infiltration potential of the soil, reduced water storage potential and restricted internal soil drainage and aeration. These factors can adversely affect crop production and crop water use. The application rate of reclaimed wastewater and the concentrations of such elements must be investigated on a site-specific basis to determine whether or not a potential problem exists. The investigations should take into account the types of crop to be irrigated as well as both the uptake into plants and the long-term accumulation in the soil. Crop type changes may permit the use of a borderline wastewater. Municipal Reuse. The most common class of uses for treated wastewater in the community is for lower grade uses which may include: (a) irrigation of landscape areas such as parks, gardens, road median strips, etc; (b) flow provision for wetlands, either natural or artificial, and for the aesthetic improvement of water quality in ornamental lakes and ponds which have no higher environmental value (such as fishing or swimming) and (c) other uses serviced by water tankers. For these reasons and except for appropriate new planned development, reuses requiring dual reticulation networks are not recommended at this stage of the development of China's wastewater system. Road tankers can be used for landscape watering, street cleaning, dust control and sewer flushing, avoiding the need for dual reticulation and are considered therefore to be viable systems. These uses have the potential to replace the use of better quality surface and ground waters. Without dual reticulation, fire- fighting use of recycled effluent may be limited to stored volumes or flow pumped from lakes and ponds. Most municipal reuses will bring the recycled wastewater into contact with the community and therefore a better quality will be required than may be needed for most agricultural uses. Suggested guidelines are shown in Table 8.3. Chapter 8. Wastewater Reuse 217 TABLE 8.3: SUGGESTED GUIDELINES FOR NONPOTABLE MUNICIPAL REUSE Reuse Treatment Uncontrolled Public Access Landscape irrigation S, P Dust control Ornamental lakes and ponds Controlled Public Access Landscape irrigation S, P Dust control Sewer flushing Pr Pr = primary treatment; S = secondary treatment; F= filtration; P = pathogen reduction; C = Chlorination. Source: Modified from NHMRC (1987). Industrial Reuse. The reuse of industrial wastewater is a pivotal part of the plans for the reduction of environmental pollution in the 3-H basins. Moreover, reuse will play an important role in augmenting raw water supply for many water-short cities in north China. Maximizing reuse of waters within individual industries and the reuse of wastewater discharged by industry to municipal sewers is sought. Within particular industries, reuse of their waste streams is common in China, yet is industry- and process-specific. Industry receives a water supply that is raw water to them, even if from municipal water supply. Then, as needed industry gives extra treatment to this water to suit its particular use. For example, use for cooling towers requires the use of agents to control slimes or for boilers, there is a need to reduce TDS. This is common practice for industry. However, where water is scarce such as most of north China, industry is very happy to get any water and to pay itself for whatever kind of treatment costs are required. Industry prefers groundwater because it is cheap and it treats it to suit particular applications. The cost of access by potential industrial customers dispersed across a city to the wastewater may also be prohibitive where supply is from a centralized treatment plant. Generally, maximum cost-effective reuse will be possible where a treatment plant can supply effluent to individual industries located nearby or in bulk to an industrial park where suitable industries are grouped. Good city planning practices will ensure such synergies are obtained and it is recognized that this is well understood in China today. Certain industries are potentially large users of treated effluent (such as those with large cooling water volume requirements) and their use may warrant larger expenditure on transmission pipelines, storages and pumping for use of treated municipal sewage. Because of the wide ranges of water quality required by industry, no standards are suggested and these must be determined on a case-by-case basis. Taiyuan and other cities in north China are already doing maximum reuse. Their industries already know how to use treated wastewater very effectively so that this is not new for China. The Taiyuan experience should be used as a case study for future industrial reuse planning elsewhere in China. The Huifeng industrial area in Changzi has also implemented industrial/domestic wastewater reuse scheme back in 1995.78 Effluent from industry contains pollutants that are not capable of being treated by conventional municipal WWTP facilities. Thus industry waste needs pretreatment prior to discharge to municipal systems. The implementation of an industrial wastewater control program in which the use of a permit system is critical is an important aspect of a reuse scheme and the basic features of such program are summarized below. This summary is based on experiences in ICs where such programs have been successfully implemented for many decades now. Annex 8.1 discusses pretreatment for the major 78 "A Pioneer Project of Wastewater Reuse In China" (1995), Jiang Peng, David K Stevens, and Xinguo Yiang in Water Resources Vol. 29, N0. 1 pp 357-363. 218 Chapter 8. Wastewater Reuse polluting industries in China/3-H basins including pulp/paper, brewing/food (MSG, citric, starch), pharmaceutical, textile (wool cotton). Pretreatment is also discussed in more detail in Section F of this chapter in relation to wastewater control program. Volumes of Wastewater. Wastewater treatment and reuse can add to the water available for economic and environmental purposes, and reduce the pollution loads that reach the rivers and aquifers. The Hai River Basin Pollution Control Plan states that in 1995, some 0.72 million ha of land or about 3 percent of the irrigated area was served by 1.13 Bcm of wastewater equivalent to 3.5 percent of withdrawals for irrigation in that year. In unit terms, this was equivalent to 1,575 m3/ha (about 105 m3/mu). Hou (1998) suggests that reuse of industrial wastewater in China has risen from 18 percent in 1983 to 60 percent in 1995. The basis of these figures is not defined, although they appear to be percentages of total industrial water volumes. The importance of meeting both these objectives has been highlighted in previous sections of this report. In water-short areas such as the Hai and Huai Basins, wastewater is already being reused untreated, or at best partly treated, due to constraints on alternative natural supplies and lack of investment in treatment facilities. Projected water use and wastewater production in the Hai and the Huai basins for the period 2000-20 are given in Tables 8.4 and 8.5. Table 8.1 relates issues/constraints to implementation of reuse schemes in ICs and those in China. Wastewater potentially available for formal reuse will be derived from the industrial and domestic sectors. Agricultural returns may also be reused within or immediately below an irrigation scheme, or may flow to the rivers or aquifers if water quality is appropriate, but treatment of those waters would not normally be practicable. Irrigation return flows are usually too high in TDS to have reuse value. It is a problem it increases TDS in rivers. In many cases, agricultural return flows may also contain high levels of pesticides79 and TSS, lowering its value as irrigation water. Treatment of this water for agricultural reuse is neither economic nor practical from a technical point of view and only dilution with environmental flows could bring agricultural wastewater back to irrigation standard. Of the industrial and domestic water use, approximately 85 percent could be expected to become wastewater and of this fraction the quantity available for treatment will be dependent on the quality of sewage collected. Los Angeles is an example of "maximum reuse" in the United States where 30 percent of total sewage flow is reused. The other 70 percent is not feasible for reuse because the quality of the sewage is not good enough (too much toxics) or it is located too far from reuse locations. Cities with combined sewer systems will generate higher wastewater quantities during wet weather. For the purposes of this reconnaissance study, wastewater quantities which may be available as effluent from wastewater treatment plants have been estimated based on the assumptions that 90 percent of water use is available for reuse and that an average of 50 percent of wastewater will be collected in sewered systems. Tables 8.4 and 8.5 summarize projected wastewater quantities potentially available based on these assumptions. These figures indicate that an annual total wastewater volume of 4.94 Bcm and 5.07 Bcm may be produced for reuse in the Hai and Huai basins. From priority cities, real data on present reuse is not readily available and much is anecdotal, but the Hai River Basin Pollution Control Plan cites "incomplete statistics" noting that in 1995, 1.1 Bcm of wastewater was used to irrigate 11 million mu (about 720,000 ha). Other information for rural areas adjacent to Beijing and Tianjin suggests that about 2 Bcm is used in these areas. In the Hai River Basin at least, pollution of drinking water wells in rural areas has occurred as a result of such practices and the Hai River Basin Pollution Control Plan identifies a list of 51 79 The answer is to control the use of these chemicals to avoid the problem. Chapter 8. Wastewater Reuse 219 deep well projects, at an estimated cost of approximately Y 0.5 billion, to provide alternate drinking water sources. The conclusion can therefore be drawn that the current practice of irrigating with polluted water, while necessary to farmers with no alternate water source, carries consequential costs. No data exist as to the quality of crops irrigated with polluted water, in terms of produce contamination, reduction in yield or other such measures. For successful reuse of wastewater in irrigation, the water must not contain pollutants damaging to the crops. Damage in this context includes excessive yield reduction. The wastewater will be available predominantly at centralized municipal wastewater treatment plants, which have treated combined domestic and industrial wastes. The costs associated with the reuse of this water will include the cost of collection and treatment of the sewage plus the cost of conveying the wastewater to the point of use. In a situation where untreated wastewater is being used for irrigation any treatment will be beneficial. Under such circumstances, any treatment that is affordable should be implemented and the failure to meet standards should not be a constraint to reuse. A staged approach should be planned with gradual improvement at an affordable rate toward treatment processes that will achieve promulgated standards.80 TABLE 8.4: URBAN INDUSTRIAL AND MUNICIPAL WASTEWATER VOLUME OF PRIORITY CITIES IN HAIBASIN (FROM WPM-DSS MODEL) City Name Present situation under Projection under Projection under Base Case Base Case Program 3 1997 2000 2010 2020 2010 2020 Anyang 166 182 214 232 178 127 Baoding 160 174 217 245 180 139 Beijing 1,124 1,249 1,461 1,564 1,218 928 Changzhi 147 161 191 207 158 113 Chengde City 95 104 127 140 105 79 Datong 124 135 166 183 138 105 Handan City 266 290 362 411 301 234 Jiaozuo 109 120 143 156 119 88 Shijiazhuang city 343 371 440 474 432 329 Tangshan 667 747 879 948 559 408 Tianjin City 440 475 574 630 701 536 Xingtai City 116 126 158 179 132 101 Xinxiang 143 156 185 201 168 122 Xinzhou 57 64 77 87 60 45 Zhangjiakou City 126 135 166 186 149 116 Binzhou 51 55 66 72 55 40 Cangzhou 60 68 85 99 72 60 Dezhou 99 106 126 137 105 73 Hebi 40 46 55 60 46 36 Hengshui 63 71 88 102 74 61 Jinan 7 7 10 11 7 4 Langfang 42 45 55 61 72 63 Liaocheng 151 165 209 239 144 102 Puyang 46 50 61 67 74 64 Qinhuangdao City 82 91 122 147 96 79 Shuozhou 162 187 227 259 118 85 Yangquan 54 58 70 77 70 54 Total 4,940 5,438 6,534 7,174 5,531 4,191 80 Refer to discussion on appropriate standards in Chapter 7. 220 Chapter 8. Wastewater Reuse TABLE 8.5: URBAN INDUSTRIAL AND MUNICIPAL WASTEWATER VOLUME OF PRIORITY CITIES IN HUAIBASIN (FROM WPM-DSS MODEL) City Name Present situation under Projection under Projection under Base Case Base Case Program 3 1997 2000 2010 2020 2010 2020 Bengbu 105 114 147 173 125 127 Fuyang 219 258 327 377 277 275 Heze 328 350 433 490 367 362 Huaiyin 87 93 116 126 98 93 Jining 382 401 460 502 390 372 Kaifeng 136 143 172 195 146 143 Lianyungang 115 125 153 165 130 122 Linyi 63 65 69 66 59 50 Pingdingshan 171 176 208 231 176 170 Shangqiu 54 63 92 114 78 83 Suzhou 170 189 264 322 224 236 Xuzhou 182 200 255 294 216 217 Yancheng 386 424 492 553 417 409 Zhengzhou 261 284 362 426 306 311 Zhumadian 47 52 69 82 58 61 Chuzhou 59 65 86 103 73 76 Huaian 103 115 166 196 142 145 Huaibei 78 86 121 148 103 110 Huainan 201 230 285 323 244 240 Liuan 237 275 347 398 297 295 Luohe 34 36 49 60 42 44 Nanyang 105 122 197 260 170 193 Rizhao 175 184 218 226 186 168 Suqian 114 126 178 209 152 155 Taian 235 247 291 301 248 224 Taizhou 101 108 119 131 101 97 Xinyang 39 44 59 73 51 54 Xuchang 59 61 76 86 65 64 Yangzhou 162 176 196 217 167 161 Zaozhuang 193 214 299 347 256 258 Zhoukou 61 63 76 85 64 63 Zibo 407 429 507 527 433 391 Total 5,069 5,518 6,889 7,806 5,861 5,769 Source: WPM-DSS Model. Having identified the volumes of wastewater produced in the major cities in the 3-H basins and the types/location of industries which currently issues related to the discharge of this mostly untreated wastewater into rivers and reservoirs (see Tables 8.5 and 8.6 and section on pollution), we now consider discharge of this industrial wastewater into a municipal joint treatment facility.81 The decision to discharge to a municipal wastewater treatment facility requires (a) infrastructure and (b) an industrial wastewater control program to be implemented by the WWTP operators and the authorities. These issues are examined in the following sections. The issue of standards for reuse is then discussed from the perspective of public health and engineering especially related to groundwater recharge schemes which are discussed in detail in the section on groundwater. This chapter should be read in conjunction with the section on pollution. 81 Pretreatment is discussed in Annex 8.1 in Volume 3. Chapter 8. Wastewater Reuse 221 D. PLANNING WATER RECLAMATION PROJECT Industrial discharge of wastewater into municipal wastewater treatment plants has been carried out in the United States for many decades now and this practice has resulted in very substantial savings for municipalities who derive additional revenue and for the industries who benefit from not having to finance the construction of their own treatment plant to treat components of their wastewater that are acceptable by municipal systems. However, industrial discharges contain significant quantities of toxic pollutants and other substances that can profoundly affect the treatment system and possibly interfere with its performance. In order to prevent contamination of municipal sludge from unacceptable industrial pollutants, managers of WWTPs need to have in place an effective industrial wastewater control program in order to ensure that normal operation of the WWTP is not affected by inflow of wastewater from industry. The nature of industrial pollutants will vary according to the type of raw material used, the chemicals used for chemical or physical processing or manufacturing the intermediate products and by-products and the types of pretreatment systems utilized. In addition, environmental regulations of allowable discharge to the environment will vary mostly according to the level of development of a particular country82 but the essential ingredients of an effective industrial wastewater control program need to be present for successful operation of combined system and for the economic benefits to accrue and this applies equally to DCs as in ICs. The following section describes these essential aspects of an industrial wastewater control program and is derived mostly from (a) "UNDP "Guidelines for the preparation of ordinances for regulating sanitary and industrial waste discharges for municipalities in Indonesia. H. Ludwig 1984." (b) "Industrial wastewater Control program for Municipal Agencies--1982" by the Water Pollution Control Federation of the US and (c) "Joint Treatment of Industrial and Municipal Wastewaters" from the Water Pollution Control Federation. Modification or additions have been made where necessary to ensure relevance to conditions in China at the moment and these have been based essentially on the substudy on Water Pollution83 carried out as part of the Water Sector Action Plan. E. INDUSTRIAL WASTEWATER CONTROL PROGRAM FROM THE WWTP OPERATOR PERSPECTIVE The basic requirement for a successful municipal and industrial waste regulatory program is the preparation of ordinances for the regulation of sanitary and industrial waste discharge into municipal sewerage system and activities include (a) the development of a database, (b) preparation of local ordinances, (c) establishment of limitations on industrial discharges to the treatment system and their enforcement, (d) authority to enter and inspect an industrial company to obtain samples of its wastewater discharges, (e) a monitoring program, (f) a program to recover the cost of industrial waste treatment. (i) Preparation of an Ordinance Program The legal aspects of industrial wastewater control are well developed in the ICs such as the United States where the practice of combining industrial wastewater treatment with domestic wastewater has been established for many decades. In addition, the rule of law is effective due to the independence of 82 The issue of appropriate environmental standards is discussed at length in Chapter 7. 83 Water Pollution Substudy, November 99, Stapleton, Ludwig and Foerster. 222 Chapter 8. Wastewater Reuse the judicial system and its ability to enforce compliance of the environmental laws. This is an important aspect of the relation between industry and municipalities. Discharge standards also serve the purpose of protecting WWTP operators because if they ensure their loads discharged to rivers is within the legal limits then they are protected from legal liabilities by third parties who may claim to be affected by such discharge. The legal system and standards are discussed at length in Chapters 2, 3F and 7, respectively. In the United States, the national industrial pretreatment standards regulate the introduction of industrial waste into WWTP. Each WWTP with design flow greater 19,000 m3/day must develop an industrial pretreatment program to implement the regulations. Design and implementation of the program will be a precondition for the WWTP gaining a Pollution Discharge Elimination System (PDES) permit and maintaining federal grant eligibility. Due to the diverse nature of industrial wastes discharges, each WWTP needs a definitive pretreatment plan and a manual of practice can be an invaluable guide for planning and implementing good municipal industrial waste program. Such program is designed to eliminate fluctuation in quality of wastewater received from industry that can seriously affect the effectiveness of the treatment process. Other variables such as the quality of domestic wastewater received, the size of the treatment facility relative to received flow and designed pollutant removal capacity of the WWTP are either fixed or fairly constant and predictable. Thus, maintaining predictable industrial wastewater characteristics is essential and municipal industrial waste program manifested by legislative enactment or "ordinances" of local government bodies are designed to impose effluent discharge requirements on industrial users. Initially "ordinances" were designed to protect sewers from clogging, corrosion and explosive hazards but these were gradually expanded as industry and wastewater treatment technology evolved. As secondary treatment and anaerobic digestion processes became more widely used, certain organic and inorganic pollutants needed to be controlled more closely and included in ordinances to eliminate inhibitory effects of these pollutants could be controlled thus ordinances evolved to include more and more pollutants. In addition, tougher environmental legislation has required WWTP operators to improve monitoring of wastewater inflow to ensure discharge compliance. Ordinances also specify the basis for calculating fees charged to the industries and these are usually based on the strength of the waste treated. Thus, required legislation to ensure effective environmental protection includes (a) protection of waterways from industrial wastewater pollutants discharge, (b) protection of WWTP facilities from industrial wastewater pollutant discharge, (c) pretreatment standards for both new and existing sources of industrial wastewater to be discharged into the WWTP, (d) wastewater sampling standards, (e) authority for municipality or WWTP operator to develop waste control programs and to inspect industries and monitor their waste characteristics and to enforce compliance with these programs. The main functions of sewer ordinances are (a) to protect the sewer system, (b) maintain and improve the quality of the effluent receiving waterway and the performance of the WWTP and provide the basis for determining the user's charge. Less developed institutions in DCs and lower level of skills mean that the application of ICs-type ordinances would not be effective. Thus, some modifications are required to allow for DCs' circumstances (Table 8.6 and Volume 3, Annex 8.2, Table A8-1 for the full table). Such modifications were developed in Indonesia for the Ministry of Public Works and Electric Power by H. Ludwig. Given similar issues in China, it is likely that with minor further modifications this manual of guidelines will be suited to Chinese circumstances. Chapter 8. Wastewater Reuse 223 TABLE 8.6: SUGGESTED GUIDELINES FOR THE PREPARATION OF ORDINANCES FOR THE REGULATION OF SANITARY AND INDUSTRIAL WASTE DISCHARGED INTO MUNICIPAL SEWERAGE SYSTEMS IN CHINA Types of ordinances Principle aspects of ordinance system Ordinance for control of use of municipal sewers. Definitions Regulations relating to the use of sewers The purpose is to more effectively protect the ability of its sewerage system, Areas not served by sewerage systems pumping stations, sewage disposal and treatment plants to satisfactorily perform Yard piping and sewer service connection the functions for which the system was designed by controlling and regulating Limitations on discharges into public sewers the quality, volume and manner of discharge into the system, and for the Damage to public property purpose of maintaining its stable operation and for the protection of the waters Inspection authority within the Special Territory of the City. Sewer rental fees and other charges Penalties Permit application forms Ordinance regulating industrial discharges to municipal sewers. Authority and general purpose Definitions The purpose of the ordinance is to provide for the maximum possible beneficial Notices public use of the sewerage enterprise's facilities through adequate regulation of Time limitations industrial wastewater discharges, to provide for equitable distribution of the Permits for industrial discharges sewerage enterprises' costs, and to provide procedures for complying with the Procedure for obtaining permits requirements placed upon the sewerage enterprise by other regulatory agencies Changes in permit restrictions Suspension of permit Revocation of permits Prohibited waste discharges Availability of public sewerage facilities Charges and fees Pretreatment requirements Separation of domestic and industrial wastewater Industrial wastewater monitoring Industrial classifications Damages caused by prohibited discharges (ii) Regulatory (Monitoring Enforcement) Program The purpose of the program is to (a) enforce compliance with the industrial waste ordinance (b) protect the treatment plant and collection system from deleterious substances and (c) establish industrial sewer use fees. The elements of the regulatory program include (i) industrial permit system (ii) pretreatment facilities construction and inspection (iii) industrial sampling and analyses and (iv) periodic and reporting. 1. Industrial Waste Permit System. The purpose of establishing industrial waste permits is to specify directly what industry must do and pay to be permitted to discharge to municipal system including building and operating industrial pretreatment and monitoring. 2. Pretreatment Facilities Construction and Inspection. The monitoring program should include provision for inspection and surveillance of industrial pretreatment facilities and so the WWTP operator needs authority to enter the premises of any industrial user so as to inspect the condition of the system. In the United States, the WWTP operator is required by EPA regulators to monitor the progress of the user by periodically inspecting the construction of pretreatment facilities and reviewing the user's progress toward conforming with its own compliance schedule. 3. Industrial sampling and analysis is arguably the most critical element of an enforcement program. In addition to providing a database on a given industry, sampling serves as the basis for evaluating 224 Chapter 8. Wastewater Reuse compliance with the local industrial sewer ordinance and with government pretreatment requirements. Sampling and analysis of selected chemicals according to scientifically accepted methodology is a complex field of environmental work that must be mastered in order to produce statistically significant data useful for devising effective treatment programs and data capable of being scrutinized in the courts to ensure compliance. Such skills probably do not exist in China and there may be a role for technical assistance projects in the environmental field to help develop such knowledge among EPA staff and WWTP operators who will carry out some of the monitoring of industries wastewater discharge. 4. Periodic reporting keeps the information flowing to where it is needed in order to ensure fully operational treatment systems at minimum costs while achieving environmental protection. Periodic reporting includes (a) baseline reports identifying the industrial discharger and confirming its status regarding compliance to pretreatment standards, (b) progress reports regarding scheduled compliance date with pretreatment standards, (c) semiannual reports containing profile of wastewater quantities, nature and concentration of pollutants occurring in the effluent during the first six-month period, (d) final compliance report detailing corrective action measures taken by the industry since being notified its effluent was unacceptable, (e) WWTP pretreatment compliance report which includes comprehensive details of the pretreatment program implemented by specific industries as well as steps undertaken by WWTP operator to bring the entire area under compliance. 5. Monitoring of wastewater discharge can be based on self-monitoring and reporting, scheduled surveillance by regulatory agency and unscheduled surveillance on a planned or random basis. In the case of scheduled monitoring of an industrial discharge, preliminary information is needed prior to initial monitoring round. Information collected should include (a) production hours, (b) pattern of effluent discharge, (c) potential for controlled discharge such as with batch dumps, (d) operation details of wastewater treatment system, (e) time required for daily cleanup, (f) past history of plant's performance, (g) identification of program as a new study, compliance evaluation or surveillance study. Samples should be split between regulatory authority and industry to permit comparison of laboratory results. Unscheduled spotchecks can be conducted to (i) determine the reliability of data collected through scheduled surveillance and self-monitoring programs, (ii) detect unreported discharges in the sewer system, (iii) verify reports of illegal discharges and unexplainable but recurring waste treatment plant upsets or environmental damage. 6. Enforcement Program Implementation. Enforcement plays a major role in acceptable operation of industrial waste control program. In the United States, the WWTP operator has the primary responsibility for enforcing national, state and local standards. Under the Clean Water Act in the United States, civil action can be taken against the WWTP operator if it does not enforce conformity with national standards, although it is possible for the WWTP to become the plaintiff where industry has violated pretreatment standards and administrative requirements. As discussed in Chapters 2 and 7, the legal system in China needs to be reformed substantially to allow for such checks and balances and allocation of responsibility to be effective and result in proper environmental protection. Program implementation will be carried out by adequately trained staff including technicians, organic/inorganic chemists and biologists, management people, engineers both field and office based. These staff mostly are additional to those that would normally operate a conventional WWTP receiving domestic wastewater only. The field monitoring personnel collect the representative samples for analysis in determining ordinance compliance. As discussed before in the section on sampling, monitoring is an extremely important aspect of wastewater management and is dependent to a large extent on the degree of training of the field personnel. This could be a problem in China as this field of work is relatively new, Chapter 8. Wastewater Reuse 225 although labor costs would not normally be a problem. The size of the municipality and number of industrial discharges will increase the complexity of any field monitoring program. Because sample credibility should always be preserved, enforcement procedures may become necessary following sample collection and analysis requiring that the chain of custody be well defined for legal purposes. F. INDUSTRIAL WASTE DATA MANAGEMENT SYSTEM In large industrial areas, discharge permits and inspection profiles may number in the thousands and this information needs to be managed on a database. Updating the database can be done in parallel with permit renewal so that these can be required when industrial inflow changes by more than 25 percent or periodically regardless of changes to industrial process. Inspectors can visit the site and record their observation in the database. Information collected includes monitoring data/sampling procedures must be standardized to ensure uniform application of regulations and laws. Laboratory analysis is another aspect of the wastewater monitoring program that needs to be carefully examined to ensure quality control objectives are met and that reliable data are obtained for the effective management of the industrial wastewater treatment program. In Western countries, most laboratories are specialist organizations that operate independently of the customer, which is really important because they need absolute integrity in reporting. Samples received from combined WWTPs can be grouped into four types including: (a) water and wastewater samples, (b) solids and semisolids, (c) gases and vapors, (d) biological and bacteriological samples. Flow rates, flow volumes, COD and SS are needed to determine the surcharge (see Volume 3, Annex 8.2, Table A8-2). The proposed sampling/monitoring and enforcement roles of WWTP personnel described in previous sections are similar to those currently undertaken by SEPA's EPBs at the provincial levels so that following formal establishment of reuse schemes, there may be an opportunity for SEPA to pass on monitoring/enforcement responsibility of industrial effluent discharged to WWTPs to WWTP operators. The onus will be on them to ensure that industries implement pretreatment programs to treat their effluent prior to discharge to the municipal system. SEPA can then focus on monitoring and enforcement of WWTP effluent prior to discharge to water bodies. Thus, control of industry will come from self-control and municipal WWTP operator control. The onus will be on WWTP operators to monitor industrial discharge to the municipal system and the cost will be passed on to industries themselves so there will be economic incentives to lower these costs by keeping effluent consistently free of unwanted pollutants by installing high level of pretreatment. Not all industries will be connected to combined municipal industrial WWTP facilities and so EPBs may still have a role in monitoring their effluents. COD/BOD and organic pollutant are currently prescribed to be monitored by SEPA and as development proceeds, inorganics such as metals (heavy metals, specific inorganic chemicals, compounds) will need to be included in the list of parameters to be monitored and so there will be a need for additional training in laboratory/sampling/monitoring/enforcement procedures specifically for combined WWTP operations. Training should include also chain of custody, reliability and reproductivity of analysis performed and efficient data handling. There are many standards included in the US EPA's "Catalog for National Standards of Environmental Protection (1973­1994)" relating to sampling methods and laboratory analytical techniques. While none relate specifically to industrial wastewater control programs, a review of these standards and opportunities to adapt them for industrial wastewater control in DC should be examined. 