noig 37752 Recifi D i s c u s s i o n P a p e r s Pac d an ai As ts Ea -- t en mpolev Delaic C H I N A So Water Quality Management-- d Policy and Institutional an Considerations tne mnoriv September 2006 En C H I N A W A T E R Q U A L I T Y M A N A G E M E N T Policy and Institutional Considerations September 2006 is publication is available online at <>. Front cover photo, Bob Sacha Photography. Environment and Social Development Department East Asia and Pacific Region e World Bank Washington, D.C. 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Contents Foreword vii Acknowledgments ix Abbreviations and Acronyms xi Executive Summary xiii Drivers in the economy and China's natural conditions impact water quality xiii Policy and institutional capacity: ensure the impact of an already expanded regulatory framework xiv Past Government interventions lacked strong continuity xiv Priorities for Focus: the need for increased cooperation between sectors xv Introduction 1 Context and Objectives of the Report 1 Methodology 1 Structure of the Report 2 Chapter . General Water Resource Situation 3 Population, Urbanization, and Growth 3 River Basins 4 Water Availability 5 Water Use 6 Urban Water Supply 8 Water Quality 8 Emissions 12 Summary of Findings 15 Chapter . Policy and Institutional Issues 19 Legislation and Policy Instruments 19 Institutional Framework 24 ­ iii ­ Financing Water Pollution Management 28 Water Pollution Management Case Studies 29 Chapter . Toward a Future WPM Policy in China 33 Introduction 33 Basic Condition and Major Features of Water Management in China 33 Focusing on Strategic Planning 35 Adjusting Policy and Regulations 36 Integrated Water Resources Management 36 Strengthening Economic Instruments 37 Strengthening Financing 37 Urban Pollution Management 38 Industrial Pollution 39 Agricultural Pollution 40 Improving Water Quality Monitoring 40 Planning and Capacity Building 42 Environmental Awareness and Public Participation 43 Annex . Trends in River Water Quality 45 Annex . Relevant World Bank Projects 49 References 53 Boxes 1.1. Drinking Water Trends in China 7 1.2. Water Transfer Projects 14 2.1. China Pollution Levy System Reform 20 3.1. Water Pollution Management in Transition Economies--Experiences from Central and Eastern Europe 34 3.2. e European Union--Water Framework Directive 35 3.3. Financing and Use of Economic Instruments in Central and Easter European Countries 38 3.4. Designing Water Quality Monitoring Systems 41 3.5. European Union--Water Framework Directive Monitoring Program 42 Figures 1.1. Total, Rural, and Urban Population, 1980­2020 (million) 4 1.2. National Distribution of Water in China's River Systems 6 1.3. Trends in Water Consumption 1997­2005 (billion m3) 6 1.4. Urban and Rural Water Consumption Rates 7 1.5. Urban Water Supply Statistics (1978­2003) 8 1.6. Environmental Monitoring Stations in the Main River Systems 9 1.7. Surface Water Quality Levels 2004 10 1.8. General State of Water Quality in the Main River 10 Policy and Institutional Considerations 1.9. An Illustration of the Water Pollution 11 1.10. Average Water Quality in Chinese Rivers (1991­2005) 12 1.11. Average Water Qualities in Southern and Northern Rivers (1991­2005) 12 1.12. An Illustration of Water Quality in Yangtze's Main River versus Its Tributaries 13 1.13. Chemical Oxygen Demand Loading, 1992­2003 (tons) 13 1.14. Trends in Industrial Wastewater and COD Emissions 15 1.15. COD Loads and GIOV Shares in Industries, 2004 15 1.16. Municipal Wastewater, 1978­2003 (billion m3) 16 1.17. Irrigation, Fertilizer, Pesticide, and Livestock Levels (1978­2004) 16 2.1. Discrepancies between SEPA and MWR Monitored Water Quality for Huai River 25 2.2. Ministries and Authorities at National Level Involved in Water Pollution Management 26 2.3. Investment Projections in Five Year Plans (1995­2020) 29 2.4. River Basin Management-- e Case of Huai River 30 2.5. Shallow Lake Management-- e Case of Lake Dianchi 31 A1. Average river water quality Liao River (1991­2005) 45 A2. Average river water quality Yellow River (1991­2005) 46 A3. Average river water quality Song River (1991­2005) 46 A4. Average river water quality Huai River (1991­2005) 47 A5. Average river water quality Hai River (1991­2005) 47 A6. Average river water quality Yangtze River (1991­2005) 48 A7. Average river water quality Pearl River (1991­2005) 48 Tables 1.1. Main River Basins and eir Characteristic Features 5 1.2. Urban Indicators and Water Use 16 3.1. Comparison of Treatment Cost in the Main COD Discharging Sectors. 40 v Foreword C hina's economy has grown rapidly since how China can expand WPM instruments, what kind the nation entered the reform path in of institutional systems need to be in place in order to 1979, and particularly since the industrial ensure efficient enforcement of new instruments, what expansion started in the mid-1980s. Over investments are needed in order to effectively improve the last decades, China--which had been stricken water quality, and how China can learn from relevant with heavy poverty, severe production inefficiencies, international experience. and almost a standstill in economic development for over a generation prior to the reform--has become is report reflects some of the critical WPM the forth largest economy in the world. is is an challenges China is facing. It reviews recent trends, impressive achievement. Rapid growth, however, has institutional arrangements, and some of the WPM been accompanied by considerable environmental instruments that have been applied over the last side effects, one of the gravest of which is deteriorated decade. Based upon international experiences, it water quality in large parts of the country's extensive points to factors China may take into account when water systems. revising her WPM policies. As part of a larger effort to work with key counterparts to address critical issues In our dialogue, the Government of China (GoC) has affecting water resource and environmental manage- frequently raised the important challenge of water pol- ment, this report is aimed at generating constructive lution management (WPM). Discussions focused on discussions among policy makers. Magda Lovei Sector Manager Environment and Social Development Unit East Asia and the Pacific ­ vii ­ Acknowledgments T his report is the result of work prepared support and encouragement by Liu Hongzhi, Director by the World Bank and the Government General, Department of Pollution Control, SEPA; of China, in particular the State Environ- Xie Yongming, Senior Engineer, Wang Xin, Senior mental Protection Administration (SEPA) Project Officer, and Yu Lan, Project Officer, all from and the Ministry of Water Resources. e work was Foreign Economic Cooperation Office (FECO), managed by Jostein Nygard, Senior Environmental SEPA. We also thank Tan Bingqing, Senior Engineer, Specialist, under the guidance of Magda Lovei, Sector Bureau of Water Resources, Bengbu City; and Zhang Manager, Environment and Social Development Yong, Researcher, Center for Environmental Sciences, Unit at the East Asia and Pacific Region (EASES) of Beijing University. Useful comments on the report the World Bank. e study team consisted of Erik were received from Greg Browder (EASUR), Doug Boerset, Water Resource Specialist, Multiconsult; Olson (EASRD) and David Hanrahan (peer review- Laszlo Somlyody, Professor, Budapest University of ers) as well as from Hubert Jenny (EASUR), Steven Technology and Economics; Ge Chazhong, Research Mink (EASRD), Andres Liebenthal and Jian Xie Fellow, e Environmental Planning Institute (EASES). e report was edited by Robert Livernash (EPI) of the Chinese Academy for Environmental (consultant). Grammarians, Inc. did the design and Planning (CAEP); He Liping, Engineer, Yunnan managed the typesetting. Production was managed Institute of Environmental Science; and Wang by Long Wen Graphic Design in Beijing. Bob Sacha Jinnan, Vice President, CAEP. Andrew Murray and Photography provided the cover photo and Erik Borset Marija Kuzmanovic, Junior Professional Associates the photos within the report. Financial support was at EASES provided significant contributions to the provided by the governments of Norway and Finland finalization of the paper. e team is grateful for the through the TFESSD Program. ­ ix ­ Abbreviations and Acronyms BOD Biological Oxygen Demand MOF Ministry of Finance BOT Build, Operate, Transfer MOH Ministry of Health CAEP Chinese Academy of Environmental Sciences MWR Ministry of Water Resources CAOE County and Above County Owned Enterprise PE Pollution Equivalent CDC Center for Disease Control (part of MOH) PLS Pollution Levy System CDR Combined Division Responsibility RBC River Basin Commission CEE Central and Eastern Europe RMB Renminbi (Chinese currency) COD Chemical Oxygen Demand SEA Strategic Environmental Assessment CP Cleaner Production SEPA State Environmental Protection Agency DO Dissolved Oxygen SME Small and Medium Enterprise EASES Environment and Social Development Sector TAC Total Amount Control Department, East Asia & Pacific Regional Office, TEC Total Emissions Control the World Bank TFESSD e Trust Fund for Environmentally and Socially EIA Environmental Impact Assessment Sustainable Development EMS Environmental Management System TN Total Nitrogen EPB Environmental Protection Bureaus TP Total Phosphorus EPI Environmental Planning Institute TVIE Town and Village Industrial Enterprise EU-WFD European Union ­ Water Framework Directive WAB Water Affair Bureau FAO Food and Agriculture Organization WBMC Water Basin Management Committees GEF Global Environment Facility WHO World Health Organization GIOV Gross Industrial Output Value WPM Water Pollution Management GoC Government of China WPPC Water Pollution Prevention and Control ISO Industrial Organization for Standardization WRB Water Resource Bureaus WRM Water Resource Management IWRM Integrated Water Resources Management WRPB Water Resource Protection Bureaus MOA Ministry of Agriculture WRPSG Water Resource Protection Steering Group MOC Ministry of Construction ­ xi ­ Executive Summary Drivers in the economy and China's natural China's National Monitoring Center) reveals that there conditions impact water quality are hardly any improvements, particularly in the most critical rivers in the North. e core fact is that in the T rends in water quality in China's extensive North, 40 to 60 percent of the region's water is continu- water systems can to a large extent be ously in the non-functional water classification categories. explained by the drivers in the economy, the nation's geological and hydrological Historically, industrial pollution was the main conditions, and by patterns of water use. ese factors contributor to the increased pollution load. Although include a slight reduction in rural population share-- these industrial pollution sources have to some extent from 58 percent in 1978 to 57 percent in 2005--and stabilized or even been reduced, the study shows that a strong increase in the absolute urban population-- urbanization has partially offset these improvements. from 172 in 1978 to 562 million in 2005. e most For example, the 10th five-year plan's (2001-2005) dynamic urbanization took place at the lower urban review of water pollution control performance indi- levels (small cities, town and townships), which had cates that it is the residential water pollution control limited investment capacities compared to larger cities. objectives that are most off target. ese trends resulted in continued high water demand from agriculture in absolute terms and expanded water Water pollution patterns vary among China's water demand from industry and residential users. systems. Most of the systems are characterized by a combination of organic concentrations (biological ere are striking differences in socioeconomic, climatic, oxygen demand and chemical oxygen demand), morphological, and hydrological conditions between nutrients (ammonium nitrate concentrations), the South and the North. In the many water-scarce and various forms of heavy metals (lead, mercury, provinces in the North, average annual per capita water cadmium, etc), particularly in the tributaries. While availability is less than one-tenth of the world average. high organic concentrations, particularly high COD Inter-annual and seasonal variations in rainfall exacerbate loads, are a critical factor in poor water quality, it these differences, also resulting in droughts and flooding. also appears that increased agricultural activities and ese factors have contributed to a serious degradation in increased urbanization is resulting in significantly China's overall water quality. In the almost 500 sections higher ammonia nitrate concentrations. Today, with of China's main river systems that are monitored for the exception of the Yangtze River, all major rivers water quality, about one-third have water quality with have excessively high ammonia nitrate concentrations. very limited or no functional use, and only 28 percent have water suitable for drinking. A thorough review of all Patterns of water pollution are thus being driven by monitoring data over a 15-year period (made available by the development of several sectors, suggesting that ­ xiii ­ China Water Quality Management China is up against a very complex challenge that agencies at the expense of the private sector and civil needs multiple interventions. society, and they do not take full advantage of market- based economic instruments. Further conflicts of interest and monitoring difficulties have undermined Policy and institutional capacity: the level of rigor with which existing regulations and ensure the impact of an already expanded policies are applied. A common issue, for example, regulatory framework is the inability of Environmental Protection Bureaus (EPBs) to enforce their mandate when it is in conflict Over the last 30 years or more, China has established with local development plans, which has led to a rather vigorous water pollution control system with widespread noncompliance with Environmental an extensive set of institutions, a variety of legislation Impact Assessment (EIA) regulations. and policy instruments, and quite comprehensive investment plans that were largely shaped within the traditional five-year plan preparation process. In the Past Government interventions lacked earlier phases, water pollution control was characterized strong continuity mostly by command and control instruments (indus- trial permit systems, simultaneous control programs) e Government of China has taken several steps and partly by economic instruments (like pollution toward improving water resource management. levy fees and discharge permits). In recent years, there Government interventions and investments in water has been a gradual increase in voluntary approaches pollution management (WPM) throughout the 9th (such as environmental management systems like ISO (1996-2000) and 10th five-year plan (2001-2005) 14,000 and cleaner production) and public disclosure. periods have resulted in some gains, such as the declines in industrial COD loads and the apparent is report shows, however, that these instruments leveling off of wastewater emissions. Furthermore, have severe flaws, even with the expansion in applying up-to-date and market-oriented pollution management new policy instruments. e actual impacts appear to policies, such as initial water pricing systems and a be limited, as shown by the fact that ambient water more comprehensive pollution charge framework, are quality has stayed about the same or even worsened starting to emerge. However, much more needs to be in some areas. For the eight instruments that were done to meet the existing and new management chal- reviewed, the report identified a set of barriers and lenges. Achieving more effective regulations, policies, challenges that need to be addressed. monitoring, and enforcement require strengthening institutional capacity, particularly the mandate of At the institutional level, there is often a lack of local environment bodies. In addition, inter-provincial horizontal and vertical coordination, and inter-agency pollution and complicated upstream/downstream communication is generally poor. Agencies often interactions underline the need for effective river basin duplicate tasks and responsibilities, which is not planning, an approach that was fully endorsed at the only inefficient, but also results in inconsistencies. legislative level in the Water Law of 2002. For example, there are discrepancies in water quality monitoring techniques and findings between the Significant gains in water supply and effective pollu- State Environmental Protection Agency (SEPA) and tion management will also require substantial financial the Ministry of Water Resources (MWR). e lack investments. While investments in water resource of clarity in the roles and responsibilities of different management are currently on the rise in China, agencies is particularly apparent in emerging fields, particularly in the larger municipal cities in the East, such as cross-boundary river basin management and they are still small compared to the funding needed urban and agricultural non-point source management. to effectively deal with water pollution problems. Moreover, the government remains the main source of e regulatory system is incomplete and complicated, funding, with little contribution from other sources. which results in lack of integration and efficiency in A major reason for the absence of private investment implementation and enforcement. Pollution manage- is the lack of adequate mechanisms and conditions for ment policies overemphasize the role of government loan repayment. is means that a successful water xiv Policy and Institutional Considerations resource management plan must also incorporate rapidly changing, and planners need to consider medium strategies for increasing funding, diversifying funding and long-term projections, as well as new technology, sources, and prioritizing objectives. before deciding on investment plans. Additionally, chang- ing agricultural practices are having a big impact on water quality, as discharges of nutrients and organic material Priorities for Focus: the need for increased lead to eutrophication of water bodies. cooperation between sectors International experience has shown that regulating e Government of China recognizes the need for more emissions in agriculture is more difficult than in effective management of its water resources. Water other sectors. e first step is to establish reliable load resource management issues are given a high priority in estimates, which can be used as a basis for developing the 2006-2010 five-year plan. Among the many WRM a strategy for agricultural pollution management. At- issues that the government must address, priorities tractive options--which also benefit farmers--include include (a) ensuring water availability in water-scarce fertilizer planning and integrated pest management. areas; (b) providing a clean supply of water in order e government should also consider adjusting the to reduce the heavy burden of water-related illness; level of subsidies for fertilizers. (c) treating wastewater, with a focus on the impact on receiving water bodies; (d) rehabilitating the heavily Establishing an effective framework for integrated polluted water bodies that are critical for local com- water resources management should be a priority on munities; and (e) protecting drinking water sources. the government's water resource management agenda. Over the long term, the Government of China should e unique nature of China's water resource manage- prepare the legal framework--or umbrella legisla- ment issues means that there is no "model country" tion--to accommodate the development of manage- that can be used as a reference point for describing ment plans at the river basin level. Such a measure optimal water pollution management solutions. would require a number of institutional changes and However, large federal countries such as the United should include consideration of water re-use and States, and supra-national bodies such as the European cascade management approaches. Union, may provide useful lessons. e current analysis highlights the need for an overall strategic ere is also a need for improved monitoring of plan for water pollution management that establishes a drinking water quality. Drinking water supply and long-term vision and realistic targets for five-year plans monitoring is currently overseen by several different over the next 20 to 30 years. Such a strategy would agencies, including MWR, SEPA, the Chinese Center support the implementation of a phased development for Disease Control under the Ministry of Health, and plan that systematically identifies next steps through the Ministry of Construction. Although there may be identification of cost-effective priorities. a need for splitting responsibilities between urban and Improvements in the legal structure pertaining to rural areas, the current lack of coordination between water pollution management, particularly a reduction the agencies has left significant information gaps about in the number of laws and the extent of overlap and the actual drinking water situation. contradiction, are needed to establish a comprehensive and simplified system. Revised instruments should Other important areas for attention include the be established around long-term effluent and ambient development of an effective monitoring system, which standards for industry and municipalities, as well as should be of a reliable standard and harmonized across the gradual introduction of economic instruments, relevant bodies. Finally, in order to effectively manage including fees and fines, and voluntary instruments. its water resources and reduce pollution levels, the Government of China must generate a greater level of While acknowledging the progress that China has made, environmental awareness and sense of responsibility particularly in tackling several forms of industrial pol- among the general public. is will require environ- lution, there is a need to plan ahead for future develop- mental education initiatives and more transparent ments in urban and industrial emissions. Both sectors are information on emissions and water quality. xv Introduction Context and Objectives of the Report that include water management and pollution control components; and (b) providing the international water T his work was initiated at the request of the resource management community with an