Fund-raising a long way to go for water conservancy

Updated: 2011-07-09 16:05

By Liang Chao (

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Local authorities throughout China are intensifying efforts to accelerate development of their water conservancy, a weak infrastructure restricting their present sustainability, despite standing issues facing them today.

Early this year, the central government issued its No 1 document on water conservancy reform and development, the first of its kind ever focused on the sector in 62 years since the founding of the New China in 1949.

The water sector is so week featuring frequent disasters, shortage of water supply, insufficient farming irrigation facilities and urgent protection of water resources that it would dampen the country’s further development and even affect its future grain, ecological and national security if not well improved, it warned.

Under the document, the central government pledged to invest 4 trillion yuan ($612.23 billion) in water conservancy over the next 10 years through increasing public finance and urged local authorities to set aside 10 percent of their revenue from land sale for farmland water conservancy, the weakest one of the sector.

Senior officials estimated that up to 90 billion yuan could be taken from land leasing incomes across the country for water conservancy this year despite other sectors that were also allowed to have a finger in the pie.

While experts applauded this policy as the most gold content the central government has ever formulated for water sector, how to carry out it down to the grassroots remained an issue for local authorities.

"To make sure water sector can benefits from the land leasing income, local water authorities are waiting a detailed rules to be worked out for them by the Ministry of Finance," experts say.

Meanwhile, they have to hammer out their own ways to ensure a steady growth mechanism of input into water sector, particularly for farmland water conservancy, as the central government urged in its No 1 document.

While securing water for rural people's livelihood and supplying water for grain-yields, farming irrigation facilities have long been plagued by worsening floods and drought due to climate change in recent years and chronic funds shortage.

It remains a tough issue today, insiders say.

So far, 27 provinces or municipalities out of the country's 31 ones have formulated their own policy about taking 10 percent from the land transfer gains to replenish input into farmland water conservancy with the rate being raised up higher by a few local governments.

In Guizhou, one of the worst-hit provinces in last years catastrophic drought ravaging Southwest China, decided to take 12 percent of its land leasing gains for rural water conservancy, Li Ping, director of the provincial water bureau, said at a recent interview.

Based on last year's land leasing gains in Guizhou, the rate will help the province to take some 6 to 7 million yuan from its land sales for farmland water conservancy this year.

Even though, it is far from enough for water sector needed in Guizhou.

To raise more funds for its water sector, Li said, the provincial government has prolonged its collection of the foundation for water works, a specific multiple financing for the sector, until 2020.

In addition, the province has officially approved a water investment company for fund-raising for its water conservancy development with this year, in which local water bureau will acted as investor by revitalizing the stock assets it has, Li said.

His bureau is expected to prepare 30 billion yuan for the company as capital stock in the next five years with one-fifth of the money being injected into the firm soon for initial capital, Lu Hongwei, deputy director of Guizhou Provincial Water Bureau, confirmed.

This year, the investment in Guizhou's water sector from government budget alone will reach a record 15 billion yuan or up 50 percent over that of the previous year, Li said.

As an underdeveloped province, Guizhou has no key water project for water supply or irrigation due to its widespread Karst topography and ensuing difficulties for building such projects except funds shortage.

Although the province has more than 10,000 small reservoirs, the total storage capacity they have is less than 2 billion cubic meters with many of them are hazardous due to aging.

Following the No 1 document, construction of the Qianzhong Water Control project capable of holding over 1 billion cubic meters of water and supplying water for more than 3.6 million people and irrigating 106,000 hectares of farmland in central Guizhou is now under way with the central government earmarked 7.3 billion yuan for it.

"Only a few funds have to be raised by Guizhou for the project's conveyance system," Zhang Aiping, an official in charge of the construction, said. "It's the largest project ever approved for the province."

In central China's Hunan province, a water investment company has been set up in Changsha where the municipal government allocated new increased land formed by construction of water projects as assets to raise funds in 2003.

Other investors have been attracted to the land for further development, which helped local water authorities to raise billions of yuan ever since for water conservancy, according to Dai Junyong, director of Hunan Water Bureau.

However, such fund-raising in Guizhou and Hunan as well as other areas is now under the State macro-control for rectifying random land development, water officials admitted.

Local water officials said they do hope the central government can give the green light for them for the sake of to water conservancy development.

While increasing government budget for water conservancy, Hunan province has encouraged water authorities to make use of credit funds from financial institutions and attract non-government funds for water sector.

Dai Junyong is confidant that, in this way, water authorities across Hunan can double its annual input into water conservancy this year as the No 1 document urged.

With investment increased and ensured, he said, Hunan is hopefully to improve its water conservancy falling behind local socioeconomic development due to its 5,300 rivers or lakes, their complicated systems and ensuing problems like floods, drought and water pollution.