226 Chapter 9. Groundwater 9. GROUNDWATER Chapter 3F highlighted the main issues with groundwater in the 3-H basins and concluded that falling groundwater levels and groundwater pollution needed much attention by MWR and provinces. Issues of concern in current management included (a) allocation mechanism, (b) water licensing and total lack of groundwater management. This chapter proposes reforms that would address the current groundwater problems in the 3-H basins. A. OPTIONS TO IMPROVE GROUNDWATER RESOURCES ANDMANAGEMENT Options to redress the problems summarized in the previous section and improve groundwater resources sustainability fall into broad categories. These are (a) improved groundwater management, essential to halt and hopefully redress threatening groundwater exploitation in the 3-H basins and also essential for other problems also occurring in the rest of China; (b) artificial recharge using wastewater and floodwater should be considered in favorable locations to improve the sustainability of groundwater use. B. ACTION PLANFOR IMPROVED GROUNDWATER MANAGEMENT It is proposed that the management objective be to reduce groundwater usage in the 3-H basins to sustainable levels by 2015. To achieve this aim will require a fundamental paradigm shift. The basic concept of sustainability will need to be understood and accepted by all stakeholders. This is certainly not the case now. The implications of not reaching this aim are huge; for example, reduced groundwater levels to the extent that virtually all existing bores would be dry, significantly reduced yields in most areas and no groundwater in many areas, massive land subsidence, seawater intrusion and water quality degradation on a scale that would be virtually irreversible. Groundwater in many areas can act as an insurance water supply in times of drought. If the current groundwater trends continue, future generations will have lost this insurance. The effective implementation of the Groundwater Management Strategy requires four key components to be in place: · A rigorous technical foundation, · A strong legal and policy framework, · Effective and compatible institutional arrangements, · A comprehensive management framework. These four components all feed into the development of effective groundwater management plans, as shown n Figure 9.1: Chapter 9. Groundwater 227 FIGURE 9.1: COMPONENTS FOR DEVELOPMENT OF EFFECTIVE GW MANAGEMENT PLAN Technical Legal/ Institutional Management Foundation policy Framework Groundwater Management Plan The steps involved in all of the above components are described below. To a large degree many of these aspects overlap. (i) Technical Foundation Currently groundwater planning is undertaken at the scale of surface water catchments, generally level 2 or 3 subcatchments within each of the major river basins. From an integrated catchment management perspective, the integration of surface water resource planning with groundwater resource planning is obviously desirable. However with respect to the North China Plain, this surface water-based geographic division is not helpful. All the major aquifers cross the surface water catchments. In addition, effective groundwater management must be undertaken at a sufficiently small scale so that local community ownership of the often difficult decisions is achieved. Hence it is proposed that Groundwater Management Units (GMUs) be defined for all of the 3-H basins. A GMU is defined as an aquifer system where interconnecting flow exists or is likely to exist as a result of pumping in the short to medium term. The important point to note is that it is one aquifer system. In most cases the GMU will cover one aquifer only. However if there is significant leakage then the GMU can deal with multiple aquifers. Hence there can be multiple GMUs overlying each other if there are multiple aquifers that behave essentially independently. The GMU is the primary scale for practical groundwater management. It would be expected that for the Hai River Basin there would be from 10 to 100 GMUs identified. The GMU boundaries can be chosen on hydrogeological, geographic (e.g. roads) or administrative (e.g. county) criteria. The GMU boundary should normally include the recharge area, so that protection of the recharge area is included in the overall GMP. This also applies to protection from pollution. It might be sensible to have a GMU around every major drawdown cone. This would commonly coincide with each major cluster of extraction bores in each major urban area. The GMU boundary must be large enough to include all (or most) of the area affected by major users, i.e. all of the drawdown cone. Large karst springs with huge discharges exist in the 3-H basins. These are very important water resources for many cities, irrigation and other uses. Hydrogeological features such as these should also be declared GMUs. Once the GMU is defined it is necessary to determine the sustainable yield (SY). The SY of a groundwater resource is defined as the groundwater extraction regime, measured over a specified planning timeframe, that ensures that the long term sustainability of the resource is maintained. The SY needs to be determined for every GMU. The actual technical methods to determine the SY will vary depending upon the available data and the degree of stress on the aquifer and will usually involve 228 Chapter 9. Groundwater numerical groundwater modeling. The USGS Modflow groundwater flow model is a suitable model for many cases. Estimates of the Sustainable Yield (so-called Exploitable Fresh Groundwater) are available for the level 2 basins (see Table 3-3). These estimates have an error of from ±10 percent up to ±50 percent. No smaller-scale estimates are available. GMUs would be expected to cover much smaller areas than level 2 basins, hence the technical effort to determine the SY for the GMUs may be significant. Nonetheless rough estimates (with large errors) would be suitable in many cases. The actual assessment of the sustainable yield is both a technical and policy decision. "Sustainability is a unifying concept that emphasizes the need to consider the long-term future as well as the present. This includes the future economic, environmental, ecological, physical and social impacts that will result from decision and action taken today" (Loucks and Gladwell, 1999). From a technical perspective, the fundamental requirement is that within a reasonable timeframe (which is often controlled by the climatic variability), the groundwater levels cease to decline and stabilize (except for annual fluctuations) at a level that is considered to be acceptable. It would seem to be virtually impossible to return to original (e.g. 1950s) levels across the North China Plain. Precisely what is acceptable is based upon what is the specific management objective for the Groundwater Management Plan. For example, if the requirement is to stop the majority of existing bores going dry, then that would directly point to a specific level. The translation of this level objective to a specific SY would probably need to be based on groundwater modeling. Similarly, if the objective is to stop subsidence within, say, five years, then this would probably mean reaching a much higher level, possibly by artificial recharge. Nonetheless the basic concept of sustainable yield that the groundwater resource is available for future generations to use generally means that the rate of extraction should not exceed the net recharge rate. This will result in much lower extraction volumes allowable in the future, especially for the deep aquifers, where the recharge rate is relatively small. The key parameters used in the technical aspects of the SY determination are the recharge and discharge rate and the aquifer hydraulic properties. These are integrated to produce a water balance and hence identify the impacts of certain levels of extraction. Nontechnical (e.g. social, environmental, economic) factors are then considered in an assessment of what is acceptable. It is important to understand that the sustainable yield will decrease as groundwater pollution increases. The SY is for a specified beneficial use. The beneficial use is generally related to the groundwater quality. The loss of beneficial use due to pollution must be considered in the SY assessment. The third task is to determine the level of allocation of the resource and an estimate of the usage for every GMU. Determining the level of allocation is important because the primary tool of management is licensing. Deficiencies in the licensing system are discussed in Chapter 3F(iii), Management Framework. Nonetheless clearly defined allocated volumes within each GMU are essential. The level of usage for all users, including those not licensed, must be estimated. In some cases metering data will be available. Usage varies with seasonal rainfall patterns and hence the temporal variation over the planning period, typically 5 to 10 years, must be considered. It is suggested that for the initial categorization that the most recent data be used, hopefully for 2000. The next task is to categorize every GMU. It is proposed that the basis of categorization will be the ratio of use to SY. A fourfold categorization is proposed: · Category 4 = Use < 70% SY Underused · Category 3 = Use 70% to 100% SY Fully Used or Near Fully Used · Category 2 = Use 100% to 150% SY Overused · Category 1 = Use > 150% SY Heavily Overused Chapter 9. Groundwater 229 Note that the choice of 150 percent is arbitrary and can be varied when the extent of the overdevelopment is identified for each GMU. It is quite feasible to use other criteria to categorize the GMUs. The final task is to prioritize every GMU. This involves, generally as a key part of the groundwater management plan (GMP), deciding the timing for when different action must occur for each category GMU. For example, category 1 GMUs must have GMPs prepared by 2002 and implemented by 2010. The above steps are shown as follows: FIGURE 9.2: STEPS OF GW MANAGEMENT UNITS FOUNDATION 1. Define Groundwater Management Units (GMU) in 3-H Basins 2. Determine Sustainable Yield for every GMU 3. Identify Level of Allocation and estimate Usage for every GMU 4. Categorize Every GMU 4 = Use < 70% SY 3 = Use 70%-100% SY 2 = Use 100%-150% SY 1 = Use > 150%SY 5. Prioritize Every GMU e.g., Category 1 GMUs to have GMPs by 2002 230 Chapter 9. Groundwater (ii) Legal and Policy Framework Legal enforcement of water allocation and groundwater management practices by MWR faces the same hurdles as water pollution and these are discussed in detail in Chapters 2 and 7. Legal enforcement of water resource management regulations is not an area that will evolve ahead of other sectors or independently from within the water sector. Legal reform constitutes a major hurdle for China during its transition from a command to market economy. Nonetheless, it is essential to have the policy and resulting legal framework in place to enable the adoption and implementation of the major reforms proposed herein. The draft proposed changes to the Water Law of the People's Republic of China specifically strengthen the powers to restrict the use of groundwater in overused cases. It is not known if the proposed laws go far enough to deal with the reforms proposed herein. Nonetheless they appear to create the right framework. The existing laws specifically allow for declaration of Groundwater Control Areas. These areas would appear to be directly comparable, if not equivalent, to GMUs. It would be most helpful if the new law could have a specific section on groundwater management, similar to other sections on specific topics. The Groundwater Management Strategy proposed herein would need to be adopted as a national policy to facilitate its implementation. This specifically applies to the categorization and prioritization process, time frames for implementation, enforcing licensing of all significant users and enforcing of usage reduction objectives. It is recommended that a specific policy paper be prepared and adopted at the national level. MWR should review the adequacy of regulations to implement the groundwater management changes proposed herein. (iii) Institutional The provincial water authorities are currently responsible for all day-to-day groundwater management activities including (a) licensing, (b) monitoring, (c) assessment of groundwater resources, (d) assessment of water demand requirements, (e) conducting regional planning with respect to groundwater, and (f) collection of water resource fees and charges. Split and ill-defined management responsibilities were identified previously as retarding good groundwater management. This applies especially to the sharing of information and data and, to the issuing, and control, of licensing of groundwater users. Three levels of management are needed to implement these reforms: · National-level planning and coordination. This is clearly the responsibility of MWR. · River Basin-level allocation linked to provincial and lower-level licensing of groundwater usage. · GMU scale "day-to-day" management, controlled at the provincial level. Independent review of water management as carried out by the provincial bureaus should be promoted as a way to ensure sustainable use of water including groundwater. Such independent review might be carried out by "Leading Groups" consisting of members from the different ministries and provincial government representatives. These leading groups used to exist but have recently been disbanded after having lost high political support. Some specific issues and reforms are recommended: Chapter 9. Groundwater 231 · Licensing. Currently groundwater licensing is undertaken by many departments. There must be a single licensing authority. It is recommended that groundwater licensing be undertaken at the appropriate provincial, prefecture or county level, by the Water Management Bureau at that level. It is proposed that the RBCM determine the SY of the groundwater resources for the Basin. The Basin Council would then determine the allocation for each province or part thereof. The province (the Department of Water Resources) or lower bureaus would then be responsible for all groundwater licensing. · Database. Effective management is highly dependent on appropriate reliable and up-to-date information. Currently there are thousands of local and personal databases storing key technical and licensing data in a very unsatisfactory manner. An absolutely fundamental need for effective groundwater management and protection is a comprehensive, publicly accessible, groundwater database (GDB). The complete lack of a GDB is seriously constraining the formulation and implementation of effective groundwater management throughout China. The inability to access information, which at times is part of institutional secrecy, encourages inaction or incorrect decisions. GDBs are well established in almost every country where significant groundwater is used. The lack of such a database in China is surprising. Table 9.1 shows major types of information contained in a groundwater database. The relatively "raw" data in a GDB can be interpreted and presented as management data using an information management system (IMS). An IMS can be an "add on" to a GDB. It is proposed that the GDB should be developed at the national level. Ongoing system control and maintenance should be at the province level. The input of data should be at all levels. It is considered desirable that the GDB also includes groundwater pollution data. TABLE 9.1: TYPES OF INFORMATION CONTAINED IN A GROUNDWATER DATABASE Technical data a. Well construction details, including dates, location, depth, b. Geological and stratographic logs, c. Geophysical logs, d. Pumping test results, e. Drillers' logs, f. Well alteration and decommissioning data, g. Chemical analysis data. Monitoring data a. Groundwater level / pressure data, b. Water quality data, c. Maintenance records, d. Usage data, including metering data. Licensing data a. Track of licensing process, including well construction license and groundwater allocation license, b. Drillers licensing data, c. Details of allocation license ­ including date, area, volumes allocated, purpose, d. Owner's name and address, e. Well number, f. GMA linkages, g. Pump type, method, and depth. Billing data a. Invoicing, b. Bills paid, c. Outstanding debts, d. Accounting information. 232 Chapter 9. Groundwater It is recommended that a GDB be developed at the national level. This would be managed by MWR. It would be essential that ready access to all the data be available by the RBCMs and all provinces. Details of the steps required to develop the GDB are in Annex 9.3, Volume 3. There are three major tasks: · Develop the GDB · System control and maintenance · Data input. · Interbasin Groundwater Issues. Groundwater knows no surface water or administrative boundaries. This fact is especially relevant across the North China Plain. The shallow and deep aquifers cross all RBCM boundaries. To manage the joint groundwater resources of the North China Plain it will be necessary to establish a specific coordinating committee of the three RBCMs to ensure sensible management. There are several examples available in the world where specific management arrangement are in place to ensure proper management. If these arrangements are not put in place then not only can each Basin Commission blame the other for not achieving specific groundwater management objectives but also local interference problems across the Basin boundaries can cause significant issues. · Groundwater Investigations. The Department of State Land Resources currently undertakes groundwater investigations. It is considered that groundwater and surface water investigations and assessments should be undertaken within the one organization, for consistency and integrated planning reasons, including eliminating double accounting of the total water resource. Hence it is recommended that MWR should undertake all groundwater investigations and assessments. · Groundwater Management Unit Control. The development of the GMU boundaries would be coordinated at the Basin Commission level. However it is proposed that the day-to-day management of the GMUs and the development and implementation of the GMPs would be the responsibility of a single authority, which suggests that the Department of Water Resources at the province level is appropriate. Even though most, if not all, GMUs would be relatively local it is believed that to ensure that the GMPs are implemented they would need strong province level support. In addition the GMU control should be linked to land use management, so that pollution can be controlled. (iv) Management Framework There are five essential groundwater management elements: · Licensing. The fundamental tool for management is licensing. An essential requirement of a license is the specification of a maximum volume which can be extracted. Almost all licenses in China specify a maximum extraction volume. Table 9.2 indicates for 1998 the extent of licensing for different types of users. It should be noted that no licenses are required for stock watering purposes, and very few (less than 5 percent) areas of China require licenses for household (domestic) use. Hence the first row in the table below is essentially all for urban purposes. Groundwater licensing only started in China in 1993. Table 9.2 indicates that most urban supply wells are not licensed. It is essential that all major users, with the only exception being domestic users, be licensed. Chapter 9. Groundwater 233 TABLE 9.2: EXTENT OF LICENSING FOR DIFFERENT USERS IN 1998 Use % Licensed % Use % Licensed % Use All China All China 3-H Basins 3-H Basins Urban, Domestic and Stock 40.00 19.58 45.00 17.06 Irrigation 75.00 58.87 78.00 61.80 Industrial 90.00 21.55 92.00 21.14 Total 71.38 100.00 75.33 100.00 Table 9.3 below indicates the percentage of all use which is licensed for the 3-H basins. It is clear that continuing commitment to licensing is still required. A fundamental requirement is that licensing must be tied to the sustainable yield. This is not currently the case. The duration of licenses is generally three years for urban and industry and five years for irrigation. Regulations for licensing need to be developed to assist the licensing authority. TABLE 9.3: LICENSING PERCENTAGE OF ALL USE IN 3-H BASINS Basin Percent of all use which is licensed Yellow Basin 57.9 Huai Basin 79.1 Hai Basin 81.0 A separate matter is the licensing of water well drillers. Currently there is no licensing of well drillers. To ensure minimum standards for the construction of water wells it is necessary to license drillers. All drillers should be licensed according to a government-approved authority to ensure proper well construction and well head protection for aquifer protection. · Metering. Accurate usage data is required for good groundwater management. This generally requires metering of all major users, or at least, some alternative method of accurate use measurement (e.g. record of pumping capacity). · Monitoring. Monitoring of groundwater levels(for shallow unconfined aquifers), pressures (for deep confined aquifers) and quality (for a broad range of pollutants) is essential to understand the aquifer response to pumping. This hydrogeological data provides the basis for future decision-making. It would appear that a reasonable level of monitoring is currently being undertaken. · Groundwater Database. The above essential elements of a management framework all must feed into a readily accessible database. The lack of a single comprehensive GDB is a major deficiency. It is recommended that such a database be developed for all of China. Details of the steps involved in developing such a database are given in Annex 9.3, Volume 3. · Pricing. It is evident that groundwater users should be charged full price based on consumption. In urban areas, price and tariff reforms aim to achieve cost recovery levels for urban water and wastewater facilities. Costs of groundwater exploitation, however, are not being fully addressed. In a number of provinces, water resource fees are charged to a limited number of groundwater users, but these fees are very low relative to the amounts of groundwater used, and do not apply to the vast majority of groundwater use. Groundwater and management resource fees need to be applied to both urban and rural users, and to water supply companies, i.e. to all groundwater users. The identification of the true financial impacts of poor groundwater management--i.e. costing subsidence, quality degradation etc.--needs to be undertaken. It is clear that significantly greater management effort, resulting in higher cost for consumers, is required in those areas where the 234 Chapter 9. Groundwater groundwater resources are overexploited. In addition, a higher resource fee should be charged in those areas that are overexploited. The costs associated with implementation of new measures to deal with overexploited groundwater resources--e.g. artificial recharge--should be reflected in the water resource fee. In addition, subsidizing energy costs required for pumping groundwater should not be practiced because it encourages overexploitation of nonrenewable resource84 like groundwater from deep aquifers. (v) A Groundwater Management Plan A Groundwater Management Plan (GMP) identifies the groundwater issues existing in a GMU and develops a strategy for addressing those issues. It is developed at a local level and must have the support of the major stakeholders. It is the guiding document for any capital works and it stipulates the time frame and method of implementation. A typical table of contents of a plan would comprise the following elements: · Define Objectives of GMP. It is necessary to identify what overall water resource and groundwater issues are being addressed by the plan. · Quantify Groundwater Resources. This involves defining the sustainable yield and the error associated with the assessment. Also involved is the overall groundwater resource description. A description of the GMU boundaries, both spatially and vertically, is necessary. · Define Management Issues. A detailed description of the management issues is essential. This must cover both quantity and quality issues. · Identify Options to Reduce Usage. Such as more efficient irrigation, demand management, surface water imports, artificial recharge, enforcement of license volumes. A detailed evaluation of all the options to address the issues is presented. This may involve considerable engineering investigation and analysis. · Recommended Preferred Strategy. The strategy should include detailed costing of any capital works. Specific actions are required, covering capital works, institutional, licensing, etc. · Management Responsibility. The responsibility for both implementation and ongoing management should be set out, specifically institutional arrangements, licensing and allocation criteria, pricing. The practical control of usage from wells (compliance) to control overuse should be specifically reviewed. · Pollution Prevention Plan. The broad range of measures to control groundwater pollution, especially of the shallow aquifers, must be developed as part of the GMP. · Education and Consultation. Gaining ownership amongst the stakeholders, especially the users, of the GMP is essential. A broad range of consultation and education measures are required. · Monitoring: Level, Quality, Usage. The recommended ongoing program of groundwater level, quality and usage monitoring needs to be developed. 84 Due to the fact that it takes thousands of years to recharge deep aquifers, groundwater pumped from them may as well be considered nonrenewable at our time scale. Chapter 9. Groundwater 235 · Implementation Program. A detailed implementation program for all the activities of the GMP needs to be developed, including tasks, deadlines, responsibility. · Plan Review, Audit and Reporting. A plan review program, for example every five years, should be proposed. A program of independent review and reporting should be included. It is recommended that GMPs be developed for all identified GMUs in the 3-H Basins. (vi) Implementation To achieve the objective recommended in the previous sections, it is recognized that implementation will be strongly influenced by many factors, including surface water source diversions, construction of water plants and wastewater treatment plants. Nonetheless it is considered essential to have a goal. It is proposed that GMPs be developed and implemented as follows: · Category 1 GMUs: GMPs be developed by 2002. Implemented by 2010. · Category 2 GMUs: GMPs be developed by 2004. Implemented by 2015. · Category 3 GMUs: GMPs be developed by 2010. Implemented by 2020. · Category 4 GMUs: GMPs be developed by 2015. Implemented by 2025. To achieve these goals will require a massive effort. A clear understanding of the extent of groundwater pollution in the 3-H basins is not available. Limited data available indicate widespread and serious pollution of the shallow aquifers. There are no comprehensive programs underway to address this broad-scale problem. The extensive pollution of the shallow aquifers is forcing many groundwater users to abandon the shallow wells and drill new deeper wells to the deep confined aquifer. In addition, this polluted shallow groundwater discharges to surface waters in some areas causing surface water pollution. The contamination of groundwater from toxic compounds is particularly noteworthy. Despite limited data available to document this, it is almost certain that aquifers beneath industrial areas are being contaminated by nondegradable toxic organics, toxic heavy metals and toxic organic compounds. In the United States, the costly superfund program was eventually established to attempt remediation of groundwater contamination (worth about US$10 billion). Recent development suggest that even these huge sums of money are not sufficient to remedy the problem and so now the focus is on containment of polluted groundwater (i.e. preventing polluted groundwater from degrading higher-quality groundwater but not necessarily treating or cleaning up the contaminated groundwater. Prevention of groundwater pollution requires a broad-scale planning process involving land use planning, comprehensive sewerage planning, enforcement and regulation of good industry and farming practices. Even though quantity issues currently dominate groundwater management planning, much greater attention to a broad range of measures to control groundwater pollution are required. It is evident that groundwater users should be charged full price based on consumption. In urban areas, price and tariff reforms aim to achieve cost recovery levels for urban water and wastewater facilities. Costs of groundwater exploitation, however, are not being fully addressed. In a number of provinces, water resource fees are charged to a limited number of groundwater users, but these fees are very low relative to the amounts of groundwater used, and do not apply to the vast majority of groundwater use. Groundwater and management resource fees need to be applied to both urban and rural users, and to water supply companies, i.e. to all groundwater users. 236 Chapter 9. Groundwater The identification of the true financial impacts of poor groundwater management--i.e. costing subsidence, quality degradation etc.--needs to be undertaken. It is clear that significantly greater management effort, resulting in higher cost for consumers, is required in those areas where the groundwater resources are overexploited. In addition, a higher resource fee should be charged in those areas which are overexploited. The costs associated with implementation of new measures to deal with overexploited groundwater resources--e.g. artificial recharge--should be reflected in the water resource fee. In addition, subsidizing energy costs required for pumping groundwater should not be practiced because it encourages overexploitation of nonrenewable resource85 like groundwater from deep aquifers. In line with proposed groundwater management plans which require community participation, it is recommended that extensive community education programs be developed to raise community awareness of groundwater issues. In addition, there will be a need to develop a training program (a manual of guidelines) directed at those who will implement the action plan such as the provincial/county/prefecture water resources bureaus because their current knowledge of these procedures and integrated nature of recommendations is likely to be very low or nonexistent. The training program should contain the approaches and methodologies of the Action Plan, including GMU definitions, sustainable yield determination, revised basis for groundwater license allocation, necessity for drilling licenses, workings of the groundwater database and needed information, pricing, etc.) C. ACTION PLANFOR WASTEWATER RECLAMATION In a water-short area such as the 3-H basins, we contend that the practice of discarding wastewater without reuse cannot continue. At some point, scarcity will increase the cost of fresh water supply to the point where reuse schemes become viable. In China, artificially low prices of water supply to industry, irrigation and municipalities have prevented reuse practices from becoming more common. However, as the notion of water provision as a public good and welfare activity gives way to the concept of water as an economic good and an input of economic activity, there will be growing policy concern about efficient and equitable use, cost recovery and financial viability. Under such circumstances, it is inevitable that reuse schemes will become more viable propositions. In Chapter 9 we investigated the role of artificial recharge schemes such as artificial storage recovery (ASR) and SSP using wastewater and floodwater to increase water resources for defined beneficial uses and to address such problems as ground subsidence, salinization and water quality degradation, groundwater depletion and seawater intrusion. These problems were identified in the 3-H basin and described briefly in Chapter 3D. Improving water quality in the 3-H basins is a key component of the proposed action plan. Pollution of rivers, lakes and groundwater in the 3-H basins poses a constant threat to public health and these issues are discussed in more detail in Chapter 3F. Wastewater treatment combining municipal and industrial waste are proposed for priority cities. Once treated, wastewater cannot be discarded to rivers without thoroughly examining the options that exist to reuse this water for suitable beneficial uses and considering the level of treatment currently planned for cities in China which is typically primary or secondary level, nonpotable use of wastewater is envisaged. There exists opportunities to direct treated 85 Due to the fact that it takes thousands of years to recharge deep aquifers, groundwater pumped from them may as well be considered nonrenewable at our time scale. Chapter 9. Groundwater 237 wastewater for irrigation in agriculture and for urban uses including vehicle washing, parks and nature strips, dust suppression for construction sites and air pollution control. In the case of irrigation for market gardens, ASR can help in improving public health because alternative low cost water is generally not available for irrigation of high value market crops near major cities and the current practice is to use untreated wastewater directly. The resulting contamination of foodstuffs to be eaten raw maintains a high level of enteric disease in the area. While much focus has been given to reuse for agriculture, attention for urban use has lagged despite many advantages including (a) nonconsumptive uses as described above, (b) proximity of reuse markets from treatment point, (c) high valued use which can be metered thus enhancing cost recovery. As the major source of treated wastewater will be from urban wastewater treatment plants, 33 cities with significant groundwater problems have been assessed from the point of view of the technical feasibility of artificial recharge and ranked accordingly. It is concluded that from a hydrogeological point of view there are many feasible artificial recharge options. Eleven high priority cities are identified where a feasibility assessment of using treated wastewater for artificial recharge should be undertaken. The availability of sufficient wastewater to address the problems of overexploitation would need to be assessed for each city. The use of treated floodwaters for artificial recharge is considered not to be practical or economic. Deep aquifer injection is, similarly, not recommended for untreated floodwaters. However, further evaluation of the technical feasibility of using untreated floodwater for artificial recharge and enhanced natural recharge should be undertaken. Some cases have been identified where flood detention basins overlie overexploited aquifers and where some relatively minor works might be feasible in increasing recharge. Further evaluation is required to confirm the technical and economic viability of this proposal. Also, a number of areas between levees in the Hai River basin are worthy of further consideration for enhancing recharge during floods. The treatment requirements for successful artificial recharge of wastewater vary considerably, depending upon the recharge method adopted. Deep aquifer injection requires a much higher quality wastewater, treated to tertiary standards, than do surface spreading systems which require a secondary treatment standard. This has major cost implications. There is not sufficient wastewater available to address the broad scale lowering of groundwater levels across large areas of the North China plain. In addition, it would not be economic. Treatment required will also be dependent on the intended use of reclaimed water for public health protection. At the moment over raw sewage is used for irrigation because of widespread water shortages. As noted in Chapters 3F and 7 while this practice is necessary at the present time, it represents a threat to public health. Wastewater containing toxic compounds such as toxic heavy metals are most dangerous. The Action Plan proposes industrial pretreatment of wastewater prior to discharge to the municipal system to eliminate this risk. The relevant standard for irrigation water quality (GB5084-1992) specifies that only treated water should be used. However as noted above due to lack of treatment facilities and water shortage, raw sewage is routinely used. The issue of appropriate standards is discussed in detail in Chapter 7. By comparison, in California, the use of floodwaters for aquifer recharge is sizable business. Therefore such practice may become more widespread in China in the future as technology and society changes. 238 Chapter 9. Groundwater There are many artificial recharge schemes currently operating in China (Table 9.4). Examples include Shanghai, middle reaches of the Chaobai River, Yongding River etc. TABLE 9.4: SOME EXISTING ARTIFICIAL RECHARGE SYSTEMS IN CHINA Location Type of Year com- Volume of Reason Depth of Comment Scheme menced Recharge Aquifer Urban area of Deep well 1965 For land subsidence 60-260m Source of water is water supply from Shanghai city injection control and energy Huangpu River. Land subsidence has been storage in aquifers. controlled. Chaobai River, Spreading 1984 40-80 Mcm/yr To enhance 0-30m Groundwater level has risen 2­3 m since Beijing Basin groundwater 1990 in this area. resources. Yongding River, Trench and 1981 200,000 m3/d To enhance Surface and Source is from Yongding River. The trend Beijing city deep well groundwater 10-50 m of groundwater level decline was slowed. injection resources. Tanggu section, Deep well 1980 Unknown To protect geothermal 160 ­ 600 m Geothermal water is source of recharge. Tianjin city injection water resources. AR slowed the speed of geothermal water level decline in deep aquifers. Dagu River, Trench 1990 Unknown To enhance 0-30 m AR ensured the groundwater supply for Qingdao, groundwater Qingdao city. Shandong resources. Province Middle reach of Trench 1994 50,000 m3/d To enhance Surface Luo River is the source of water. Luo River, groundwater Groundwater is in dynamic balance in the Luoyang city resources. recharge area. Source: Table 9.2 in Chapter 9. Following hydrogeological investigations in the 3-H basins, additional artificial recharge schemes have been recommended as part of the action plan. Artificial recharge would have both a water storage function (and hence reduce depletion of aquifers) and a problem-solving function (to arrest seawater intrusion, water quality degradation and subsidence). Figure 9.3 show areas in the Hai and Huai basins that are potentially suitable for artificial recharge. The hydrogeological characteristics of feasible recharge schemes are described in Table A9-1, Annex 9, Volume 3. These include permeability, hydraulic conductivity grain size, porosity. In addition, the quality of the water must match those acceptable for the geological conditions and obviously this will be site-specific. Deep aquifer recharge will require more sophisticated treatment than surface spreading. If flood water is used to recharge, TSS will need to be reduced prior to spreading. The estimated volumes required to address groundwater problems in the 3-H basins are presented in Table 9.5 at the basin II level, in Table 9.6 for individual cities (for water supply augmentation) and Table 9.7 for groundwater issues. For the 3-H basins, the calculated volume required is 11.1 Bcm/year, while the cities will need 2.5 Bcm/year for water supply and 1.2 Bcm/year for environmental issues. The overall observation is that there is not enough wastewater available to address the huge groundwater problems across the 3-H basins. It is likely that only a small proportion of the wastewater might be available for artificial recharge. Deciding priorities for use of treated wastewater should be within the context of an overall water management strategy. Nonetheless it is possible that there could be enough wastewater available to address the groundwater problems in the cities listed in Table 9.8. Only four of the cities listed in this table have overexploited deep aquifers. In all four cases, there is not sufficient data and knowledge available to assess the feasibility of deep well injection. In the other 17 cases, the shallow aquifers are overexploited and in 13 of these cases it is believed that artificial recharge using surface systems such as SS is technically feasible. Chapter 9. Groundwater 239 FIGURE 9.3: AREAS SUITABLE FOR SURFACE ARTIFICIAL RECHARGE IN HAI RIVER BASIN 240 Chapter 9. Groundwater TABLE 9.5: VOLUMES OF WATER REQUIRED TO ADDRESS GROUNDWATER PROBLEMS IN 3-H River No. Subarea Area Groundwater problems Volume Time to basin (km2) (Mcm) solve Possible options problems Hai 2-1 Luanhe and east 54,530 Seawater intrusion 256 10 years Decrease GW extraction Hebei coastal area Surface collapses Artificial recharge 2-2 Hai river north 83,119 Land subsidence 2,440 20 years Decrease GW extraction system Continuous drawdown of groundwater levels Artificial recharge 2-3 Hai river south 148,669 Land subsidence 6,162 20 years Decrease GW extraction system Continuous drawdown of groundwater levels Artificial recharge 2-4 Tuhai and Majia 31,843 Continuous drawdown of groundwater levels 1,218 20 years Decrease GW extraction river system Artificial recharge 2 Basin total 318,161 10,076 Decrease GW extraction Artificial recharge Huai 3-2 Between Wang and 91,860 Continuous drawdown of groundwater level 148 10 years Decrease GW extract Beng area 3-7 Shandong 60,370 Sea water intrusion 100 10 years Artificial recharge peninsula 3 Basin total 331,620 248 Total 1,448,842 11,143 20 years Source: Table 9.4. TABLE 9.6: VOLUMES OF WATER REQUIRED FOR WATER SUPPLY PROBLEMS IN SOME CITIES WW produceda Water needed Time to solve Basin City Problems (Mcm/yr) (Mcm/yr) problems Possible options Hai Beijing Continuous drawdown of 360 565 10 years Decrease GW extraction, groundwater levels Artificial recharge Tianjin Land subsidence 140 158 20 years Decrease GW extraction, Continuous drawdown of Artificial recharge, Interbasin groundwater levels transfer Shijiazhuang Continuous drawdown of 262 36 20 years Decrease GW extraction, groundwater levels Artificial recharge Tangshan Surface collapses in karst area 372 10 20 years Decrease GW extraction, Artificial recharge Qinhuangdao Seawater intrusion; Surface 26 122 20 years Decrease GW extraction, collapses Artificial recharge Xingtai Continuous drawdown of 79 26 20 years Interbasin transfer groundwater levels Cangzhou Land subsidence 77 20 years Decrease GW extraction, Continuous drawdown of Interbasin transfer groundwater levels Dezhou Land subsidence 71 37 20 years Decrease GW extraction, Continuous drawdown of Interbasin transfer groundwater levels Anyang Continuous drawdown of 115 57 20 years Artificial recharge and groundwater levels Interbasin transfer Datong Continuous drawdown of 40 94 20 years Interbasin transfer groundwater levels Puyang Continuous drawdown of 15 50 20 years Artificial recharge and groundwater levels Interbasin transfer Huai Zhengzhou Continuous drawdown of 41 293 10 years Artificial recharge groundwater levels Xianyang Continuous drawdown of 47 202 20 years Interbasin transfer, Artificial groundwater levels recharge Land fissures and subsidence Qingdao Sea water intrusion 80 10 years Artificial recharge and Interbasin transfer Chapter 9. Groundwater 241 WW produceda Water needed Time to solve Basin City Problems (Mcm/yr) (Mcm/yr) problems Possible options Yellow Taiyuan Continuous drawdown of 16 20 years Interbasin transfer groundwater levels Xian Continuous drawdown of 135 20 years Interbasin transfer groundwater levels Land fissure and subsidence. Lanzhou Groundwater pollution 160 20 years Interbasin transfer, Artificial recharge Luoyang 35 20 years Artificial recharge Cities in 3­H Basin Total NA 2,493 aData from Water Pollution substudy for the Hai/Huai basins. Data not available for Yellow. Note: The volume data are from: Yellow River Water Resources Commission (1997), Haihe River Water Resources Commission (1997) and Huaihe River Water Resources Commission (1996). Source: Table 9.5 in Chapter 9. TABLE 9.7: GROUNDWATER QUALITY ASSESSMENT FOR SOME PROVINCES IN THE 3-BASINS (%) Province/city Class I Class II Class III Class IV Class V Beijing 2 50 0 45 3 Tianjin 0 14 0 21 65 Hebei 4 27 0 35 34 Henan 9 40 0 36 15 Shanxi 3 28 16 49 3 Inner Mongolia 0 29 24 12 25 Ningxia 0 0 0 0 100 Gansu 0 0 42 33 25 Qinghai 0 0 0 0 100 Source: Department of Hydrology, Ministry of Water Resources, Water Quality Assessment of China, 1997. TABLE 9.8: VOLUMES OF WATER TO ADDRESS GROUNDWATER PROBLEMS IN SOME CITIES Basin City Area Average water Water needed WW produced Aquifer Suitability for km2 level decline Mcm/yr Mcm/yr overexploited AR Hai Beijing 16,374 30 m 116 360 S Y Tianjin 546 50 m 5 140 D U Shijiazhuang 253 28 m 142 262 S Y Tangshan 668 15 m 7 372 S Y Qinhuangdao 390 8 m 6 26 S Y Hengshui 17 57 m 19 D U Xingtai 138 35 m 39 79 S Y Cangzhou 195 85 m 17 D U Anyang 110 20 m 20 115 S Y Datong 190 12 m 30 40 S U Puyang 220 16 m 48 15 S U Huang Huhehot 2,056 20 m 68 S Y Taiyuan 735 10 m 35 B U Luoyang 455 20 m 65 S Y Zhengzhou 544 15 m 20 S Y Zibo 2,920 20 m 199 S Y Xian 968 30 m 135 S U Lanzhou 13,085 10 m 8 S Y Anyang 1,639 20 m 154 S Y Xianyang 615 20 m 44 S U Huai Qingdao 10 m 32 S Y Total 1209 NA Note: Volume = GW usage ­ GW safe yield; S ­ Shallow, D ­ Deep, B - Both; Y ­ Suitable, U - Unsure. 