accessible Government of China (GoC) and fits into a source of up-to-date information on the nature of broader package of analytical and invest- China's water pollution management challenges. ment support that the Bank is providing for China's water resource management. Previous Bank- is study capitalizes on the long-term collaborative supported analytical relationships between work highlighting the World Bank and the urgency of representatives from water pollution issues a number of different includes China: institutes, including Air, Land, and the State Environmen- Water; Environmental tal Protection Agency Priorities for a New (SEPA), the Ministry Millennium. In of Water Resources addition, the (MWR), the Ministry importance of this of Construction issue was confirmed (MoC), and the in the Bank's China Ministry of Agricul- Country Assistance ture (MoA). e final Strategy (2003­05 report is the product of and 2006­10). Along Diance Lake collaboration among international experts, e World Bank and GoC are currently undertak- several Chinese researchers, and World Bank specialists. ing or planning numerous projects to address the management and pollution issues raised in this report. Annex 1 provides an outline of these ongoing World Methodology Bank projects. At the same time, GoC is including a major water resource management component in is report analyzes China's water pollution situation its 11th 5-year plan (2006­10). In this context, this in both inland rivers and lakes. It provides a detailed report is aimed at (a) providing technical guidance for picture of the water pollution situation, as well as an ongoing and future World Bank investment projects assessment of current policy instruments, institutional, ­ 1 ­ China Water Quality Management and investment structures, of which these three this river basin. e Huai case is used to demonstrate a components have formed the analytical framework number of Chinese river basin management options. for the report. It briefly refers to the pollution and management situation, using examples such as the Dianchi Lake is situated to the south of Kunming City Huai River and Dianchi Lake. To add some inter- in Yunan Province. e major factors that contributed national perspective, it includes lessons learned and to the long-term pollution and eutrophication of experience from water pollution management in other the lake were rapidly increasing municipal sewage countries. e report also provides guidance to help discharges and agricultural non-point sources. e prioritize initiatives in this sector. lake exemplifies one of the gravest examples of water pollution impacts on lakes in China and is highly e methodology used in this study included the prioritized by the GoC. collation of various sources of information to generate a detailed picture of pollution levels and the policy/ institutional environment, and detailed analysis by Structure of the Report international experts. To gather baseline information, we conducted an extensive literature review of previous e paper is organized as follows. Chapter 1 describes the studies and databases. general water resource situation with reference to water availability, river systems, water quality, and emissions. e Huai River Basin and Dianchi Lake catchments Chapter 2 provides an assessment of water pollution were used as case studies. e Huai River basin is one of management' in terms of (a) legislation and policy instru- the seven largest river basins in China and has been seri- ments; (b) the institutional framework; and (c) financing. ously polluted, particularly since the early 1990s. e Chapter 3 then provides a framework of priorities and river crosses several provinces and districts and can thus recommendations for reforming water pollution manage- be classified as a "transboundary" river. After laborious ment systems and improving water resource management work for better pollution management, water quality in in China, including references to international experience the Huai River improved for a period of time. e first and lessons learned in other parts of the world. regulation for pollution management was enforced in 2 1. General Water Resource Situation Population, Urbanization, and Growth A critical feature of China's urbanization since the early 1980s has been the expansion at the sub-city P opulation Growth. China has the world's largest level, particularly in categories such as "small cities," population, 1.3 billion people, representing "established towns," and "township concentrations." just over one-fifth of the global total. e From 1985 to 2004, the number of established towns country's demography has been heavily increased from less than 8,000 to almost 18,000, influenced by govern- accounting for a non- ment policies over the agricultural popula- last 25 years, and the tion of 63.5 million population growth people. Between rate is now only 0.6 1990 and 2004, the percent. e leveling- established towns off that is occurring category increased by in China's population about 14.5 million statistics is shown in people, which Figure 1.1 below. represents almost a seven-fold increase. Urbanization. e By 2004, China's figure above also total non-agricultural shows the develop- population below the ment of China's city level was about rural and urban Lighters on the Huai River 100 million, and populations. e level about 44 percent of of urbanization is striking. In 1980, the proportion of China's total urban (non-agricultural) population urban dwellers constituted less than 20 percent of the was living in small cities, established towns, or population, in 2000 it was 36 percent, and by 2020 it is township concentrations. In essence, these statistics projected to be 54 percent. e growing urban popula- indicate that the strongest drive for China's rapid tion has been accommodated through rapid expansion urbanization comes primarily from the lower levels of existing cities and the emergence of new cities; the below the cities. e increase in urbanization results total number of cities in China increased from 190 in in a rising demand for water from the established 1978 to 663 in 2000, and have leveled off since then water supply system and an increase in water pollu- (table 1.2). tion in the short run. ­ 3 ­ China Water Quality Management Figure 1.1. Total, Rural, and Urban Population, 1980­2020 (million) 1,600 1,400 1,200 1,000 800 600 400 200 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Total population Urban population Rural population Established towns Source: Chinese Academy for Environmental Planning, 2004. Study on integrated environmental and economic modeling. Economic Development. China is experiencing rapid v) Changjiang River (Yangtze River) Basin (951.3 economic development. GDP grew by 9.4 percent billion m3/yr) in 2004. Initial information indicates it was 8.3 vi) Zhujiang River (Pearl River) Basin (333.8 billion percent in 2005 and will be about 7.5 percent in m3/yr) 2006. Rapid economic growth has brought about vii) Southwest River Basins significant improvements in the standard of living viii) Southeast River Basins for many Chinese, but it is generating increasing ix) Interior river basins (rivers not discharging into levels of demand for water. By relating water demand the sea). projections to expected sector growth, projections indicate that this growth will lead to an increase in Each river basin presents a specific management water demand of 6.5, 32, and 35 percent (2003­2020) challenge because of its socioeconomic, climatic, from agriculture, industry, and residential users morphological, and hydrological conditions. e most respectively (Chinese Academy for Environmental important feature is the abundance of water relative Planning, 2004). ese figures imply that a total to population, arable land, and local GDP. Table 1.1. increase in demand for water of 83 billion m3 will be provides a summary of water availability, population, essential if China is to maintain its current pattern of and arable land area. economic growth. However, with a relatively constant water supply, the increased water demand will have to e table shows the relative water availability in differ- be met mainly through water savings and improved ent river basins, of which the northern rivers account water quality. for less than 20 percent. It also shows water availability per capita and per hectare, which is as low as 343 and 6,000 m3 in the north, and as high as 29,427 and 346, River Basins 350 m3in the south. In 2001, the water development ratio (the ratio between water supply and water avail- China has nine main river basins. ability) was 0.2, but the north has a much higher value, up to 0.93 in the Hai River basin. e northern rivers i) Song-Liao River Basin (91 billion m3/yr) are therefore characterized by high use/availability ii) Hai-Luan River (22.8 billion m3/yr) ratio, water scarcity, and serious pollution problems. iii) Huang River Basin (Yellow River) (66.1 billion m3/yr) Inter-annual and seasonal variations in precipitation iv) Huai River Basin (62.2 billion m3/yr) are quite large across most of China, but are most 4 Policy and Institutional Considerations Table 1.1. Main River Basins and Their Characteristic Features Water National Percentage Water Availability Water River availability % Arable per capita (to m3) availability Basin (1000 m3) Pop. Land 1997 2010 2050 per ha (m3) Northern Rivers Interior R. 4.6 (130.4) 2.1 5.7 4,876 4,140 3,331 23,835 Song-liao 6.9 (192.2) 9.6 20.2 1,646 1,501 1,287 9,900 Hai 1.5 (42.2) 10 11.3 343 311 273 3,885 Huai 3.4 (96.1) 16.2 15.2 487 440 383 6,555 Huang 2.7 (74.4) 8.5 12.9 707 621 526 6,000 North Total 19.1 (535.3) 46.4 65.3 8,059 7,013 5,800 Southern Rivers Yangtze 34.2 (961.3) 34.3 23.7 2,289 2,042 1,748 41,745 Pearl 16.7 (470.8) 12.1 6.7 3,228 2,813 2,377 67,515 Southeast 9.2 (259.2) 5.6 2.5 2,285 2,613 2,231 80,160 Southwest 20.8 (585.3) 1.6 1.8 29,427 25,056 20,726 346,350 South Total 80.9 (2277) 53.6 34.7 34,001 32,524 27,082 Source: Shen (2004). pronounced in the water-scarce north. For instance, population peak occurs, at around 1.6 billion in the difference between minimum and maximum 2030, annual per capita water availability will be only precipitation is generally 3 to 6 times in the northern 1,750 m3. Given that China cannot increase its water regions, while in the south it is only 2 to 4 times.1 In resource base, future demand can only be met by the Hai Luan and Huai rivers, the flow is less than 70 increasing water efficiency in municipal, industrial, percent of the average once in four years and less than and/or agricultural sectors, promoting water re-use, 50 percent once in 20 years. However, the northern or by cleaning up water that is currently unfit for rivers are also highly regulated: the annual storage consumption. capacity in the 3-H basins is about 90 percent of the average annual runoff (the country wide average is Precipitation patterns across the country show that about 20 percent. the rainy season is as long as six to seven months in some southern areas and as short as two or three months in more arid northern regions. In general, Water Availability annual precipitation decreases from the southeast to the northwest. In eastern areas around the Changbai China's total annual renewable water resources Mountains, annual precipitation may reach 800 to amount to between 2,400 and 2,800 billion m3/year 1,000 mm--about 800 to 900 mm in the area from (6th in the world). However, annual per capita water Qinling Mountains to the Huaihe River (Anhui availability was only 1,856 m3in 2004 (average 2,100 province), above 1,000 mm south of the middle and m3 2000­2004), which is about a quarter of the world lower reaches of the Yangtze River, and more than average (8,513 m3/year). e south is relatively water- 2,000 mm in some coastal mountainous and hilly abundant. Water scarcity is very severe in northern areas in the southeast and parts of the southwest. In areas, where average annual per capita availability is the western regions (except for the Altay and Tian- only about 725 m3. However, population growth will shan Mountains), most areas are dry. In the Tarim continue to undermine per capita water availability. and Qaidam basins, annual precipitation is less than When China's (projected) 25 mm; mean annual precipitation at some stations in the Turpan basin is less than 10 mm. 1. Ministry of Water Resources, Department of Hydrology. 1992. Water Resources Assessment of China. China Water and Power Press. 5 China Water Quality Management Figure 1.2. National Distribution of Water in China's respectively accounted for 63.3, 22.8, and 12.5 percent River Systems of total water usage in 2005. e overall decline is due to reduced demand from the agricultural sector and has occurred in spite of increases in industrial and consumption usage. Water savings from agriculture have been achieved through investing in more efficient irrigation systems and cultivation methods. In rice production, for example, there has been a widespread shift from traditional to water-saving irrigation systems that reduce water consumption by a third (FAO, 1996). ese efficiency gains have allowed the overall water demand from irrigation to fall by about 5 percent (1997­2005), while the total irrigated area actually increased by about 5.5 percent over the same period Source: Chinese Academy for Environmental Planning. (see Figure 1.3). Water Use e declining proportion of water usage accounted e countrywide average use/availability ratio is about for by agriculture is even more impressive when we 20 percent, which, seen in isolation, is not an alarming consider that in 1980 it accounted for around 80 value, but at local levels there are many areas where percent of total water use, and it is projected to be water systems are stretched beyond their capacity. In close to 50 percent by 2050 (World Bank, 2001). e many areas, the cost of water shortages from pollution growth that has occurred in the consumption category appears severe. According to 1997 statistics for the is driven by urbanization (4.3 percent, see Figure 2.1), Yellow, Huai, and Hai Luan river basins, exploitation and rising urban per capita residential consumption rates reached 67, 59, and 90 percent respectively (as (110 l/cap/y 1980 - 230 l/cap/y 1997). compared to use rates of below 20 percent in the south). With about 40 percent utilization rate, all of these Urban and rural residential consumption both account northern rivers exceed international recommendations for around 5.5 percent of water consumption. In 2001, for water use. Moreover, usage in the Hai-Luan basin urban water consumption surpassed rural consump- exceeds the sustainable yield, resulting in groundwater tion. For a long time, China experienced rapidly depletion. e net effect is that increasing per capita urban water consumption rates; the bulk of river flows in the north Figure 1.3. Trends in Water Consumption 1997­2005 (billion m3) comprise wastewater, and the dilution 600 and absorptive capacity of the rivers is 9.4% 12.5% severely compromised. 500 20.1% e total amounts of water use and 22.8% 400 wastewater generation have actually declined in recent years (World 300 Bank, 2005; China Statistical Yearbook, various years). is trend 200 69.4% 63.3% is depicted in Figure 1.3, which shows that total water consumption 100 declined by 4.5 percent between 1997 and 2005. e figure also 0 shows the relative importance 1997 1998 1999 2000 2001 2002 2003 2004 2005 of agricultural, industrial, and Agriculture Industry Residential consumption categories, which Source: China Statistical Yearbook (various years). 6 Policy and Institutional Considerations in recent years, this trend seems Figure 1.4. Urban and Rural Water Consumption Rates to have leveled off. Figure 1.4 0.25 35 shows the trend in urban daily 30 water consumption levels. 0.2 25 m3/year) e proportion of people with (bill 0.15 20 access to an improved water (m3/day/capita) source (i.e. household connection 15 0.1 consumption or public standpipe) in rural 10 consumption Annual and urban areas is 66 and 94 0.05 Daily 5 percent respectively in 2002 (WHO, 2004). However, other 0 0 1997 1998 1999 2000 2001 2002 estimates are less optimistic and Total urban (bill m3) Total rural (bill m3) Urban (m3/day/capita) Rural (m3/day/capita) indicate that as much as half of the population does not have Source: China Statistical Yearbook (2003, 2004) and China Urban Construction Statistics Yearbook (various access to clean water (see Box years). 1.1). Of particular concern are the communities at the town and township level (i.e. below city level), which may not be captured in typical Box 1.1. Drinking Water Trends in China W ater supply in China has increased signi cantly in both Disease incidence and mortality rates due to microbial pollut- urban and rural areas in the past fteen years. According ants remain relatively low on national level. For example, ac- to the Chinese Ministry of Health (MoH) statistics, the per- cording to the China National Health Survey, in 2003, infectious centage of rural population with some kind of access to a drinking diarrhea (ex. bacterial and amoebic dysentery) and typhoid in- water supply rose from 75.5 percent in 1990 to about 93.8 percent cidence were 35 and 4.17 cases per 10,000 persons respectively. in 2004, an increase of about 220 million bene ciaries. In urban However, the incidence rates in towns, townships and villages, areas, access to tapped water rose from 48 percent in 1990 to 88.9 particularly in heavily polluted areas, are suspected to be sig- percent in 2004. While these increases in the supply of drinking ni cantly higher. water represent a major achievement, trends in the quality of wa- Increasing the supply of clean drinking water, especially in rural ter supply are less encouraging. areas, has become one of the major objectives of the Chinese gov- According to a Ministry of Water Resources (MWR) survey, more ernment. The GoC began addressing the issue through an ambi- than 300 million rural residents throughout the country consume tious $2.1-billion rural drinking water supply project, completed unsafe drinking water. In Chongqing municipality, where the during the10th Five-Year Plan (2001­2005). The project included World Bank is conducting a study at both town/township and the installation of 800,000 new water processing facilities, which pure rural areas to examine the correlation between access to provided access to clean drinking water to 14 million rural house- clean water and public health, 39.8 percent of the population have holds. According to the MWR, the overall project is estimated no access to a safe water supply. to have relieved water shortages for more than 57 million rural residents. The health risks associated with both, biological or microbial pol- lutants (e.g. large intestine bacilli, hepatitis B virus, cholera virus, The continued problems associated with the lack of access to typhoid, E-coli etc.) and chemical pollutants (e.g. heavy metals, clean water, have prompted the Chinese government to continue uorine, arsenic, benzene, oil, etc) are widespread. According to with its aggressive measures to tackle the issue. In urban areas, MWR, an estimated 63 million rural people in the northern, north- stricter standards for piped water quality have taken e ect since western and north-eastern provinces and across the Huang-Huai- June 1, 2005. In rural areas, according to MWR, China plans to cut Hai (3-H) plains are exposed to drinking water with high uorine down the number of residents without access to clean drinking content. In the coastal areas of North and East China, salinization water by one third by 2010 and to provide safe drinking water to of drinking water sources is a ecting about 38 million people, and all rural residents by 2020. some 2 million people in parts of Inner Mongolia, Shanxi, Xinjiang, Ningxia and Jilin drink water with high arsenic content, which has been linked to several types of cancers. 7 China Water Quality Management urban-rural statistics. China has 18,000­20,000 town in industrial water demand connected to government and township centers, often with very poor access to initiatives to address water use and pollution from clean water, but because of their hybrid (urban­rural) this sector. However, it also shows how urbanization status, the Chinese institutions that would normally is quickly negating the gains made in mitigating be responsible for infrastructure development have no industrial water use. clear mandate. Water Quality Urban Water Supply China has established a water quality classification e rapid growth of China's urban centers has neces- system based on purpose of use and protection sitated increased level of water infrastructure. In 2003 target, following Environmental Quality Standard China's national urban water supply capacity was GB3838-2002; 87.5billion m3/year. is represents a vast increase in water capacity in China over the last 25 years. Figure Grade I ­ Mainly applicable to the source of water 1.5 shows the rapid increase in urban population sup- bodies and national nature preserves. plied with water services, which grew from 62 million Grade II ­ Mainly applicable to class A water in 1978 to 291 million in 2003. e urban water source protection area for centralized drinking supply capacity increased at a similar rate, by almost water supply, sanctuaries for rare species of fish, an order of magnitude in the same 25-year period. In and spawning grounds for fish and shrimps. order to achieve this capacity increase there has been Grade III ­ Mainly applicable to class B water a nine-fold increase in the length of China's water source protection area for centralized drinking supply pipelines, from 35,986 Km in 1978 to 333,289 water supply, sanctuaries for common species of Km in 2003. However, since the late 1980s total urban fish, and swimming zones. supply capacity has greatly exceeded the water actually Grade IV ­ Mainly applicable to water bodies for supplied to the consumers. In 2003, daily capacity was general industrial water supply and recreational 239 million m3, but only 54 percent (130 million m3) waters in which there is not direct human contact was supplied. with the water. Grade V ­ Mainly applicable to water bodies An important element to note in the figure 1.5 is the for agricultural water supply and for general leveling-off that has occurred in total water supply landscape requirements. since 1994, in-spite of continued increase in residential Grade V+ - Essentially useless. use. is pattern is thought to be related to reductions Based upon this classification, water Figure 1.5. Urban Water Supply Statistics (1978­2003) quality is being monitored on regu- 300 larly basis in almost 500 monitored stations within China's referred nine 250 main rivers basins through national and provincial-run water monitoring 200 centers (figure 1.6).2 e number of 150 monitored sections within each river basins varies from for example 104 100 in the Yangze basin to only 17 in the South West rivers. As outlined in 50 figure 1.7, the most polluted water 0 sections are largely in Northern China 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2003 and particularly in the most populous Production capacity (mill m3/day) Water supplied (mill m3/day) Residential use (mill m3/day) Population supplied (million) 2. e Ministry of Water Resources has also a monitoring Source: China Urban Construction Statistics Yearbook (various years). system in place coverin about 2000 monitoring sections. 