242 Chapter 9. Groundwater ASR potential using floodwater was also investigated. By overlying the map of areas hydrogeologically suitable for recharge and the location of detention basins it was possible to estimate the feasibility of such scheme from geological perspective. Other considerations included the volumes and quality of water available and the need for artificial recharge. Clogging of shallow aquifers and the expense of treatment for deep injection schemes are the major constraints of ARS/SS using floodwater. Nonetheless, it is recognized that due to the high turbidity of the floodwaters in some cases, the enhanced recharge areas would clog within several weeks and the infiltration rate would decrease significantly. Prior to the next flood, it would be necessary to clean these enhanced recharge areas. Nonetheless, considering the large areas involved, the useful addition to the groundwater resource would be significant. Assuming a (short-term) infiltration rate of 10m/d over ten days a flood could produce a shallow aquifer recharge of 100 million m3/km2. Some of this recharge would be currently occurring. Table 9.9 considers the potential for shallow artificial recharge between the levees for the Hai and Yellow River basins where groundwater is heavily used. The Huai River basin is not included because there are no suitable areas where groundwater is overexploited. TABLE 9.9: RECHARGE POTENTIAL BETWEEN RIVER LEVEES--YELLOW AND HAIRIVERS No. Location Length Approximate Typical Surface Amount of Comment on recharge (km) frequency of duration of geology GW usage potential inundation inundation Natural Artificial (years) (days) 1 Zhengzhou, Huang R. 30 5 20 Silty sand H (B) H M 2 Xian, Wei R. 50 5 ~ 10 5 Silty sand OE (D) H M 1 Shijiazhuang, Hutuo R. 50 2 ~ 5 3 ~ 5 Gravel sand OE (S) H H 2 Handan, Zhang R. 20 5 ~ 10 2 ~ 3 Silty sand OE (D) H H 3 Beijing, Yongding R. 50 2 ~ 5 5 ~ 10 Gravel sand OE (S) H H 4 Beijing, Chaobai R. 30 5 3 ~ 5 Sand OE (S) H H H ­ High, M ­ Medium, L ­ Low, U ­ Unknown, OE ­ Overexploited; S ­ Shallow, D ­ Deep, B - Both Raising broad scale groundwater levels across the 3-H basins by artificial recharge is not feasible for technical and institutional reasons and because insufficient water is available for recharge. However ASR and SS could play an important role at local scale to help alleviate local water shortages or environmental problems caused by excessive groundwater extraction. Thus the action plan requires prioritizing of activities for the artificial recharge component and broad-scale application of institutional reforms. In Volume 3, Annex 3.2, Table A3.2-6 identified key cities where ASR may be needed and feasible, i.e. based on hydrogeological criteria and the severity of the problem. The top priority cities (11) are Beijing, Tianjin, Qingdao, Huhehot, Xian, Taiyuan, Qinhuangdao, Chengde, Luoyang, Lanzhou, Linyi.; Second Priority Cities (18) are Shijiazhuang, Tangshan, Xingtai, Anyang, Datong, Zhangjiakou, Shuozhou, Xinzhou, Baoding, Changzhi, Zhengzhou, Zibo, Xianyang, Jining, Xuzhou, Zhumadian, Heze, Shangqiu; Low Priority Cities (4) are Hengshui, Cangzhou, Puyang, Suxian. For many of the cities, there are a range of SS and deep injection options using treated wastewater, untreated floodwater and treated floodwater. In many of the 33 cities a feasible option identified was surface recharge in existing alluvial river channels. The areas required for SS basins in many cases are large. However the infiltration rates in alluvial sands and gravels are usually large and Chapter 9. Groundwater 243 hence the area required would be much smaller. A key advantage of deep aquifer injection is, obviously, that very little area is required. The key conclusions in relation to wastewater reuse are: 1. Tertiary level treatment of wastewater is required for deep well injection. 2. Secondary or primary level treatment of wastewater is satisfactory for surface artificial recharge systems depending on conditions. 3. Reducing groundwater extractions, by a variety of means, will generally be the most cost effective method of solving groundwater problems. In some cases, however, this may not be achievable nor sufficiently rapid and artificial recharge will be required to achieve a definite and/or faster response. 4. Artificial recharge to address broad scale lowering of groundwater levels across large areas of the North China plain is not feasible or economic. 5. Locations where coarse sediments outcrop around the western rim of the North China plain are the most attractive locations for shallow artificial recharge. 6. More detailed evaluation at the prefeasibility level is required to assess the most appropriate water and wastewater management approach, including artificial recharge, for solving groundwater related problems for many cities in the 3-H basins. However sufficient data is available to indicate a priority for more detailed assessment of the technical and economic feasibility of artificial recharge. The key recommendations from this section are: 1. Feasibility level assessment of artificial recharge of the 11 highest priority cities identified be undertaken. This assessment will involve evaluation of recharge water availability and wastewater treatment requirements, hydrogeology, concept design and costing. 2. Following on from the previous recommendation, at the completion of the highest priority cities, a feasibility level assessment of the remaining cities should be undertaken. D. ACTION PLANFOR GROUNDWATER IMPROVEMENT 1. Improved Groundwater Management Issue/Problem Proposed Action Plan Groundwater management currently not focused on Define Groundwater Management Units (GMU) 10 to 100 in the 3-H problem areas; basins may be necessary. Characteristic of GMU include (a) large scale, Hydrologic basins not coincide with groundwater (1:1500) (b) defined aquifer system (several GMU can overly each other aquifers provided each has 1 discreet aquifer). Boundaries are chosen based on geographic/administrative criteria for example. GMU should include recharge area. Unsustainable extraction exceeds sustainable yield Define sustainable yield by adopting resource modeling such as Modflow. of aquifer as evidenced by falling groundwater SY = Use of the resource in such a way that doesn't present future tables and decreased pressure levels generations from haring similar level of access to the same resource Licensing system is not resource related and Allocate licenses based on SY as defined above therefore does not serve the intended purpose to regulate extraction to ensure sustainable use 244 Chapter 9. Groundwater Issue/Problem Proposed Action Plan Too many governments departments with similar or Licenses to be allocated by one department only. Different existing levels overlapping responsibilities of government are appropriate MWR should have national level planning and coordination, river basin level allocation linked to provincial and lower level licensing of groundwater, GMU scale day to day management controlled at the provincial level. Independent review of GMU plans. Water wells design and construction less than Set up system of licensing for drillers, require design to be approved by a optimum leading to less efficient wells, possible qualified professional groundwater engineer contamination of groundwater Information on groundwater resource, groundwater Compile existing information on groundwater resource, groundwater quality, well design parameters and subsurface quality, subsurface geology, well design parameters. geology is not readily available and not compiled Allow public access, develop database at national level. Maintenance of on a data base, leading to the inability to manage database at provincial level. groundwater based on objective resource management principles Groundwater pollution is widespread but not For China, given the heavy reliance on groundwater for urban/irrigation documented prevailing pollution prevention water supply in normal years and as security in drought years, immediate strategy to be implemented. Of particular concern action is required to develop a strategy to define the problem and start a are the toxic compounds that may be contaminating program to present existing groundwater degradation from such pollution fresh groundwater supplies. Only extremely sources. expensive remediation technology is capable of treating such kind of pollution and this likely to be unaffordable. Shallow groundwater contamination forces users to Broad scale planning/land use/sewerage planning, shift to deeper aquifers increasing reliance on less monitoring/enforcement of industries. See pollution action plan. readily rechargeable and more expensive resource. Current groundwater prices are too low to reflect Groundwater and management resource fees need to be applied to both degree of scarcity or resources and promote urban and rural users and water supply companies. increased efficiency of use fees charged to limited Identify true costs of poor management including subsidence, salinization, users. quality degradation etc. to promote development of groundwater management plans and identify costs associated with artificial recharge. These costs should be reflected in the water resource fee. Discontinue practice of subsidizing energy costs for pumping. Community are largely unaware of groundwater Undertake immediate community awareness raising programs of serious problem and consequences groundwater issues including implication of "do-nothing" option. 2. ASR and SS Issue/Problem Proposed Action Plan Pollution of surface water due to discharge of Investigate the role of recharge of aquifers at the local level to determine untreated sewage and industrial effluent from rural feasibility of ASR and SS. towns and urban areas creates environmental and Promote construction of WWTPs as identified in pollution action plan to public health problems. primary/secondary standards to satisfy public health and engineering requirements of ASR, SS schemes. Promote use of industrial pretreatment to ensure toxic compounds are removed prior to discharge to municipal sewers. Chapter 9. Groundwater 245 Issue/Problem Proposed Action Plan Subsidence, groundwater quality degradation, Top priority cities using wastewater: Beijing, Tianjin, Qingdao, Huhehot, salinization falling groundwater levels Xian, Taiyuan, Qinhuangdao, Chengde, Luoyang, Lanzhou, Linyi: Second priority cities: : Shijiazhuang, Tangshan, Xingtai, Anyang, Datong, Zhangjiakou, Shuozhou, Xinzhou, Baoding, Changzhi, Zhengzhou, Zibo, Xianyang, Jining, Xuzhou, Zhumadian, Heze, Shangqiu; Low priority cities: Hengshui, Cangzhou, Puyang, Suxian. Top priority locations using flood water: Zhengzhou, Yellow River; Xian, Wei River, Shijiazhuang, Hutuo River; Handan, Zhang River; Beijing, Yongding River and Beijing, Chaobai River. 246 Chapter 10. Institutional Management 10. INSTITUTIONAL MANAGEMENT A. INTRODUCTION Water resources management in China has long focused on flood control and irrigation, and given the high variability of the hydrology in China and particularly in the 3-H basins, these issues will continue to be of vital importance. However, China's impressive development over the past 20 years, with its rapid urbanization and extraordinary growth in industrial output, has also seen urban and industrial water supply, and water pollution control, become a focus of attention. In the last decades, there have been huge increases in water consumption resulting in major problems and strong competition and conflict over access to the available water resources between the provinces86 and the various sectoral users.87 Very severe water shortages, particularly in the north of the country, have had a negative effect on economic growth and on the ecological environment that is evidenced by periodic reductions in factory and agricultural production; extractions from groundwater far in excess of natural recharge that has resulted in severe groundwater salinization and ground subsidence; and heavily polluted surface water resources. Nevertheless, the wider perception, which is driven by the devastating floods that occur almost yearly somewhere in the country, is that China has abundant water but the reality is that, on a per capita basis, China's water resources are less than a quarter of the world average. Floods and pollution, both of which are exacerbated by economic development, are certainly the most visible water problems, whereas the water shortages and the dramatically increasing competition among the various sectors, regions and provinces for access to scarce water resources, are much less visible. There are many dimensions to China's water problems such as quantity, quality, timing, spatial distribution, the condition of the water storage and distribution infrastructure, and the management of that infrastructure. The issues are complex and interconnected and also include floodplain management, resource allocation and protection, pollution control, demand management, conflict resolution, and institutional arrangements to ensure sustainable economic cum environmental development. In fact, it is suggested that possibly the single most important factor impacting on China's continuing development march is access to water, even more than flood control, so that clearly sustainable water resources management is a national priority. So far in this report institutional issues have been addressed in the various chapters (3-9) where specific aspects of the water sector have been discussed. Past and current situation were reviewed in Chapter 3 along with analysis of previous management of water. In Chapters 4 to 9, various aspects of the water sector were investigated including institutional issues related to them. Additional information on irrigation management in China compared to international experience is provided in Annex 10.1, Volume 3. Annex 10.2 contains a discussion of flood control management and the Law of Flood Control. Annex 86 Read municipalities, provinces, and autonomous regions. 87 Agriculture, urban and industrial water supply, flood control, hydropower, navigation, etc. Chapter 10. Institutional Management 247 10.3 discusses demand management and pricing and Annex 10.4 outlines the 2000 revision of the Water Law. This chapter seeks to take consideration of these and other interactions further, and considers how policies and institutional structures in the basins might evolve to provide a coherent overall framework for water in all its aspects. While the focus is on the 3-H region, the nature of the subject implies a more strategic, albeit general, consideration of issues than in other chapters of this report, and much of the discussion applies equally to other regions throughout China. Four areas are covered including 1. resource management and macro-planning, or in other words, water resource allocation (both surface and groundwater) between and within river basins and the various sectors; 2. regulation and enforcement, including water resource protection including pollution control, environmental and floodplain management; 3. demand management, financing and incentives; and 4. service delivery organizations. B. WATER RESOURCE MANAGEMENT IN CHINA As demonstrated in Chapter 4, the 3-H basins have reached a limit to the volume of water that can be delivered to consumers. With limited additional supplies, incremental increases can only push available resources by 14 Bcm to about 146 Bcm by 2050. In comparison, demand is projected to continue to increase from the present 169 Bcm to 204 Bcm even with a 3.9 percent to 2 percent annual increase in price included in the calculations from the present and continuing to 2050. Thus, water shortages are not only projected to continue--confirming that the limits on the natural resources use in the 3-H Basins have long been reached-- but are forecasted to intensify warning that competing demands on access to the available resources will become more acute. Since the traditional approach to increase supply from within the 3-H basins is no longer an option, many Chinese planners are rightly turning their heads to other methods of meeting supplies. (i) Governance Issues MWR has the primary responsibility for overall management and development of the nation's water resources and is well skilled and qualified to address the many problems. However, in an operational sense, its specific functionaries for flood protection and water management are the seven RBCMs, and the ministry's authority is limited in many critical areas given the high degree of autonomy of China's provinces88 and overlapping jurisdiction of other ministries and agencies, particularly in the areas of urban water supply, groundwater management, pollution control, and operation of reservoirs for hydropower. The result is that the current water management system is somewhat confused, uncohesive, and fraught with opportunities for overallocation, which has been confirmed by grossly depleted groundwater resources. The RBCMs are, in general, weak compared with the economic and political strength of the provinces. Institutional fragmentation from the central government downward explains a large part of this since it does not allow planning and day-to-day operational management to be effected over whole river basins. 88 Read municipalities, provinces, and autonomous regions. 248 Chapter 10. Institutional Management However, although the central government must retain the ultimate responsibility for the allocation and management of water resources in the national interest, the political reality is that the provinces have become increasingly powerful entities and already have a high degree of authority over resource development and management and, inevitably, this will be maintained. It is suggested therefore that the provinces' preeminence over natural resources management and development within their borders, subject to "technical" oversight by the respective RBCMs, should be formally recognized, and in particular, their responsibility for the management and use of their respective shares of interprovincial surface and groundwaters. In other words, once an allocation of interprovincial water has been made, the provincial governments should be able to decide how their share is to be used, consistent of course with national and basin policies and subject to any other river basin or interprovincial commitments such as with respect to minimum flows, water quality targets/pollution loads, or flood routing demands. At the river basin level the institutional challenge is to bring the provinces together with the key "water" agencies so that they all have a direct role in governance to ensure sustainable development of the various river basins as a whole. The provinces should also be fully responsible for managing land use and for associated water resource issues covering areas such as floodplain management, pollution control and catchment management, again consistent with national and river basin policies. Funding may be jointly shared with other levels of government, and guidance will continue to be provided by the central agencies but, accountability would rest with the provincial governments. (ii) Surface Water Management (a) River Basin Agencies The RBCMs as they are now constituted are effectively administrative departments of MWR.89 They cooperate with other central departments and agencies, the provincial and local governments, and with other stakeholders as necessary, but receive their instructions from MWR. If they are required to implement State Council or other high-level decisions, they do so on behalf of MWR. However, the RBCMs have little or no authority, and with decentralization and the strengthening role of the provinces, there are very persuasive arguments for broadening the governance of the RBCMs to include the provinces and perhaps other stakeholders such as key civil societies Although there are numerous established river basin or water resources management agencies throughout the world, fundamentally, they all fall into one of three models--a River Basin Authority, a River Basin Commission, or a River Basin Coordinating Committee or Council (refer to the proposed RBCN scematic below). It is suggested that the River Basin Coordinating Committee or Council philosophy is the most appropriate model for the 3-H basins. It builds on the long, well-established political and bureaucratic arrangements and organization structures, and it is consistent with the Chinese social system that relies heavily on personal relationships, avoids confrontation, and allows for negotiation and bargaining. A typical River Basin Coordinating Committee: 89 An exception is in respect of the Basin Environmental Protection Departments, which reports jointly to both MWR and SEPA. In a flood emergency, they also report directly to the Flood Control and Drought Relief Headquarters, as of course do all other concerned agencies. Chapter 10. Institutional Management 249 STATE COUNCIL RIVER BASIN COUNCIL CHAIRMAN: VICE-PREMIER Executive Vice-Chairman Vice-Minister for Municipality Mayors Vice-Ministers of Civil Societies such as: Water Resources and Provincial and associated "Water" Autonomous Region Ministries Irrigation Water Users Governors Associations and Water Supply Companies City Water Supply Companies, Sewerage Companies Commissioner or Ministries of Agriculture, Construction, Director RIVER BASIN Finance, Transportation, National Meteorology Bureau, National Planning COMMISSION Commission, State Environmental Protection Authority RIVER BASIN COMMISSON Executive Secretariat 250 Chapter 10. Institutional Management · comprises the heads of all relevant ministries, agencies, or departments, with a small supporting secretariat; and · coordinates high-level policy and strategy matters and have no role in daily operation or management. This arrangement is often used in "developed" countries where most development is completed, where water trading and other economic instruments are in place, and the water sector is in a stable or mature situation. This type of organization is the "softest" or "weakest" intervention in the overall management of a river basin. It is imperative that representation on the committee from all the "water" agencies and governments is at the highest level to ensure compliance with its decisions to ensure sustainable development for the whole basins. Accordingly, it is recommended that River Basin Coordinating Committees or Councils be established in each of the 3-H Basins, chaired by a Vice-Premier with MWR as Vice-Chairman, and comprise the Mayors and Governors of the constituent municipalities, provinces and autonomous regions; and the Vice-Minister for Water Resources and the Vice-Ministers of SEPA and the other key "water" ministries--the Ministry of Agriculture, Ministry of Construction, Ministry of Finance, Ministry of Transportation, the National Planning Commission, and the National Meteorology Bureau; and the Commissioner or Director of the respective RBCM. In addition, it is important to include key civil societies such as WUAs and WSCs in the River Basin Council to facilitate ownership and implementation of decisions taken by the councils. It is suggested the River Basin Councils would need to meet two or three times a year and report direct to the State Council. The councils must be given the necessary legislative support and authority to ensure the essential coordination and enforcement of their policy and program decisions in the municipalities, provinces, and autonomous regions. Similarly, the established RBCMs should be confirmed by law as the primary river basin or water resources management agencies in the 3-H Basins and be strengthened with the appropriate expertise where necessary to provide the support for the councils. C. ALLOCATION AND EFFICIENCY The rapid pace of urbanization will continue to result in an increasing demand for water, which will see stronger competition and conflict over access to the available resources between the provinces and the various sectoral users. In the 3-H basins it is clear that the present system of water allocation will be unable to cope with the anticipated demand, which necessitates alternative arrangements to optimize economic, environmental and social productivity in order to make some progress towards meeting the central government's Agenda 21 goals for sustainable development.90 Public health, and agricultural, industrial and urban growth, will all depend upon finding ways to optimize allocations and make efficiency gains. Although water resources planning calls for moderately increasing allocated supplies of water for irrigation over the next decade, this will be very difficult to achieve. More probable is a continuation of recent trends with modest reduction in irrigation water allocations because most dry-season surface water is already consumed, and groundwater is heavily overabstracted. 90 China's Agenda 21 is a strategic framework for long-term, integrated, sustainable development. Chapter 10. Institutional Management 251 The high cost of new investments in water resource development, coupled with increasing economy-wide demands for limited financial resources, will likely constrain rapid development of new water resources. Although water can continue to be administratively allocated, it is more efficient and will lead to higher growth, if water is appropriately priced and market forces allocate the water to uses with higher economic value. As the economy becomes more market-oriented, the long-run sustainability of irrigation and drainage will depend increasingly on self-financing entities that are based on hydrologic boundaries (not administrative), with maximum management responsibility and control accorded to farmer users. From a macroeconomic view, the vastly higher economic values of water generated by the urban and industrial sectors should not be sacrificed for increased agricultural production. The ability of China's industrial sector to generate trade surpluses easily offsets foreseeable reductions in agricultural output that may arise from irrigation water shortages. However, three-fourths of China's population is rural and depend on agriculture for two-thirds of their incomes. Protecting and increasing these incomes and maintaining growth in agricultural production is a national concern, and one that depends in part on more and better irrigation. Rehabilitating and completing surface irrigation and drainage systems, including the installation of control structures and water measuring devices to improve efficiency, can yield local benefits. Rehabilitation should be undertaken where economic benefits justify the investment, particularly if it provides a more reliable and equitable supply of irrigation water to farmers and increases deliveries to water-deficient areas within the scheme, typically located in the lower lateral and sublaterals. Investments in improving and extending existing systems would likely provide better returns than new construction. [Between 1989 and 1995, the marginal cost of irrigation expansion was about Y 10,000/ha (1990 terms), representing very efficient investments. However, future investments will prove more expensive.] (i) Interprovincial Allocation and Other Agreements The only formal allocation of a major river system in China, apart for the Tarim River, is that for the Yellow River (State Council Decree No. 61, 1987). This provides for the allocation of the mean annual flows between twelve provinces, municipalities and autonomous regions.91 In addition to the Yellow River allocation, there are numerous local agreements relating to specific tributaries and watercourses that effect more than one province. These cover such issues as reservoir operations, river transfers (e.g. from the Luan River to Tianjin), minimum flows, water quality and operation of flood detention basins. Numerous problems have arisen with existing basin allocation and these include: · excessive withdrawals in the upper reaches (Chapter 4); · disputes as to whether the allocation refers to consumptive use or gross withdrawals; · a failure to clarify how shares are to be adjusted in response to variable river flows, and · flows in recent years that have fallen well short of the mean assumed. 91 The agreement allocates mean flows between Qinghai (1.41 Bcm), Sichuan (0.04 Bcm), Gansu (3.04 Bcm), Ningxia (4.00 Bcm), Inner Mongolia (5.86 Bcm), Shaanxi (3.80 Bcm), Shanxi (4.31 Bcm), Henan (5.54 Bcm), Shandong (7.00 Bcm) and Hebei/Tianjin (2.00 Bcm), giving a total of 37 Bcm. The mean annual runoff is given as 58 Bcm, thus allowing 21 Bcm in flows to the sea for sediment management and other environmental purposes. 252 Chapter 10. Institutional Management In effect, provinces in the lower reaches (in particular Shandong) take what they can divert after the upper provinces have taken their presumed shares. The complex river channels that characterize the Hai and the Huai basins are generally suited to local agreements, and there may be no need for comprehensive agreements of the Yellow River type.92 Nevertheless, provinces need to know what resources are at their disposal if they are to have preeminent responsibility for resource planning and management and local agreements may not optimize overall river management (there may for instance be opportunities for tradeoffs between tributaries and/or purposes). Consideration could thus be given as to whether broader allocation and related agreements would be beneficial to the provinces as a whole. It should be noted that, although RBCMs may play an important role in proposing the terms of such agreements, the governments concerned would normally sign them. (ii) Basin Management Functions In view of the foregoing, it is recommended the River Basin Councils be charged with the responsibility for: 1. determining water resources allocations (surface and groundwater) for the various municipalities, provinces and autonomous regions; 2. development of broad policies and programs promoting sustainable water resources management, and particularly with respect to (a) flood control and drought relief; (b) groundwater management; (c) water resources protection and pollution control; and (d) promotion of increased water use (especially irrigation) efficiency through demand management mechanisms and community/farmer education; and 3. preparation and supervision of comprehensive basin development and operating plans93 which would provide the basis for guiding the development and management of major multipurpose projects, present structural and nonstructural floodplain management proposals, and outline mainstream water quality and environmental conditions etc. These plans would be essential to the preparation of provincial94 plans but would not dictate in any way in which the provinces should utilize their water allocations; 4. with regard to regulation, RBCMs could issue water use permits to major users above a certain water amount or licensing powers could remain wholly with the provincial regulatory agency or agencies, subject to approval by the RBCM for all permits that fall within the prescribed criteria. (iii) Groundwater Management Groundwater management issues were discussed in Chapter 9. In summary, Groundwater management areas (GMAs) need to be defined and groundwater management plans (GMPs) drawn up for those aquifers that are overdeveloped. Since conjunctive use of groundwater and surface water can contribute greatly to the value of both resources, GMPs should give priority attention to this aspect. 92 Similar agreements have proven necessary in many other parts of the world, both for international river systems and for interprovincial river systems in federal countries. 93 In accordance with the Water Law: Article 11. 94 Read municipalities, provinces, and autonomous regions. Chapter 10. Institutional Management 253 Three levels of management are needed to implement these reforms. These include (a) national- level planning and coordination (This is clearly the responsibility of MWR); (b) river basin-level allocation linked to provincial licensing of groundwater use; and (c) GMA scale "day-to-day" management, controlled at the provincial level. Some specific issues and reforms are recommended as follows: (a) Licensing Currently licensing of groundwater use is undertaken by many departments, which makes the management of the resource very difficult. There must be a single licensing authority and it is recommended that the role be undertaken, at the appropriate provincial, prefecture, and county level, by the respective water resources department or bureau. The RBCMs would be responsible for determining the sustainable yield of the groundwater resources for their basin and submitting recommendations on provincial allocations to the River Basin Councils for approval. (b) Database The ready availability of technical and licensing data is a fundamental requirement for good management. Currently there are thousands of local and personal databases storing key technical and licensing groundwater data, which is very unsatisfactory. It is proposed that a Groundwater Database (GDB) be developed at the national level managed by MWR. It would be essential that ready access to the entire database is available to the RBCMs and all the provinces. Details of the steps required to develop the GDB are in Volume 3, Annex 9, Table A9-1. (c) Interbasin Groundwater Issues Groundwater knows no surface water catchment or administrative boundaries. This fact is especially relevant across the North China Plain. Both shallow and deep aquifers cross the three river basin commission boundaries so in order to manage the joint groundwater resource of the plain it will be necessary to establish a specific coordinating committee of the three commissions to ensure sensible management. There are several examples available throughout the world where specific management arrangements are in place to ensure proper management. If these arrangements are not put in place then not only can each commission blame the other for not achieving specific groundwater management objectives, but also local interference problems across the basin boundaries can cause significant issues. (d) Groundwater Investigations The Department of State Land Resources currently undertakes groundwater investigations. It is considered that both groundwater and surface water investigations and assessments should be undertaken by the one organization, for consistency and integrated planning reasons, and to eliminate double accounting of the total water resource. Clearly MWR ought to be responsible for groundwater investigation and assessment. 254 Chapter 10. Institutional Management (e) Groundwater Management Area Control The development of the GMA boundaries would be coordinated at the RBCM level. However, it is suggested that the day-to-day management of the GMAs and the development and implementation of the GMPs would be the responsibility of the provincial, prefecture, and county water resources departments and bureaus is appropriate. Even though most, if not all, GMAs would be relatively local, it is believed that to ensure that the GMPs are implemented they would need strong province level direction and support. (iv) Land Management Land use planning provides the context for addressing issues related to the integrated use of water and associated land resources, depending on the particular balance of uses to which the land is put. At its most general, it comprises urban and regional planning, with water service infrastructure (water supply and sewerage, flood protection, urban drainage etc) accommodated within an integrated planning framework for a city or region so as to provide all the infrastructure necessary to support the population concerned. Rural plans can also provide for the integrated development of total communities (e.g., for land settlement schemes). Alternatively, land use planning may be limited to planning for a specific purpose e.g. an irrigation scheme. In the latter case, though irrigation may be the primary objective, all water services (drainage, flood protection. etc.) would invariably be planned together. Other examples include flood plain management that addresses the flood risk along with responses that are appropriate to that risk (e.g. in terms of land use controls, construction standards, emergency procedures etc., Chapter 4); catchment management that addresses conservation and erosion control in upstream watersheds; and environmental management that addresses issues related areas of environmental value or special concern (e.g. to wetlands, national parks, watersheds above reservoirs or water intakes, etc). As in the case of groundwater management, besides direct investment, regulation and pricing are typically the main instruments for ensuring that the objectives of the specific land use are attained. Public education and awareness programs can play a very important role and increased use is recommended. (v) Regulation and Enforcement The primary instrument for regulating water quantity is the water permit system and of water quality the discharge permit system. These are administered by the provincial Departments of Water Resources and Environmental Departments respectively, along with their subsidiary offices in prefectures, municipalities, counties, townships and villages. As stated above, the RBCMs also issue permits for major water uses at the discretion of MWR. The water permit system was legislated under the 1988 Water Law but only took effect when implementing regulations were approved by the Standing Committee of the State Council in 1993. Each province has since adopted its own regulations and a permit now covers approximately 85 percent of water withdrawals in the country in one way or another. Details vary but in water-scarce north China, withdrawals are usually limited by month (in south China authorization may be for a year). Permits are issued to utilities, irrigation companies and industries that take water directly from the water system rather than to end users (i.e. households, farmers, small industries served by municipal systems etc.). They may be issued to multipurpose water entities (e.g. bodies that operate reservoir systems) in which case the entity is accountable for managing water deliveries according to approved priorities. In principle, permits Chapter 10. Institutional Management 255 cover both groundwater and surface water (excluding specified small users) but it has proven more difficult to extend coverage to dispersed wells than to identifiable river offtakes, and coordination with other agencies has posed difficulties (the Ministry of Construction, the Ministry of Land and Resources etc). Permits may carry quality conditions governing discharges back to the system, and must be cleared by the environmental authorities (as well as by other specified agencies) but how these conditions relate to discharge permits is uncertain. The permit system has been introduced remarkably quickly though problems have inevitably arisen. These include (a) monitoring and enforcement problems; (b) insufficient objective data on which to base allowed quotas95 (notably for industry as municipal and irrigation quotas are better documented); (c) ambiguities on rights and allocations at times of shortage; and (d) overlapping responsibilities between the provinces, the local departments, groundwater agencies and the RBCMs. In some cases more water has been allocated than in fact exists. Resolving these problems will be a detailed and gradual process. Permits are usually given for five years to preserve flexibility, and allow an opportunity for review and the resolution of difficulties in specific cases. Consolidation of accountability at the provincial level, together with transparent and comprehensive permit registers on a river course/aquifer basis, could clarify the situation and help resolve some of the problems.96 Associating the permits with real price incentives, rather than nominal resource and administrative fees, would also go a long way towards strengthening performance (see below). The discharge permit system dates from the 1984 Water Pollution Law although, as in the case of water permits, implementation was delayed until implementing regulations had been adopted. Similar problems have arisen to those faced in implementing the water permit system. Moreover, as its name implies, a discharge permit controls specific point sources, and is only indirectly related to total loads and ambient water standards. The objective may be to reach ambient quality standards for a specified river reach but the system lacks the direct means of achieving such standards. Indeed, it is reported that industrial enterprises often find it cheaper to augment their discharges with fresh water pumped for this purpose than to invest in cleaner process technologies, thus perpetuating total pollution loads. No doubt the discharge permit system was a major step forward but it needs to be more closely coordinated with quantity regulation if its objectives are to be achieved. There is thus a strong prima facie case for strengthening integration of quantity and quality regulation. In the first instance, consolidation of regulatory accountability in the provincial Departments of Water Resources for both surface and groundwater, and quality regulation in provincial EPAs, would promote transparency and accountability. Formal links between the two could promote compatibility. Provincial governments could go further and consider creating independent water regulatory bodies that unified quantity and quality regulation. Such an agency might report to an independent board and be given statutory powers with the aim of further promoting transparency, accountability and independence from subsectoral interests. Comparable solutions have been adopted in other countries although experience suggests that divorced from other powers such agencies may also be marginalized. 95 Industrial firms apply for more than they need or for historical amounts rather than those strictly necessary for the process involved. The regulating agency has limited means of judging whether this is reasonable or not, and is in no position to set quotas that might constrain amounts. 96 No doubt local offices should retain responsibility for detailed survey work, monitoring and enforcement, and related activities. But international experience suggests that consolidated, comprehensive and transparent registries of water rights are a necessity. 256 Chapter 10. Institutional Management (vi) Environmental Standards for Water Quality As noted in Chapter 7 in order to achieve cost effectiveness in managing pollution in the 3-H basins, design of the pollution control facilities needs to be based on economically acceptable as well as environmentally acceptable criteria or standards, including both ambient standards (river water quality use classifications) and emission/discharge standards (Lohani/Evans, 1990). Experience in practically all developing countries over the past several decades has shown that environmental standards promulgated by national environmental agencies are often not met and/or cannot be met, because the standards often attempt to match those set by the affluent industrialized countries. As a consequence, some of the ongoing major MWR water resource development projects, such as the Xiaolangdi Dam project in the Yellow River Basin (RPDI/YRCC/1996), utilize standards for the management of wastes that are practicable/affordable under the circumstances. The recommendation here is that it seems very timely now to formulate and carry out a study for review/evaluating the ongoing situation on water quality standards as applied to the 3-H basins, in order to achieve a better balance between goals and actual results, which is sorely needed because of the huge wastage which could accrue in investing in systems for achieving goals which are not realistic. Of special importance is the need to reevaluate the river water quality classification system prepared by SEPA, to ensure this is consistent with the current status of applicable technology, particularly as related to the minimum quality standards for river water suitable for raw water supply for municipal systems. A great deal of research and development has been carried out in the industrialized countries over the past 50 years on how to improve performance of the rapid sand filtration systems (RSFSs) which are commonly used for treating raw waters to produce an effluent of drinking water quality, especially on use of new flocculation agents used in the RSFSs, and as a result it is now feasible to produce quality drinking water using raw water of considerably lower quality than, say, in 1950. Another aspect of the study would be to modify emission/effluent standards so these will be realistic and appropriate as the basis for design of facilities/systems. In 1996 the State Council promulgated the regulation that all Chinese industries must meet SEPA emission standards for air as well as water pollutants by the end of year 2000 or be closed down, which if taken seriously would mean shutdown of a large number of factories by the end of 2000. The suggestion here is to consider the existing standards as goals and to set "working level standards" (WLSs) applicable to the existing status of economic development for, say, a period of 10 years, to be revised every new decade, i.e., set the WLSs at levels representing the maximum standards that can reasonably be met at the time, which could be accepted by industry in a constructive manner so the industry would be prompted to comply rather than evade them. Such revisions could consider more stringent requirements for new industries than for existing ones. On this same point it should be noted that experience in the industrialized countries, where effective river pollution control has been accomplished, shows clearly that small-scale/polluting type industries, including many TVEs and straw-type paper mill plants, will never be able to afford appropriate wastewater treatment, hence these must be phased out over an acceptable period of time with appropriate government programs in place to absorb their work force and this would form part of the feasibility study for all financed programs in pollution abatement in the same way that resettlement is an important component of flood control or dam construction projects. Emission/discharge standards applicable to industrial wastewater discharges should be expressed in weight units (weight of pollution per a selected unit of plant production) rather than in concentrations of discharge volume. The US EPA made this change in the 1970s, in recognition that concentration units Chapter 10. Institutional Management 257 cannot be depended upon to achieve control, and it is timely now for China/SEPA to do the same. Such weight units eliminate the practice of industries of wasting large amounts of water to dilute wastewater effluents so these will meet concentration standards with no or lesser treatment. It would be very helpful if the Action Plan program could include translation of the latest volume of the United States' "Standards Methods for Examination of Water and Wastewaters," which is a virtual up-to-date textbook on the current status of water quality technology, and copies of this be made available to key Chinese water quality practitioners. They need this. To sum up, the proposed study would reevaluate the entire subject of water quality standards applicable to industrial/municipal wastewaters in China, including emission and ambient standards and including the river water quality classification system, to come up with a new set of regulatory requirements which will be constructive and suitable as the basis for design of community water supply and sewerage systems and of industrial wastewater management systems. (vii) Environmental Monitoring and Enforcement Chapter 3F reviews and evaluates the role of water quality monitoring and enforcement as currently practiced in China and presents recommendations for improving water quality monitoring performance in China, especially for the 3-H basins. The key problems with the current water quality monitoring/ enforcement program in the basins is the need for improved planning of monitoring systems, including selection of stations, parameters, and frequency of sampling/observations, in order to eliminate costs for obtaining data which has little if any value in planning of riverine pollution control programs and, to use additional parameters needed to fill gaps. From a strategic point of view, and given the limited funds/resources, there is a need to concentrate monitoring programs where there is intensive industrial activity because that's where the enforcement will need to take place also. The key to cost-effective reduction in industrial pollution in China's cities is targeted enforcement of higher abatement standards for large facilities. This approach has been utilized in other developing countries such as Brazil (Greening Industry, WB 2000) and has proved to be very effective in achieving real results within limited time and with limited funding. The WWTP proposed in this chapter focus on top polluting cities and it is proposed to complement this "hardware" approach with comparable regulatory framework tailored for these cities. All monitoring programs should be reviewed periodically (say annually) to eliminate wastage and to cover all needs in order to obtain reliable information at least costs. Monitoring should not measure "everything" designated in prescribed monitoring manuals but should be limited to obtaining data that is actually useful/necessary for project investment planning agencies. There is a need for improved coordination between the water quality monitoring programs carried out by MWR and by SEPA to help achieve efficiency objectives The recommendation here is that policy- level representatives of SEPA and MWR concerned with water quality monitoring meet the plan a coordinated cost-effective monitoring program. This would 1. review the existing water quality monitoring programs (WQMPs) of both agencies, 2. evaluate the existing system of monitoring stations and revise this to obtain the minimum number of stations (tributaries and mainstream) which will give reliable information to meet the needs of both agencies, 258 Chapter 10. Institutional Management 3. determine the parameters to be measured at each station (in addition to flow quantity), including frequency, and 4. divide the monitoring work for each station between the two agencies and arrange for preparation of periodic reports that combine the information from both agencies. Flow measurements would be made by MWR. There is a need to evaluate the degree of enforcement applied by the regulatory agencies (EPBs and SEPA) and the effectiveness of such enforcement in obtaining compliance by pollution discharging agencies, including compliance with monitoring to be carried out by the discharger (as specified in the project EIA and otherwise) and including penalty measures for persistent noncompliance, and how to improve use of the enforcement power of the regulatory agencies. There is a need to review the formulation and design of the current levy and the rate applied in the levy for all industries in the priority cities, which are likely to be representative of those in the whole of China, and investigate options for progressing to full emission based system assessed on all units of pollutants. It is believed very timely, now that the new millennium has just began, to move ahead with some positive steps towards the goal of achieving effective monitoring/enforcement of water quality issues in China. Hence provision for this is included in the scope of the evaluations to be made by the feasibility studies proposed in Chapter 7. (viii) Wastewater Reuse Industrial discharge of wastewater into municipal wastewater treatment plants has resulted in very substantial savings for municipalities who derive additional revenue and for the industries that benefit from not having to finance the construction of their own treatment plant to treat components of their wastewater that are acceptable by municipal systems. However, industrial discharges contain significant quantities of toxic pollutants and other substances that can profoundly affect the treatment system and possibly interfere with its performance. In order to prevent contamination of municipal sludge from unacceptable industrial pollutants, managers of WWTPs need to have in place an effective industrial wastewater control program in order to ensure that normal operation of the WWTP is not affected by inflow of wastewater from industry. The basic requirement for a successful municipal and industrial waste regulatory program is the preparation of ordinances for the regulation of sanitary and industrial waste discharge into municipal sewerage system and activities include (a) the development of a database, (b) preparation of local ordinances, (c) establishment of limitations on industrial discharges to the treatment system and their enforcement, (d) authority to enter and inspect an industrial company to obtain samples of its wastewater discharges, (e) a monitoring program, (f) a program to recover the cost of industrial waste treatment. Specific areas of concern in China are: · Preparation of Local Ordinances. The main functions of sewer ordinances are (a) to protect the sewer system, (b) maintain and improve the quality of the effluent receiving waterway and the performance of the WWTP and provide the basis for determining the user's charge. Due to less developed institutions in China, it will be necessary to modify existing ordinances designed for industrialized countries so that their implementation in China will be successful. Principle aspects of ordinances as applied in the China context are suggested in Table 8.6 in the wastewater reuse chapter. Chapter 10. Institutional Management 259 · Regulatory (Monitoring Enforcement) Program. Such program will need to (a) enforce compliance with the industrial waste ordinance, (b) protect the treatment plant and collection system from deleterious substances and (c) establish industrial sewer use fees. The elements of the regulatory program include (i) industrial permit system, (ii) pretreatment facilities construction and inspection, (iii) industrial sampling and analysis, and (iv) periodic and reporting. Industrial sampling and analysis is arguably the most critical element of an enforcement program. In addition to providing a database on a given industry, sampling serves as the basis for evaluating compliance with the local industrial sewer ordinance and with government pretreatment requirements. Sampling and analysis of selected chemicals according to scientifically accepted methodology is a complex field of environmental work that must be mastered in order to produce statistically significant data useful for devising effective treatment programs and data capable of being scrutinized in the courts to ensure compliance. Such skills probably do not exist in China and there may be a role for technical assistance projects in the environmental field to help develop such knowledge among EPA staff and WWTP operators who will carry out some of the monitoring of industries wastewater discharge. (ix) Economic Regulation Whereas resource regulation deals predominantly with technical and development matters, economic regulation deals with enterprise, management and financial matters, and in particular the need to protect society from monopoly abuse. Potential tasks include: (a) definition of service obligations and service standards; (b) determination and supervision of water tariffs; (c) approval of investment plans; (d) standardization of accounting systems; (e) overseeing financial planning; (f) overseeing industry structure; (g) enforcement of regulatory requirements; and (h) resolution of disputes involving water entities (WB 1995). The primary task is to set prices in such a way that efficient and viable water services are provided. The merits of an independent industry regulator are that it can be protected from extraneous pressures and can build the specialist knowledge base for effective industry control. In China, prices of water and many other public goods and service are regulated by price bureaus that in some respects function like independent regulators in a market economy. They review costs, investment plans and other proposals by autonomous agencies, and determine prices in the light of the public interest, taking into account also the financial condition of the enterprise concerned. In practice, however, price bureaus differ from independent regulators in how they interpret the public interest (e.g. by giving primary importance to social issues and inflation control rather than efficient service provision) and by the fact that profits and losses are often accounted for as a matter of routine through the government budget rather than being met by the utility from its water sales. Justification for a separate economic regulator depends on how service delivery is organized. If water services are delivered by government departments, economic regulation serves little purpose. Financial and management control can be subject to government procedures and water charges can be set by direct government decision. Autonomous public corporations can be regulated in a similar manner or by enforcement of contracts on terms that address customer service, other performance standards (water quality, effluent discharge, reliability, water pressure, customer protection, etc), price setting and penalty provisions. In the case of private involvement, contractual arrangements may still be adequate so long as there is a clear distinction between government (as a purchaser of services and owner of the primary facilities) and the contractor (for the finance and services that he supplies). But, if the private contractor 260 Chapter 10. Institutional Management markets services to the general public, then it may be advisable to establish an independent regulator comparable to OFWAT in the United Kingdom (Hydrosult 1999, Annex 1). There may indeed be a case for such a regulator even in the case of public corporations. Decentralization in China has sometimes resulted in managers taking control lacking the disciplines associated with ownership and risk. This has allowed them to extract profits from government assets by sacrificing routine operation and maintenance, investment, or quality of service. An independent regulator can help bring the situation under control, and requiring proper financial audits, and by using as benchmarking, cross-company comparisons and other mechanisms that have been for instance developed by OFWAT in its regulation of private companies can gradually improve discipline and service provision. An alternative would be a Public Utilities Commission or similar entity modeled on US experience. D. DEMAND MANAGEMENT: FINANCING AND PRICE INCENTIVES (i) Introduction Appropriate charging for both surface and groundwater, in all its uses, is the single most effective method to overcome many of the problems of water shortage and water pollution in the 3-H Basins as discussed respectively in Chapters 4 and 7. International experience has shown that simply limiting supply to production capacity has undesirable repercussions while regulation through permit systems are, on their own, difficult to enforce. In addition, water permit systems and water savings activities are much more effective when supported by appropriate water charges and prices. Components of water price include the following. (ii) Resource Charges China is one of only a few countries that has legislated a resource charge (in the water law and its implementing regulations and policies), though many countries levy administrative fees (e.g. to cover the costs of a permit) and pollution charges (on the "polluter pays principle"). The resource charge in China has, however, been linked to resource administration costs rather than to opportunity and externality costs. It is thus regarded more as a cost recovery instrument comparable to a service charge than as an economic incentive mechanism that incorporates opportunity costs into water charges. Moreover, the irrigation sector is normally exempt; groundwater charges from dispersed small wells are difficult to collect; and the level of the resource charge is in general too low to have a significant impact on water use no matter what its objective. Pollution charges for point sources are similarly linked to the costs of environmental administration although they tend to be greater and have a relatively greater incentive impact. Even so, it is claimed that industries often find it advantageous to dilute wastewater with additional freshwater pumped for this purpose rather than to invest in (expensive) clean production technologies. Charges for resource use and water discharge could in principle have an important role in promoting sustainable and optimal water use. Among important objectives would be to achieve more efficient allocation between upper and lower reaches of river basins, and a better balance between surface and groundwater use. They can thus powerfully reinforce the implementation of the permit systems described in the previous section. For this, two main decisions need to be taken: · First, the charge should ideally be delinked from the costs of resource administration. These costs should in principle be a regular item in the national and/or provincial budget, and should be met out of general revenue. But even if income from the resource and pollution charges continue to accrue to Chapter 10. Institutional Management 261 the RBCM, or to the provincial water and environmental agencies, their levels should be set independently of any costs of administration. · Second, to the extent acceptable, the levels of the charge should be varied to reflect specific conditions and be increasingly adjusted to reflect scarcity and externality effects associated with the resource concerned (river basin, groundwater management zone, etc). In many cases a relatively steep increase in the resource charge may be required if it is to have a real impact. The relationship between water permits and resource charges should be clarified. In the case of domestic and industrial demands, normal economic principles apply (see below). In the case of irrigation, it has been argued that the sector can use any water that is available. Only if the resource charge was to be increased to levels that made irrigated agriculture at the margin unprofitable would it begin to have a true allocative impact. Since this may be politically and socially unacceptable, the main instrument for limiting water use in irrigation will possibly remain enforcement of the terms of water permits. However, an irrigation company would be able to absorb any water saved as a result of increased irrigation efficiencies, for instance by extending the actual irrigated area (indeed by increasing the proportion of withdrawals that is evapotranspired by crops, modernization programs will if anything reduce the water that would otherwise be available to others through return flows to the river or aquifer). Thus, only if withdrawals by an irrigation scheme are reduced can the water saved be allocated to higher priority (nonirrigation) purposes. The flexibility inherent in five-year permits could provide a context for adjusting allocation rights in this manner (see previous section). Groundwater is a special case. In principle, groundwater withdrawals should be regulated and charged for in a similar manner to surface withdrawals. This is feasible for urban and industrial supply from large wells that normally exploit confined aquifers. But, experience has shown that as long as the resource charge for groundwater is close to zero, the utility or enterprise will utilize pumping capacity to the full rather than buy more expensive surface supplies. It is recommended that a concerted program to enforce permits in line with sustainable development as defined under a groundwater management plan, together with the imposition of a significant groundwater resource charge, be implemented as a matter of urgency. Overexploitation of shallow aquifers for irrigation is more problematic but may have less serious implications. In principle, shallow wells should be regulated and charged for in a comparable manner to deep wells, but in practice regulation of dispersed small wells may be difficult and farmers may resist resource charges. Unsustainable use results in well interference, higher pumping costs, reductions in over- year storage and other adverse externality effects (of which mobilization of arsenic and other minerals may be the most damaging). Nevertheless exploitation of shallow aquifers tends ultimately to be self- regulating as farmers adjust conjunctive use of rainfall, surface supplies and groundwater to whatever combination of resources is available to them. This may not result in a theoretical "optimum" but in practice can be an acceptable compromise. Similar considerations apply in the case of pollution discharge permits. Only if a charge is levied at a rate that begins to affect the commercial viability of excessively polluting processes and/or industries can it be said to have the desired effect. As in the case of irrigation, closure of small paper and other highly polluting enterprises may be unacceptable on short-term employment and income grounds. If so, the approach may need to be gradual and include: · enforcing discharge permits in line with realistic total pollution loads (e.g. a river reach); · increasing charges and penalties, while delinking these from the costs of administration; 262 Chapter 10. Institutional Management · promoting cleaner technologies wherever affordable, e.g. through special programs and subsidies; and · adopting industrial restructuring and location policies that increasingly support the achievement of realistic ambient water standards. Finally, similar considerations also apply in the case of land use viz., a combination of regulation and charges to promote desirable outcomes (e.g. based on plans for nonpoint source pollution, floodplain management, catchment management, etc). The combination of regulatory powers and charges (or taxes) should be appropriate to the specific purpose and location. They should also complement the provision of physical facilities (e.g. relating to floodplain risk), and be integrated with programs that recognize the legitimate interests of the local population. This is of particular significance in catchment management where experience shows that soil conservation is only sustainable if the inhabitants see it to be in their financial interest. It is also important in such areas as the control of nonpoint pollution from livestock; in conservation of wetlands and other areas of environmental value; and in flood-proofing and related programs, notably in detention basins. (iii) Service Charges (a) Urban and Industrial Uses Charging urban and industrial consumers for water at levels that more closely approach marginal costs can be a powerful determinant of water demand. Since urban and industrial water are typically charged on a volumetric basis, and connections are few by the standards of other countries, practical problems, though not negligible, should be manageable. Since current charges are below full cost recovery levels, they may need to be increased fairly sharply in the short term if full cost recovery is to be achieved. And since costs typically increase in real terms over time, charges will need to rise continuously at rates that exceed the rate of inflation if full cost recovery is to be sustained. Urban water use per capita in the 3-H basins, both domestic and industrial, is more than in most towns and cities of the world (600 lcd), despite freshwater availability that is among the lowest in the world (490 m3/capita/year). Even so, urban and industrial users pay only a very small proportion of their income in water charges, in the case of domestic consumers about 0.3 percent and of industrial users about 0.2 percent. Studies in China and overseas indicate that domestic and industrial consumers are willing to pay up to 1.0 percent, and are generally able to adjust consumption to maintain such a share given the appropriate price incentives. Full cost recovery for domestic and industrial consumers served by municipal water supply/ wastewater companies may be in the order of Y 2.0-2.5/m3 including allowance for profits and retained earnings but excluding resource charges that may be imposed to account for opportunity costs. In the townships it may be less because of less sophisticated systems, particularly sewerage and drainage systems. In both cities and townships it must be anticipated that costs will increase as incomes increase, perhaps substantially. As already indicated this will require that charges increase at rates that exceed the rate of inflation. However, concerns as to the impact on inflation are misconceived. So long as water charges are less than the cost of providing water services, an increase in water charges no doubt has a small immediate inflationary impact. However, in the medium and long-term the outcome will be a downward pressure on inflation. The reason is that when tariffs and charges are below cost recovery levels, raising tariffs reduces benefits by a little but simultaneously reduces the costs of providing water services by a lot. There is thus a net economic gain that in China could be substantial, and the overall impact on inflation is favorable. Chapter 10. Institutional Management 263 For water prices to be effective in improving efficiency, water services need to be charged on a volumetric basis. Price signals must be clear and undistorted, and all users must be required to pay. Water charges should not be lumped with other charges, nor should water charges be subsidized. The structure should also be simple. Structures vary greatly around the world, and include rising block tariffs, falling block tariffs, quota allocations with penalties for excessive use, part fixed/part volumetric tariffs, uniform rates with a minimum charge and simple uniform rates per m3 used. However, it is increasingly being realized that complex tariff structures, generally designed with welfare and equity considerations in mind, do little to help the poor; that a uniform tariff rate is the simplest, fairest and most effective structure; and that water tariffs are an inappropriate vehicle for welfare assistance. A different uniform rate may apply to different categories of consumer but, for simplicity and to minimize conflicts and abuse, the number of different categories should be kept to a minimum. Where water is plentiful or incomes are high, a part fixed/part volumetric tariff may be appropriate. However, where water is scarce and incomes are low, as in the 3-H Basins, uniform volumetric tariff rates are almost certainly the most sensible structure to adopt. With rising water charges, the monopoly position of water supply and wastewater companies will need to be kept under scrutiny. There will be concern about excessive profits, fairness, lack of competition, cost control, and quality of service. There may be a case for creating an independent economic regulator (see previous section). Irrespective of whether this is justified, regulation by price bureaus primarily concerned with containing general price inflation should be seriously questioned. Other pertinent recommendations that may be investigated in order to establish workable price structures are summarized below:97 1. Formulating and issuing a local implementation regulation of the National Guidelines on Water Tariffs (NGWT) should be the first priority of local tariff reform since it will establish a legal water tariff system to regulate tariff activity. 2. A local implementation regulation should be formulated based on the NGWT principles and considering local conditions. A local regulation must have its own characteristics and not be a copy of the NGWT. It may be necessary to add or remove articles contained in the NGWT to develop a local regulation. These changes will make a local implementation regulation operational. 3. Procedures for tariff application, review and approval should follow the NGWT Procedures include: (a) tariff applications are prepared by the WSC; (b) applications are reviewed and approved by the local price bureau, the water administrative bureau and the government; (c) tariff approvals are made at the local level of government. Tariff adjustment applications should present clearly defined objectives for the tariffs. The reviews and approvals of WSC tariff adjustment applications under the authority of the price bureau should be established. 4. All user charges should be in the form of regulated tariffs in order to protect customers. For this reason, other fees should be either eliminated or incorporated into tariff. 5. Financial management in the WSCs should be strengthened. Measures to do this include: (a) use of long-term financial planning models to forecast costs and tariffs and develop optimal plans for capital finance. This type of analysis should provide the basis for tariff adjustment applications; (b) adoption of clear and explicit objectives for tariffs including full cost recovery and profitability targets. Full 97 Based on Water Tariff Reform in P.R. China, The S.M Group International Inc., 2000. 264 Chapter 10. Institutional Management cost recovery should be interpreted to mean recovery of all costs over a period with allowance for occasional losses that are offset in subsequent years; (c) adoption of a more detailed accounting classification of costs to facilitate a detailed analysis of cost performance by function and activity; and (d) establishment of a budget approval process lined to tariff approvals. WSCs should be required to operate within approved budgets. 6. Government agencies should rely on regulatory approaches to reinforce their capacity to control WSC costs. Potential cost control measures include: improved financial management, measures such as franchising to introduce competition into the supply of services, improved capital planning, the use of performance standards and benchmarking to evaluate cost performance and institutional reforms to increase the autonomy and responsibility of WSCs. 7. Increase foreign private sector participation in infrastructure for water supply and wastewater treatment by joint venture with local WSC to allow transfer of management skills, technology and financing. This will require the implementation of price changes sufficient to attract such commercial operators and price bureaus who are likely to be the main opponents to price increases should be made aware of the benefits of efficient service delivery and the critical need for higher prices for water and wastewater services. 