8 Policy and Institutional Considerations Figure 1.6. Environmental Monitoring Stations in the Main River Systems Heilongjiang Neimeng Jilin Liaoning Xinjiang Gansu Beijing HebeiTianjin Ningxia Shanxi Shandong Qinghai Shaanxi Henan Jiangsu Xizang Sichuan Hubei Anhui Shanghai Chongqing Zhejiang Hunan Jiangxi Guizhou Main River Systems in China: Fujian Inward owing systems-West Yunnan Songhua R. Guangxi Guangdong Taiwan Hong Kong Fujian/Zhejiang Macao Hai R. Huai R. Hainan Pearl R. Nu/ Yarlung Zangbo R., in the Southwest 0 250 500 Kilometers Liao R. Yangze R. Yellow R. 0 125 250 500 Miles Source: China National Monitoring Centre (Presented in World Bank 2006). provinces of Henan, Anhui, Jiangsu, Hebei, Beijing indicator for triggering water quality levels was nitrogen and Tianjin. Other water pollution hotspot areas (in the form of ammonia), followed by organic materi- includes North East provinces and in high population als (BOD and COD). Figure 1.9 shows the relative concentration in Sichuan and Chongqing. importance of different indicators in terms of the frequency with which they `trigger' a lower water quality Results from ongoing water quality monitoring show category in China's main rivers. Many rivers have a overall water quality in China to be poor. In 2004, similar pollution structure, but the Huai is heavily only 28 percent of monitored river water was in dominated by nitrogen (as ammonia), whereas in the categories I to III, while as much as 31 percent was in Yangtze, nitrogen is never the most important pollutant. the worst two categories. China's large lakes are also experiencing declining As outlined in figure 1.8, the situation does not appear water quality caused by both point and non-point to have improved, where it is shown that larger shares source emissions. Lake Dianchi is a good example of of the water quality appears to have increased between this trend, as water quality declined from Class II in 2000 and 2004 in particularly the northern regions. the 1960s, to class V and IV in the 1990s. e lake has also undergone significant eutrophication during this Among the about 30 pollutants included in the overall period with a massive shift from a high biodiversity water quality monitoring schemes, usually about 14 are low productivity system to a low biodiversity high selected in comprehensive water pollution indexing. e productivity state. Concentrations of organic matter worst individual monitored pollutant establishes the and nutrients, such as phosphorus and nitrogen, show water quality grade for the section. e most important high levels, and the latter are still increasing. Organic 9 China Water Quality Management Figure 1.7. Surface Water Quality Levels 2004 Heilongjiang Neimeng Jilin Xinjiang Liaoning Beijing Gansu Tianjin Hebei Ningxia Shanxi Shandong Qinghai Shaanxi Henan Jiangsu Shanghai Xizang Anhui Hubei Sichuan Chongqing Zhejiang Hunan Jiangxi Guizhou Fujian Yunnan WQ 2004 Guangxi Guangdong Taiwan I-III (n=243) Hong Kong IV (n=92 ) Macao V (n=34) 0 250 500 Kilometers Hainan VI (n=115 ) 0 125 250 500 Miles Source: China National Monitoring Centre (Presented in World Bank 2006). Figure 1.8. General State of Water Quality in the Main River Point source pollution is made up of industrial and municipal emissions. Recent measures to encourage industries to meet wastewater regulation standards led to a 25 percent reduction in emissions (28 to 21 billion tons) between 1990 and 2004. In 2000, industrial sources accounted for 11 percent of BOD, 4 percent of Total Nitrogen (TN), and 2 percent of Total Phosphorus (TP) discharges. Municipal sources are increasing, as population and economic growth leads to more wastewater, important elements include growth in flushing toilets and washing machines. Municipal sources accounted for 52 percent of BOD, 69 percent of TN, and 53 percent Source: Chinese Academy for Environmental Planning. of TP in 2000. Non-point sources are primarily related to agricultural activities, including fertilizer material contributes to decreased oxygen levels and and pesticide run-off from farmland, and bacterial growth and nutrients cause eutrophication. infiltration of livestock waste. In 2000, non-point sources accounted for 37 percent Pollution sources are often grouped in two classes: of BOD, 27 percent of TN and 45 percent of TP. e excessive loads of nutrients, and 10 Policy and Institutional Considerations Figure 1.9. An Illustration of the Water Pollution extent agricultural costs. e estimated cost Structure in Major Rivers in 2003 for the whole of China for water- 100 related damages of four major types of crops (wheat, corn, rice and vegetable) was about 80 0.05 percent of GDP. Establishing the true extent of public health impacts from water 60 pollution is challenging, because it is hard to isolate specific dose response functions given Percent the wide range of factors, including food 40 chain effects. Initial World Bank analysis on the environmental health impact of water 20 pollution in China found significantly higher disease rates, e.g. cancers and spontaneous 0 Huai Hai Liao Yellow Song Pearl Yangtze abortions, among fishing and farming com- munities living near polluted water sources Ammonium Nitrate BOD COD (World Bank, 1997). Oils Volitile Phenolic Arsenic Mercury Nitrite Nitrate Cadmium Lead Ongoing work has indicated that improved water quality could significantly reduce the Source: China Environmental Yearbook 2002. spread of the hepatitis A virus (70 to 90 percent of in particular Phosphorus, leads to eutrophication, hepatitis A cases in China are transmitted by water). excessive algae growth, reduced biodiversity levels, Waterborne diseases, such as diarrhea, cholera, and and poor quality water. typhoid, which are entirely related to impure water, could be reduced by almost 50 percent by moving Despite considerable efforts to clean up China's major from heavily to moderately polluted water (World river basins the situation remains generally poor. ere Bank, 2006). e ongoing study also estimates 9 have been some improvements in the Yangtze and million cases of diarrhea due to water pollution Pearl River basins where a reasonable proportion of based upon the national health survey from 2003. the water is now classified at grade I or II (but all still Excessive application of fertilizers can also have health contain areas of very poor water quality, particularly consequences; under aerobic conditions, NO3 can be in the tributaries). However, many of China's rivers, formed, which is absorbed into the body and interferes such as Hai, Liao, Yellow and Songhua, are still with the blood's oxygen carrying capacity. dominated by water of the worst categories (V and V+). e problem is typically most prominent when rivers Trends. Average water quality for China as a whole flow through large cities, where discharges of organic shows a steady increase in the relative abundance of materials have caused increased concentrations levels the worst and best water quality categories. Figure 1.10 of various pollutants. shows that between 1991 and 2005 the number of monitoring stations recording the worst categories (V e clean-up challenge is huge and is especially and V+) stayed the same at about to 30 to 35 percent important given the water shortage problem. Accord- (but with high fluctuations), while the percent of best ing to WB estimates, the cost of water shortages from categories (I and II) increased from 3 to 20 percent. pollution ranges from 1 to 3 percent of local GDP in is pattern may reflect two main processes: (a) the dif- water scarce areas (World Bank 2006). In order to ference in water quality patterns in the north and south address this problem, the Chinese government has of the country; and (b) water quality improvements in already started work on a number of water transfer the main course versus deterioration in tributary waters. projects (south to north), but poor water quality in intervening rivers is a major constraint (box 1.2). e difference between recent water quality trends in southern rivers (Yangtze, Pearl) and northern rivers (Hai, Addressing water pollution in China is also significant Huai, Yellow, Liao, and Song) is shown in Figure 1.11. given its particularly high health cost and to some In the southern rivers, the proportion of water rated in 11 China Water Quality Management Figure 1.10. Average Water Quality in Chinese Rivers (1991­2005) operations has been focused on the 100 main river course, with less effort on the tributaries. For example, in the 90 All China Yangtze River, which has experienced 80 V ­ V* significant water quality improve- 70 ments in recent years, there is a stark 60 difference in the relative abundance of best and worst water qualities 50 All China between main river and tributaries. 40 III ­ IV Figure 1.12 shows that, in 2001, the 30 main river had no cases of class V 20 or V+, while this accounted for 48 All China 10 I ­ II percent of the water in its tributaries. 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 An important indicator of the pol- lution management efforts that have All China I ­ II All China III ­ IV All China V ­ V* been made over the last decade is the Source: China Environmental Statistics Yearbooks (various years), World Bank (2001). decline in chemical oxygen demand Note: Figures 1.10 and 1.11 haven't been corrected for inter-annual or inter-region ow variations that (COD) from industrial sources might a ect dilution capacity and classi cation. in many rivers. Improvements are the best categories has increased from 2 to almost 60 shown in Figure 1.13 for the Liao, percent, while in the northern rivers the change is much Hai, and Huai rivers. smaller (4 to < 10 percent). However, water in the worst categories has increased in northern rivers, from 40 to 45 percent (but with fluctuations up to > 60 percent), Emissions as a result of the pollution sources outlined above and the very low levels of water available to absorb it. e ere are three main categories of water pollution deterioration of water quality is particularly severe in the emissions: (1) industrial, (2) municipal, and (3) Hai and Huai river basins. Annex 1 gives these trends for agricultural non-point sources. Over the last 20 years, each river separately. there has been a sequential development of these sources, with the following chronology; Another important reason for the simultaneous increase in abundance of best and worst categories 1. Country and Above Owned Enterprises dominated is the fact that much of the attention in cleaning up until the end of the 1980s Figure 1.11. Average Water Qualities in Southern and Northern Rivers (1991­2005) 100 100 90 South China 90 V ­ V* 80 80 North China V ­ V* 70 70 60 South China 60 III ­ IV 50 50 40 40 North China 30 30 III ­ IV 20 20 South China North China 10 I ­ II 10 I ­ II 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 South China I ­ II South China III ­ IV South China V ­ V* North China I ­ II North China III ­ IV North China V ­ V* Source: China Environmental Statistics Yearbooks (various years). 12 Policy and Institutional Considerations Figure 1.12. An Illustration of Water Quality in increase over the last year. Until 2000, most of the Yangtze's Main River versus Its Tributaries reductions were achieved by the country- and above- country-owned enterprises (CAOE). In the same 100 period, there has been a slight increase in wastewater 90 80 discharge at the town and village industrial enterprise 70 (TVIE) level. 60 50 e level of chemical oxygen demand (COD) from Percent 40 these sources has followed a similar pattern, with most 30 of the improvements being made since 1995 (Figure 20 1.14). However, in the most recent years (2000­2004), 10 COD levels have continued to fall, in spite of the fact 0 Overall Main river Tributaries that the total level of wastewater emissions increased slightly. is result indicates that while total emissions Class I & II Class III & IV Class V & V* have remained relatively stable in the last few years, Source: China Environmental Statistics Yearbook (2002), the oxygen demand of this material has dropped, suggesting that this particular pollution problem may 2. Township Village Industrial Enterprise emissions have been successfully addressed. peaked in the mid-1990s In relative terms, these figures show that total 3. Municipal wastewater emissions increased (with wastewater flow and COD from industrial emis- urbanization), but investment in treatment sions have fallen by 29 and 49 percent respectively infrastructure has brought about a leveling off in (1989­2004). ere are a number of reasons for this untreated urban wastewater emissions trend, including; 4. Agricultural non-point source emissions are still Improved and more stringent regulations have led increasing, rapidly in some places, and will be the to large-scale closures in 15 categories of small- next emissions issue to address. scale TVIEs. e policy was very efficient from a pollution reduction point of view, but there Industry. Over the last 15 years, total industrial may have been economic and social costs from wastewater volumes have declined from 28 to 22 enterprise closure. billion tons, but (as Figure 1.14 shows) with a slight Improved industrial processes and an increase in the volume of wastewater treated. Figure 1.13. Chemical Oxygen Demand Loading, e level of water 1992­2003 (tons) pollution generated by 1,600,000 different industrial sectors 1,400,000 is not even. e most important sectors in 1,200,000 terms of total wastewater (tons) 1,000,000 discharge volumes are loads 800,000 paper and chemicals, COD 600,000 which both release over 3 billion tons annually. 400,000 By comparing the gross 200,000 industrial output value 0 (GIOV) and the level of 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 COD from emissions in Liao Hai Huai each sector, we can assess the pollution generated Source: Water Pollution Management (Vol I), and China Environment Yearbook (2002, 2003). 13 China Water Quality Management Box 1.2. Water Transfer Projects billion tons. At the start of the 1990s, municipal wastewater treatment capacity T he uneven distribution of China's water resources between the water-scarce was only able to handle a fraction of the north and water abundant south is forcing the Chinese government to seek consumption levels (4 and 10 percent in measures to ensure su cient water availability for people living in northern 1991 and 1998 respectively). Increases in regions.Onesuchmeasureisthe`SouthtoNorthWaterTransferProject'(otherproj- ects include the World Bank-funded Wanjiazhai project). The project is designed water consumption levels meant that even to divert 13.4 billion m3/yr of water from the Yangtze to Beijing, and the project will greater rates of expansion in wastewater supply many other cities along the route. The plan foresees a total water transfer treatment capacity and sewage facilities capacity of 44.8 billion m3 by 20501. Work began in 2002, the rst supplies are to would be required in order to increase the reach Shandong and Beijing in 2007 and 2010 respectively. Total project expenses, coverage. However, construction of treat- which were initially projected at $60 billion, have been increasing. ment facilities has now, in many places, The project faces a number of logistical challenges, including the need to clean out-paced the development of an effective up water bodies at intersections that the canals will pass through. The 1,154 km sewer network. As a result, a significant eastern route of the project, largely following the Grand Canal route from the part of the capacity at the treatment works Yangze River through Jiangsu and Shandong provinces to Hebei and Tianjin, is underutilized, and a significant part of crosses through 53 rivers sections in China's most heavily water-polluted area. In the wastewater generated is still discharged most cases, these sections have water quality of category V+. Cleanup operations without any treatment. Furthermore, will account for 37 percent of the total investment. If completed on schedule it investments in wastewater treatment will represent one of the most comprehensive water cleanup operations in the world. The water improvement objective is to reach category III throughout the capacity have been disproportionately transfer scheme, requiring an average water improvement (for critical water qual- concentrated in larger urban centers. In ity and pollution parameters) of between 82 and 99 percent for pollutants such 2003, centralized wastewater treatment as nitrogen, BOD, COD and oils. However, at present, China has no track record in rates of super, mega, high, medium, and cleaning up polluted rivers at this level. Challenges include implementation and small cities are 43, 42, 20, 18, and 16 e ectiveness of wastewater treatment plants, ensuring inter-provincial dialogue, percent respectively in northern regions and agreement on project components. (World Bank, 2005). The vast cost of the projects may mean that water pricing will be a problem for some consumers (between 3.2 and 4.8 Yuan/m3 in many cities and as high as 7 e continued growth in municipal Yuan/m3 in Beijing2). Also, stricter enforcement of pollution regulations and con- wastewater discharges (Figure 1.16) tinued closedown policies may have a signi cant impact on industries in some has effectively offset the gains made in locations along the transfer route. industrial pollution management (Figure 1.14). In 2003, the total amount of 1. http://www.nsbd.mwr.gov.cn/nsbd/intro. 2. See http://www.people.com/cn/GB/14576/28320/31049/31054/2266569.html municipal wastewater was 24.1 billion m³ and industrial wastewater 21.2 billion m³. Agriculture. Fertilizer application, which is often excessive and inefficient, is a major cause of by sector in relation to its economic importance (see the growing agricultural non-point source pollution Figure 1.15). e pulp-and-paper and food industries problem. Fig 1.17 shows the increase in fertilizer use generate the most COD in relation to their contribu- over the period 1978­2004. Average levels of fertilizer tion to the economy (GIOV). is result suggests application increased five-fold over the period; in that the paper and food industries represent a good 1999, the average level was about 320 kg/ha/y (though target for reform initiatives. However, the other sectors maximum values may be 4 to 5 times higher). Nutri- (chemicals, textiles, tanning, and mining) all have the ent pass-through from fertilizer overapplication, which potential to discharge pollutants with more serious is increased through inefficient forms of irrigation, is human and environmental impacts than COD. one of the main driving forces behind increasing levels of eutrophication in Chinese lakes and near-shore Municipalities. e demand for water in China's cities marine waters. For instance, it is estimated that 70 has increased dramatically over the past few decades. percent of the nutrient load of Lake Dianchi comes Between 1990 and 2004, urban water consumption from agricultural diffuse pollution; the picture is increased by about 6.3 percent annually, to 23.4 similar in Lakes Chao and Tai. 14 Policy and Institutional Considerations Figure 1.14. Trends in Industrial Wastewater and COD Emissions ere is a high likelihood that the use of, and 1,600 30 pollution associated with, pesticides is also increas- 1,400 25 ing; however, data on this 1,200 issue is missing. e lack 20 tons) of appropriate monitor- tons) 1,000 ing and data collection (bilion 800 15 systems is indicative of thousand the problems that the (ten 600 10 COD Wastewatergovernment is facing 400 in the management of 5 pesticide use. Given the 200 impact that pesticides 0 0 can have on water qual- 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ity, the issue is assumed COD CAOEs COD TVIEs Total COD to be a serious problem. Wastewater CAOEs Wastewater TVIEs Total wastewater Source: China Statistical Yearbooks, data for 1990 ­ 1994 and 1996-1997 are extrapolated from 1989, 1995 and 1998 Finally, China's data points. Note: Country and Above Country Owned Enterprise (CAOE), Town and Village Industrial Enterprise (TVIE). economic growth and the increasing affluence of the population are Figure 1.15. COD Loads and GIOV Shares in Industries, 2004 resulting in a changing diet and consequently a major increase in Mining livestock production. Figure 1.17 shows that total weight of pig, sheep, Tanning and other (cattle, horse, donkey and camel) increased 54, 86, and 62 Textiles percent respectively between 1978 and 2004. is presents a new water pol- Chemicals lution problem because the potential of growth and the difficulties in Food regulating this industry mean that manure generation could have serious Pulp/paper consequences on water quality. 