8. Public hearing meetings are very important and should be a required component of local tariff adjustment procedures. Public understanding of the water supply industry and public support for tariff reforms should be cultivated through public information and participation programs including presentations at public meetings and news releases. 9. Establish methods and criteria to evaluate affordability and to evaluate the impact of water tariffs on affordability. The assessment of affordability should be used to plan programs to mitigate the impact of tariff adjustments on the urban poor. Local implementation regulations for the NGWT should specify the need for affordability assessments and specify social programs to mitigate impacts on the urban poor. 10. Government agencies should make greater use of performance monitoring to help evaluate and regulate the activities of WSCs. The tariffs and other charges should be monitored to assure that these conform to the local implementation regulation of the NGWT. Financial and technical indicators of performance should be tracked on a routine basis to determine if the WSC is achieving tariff objectives stated in tariff adjustment applications. Failures to achieve objective should be analyzed to determine the cause of the failures and action should be taken to overcome difficulties. (b) Irrigation In contrast to urban and industrial uses, any realistic irrigation water charge is so far below the theoretical equilibrium price, and the irrigated area is so extensive, that the irrigation sector will in practice take any water that remains after satisfying priority industrial, urban and other demands. Even so, an increase in irrigation water charges could potentially contribute to increased economic returns per unit of irrigation water, e.g. by promoting reductions in field applications, changes in cropping patterns, extensions of actual irrigated areas, and/or farm restructuring (Chapter 5). Higher water charges would also help cover operation and maintenance (including resource) costs and perhaps some capital costs, and thus help promote the sustainability of irrigation schemes. Chapter 10. Institutional Management 265 Again in contrast to the industrial and urban sectors, supplies to individual farmers other than those paying for pumped supplies are seldom measured since providing measuring devices at each small farm is impracticable. Moreover, stochastic rainfall events, varying crop water requirements over time, and the relatively low levels of reliability implicit in much irrigation design, can all complicate matters. The irrigation company is normally charged volumetrically by the resource manager, and water may be measured at a lateral serving a group of farmers and subsequently divided among them. While this may implicitly be a volumetric charge, water charges are often collected together with numerous other local charges. While these effects need to be clarified, practical difficulties may be an impediment to the design of effective farm level incentives for surface irrigation water. Area-based or crop-based charges may of course still be an important mechanism for cost recovery. An IWHR study (IWHR 1999) demonstrated that farmers are willing to pay Y 50/mu and more for irrigation water, and have an ability to pay Y 100/mu. The current charge ranges between Y 2/mu to Y 20/mu depending on the irrigation district. Moreover, as in the urban and industrial sectors, there is a willingness and ability to adjust consumption to use water more efficiently, given the appropriate price incentives. (c) Other Water Services Financial charges and incentives can in principle play a comparable role in other water subsectors (e.g. pollution control, flood protection, catchment management etc). As in irrigation, however, it may in practice be difficult to design efficiency incentive systems although income from such charges can help fund investments and operations and maintenance and promote sustainability. Wastewater charges are an exception to this general conclusion, both when charges are measured and levied directly on industrial and/or urban point source wastewater, and when combined sewage/water charges impact indirectly on water use and hence wastewater amounts. (iv) Water Markets Tradable water rights and discharge permits will inevitably have a role to play in the conservation and allocation of water use. In theory, water markets have the great advantage over administrative charges in that they arise out of the mutual interests of willing buyers and willing sellers. Both act in their own self-interest and both benefit from an agreed trade. There are in fact many examples of water markets e.g. within well commands, between farmers along a watercourse, for tanker water in towns cities poorly served by reticulation systems, for bottled water, etc. These share the characteristic that they are short- term "spot" markets with little ambiguity as to what is being bought and sold. The price may reflect market failure, for instance, a local monopoly or monopsony, but willing buyers and willing sellers sets the price at which the exchange takes place. Longer-term markets involving tradable water rights and/or pollution permits may be more difficult to introduce. For these to be effective both the buyer and seller must be secure in what is being traded i.e., they depend on effective regulation and enforcement, and on full trust in the intermediation of a resource manager. In principle there should also be a full accounting for externalities and third party effects. Such conditions are difficult to establish and the potential for such markets may be more limited than sometimes suggested. Nevertheless, some more long-term exchanges have occurred in the 3-H basins, despite the fact that they appear to be disallowed under the regulations governing the existing permit systems. For instance, the city of Qingdao is reported to have purchased the water rights of local farmers at rates that are well below the costs of Yellow River water via the transfer scheme, but presumably at rates above the equivalent net income that the farmers would have earned by applying the water to their fields (otherwise the farmers would not have sold their rights). Similar markets may have 266 Chapter 10. Institutional Management emerged elsewhere and the potential for integrating exchangeable and saleable rights within the permit systems is an area that should receive further study. E. ORGANIZATIONAL ISSUES AND SERVICE DELIVERY (i) Introduction Organizational issues have been referred to in earlier sections of this chapter. In particular, independence has been advocated for resource management and regulatory agencies (e.g., RBCMs and regulatory agencies), and financial autonomy has been assumed in respect to most bulk water and service delivery entities (e.g., dam management corporations, water utilities and irrigation companies). These suggestions are consistent with present policies of decentralization, as expressed in legislation and more particularly in the 1997 Industry Policies for the Water Sector. It has been assumed that resource management and regulation should be consolidated at the level of the province for all water resources lying within a province's borders, including any shares of interprovincial waters. A recent report (Hydrosult 1999) has recommended that this might be formally clarified in order to remove any ambiguity arising from the present situation, which is supported (subject to oversight by the respective river basin commission). If this is accepted, the provinces would need to strengthen their policy-making and planning functions, and all water sector policies and programs would need to be coordinated within the framework of a provincial water resources plan. Such a plan would need to be consistent with water allocations and broad planning at the river basin level. However, it would be for the province to decide how to use its water allocation, and it would be for the river basin commissions to ensure that the surface water is provided in line with the requirements of the province, subject of course to any interprovincial quantity or quality constraints. (ii) Multipurpose Bulk Water Facilities Construction and operation of multipurpose facilities are, as at present, often best left to single- purpose subsector entities that have the predominant interest in the facility concerned: for instance insystem irrigation reservoirs that also provide domestic supplies; city reservoirs that have environmental or recreational benefits; and hydroelectric dams that also serve other requirements downstream. Operating rules need to be clarified to recognize all types of benefits but operations are so closely integrated with the primary purpose that it would make little sense to separate operational responsibility from the user entity. However, if a multipurpose facility serves clearly identified users, there may be strong justification for a separate multipurpose/bulk wholesaling entity to clarify accountabilities. Such a provincial entity has been created to implement the Wanjiazhai transfer project in Shanxi Province, and this provides one good model. Additional examples can be quoted from other provinces and from other countries (Hydrosult 1999). Alternatives include a province-wide corporation owning and managing all major multipurpose facilities, or separate entities for each major facility. Which alternative is selected will depend on relative size and location, the degree of integration of the bulk water system and related factors. Contractual relationships between the entity and its customers (industrial enterprises, urban utilities, irrigation districts etc.) can promote transparency, accountability and equitable treatment. Financial autonomy establishes the incentives for efficient operation. Well-established cost allocation techniques can be adopted to ensure that each user is charged a fair share of the capital and operational and maintenance costs of joint facilities. If benefits accrue to nonrevenue-earning purposes (e.g. flood Chapter 10. Institutional Management 267 protection, environmental flows etc i.e., Class A projects), then it is important that this is recognized and that the provincial government assumes responsibility for meeting the corresponding share of the costs. In China, there has been a tendency to depend excessively on revenue from hydropower sales to fund multipurpose facilities, and while this has obvious practical advantages (power companies can readily find the money), this may distort the economic performance. (iii) Service Delivery The scope of a service entity needs to reflect the subsector concerned, taking into account economies of scale and other factors. Irrespective of size, services are typically provided in a hydraulically defined or geographically defined area. Thus, urban water supply and sanitation may be provided for a city or town; irrigation within a command area; flood protection for an area threatened by a river; and electricity within a power grid. Organizational structure is best addressed at a subsector level but five main types of service delivery entity can be described (based on Hydrosult 1999): 1. Departmental service provision under which services are directly funded and operated by a government department, with revenues and expenditures accounted for through the government budget. Departmental provision has typically dominated those subsectors for which charging for the service is difficult (e.g. navigation, flood protection, drainage, etc). Departmental provision of irrigation services has also been widely justified on social and food security grounds. 2. Government/publicly owned utilities with financial and management independence that provide services to their customers for a fee. Subsidies may be given to fund general or specific activities (e.g. for a particular class of customer or area) and the extent to which such entities are truly independent varies. Public utilities have typified water supply and sanitation, and power services worldwide, and remain the predominant form in many countries. For nonexclusive services such as flood protection and urban drainage, utilities in some countries have been given special powers (e.g., to levy land taxes) to fund and provide services in defined areas. 3. Public-private partnerships under which asset ownership is retained by the local government or municipality but private interests are employed to undertake ancillary operations, provide management services under a management contract or affermage arrangement (under which the private interests also supplying working capital), or construct and operate specific facilities on a permanent or temporary concession basis (e.g. under build-operate-transfer--BOT--or build-operate- own--BOO--terms). 4. Privately owned facilities with partial or full private ownership of existing or new facilities e.g. through formation of joint stock companies with private ownership of all or some of the shares. England and Wales provide one of the few examples worldwide where the water and sanitation services have been fully privatized. Examples of what might be termed "semiprivatization" under which managers assume control of government assets are common in China. 5. Customer-owned facilities under which users own common facilities providing the service. This has typified many local irrigation and agricultural drainage services worldwide. In recent years, WUAs have been promoted by the WB and other international organizations within the context of irrigation management transfer, rural water supply and similar programs. These programs have either clarified and/or formalized existing autonomous arrangements (as in China) or have been introduced within large schemes built and operated by government departments. 268 Chapter 10. Institutional Management Many irrigation and urban water supply services in China are provided by publicly, or communally owned, autonomous entities. With the move to a socialist market economy, numerous models are being piloted with the aim of increasing efficiency and customer satisfaction, and reducing the financial burden on government. Typically these aim for greater autonomy, self-financing/self-reliance, a formal legal identity and contractual arrangements, and accountability to end users. In the water supply subsector, they are increasingly characterized by public-private partnerships and by privatization of aspects of ownership through shareholding arrangements. These approaches aim to access private funds and management skills, and promote incentives for efficient operations. In the irrigation sector, farmer- owned SIDDs are being piloted under WB-assisted projects having two key organizational characteristics: · WUAs and · an independent WSC for main system operation, also perhaps farmer-owned. Which model is appropriate depends on subsector and location-specific factors, and there can be no standard solutions. The key issues are local control, and that water use, water price, and collected fees are transparent. In introducing reforms, however, there is a need to guard against three real dangers, each of which threatens to undermine the success of reform programs: 1. A failure to provide service entities with true autonomy. There is a continuing tendency for local governments to intervene in the management of service entities. This may reflect a reluctance to break with past practice or a wish to promote social objectives. Price bureaus, for instance, regulate water charges to moderate inflation and protect low-income households rather than enforce financial discipline. This may be understandable but undermines incentives for efficient performance and is counterproductive (see previous section). 2. A failure to clarify ownership and risk. Managers often take control of government assets without being subject to the disciplines associated with ownership and risk. In the absence of effective regulation, and with limited freedom to set tariff levels, the most obvious way of generating profits is to reduce regular maintenance and/or quality of service. Managers have thus been able to exploit assets for their own ends with inequitable results and threats to sustainability. 3. A failure to address all service requirements in an integrated and balanced manner. Many water services are best integrated within a defined service area. In urban areas, these include water supply and sanitation, storm drainage and flood control and in rural areas irrigation, agricultural drainage, rural water supply and flood control. However, profits can be generated from some services (e.g. water supply) more readily than from others (e.g. land drainage), and unless care is taken to structure utilities appropriately, and develop incentives for balanced provision, there is an inevitable tendency to distort the provision of less-favored services. The main requirement is to reestablish basic disciplines so as to ensure that government assets are maintained, financial and management distortions are avoided, and the community interest is served. This is typically best addressed by clarifying the community or public ownership of facilities and by promoting truly autonomous utilities and user organizations. If these preconditions can be satisfied, they provide the basic incentives needed for efficient service delivery. Even so, it may be politically and administratively difficult to enforce efficient service delivery and environmental protection on utilities in the public sector. Public-private partnerships and BOT, BOO and other initiatives may be extended under the right conditions. A cautious approach should, however, be taken to the transfer of government assets to full private ownership. Again, the key is local "ownership" and control. The theoretical advantages of Chapter 10. Institutional Management 269 privatization can only be achieved if effective economic regulation is enforced and this in itself is a major task. (iv) Wastewater Utility Reform · Newly formed wastewater companies in the implementation of their institutional and financial reform programs have largely focused on those reform elements in which implementation can be achieved within the companies' existing scope of authority. This includes fixed asset transfers, the assumption of direct operations of some assets, the development of plans and policies for taking over remaining assets, and the implementation of enterprise accounting systems. However, achieving progress in core elements of the reform programs also require approvals by the municipal governments on such items as financial autonomy, tariff policy and operationalizing of the companies. · Financial Autonomy of Utility Companies. State Circular 1192 of 1999 requires institutional and financial reform of wastewater utilities. Often the newly established wastewater companies do not have control over their revenue streams, however, which prevents them from operating as financially autonomous entities. While the project cities maintain wastewater charges, collections are usually transferred to the municipal finance bureaus that then make budgetary allocations to the companies. This arrangement is inconsistent with State policies on the reform of the wastewater management sector. Some project cities/wastewater companies have attempted to address this deficiency by proposing a change in the legal status of the charge to a wastewater treatment tariff, which is legal obligation due to the wastewater company. Furthermore, revenues derived from the collections of the wastewater tariff should be transferred directly from the water supply companies to the wastewater companies. However, municipal governments are often reluctant to implement these arrangements. · Tariff Increases. We need to underline the importance of upfront tariff increases when new investments are being undertaken. In many cities, a wastewater company is yet to be established, assets are yet to be transferred, and enterprise accounting not yet operational. In such cases, it is quite difficult to have the proper upfront increases agreed upon, approved and implemented before project implementation. Instead tariff increases should be considered that will generate surpluses during project implementation to contribute to the investment costs. The State Circular 1192 requirement for tariffs are: "Operating revenues to cover operating expenses and the greater of depreciation or debt service in any given year." · Enterprise Accounting. While wastewater companies need to fully operationalize enterprise accounting systems in order to provide the basis for proper financial management and reporting, all external reporting tend to continue to be based on the government institutional accounting system. Reporting on this basis is required because the companies often still rely on government budgetary allocations rather than tariff revenues. Full implementation of the essential enterprise accounting system is directly linked to the financial autonomy issue. · Billing and Collection Implementation of combined billing (one bill for water and wastewater charges) in many cities has generally improved collection efficiency. However, continuing deficiencies exist in the collection of charges from self-supplied water consumers (industrial). · Operational Status of Wastewater Companies. Often the wastewater companies are not fully operational in that it is operating the assets under its ownership. Instead, all or portions of these systems and facilities continue to be operated by the government units previously holding responsibility over the assets under contract arrangements. The case with Shenyang sounds similar to 270 Chapter 10. Institutional Management Shijiazhuang, preferring more an implementation role than an operational role. Establishing wastewater companies that implement new assets and operates existing ones is essential. · Fixed Asset Transfers. In a number of cases fixed asset transfers have been approved but not actually implemented because the existing revenue stream available to the companies is insufficient to operate the assets. Again, complete reforms required. · Sludge Management. The volume of sludge produced from wastewater plants is significant. Adequate processes for sludge treatment before disposal, and disposal to a environmentally safe site is critical. F. RECOMMENDATIONS The recommended priority actions for immediate consideration include: 1. The establishment of high-level River Basin Coordinating Committees or Councils in each of the 3-H basins, chaired by a Vice-Premier with MWR as Vice-Chairman, and comprise the Mayors and Governors of the constituent municipalities, provinces and autonomous regions; and the Vice- Minister for Water Resources and the Vice-Ministers of SEPA and the other key "water" ministries-- the Ministry of Agriculture, Ministry of Construction, Ministry of Finance, Ministry of Transportation, National Planning Commission, and the National Meteorology Bureau; the Commissioner or Director of the respective RBCM; and representatives of key civil societies such as WSCs and WUAs; 2. the River Basin Councils be charged with the responsibility for: · determining water resources allocations (surface and groundwater) for the provinces98 (real-time and dependent on the water held in reservoirs and seasonal conditions); · development of broad policies and programs promoting sustainable water resources management, and particularly with respect to: · flood control and drought relief (see Annex 10.2, Volume 3); · groundwater management (see separate report); · water resources protection and pollution control; and · promotion of increased water use (especially irrigation) efficiency (see Annex 10.3, Volume 3); and · comprehensive basin development planning.99 With respect to water resources protection and pollution control, it is suggested the Council secretariats, as independent basin agencies, would have the responsibility to develop and monitor water quality targets at key locations on the mainstream throughout the basin, and SEPA would have the necessary legislative authority to enforce compliance. For example, in the Yellow River Basin the proposed Council would have the responsibility to monitor water quality downstream of the key 98 Read municipalities, provinces and autonomous regions. 99 In accordance with the Water Law: Article 11. Chapter 10. Institutional Management 271 pollution control and environment protection projects in the Tenth Five-Year Plan in the upper and middle areas of the basin. These include the ecological protection projects in the river source area in Qinghai; ecological protection projects in the energy and heavy chemical industry base in Shanxi, Shaanxi, and Neimenggu; water and soil conservation projects in the Loess Plateau; pollution prevention projects in Sanmen Gorge and Xiaolangdi reservoir areas; and various urban wastewater treatment plant projects; 3. the River Basin Councils be given the necessary legislative support and authority to ensure essential coordination and enforcement of their allocation, policy, and program decisions in the municipalities, provinces and autonomous regions; 4. the established RBCMs be confirmed by law as the primary water resources management agencies in the basins (and with specific flood control responsibilities), to ensure enforcement of Council decisions on the allocations, policies, and programs in consultation with the municipal, provincial, and autonomous region governments, and be strengthened with the appropriate expertise where necessary to provide the administrative and technical secretariat support for the respective River Basin Councils; and 5. the strategic planning methodology developed in this study be adopted by the River Basin Councils to determine the policy, program, and project priorities required to accelerate the basins towards achievement of sustainable development. The first step in a strategic planning approach requires the development a so-called vision statement for the basins, i.e., what the central government would like to see. It is suggested that the vision for the 3-H basins would be something along the lines of "economically prosperous, socially just, and environmentally sound." Then short to medium-term goals, within key result areas, need to be determined to accelerate the achievement of that vision. From discussions with the institutes it is suggested the four key result areas for the basins are water resources planning and development; environmental management and social issues; databases and information systems; and institutional arrangements. The next step would be to determine specific objectives and strategies in each of the key result areas to assist in developing the necessary policy, program and project priorities. There is no doubt that all the potential actions proposed from the study are important but, they are not equally important. The challenge for China is to determine the priority actions that will accelerate achievement of its vision for the 3-H basins. The task is urgent and it will not be easy. At the next administrative level below the River Basin Councils, it is recommended that: 6. Provincial Water Resources Coordinating Committees be established, if and where necessary, on similar lines to the river basin councils, comprising the most senior prefecture government and "water" agency representatives, to allocate and manage their share of the basin's resources, with the provincial department of water resources providing the administrative and technical secretariat. (The provinces should be confirmed as having the primary stewardship responsibility for the water resources within their boundaries subject to river basin commission oversight and consistent with the wider basin water resources management objectives); and 7. Within the provinces and at the major water service entity level, the recommended institutional arrangements proposed for managing and utilizing the Wanjiazhai water transfer project, now under 272 Chapter 10. Institutional Management construction for the provision of urban and industrial water supplies in the city of Taiyuan in Shanxi Province, be adopted as the model for use elsewhere in the 3-H Basins, and indeed throughout China. In addition, it is recommended that: 8. legislative amendments and institutional restructures be undertaken so that approval to extract both surface and groundwater rests with a single agency (presumably MWR, the RBCMs, and the provincial, prefecture and county water departments and bureaus). This is very urgent. The current situation with numerous water license/permit-approving agencies should not continue. As well, extensive monitoring stations should be established for both surface and groundwater, quantity and quality, and a single, comprehensive database established. Obviously if the resource is not measured, it cannot be managed; 9. with respect to the irrigation sector, institutional reform to transfer management authority from the government be actively promoted by the respective level of government, through consultation and appropriate incentives the establishment of WUAs, WSCs, and SIDDs--(see Annex 10.1, Volume 3); On a broader perspective, it is recommended that consideration be also given to transferring management authority for operating and maintaining headwork storage dams and reservoirs from government to autonomous or semiautonomous corporatized or privatized entities. The reservoirs would be operated under instructions and rules specified by the RBCMs during both normal and flood seasons, and water users would pay for the service provided, which may include a dividend for the government for the capital works. There are many models available and given the number of dams in China there are certainly thousands of potential opportunities. 10. efforts be made to encourage greater adoption of a range of water use efficiency suggestions, and in particular, reuse of municipal wastewater around the major urban areas for irrigated agriculture using appropriate filter technology; 11. with respect to flood control arrangements, consideration be given to establishing a division within the People's Army, along similar lines to the US Corps of Engineers, to provide emergency assistance during flood (and drought) events--(see Annex 10.2, Volume 3); 12. with respect to demand management, a number of suggestions be considered, but in particular, that water charges be instituted for all uses and users where practical (metered and on a volumetric basis) and supported by necessary regulations; 13. an ongoing community awareness and education program be initiated confirming the seriousness of the resource situation, the necessity to save water, and the means by which this may be achieved (possibly along similar lines to the Australian WaterWise program focusing on school children and adults--see Annex 10.3, Volume 3); and 14. further consideration be given to constructing one or more routes of the proposed South-North transfer scheme as early as possible. (Delays will increase the cost in terms of lost industrial and agricultural output, the social costs associated with chronic water shortage, and irreparable environmental damage from overuse of seriously depleted surface and groundwater resources.) Chapter 11. Proposed Action Plans 273 11. PROPOSED ACTION PLANS A. INTRODUCTION The action plan summarized in this chapter proposes a set of integrated measures to be adopted by riparian states in the 3-H basins, the Ministry of Water Resources and the World Bank. The recommendations include structural changes, policy/nonstructural changes and institutional changes which if applied in the proposed time frame and with sufficient degree of political and financial commitment, will ensure that water resources do not impede China's development but rather play an increasingly vital and supportive role in the development of China's economy and society. The main components of the proposed action plan are in the areas of (a) water resources development, (b) flood protection, (c) agriculture, (d) water pollution, (e) wastewater reuse, (f) groundwater, and (g) institutional management. The main aspects of these components are described in this introduction and more specific actions for each component are presented in sections B to I below. Table 11.1 in this chapter presents the summarized total investment program for the action plan. Water Resources: The current level of shortages are caused by excessive demand for water and limited supplies at the basin level. The proposed action plan recommends two key measures for demand management because water resources are unable to cope with augmented new supplies from within the 3- H basins if sustainable water balances are to be maintained. These measures are: (a) price increase for all sectors and (b) increased efficiency. According to the analysis carried in this study, demand management alone will not be able to reduce demands for them to meet current supply levels and so the action plan recommends two measures to augment supplies. These are (i) increased wastewater reuse and (ii) construction of the south-north transfer. Flood Protection: The study describes how the value of flood damages are increasing despite massive efforts and resources being expended on flood protection. The action plan recommends more emphasis on the development of a systematic methodology focusing on flood protection areas with defined levels of flood protection levels to focus on the protection of key assets. Flood protection is a highly visible activity to the public and is easily targeted for short-term political gains but the costs to society of inappropriate flood protection are also highly visible and damaging. In addition, the action plan proposes a series of strategic projects in the 3-H basins in parallel with existing Chinese planners' recommendations. These strategic projects are in the areas of (a) reservoir construction, (b) upgrading of flood capacity, (c) risk assessment, (d) upgrading of flood forecasting and warning systems, (e) road construction, (f) the development of hydrodynamic models. Agriculture : The changes occurring in China's economy will continue to reduce the relative importance of the agricultural sector's contribution to GDP. However, agriculture itself will continue to grow over the coming decades and will also undergo a shift from grain production to higher-valued cash crops. The percentage income of farmers derived from agriculture will remain steady at about a third of total income and for many farmers in inland provinces, agriculture will continue to be an important source of revenue and security. The action plan recognizes the important social and political (including food security) implications of maintaining adequate water supplies to rural areas for agriculture. At the same time, the cost to the government of supplying large volumes of water to low value adding agricultural activity is no longer sustainable. Thus the action plan focuses on structural and nonstructural components. 274 Chapter 11. Proposed Action Plans The action plan recognizes the need to increase participatory mechanisms and continue management reforms in order to develop innovative models for irrigation districts management including leases, water users associations, contracts, auctions, joint stockholders, water supply companies and self-financed irrigation and drainage districts. Structural components run in parallel with existing Chinese government programs, namely the comprehensive agricultural development program, the large irrigation district program and the water saving program. These are solely focused on demand management, increased efficiency of water use and appropriate pricing reviews and no supply augmentation is proposed for agriculture. The exception might be indirect water supply derived from wastewater reuse schemes where some water might be available for market gardens in the peri-urban areas around cities once priority shortages for industry and urban life have been satisfied. In addition, increased return flows from additional water supply to priority uses will also benefit irrigation. Water Pollution: Surface and groundwater quality has been declining for the last several decades to alarming states in much of the 3-H basins. The action plan recognizes that water pollution is not only a threat to public health and the environment but also diminishes the total resource available for specific beneficial uses and these effects combine to seriously impede China's development. The action plan recommends structural, nonstructural and institutional investments and programs to enhance existing government efforts designed to improve declining current water quality trends. Structural options available to reduce industry pollution loads include (a) industrial wastewater treatment, (b) cleaner production technology, and (c) reuse of treated wastewater. Reuse of wastewater features as part of the water resources action plan confirming the integrated nature of the recommendations. Pollution from urban municipal sources will be addressed by constructing municipal wastewater treatment plants with the required pipe network to allow industry to discharge its wastewater into the municipal systems thus reducing the costs significantly to industry and the community. In the less affluent areas of the cities and for rural populations, programs of well-engineered pit latrines should be developed. Small industry collectively represent a significant proportion of the pollution load and the action plan recommends gradual phasing out of those industries not capable to afford small treatment or cleaner production for pollution control and implementation of such program for those who can. Registration of TVEs is the first step to categorizing small industries on the basis of pollution control cost. Livestock will continue to grow in the 3-H basins due to growing domestic demand and due to China's imminent entry into the WTO which will strengthen industries where China has comparative advantages. Pollution from livestock is already significant and the action plan recommends stabilization ponds and manual of guidelines for appropriate design and construction. The nonstructural part of the action plan for water pollution is equally ambitious. The main components of include (a) review of water quality, effluent and laboratory analytical methods standards, (b) review of the monitoring program by MWR and SEPA including opportunities for combining these for increased benefits and reduced costs, (c) review of the regulatory system with a view to develop a mass-based system, (d) inclusion of EIA process for small industry planning, (e) review of the pollution permit allocation system and its management at the EPB level. Wastewater Reuse: As prices for water increase, the value of wastewater will also increase permitting the development of wastewater reuse schemes. The action plan recommends that options for reuse of wastewater for agricultural, municipal and industrial purposes be investigated. While such practice is already informally established for agriculture, formal schemes will reduce public health threats. Reuse of wastewater for municipal purposes will need a greater degree of treatment while treatment at common industrial treatment plants, combined municipal treatment plants or in-plant treatment will supply raw water for industry to be further treated according to individual requirements. Chapter 11. Proposed Action Plans 275 The development of appropriate institutional and legal mechanisms will be required including local ordinances for combined treatment systems. Groundwater: The alarming decline in shallow and deep water tables in many parts of the 3-H basins is symptomatic of excessive withdrawals which are in turn due to (a) excessive pollution of alternative sources of water, (b) general water scarcity situation, (c) lack of demand management (low prices for the resource), (d) ineffective or nonexistent regulatory mechanisms to control withdrawals. The key actions required by the action plan are: (i) definition of groundwater management units with determination of sustainable yields, (ii) preparation of groundwater management plans, (iii) allocation licensing linked to the sustainable yield and undertaken by one department only, (iv) licensing of well construction drillers, (v) development of a national groundwater database, (vi) preparation of groundwater pollution strategy. Institutional Management: The role that institutions play in the management of water resources is critical and paramount for the success of the proposed action plan. In addition to those moted in previous sections, a number of key recommendations must be implemented to facilitate other components of the action plan. These include: (a) the establishment of high-level River Basin Coordinating Committees or Councils in each of the 3-H Basins, (b) the RBCMs be charged with determining water resources allocations and developing water resources policies, (c) RBCMs be given necessary legal muscle and be confirmed by law, (d) the strategic planning methodology be adopted by the RBCMs, (e) provincial water resources coordinating committees be established at the next administrative level including for the management of water resources at the local levels, (f) ensuring that only one agency be charged with permits for resource extraction, e.g. MWR, (g) transferring management of irrigation districts to local institutions following consultative process, (h) reviewing water charges for all sectors. The total estimated investment for the proposed action plan is summarized in the table below, and details of the costs for each component are shown in sections B to H. Total Cost of Implementation of Proposed Action Plan (Constant Billion Yuan in 2000) 2000-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Water Supply New & Rehabilitation 135 142 19 13 4 313 Water Pollution Control and Reuse 54 81 67 67 17 286 Irrigation Efficiency Improvement 54 58 54 20 19 205 Groundwater Recharge and Rehabilitation 39 48 41 24 152 Flood Control 131 159 59 34 11 394 Total 412 488 240 158 52 1,350 B. ACTION PLANFOR WATER RESOURCES We suggest the following possibilities: a./ demand management including: (i) water pricing, and (ii) increased efficiency, b./ supply augmentation including: (iii) wastewater reuse and (iv) South North transfer, c./ other options include: (v) intrabasin water allocations, (vi) intersectoral water allocations. These are summarized below. a./ Demand Management: (i) Water Pricing A rational water pricing schedule for north China would be solely based on volumetric deliveries and would include: 276 Chapter 11. Proposed Action Plans · O&M charges · System depreciation costs · Resource fees · Scarcity surcharge · Treatment costs (nonagricultural uses) · Wastewater collection and treatment costs (nonagricultural uses) and/or · Environmental tax. Proposed tariffs (Yuan/m3) are shown below: Year Low Tariff Mean Tariff High Tariff 2000 0.9 1.1 2.9 2010 1.4 1.9 4.8 2020 1.7 2.3 5.9 2030 2.1 2.8 7.2 2040 2.8 3.7 9.6 2050 3.6 4.7 12.3 (ii) Increased Efficiency If withdrawals and consumptive use have approximately reached maximum levels given within- 3-H water resources, the alternative to increasing economic benefits from water is to make consumptive use more efficient. There are two components to this. First, the beneficial use component of consumptive use can be increased at the expense of the nonbeneficial component. Second, the economic returns to beneficial consumption can be increased. The largest components of nonbeneficial use are evaporation and seepage. Nothing can be done about evaporation from reservoirs and river channels, but many things can be done about the rest. For example, canals and watercourses can be designed to decrease surface area and permit faster water flow. Fields can be leveled to reduce ponding and hence evaporation. The use of plastic film can be increased to reduce evaporation and retain available soil moisture. Reducing seepage losses can immediately increase the supply of water for consumptive use relative to withdrawals. But this is a two-edged sword. A large part of groundwater recharge comes from seepage losses, and reducing them in areas where groundwater is fresh and exploitable not increase overall consumptive use. Where groundwater is saline or otherwise not exploitable, reducing seepage to an economic minimum is warranted. For example, surface water channels can be replaced with pipelines.100 b./ Supply Augmentation. (iii) Wastewater Reuse By 2010, we project urban wastewater volumes will be about 25 Bcm in 3-H, and by 2050, 33.5 Bcm. If properly collected, treated, and distributed, this represents a large volume of potential irrigation supplies--nearly one-third of current consumption. With the growth of cities will come 100 Pipelines also greatly reduce the risk of pilferage, and if buried, can help increase the supply of irrigable land. Chapter 11. Proposed Action Plans 277 increased demands for locally produced vegetables, and these water supplies can be made available locally. Sales of treated wastewater could well offset much of the costs of treatment; marginal returns to vegetable farming are at least Y 2/m3. (iv) 1. South-North Transfer Despite possible/feasible price increase, efficiency gains and reuse improvements, the 3-H will continue to be short of water as demonstrated in Chapter 4. Therefore it can be concluded that proposed demand management programs (efficiency improvement and price increases) and supply enhancement (reuse) will not be sufficient to ensure some kind of equilibrium between supply and demand. The only feasible addition to the proposed action plan, one that has been already extensively investigated by the Chinese government, is the South-North Transfer whereby water would transferred from the Yangtze River to the Hai and Huai basins. The action plan recommends further investigations of the South-North transfer. Preliminary costs are estimated at Y 245 billion (Y 70.9 billion for the eastern route and Y 174.1 billion for the middle route) representing almost 30 percent of total action plan costs. Shortage reductions resulting from the South- North Transfer are approximately 45 percent of total but account for about 53 percent of the total Y 233 billion expected benefits while costing about 30 percent of the total Y 217 billion in implementation costs for the entire action plan. 2. Supply Augmentation Infrastructure Needed to Complement the South North Transfer. The main components of the additional supplies are (a) source development and transmission, (b) water treatment, (c) network rehabilitation, (d) others (including design, supervision, contingency). Existing system rehabilitation is a major program which needs to be undertaken since a large number of urban water supply networks are old and the unaccounted for water would be up to 40 percent or more. Many treatment plants also do not exist or are very simple (disinfection processes only). There may be some source and transmission line upgrading to cope with additional water supply. Some upgrading will be associated with the south north transfer (mainly the Huai and Hai basins) and some will be independent (Yellow basin). c./ other options: (ii) Intrabasin Water Allocations The action plan recommends a review of allocation mechanisms in relation to (a) institutional arrangements (which are discussed in detail in Chapter 10 and the last section of the action plan), and (b) technical assistance projects to empower MWR and river basin commissions to utilize water allocation optimization techniques including the 3-H basin modeling system already fully developed for this study. (iii) Intersectoral Water Allocations Although water resources in China are owned by the state, and water trading has been illegal, ad hoc rights to the use of water have clearly been established. The recently imposed water licensing system legalizes and quantifies these rights. To gain the benefits from market mechanisms, China only needs to sanction and promote water trading among the various groups holding these rights. The result will be that water flows from the lower economic uses to the higher, to the benefit of all. Summary of Action Plan for Water Resources: 278 Chapter 11. Proposed Action Plans Problems/Issues Proposed Action Plan Price: Prices of water need to be raised across all sources (surface and Water prices charged to different categories of consumers are too low groundwater) according to the proposed schedule presented below which and promote wasteful consumption. North China consumers use a very has been calculated based on extensive analysis presented in this report. high volume of water by world standards while the per capita resource Average Tariff (Y/m3) availability is one of the lowest being a mere 1/20th the world average. Low Mean High 2000 0.9 1.1 2.9 Some areas in north China have raised prices marginally but other 2010 1.4 1.9 4.8 sources with lower prices are available and so consumers shift to cheaper 2020 1.7 2.3 5.9 supplies (e.g. groundwater). This practice has created unsustainable 2030 2.1 2.8 7.2 levels of groundwater usage. 2040 2.8 3.7 9.6 2050 3.6 4.7 12.3 Wastewater Reuse: The proposed action plan required that wastewater reuse rate increase to The main issues preventing more wide spread wastewater reuse in north 165 percent by increasing the rate of treatment, developing institutional China include: mechanisms needed to support this practice, raising the price of water, low level of treatment currently practical; developing infrastructure and raising water reuse standards. These Lack of institutional mechanisms; proposed actions are described in the Chapter on wastewater reuse and Low prices for water supply as described above; reuse action plan. Lack of infrastructure; Inappropriate standards there are discussed fully in the section on wastewater reuse Water Supply Efficiency: The action plan proposes to increase water supply efficiency to about 18 Water supply to agriculture will not increase and so water saving /water percent with (a) physical improvements; (b) agronomic measures; (c) supply efficiency improvement is the major component of agriculture irrigation management measures complementing existing SOCAD, LIS and water resources action plan. and water saving government programs. These are discussed in the section on agriculture/irrigation. The action plan recognizes that these measures will lower irrigation shortages by 19 percent or 30 percent overall. All water saved will be available as additional supply for agriculture and so the shortage reduction benefits overall will amount to only about 12 percent of overall benefits to be gained from the entire action plan proposed in this water resource section. The cost of implementation account roughly for 50 percent of total action plan implementation costs. South-North Transfer The action plan recommends further investigations of the South-North Despite possible/feasible price increase, efficiency gains and reuse transfer. Preliminary costs are estimated at Y 245 billion (Y 70.9 billion improvements, the 3-H will continue to be short of water as for the eastern route and Y 174.1 billion for the middle route) demonstrated in Chapter 4. Therefore it can be concluded that proposed representing almost 30 percent of total action plan costs. demand management programs and supply enhancement by reuse will Shortage reduction resulting from the South-North are approximately 45 not be sufficient to bring supply closer to demand. The only feasible percent of total but account for about 53 percent of the total Y 233 billion additions the proposed action plan: one that has been already extensively at expected benefits while costing about 30 percent of the total Y217 investigated by the Chinese government is the South-North Transfer billion in implementation costs for the total entire action plan. whereby water would transferred from Yangtze River to the Hai and Huai basins. Summary of Cost of Implementation of Water Resources Action Plan. Water Supply New & Rehabilitation 2000-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai Urban 2.8 4.1 4.2 2.8 1.6 15.5 Rural 0.8 1.2 1.1 0.8 0.0 4.0 Environmental 0.1 0.2 0.1 0.1 0.0 0.5 Subtotal 3.7 5.5 5.5 3.7 1.6 20.0 Huai Urban 3.9 5.8 5.3 3.5 1.1 19.6 Rural 1.0 1.4 1.6 1.1 0.2 5.3 Environmental 0.8 1.3 1.3 0.9 0.1 4.4 Subtotal 5.7 8.5 8.2 5.5 1.4 29.3 Yellow Urban 2.6 4.0 3.7 2.5 1.1 14.0 Rural 0.5 0.7 0.8 0.6 0.2 2.8 Environmental 0.4 0.7 0.7 0.5 0.0 2.3 Subtotal 3.6 5.4 5.3 3.5 1.4 19.1 3H Total 12.9 19.4 19.0 12.7 4.4 68.4 Chapter 11. Proposed Action Plans 279 S-N Transfer 122.5 122.5 245.0 Total 135.4 141.9 19.0 12.7 4.4 313.4 C. ACTION PLANFOR FLOODCONTROL (i) Priority Projects Priority projects have been selected and are described in this section. They are based on the following considerations more fully explained in the Flood Management Annex: · Floodplain management principles discussed in Annex 5.1, Volume 3 · Existing levels of protection as discussed in Section 5B · Proposed works that have been identified for the 3-H basin in Annex 5.2, Volume 3 · Flood losses and consequences discussed in Chapter 3C part D of the main report. In this strategic-level flood study, it is not possible to investigate each potential project in detail and so the Priority Projects have been selected based on preliminary information using the criteria developed and explained in this report. It is recommended that further investigation be undertaken to assess the validity of the project and their status. For the 3-H basin, there are discrete projects proposed but it is difficult to see which projects will be most effective and whether they are complementary or will duplicate one another. There is a very urgent need to develop comprehensive master plans for each basin so that each proposed project can be assessed against the master plan. The methodology described earlier in this chapter would serve this purpose. Projects in each basin have been selected for further consideration and are described below. (a) Hai River Basin Flooding in the Hai Basin occurs in the southern part of the basin and around Tianjin and Beijing. Flood losses are quite high in Hebei Province and in Beijing itself. It is therefore economically justified to spend considerable funds to improve the situation. The Priority projects are as listed below. 1. There is considerable flooding along the southern border of the Hai River basin which is shown on flood maps. The inundation area is commencing on the Wei floodplain. The detention basins of Liangxiangpo, Changhongqu and Baisipo are required to be used every two to three years. This clearly too frequent and needs to be reduced. It is suggested to upgrade these detention basins but the proposal to construct a dam upstream may mean then this is not necessary. It is proposed to construct Panshitou Reservoir on the Qi river to be used for flood storage. Storage capacity will be 6.20 x108 m3. This would seem to be a very worthwhile project. It may provide some water resource storage and can be used to reduce the dependency on the use of the detention basins in the area. It may also be able to reduce the flows in the Wei and thereby reduce flooding in the downstream areas. While the dam will be in Henan Province the downstream benefits will also accrue to Hebei and Shandong Provinces where there are considerable flood damages each year. 280 Chapter 11. Proposed Action Plans 2. Beijing suffers considerable flooding and drainage problems and as the nation's capital, should have a very high level of protection. It is proposed to construct a dam on Yonding River upstream of Beijing called Chengxiazhuang Reservoir. It will have a capacity 0.63 x108 m3. However in terms of cost per stored cubic meter, it is far more expensive than Panshitou Reservoir. It is recommended that further work be undertaken to determine a cost effective site for a dam. If constructed it will reduce the flooding in Beijing, reduce the need to use the Yongding detention storage, and reduce the need to transfer water to the Daqing system. If this dam if found not to be cost-effective, then another scheme needs to be designed in order to protect Beijing from flooding. 3. It would be desirable to improve the flood capacity of rivers, channels and estuaries close to the cities of Beijing and Tianjin. Rivers such as New Yongding, Jiyun, Duliu, New Zhangwei, Feng, Beiyun and the Hai Rivers should be upgraded by dredging and/or raising levees to ensure that the floods can be safely carried to the sea and protect Beijing and Tianjin. 4. As discussed in Section 5.3, four major storages have very low safe ARIs. These are Yuecheng, Huangbizheung, Gangnan and Xidayang. These dams should have risk assessment to determine if the ARI of the safe flood should be increased. 5. There are a number of other river systems which have been upgraded but may not now have the design capacity due to sedimentation. They should be assessed to determine if they should be rehabilitated to their old standard. 6. Improvements are required for all aspects of the flood forecasting and flood warning system for the Hai River Basin . This includes expansion of the instrument monitoring network, updated data transmission technology, forecasting techniques and telecommunications for issuing warnings and maintaining contact during flood emergencies. 7. Improve the safety of the detention areas by construction of elevated roads above the flood level that can be used for evacuation and temporary sanctuary during floods. The roads should be at least 20 meters wide to accommodate people sheltering from floods. 8. Development of a hydrodynamic flood model for the major rivers which will provide information to determine which rivers should be upgraded and which reservoirs should be built. (b) Yellow River Basin The major flood damages and losses in the Yellow River Basin are Shandong Provinces which agrees with the areas flooded in the flood inundation maps for the basin. Undoubtedly the biggest problem in the Yellow River is the sediment because it reduces the capacity of the channels and rivers to convey flood waters. The ideal solution would be revegetation of the catchment but this will take too long and may not be practical. The proposed solution is the construction of dams with the main purpose of collecting silt. These dams seemed to be required and are described below along with other priority projects. 1. Construction of The Qikou water conservancy project is one of the major projects on the Yellow River. The dam site is located on the middle reaches of the Yellow River in Shanxi province. The project will trap large amounts of silt. The dam is designed as earthfill dam having a maximum height of 143.5m. The project will have a small design discharge and big storage capacity. Its main task is to retain 14.4 billion tons of silt and also reduce 2.44 billion tons of sand to be accumulated in the Chapter 11. Proposed Action Plans 281 Xiaobei main river course. The project is aimed at removing the need to continue to raise levees in the lower areas of the Yellow River to counter the aggrading of the channel bed. In addition power supply will be guaranteed for the agriculture and industry along the river banks within the Shanxi and Shaanxi provinces. While this project seems to be very valuable in maintaining flood capacity, careful consideration will need to be made as to the effects of sediment deficit downstream of the dam. The river will erode until the stable sediment balance is reestablished. This may provide problems of erosion near the dam and deposition continuing downstream. 2. The Guxian water conservancy project is also one of the primary projects on the Yellow River stem. The dam site is located on the middle reaches of the Yellow River in Xiangnin of Shanxi province and Yichuang of Shaanxi province. The total storage capacity is 160 x 108 m3 and sediment-retaining capacity is 11.35 Bcm. The dam has a maximum height of 186m and is designed as earth- rockfill dam. Its main task is to control flood and silt and to regulate runoff. It will retain 16 billion tons of silt. After completion of the Guxian and Qikou reservoirs the lower reach levees of the Yellow River will not need to be raised. 3. Dongping Lake reservoir should be upgraded to have an operation water level of 44.5m, storage capacity of 3.04 Bcm, of which the old lake comprises 880 Mcm and the new lake comprises 2.16 Bcm. 4. Downstream of Dongping detention area, levees in the delta area, and levees which protect the left bank of the lower Qin River and the adjoining irrigated plains will need to be raised and strengthened. 5. Extension work to assist small communities in implementing and maintaining sound soil and water conservation measures, improved monitoring of conditions and of water and sediment yield, expansion of project areas by 12,000 km2 a year, ongoing efforts in existing management areas, construction of 5,000 gully dams (by year 2010), research, development and training. 6. As for the Hai, there is a need to develop a hydrodynamic flood model for the major rivers which will provide information to determine which rivers should be upgraded and which reservoirs should be built. (c) Huai River Basin Flood losses are most severe in Anhui and Jiangsu Provinces where annual damages and deaths from flooding are very high. The flood prone area for the Huai Basin include the main branch of the Huai River. This corresponds well to the low ARI of rivers in this area.. In addition, flooding can occur from the right bank breakout downstream of Zhengzhou from the Yellow River see the flood map for Yellow River. The overflow follows the old Yellow River can flood large areas of Anhui and Jiangsu Provinces which have very large flood damages every year. Works on the Yellow River will reduce flooding in this area. Flooding on the main branch of the Huai River can be reduced by the following works which can be considered priority projects: 1. Construction of a dam on Kanjing River, a tributary of the Sha-Ying River for flood detention. This will reduce the frequency of flooding of the Nehewa detention area which is used on average every two years. 282 Chapter 11. Proposed Action Plans 2. Construction of Bailianya Reservoir to reduce flooding downstream in the Pi River which only has a capacity of 7 year ARI. It will also reduce flooding in the main branch of the Huai River. 3. There are two major dams (greater than 1 Bcm) which have low ARIs, below 10,000 years). These are Meishan and Suyahu Dams and should have risk analysis carried out to determine if they should be upgraded. 4. Construction of an improved main floodway directly to the sea to reduce flooding and the duration of flooding in the flood areas of the Anhui and Jiangsu Projects. 5. A major project to be undertaken is the Linhuaigang project. This involves construction of a large, gated regulator on the Huai River upstream of the Ying confluence, and levee embankments surrounding a large depression area adjoining the Huai River. It would enable an onstream regulated flood storage to be used to better control flood discharges from the upper Huai and Hong-Ru into the middle river reach from Zhengyangguan to Hongze Lake. 6. Raising of the Huaibei levee, or north bank levee of the Huai River from Zhengyangguan to Hongze Lake--this is a very strategic levee protecting a densely populated area of 12,000 km2, including over 8,000 km2 of intensively cultivated land, and more renovation and raising is required to achieve satisfactory standards throughout 7. A high degree of operational management and intervention is necessary during large floods to divert floodwaters into detention areas for temporary storage and to distribute flood flows in original river channels and new river diversions through operation of regulators. Very good forecasting accuracy was achieved in the 1991 flood, which greatly aided management of the situation. Flood forecasting therefore assumes great importance in flood management of the Huai River system. Upgrading to the latest technology and maximizing flood warning time is very important, and has been identified as an objective in long-range planning to year 2010 8. As for the Hai and the Yellow River Basins, there is a need to develop a hydrodynamic flood model for the major rivers which will provide information to determine which rivers should be upgraded and which reservoirs should be built (ii) Secondary Priority Projects Other projects that should be considered further in the 3-H basin are listed in Section 3 of the Flood Annexes in Volume 3. It may well be that there are some very important projects in these lists and it is recommended that further work be undertaken to assess at least the basic facts of the each project so that they can be assessed. City Protection. Table 11.1 shows major cities in the 3-H basins which have an ARI of no higher than 10 years. This is a very low standard for major cities and further review should be carried out to assess if their level of protection should be upgraded. TABLE 11.1: CITIES WITH LOW LEVEL OF FLOOD PROTECTION Ref. Nonagriculture Total output Flood control Flood loss in No Province City River pop. (1995) (104) of 1995 (108)standard (year ARI) 1997 (Yx108) 2 Tianjin Tianjin Haihe 477.56 2,363.94 10 1.2 5 Hebei Xiangtai Qilihe 36.06 86.64 5 16 Jiangsu Nanjing Changjiang 229.85 764.50 10 Chapter 11. Proposed Action Plans 283 Ref. Nonagriculture Total output Flood control Flood loss in No Province City River pop. (1995) (104) of 1995 (108) standard (year ARI) 1997 (Yx108) 17 Jiangsu Xuzhou Old Huang River 100.20 277.00 10 22 Jiangsu Dongtai Taidonghe 22.55 150.00 10 35 Jiangxi Jingdezhen Changjiang 30.57 110.45 5 36 Jiangxi Xinyu Yuanhe 24.11 112.47 10 0.03 37 Jiangxi Pingxiang Pingshuihe 47.26 177.30 10 0.8 39 Shandong Laizhou Nanyanghe 31.09 235.00 10 43 Shandong Zibo Xiaofuhe 141.78 719.00 10 44 Shandong Gaomi Xiaokanghe 20.57 180.60 10 48 Shandong Feicheng Kangwanghe 31.36 100.36 10 49 Shandong Rizhao 32.65 195.10 10 0.28 50 Shandong Rongcheng Chuanchenghe 20.81 204.00 10 0.04 53 Shandong Tengzhou Chenghe 46.49 110.80 10 54 Shandong Zoucheng Nanshahe 33.14 120.00 10 55 Shandong Heze Dongyuhe 29.23 58.20 10 56 Shandong Dongying Guanglihe 47.10 179.36 10 61 Henan Jiaozuo Qunyinghe 50.91 81.44 10 0.31 62 Henan Xinxiang Weihe 55.93 111.72 13 0.2 63 Henan Xuchang Qingyihe 25.37 59.56 10 64 Henan Luoyang Yiluohe 95.29 133.20 5 66 Henan Kaifeng Huijihe 55.17 76.68 5 68 Hubei Jingzhou Changjiang 70.41 54.57 10 71 Hubei Yichang Changjiang 45.93 61.79 10 72 Hubei Xiantao Hanjiang 39.81 65.25 10 74 Hubei Qianjiang Hanjiang 30.55 104.50 10 81 Chongqing Chongqing Changjiang 281.11 694.45 5 3.01 82 Sichuan Chengdu Minjiang 205.05 907.89 10 84 Sichuan Yibin Minjiang 27.43 74.89 6.5 86 Guizhou Zunyi Xiangjiang 32.70 53.25 10 0.03 93 Qinghai Xining Huangshuihe 58.67 57.36 10 0.712 Summary of Action Plan for flood control is as follows: Basin Problem/Issue Proposed Action Description/Action Hai 1. There is considerable flooding Reservoir Construction It is proposed to construct Panshitou Reservoir on the Qi along the southern border of the Hai river to be used for flood storage. Storage capacity will be River basin inundation commencing 6.20 x108 m3. This would seem to be a very worthwhile on the Wei floodplain. The detention project. It may provide some water resource storage and basins of Liangxiangpo, can be used to reduce the dependency on the use of the Changhongqu and Baisipo are detention basins in the area. It may also reduce the flows required to be used every two to three in the Wei and thereby reduce flooding in the years. This is clearly too frequent and downstream areas. needs to be reduced. It is suggested to While the dam will be in Henan Province the downstream upgrade these detention basins but the benefits will also accrue to Hebei and Shandong proposal to construct a dam upstream Provinces where there are considerable flood damages may mean that this is not necessary. each year. 2. Beijing suffers considerable Reservoir Construction It is proposed to construct a reservoir on Yonding River flooding and drainage problems and upstream of Beijing called Chengxiazhuang Reservoir. It as the nation's capital, should have a will have a capacity 0.63 x108 m3. However in terms of very high level of protection. cost per stored cubic meter, it is far more expensive than Panshitou Reservoir. It is recommended that further work be undertaken to determine a cost effective site for a dam. If constructed it will reduce the flooding in Beijing, reduce the need to use the Yongding detention storage, and reduce the need to transfer water to the Daqing system. If this dam is found not to be cost-effective, then another scheme needs to be designed in order to protect Beijing from flooding. 284 Chapter 11. Proposed Action Plans Basin Problem/Issue Proposed Action Description/Action 3. The flood carrying capacity of Upgrading flood capacity Rivers such as New Yongding, Jiyun, Duliu, New rivers, channels and estuaries close to Zhangwei, Feng, Beiyun and the Hai Rivers should be the cities of Beijing and Tianjin needs upgraded by dredging and/or raising levees to ensure that to be improved desirably. the floods can be safely carried to the sea and protect Beijing and Tianjin. 4. Four major storages, Yuecheng, Risk Assessment These dams should have risk assessment to determine if Huangbizheung, Gangnan and the ARI of the safe flood should be increased. Xidayang, have very low safe ARIs.. 5. There are a number of other river River flood carrying capacity They should be assessed to determine if they should be systems which have been upgraded assessment rehabilitated to their old standard. but may not now have the design capacity due to sedimentation. 6. Improvements are required for all Upgrading flood forecasting and This includes expansion of the instrument monitoring aspects of the flood forecasting and warning system network, updated data transmission technology, flood warning system for the Hai forecasting techniques and telecommunications for River Basin . issuing warnings and maintaining contact during flood emergencies. 7. Safety of the detention areas needs Roads construction Construct roads with elevation above the flood level that to be improved. can be used for evacuation and temporary sanctuary during floods. The roads should be at least 20 meters wide to accommodate people sheltering from floods. Low flood modeling capacity Development of hydrodynamic Development of a hydrodynamic flood model for the model major rivers which will provide information to determine which rivers should be upgraded and which reservoirs should be built. Yellow Undoubtedly the biggest problem in The ideal solution would be revegetation of the catchment the Yellow River is the sediment but this will take too long and may not be practical. The because it reduces the capacity of the proposed solution is the construction of dams with the channels and rivers to convey flood main purpose of collecting silt. These dams seem to be waters required and are described below along with other priority projects. 1. Construction of The Qikou water conservancy project is one of the major projects on the Yellow River. The dam site is located on the middle reaches of the Yellow River in Shanxi province. The project will trap large amounts of silt. The dam is designed as earthfill dam having a maximum height of 143.5m. The project will have a small design discharge and big storage capacity. Its main task is to retain 14.4 billion tons of silt and also reduce 2.44 billion tons of sand to be accumulated in the Xiaobei main river course. The project is aimed at removing the need to continue to raise levees in the lower areas of the Yellow River to counter the aggrading of the channel bed. In addition power supply will be guaranteed for the agriculture and industry along the river banks within the Shanxi and Shaanxi provinces. While this project seems to be very valuable in maintaining flood capacity, careful consideration will need to be made as to the effects of sediment deficit downstream of the dam. The river will erode until the stable sediment balance is reestablished. This may provide problems of erosion near the dam and deposition continuing downstream. 2. The Guxian water conservancy project is also one of the primary projects on the Yellow River stem. The dam site is located on the middle reaches of the Yellow River in Xiangnin of Shanxi province and Yichuang of Shaanxi province. The total storage capacity is 160 x 108 m3 and sediment-retaining capacity is 11.35 Bcm. The dam has a maximum height of 186m and is designed as earth- rockfill dam. Its main task is to control flood and silt and to Chapter 11. Proposed Action Plans 285 Basin Problem/Issue Proposed Action Description/Action regulate runoff. It will retain 16 billion tons of silt. After completion of the Guxian and Qikou reservoirs the lower reach levees of the Yellow River will not need to be raised. 3. Dongping Lake reservoir should be upgraded to have an operation water level of 44.5m, storage capacity of 3.04 Bcm, of which the old lake comprises 880 Mcm and the new lake comprises 2.16 Bcm. 4. Downstream of Dongping detention area, levees in the delta area, and levees which protect the left bank of the lower Qin River and the adjoining irrigated plains will need to be raised and strengthened. Extension work to assist small communities in implementing and maintaining sound soil and water conservation measures, improved monitoring of conditions and of water and sediment yield, expansion of project areas by 12,000 km2 a year, ongoing efforts in existing management areas, construction of 5,000 gully dams (by year 2010), research, development and training. Low flood modeling capacity Development of a hydrodynamic There is a need to develop a hydrodynamic flood model flood model for the major rivers which will provide information to determine which rivers should be upgraded and which reservoirs should be built. Huai Flood losses are most severe in Anhui Construction of dams and 1. Construction of a dam on Kanjing River, a tributary and Jiangsu Provinces where annual reservoirs. of the Sha-Ying River for flood detention. This will damages and deaths from flooding reduce the frequency of flooding of the Nehewa are very high. The flood prone area detention area which is used on average every two for the Huai Basin include the main years. branch of the Huai River. 2. Construction of Bailianya Reservoir to reduce flooding downstream in the Pi River which only has a capacity of 7 year ARI. It will also reduce flooding in the main branch of the Huai River. 3. There are two major dams (greater than 1Bcm) which have low ARIs, below 10,000 years). These are Meishan and Suyahu Dams and should have risk analysis carried out to determine if they should be upgraded. 4. Construction of an improved main floodway directly to the sea to reduce flooding and the duration of flooding in the flood areas of the Anhui and Jiangsu Projects. 