0 10 20 30 40 50 Percent Summary of Findings GIOV COD Source: China Environment Yearbook (2005). A combination of unprecedented economic growth and urbanization is putting significant strain on China's water resources. Water shortages are increasingly Compared with the industrial and municipal sectors, a reality, particularly in the northern part of the initiatives to address agricultural emissions have been country, and the declining quality of the existing water very limited. is sector is especially challenging, resources only exacerbates the country's problems in because there are a growing number of small-scale the water sector. farm units that are difficult to supervise, and, as the economy continues to open, the government's influ- Water consumption is increasing in spite of efficiency ence over farming practice is diminishing. gains in agriculture and industrial water use. e 15 China Water Quality Management Table 1.2. Urban Indicators and Water Use Annual Growth 1990 1995 2000 2003 2004 (percent) Water consumption residential (billion m3 ) 10 15.8 20 22.5 23.4 6.3 Per capita water consumption residential urban (ton) 69.7 71.3 95.5 77.1 76.9 0.7 Municipal wastewater treatment capacity (mill m3/yr) 2.77 7.14 21.58 42.54 49.12 23.4 Length of sewer pipelines (10,000 km) 5.8 11 14.2 19.9 21.9 10 Municipal Wastewater treatment rate (percent) 13 19.7 34.25 42.39 45 9.3 O cial urban population (million) 301 351 459 523 543 4.3 Number of designated cities 467 640 663 660 661 2.5 Built-up city areas (km2) 12,856 19,264 22,439 28,308 30,406 6.3 Source: China Statistical Yearbook (1992, 2000, 2004, 2005) and China Urban Construction Statistics Yearbook (various years). Figure 1.16. Municipal Wastewater, 1978­2003 (billion m3) 40 45 40 35 35 (%) 30 30 m3) (B 25 25 treatment 20 Discharge 20 15 10 Wastewater 15 5 10 0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 WW treatment (%) WW discharged (B m3) sewer length (Mill 10m) WW treatment cap (100M m3/day) Source: China Urban Construction Statistics Yearbook 2003. Figure 1.17. Irrigation, Fertilizer, Pesticide, and Livestock Levels (1978­2004) 60 1.8 60,000 1.6 50 50,000 1.4 fertilizer 40 1.2 40,000 1 Chemical 30 Pesticides 30,000 0.8 area, 20 0.6 20,000 0.4 10 10,000 Irrigated 0.2 0 0 0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Irrigation (M hec.) Chemical fertilizer (MT) Pesticide (MT) Pig Sheep, goats Cattle, horse, donkey, camel Source: China Statistical Yearbook (various years). 16 Policy and Institutional Considerations primary culprit for this trend is the rapid growth in sources, primarily agricultural runoff, which is urban populations and simultaneous increase in urban difficult to regulate. per capita water consumption. e growing demand for water in northern cities has resulted in major water Industrial pollution has decreased substantially since transfer projects. Having resulted in increased govern- 1989. More stringent regulations have led to the ment attention to water quality, these projects have closure of many highly polluting small-scale TVIEs. generally had positive ecological impact. However, the Improved industrial processes and higher volumes resulting increase in water prices will be a problem for of treated water can also account for the pollution many consumers. reduction. Overall water quality in China is poor. In 2004, In recent years, water quality in China has improved only a quarter of China's rivers were classified as in the rivers classified in the best water quality catego- category I and II (highest water quality), while about ries, but it has worsened for the worst categories. ese 40 percent were in the most polluted categories. trends reflect the difference in water quality patters Most of the pollution in China's rivers is caused by in the northern and southern parts of the country, as the discharge of nitrogen (in the form of ammonia) well as concentrated efforts on improving quality in and organic materials, such as BOD and COD. the main river courses, with less effort in the tributary Much of this discharge originates from non-point waters. 17 2. Policy and Institutional Issues Legislation and Policy Instruments of industrial discharges of eight of the main water pol- lutants (mercury, cadmium, hexavalent chrome, lead, At the time of the first Chinese water pollution arsenic, cyanides, oil, and COD) were achieved over policy, which was formulated in 1972, the focus was the period 1990­2000, but more recently some of the on abatement of point-source pollution. Since then, critical water pollution reduction targets have not been the approach has undergone a number of profound achieved in the 2001­05 period (World Bank, 2006). changes, including a shift toward pollution prevention, In particular, less progress has been made in address- the use of integrated management approaches, multi- ing COD loads and concentrations, and the modest source financing gains that have been schemes (replacing achieved have been government budget offset by increases in allocations), and COD from mu- policy instruments nicipal sources integrated with com- (Statistical Yearbook, mand and control 1990­2005; measures. New policy China Environmental instruments include Statistical Yearbooks, effluent standards, 1990­2005). EIA requirements, discharge permits, is situation reflects fee and levy systems, the fact that the ISO 14000, and Total legal system has been Load Control. A sluice along the Huai River focused on industrial sources and has been e current policy unable to account for structure has had some success in reducing water "new" water pollution problems, such as agricultural pollution from the industrial sector. Between 1995 and non-point and municipal sources. e approach is 2004, the absolute discharge of wastewater decreased entirely dependent on government agencies and does from 28 billion m3 tons to 22 billion m3, though the not take advantage of the potential for participation situation deteriorated somewhat in the last few years. from the private sector and civil society. Furthermore, Between 1999 and 2004, the percentage of industrial the system is heavily reliant on protection and com- wastewater meeting discharge standards increased mand-and-control tools, as opposed to economic and from 67 to 91 percent. Target levels for the reduction voluntary instruments. ­ 19 ­ China Water Quality Management A major problem with respect to water pollution it is also a source of funding for investment in pollution management (WPM) in China, as in many parts management and capacity building for environmental of the world, is that well-designed policies are often protection agencies. In 1999, total water pollution charges poorly enforced. Further complications exist in areas amounted to about 0.3 billion Yuan, about 5 percent where rivers cross administrative boundaries, between of total environmental charges. Under the old system, municipalities or provinces, because agencies pay more charges would only be levied against the most significant attention to protection of water resources that affect their element of pollution in excess of the effluent standard. clients than to discharges transported out of their area With the 2003 revision, however, there are charges for all of responsibility. is behavior causes conflicts between elements, e.g. COD is charged at 1.2 Yuan per Kg. An upstream and downstream administrative units. example of the charge system is given in Box 2.1. e following WRM policy instruments are currently e initial problems associated with the pollution levy employed in China: system included: Pollution Charges. e pollution levy system (PLS), Polluters limited ability to pay resulted in a system initially established in 1982 and revised in 2003 (see Box where charges did not reflect environmental costs; 2.1), has become the most important economic instru- Charges were collected against the pollutant with ment for environmental protection. e PLS not only the highest concentration, which implies that serves as an incentive to change polluters' behavior, but other pollutants were not penalized; e system was based on concentrations rather than on loads. Box 2.1. China Pollution Levy System Reform T he new pollution levy system was initiated in July 2003, and includes new e above-mentioned problems appear to regulations on principles, charge basis, charge rate schedule, revenue, and have been solved with the referred new use policies. The main change is the shift from a concentration-based to a pollution charge regulation, but further total load charge system, i.e. charges are levied against discharges regardless of detailed reviews should perhaps also be whether the concentration is above the discharge standards or not. The charge undertaken. basis covers more than 100 pollutants, a ecting water, air, solid waste, noise, and radioactive pollution. Industry Permit Systems. Acceptable total Pollution charges are calculated using a pollution equivalent (PE) system, which discharge loads are set in each region represents the aggregate volume of pollution from each source. Each constituent according to the local recipient carrying pollutant has a speci c PE coe cient, and the total charge is calculated as the sum capacity. Based on these limits, polluters of PEs multiplied by the local charge rate. For example, a rm is in compliance are allocated discharge licenses with a with the relevant e uent standards, discharging 50kg COD, 8kg SS, and 1kg oil per specified maximum volume, and permis- month. Under the previous system, there would have been no charge for these emissions, as the e uent standards have not been exceeded. However, under the sion is granted through permit decrees. new system, each PE is charged at a set rate. If we assume the rate is 0.7 Yuan/PE, In 1989, the State Council approved then the total charge will be 43.4 Yuan/month [((50/1)+(8/4)+(1/0.1)) x 0.7]. implementation regulations for the Law of Water Pollution Prevention and Treat- The pollution levy is collected by local EPBs (at city and county levels) and the ment, stating that the discharge permit revenue is distributed to respective nance bureaus. Revenues from pollution lev- ies are allocated through budgetary management, that is, nancial bureaus and certificate is a management measure for respective EPBs are responsible for allocating nes and selecting projects based reporting and registration of pollution. on the criteria given in the regulation. In order to strengthen the e ective utiliza- Initially, implementation was carried tion of pollution levy revenues, 20 percent of the total revenue is allocated to the out on a test basis. e water pollution central nancial body, the Ministry of Finance (MOF), where it is managed by MOF permit system involves reporting and and SEPA to fund projects of national signi cance. MOF has the nal say in terms of registration of pollutant discharges, budget allocation, while SEPA decides on selection. Provincial governments might allocation and issuance of pollution also set aside a portion of the pollution levy revenue to fund projects of provincial permits, supervision, and management. signi cance. It appears, however, that the principle of setting aside revenue for national and provincial projects and strengthening of budgetary management After piloting the system in several has discouraged the local EPBs in pollution levy collection. provinces, including Shanxi and Jiangsu, SEPA announced the end of the trial 20 Policy and Institutional Considerations period in 1994 and initiated the implementation of a Close-Down Policy. While total load control permit nationwide wastewater discharge permit system. systems are used for firms that comply with effluent standards, firms that exceed effluent standards are is discharge permit system has improved pollution faced with the threat of closure. Firms receive a management and has moved the system from a con- warning and guidance about their need to comply, centration-based approach (referred to above) to a total but ongoing breach of regulations can lead to closure. load control system based on assimilation capacities in Application of the close-down policy is closely linked recipient water bodies. is has led to significant water to local development policies. For example, regulators pollution decreases, particularly in pollution from are less likely to enforce closure in areas where local industrial sources. Application of the permit (total economic development is weak, while closure is more load) system runs in parallel with effluent standards. likely where pollution from firms affects important e former is seen as more stringent, but the polluter investments such as within the South-North Water is required to meet both requirements and is liable Transfer Project area. for disciplinary action if either is exceeded. e total load system is, therefore, not used in isolation but in When the government assessed industrial pollution combination with a variety of the other instruments. across different sectors, it identified fifteen categories However, problems still exist, including: of enterprises that are defined as serious polluters. e "Fifteen Small" enterprises policy then recom- Technical/scientific challenges in establishing mended that these categories be phased out. e the ecological status of water bodies and in the most important category is TVIE Pulp and Paper calculation of assimilation capacities of the receiv- factories. By 1997, more than 64,000 "Fifteen Small" ing water bodies. is has resulted in significant enterprises were shut down, accounting for 86 percent delays in the implementation of load-based of non-complying units. However, strategically management systems. important enterprises located in economically strug- Coordination difficulties between the permitting gling regions were allowed to continue operating. e and the total load control systems. In particular, policy encountered significant resistance because of it is difficult to be confident in total load limits, its socioeconomic implications, but from an environ- which are set for provinces, cities, and towns mental perspective, the results were encouraging. e through self-monitoring and assessment processes. evaluation of the policy concludes that: e lack of an independent monitoring system to guarantee the required load reduction and water Direct positive environmental impacts include quality criteria is a significant concern. the annual reduction of more than 3 billion m³ Equitable allocation of permits between existing wastewater discharges and 1 million tons of COD and new pollution sources. Difficult technical and load from pulp and paper factories; political decisions have to be made in the cases Estimates indicate that the policy produced a where local assimilation capacities are already net benefit for society, with the 42 billion Yuan being exceeded. is raises issues related to cost (80 percent born by enterprises) more than effectiveness, methodology, allocation, and equity. being offset by the economic and environmental Difficulties in aligning targets to regional water benefits; quality and load-bearing capacities. e policy showed the seriousness with which the Problems in integrating agricultural non-point government intends to address water pollution pollution and urban pollution management into problems; the discharge permit system. Only limited attention was paid to local economic A fully efficient and "fair" discharge permit and social impacts, such as job losses and associ- system requires improvements in emission ated local economic impacts. However, only about monitoring and supervision. 1 percent of the total number of TVIE staff appear e weak scientific basis and poor monitoring to have been affected by the close-down policy. means that strict legal enforcement is difficult, and enterprises can get away with permit Centralized Wastewater Treatment Plants. e Water violations. Pollution Prevention and Control Law (1996, article 21 China Water Quality Management 19) requires centralized treatment of municipal sew- Cost: Construction and maintenance costs are age, and prescribes that relevant government bodies high, and the onus is on local users to pay for should incorporate water protection and treatment these facilities. However, full cost recovery may infrastructure into urban planning.1 A centralized not be realistic in smaller cities that cannot take system refers to an urban wastewater treatment plant full advantage of efficiencies of scale. and its pipeline sewerage network, as opposed to treat- Financing: Various sources of funding can be ment infrastructure for specific firms. e revised law explored including government budgets, private also indicates that users will be charged a wastewater partnerships, and foreign investments. discharge fee for sewage treatment services, and those Pre-treatment: Criteria for the pre-treatment of who pay should be exempt from separate pollution some industrial discharges, prior to entering the discharge fees. Revenue from these fees is used central system, may need to be developed. exclusively for construction and operation of facilities Incentives: Positive incentives or stricter enforce- for central treatment of urban sewage. However, many ment may be required to make enterprises move cities are still quite far from the situation envisioned in from existing systems to centralized treatment this municipal wastewater management policy, which facilities. includes the development of sewerage systems and Fees: Effective cost recovery systems, such as user large treatment plants. In many places sewerage and fees, need to be established. Technology: Identification of the most appropri- treatment facilities are either absent or very partial, ate technical approach for wastewater treatment and industrial enterprises have to treat their own is difficult. For example, the socioeconomic emissions. conditions in many municipalities indicate that e development of the required sewage and state- of-the-art technology may not necessarily be wastewater treatment facilities is a difficult process, the best option and that low-cost, labor-intensive solutions are more appropriate, even if treatment and planning, coordination, and timing have all been capacity remains sub-optimal in the short run. stumbling blocks. A crucial element determining the Integrated approaches: New wastewater facilities capacity and technology of these plants is the projected should be integrated with existing water supply, quantity and composition of wastewater generated. sewerage, wastewater treatment, and sludge Another problem is the appropriate pricing of water, as handling systems. Furthermore, facilities for underpricing leads to overconsumption and increasing peri-urban areas might be linked into the urban levels of wastewater generation. In Beijing, which has systems. the second highest average per capita consumption rate2 (248 l/day), water prices have been increasing over Environmental Impact Assessment (EIA). e Envi- the last few years. e latest increase, in May 2005, ronmental Impact Assessment (EIA) and approval was from 3.7 Yuan to 4.5 Yuan (0.55 USD) per M3 for system has become an important element of pollution residential consumers. is rate is one of the highest management in China. e EIA system is used to in China (Kunming is 1.8 Yuan/m3) and compares to establish critical conditions for pollution prevention urban disposable income levels of 15,637 Yuan/year in new developments. In 2002, the Environmental (Beijing Municipal Statistical Bureau, 2005). About Impact Assessment Law was issued, requiring not only three-quarters of this price is used to cover water EIAs for specific projects but also for overall plans. supply, and one-quarter is assigned to cover sewage Some of the problems faced in implementing the EIA disposal costs. requirements are: e implementation of centralized wastewater treat- EIA enforcement can be difficult, especially when ment policies has raised a number of issues: projects have strong political backing. However, SEPA has recently taken a much tougher stance 1. Reform of Environmental and Land Legislation in the with respect to EIA enforcement and has released People's Republic of China. Asian Development Bank, 2000 2. After Shanghai (330.6 L/day) but water availability is much information on projects that are breaking the lower in Beijing. rules; 22 Policy and Institutional Considerations e timing of EIAs often lags behind the Cleaner Production. China's Cleaner Production feasibility study of construction projects. is Promotion Act was enacted in 2002 to promote CP, has reduced the potential positive impact that reduce pollution, and improve the environment. It the assessment can have as important design and requires the continuous application of measures for location decisions may already have been taken; design improvement. e law sets out responsibilities Public participation in the processes remains low, for the State Council and other administrative reducing the validity and acceptance of the EIA departments to ensure more sustainable resource results, even though the current law has provi- use, including the establishment of product labeling sions to encourage public participation. systems, "naming and shaming" heavy polluters, and compulsory recycling lists. e measures are designed River Basin Water Pollution Management Planning and to enhance energy and water conservation, and to Implementation. China has a long history of river basin increase the level of water reuse and recycling. ey are management in various forms, including the establish- seen as the first step in developing a more ecologically ment of river basin commissions (RBC) for the seven based economy. e relevant government departments main river basins in the early 1950s. However, an have started to implement an industrial policy based approach reflecting needed differences between the on cleaner production and given guideline standards basins was undermined by the 1998 Water Law, for cleaner production in their respective sectors. In which stressed that "the State shall exercise a system of order to strengthen implementation of the CP Promo- unified administration on water resources in association tion Act, CP standards for several industries were with administration at various levels." Moreover, promulgated in 2004 (e.g. for petroleum refineries and the 1998 law undermined the powers of river basin coking and tanning industries). management organizations (e.g. enforcement), left them with ambiguous legal status, and limited their Environmental Management System (ISO14000). influence in many WRM areas. e 2002 Water Law Since the late 1990s, PRC started environmental (re-draft) addressed river basin management directly, management system (EMS) auditing and ISO14000. specifying that "the state shall adopt a `combined In several years, SEPA successively issued management division responsibility' (CDR) system of river basin documents and established a set of effective manage- management in conjunction with jurisdictional man- ment measures. SEPA initiated pilot certification of agement." It indicated that river basin management EMS in 1996 and identified 55 pilot enterprises for the shall be set up by the water administration department certification of ISO14001. In 1997, SEPA approved 13 under the State Council, and set out the following pilot cities (areas) for implementing ISO14000 series. river basin management functions: (a) planning; (b) By the end of 1999, 263 enterprises had obtained protection of water resources water areas and projects ISO14001certificates.3 (including pollutant discharge loading and sewage From the demonstration experience, there are three facilities); (c) water resource allocation and saving; and main barriers or problems for implementing ISO14000 (d) water dispute resolution. in China: Voluntary Approaches for Pollution Management. 