5. A major project to be undertaken is the Linhuaigang project. This involves construction of a large, gated regulator on the Huai River upstream of the Ying confluence, and levee embankments surrounding a large depression area adjoining the Huai River. It would enable an onstream regulated flood storage to be used to better control flood discharges from the upper Huai and Hong-Ru into the middle river reach from Zhengyangguan to Hongze Lake. 6. Raising of the Huaibei levee, or north bank levee of the Huai River from Zhengyangguan to Hongze Lake--this is a very strategic levee protecting a densely populated area of 12,000 km2, including over 8,000 km2 of intensively cultivated land, and more renovation and raising is required to achieve satisfactory standards throughout A high degree of operational Develop flood forecasting capacity Very good forecasting accuracy was achieved in the 1991 management and intervention is flood, which greatly aided management of the situation. necessary during large floods to Flood forecasting therefore assumes great importance in divert floodwaters into detention flood management of the Huai River system. Upgrading areas for temporary storage and to to the latest technology and maximizing flood warning 286 Chapter 11. Proposed Action Plans Basin Problem/Issue Proposed Action Description/Action distribute flood flows in original river time is very important, and has been identified as an channels and new river diversions objective in long-range planning to year 2010 through operation of regulators. Lack of a hydrodynamic flood model. There is a need to develop a hydrodynamic flood model for the major rivers which will provide information to determine which rivers should be upgraded and which reservoirs should be built Summary of Cost of Implementation of Action Plan for Flood Control: Flood Control 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai Dam safety 2.0 2.0 2.0 2.0 2.0 10.0 New dam 3.0 3.0 0.0 0.0 0.0 6.0 Detention basin 5.0 5.0 4.0 3.0 17.0 Levee strengthening 10.0 16.0 5.0 5.0 36.0 Water cost improvement 10.0 8.0 8.0 26.0 Flood protection area (FPA) establishment 1.0 0.5 0.5 2.0 Flood forecasting 1.0 1.0 2.0 Flood database 0.5 0.5 1.0 Disaster prevention 0.5 0.5 1.0 Training 0.5 0.5 0.5 1.5 Total 33.5 37.0 20.0 10.0 2.0 102.5 Huai Dam safety 3.0 2.0 2.0 2.0 2.0 11.0 New dam 4.0 2.0 6.0 Detention basin 4.0 3.0 1.0 8.0 Levee strengthening 10.0 17.0 5.0 2.0 34.0 Water cost improvement 15.0 16.0 5.0 5.0 5.0 46.0 Flood protection area (FPA) establishment 1.0 0.5 0.5 2.0 Flood forecasting 1.0 1.0 2.0 Flood database 0.5 0.5 1.0 Disaster prevention 0.5 0.5 1.0 Training 0.5 0.5 1.0 Total 39.5 43.0 13.5 9.0 7.0 112.0 Yellow Dam safety 3.0 2.0 2.0 2.0 2.0 11.0 New dam 4.0 5.0 4.0 13.0 Detention basin 7.0 5.0 4.0 3.0 19.0 Levee strengthening 20.0 37.0 5.0 5.0 67.0 Water cost improvement 20.0 27.0 10.0 5.0 62.0 Flood protection area (FPA) establishment 1.0 0.5 0.5 2.0 Flood forecasting 1.0 1.0 2.0 Flood database 0.5 0.5 1.0 Disaster prevention 0.5 0.5 1.0 Training 0.5 0.5 1.0 Total 57.5 79.0 25.5 15.0 2.0 179.0 3H total 130.5 159.0 59.0 34.0 11.0 393.5 D. ACTION PLANFOR AGRICULTURE (i) Management Reforms The need for irrigation management reforms has been strongly supported by China's Ministry of Water Resources (MWR). As a result, China has taken a lead in implementing management reform and over the past decade has instituted innovative irrigation management reform programs allowing greater decentralization of decision-making in large-scale irrigation projects in several provinces. At the provincial level local governments have supported management reform as they realize greater participation of farmers in the management of irrigation systems is needed if they are to strengthen Chapter 11. Proposed Action Plans 287 financial efficiency and overall sustainability of irrigation investments. Management reform models being used are still evolving in China, and have slightly different characteristics in the nine IDs, but in general they include contracts, lease, WUA, auction, joint stockholders, water supply companies, SIDDs. (ii) Structural/Engineering Measures See Table 11.2. 288 Chapter 11. Proposed Action Plans TABLE 11.2: MEASURES OF REHABILITATION AND WATER SAVING IMPROVEMENT IN LARGE IRRIGATION SCHEME Region Engineering Measures Agricultural Measures Management Canal Head Works Main/Branch Canals & On-farm Works Drainage Works Measures Structures Huabei Region (North China Region) lining the canal with Leveling land, adjust size of complete drainage system, adjust planting structure, exercise economical serious leakage; enforce land pieces, use sprinkler or improve alkaline and improve cultivation irrigation, water use as & improve canal system micro-irrigation saline soil mechanism, spread high plan, enforce structures efficient measures of water monitoring of the content of soil water content of soil Upper & in General various measures are mainly use lining open Mainly develop water saving use natural river course adjust the structure of exercise insufficient Middle taken for 23 canal head canal for the main canal irrigation technology, and trenches for drainage, agriculture, forestry and irrigation or Reaches works which do not system; in special improve on-farm works ratio make conjunctive animal husbandry, as well supplementary of Yellow reach the designed sections or the sections and lining ratio of lateral & consideration for both as the planting structure, irrigation in the area Basin standards, including with topographic sublateral canals; level the irrig. & drainage canals; properly increase the ratio where annual rainfall dam heightening, conditions use canal land, develop irrigation by enlarge duplicate irrig. of forestry and animal is 400-500 mm to constructing more gates, with covers or pipes; small piece of land, on System (canal & well) or husbandry, and planting ensure a high output remedial construction, improve or rehabilitate plastic film, or through pure well irrig. Systems in percentage of high efficient and the highest maintaining or the canal system trenches; mainly use U type the schemes where good and good quality products production yield of renewing lifting liner for on-farm canals, GW is available, and use and cash crops; select water each m3 water. equipment give proper priority of low- irrig. as drainage saving & cold-resistance pressure pipe irrig., sprinkler variety & micro-irrig. in GW & surface water conjunctive use irrig. area. Ningxia & change flood irrigation to conjunctive use of well & canal, complete drainage works, control GW table and dynamic balance of water and salt, improve the Neimenggu alkaline soil. Lifting take high efficient use of water resources and renewal of equipment as the key point, reduce energy consumption and operational cost Irrigation areas Fen & Wei try to play the advantages of conjunctive irrigation of wells & canals, develop more low-pressure pipeline irrigation, exercise non-sufficient irrigation, develop River irrig. flood water resources, use optimized comprehensive measures for high efficient water saving. Areas Chapter 11. Proposed Action Plans 289 Region Engineering Measures Agricultural Measures Management Canal Head Works Main/Branch Canals & On-farm Works Drainage Works Measures Structures Middle and lower properly adjust the mainly use lining open Level land, develop ground pay same attention to adjust agricultural structure use water by plan, reaches of Yellow projects layout based on canal for the irrigation water saving irrigation & drainage, and crops layout, properly seasonal withdraw and Basin different type of irrig. main/branch canals, or technology, improve on- speed up the improvement increase the ratio of high distribute water to Schemes, such as use canal with covers or farm works ratio; properly of existing saline or efficient & good quality avoid flood irrig. And gravity irrigation and pipelines; choose canal adjust lateral, sublateral and alkaline land based on the cash crops; improve salinity of soil; spread lifting irrigation sections fitted to local field ditch; develop training works of existing cultivation system, adjust water saving irrig. conditions, such as bordering irrigation by small drainage system and soil structure; spread System; exercise ladder-shape, ladder- pieces, trench irrig., improved drainage technology for maintaining water use procedure, shape with arch bottom, irrigation on film, and standard with soil moisture. enhance management, and U type. gradually spread pipeline consideration of the control and irrig., sprinkler irrig. and various drainage maintenance of the micro-irrig. requirements and structures. conditions of each scheme. Huai Basin in well irrigation area smooth the relationship Reasonably plan, arrange fully plan and repair main use mulch to maintain use various water with surface water as between irrigation and smoothen the on-farm drainage system based on water content of soil saving irrigation supplementary source, system and drainage ditch system as per the water the waterlogging drainage system, gradually smooth the approach , system; repair canal saving & high efficiency standards of local area; in spread high-efficiency notice to balance sections, use mature standards; complete the areas where lifting water-saving irrigation between water lining technologies to auxiliary structures as well system is needed for technology based on withdrawal and reduce water loss; as the facilities. drainage, complete the crops and soil compensation; in GW complete auxiliary pumping facilities. moisture; enhance overexploitation area, structure facilities for management of water try to reduce the water distribution and distribution and on- exploitation amount, flood discharge control; farm works. and in the area where enhance or rehabilitate GW table seriously the outdated or damaged dropped, ensure the GW structures return to the normal depth within the planned period, in lifting irrigation area, renew or improve some of the outdated equipment, improve centralized water supply capacity and water lifting efficiency. 290 Chapter 11. Proposed Action Plans (iii) Water-Saving Technology Continue to promote water-saving technology as described below: Canal lining Use of antipermeable treatment materials, e.g., concrete, masonry, plastic, asphalt, pipelines to transfer water Improved surface irrigation techniques Surface moisture irrigation, wastewater use, dry sowing, dry culture, paddy nurseries Alternative irrigation techniques Spray irrigation, micro-irrigation, trickle and microsprinkler irrigation Precision land leveling Laser guidance to increase accuracy of leveling to reduce irrigation water requirements High-rate, in-flow systems (surge flow) Conservation of irrigation water Conjunctive use of surface and groundwater Improves reuse of surface water and reduces ineffective ET. Use of excess surface water to recharge depleted aquifers which can then be used for irrigation in times of droughts or inadequate rainfall. Cropping pattern Changing cropping patterns can reduce reliance on irrigation water requirements. Plastic film mulch Reduces evaporation from the soil surface, increases soil temperature, assists in weed control. Input substitution Substitute capital and technology for land and water, e.g., develop new varieties, fertilizers, agrochemicals, husbandry practices and apply them as quickly as possible. Information knowledge-building Promote knowledge of use of new technologies. (iv) Demand Management: Pricing The most effective tool in demand management is price. Prices, particularly to urban and industrial users, have been rising in the last few years, and there is increasing evidence that demand increases are slowing as a result. But prices need to rise much more in order to recover the full costs of water supply, and restrain demand to manageable levels. Implementation of water measurement at the field level to ensure charges are related to water consumption. In the 3-H basins overall, raising the price of irrigation water would probably not reduce the aggregate demand for irrigation water. Nonetheless, it could be very beneficial. It would (a) encourage more efficient water use and enable a more efficient allocation of water, (b) provide funds to irrigation companies enabling improved maintenance and repairs, (c) enable more land to be irrigated, and overall could result in increased production. While it may not be intuitively obvious, the efficiencies brought about by increasing the price of irrigation water can lead to both an increase in the value and the quantity of agricultural production. Alternatively, with increased efficiency of water use, water allocations to irrigation companies can be reduced, and diverted to other uses, without necessarily reducing the value of agricultural production to the nation. Cost of implementation of Action Plan for Agriculture: Irrigation Efficiency Improvement 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai SOCAD 3.2 1.7 1.5 1.4 1.2 9.0 Water Saving 5.1 9.0 7.4 5.0 5.2 31.7 LIS 7.8 5.4 4.1 0.1 0.0 17.4 Total 16.1 16.1 13.0 6.5 6.5 58.1 Huai SOCAD 4.3 2.5 2.2 2.0 1.8 12.7 Water Saving 6.6 8.9 8.6 5.9 6.1 36.0 LIS 6.1 12.5 14.0 0.3 0.0 32.9 Total 17.0 23.9 24.7 8.2 7.9 81.6 Yellow SOCAD 3.1 1.5 1.3 1.2 1.1 8.2 Water Saving 5.0 5.3 5.2 3.7 3.9 23.1 LIS 12.5 11.4 10.0 0.3 0.0 34.2 Total 20.6 18.2 16.5 5.2 5.0 65.4 3H Total 53.7 58.2 54.2 19.8 19.3 205.2 Chapter 11. Proposed Action Plans 291 Summary of Action Plan for Agriculture Problem/Issue Proposed Action Plan and Description/Action Areas of Focus for Action Plan Proposed Financial Commitment Action Current Government to 2020 (108 Yuan) Program Addressing SOCAD Water LIS Problems Saving Water supply to agriculture will not Physical LIS, Water Saving Canal lining/control structures, low Water saving: increase and so water saving measures Improvements and SOCAD pressure pipes for small distributions Hai: South Hai 196 44 55 will be the major way to address water systems, facilities for groundwater Tuhaimajia 60 28 78 shortages to agriculture recharge and conjunctive use of surface Huai: Wangjiabu to Bengbu and groundwater; drainage system and Shandong Peninsula 116 32 80 reuse of return flows, improved surface Lower Yishusi 50 28 44 irrigation systems on-farm sprinkler Yellow: 103 system, micro irrigation systems Longmeng to Sanmenxia 98 39 158 Lanzhou to Hekouzhen 57 21 128 Agronomic SOCAD Precision land leveling, cropping Water saving: measures pattern, plastic film mulch, stubble Hai: South Hai 196 mulching, input substitution Tuhaimajia 60 Huai: Wangjiabu to Bengbu Shandong Peninsula 116 Lower Yishusi 50 Yellow: Longmeng to Sanmenxia 98 Lanzhou to Hekouzhen 57 Irrigation Institutional Irrigation and drainage system No specific area targeted but management management improvement: water applied throughout North China. measures measurement, volumetric water price; institutional development; On-farm irrigation management improvement, soil moisture control, management of irrigation schedule Previous central planning policy for water Institutional Institutional Investigating at local level best mix of No specific area targeted but allocation and water management local management irrigation network management or applied throughout North China. initiative and irrigation by-pass prevent reform transfer including contracts, lease, "ownership" of management policies. In WUA, auction, joint stockholders, water addition, current financial arrangements supply companies and SIDDs. prevent appropriate levels of operation and management causing infrastructure to become inefficient. Current prices of water to irrigation do not Water demand Pricing reform Increase prices to irrigators, separate No specific area targeted but allow cost of supply recovery, proper management resources charges from other applied throughout North China. maintenance of system and promote administration changes to ensure direct wasteful consumption link to reflect degree of scarcity of water at the 3-H basin level. 292 Chapter 11. Proposed Action Plans E. ACTION PLANFOR POLLUTION CONTROL (i) Options to Further Reduce Pollution Loads The following sections--(a) and (b)--discuss possible structural options available to the government to reduce pollution loads in the Hai and Huai basins and their forecasted impact on load and water quality along with implementation time frame of key programs. Augmenting current government programs and economic activities that benefit the environment can be achieved in an infinite number of combinations of activities in many locations and sectors. However limited resources available require prioritizing hence the WPM-DSS has been designed to distill key elements of a rational achievable program that could lead to dramatic reductions in pollution loads in the Hai and Huai basins within a realistic time frame and at realistic cost. Table 11.3 summarizes indicative programs (called program 1, 2 and 3) which can be seen as markers in a continuum of possible action programs. Thus with the help of the WPM-DSS, Chinese experts can explore the effects of more customized programs that may suit economic or regional constraints. Nonstructural options are viewed as relevant for China and are also discussed in section (c). Program 1 is the current government program also known as the "base case scenario" or the "business as usual" scenario. It represents our understanding of government commitment to improve water quality through structural programs. Nonstructural programs also exist although these are not modeled but discussed and assessed in the last part of Chapter 7. The effects of the government program are modeled using the WPM-DSS for the present and for future years to 2020. The model is described in detail in Appendix 7.1. Program 2 is an intermediary program consisting essentially of similar components as program 3 except for reuse. Program 3 also consists of structural investments and should produce the maximum load reductions TABLE 11.3: POSSIBLE INTERVENTION PROGRAMS TO REDUCE COD POLLUTION LOADS IN THE HAI AND HUAI BASINS (A) Urban Industry + Municipal (6 (B) Rural Industry (4 scenarios, (C) Rural Domestic (2 (D) Livestock (4 scenarios, see scenarios, see Tables 7A.2 & 7A.3 see Table 7A.4 for Hai and scenarios, see Table 7A.5 for Table 7A.6 for Hai and Table for Hai, Tables 7B.2 & 7B.3 for Table 7B.4 for Huai in Annex Hai and Table 7B.5 for Huai 7B.6 for Huai in Annex 7.2, Huai in Annex 7.2, Volume 3) 7.2, Volume 3) in Annex 7.2, Volume 3) Volume 3) 1 Base Case or current government Base Case or current government Base Case or current Base Case or current program: program: some treatment and government program: Scenario government program: Scenario some attention to PPP 1: Reuse=10 percent, pit latrines 1: 6 percent weighed annual treat to 180 mg/L runoff coefficient for intensive pigs and 10 percent for nonpigs. 2 Treatment Intervention focusing on Scenario 2: Reuse=10 percent, Scenario 2: 50 percent treatment with some PPP pit latrines treat to 80 mg/L reduction of runoff in Beijing, Hebei & Shandong ( for the Hai) and Henan & Shandong (for the Huai) 3 RevE-3: Cleaner Production Only Scenario 3: Intervention focusing Scenario 3: 50 percent (PPP) on PPP reduction of runoff in all provinces 4 RevE-4: Treatment + PPP Scenario 4: Treatment & PPP Scenario 4: 75 percent reduction of runoff in 2010 and 90 percent in 2020 for all provinces 5 RevE-5: Treatment + Reuse only 6 RevE-6: Treatment + PPP + Reuse Note: Program 1 consists of A1+B1+C1+D1, Program 2: A4+B4+C2+D2 and Program 3: A6+B4+C2+D4. Chapter 11. Proposed Action Plans 293 (a) Structural Pollution Control Measures for Urban Industrial and Domestic Sources Structural options available to reduce industry pollution loads include (a) industrial wastewater treatment, (b) cleaner production technology, and (c) reuse of treated wastewater. TABLE 11.4: TYPES OF INTERVENTION TO REDUCE POLLUTION DISCHARGE Option to reduce pollution discharge Chapter / Annex of this report where this is discussed Industrial wastewater pretreatment and internal reuse of process water Chapter 8, Annex 8.1, Volume 3 Pollution prevention programs including cleaner production Chapter 7 and Annex 7.4 in Volume 3 Municipal WWTP and combined industrial and municipal WWTP Chapter 3E and Chapter 8 Wastewater reclamation Chapter 8 Wastewater reclamation: Irrigation with wastewater Chapter 9 Wastewater reclamation: Artificial recharge with wastewater and Chapter 9 floodwatera aUse of floodwater for this purpose is common in California. Industrial wastewater treatment is projected to increase as noted above but under the accelerated intervention programs 1 and 2, this level of treatment should increase more dramatically to achieve significant improvement in water quality and the WPM-DSS input data reflects this by assigning 80 percent and 95 percent proportion of wastewater volume treatment in 2010 and 2020 respectively in the Huai basin and 90 percent and 100 percent in the Hai basin. The difference is due to the more critical water pollution status in the Hai basin. The proposed action plan for urban system is described more fully in Chapter 8 and consists of combined treatment of sanitary sewage discharged into municipal treatment plants along with degradable BOD from industry to provide economy of scale. Revenue from industries greatly help finance WWTP because the latter can remove BOD much more cheaply than industry could with its own inplant treatment. Urban industry wastewater volume reduction under programs 2 and 3 should result in 90 percent and 80 percent of volumes of wastewater being generated for the Hai and Huai basins in 2010 and 2020 respectively compared with 2000 volumes. Similarly, programs 2 and 3 should accelerate wastewater strength reduction in 2010 and 2020 to 30 percent and 20 percent respectively compared to 50 percent and 40 percent for the same year under the current "business as usual" scenario or program 1. Programs 2 and 3 also suggest that 20 percent and 30 percent of wastewater should be reused in 2010 and 2020. The combined effect of the urban programs requires that P0 cities should have a combination of primary and secondary treatment combined with a level of collection system in affluent areas and leaching systems in low income areas which will result in 25 percent and 65 percent of municipal COD removal by 2010 and 2020 respectively. Similarly, P2 cities should have primary and secondary treatment causing 65 percent and 80 percent municipal COD removal by 2010 and 2020 respectively. Higher removal rates in P2 cities would be achieved by more treatment plants and higher levels of connections. P1 cities should have secondary treatment with 80 percent and 95 percent removal by 2010 and 2020 respectively. Similarly, higher reductions of municipal COD should be achieved by more secondary treatment plants and higher levels of connection in addition to higher efficiencies of operation. The rationale here is that since P1 cities were identified as top priority cities101 with P2 and P0 ranking next, they should have an accelerated and expanded program to reduce COD loads. See Figure 7.1. 101Based on a number of key criteria as explained in section on locating priority regions in this Chapter. 294 Chapter 11. Proposed Action Plans COD pollution from domestic sources will be larger than industry in 2010 and 2020 under the base case scenario and so program 3 reduces this growth by allocating resources to boost treatment capacity especially in P1 cities because of environmental and public issues as discussed in the section on prioritizing location of cities above. Treating industrial and municipal wastewater in combined systems should offer large cost savings and this is investigated in Chapters 8 and below in the section on costing of the priority program. (b) Structural Pollution Control Measures for Rural Industry102 Rural industry contribution to the total basin load in both the Hai and Huai will continue to grow. In 2020, load from rural industry is projected to account for 18 percent and 22 percent of the total load in the Huai and the Hai basins under the base case scenario. According to program 3, this contribution should decrease by about 60 percent by 2020 for the Hai and Huai Basins. This is achieved with an ambitious program of end-of-pipe treatment and pollution prevention which will reduce the paper industry wastewater concentration to 20 percent and 12 percent of its original strength by 2010 and 2020 and nonpaper industry wastewater concentration to 45 percent and 30 percent of its original strength in the same time frame for both the Hai and the Huai basins. As explained in Chapter 3E, rural industry restructure resulting from economic changes combined with tighter regulation will be the main causes of change. The first part of the action plan addressing rural point sources should categorize TVEs on the basis of pollution control costs, to show clearly which TVEs will likely not be able to afford to furnish the needed environmental protection, even with due attention to use of cleaner protection technologies by means of a registration system. The regulation calls for all TVEs to comply with waste discharge standards by year 2000 which as noted above and in previous sections of this report is an unrealistic and unachievable goal. Reasons for polluters' inability to meet the standards set by SEPA as explained in more detail in section C above are that they are derived mostly from ICs and thus do not reflect the level of development and affordability of a country such as China because treatment technology required to meet these standards is beyond the current financing capability of even some large operators such as SOEs let alone small operators such as TVEs. The second part of the action plan on rural point sources is thus a review of water quality standards and strengthening of monitoring and enforcement procedures appropriate for the rural sector. This in fact forms part of the second element of the general water pollution control action plan described in the introduction of this chapter. While the legislation makes the local government and the mayor responsible for environmental quality improvements and reduction of discharge through administration of the law, there is a fundamental lack of knowledge about planning, design, operation and maintenance of TVEs appropriate for developing countries and despite calls by the government for institutes and universities to help in these matters, little has been achieved to date that has resulted in any improvement to water quality as a result of lower discharge of waste from TVEs. Thirdly then, the action plan calls for the preparation of a manual of guidelines on planning, design, operation and monitoring of production TVEs appropriate for developing countries. This would require the adaptation of similar manuals produced for industrialized countries or other developing countries including attention to technical design criteria, costs for installation and for O&M, financing and cost recovery, and for environmental monitoring, for each and 102Rural industry here implies TVEs in rural areas. Chapter 11. Proposed Action Plans 295 every type of TVE to be considered, for a range of production sizes covering smaller family to medium scale operations, including production technologies, using appropriate environmental standards103. Such manual would give very useful information to EPBs and local governments on how to evaluate TVE proposals and whether to approve them or to specify improvements needed for approval. Since the regulations calls for exactly this type of process, producing such a manual should be high on the list of priorities in the water sector action plan. With appropriate strengthening of SEPA's role in the planning process, the impact of such technology transfer (which would include expatriate demonstration workshop) could improve water quality significantly with minimal investment. TVEs in construction, mining, industry, agriculture and commerce would all be subject to the requirements of the manual adapted for their particular activity. This is already implemented by the regulation and so all that is really required is to develop the guidelines and disseminate the information to the appropriate government agencies. Other advantages of such a manual would be (a) to show government regulatory and TVE investors and managers minimum size of plant that can be both profitable and environmentally sound, (b) to help determine requirement for clustering of small operations in order to meet economies of scale for the use of cleaner production technology, (iii) to define environmental responsibilities for potential TVE investors, (iv) to give clear guidelines to government financing units on which to base approval or rejection of requests for funding from TVE investors. Rural Towns' Sources. Further options to reduce rural domestic or rural municipal loads in the Hai and the Huai basins focus on increased treatment levels from 180 mg/l in 2000 to 120 mg/l and 80 mg/l for 2010 and 2020. The action plan does not propose major treatment works for rural areas comparable to the urban investment program. As explained earlier, rural homes use latrines and pits but in impermeable soils and where groundwater is above the pit level, these leaching systems do not work properly and excreta does not stabilize and the pit gets filled up and spreads undigested sludge all over the place, into drains and eventually to the rivers. Most rural towns have no environmental engineering infrastructure for sewage or solid waste which is another major source of BOD in towns.104 Thus, the 0.25 million tons COD produced in 2000 in the Hai basin should be reduced to 0.13 million tons in 2020 with lower wastewater concentration. In the Huai Basin, the reduction should be from 0.5 million to 0.24 million tons a year. (c) Structural Pollution Control for Rural Municipalities Rural municipal treatment using pit latrines currently produces wastewater with about 180 mg/l COD. If the latrines are not engineered or maintained properly, (e.g. built in impermeable soils or the excreta in the pits is situated below the groundwater level) the excreta will not stabilize with the pits eventually overflowing and the undigested sludge will be collected by storm water runoff and eventually 103 "Keynote address on good governance for environmental management for production SMEs in Developing Countries" for EXPO 2000 Symposium on Efficiency through Management of Resources: Green Productivity Programs in SMEs, Hannover, Germany, September 2000. By Kasem Snidvongs, Permanent Secretary, Ministry of Science, Technology and Environment (Retired) 104 Even in many urban municipalities, many homes are not connected to sewers and rely on pit systems for sewage disposal with similar results. In western countries, regulations require sewer services for every home / building within the service areas no matter what the cost. In DCs including China, where money is scarce, the sewer usually serve only areas in the city where a lot of people can connect and other areas remain unconnected. Often, only the affluent areas of cities are sewered and other areas are not. 296 Chapter 11. Proposed Action Plans end up in the drainage channels which drain to the rivers.105 Program 3, proposes to improve the engineering design of the latrines through community programs for urban low income communities. Thus the effluent concentration of stormwater runoff should improve to 120 and 80 mg/l in 2010 and 2020. There is an option to increase municipal wastewater reuse in the model however this function is set to 10 percent from 2000 to 2020 because it not anticipated that infrastructure will be developed enough in the foreseeable future to allow formal reuse schemes in rural towns. (d) Pollution Control for Livestock The basic intervention scenario for livestock consists of stabilization ponds installed in a large number of livestock operations producing a 50 percent reduction in direct COD runoff to the river. It is accepted that such technology can reduce COD by 80-90 percent however initial limited adoption rates and less efficient operation and construction may reduce this reduction rate to 50 percent. With continued community programs to improve the design and operation and with more widespread adoption, load reductions can be increased to 75 percent by 2010 and eventually 90 percent by 2020. This is modeled as program 3. Thus, the action plan for livestock industry calls for the implementation of stabilization ponds to reduce COD loads discharged to the environment. (iii) Cost of Government Program and Action Plan See Tables 7.10 and 7.11, and details in Tables A7.5-5 to A7.5-14, Annex 7.5, Volume 3. (iv) Proposed Action Plan for Nonstructural Pollution Control See Table 11.5. 105 This also occurs in low income areas of major urban centers because these areas are usually not sewered and rely on pits as in rural areas. This is discussed in the section on urban municipal sources. Chapter 11. Proposed Action Plans 297 TABLE 11.5: PROPOSED ACTION PLANFOR NONSTRUCTURAL POLLUTION CONTROL Type of Component Issue/Problem Proposed Action Plan regulation Command 1. Pollutants dis- Discharge limits are expressed in terms of · Concentration based standards must be replaced by mass based standards and control charge limits, concentration and the fines (or environ- expressed in terms of pollutant mass (e.g. COD-kg) per unit of output, such as instruments based on allow- mental levies) are calculated only based on kg. Of product; able pollutants the worst pollutant, in addition, the levy is · Review environmental standards by (a) establishing current water quality concentrations; too low and applied too infrequently and situation in water body of concern; (b) evaluating sources of pollution loading; selectively to be real deterrent; (c) evaluate effectiveness of government's regulatory system to control these sources; (d) collate and evaluate current IC standards for comparison only (e) The standards applied for water quality are compile experiences in other DCs to review standards e.g. Thailand, and (f) use generally not affordable for China being (a) to (e) to set tentative standards that match the reality of China's development replications of western standards and very situation. few water bodies meet their currently · Review effluent standards by (a) determining treatment level (TL) for specific designated beneficial uses. industrial waste to achieve significant reduction in pollution at relatively low cost (TL/1) using appropriate technology; (b) Examine downstream environmental situation to assess essential beneficial water uses (BWUs) existing or projected. Irrigation/water supply for urban consumption/hydropower recharge/boating; (c) compare (a) and (b) to determine the particular additional removals which must be achieved to protect BWUs (TL/1+2) for each pertinent pollution parameter; (d) compare effluent values for pertinent pollution parameters for TL/1 and TL/1=2 with any existing established national or regional effluent standards and with standards published by ICs and by international assistance agencies; (v) based on (a), (b), (c) and (d), set appropriate TL which is not less than TL/1 and which exceeds TL/1 only to extent needed for essential environmental protection 2. Monitoring of Monitoring of water quality is undertaken Monitoring program needs to be revised to contain (a) minimum data base needed water quality by both SEPA and MWR and there is little to relate cause and effect, e.g. reflect improvement in pollution control measures; and effluents by coordination between the two bodies. (b) combine MWR and SEPA monitoring program; (c) link monitored parameters EPBs to objectives such as public health, regulatory or descriptive "State of the environment" data. The latter is current design of monitoring system; (d) design monitoring program to allow tracking of mass load including behind gates, prior major confluence; (e) parameters to include toxic pollutants known to be generated by industries or mining upstream; (f) include river/lake sediment sampling on annual basis to determine toxic accumulation bound in sediments (legacy pollution); (vii) allow upgrade of laboratory analytical techniques for analysis of samples. This requires abolishing the current analysis standards which "lock" monitoring agency into outdated techniques Translate the latest version of "Standards Methods for Analysis of Water and Wastewater"; (g) increase EPB input into design of monitoring network to promote more decentralized design; (h) retrain EPBs staff to focus on environmental outcomes rather than enterprise specific pollution loads. 3. Mass-based con- Mass-based control has been applied in Proceed to apply mass based regulatory system as quickly as possible with due trols on total some circumstances/areas but not every- attention to increased ambient monitoring data requirements and modeling. Apply provincial dis- where and this possibly confuse regulators mass-based system to pollution hot spots first but follow through without delay to charges, with and polluters because other areas have kept all other areas to avoid dual regulatory system for prolonged periods which pilot application the concentration based control increases the difficulty of enforcement for the regulator and can promote confusion to municipalities for the regulated. 4. Environmental EIA are carried out by SEPA appointed The EIA process is focused on industrial pollution, leaving many other sources impact assess- institutes but it is the EPBs who generally (such as TVEs and small livestock operations) with little planning. The first part of ments (EIAs) lack the skills and staff to fulfill their role the action plan addressing rural point sources should categorize TVEs on the basis in this important process. of pollution control costs, to show clearly which TVEs will likely not be able to afford to furnish the needed environmental protection, even with due attention to use of cleaner protection technologies by means of a registration system. Second is a review of water quality standards and strengthening of monitoring and enforcement procedures appropriate for the rural sector. This in fact forms part of the second element of the general water pollution control action plan. Thirdly, is the preparation of a manual of guidelines on planning, design, operation and monitoring of production TVEs appropriate for developing countries. This would require the adaptation of similar manuals produced for industrialized countries or other developing countries including attention to technical design criteria, costs for installation and for O&M, financing and cost recovery, and for environmental monitoring, for each and every type of TVE to be considered, for a range of production sizes covering smaller family to medium scale operations, including production technologies, using appropriate environmental standards. 298 Chapter 11. Proposed Action Plans Type of Component Issue/Problem Proposed Action Plan regulation 5. Mandatory EPB There are adequate legislation to control The action plan calls for strengthening permit allocation process by EPBs with certification pollution sources however where perform- improved transparency. Proceed to apply mass based regulatory system as quickly before new pro- ance suffers, it reflects local choice or as possible with due attention to increased ambient monitoring data requirements duction lines interpretation of the law rather than legal and modeling. Apply mass-based system to pollution hot sports first but follow operate, affirm- tools; through without undue delay to all other areas to avoid dual regulatory system for ing that agreed prolonged periods which increases the difficulty of enforcement for the regulator pollution con- The production licensing or three synchro- and can promote confusion for the regulated. The problem of the extent of trols are in- nous program which focuses on pollution devolution or decentralization of responsibilities goes beyond the water sector and stalled and func- prevention has had limited impact due to is a complex issue which impacts of all aspects of Chinese society. It reflects the tioning (three selective application at the local level as relationship between central and provincial government. Thus it is not appropriate synchronization explained in part or useful to suggest possible adjustments. In addition the legal system and its program- implication at the local level, the dependence of the court system on finding from santongshi) provincial government are also issues that go beyond the water sector but that have great impact on resource management. 6. For existing The production licensing or" three The action plan calls for strengthening permit allocation process by EPBs with factories out of synchronization" program which focuses improved transparency. Proceed to apply mass based regulatory system as quickly compliance with on pollution prevention has had limited as possible with due attention to increased ambient monitoring data requirements discharge limits, impact due to selective application at the and modeling. Apply mass-based system to pollution hot spots first but follow a program of local level as explained in part through without undue delay to all other areas to avoid dual regulatory system for mandatory pol- prolonged periods which increases the difficulty of enforcement for the regulator lution controls/ and can promote confusion for the regulated. The problem of the extent of treatment within devolution or decentralization of responsibilities goes beyond the water sector and specified time or is a complex issue which impacts of all aspects of Chinese society. It reflects the plant closing relationship between central and provincial government. Thus it is not appropriate or useful to suggest possible adjustments. In addition the legal system and its implication at the local level, the dependence of the court system on funding from provincial government are also issues that go beyond the water sector but that have great impact on resource management. Economic 7. Pollution levy There are adequate legislation to control Review pollution levy system with the intention to increase by 5-10% annually for incentives fee pollution sources however where perform- example, in order to ensure behavioral changes by polluters. Levy system to be ance suffers, it reflects local choice or base don mass loads as discussed in part 1 above. interpretation of the law rather than legal tools; Discharge limits are expressed in terms of concentration and the fines (or environ- mental levies) are calculated only based on the worst pollutant, in addition, the levy is too low and applied too infrequently and selectively to be real deterrent. 8. Noncompliance There are adequate legislation to control As for Part 6. fines pollution sources however where perform- ance suffers, it reflects local choice or interpretation of the law rather than legal tools; 9. Environmental There are adequate legislation to control Proceed to apply mass based regulatory system as quickly as possible with due taxes on waste- pollution sources however where perform- attention to increased ambient monitoring data requirements and modeling. Apply water discharges ance suffers, it reflects local choice or mass-based system to pollution hot sports first but follow through without undue interpretation of the law rather than legal delay to all other areas to avoid dual regulatory system for prolonged periods which tools; increases the difficulty of enforcement for the regulator and can promote confusion for the regulated. Permit issuance in a mass based regulatory system needs to (a) consider the economic ramifications of limits to permit issues, (b) allow entrepreneurship and new entries into the market to develop while maintaining total maximum loads, (c) allow new technology which cleaner production methods to replace old more polluting SOEs. Allocation of permits through auction offers efficiency gains but if there are restrictions on water intake such as in the 3-H basins, then there will be limits to discharge and these circumstances, nonmarket- based method of allocating allowances directly to existing polluters (or grandfathering) should be the preferred choice although this method is biased against new firms and slows the introduction of new technologies. China needs to be especially weary of this problematic aspect of permit allocation because the replacement of older highly polluting enterprises with newer, and larger enterprises with improved manufacturing processes is an important aspect of industrial policy and China's global competition.. The action plan calls for training for EPBs and SEPA. Chapter 11. Proposed Action Plans 299 Type of Component Issue/Problem Proposed Action Plan regulation Public man- 10. A managerial The standards applied for water quality are As for part 1. agement goal-responsi- generally not affordable for China being instrument bility system of replications f western standards and very environmental few water bodies meet their currently protection, fix- designated beneficial uses ing on individ- ual leaders the responsibility for meeting overall environ- mental targets Public dis- 11. Comprehensive Improve system by adopting modern information technology such as setting up a closure evaluation sys- web page for citizens complaints bureaus. instruments tem for city environmental quality, includ- ing citizen com- plaint bureaus; environmental awareness; cleanup cam- paign 300 Chapter 11. Proposed Action Plans Summary of Structural Action Plan for Water Pollution Control Pollution source Main problems in reducing pollution from the Proposed Action Investment for Proposed Action Plan (by region and remediation measure) (1000 sources yuan) Large industry (100 SOEs usually have older manufacturing process than Industrial wastewater pretreatment and internal Municipal Pre- m3/day or more, State non-SOEs and are more polluting and less efficient. reuse of process water; pollution prevention Treatment Sewerage PPP treatment Owned Enterprises (SOE) Discharge to municipal treatment plants requires programs including cleaner production; Luanhe & East Coast Hebei 652,616 652,616 2,701,427 523,908 or Non-SOEs knowledge of wastewater characteristics and wastewater reclamation: artificial recharge or North Haihe 419,374 419,374 1,581,483 131,791 pretreatment which may not be feasible for some irrigation with wastewater or floodwater; SOEs as noted above. municipal WWTP and combined industrial and South Haihe 2,975,303 2,975,303 10,131,814 1,626,489 municipal WWTP. Tuhaimajia 1,087,852 1,087,852 4,102,167 956,003 Hai Basin 5,135,145 5,135,145 18,516,889 3,238,191 Upstream of Wangjiaba 172,020 172,020 682,662 120,646 Wangjiaba to Bengbu 1,563,504 1,563,503 5,806,224 843,407 Bengbu to Hongze lake 616,536 616,535 2,142,498 321,736 Lower Huaihe, Hongze lake to Huang Sea 536,413 536,413 2,050,848 257,782 Nansi Lake 1,287,125 1,287,125 4,744,245 734,259 Lower Yishusi 756,581 756,580 2,630,257 417,418 Shandong peninsula 474,390 474,390 1,878,261 141,069 Huai Basin 5,406,567 5,406,567 19,934,993 2,836,318 Small industry (less than These have also more primitive manufacturing Rural Industry restructure with phasing out of 100 m3/day, Township processes that are much less efficient and more many small rural TVEs in the next decades; Treatment Sewerage PPP village enterprises) polluting than larger enterprises described above. registration system of TVEs and categorizing in Small industries are usually unable to cope with PPP order to assess their ability to afford pollution Luanhe & East Coast Hebei 222,926 111,463 1,164,921 and rudimentary end-of-pipe treatment Marginal control; strengthening of monitoring and cost of pollution abatement is more expensive than enforcement procedures appropriate for the rural North Haihe 398,902 199,451 2,291,734 for larger-scale non-SOE for example. sector; preparation of manual of guidelines on planning, design operation and monitoring of production TVEs appropriate for developing South Haihe 1,803,126 901,563 11,098,436 countries. This would require the adaptation of similar manuals produced for industrializedTuhaimajia 224,916 112,458 1,102,865 countries or other developing countries including attention to technical design criteria, costs for Hai Basin 2,649,869 1,324,934 15,657,956 installation and for O&M, financing and cost recovery, and for environmental monitoring, for Upstream of Wangjiaba 204,735 102,367 1,383,919 each and every type of TVE to be considered, for a range of production sizes covering smaller family Wangjiaba to Bengbu 1,144,630 572,315 9,602,330 to medium scale operations, including production technologies, using appropriate environmental standards Bengbu to Hongze lake 458,651 229,326 4,675,220 Lower Huaihe, Hongze lake to Huang Sea 318,719 159,360 3,311,456 Nansi Lake 348,576 174,288 3,709,807 Lower Yishusi 233,606 116,803 2,466,095 Shandong peninsula 204,501 102,250 1,626,448 Huai 2,913,418 1,456,709 26,775,275 Chapter 11. Proposed Action Plans 301 Pollution source Main problems in reducing pollution from the Proposed Action Investment for Proposed Action (1000 yuan) sources Urban population Pollution from urban population needs to be treated Municipal WWTP; sewerage Treatment Sewerage at WWTPs. Currently there is insufficient investment in infrastructure (collection interceptors Luanhe & East Coast Hebei 1,825,211 1,825,211 and treatment-disposal) to treat loads from urban population. Reasons include institutional North Haihe 7,011,252 7,011,252 arrangements which (a) do not allow cost recovery South Haihe 13,243,576 13,243,576 and allow profit (although this is changing), (b) do not require provinces/cities to be responsible for the Tuhaimajia 653,710 653,710 load they generate, (c) lack of financing. In turn Hai Basin 22,733,749 22,733,749 inadequate pricing of services restrains investment and causes excessive consumption of water which Upstream of Wangjiaba 1,390,820 1,390,820 generates large wastewater quantities. Wangjiaba to Bengbu 9,706,529 9,706,529 Bengbu to Hongze lake 2,291,173 2,291,173 Lower Huaihe, Hongze lake to Huang Sea 1,515,681 1,515,681 Nansi Lake 2,881,335 2,881,335 Lower Yishusi 1,861,277 1,861,277 Shandong peninsula 2,722,260 2,722,260 Huai Basin 22,369,074 22,369,074 Rural population Urban infrastructure in small towns in China is Pit latrines, properly engineered for low income Treatment usually inadequate or even nonexistent with severe urban community; reuse of wastewater Luanhe & East Coast Hebei 1,572,120 shortages of sustainable development infrastructure North Haihe 2,596,000 including sewage treatment systems. Much of South Haihe 10,572,540 excreta is washed away by rain and solid waste is Tuhaimajia 2,402,620 usually dumped into natural channels. Hai Basin 17,143,280 Upstream of Wangjiaba 2,426,380 Wangjiaba to Bengbu 10,228,240 Bengbu to Hongze lake 3,388,220 Lower Huaihe, Hongze lake to Huang Sea 2,942,500 Nansi Lake 4,702,500 Lower Yishusi 3,949,440 Shandong peninsula 4,336,200 Huai Basin 31,973,480 302 Chapter 11. Proposed Action Plans Pollution source Main problems in reducing pollution from the Proposed Action Investment for Proposed Action (1000 yuan) sources Livestock The projection for the livestock industry indicates Stabilization ponds, manual of guidelines for continued rapid growth. At the moment, most appropriate design and construction Treatment Sewerage livestock operations remains at individual farmer level. The extent of pollution from these sources is Luanhe & East Coast Hebei 357,342 178,671 not known but suspected to be serious because of limited reuse of waste. The trend is for North Haihe 625,476 312,738 amalgamation of these operations into larger ones whose propensity to pollute is greater and becomes South Haihe 1,589,788 794,894 point source. In 2020, model predictions are that some 85% of operations will have 10,000 or more Tuhaimajia 631,021 315,511 animals. Pollution from these in terms of COD is already very significant (but not accounted for) but Hai Basin 3,203,627 1,601,814 remains unchecked because of their "nonpoint source" status and because they fall under the Upstream of Wangjiaba 393,758 196,879 jurisdiction of the Ministry of Agriculture. Wangjiaba to Bengbu 1,817,617 908,808 Bengbu to Hongze lake 587,984 293,992 Lower Huaihe, Hongze lake to Huang Sea 482,346 241,173 Nansi Lake 1,053,047 526,523 Lower Yishusi 632,998 316,499 Shandong peninsula 562,242 281,121 Huai Basin 5,529,990 2,764,995 Non-point source Return flows from irrigation and runoff from nonirrigation containing N, P and pesticides are difficult to address in most countries. Nonpoint sources are reported to contribute 25% of COD loads in the 3-H basins although at the same time irrigation is also suspected of being a COD "sink" capable of lowering the loads to rivers. Chapter 11. Proposed Action Plans 303 Cost of Implementation of Water Pollution Control and Reuse (by pollution source): Water Pollution Control and Reuse 2000-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai Urban Industry 6.4 9.6 8.0 8.0 2.0 34.0 Urban Municipal 9.1 13.6 11.4 11.4 2.8 48.3 Rural Industry 3.9 5.9 4.9 4.9 1.2 20.9 Rural Municipal 3.4 5.1 4.3 4.3 1.1 18.2 Livestock 1.0 1.4 1.2 1.2 0.3 5.1 Total 23.8 35.7 29.8 29.8 7.4 126.5 Huai Urban Industry 6.7 10.1 8.4 8.4 2.1 35.7 Urban Municipal 8.9 13.4 11.2 11.2 2.8 47.5 Rural Industry 6.2 9.3 7.8 7.8 1.9 33.1 Rural Municipal 6.4 9.6 8.0 8.0 2.0 34.0 Livestock 1.7 2.5 2.1 2.1 0.5 8.8 Total 29.9 44.9 37.4 37.4 9.4 159.1 Hai + Huai Total 53.8 80.6 67.2 67.2 16.8 285.6 F. ACTION PLANFOR WASTEWATER REUSE Types of reuse to be investigated for the 3-H basins include (a) agricultural reuse, (b) municipal reuse and (c) industrial reuse. (i) Agricultural Reuse The biggest issue with reuse of wastewater for agriculture relates to the quality of the water. Reuse of wastewater will not generally contribute "new" water to the 3-H basins since little dry weather flow passes to the sea and water is already being reused. However, significant environmental and health benefits may be gained by the reuse of treated wastewater in conjunction with water conservation measures, such as improved irrigation efficiencies and reduction of groundwater overdrafting. (ii) Municipal Reuse The most common class of uses for treated wastewater in the community is for lower grade uses which may include: (a) irrigation of landscape areas such as parks, gardens, road median strips etc; (b) flow provision for wetlands, either natural or artificial, and for the aesthetic improvement of water quality in ornamental lakes and ponds which have no higher environmental value (such as fishing or swimming) and (c) other uses serviced by water tankers. For these reasons and except for appropriate new planned development, reuses requiring dual reticulation networks are not recommended at this stage of the development of China's wastewater system. Road tankers can be used for landscape watering, street cleaning, dust control and sewer flushing, avoiding the need for dual reticulation and are considered therefore to be viable systems. These uses have the potential to replace the use of better quality surface and ground waters. Without dual reticulation, fire- fighting use of recycled effluent may be limited to stored volumes or flow pumped from lakes and ponds. Most municipal reuses will bring the recycled wastewater into contact with the community and therefore a better quality will be required than may be needed for most agricultural uses. 304 Chapter 11. Proposed Action Plans (iii) Industrial Reuse The reuse of industrial wastewater is a pivotal part of the plans for the reduction of environmental pollution in the 3-H basins. Moreover, reuse will play an important role in augmenting raw water supply for many water-short cities in north China. Maximizing reuse of waters within individual industries and the reuse of wastewater discharged by industry to municipal sewers is sought. Within particular industries, reuse of their waste streams is common in China, yet is industry and process specific. Industry receives a water supply which is raw water to them, even if from municipal water supply. Then, as needed industry gives extra treatment to this water to suit its particular use. In a water-scarce area such as north china, discarding wastewater cannot be allowed to continue. Thus, treatment and reuse are strongly recommended. The use of municipal treatment systems for industrial wastewater has been practiced in many water-short areas because it results in significant savings for both industry and municipalities. In addition, wastewater can be collected after treatment and reused with further treatment, depending on the intended use as described above. Planning an industrial wastewater discharge program is the key aspect of such a program and in particular the successful establishment of an ordinance program is needed to regulate industrial waste discharges into municipal sewerage systems. It is recommended that a technical assistance project be developed in order to establish such an ordinance program. Key features are summarized below. Problems/Issues Proposed Action Description 1. Water scarcity in the 3-H Wastewater quantities is the 3-H basins Reuse of treated wastewater for agriculture may not represent new basins is so great that there represent a significant resource which water source but will improve public health aspects of existing reuse is a need to put in place should be utilized in urban centers to schemes. Municipal reuse for landscape irrigation, parks, gardens, road technology and institutional alleviate shortages,. median strips, wetlands ornamental lakes are recommended. Reuse mechanisms to make wastewater can be to the river, back to industry, for groundwater appropriate use of recharge or irrigation. wastewater 2. Current treatment level of Agricultural, municipal and industrial reuse Treatment level for agriculture reuse can be primary while reuse for wastewater is too low to have water quality requirements to be municipal context will need higher treatment because of community allow reuse schemes to technically viable; appropriate treatment is contacts. Industrial reuse is currently practiced internally and this operate. Informal reuse needed to achieve this. practice should continue. Scarcity and not price is the main driving schemes already operate but force for industry reuse schemes. Treatment can be at common the use of raw sewage for industrial treatment plants, municipal treatment plants receiving irrigation represents a threat industrial wastewater or in-plant treatment. to public health 3. Institutional mechanisms Improve coordination of government Level of institutional capacity/integration currently does not permit needed for reuse schemes departments at municipal level, provincial operation of reuse schemes. Institutional development is needed to do not exist currently level and national level to provide allow reuse schemes no operate efficiently. Government departments workable reuse scheme. Develop industrial involved include MOC, MOF, SPD, MWR, MH, and Provincial wastewater control program to ensure Bureaus equivalents. efficient operation of combined systems. Following are needed: (i) the development of database; (ii) preparation of local ordinance; (iii) establishment of limitations on industrial discharges to treatment systems and their enforcement; (iv) authority to enter and inspect industrial company to obtain samples of its wastewater discharges; (v) monitoring program; (vi) program to recover the cost of industrial waste treatment. Price of water is too low to Raise the price of water complied to allow financial operation of industry, domestic consumers and wastewater treatment and agriculture. reuse schemes. Lack of infrastructure and Construct needed infrastructure to allow Collection/interceptors and WWTP are needed in most cities in China. finance presents operation of reuse schemes. Investment needed to construct infrastructure is very large and action development of reuse plan must spar over many decades. schemes. Chapter 11. Proposed Action Plans 305 Problems/Issues Proposed Action Description 6. Wastewater reuse Review wastewater reuse standards to Review of reuse standards can follow similar steps described in the standards are derived from ensure these are affordable and can be met. water pollution section. IC standards and are not Inability to meet ICs wastewater standards developed for conditions should not preclude operation of reuse and affordability in China. scheme. Current reuse schemes for agriculture operate without any treatment. Cost of Implementation of Wastewater Reuse: See table in water pollution section above. G. ACTION PLANFOR GROUNDWATER MANAGEMENT The groundwater resources of China, and especially the 3-H basins, represent a vital water resource which has served China well. Groundwater resources represent about 31 percent of the total water resources of China, and about 63 percent in the 3-H basins. The Hai River basin has large areas where both the shallow and deep aquifers are highly overexploited. Approximately 28 percent of the total groundwater used is from deep confined aquifers where the recharge is very limited. The heavy overexploitation of the groundwater resources of the 3-H basins is causing huge environmental damage-- subsidence, seawater intrusion, salinity degradation, pollution, and falling groundwater levels. The economic consequences of these effects are great. The serious pollution of surface waters and surface water scarcity has driven increased groundwater use over the last few decades. The groundwater quality, especially of the deep aquifers, is far better than the surface water quality. However increasing pollution of the shallow aquifers is now driving increased use of the deep groundwater resources. The very serious and largely irreversible falling groundwater levels throughout the North China Plain demands a major program of groundwater management planning to reduce groundwater use to sustainable levels. The groundwater management strategy proposed will require a huge effort, however the consequences of not doing it will have major long term implications, such as effectively destroying the groundwater dependent agricultural base, massive subsidence and sea water intrusion, virtual elimination of groundwater as a water source for many cities and countless households and the loss of "insurance" water for future generations. The fundamental objective proposed is to reduce groundwater use to sustainable levels by 2015. A broad range of technical, institutional and management actions are required to achieve this goal. The key actions required are: · All significant groundwater usage areas be defined as Groundwater Management Units and the Sustainable Yield be determined. · Groundwater management plans be prepared and implemented as per the program described herein. · Allocation licensing be linked with the sustainable yield assessment. · Allocation licensing be only undertaken by one department. · Licensing of well construction drillers. 306 Chapter 11. Proposed Action Plans · A National Groundwater Data Base be developed. · A groundwater pollution prevention strategy be prepared. · The Ministry of Water Resources should review the adequacy of regulations required to implement the groundwater management reforms proposed herein. · The introduction of realistic groundwater prices. · A major education program about groundwater processes and the need for groundwater management. The feasibility of artificial recharge using wastewater and floodwater to act as a partial solution to address the huge groundwater over development problem in the 3-H basins is evaluated. In the order of 4 to 6 billion m3/year of treated wastewater is produced within the 3-H basins. The treatment requirements for successful artificial recharge of wastewater vary considerably, depending upon the recharge method adopted. Deep aquifer injection requires a much higher quality wastewater, to tertiary standards, than do surface spreading systems which require a secondary treatment standard. This has major cost implications. There is not sufficient wastewater available to address the broad scale lowering of groundwater levels across large areas of the North China plain. In addition, it would not be economic. A far better strategy is to reduce the extraction of groundwater. Nonetheless, artificial recharge using treated wastewater and untreated floodwater is technically feasible in many areas in the North China Plain. Artificial recharge would have both a water storage function (and hence reduce depletion of aquifers) and a problem solving function (to stop sea water intrusion, water quality degradation, and subsidence). As the major source of treated wastewater will be from Urban wastewater treatment plants, 33 cities with significant groundwater problems have been assessed from the point of view of the technical feasibility of artificial recharge and ranked accordingly. It is concluded that from a hydrogeological point of view there are many feasible artificial recharge options. Eleven high priority cities are identified where a feasibility assessment of using treated wastewater for artificial recharge should be undertaken. The availability of sufficient wastewater to address the problems of over-exploitation would need to be assessed for each city. The use of treated floodwaters for artificial recharge is considered not to be practical or economic. Deep aquifer injection is, similarly, not recommended for untreated floodwaters. However, further evaluation of the technical feasibility of using untreated floodwater for artificial recharge and enhanced natural recharge should be undertaken. Some cases have been identified where flood detention basins overlie over-exploited aquifers and where some relatively minor works might be feasible in increasing recharge. Further evaluation is required to confirm the technical and economic viability of this proposal. Also, a number of areas between levees in the Hai River basin are worthy of further consideration for enhancing recharge during floods. Chapter 11. Proposed Action Plans 307 Proposed Action Plan for Groundwater Issue/Problem Proposed Action Plan Groundwater management currently not focused on Define Groundwater Management Units (GMU) 10 to 100 in the 3-H problem areas; basins may be necessary. Characteristic of GMU include (a) large scale, Hydrologic basins not coincide with groundwater (1:1500) (b) defined aquifer system (several GMU can overly each other aquifers provided each has 1 discreet aquifer). Boundaries are chosen based on geographic/administrative criteria for example. GMU should include recharge area. Unsustainable extraction exceeds sustainable yield of Define sustainable yield by adopting resource modeling such as aquifer as evidenced by falling groundwater tables Modflow. and decreased pressure levels SY = Use of the resource in such a way that doesn't present future generations from haring similar level of access to the same resource Licensing system is not resource related and therefore Allocate licenses based on SY as defined above does not serve the intended purpose to regulate extraction to ensure sustainable use Too many governments departments with similar or Licenses to be allocated by one department only. Different existing levels overlapping responsibilities of government are appropriate MWR should have national level planning and coordination, river basin level allocation linked to provincial and lower level licensing of groundwater, GMU scale day to day management controlled at the provincial level. Independent review of GMU plans. Water wells design and construction less than Set up system of licensing for drillers, require design to be approved by a optimum leading to less efficient wells, possible qualified professional groundwater engineer contamination of groundwater Information on groundwater resource, groundwater Compile existing information on groundwater resource, groundwater quality, well design parameters and subsurface quality, subsurface geology, well design parameters. geology is not readily available and not compiled on a Allow public access, develop database at national level. Maintenance of data base, leading to the inability to manage database at provincial level. groundwater based on objective resource management principles Groundwater pollution is widespread but not For China, given the heavy reliance on groundwater for urban/irrigation documented prevailing pollution prevention strategy water supply in normal years and as security in drought years, immediate to be implemented. Of particular concern are the toxic action is required to develop a strategy to define the problem and start a compounds that may be contaminating fresh program to present existing groundwater degradation from such pollution groundwater supplies. Only extremely expensive sources. remediation technology is capable of treating such kind of pollution and this is likely to be unaffordable. Shallow groundwater contamination forces users to Broad scale planning/land use/sewerage planning, shift to deeper aquifers increasing reliance on less monitoring/enforcement of industries. See pollution action plan. readily rechargeable and more expensive resource. Current groundwater prices are too low to reflect Groundwater and management resource fees need to be applied to both degree of scarcity or resources and promote increased urban and rural users and water supply companies. efficiency of use fees charged to limited users. Identify true costs of poor management including subsidence, salinization, quality degradation etc. to promote development of groundwater management plans and identify costs associated with artificial recharge. These costs should be reflected in the water resource fee. Discontinue practice of subsidizing energy costs for pumping. Community are largely unaware of groundwater Undertake immediate community awareness raising programs of serious problem and consequences groundwater issues including implication of "do-nothing" option. 308 Chapter 11. Proposed Action Plans Cost of Implementation of Action Plan for Groundwater Recharge and Rehabilitation: Groundwater Recharge and Rehabilitation 2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 Total Hai GMU establishment 2.0 2.0 2.0 6.0 Database 1.0 1.0 2.0 Recharge Basin 5.0 10.0 10.0 10.0 35.0 Injection wells 5.0 5.0 5.0 5.0 20.0 Well rehabilitation 2.0 2.0 2.0 2.0 8.0 Total 15.0 20.0 19.0 17.0 71.0 Huai GMU establishment 2.0 2.0 4.0 Database 1.0 1.0 2.0 Recharge Basin 5.0 5.0 5.0 15.0 Injection wells 5.0 5.0 5.0 15.0 Total 13.0 13.0 10.0 0.0 36.0 Yellow GMU establishment 3.0 2.0 5.0 Database 1.0 1.0 2.0 Recharge Basin 5.0 10.0 10.0 5.0 30.0 Injection wells 2.0 2.0 2.0 2.0 8.0 Total 11.0 15.0 12.0 7.0 45.0 3H Total 39.0 48.0 41.0 24.0 152.0 H. ACTION PLANFOR INSTITUTIONAL MANAGEMENT The Action Plan for Institutional Management is summarized as follows: Issues/Problems Description of Proposed Action 1. Water Resources Management in China 1.1 Governance: provinces often have mere influence Jurisdiction of provinces over water resources should be formally recognized subject on water resources management at operational level to technical/economic oversight by river basin coordinating committees who will have than the basin commissions or the Ministry of Water basin level interest in resource management. Interbasin allocations to provinces can be Resources. Provinces tend to act in a protectionist decided by commissions but how the water is used within each province should way with natural resources and prevent good basin remain within the jurisdiction of the province. Floodplain management, pollution management principles from governing water control and catchment management should also remain within the provinces resources management. There is also overlapping jurisdiction. jurisdiction between the ministries. Thus water resources management is confused, uncohesive and allocation are in suboptimal. 1.2 River Basin agencies are currently effective only Move RBCMs within government structure so that they can have some jurisdiction as agents of MWR. Their authority is limited or over other ministries and provincial governments. Adapt the River Basin Coordinating nonexistent over provinces and other ministries due to Committee model for the 3-H basin. Chinese Government Structure. 2. Allocation and Efficiency Increasing competition and conflict for water due to Appropriate pricing of water and allocation based on market forces will ensure population growth and economic development efficient allocation of water resources and will lead to higher growths. including income rise, urbanization, industrialization, River Basin Coordinating Committees should be charged with: etc. Present system of water allocation will not cope § determiningwaterresourcesallocations(surfaceandgroundwater)forthevarious with anticipated demand. Current supply levels have municipalities, provinces and autonomous regions; peaked and will probably decrease due to over § development of broad policies and programs promoting sustainable water extraction of groundwater. Water allocation is based resources management, and particularly with respect to (a) flood control and on administrative system, problems include: drought relief: (b) groundwater management; (c) water resources protection and § Excessivewithdrawalsintheupperreaches; pollution control; and (d) promotion of increased water use (especially irrigation) § Disputes as to whether the allocation refers to efficiency through demand management mechanisms and community/farmer consumptive use or gross withdrawals; education; and § Failure to clarify how shares are adjusted in § preparation and supervision of comprehensive basin development and operating response to available flows plans which would provide the basis for guiding the development and management of major multipurpose projects, present structural and nonstructural floodplain management proposals, and outline mainstream water quality and environmental conditions etc. These plans would be essential to the preparation of provincial plans but would not dictate in any way in which the provinces should Chapter 11. Proposed Action Plans 309 Issues/Problems Description of Proposed Action utilize their water allocations; § with regard to regulation, RBCMs could issue water use permits to major users above a certain water amount or licensing powers could remain wholly with the provincial regulatory agency or agencies, subject to approval by the RBCM for all permits that fall within the prescribed criteria. 3. Current groundwater management does not prevent Key actions required as discussed in the groundwater action plan, include: unsustainable exploitation of the resources. groundwater management plans, licensing, database, interbasin groundwater issues, groundwater investigations, groundwater management area control 4. Demand Management Current resource charge are administrative and are Resource charges can play an important role to balance allocation between upper and levied to recover staff cost, permit administration lower reaches of river basins and a better balance between surface/groundwater use. costs etc. Thus they have little impact as economic Resources charge should not be linked to administration but should be set as an incentives to guide consumption. Irrigators are economic incentive mechanism that incorporates opportunity costs into water charges. exempt from paying charge. Collection from small The charges should vary to reflect specific conditions of scarcity. well operators is difficult level of resource charge is too low to have impact on water use. Pollution charges suffer from similar problems. Urban water use per capita is higher than in most Full cost recovery water prices in 3-H could be set at 2-2.5 year/m3 excluding towns and cities of the world (600 l/c/d) despite fresh resource charge to account for opportunity costs. The recommendation for north water resources levels approximately 5% that of the China is that water prices should be raised, applied on a volumetric basis, prices rest of the world (450 m3/capita/year). Urban should apply to all users with a simple uniform rate with a minimum number of domestic and industrial users pay only a very small categories of users. Where water is plentiful or income are high, a part fixed-part proportion of their income in water charges (0.3 + 0.2 volumetric tariff may be appropriate. However, where water is scarce and incomes are percent respectively) willingness to pay could be 1% low, as in the 3-H basins, uniform volume tariff rates are almost certainly the most or more. sensible structure to adapt. Price bureaus give more emphasis on social issues Economic regulator needs to define service obligations and standards, determine and and inflation rather than efficient service provision supervise water tariffs, approve investment plans, standardize accounting system, oversee financial planning and industry structure, enforce regulatory requirements, resolve disputes involving water entities. Regulator needs to be independent of external pressure and should build specialist knowledge base for effective industry control. Clearly this is not a role for price bureaus. Irrigation water is charged currently far below the Higher prices will increase efficiency of water use by improving economic reforms theoretical equilibrium price. In addition agriculture per unit of irrigation water by promoting reductions in field applications, changes in will take up all water left after urban industrial and cropping pattern, extensions of actual irrigated areas and/or farm restructuring. Higher domestic needs are satisfied. water charges will help cover O & M costs and some capital costs and so help promote sustainable irrigation. Difficulties are measuring water consumption at farm Area based or crop-based charges can be important mechanisms for cost recovery. level. Willingness to pay for irrigation water is between 50-100 Yuan/mu. Farmers will adjust water consumption to use water more efficiently. 5. Organizational Issues and Service Delivery Commercial water supply organizations are currently The action plan recommends that service delivery entities such as government not widely in operation. China needs to investigate the departments, government publicly owned utilities; public/private partnerships; best mix of service delivery entities to account for its privately owned facilities; customer owned facilities be adopted throughout the 3-H own circumstances, bearing in mind the degree of basins and in China according to their suitability for local socioeconomic and local control, transparency, resource management hydrologic conditions. implications and optimization of economic benefit. Current problems with devolution/privatization of water supply entities include (i) failure to provide service entities with true autonomy, (ii) failure to clarify ownership and risk; (iii) failure to address service requirements in an integrated and balanced manner.