1. Both enterprise management and environmental Compared with mandatory approaches, voluntary management awareness levels are low. It is difficult approaches are more flexible and easier to introduce. for enterprises that do not focus on product quality In developed countries, voluntary approaches have management to pay attention to EMS auditing. become more and more important elements of environmental management. ose approaches can be 2. e enterprises' technological capacity is low and applied both to polluting enterprises and to the general means of production are not highly developed. public. Preventive approaches, such as ISO14000, Most enterprises are oriented toward the domestic environmental labeling, and cleaner production (CP) market and have limited understanding of the principles, can be adopted by polluting enterprises. requirements needed by international markets. e general public can have an influence through involvement in decision making and applying environ- mentally conscious consumption principles. 3. http://www.zhb.gov.cn/iso 23 China Water Quality Management erefore, they often hardly meet the requirements work on a national level and to establish national of ISO14000. standards for environmental quality (including water quality standards) and for discharge of 3. Some current environmental management policies pollutants. It also gives the "competent administra- and regulations do not embody the sprit of the tive departments" the authority to supervise the process management approach (CP), and only focus management of the protection of respective natural on end-of-pipe issues. Many environmental regula- resources. In the case of water, the responsibility is tions and standards do not comply sufficiently with given to MWR. ISO14000 series and international conventions. 2. e Water Pollution Prevention and Control (WPPC) Law (1984, revised 1996). is law gives Information Disclosure. Information disclosure SEPA and EPBs the responsibility to supervise and and invitations for public involvement have been manage the prevention and control of water pollution important factors in forming the political basis for (qualitative aspects), and defines SEPA as the leading strict enforcement of control measures in many central administrative body for water pollution countries. e enterprises are concerned about their management. e draft amendments clarify the public image and, in most cases, will be sensitive to responsibilities for water monitoring, and the protec- public pressure. In some rather developed regions of tion of water sources for drinking water purposes. China, environmental information disclosure has been extensively used and plays an important role 3. e Water Law (1988, 2002). is law prescribes in promoting enterprise pollution reduction and in that MWR and WRBs are in charge of the admin- improving the public's environmental awareness. istration and supervision of the quantitative aspects Unfortunately, a wider introduction of a disclosure of water resource management. e 2002 revision policy has been restricted because of the "traditional" is designed for rational development, utilization, ideas and attitudes among management institutions. saving, and protection of water resources, and is notable for its treatment of river basin management Institutional Framework - prescribing that "the state shall exercise a WRM of river basin management in conjunction with National Structures. e government structure in jurisdictional management." China is built around central institutions, such as the State Environmental Protection Administration Further revisions of the Water Pollution Prevention (SEPA), and local-level counterparts, such as the and Control Law are currently being developed in Environmental Protection Agencies (EPBs). Central order to address overlaps with the Water Law. Article and local levels of governance are therefore structured 12 of the Water Law indicates that MWR and the along similar lines. In terms of water pollution WRBs are responsible for unified administration and management, at the central level SEPA is in charge of supervision of water resources, while article 4 of the overall pollution policy, while other ministries--such WPPC law stipulates that SEPA and the EPBs should as MWR, MOC, and MOA--contribute in specific supervise and manage the prevention and control fields of responsibility. At the local administrative of water pollution. is framework has undermined levels (mainly provinces, cities and counties), the cooperation between the two agencies; specific structure is a replica of this central blueprint. e legal problems include widespread functional overlaps in basis for this institutional arrangement is set out in; responsibility for managing surface and underground water resources, implementing general management 1. e Environmental Protection Law (1989). is is and pollution prevention plans, pollution quantity the principal law for environmental protection in control, water quality monitoring, protecting drinking China. It defines the rights and duties of all levels of water, and industry regulation, enforcement, and government, industries, organizations, and indi- disciplinary action. viduals with respect to environmental protection. It gives SEPA the authority to coordinate supervision is legal framework assigns responsibility for and management of environmental protection overall water resources management to MWR and 24 Policy and Institutional Considerations the WRBs, while SEPA and the EPBs (under the approach designed to ensure appropriate use of leadership of local government) are in charge of water water resources and the environment. pollution management. However, since laws and ere is poor coordination between MWR and regulations are quite general, there remains some SEPA on many WRM issues, such as water ambiguity with respect to exact responsibilities, and quality management. many problems emerge in the practical execution of water management. e often-unsatisfactory level of Data inconsistencies from MWR and SEPA are cooperation and coordination between water resource common. Figure 2.1 (below) shows the differences in management and the water pollution management MWR and SEPA data on average water quality in the agencies compounds this problem. Indeed, the issue of Huai River basin. e data from these two sources are inter-agency coordination (in planning, implementa- often inconsistent; in the reviewed period (1995-2001), tion and control) is widely regarded as one of the most there was an average difference of 11 percent. Data important constraints to an effective integrated water reliability is a serious concern for the development management system in China. e overlap or conflict- and enforcement of appropriate policies. In spite of ing responsibilities of SEPA and MWR often leads the fact that 15 of the 37 surface water parameters to counterproductive duplication of efforts. Problems are monitored by both agencies, there is no common exist in the following fields: database of water quality information. e river basin management institutes are under SEPA and MWR are not the only ministries with the jurisdiction of MWR, but its relationship with jurisdiction over water pollution issues. e full SEPA and the EPBs is not clear, which makes it institutional framework is set out in Figure 2.2, which hard to judge how plans are implemented. shows the various institutional responsibilities for water e relationship between environmental protec- pollution management in China. e figure shows tion plans of SEPA and EPBs and the water the complexity of the managerial structure and gives resources protection plan of the MRW and WRBs an indication of the challenges faced in implementing is not clear. integrated water management and pollution control. e system of Water Environmental Function Given the complexity of this management structure, Zones established by SEPA and the system of the occurrence of conflicts and poor coordination Water Functional Zones used by MWR are not is less surprising. However, evidence suggests that compatible, as their relations and functions are sectors frequently act in their own interests, and their not clear. Function zones are areas designed to policies do not always support the overall goal of water fulfill a specific function with a management pollution management. In the current structure, the Figure 2.1.Discrepancies between SEPA and MWR Monitored Water Quality for Huai River 100 80 60 Percent 40 20 0 SEPA MWR SEPA MWR SEPA MWR SEPA MWR SEPA MWR SEPA MWR SEPA MWR `95 `95 `96 `96 `97 `97 `98 `98 `99 `99 `00 `00 `01 `01 I + II III + IV V + V* Source: China Environment Yearbook (various years), MWR Statistical Yearbook (various years). 25 China Water Quality Management Figure 2.2. Ministries and Authorities at National Level Involved in Water Pollution Management Lead agency Water pollution laws, regulations/standards. State Environmental Supervise/enforce. Water Environmental Protection Agency Function Zoning; Initiate WPM plans in key rivers and lakes. Monitor water quality. Integrated water resource management, water resource protection planning, monitoring water Ministry of Water quantity and quality in rivers and lakes; issuing Resources of water resource extraction permit; propose water pricing policy. Ministry of Construction Urban water supply; urban wastewater treatment Ministry of Rural and agriculture water use and Agriculture agricultural non point pollution Ministry of Land Related Resources Water as a resource Management agencies State Forest Forests for conserving water sources Agency ollutionP erta Ministry of Ship transportation water pollution control W Transportation State Economic & Industrial policies that a ect wastewater Trade Com. discharge and its treatment Ministry of Pollution levy proceeds management; decide Finance wastewater treatment charge and water price policy State Dev. Planning Com. Pollution levy policy; wastewater treatment pricing policy, water pricing policy State Council Implementation regulation; administrative regulation and order; lead and coordination Legislations and law enforcement and National People's Congress supervision State Council and the National People's Congress are Center for Disease Control (CDC) under the Ministry supposed to play a coordinating role through the enact- of Health (MoH), and MOC--is also critical in the ment of laws and inspection of their implementation. management of the drinking water supply and moni- toring of drinking water quality. Urban drinking water Apart from the SEPA­MWR nexus, the relationship supply and quality falls under the authority of the between these ministries and the MOC is particularly MOC, while rural drinking water is overseen by the important. e latter is responsible for a number of MWR. MoH through CDC oversees the monitoring activities with a significant impact on water pollution of rural drinking water quality. is disaggregation management, such as construction and operation of in the authority has resulted in lack of consistent and sewage treatment plants and urban water supply facili- comprehensive data on drinking water quality. ties, and water conservation. Unfortunately, SEPA, the EPBs, MWR, and the WRBs are not always included River Basin Management. In the current water manage- in this process. ment system, there is no fully integrated system for management of water resources and water quality e diversification of responsibilities among different aspects. ere are, however, a number of models for government agencies--including SEPA, MWR, the river basin management and coordination. SEPA and 26 Policy and Institutional Considerations MWR will typically advocate for the use of a specific proposing actions and policies. However, in spite of the approach, but the final decision on which model to use participatory and inclusive approach, there have been is made by the State Council. Models include; conflicts between the two main parties. As a result of the increased authority of the MWR, SEPA decided in 1. Water Basin Management Committees (WBMC): As 2002 to distance itself from participation in the WRPB referred, these were set up for many of the main rivers within the WBMCs and rather to exercise its increased after the foundation of the People's Republic and were authority through a direct SEPA­local government responsible for flood control, river transportation, hy- alliance and the application of a "joint meeting system" draulic engineering, and construction and operation (see below). erefore, although the planning process of water services facilities. Increasing pollution levels for water quality management is basin-wide (SEPA led to the establishment of Water Resource Protec- formulates specific pollution management programs tion Bureaus (WRPB), which were under the dual such as Liao, Hai and Huai), the actual implementa- supervision of MWR and SEPA. e latter provides tion is conducted through local governments. A more technical guidance and covers relevant operational decentralized approach, with river basin authorities expenses. According to China's institutional classifica- holding executive power for water-related activities in tion, these bureaus were public technical institutions river basins, has not been implemented in China. with limited administrative power. e WBMCs were, therefore, not able to act as strong coordinators Urban Pollution Management. At the local level, for water pollution management. decentralization has led to the creation of urban Water Affair Bureaus (WABs) that are responsible for 2. Water Resource Protection Steering Group planning and operating water utilities. is structure (WRPSG): ese groups are co-chaired by SEPA means that there are two parallel management systems and MWR and include deputy governors of river (EPBs and WABs) responsible for pollution manage- basin provinces as members. Meetings are used to ment in the urban water sub-sector. express interests and coordinate activities, which require approval. is loose organizational structure Environment Protection Bureaus (EPBs): EPBs are brings together the relevant bodies, and facilitates responsible for zoning of water bodies, issuing pollution coordination and implementation. is approach is permits, protecting drinking water and controlling used in the Huai River basin. pollution sources, while monitoring and management is often delegated to Environmental Monitoring Stations. 3. Joint Meeting for Pollution Management System: Financing for these activities is subsidized with income is State Council-endorsed model, which has from wastewater pollution charges and fines. However, been used in the Tai Lake basin, differs from the in cases where local economic development plans are above in that SEPA plays a leading role, with the in conflict with the EPB mandate, their authority to participation of local EPBs and other cooperating enforce environmental regulations and collect fees is departments. e main limitation is that the system often constrained (though this will vary between areas). is only operating on an ad-hoc basis. Water Affair Bureaus (WABs): e urban WABs are In practice, the management of shared river basins subordinated to the Water Resource Department of includes a combination of horizontal and vertical the Ministry of Water Resources. e WABs provide processes. e former operates within current boundaries an integrated management for city and county water (i.e. kuai kuai guan li) and has more administrative services and are designed to establish an integrated wa- power, while the latter operates through MWR (i.e. tiao ter resource management strategy at the local level by tiao guan li) and has more technical authority. River basin breaking down the segmentation that exists between organizations provide technical directions and guidelines administrative regions and different departments. to local governments within the basin, while the local governments are responsible for implementation. With the development of institutional reform of the counties, more and more cites and counties have e models all provide a forum for consultative infor- established WABs. By the end of 2001, 633 WABs had mation sharing and joint planning that can be used for been established, comprising; 27 China Water Quality Management 1 provincial WAB (Shanghai) environmental protection is projected to increase 4 sub-province WABs (Shenzhen, Wuhan, significantly in the 11th (2006­2010) and 12th Haerbin and Dalian) (2011­2015) plans, and by the 13th Five Year Plan 59 city WABs (2016­'20) it is projected to reach 524 billion yuan 569 county WABs (Figure 2.3) One of the specific tasks of the WABs includes Infrastructure-related investment is steadily growing reforming the water affair and utility management and amounted to more than 15 billion yuan in 1998, systems. For example, Heilongjiang Province was the which is ten times higher than the corresponding first to introduce a water utility management system investment in 1991. Investment in technology in- at the province level, but Heibei, Inner-Mongolia, and novation and cleaning up "old industries" is still high Shandong provinces have set them up in 50 percent and accounts for about half of the industry-related of their counties and cities. A number of southern control costs. If we consider the 14 provinces and cities provinces with abundant water resources--such as in Northern China, investments in municipal and Jiangsu, Guangdong, and Yunnan--have also actively industrial wastewater treatment plants and sewerage carried out water affair management system reforms. systems in the period 1998 to 2004 amounted to ese reforms, which have been promoted by MWR around 49 billion yuan, and had been steadily increas- in order to unify water management, are rarely ing over the period (World Bank, 2005; Statistical integrated with wider river basin management and are Yearbook, 2005). e urgent need to develop sewerage typically applied within the administrative boundaries systems appropriate for local treatment capacity of specific cities, countries, or provinces. has, to some extent, been recognized; between 1998 and 2003, annual investment in sewers (in northern In spite of the apparent success of the "WAB" model regions) increased 272 percent. and new management systems, a number of institu- tional issues remain. For example, it is unclear if the Establishment of sewers and treatment facilities has WABs should operate as governmental departments or not been even across the country, with more developed as public cooperatives, of if they have a cocoordinating areas receiving greater investments (perhaps reflecting or a supervisory function. Similarly, the relationship their ability to pay for these facilities). is pattern is between the City Bureaus and the River Basin Water reflected in the level of centralized wastewater treat- Resources Bureaus is not well defined. ese issues can ment, which was 30 percent on average (2003), but up lead to conflicts and undermine the effectiveness of the to 50 percent in Beijing, and as low as 15 percent in river basin institutions. north Hubei. In order to achieve a centralized wastewater treatment Financing Water Pollution Management rate of 60 percent, it is estimated that a total invest- ment of around 14 million RMB will be required Between 1995 and 2000, China invested more than between 2003 and 2010 (World Bank, 2005). Invest- 360 billion yuan in environmental protection, which ments of 5.6, 7.6, and 0.65 million RMB are required was only 80 percent of the budget set out in the 9th for wastewater treatment plants, sewer networks, and Five Year plan ('95 ­ '00) and about 0.87 percent of sludge handling facilities respectively (World Bank, the country's GDP. However, actual investment in 2005). environmental protection has increased yearly in the 10th Five Year Plan period from 1.13 percent of GDP Funding sources. Sources of funding for water pollution in 2000 to 1.40 percent in 2004 (China Statistical management in China include central government, Yearbook, 2005). In the most developed regions financial institutions, and the private sector. Funds (Peking, Shanghai and the Pearl River Delta), the planned under the five-year plans represent central share of GDP spent on environmental protection and local budget commitments to water pollution exceeded 3 percent, two-fifths of which was used for management, and foreign sources would represent water pollution management, e.g. industrial control additional streams of investment. e dominant source and urban wastewater treatment. e allocation for of investment in pollution management is still public 28 Policy and Institutional Considerations Figure 2.3. Investment Projections in Five Year Plans (1995­2020) cost-benefit-based prioritiza- tion. is approach has a 600 number of shortcomings: 500 It is based on a single 400 investment channel, which lacks economic driving 300 mechanisms and inhibits (billion) the use of private financ- Yuan 200 ing. Consequently there are insufficient funds for 100 investments in pollution 0 management. 9 5YP 10 5YP 11 5YP 12 5YP 13 5YP To compensate for the lack of governmental funding, Water Pollution Control Air Pollution Control Solid Waste Management Pollution Control several projects have been Source: World Bank 2002, Chinese Academy for Environmental Planning (2004). financed through interna- tional loans. is approach has favored use of foreign money, provided as allocations from national or regional technology and has therefore constrained the budgets, including revenues collected from environ- development of domestic technology. mental fees and fines. However, with increasing trust e existing investment system does not include in China's market mechanism and economy, financial a market mechanism, so input-output and cost institutions and the private sector have shown increasing accounting systems have not been established. interest in investing in environmental protection. As a consequence, there is an increasingly diverse range of Water Pollution Management Case Studies financing sources for pollution management. General. While every water body in China presents a In the 10th five-year plan (2001­2005), the govern- different set of physical and socioeconomic challenges, ment set out to restructure these financing mechanisms many features are common across similar rivers and by integrating regulation with market-based ap- lakes, and water pollution management lessons can be proaches. Measures have been taken to develop private gained by looking at certain case studies. e Huai and public financing, to subsidize key infrastructure River and Lake Dianchi cases are particularly interest- construction, to increase loans to enterprises, to focus ing for a number of reasons. Both represent water more on pollution abatement and clean production, bodies that have been the focus of considerable national and to upgrade the pollution charge system. and international attention, with many projects and initiatives yielding a mixed set of results. As typical for a e next step in setting up financing options will be to northern river, per capita water availability in the Huai open investment in pollution management to private River basin is low (~ 450 m3/capita/year) and industrial capital markets. In addition, or in combination with pollution has been a major problem. e case of Lake this, it is envisaged that wastewater facilities will come Dianchi is typical of many shallow lakes in China, as it under private management, which will require the is experiencing increasing levels of eutrophication from setting up and collection of sewage disposal fees that growing municipal and non-point pollution sources. meet investor's expectations. e sections below highlight a few general features of the water pollution experiences from these locations. e existing investment system has evolved under a regime of strict central planning dominated by Conditions. Over the last 15 years, water quality in government investments. However, the government is the Huai River basin has declined significantly, and also responsible for defining environmental and social quality in tributaries is a particular concern (see Figure goals, and the current set-up has no mechanism for 4A, Annex 1). Initiatives over the last decade, targeting 29 China Water Quality Management Figure 2.4. River Basin Management--The Case of Huai River from the dirtiest industrial sectors, with 3,860 firms closed as of 2002. However, social equity implications have made it hard to sustain this initiative, and many enterprises have re-opened and continue to pollute. Prices for water supply and treatment and pollution levies are generally considered to be too low, but reforms for price increases are being implemented. e pollution levies and wastewater treatment charges are levied in all provinces of the basin, and proceeds are used to raise funds for construction and operation Source: Chinese Academy for Environmental Planning. of treatment plants. Local officials consider pollution levies to be one of the most effective tools available. However, industrial pollution, have led to some improvements, monitoring of progress has been difficult and has and some sections of the river now have relatively tended to focus excessively on COD loads. clean water. Significant reductions in COD loads from industry and urban residential discharges following Investment in Water Pollution Management. e 9th five- completion of urban wastewater treatment plants have year plan (1995­2000) required 52 wastewater treat- alleviated the problem of organic pollution. e main ment plants to be established, 30 of which are complete problem now is non-point sources such as fertilizer or under construction. Progress, however, has been runoff. Now nitrate and nitrogen (in the form of am- much slower than planned, and established units cannot monium nitrate) are dominant in the river's pollution run at full capacity due to a lack of complementary structure. Both pollutants are primarily associated sewer networks. As a result, targets for COD pollution with agricultural runoff. were exceeded by 8 percent by 2000. During the 10th five-year plan (2000­2005), COD loads were restricted Institutional Framework. e Huai River passes to 1.3 million tons/year. e target for the 11th five-year through different administrative regions so authority plan is a five percent reduction of this quantity. for water pollution management in the basin is divided among four provincial EPBs. Technical supervision A major obstacle for investment in water pollution and inter-provincial coordination is undertaken by management infrastructure is the low level of recogni- SEPA, which also heads up WRPSG (along with tion it receives among local authorities. A fundamental MWR). Other relevant institutional bodies include element in this problem is the inter-disciplinary nature the Huai River Water Resource Protection Bureau, of river basin management and the incentive problems which is responsible for water supply and protection; this creates; for example, the benefits from expensive and the WRPSG, which coordinates water resource abatement in one province will be felt further down- management and pollution control (including dispute stream. However, the majority of funding for pollution resolution). management investments must come from local budgets (user fees or loans), with only minor central Legislation and policy tools. A range of legislation and commitments. is represents a major challenge for policy tools has been applied in the Huai River basin. SEPA and the WRPSG. Total Amount Control (TAC) targets--for counties, cities, and enterprises--provided a positive stimulus General situation. Economic growth, increasing local for various pollution management initiatives. Imple- urban population, and changing agricultural practices mentation of the "Fifteen Small Shutdown Policy" has around the Lake Dianchi basin have increased water successfully eliminated a large amount of pollution shortage problems and the pollution loads entering the 30 Policy and Institutional Considerations Figure 2.5. Shallow Lake Management--The Case of P (TP) and N (TN) increased two- to three-fold. Lake Dianchi is part of the lake suffers severe eutrophication and oxygen depletion. "Waihai": COD, TN, and TP pollution is less severe. Institutions. e Kunming Environmental Protection Bureau, which is the city-level EPB reporting to the Kunming city government, and its subsidiary bodies are responsible for water pollution and quality man- agement, project implementation, and application of environmental law around Lake Dianchi. e Dianchi Protection Committee was initially established as a watershed management authority to enforce the Dianchi Protection Ordinance, but has since been strengthened and is now the lead agency for decision making on major issues concerning lake protection and treatment. e Dianchi Administration Bureau and the Kunming Dianchi Management Office both sit on the committee. e former is responsible for law formulation, promulgation, and enforcement, as well as monitoring impacts and managing funds. e latter consolidates and organizes management activities for the lake, but this process overlaps somewhat with the EPB's role. Legislation and policy tools. The requirement for EIAs has generally been well-enforced in the area and implementation of the emission permits system has now reached 780 enterprises. A system for the Source: Yunnan Institute of Environmental Science. collection of fees for wastewater drainage and emissions has been established for large-scale factories, but the inclusion of small-scale operators has been more lake. Nitrogenous, phosphoric, and organic pollution problematic. Supply of water in Kunming is currently of the lake is so heavy that the water body is highly charged at 1.8 Y/M3(includes a sewerage fee of 0.56 eutrophic, causing incidents of severe algae blooms. Total Y/M3), which is very low compared to other areas (4.5 levels of N, P, and COD discharges into the lake in 2004 Y/M3 in Beijing). Incentives for water conservation or were 14,446, 1,312, and 71,891 tons respectively. Targets re-use are therefore limited and scarce water resources for reductions by 2010 are 8,829, 766, and 34,228 tons are significantly overused. e charge for sewage costs respectively. Blue-green algae concentrations are high is also considered low and has led to underfunding and (thousands or ten thousands mg/m3). In the summer closure of wastewater collection and treatment facilities. months, sections of the lake experience oxygen deficit (anoxic conditions). Under these conditions, water turns Other local initiatives to support lake water quality black and has a very unpleasant odor. have included the banning of phosphorus in detergents in order to reduce the influx of this pollution into e status of the lake's two sub-sections can be the lake (phosphorus loads are a key element in the summarized as follows: eutrophication process). e local government has also been actively trying to raise public awareness about "Caohai": Over the last decade COD has been the vulnerability of the lake and the need for envi- effectively controlled, but total concentration of ronmental protection through media and propaganda 31 events. Finally, there has been extensive engagement Initial indications are that the 11th five-year plan with local industry, with clean production audits in 71 (2005­2010) will include funding for (a) pollution polluting firms, and the provision of clean production management, (b) supervision, (c) administration, and training to 242 key enterprises, with more planned in (d) science/technology demonstration. Investments the future. e clean production message seems to be in municipal pollution management will account getting through, as some of the larger firms are now for the largest fraction of the budget. Financing for becoming interested in ISO 14000. these activities has largely been through government budgets, but increasing attention is now being paid Investments. During the 9th five-year plan period to options such as build-operate-transfer (BOT) (1995­2000), 65 treatment projects were completed, schemes. However, charges for tap water, drainage, including the establishment of four sewerage treatment sewerage, and treatment are universally low and this is facilities with a combined capacity of 365,000 tons/day potentially an important area of finance. (65 percent of wastewater production in Kunming). However, similar investments were not made in the During the 10thfive-year plan period, the central sewage pipe network. Collection rates are only around government outlined its objective that provincial 33 percent, which means that many of the treatment capitals, including Kunming, should reach a 100 facilities are either closed or only partially operational. percent wastewater collection rate (sewage) by 2010, Delayed implementation meant that much of the which would ensure full utilization of installed planned work (12 urban wastewater projects, 1.29 bill treatment capacity. RMB) could not be However, following completed before the strong interventions 2000­2010 period, from local govern- and lake water quality ments, including targets were not met Kunming city, the (in fact, lake water plans had to be quality deteriorated). extended to about 2020. e extension Pollution management of collection systems was a major feature into old city areas of the 10th five-year and certain outskirts plan, including 4.2 has a particularly billion RMB allocated Eutrophication in Dianche Lake high investment for 10 pollution man- cost. is means agement projects, and that the installed 3 billion RMB for investments in municipal pollution wastewater treatment capacity may hardly be fully management. However, less than half of the projects utilized, and by the time a collection system is com- were completed within the five-year period, and many pleted, certain wastewater treatment plants may have have only just started. e lack of preparatory research become outdated. In certain cases, it may have been and poor evaluations of completed works have been more feasible to establish wastewater treatment plants sighted as significant shortcomings in the approach. closer to the users. 3. Toward a Future WPM Policy in China Introduction be learned, however, from several countries or regions where the development of pollution management has T his chapter provides recommendations for similarities to development in China. further improvements in water pollution management in China based on, (a) To find potential "model" cases, we noted the follow- analysis set out in the preceding chapters, ing major features of water pollution management in (b) dialogue with Chinese counterparts during the China: preparation of the study, and (c) experiences from the complex history of evolution of pollution management e country is the size of a continent. and integrated water e economy of resources manage- the country is ment in other parts developing very of the world. e rapidly, resulting in recommendations urbanization and that we provide are changed industrial described at a rela- structure. tively generic level. Huge regional For more details on variability exists some of the issues, in the economic we refer to the main structure. (2003) report. Huge regional variability exists in the availability of Basic Condition Water treatment in Kunming City water resources. and Major In many regions, serious water Features of Water Management in China scarcity and water quality issues appear both in surface water and groundwater. ere is no country in the world with the same Coexistence of many pollution problems is typical institutional structure, the same water-related for many regions. problems, or the same economic development pattern Controlling industrial emissions and toxic materi- as China. us, there is no "model country" to use als was initiated relatively early and successfully; as a reference point in establishing an efficient water however, industrial pre-treatment is often missing. pollution management system. Valuable lessons can ­ 33 ­ China Water Quality Management Water- and environment-related Box 3.1. Water Pollution Management in Transition laws and decrees are not properly Economies--Experiences from Central and Eastern Europe harmonized and often overlap. C e institutional system is EE countries have gone through unprecedented political, social, economic and institutional transition during the past fteen years. This process en- complicated with many levels and abled some of them to join the European Union (EU) in 2004. From a water administrative units, both vertically quality management perspective, this transition was associated with the need to and horizontally. ere is a tendency simultaneously address many di erent coexisting problems, e.g. point and non- to decentralize, but the state still point sources, traditional and toxic contamination, surface and subsurface waters, plays a strong role in pollution and local and regional problems. Most fully developed countries managed these management, particularly through issues in a step-by-step manner over several decades. its role in financing and defining The transition resulted in many changes in the management of water pollution, economic principles. particularly: Today, major concerns include (a) urban pollution management due Market-based pricing led to a drastic reduction in fertilizer application and dif- fuse pollution; to rapid urbanization and the low level of infrastructure, and (b) the Abolishing outdated technologies in industry and introduction of clean tech- growing need for emerging agricul- nologies has signi cantly reduced emissions; tural non-point source pollution Increased tari s for water use and wastewater handling have reduced water management. consumption. Water quality legislation still focuses The combination of these factors has led to remarkable improvements in surface primarily on protective measures, water quality, highlighting the linkages that exist between economic restructur- incorporating tools such as standards, ing and environmental management. ambient water quality criteria, fees and fines, total load control etc. Municipal emissions largely remained untouched during the transition. However, However, there is a lack of integration increased tari s for water use led to reductions in public water consumption by 40 to50percent.Asaconsequence,manyoftheprevioushydraulicallyoverloadedmu- between these approaches. Further- nicipal wastewater treatment plants ended up with excess capacity. The changed more, the target for each of these is (denser) composition of the raw sewage caused serious operational problems. often not set properly and thus they have little or no impact in practice. Lack of industrial pre-treatment was found to be a serious issue. Residence time in Water monitoring and legal enforce- water distribution networks increased signi cantly, which also resulted in water quality problems. ment is weak or lacking. Huge investments are needed in During this period, the central issue was how CEE countries could achieve the larg- water pollution management. est improvement in the short run, using the scarce nancial resources available, and how they could design a process to ensure further improvements in order to meet e most useful analogy can probably EU requirements and standards. A number of detailed studies led to the proposal for "step-wise" development with a time horizon of two to three decades. Within be found between China and two large, this development process, the rst few years should be devoted to identifying multi-state or multi-country entities, the and dealing with priority "hot spot" issues, and applying least-cost water quality United States and the European Union. management policies on the river basin scale. The second phase should focus more Like China, both are characterized by on sewer renovation, wastewater treatment plant upgrading, and other develop- the fact that administrative borders do ments to meet EU criteria. not coincide with river basin geography, In order to implement the above ideas, it was recommended that policy makers which implies the need to address shared initially de ne phased e uent and ambient standards in harmony with multistage water resource issues. Additional experi- upgrading and development of wastewater treatment plants, accompanied by ences may stem from Central and Eastern tightening requirements and promoting best management practices in industry Europe (CEE), which has been going and agriculture. through tremendous economic transition during the past fifteen years (see Box 3.1). 34 Policy and Institutional Considerations Focusing on Strategic Planning A strategic approach should recognize the need for a long-term perspective in pollution management. In spite of the extensive effort that has gone into Realistic targets and time schedules should be set for pollution management in the last decades, China still pollution reduction and water quality improvement. has a long way to go to handle existing water pollution Achievable targets are needed, because many of the problems and to keep pace with new and emerging required measures will not have a measurable impact issues. ere is a clear need for an overall strategic plan for some time, and institutional actions and legal and for the coming two to three decades. is plan should economic changes may take several years to implement. be developed with the following elements: Ideally, targets--such as percentage of infrastructure development for urban and rural areas; level of meeting Definition of a long term vision for water quality, drinking water quality standards; municipal, industrial including specific targets (see Box 3.2); and agricultural emission reductions; water quality Identification of sub-periods within the total improvements in terms of quality classes; fees collected; time frame, with realistic targets set for each of level of cost recovery; and budget for planned invest- these periods. e "5-Year Plan" periods may be ments--should be quantified. considered as suitable "sub-periods." A change in strategic focus is also envisaged. In previ- ous periods, the focus has been on industrial pollution and treatment of municipal wastewater, particularly aimed at controlling COD Box 3.2. The European Union--Water Framework Directive and heavy metals. In the future, water S ince 1975 nearly thirty so-called "daughter directives" have been created by pollution prevention in China should the European Commission. They de ne water quality standards for various pay more attention to nutrients (N and substances and uses and cover topics such as drinking water quality, bathing P) and persistent organic pollutants. waters, dangerous substances, municipal wastewater treatment, and integrated More efforts will be needed to address pollution prevention and control. In the 1990s it became apparent that directives emerging water pollution issues, such as alone would not lead to an integrated water management strategy. Thus the uni ed water policy of the EU, the Water Framework Directive (EU-WFD), was ap- agricultural pollution and surface runoff. proved in 2000 and is now under implementation in 25 countries. ese new problems will also require new or modified means and strategies for The EU-WFD establishes a framework for the protection of waters regardless of policy implementation and enforcement. national borders with a long-term approach to management. The basic unit for management is the river basin, which is de ned as an area of land from which all With growing levels of urbanization (see surface runo ows into the sea at a single river mouth, estuary, or delta. section in chapter 1), there is an increasing The principal concept of the EU-WFD is to ensure the "good" status of waters. need for municipal wastewater collection The purpose is to protect and, where possible, to enhance the state of water eco- and treatment facilities. In this develop- systems, the aquatic environment, water quality, and groundwater by a variety ment process, all related forms of infra- of measures. It is also used to promote sustainable water use and to mitigate the e ects of oods and droughts. structure, e.g. water supply, wastewater, water and sewer networks, treatment and Cost recovery is one of the main pillars of the EU-WFD. A crucial element in this reuse facilities, should be seen in connec- approach is to develop plans based on a ordability that can be implemented. tion. By considering the broader picture, However, it is not yet clear how this approach will perform in cases where user it is easier to spot and assess imbalances groups and bene ciaries are not well-de ned (e.g. ood control). between the coverage and capacity of A crucial element for implementationofthe EU-WFDis the riverbasin management collection and treatment systems. plan. This plan addresses major characteristics of a river basin, the various human activities, monitoring, objectives, and a program of measures. The deadline for the Phased development is also an important program is 2015, with reviews and updates every six years thereafter. concept to follow. is approach can be applied on the basis of comprehensive 35 China Water Quality Management planning, which systematically identifies the next steps ent approaches have been tried. e present tendency through the identification of the most cost-effective is to develop integrated water resource management priority actions. (IWRM) projects at the river basin scale. In many countries, the lead agency has been the environment ministry; in other cases, new authorities have been Adjusting Policy and Regulations established, which often leads to conflicts with existing institutions. Overall experience has shown that it has China has an extensive set of legal instruments been difficult to establish a management system that is related to water pollution management. However, this fully integrated at the institutional level. legislation appears unnecessarily complex, with many areas of duplication and overlap. Improving this legal China should prepare the legal framework for an structure, particularly by reducing the number of laws integrated approach to water management and and regulations, would result in a more comprehensive pollution control (umbrella water legislation). How- and simplified system. ever, the process of establishing and implementing such a framework could take decades. e umbrella Standards are technical instruments used to control legislation should accommodate the development of emissions and the receiving water quality. In most management plans at the river basin, provincial, and industrialized countries, effluent standards are other levels, as in the United States and EU. mandatory, with ambient water quality criteria used for additional "fine tuning" and to control non-point Institutionally, a number of changes may be required. sources. In these countries, total emission control If SEPA were elevated to a cabinet ministerial level (TEC) is rarely applied except for lakes, river deltas, institution, this would give the same political authority inland seas, and transboundary issues. to the relatively new field of water pollution manage- ment as is the case with the "older" quantity and water Based on international experience, the following use-related activities. recommendations can be made for improving China's WPM legal instruments: For the next decade, China should consider shifting Set basic effluent and ambient standards for the highest WRM-related responsibility to the State industries and municipalities, which are to be Council. is might be a pre-condition to realizing a implemented over the long run; strongly coordinated, subsidiary-based decentralized Develop embedded river basin, sub-basin, region etc, system at the lower levels. China's State Council is water quality management plans as an element of currently preparing for a new round of institutional broader management planning to define hot spots, reform; institutional restructuring for water manage- priorities and impact driven cost-efficient actions. ment is an important issue on the agenda. Since this Priorities should be defined on the basis of possible process will inevitably affect the interests of existing positive multiple impacts on water uses, health, departments, and there is no fixed model for reform, ecosystems, regional water quality, and others; the structure indicated here should be considered On the basis of the aforementioned plans, define indicative only, and further studies and stakeholder areas that can have different (regionally variable) consultation would be required before a final formal effluent standards and minimum requirements, structure could be developed. is might lead to the which should be gradually tightened over time; following division of responsibilities for the two main As a final step, make the basic effluent criteria actors in water and water quality management: mandatory and assign the usual "fine-tuning" role to the ambient criteria. SEPA to have the leading role on issues related to water quality and pollution management, includ- Integrated Water Resources Management ing water quality monitoring, definition of water environmental functional zones, and relationship ere is no universal institutional system for integrated with river basin institutions. In these areas, SEPA's water resource management, even though many differ- responsibilities should cover all issues, from policy 36 Policy and Institutional Considerations formulation and program implementation to law equal to or just above the marginal cost of wastewater enforcement. treatment, so that treatment becomes more economical MWR to have the overall responsibility for the than pollution. e reasons for both measures are to quantitative aspects of water resource manage- avoid social damage and excess profits for polluting ment, including hydrological monitoring, water entities at the expense of society. planning, management of distribution, and conservation of water. If a system for Total Load Control is used together Close cooperation with SEPA will be needed to with trading of discharge permits (e.g. for managing find optimal solutions for water management a lake eutrophication problem), fees should not be issues, especially for developing the river basin applied, since they would contradict the principle of perspective in planning. trading. An important feature of water resource manage- In the development of a future Chinese fee and fine ment in industrialized countries, independent of system, the following principles should be considered: institutional structure or location, is that the authority for management of utilities is kept separate from, Fees and fines should be introduced gradually in and has no institutional linkages to, the authority for parallel with the development of the water quality control and regulatory functions (be it water pollution standards and ambient criteria; management, quality control, tax control, etc.). is Fines should be highest for discharges of toxic approach is also recommended to be followed in materials; China. As part of the ongoing reform of water man- agement and the implementation of the new Water Affordability constraints may mean that it is Act, the roles of respective agencies (SEPA and MWR) impractical to apply realistic fines above phased and the departments in charge of construction and effluent standards for municipal wastewater operation of water utilities should be clarified. discharges. Under such conditions, it is probably more realistic to declare a lower level of fines, Part of the rationale for IWRM is the fact that many specified for instance on the basis of discharges aspects of pollution control cannot be separated measured in population equivalent (standard from water resource management, particularly not in discharge generated per person per day); countries, such as China, where scarcity is a problem. Money collected from fees and fines should be Under such conditions, it is essential to look for ways invested in water pollution management systems, to close water and material cycles and increase re-use e.g. for water treatment, monitoring, or dispersed and recycling. China has many such opportunities, trough an environmental fund. primarily in rural areas. e "cascade management" approach should also be considered. is implies that Strengthening Financing water is used several times and is transferred among different sectors and use categories (municipal, indus- ere is a wide range of potential sources for financ- trial, agricultural, etc.), where treatment is performed ing. Options include cash flow from user fees, charges only at the level prescribed by the subsequent use. and penalties, international aid, concessions from e application of this kind of an approach obviously multilateral and bilateral agencies, national subsidies, influences standard setting. grants and soft loans (from central government), subsi- dies from local and central government budgets, debt Strengthening Economic Instruments cancellations, commercial loans from local bodies, and loans from international banks at market rates. A lot Fees and fines are important instruments in pollution of emphasis has been placed on private investment as management. Fines are supposed to penalize emitters a source of new finance for water utilities, and China for discharging wastewater of a volume or concentra- has piloted new project finance schemes (including tion violating effluent standards. Fees are taxes based various BOT forms) from the early 1990s, including in on well-defined economic principles, normally set the water sector. 37 China Water Quality Management through their know-how, beneficial Box 3.3. Financing and Use of Economic Instruments in Central and Easter European Countries impact on projects and institutions, and through the goodwill that comes with C entral and Eastern European Countries have gone through dramatic eco- their involvement. nomic transition with fundamental changes in the management of water pollution (see Box 3.1). Their experiences with respect to economic instru- An appropriate government strategy to ments and nancing are brie y described here. raise initial investment capital would Market-based economic instruments have not yet been fully implemented. While therefore be to maximize uptake of grants charges and nes have been implemented and have increased over time, fees are and soft loans available from interna- generally not high enough to cover the marginal cost of water and wastewater tional agencies. e government will have service provision. The fees have been gradually increased to change the behavior to decide how much of a public subsidy of users and to improve service performance. Collected fees are often channeled should be extended to the water sector into environmental funds to be re-distributed for environmental projects by the state and not used exclusively to support water facilities, though there are also to fund "public goods," and phase out examples of a combination of the two allocations. remaining subsidies as quickly as possible. e government should also decide how Investments in the water sector are increasing, but more e ort is needed to achieve much privatization is desirable / feasible, compliance with EU standards and directives. In the more developed CEE coun- where, and of what type, and seek to tries, it is estimated that, assuming 15-year implementation plans, water-related expenditures will be about 1 percent of the GDP. Assuming the principle of cost attract private partners and organize recovery is applied for water services, inhabitants should pay about 4-5 percent long-term international and commercial of their net income for water supply and treatment. Thus a ordability is a crucial loans to cover remaining needs. issue, and in less-developed CEE countries, the realization of plans will need much more than the 15 years indicated for richer countries. Over the long run, the principle of cost Sources of nance for investments include national funds, grants, soft loans, EU recovery should be one of the basic pillars aids (often ine cient), subsidies, loans from national and international banks, etc. of water pollution management in China. In many cases the nancial plans are weak and the state budget remains impor- is will have a major impact on tariffs, tant. The involvement of private investors and operators has not materialized as which in the future might have to cover expected, and better mechanisms for sound private-public partnership have to the full cost of new investments. is be found. would require the gradual phasing out Pre-conditions for accessing the international sources of nancing include: of subsidies. Experiences from other countries in the same situation show a) Stable national economies. that with increasing tariffs, household b) Well-developed plans, including cost-bene t calculations and feasibil- consumption in urban areas is likely to ity studies to justify the investment. settle in the range of 120-140 m3 per capita/day. While the region is on the brink of achieving the rst condition, many shortcom- ings remain in the plans and studies developed for the required investments. Urban Pollution Management When privatization occurs, most cases involve foreign Under conditions of transition from a planned participation in operating companies, with asset to a market economy, it is important to avoid the ownership remaining in public hands and the public establishment of unnecessary future excess capacity. sector responsible for raising finance for new invest- e volume of wastewater produced and the chemical ment. e present situation is that many governments composition of the water might be changed as a result are resistant to further private involvement in the of increased water tariffs and structural changes water sector, and the leading multinational private in industry. Future design conditions of various water companies have an increasingly selective attitude facilities must not be extrapolated from past data and toward overseas exposure. Instead of being a major needs. Incentives should be used to ensure that water source of financing, it is more realistic to regard supply, sewerage, wastewater treatment, and sludge multinational private companies as catalysts that management are constructed simultaneously and in an can unlock previously inaccessible sources of funds integrated way. 38 Policy and Institutional Considerations In large cities and towns, appropriate or alternative All water enterprises under Municipal Water technologies are often not feasible. In these cases, the Board jurisdiction should be established as only alternative is to consider the phased, step-by-step independent economic units. development of traditional technologies from me- chanical treatment. Development into more advanced Industrial Pollution treatment can then be gradually investigated if neces- sary, e.g. chemically enhanced mechanical treatment, China has made significant progress in managing high- and low-load biological treatment, bio-film, industrial pollution. With the development of new advanced treatment with nutrient removal, etc. Design production technologies, pollution mitigation op- of treatment facilities should ensure a certain degree portunities are constantly changing. of flexibility, so that appropriate technologies can be incorporated in the future. In principle, the available funds for pollution treat- ment should be allocated to sectors where the greatest Industrial pre-treatment is crucial to avoid problems impact can be achieved. It is important to select the with operation and sludge disposal at municipal preferred investment sector to gain the socially optimal plants. effect of investments in pollution management. For in- stance, the main COD discharge sectors are pulp and In peri-urban and rural areas, options other than paper production, food processing, chemicals, phar- traditional sanitation should be considered due to the maceuticals, breweries, textiles, and the metal smelting high costs of installing sewerage networks. and processing industries. If the average treatment cost for one ton of COD is compared across sectors (Table In urban pollution management, the roles and tasks of 3.1), it is evident that the food processing industry and the Municipal Environment Protection Bureaus and the breweries have the lowest cost and thus will be the Municipal Water Boards need to be clarified. sectors where the highest environmental benefit per unit investment can be attained. e Municipal Environment Protection Departments should be in charge of the following tasks: Wastewater recycling technologies can reduce urban natural water demand, mitigate water pollution, and Drafting water pollution management policies, reduce the impact of wastewater on water quality. In laws, regulations and standards, and supervising appropriate cases, full treatment of wastewater can be and enforcing their implementation. introduced with the recycled water used in agriculture, Organizing the target-setting process; determin- industry, and municipal facilities. In water-deficient ing total load control targets; preparing water areas, the water recycling processes should be inte- pollution management and ecological protection grated into wastewater treatment works. plans for the main rivers, and supervising their implementation. Legislation should focus on supporting the transfer Carrying out monitoring of water quality and pol- of clean technologies, and efforts should be made to lution sources, resolving disputes on trans-county introduce environmental management systems at the pollution, and compiling/distributing information company level. Cleaner and more efficient industrial from the monitoring activities. production should also be a priority for policy makers. Determining conditions and organizing measures e main aim would be to reduce water use, and thus for protection of drinking water sources against the level of wastewater discharge per unit product. pollution. Technological innovation with a focus on increasing water efficiency should be encouraged. Given the e following recommendations are made for the relatively high levels of COD load compared with functions of the Municipal Water Boards: GIOV shares observed in the pulp/paper and food industries, these sectors would seem like an ideal Administrative, regulatory, and business operation starting point. Closed-circuit technologies for water functions of Municipal Water Boards should be treatment should be promoted in the iron and steel, separated. electric power, chemical, and coal industries. 39 China Water Quality Management Table 3.1. Comparison of Treatment Cost in the Main COD Discharging Sectors. The decreased rate The average treatment The marginal decreasing Sector (percent) cost (RMB/t) cost (RMB/t) Paper and paper ware industry 40 2,181.4 225.8 Food industry 75 1,248.2 494.1 Chemical industry 44 1,810.0 211.7 Pharmaceutical industry 73 2,610.3 925.0 Breweries 62 528.5 121.0 Textile industry 67 2,624.3 730.4 Steel industry 20 1,790.9 72.1 Source: Cao Dong, et al., 1999. Agricultural Pollution sentatives and grassroots officers should take care of the primary contact with the individual farmers. Unless the Agriculture contributes to water pollution through need for action has support from the agricultural sector point and non-point source discharges of nutrients (P representatives, little progress will be seen. and N), organic materials, organic micro-pollutants (primarily pesticides), and heavy metals (contaminated Following this assessment, it is necessary to identify fertilizers). ese pollutants can lead to eutrophication different options for pollution reduction related to of water bodies and contamination of food products. non-point source activities and calculate the cost-ef- Internationally, studies have shown that 60 to 70 ficiency of each measure. percent of the nutrient load of many rivers and watersheds stem from agriculture. e importance In the implementation of pollution management actions, of reducing agricultural pollution is starting to be win-win options, which will save money for farmers recognized in China. However, experience from many and reduce pollution, should be sought out. Examples countries shows that it is more difficult to apply strict include fertilizer planning and integrated pest control. pollution controls and to implement environmental e pricing mechanism--for instance, reducing subsidies regulation in the agriculture sector than it is in the on fertilizer and other production inputs--should be industrial and municipal sectors. investigated with care because farmers need time to adjust to new economic framework conditions. Agricultural e first step toward managing non-point source subsidies that do not support water protection should pollution is to derive reliable load estimates. is can be decreased and gradually phased out. Experience has be done by (a) monitoring the flux of pollutants in shown that legal measures are generally less efficient than watercourses in agricultural areas, or (b) preparing economic measures and information. pollution production and retention budgets. Ideally, these two approaches should be used in parallel. Management of agricultural pollution is a long-term policy objective and should be approached by develop- e next step would be to develop a well thought-out ing tools that have to be carefully tailored to each type strategy for agricultural pollution management, starting of activity. e pollution management program should with the establishment of a consensus among the initially target the easiest and least controversial relevant parties on the current pollution situation, i.e. the opportunities and gradually expand when a wider different pollution sources and environmental impacts. understanding and general acceptance of the measures Unless such an understanding is reached, it will be dif- has been developed. ficult to develop a consensus on the required measures. In establishing the aforementioned consensus, and Improving Water Quality Monitoring particularly for the policy implementation of the measures, agriculture extension services have to be Water quality monitoring incorporates a number of emphasized more assertively. Local agriculture repre- interrelated issues, such as sampling, analysis and 40 Policy and Institutional Considerations inter-calibration, water information Box 3.4. Designing Water Quality Monitoring Systems systems, evaluation of data by statistical A and other methods. Incorporation of water quality monitoring system has to be designed for the speci c pur- these elements depends on the objectives poses it is supposed to serve. The monitoring data can, for instance, be used for: of the monitoring system, which often differs between different users of data. Determining baseline environmental conditions; ese objectives will determine sampling Making quality classi cation and thematic of maps; sites, sampling frequency, and duration of monitoring. Detecting trends; Determining annual or monthly averages of certain parameters; If design is inadequate, then significant resources can be spent without obtaining Monitoring critical conditions (annual maximum or minimum values of certain information on the desired confidence water quality parameters); level. Monitoring violation of standards; One of the problems of the existing Studying cause-e ect relations between discharges and water quality impacts; monitoring system in China is the lack Provide input to water quality planning models; of harmonization and quality control Giving an early warning of accidental spills (primarily for micro-pollutants and oil to secure that the data from different products); sources can be compared (similar sampling techniques, analytic techniques, Studying watershed transmission and retention processes for nutrient load etc.). A functioning monitoring system estimates; would require constant updating and EIA purposes (see also Box 3.2 for objectives related to the EU-WFD). maintenance of the system for data Not all of these objectives can be met with the same sampling methods or ana- storage, distribution, and presentation. lytic approach. The purposes will determine sampling sites, frequency, duration of monitoring, and the need for more speci c and detailed recipient studies. In recent years, the development of data management software has created an Design of the monitoring system should also consider the fastest and slowest opportunity for large integrated water changes in concentration and the behavior of the pollutants in the water body. data management and decision support Simple water sampling and analysis of a few chemical parameters will only give "snapshots" of the water quality situation. The present tendency in Europe is to systems. However, experience has shown monitor a limited number of sites at higher frequency. Increased sampling fre- that in many countries the ambition quency enables the collection of information with a higher statistical reliability for such systems has been too high. and makes it possible, for instance, to analyze trends. In some cases it might be For example, when trying to satisfy too more e cient to monitor indicators (concentration in plant material, concentra- many purposes in the same system, the tion in sediments, survival of certain organisms etc) rather than to try to monitor eventual outputs may not manage to do the chemical parameter in the water itself. This is particularly true for toxic micro- anything properly. pollutants that are found in very small concentrations in the water or where the discharge is a result of accidental release. Water quality monitoring should be One important bottleneck in monitoring is quality control. A system of quality supervised by SEPA, while hydrological control has to include, (a) technical manuals describing in detail the procedures monitoring (quantity monitoring con- of water sampling, sample transport and storage, analytical methods, "meta-data" ducted for water management purposes) requirements etc, and (b) an inter-calibration procedure for laboratories involved should be managed by MWR. However, in the monitoring activities. uniform standards should be applied, and a coordinated organization for water monitoring should be established. By coordination of the existing monitoring organization, the quality of data and information can be improved and duplication can be avoided. 41 China Water Quality Management Internal control of water facilities Box 3.5. European Union--Water Framework Directive Monitoring Program operation and industrial process control. is will also provide data T he EU Water Framework Directive prescribes a system for water quality moni- for reporting, if the principle of toring consisting of three elements. These are: self-auditing is applied. e monitor- Surveillance monitoring to provide information for: ing program has to be tailored and operated by the facilities themselves. Supplementing and validating the impact assessment procedure; Monitoring of facilities' and E cient and e ective design of future monitoring programs; enterprises' compliance with pollution standards or discharge concessions Assessment of long-term changes in natural conditions; by the relevant authorities. Parameter Assessment of long-term changes resulting from widespread human activity. and sampling frequency will have to The results of such monitoring are reviewed and used, in combination with the im- be decided for each individual case, pact assessment procedure, to determine requirements for monitoring programs and the analytic and sampling quality in the current and subsequent river basin management plans. control will have to be strict, since the results might be used to apply fees and Operational monitoring in order to: fines and could be challenged in court. Establish the status of those bodies identi ed as being at risk of failing to meet Monitoring to establish the state of their environmental objectives; water resource quality. e objective Assess any changes in the status of such bodies resulting from the measures here is to follow the trends in water taken. quality and to present this informa- tion to the general public and decision The program may be amended during the period of the river basin management makers. is type of monitoring plan in light of information obtained. Such amendments may include a reduction should concentrate on a few general in sample frequency where an impact is found not to be signi cant or the cause of pollution or stress is removed. parameters that are held constant over longer time periods, so that different Investigative monitoring shall be carried out: water bodies can be compared on an Where the reason for any pollution levels above the standards is unknown; equal basis, and so that time series can be produced. Where surveillance monitoring indicates that the objectives for a body of wa- ter are not likely to be achieved and operational monitoring has not already been established; Planning and Capacity Building To ascertain the magnitude and impacts of accidental pollution. The monitoring shall also inform the establishment of a program of measures for Many advanced computer tools are the achievement of the environmental objectives and speci c measures necessary marketed for water-related planning. to remedy the e ects of accidental pollution. e key to practical planning is not the presence or absence of such tools, but the overall understanding, Before launching an integrated water data monitoring level of participation in the planning and management system, careful analysis of the needs processes, and the commitment of the key parties to and costs are needed. e system might be more implement the plans. Nowadays, the focus is on an effective and cost-efficient without some of the many "open" planning procedure where the essence is the possible aspects outlined above. However, cost-cutting involvement of the public from the very beginning should not be allowed to undermine or compromise of the project in question. Experiences from CEE the effectiveness of the system, so that it cannot satisfy countries, for instance, show that this new approach the real information needs of the potential users. for planners and the public alike requires a long-term effort to create a culture of public participation. In light of the above, it is often found appropriate to distinguish between three separate water quality A critical mass of expertise is required in order to monitoring and data management systems: develop new legislation, harmonize laws, modify the 42 Policy and Institutional Considerations institutional system, and prepare strategies/plans for building this level of interest and awareness. is implementation. Experts are needed to transfer knowl- is particularly relevant for results of environmental edge from other countries to interpret "local" conditions monitoring. e data from such monitoring should to which innovative applications should be performed. be processed and made public in a form that makes it us, exchange programs, training, and capacity understandable to the general public. building in a broad sense are inevitably important. In the processes of preparation and approval of EIAs, the concerned parties should have a clear role. e Environmental Awareness and Public rights and duties of the public should be clearly spelled Participation out in the EIA regulations and guidelines. e support and pressure from the general public is an e public might also influence the productive important factor in enforcing stricter water pollution sectors as consumers of goods and services. Again, management and improved environmental standards information is needed for the public to make a and the quality of products. e basic condition for qualified choice. Based on the international envi- such involvement is a certain level of knowledge about ronmental labeling standard and China's technology the situation and a general awareness of the need for level, a system of environmental labeling for food changes and the risk faced when doing nothing. products should be established. Sector management authorities and sector experts should be involved in e disclosure of information about pollution loads developing environmental labeling standards and and environmental risks is an important element in classification. 43 Annex 1 Trends in River Water Quality e following figures have been generated by signs of improvement. In fact, there are a number summarizing all available water quality information of cases where average water quality is declining. form the China National Monitoring Center for In four out of the seven rivers presented below, each of the rivers for the 1991­2005 period. (For the between one-third and one-half of the monitored location of the monitoring stations in each of the water quality is in the worst two categories, i.e. river basins, refer to Figure 1.6 in Chapter 1). no longer fishable and of questionable agricultural value. In spite of massive investment in the past 15 years, water quality in China's main rivers is showing few Figure A1. Average river water quality Liao River (1991­2005) 100 90 80 70 Liao 60 V ­ V* 50 40 30 Liao III ­ IV 20 Liao 10 I ­ II 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Liao I ­ II Liao III ­ IV Liao V ­ V* ­ 45 ­ China Water Quality Management Figure A2. Average river water quality Yellow River (1991­2005) 100 90 Yellow 80 V ­ V* 70 60 50 40 Yellow III ­ IV 30 20 Yellow 10 I ­ II 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Yellow I ­ II Yellow III ­ IV Yellow V ­ V* Figure A3. Average river water quality Song River (1991­2005) 100 90 Song V ­ V* 80 70 60 50 Song 40 III ­ IV 30 20 Song 10 I ­ II 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Song I ­ II Song III ­ IV Song V ­ V* 46 Policy and Institutional Considerations Figure A4. Average river water quality Huai River (1991­2005) 100 90 Huai V ­ V* 80 70 Huai 60 III ­ IV 50 40 30 20 10 Huai I ­ II 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Huai I ­ II Huai III ­ IV Huai V ­ V* Figure A5. Average river water quality Hai River (1991­2005) 100 90 80 Hai 70 V ­ V* 60 50 40 Hai 30 III ­ IV 20 Hai 10 I ­ II 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Hai I ­ II Hai III ­ IV Hai V ­ V* 47 China Water Quality Management Figure A6. Average river water quality Yangtze River (1991­2005) 100 Yangtze 90 V ­ V* 80 70 60 Yangtze III ­ IV 50 40 30 20 Yangtze I ­ II 10 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Yangtze I ­ II Yangtze III ­ IV Yangtze V ­ V* Figure A7. Average river water quality Pearl River (1991­2005) 100 Pearl 90 V ­ V* 80 70 Pearl III ­ IV 60 50 40 30 Pearl I ­ II 20 10 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Pearl I ­ II Pearl III ­ IV Pearl V ­ V* 48 Annex 2 Relevant World Bank Projects T he World Bank is closely engaged in control (wastewater management, environmental China's Water Resource Management flows). However, the strategy also notes the lack of a sector, with many ongoing, recently strategic relationship on water issues in China. e completed, or pipeline projects that address Chinese government has typically developed project water pollution-related issues. e depth of this ideas from the conceptual to implementation stage engagement testifies to the seriousness with which the and only enlisted Bank support when financing was World Bank regards the issue in China. is work required. e strategy sets out proposals for a closer ranges from rural to urban environments and includes relationship, where the client can take advantage of dedicated investment projects and analytical and more upstream dialogue and AAA assistance from capacity building initiatives. Relevant examples are the Bank. For example, there should be increased given below. emphasis on parallel World Bank analytical and capacity building in addition to the loans for physical infrastructure. China Water Resource Assistance Strategy e China Water Resource Assistance Strategy (2002) Hai River Basin Integrated Water Resources was developed as a joint Bank-client venture to set out Management Project (GEF) a framework for future World Bank assistance. e strategy highlights the key unresolved problems for e Hai River is one of the most polluted bodies of WRM in China (water shortages, flooding, and pollu- water in the country. It is a major source of pollution tion) and stresses that the ineffective and fragmented in the "stressed" Bohai Sea. So far, the government's water management systems are a critical unresolved efforts to manage pollution in this area have been problem. e focus is, therefore, on improved water focused on large municipal and industrial sources. resources management and the need for coordinated However, despite considerable reductions in these and integrated approaches. sources of pollution, water quality has continued to decline. Reducing pollution from secondary cities as In order to capture all the dimensions of the water well as town and suburban industries is required in resource management challenges in China, the report order to make an impact on overall water quality in breaks the subject down by key themes and issues. the area. emes include environmental preservation and financial and political support; key issues include e overall objective of this project is to catalyze an institutional development (data, rights, pricing), integrated approach to water resource management water scarcity (transfer projects), and pollution and pollution control in the Hai basin. e project ­ 49 ­ China Water Quality Management activities are designed to meet this objective by Lake Dianchi Freshwater Biodiversity promoting a more integrated approach to water Restoration Project resource management, providing technical and financial assistance for wastewater management and Environmental improvement in Lake Dianchi and canal clean-up in small cities, and funding pre-invest- its watershed is a major national priority. e basin ment studies for innovative projects. e project is is a hotspot of freshwater biodiversity and endemism. developing top-down and bottom-up mechanisms for e objective of the project is to restore and manage integrated water and environment management. In habitats around the lake in order to secure the order for this management approach to be successful, conservation of the remaining endemic species of Lake great emphasis is being placed on coordination among Dianchi and its immediate tributaries. is water relevant ministries/bureaus and the central and local resource management project links with the World levels of governance, such as SEPA, MWR, EPBs, Bank's Yunnan Environment Project (see below) by and WABs. If successful, the benefits should include applying a biodiversity overlay to the ongoing infra- improved public health, healthier ecosystems, and structure, policy, and regulatory measures. In order to various water- and agriculture-related economic achieve its objective, the project is establishing stable benefits. breeding habitats, providing biological survey data, monitoring lake quality, and raising public awareness of the region's unique biological environment. Huai River Pollution Control Project Expected project outcomes are categorized into four e development objectives for this project focus areas: (1) wetland management and restoration; on supporting the government's work to improve (2) improved monitoring and species conservation; the environmental quality of the Huai River and its (3) capacity building and training; and (4) public tributaries through improved collection and treatment awareness. e first component seeks to restore natural of wastewater. e project is providing facilities habitats to some semblance of their natural state, with for collection and treatment of wastewater and interventions integrated into broader local government establishing competent municipal wastewater utilities plans that will build capacity and can be scaled up. responsible for managing facilities. It is also bringing e other components have been designed to provide new and innovative approaches to WPM in China, the required data, capacity, and public support to such as the integration of septic tank management into ensure the sustainability of these environmental the wastewater program. is includes investments benefits. in sewerage and associated infrastructure, wastewater treatment plants, and logistical facilities (such as laboratories and technical equipment) in the Anhui Yunnan Environment Project and Shandong provinces. is recently closed project was part of a phased In order to ensure the sustainability of these development program to improve environmental undertakings, the project is taking advantage of the conditions and sustain urban services in Yunnan recently enacted Tariff Regulation 1192, which sets a Province. e project's principal objective was to framework for tariff policy geared toward sustaining provide a sustainable environmental framework for wastewater operations. e creation of autonomous the long-term economic and social development of the utility companies with proper management and province. It had specific objectives to (a) strengthen direct use of their collected revenues should foster policies, regulations and institutional arrangements for the development of wastewater companies as business pollution management; (b) improve lake water quality; undertakings that would apply modern management (c) facilitate pollution management investments; and principles. Furthermore, comprehensive training (d) introduce a comprehensive approach to urban combined with a focused technical assistance program environmental infrastructure investment planning. would build up the competence and motivation Components included establishment of physical works for implementing, operating, and maintaining the such as water supply, wastewater treatment plants, and wastewater treatment plants. solid waste landfills, and an improved institutional 50 Policy and Institutional Considerations setting with an increased role for private enterprises in quality monitoring and industrial pollution manage- water supply and wastewater management. ment. ese activities are being complemented by policy and institutional reforms, such as the promo- tion of regional planning approaches, adoption of Guangdong Pearl River Delta Urban Envi- demand management to conserve water, the formation ronment Project of a financially autonomous water company, and improved water quality monitoring and management e fragile environment of the Pearl River Delta and regulations. South China Sea region has deteriorated as a result of the region's rapid economic growth. Between 1990 and 2000, average regional GDP growth was 14.7 percent. Related Watershed Management Projects However, this growth has led to regional immigration (Guangzhou had a migrant population of over 4 mil- e World Bank has been involved in numerous lion in 2000) and increasing levels of waste generation projects designed to protect the watersheds of China's (wastewater: 11.5 m m3/dy in 2000, 12.3 m m3/dy in river basins. Two good examples of this work are 2010). e region lacks appropriate environmental the long-term forest management program and the management capacity and is experiencing severe Tarim Basin projects. Over the last 20 years, the deterioration in local water quality. is deterioration Chinese government and the World Bank have made is attributed to factors such as poor regional planning, tremendous efforts in the forestry sector. One of the lack of treatment facilities for domestic and industrial major results has been the reversal of the trends in wastewater and solid waste, inadequate water quality deforestation, but another major objective in most of monitoring, and inappropriate pricing systems. these projects is improved watershed management. e maintenance of an appropriate surrounding In order to address this decline and improve water environment is essential for China's river systems to quality in the Pearl River Delta and the South China supply and dispose of water in the required manner. Sea, this project will support Guangdong Province For example, the current China Sustainable Forestry in addressing environmental service delivery and Project includes specific objectives for protecting associated investment in an integrated manner. It will watersheds in order to maintain river structure and support an environmentally sustainable development reduce flooding. e Tarim Basin I and II projects process by improving the management of water supported rehabilitation and improved irrigation, resources and hazardous waste management through drainage systems, and agricultural services in the interventions in the following areas: (a) comprehensive Tarim Basin in northwestern China. e projects and regional planning; (b) jointly managed environ- have improved water resource management in the mental infrastructure; (c) wastewater management; basin, dramatically reduced sedimentation levels, and (d) hazardous waste management; (e) improved water strengthened local water management bodies. 51 References Asian Development Bank. 2000. Reform of Environ- Shen D. 2004. " e 2002 Water Law: its impacts on mental and Land Legislation in the People's Republic river basin management in China." Water Policy 6: of China. 345­364. 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