China may fail to achieve its 2001- 05 water and air pollution control targets since concerns over lack of profit have dampened the interest of investors because of inadequate charges on waste water discharge, environmental officials and experts have warned.

The State Environmental Protection Administration (SEPA), China's top environmental watchdog, said charges are well below the cost of treatment of polluted water, and this has turned out to be a major factor in China's slow progress in achieving the planned reduction in water pollution during the five-year period.

China formulated several national and regional water and air pollution control programmes in the late 1990s to curb worsening environmental pollution and ecological degradation as part of its sustainable economic and social development strategy. The areas involved are home to 62 per cent of the country's population and account for 75 per cent of the country's gross domestic product (GDP).

SEPA officials said construction of about 700 planned major projects to cut water pollution, or half of the country's total planned by the central government for the 2001-05 period, had not yet been launched by the end of last year.

No arrangement has been made yet for billions of US dollars worth of investment needed for waste water treatment projects to be launched, and there is only 18 months left, according to SEPA officials, who requested anonymity.

To make matters worse, the amount of chemical oxygen demand (COD)-related pollutants discharged into three major rivers in China, including Huaihe River in central China, Haihe River in North China and Liaohe River in Northeast China, have been cut by only about one-fifth of the planned goal, according to figures released recently by SEPA.

The total amount of ammonia and nitrogen, two other major water pollutants, has not been reduced as planned, and some provinces have reported increases in the amounts of these pollutants.

SEPA officials said "a significant number of" the several hundred State-funded waste water treatment plants built during the past decade remain idle, or are operating under capacity to reduce operating losses.

The charge for waste water treatment was set at 0.2 yuan (2.5 US cents) per cubic metre by the local government in Quanzhou City in Fujian Province, in East China, while the actual cost is about 0.9 yuan (11 US cents) per cubic metre.

Anhui Province's Huaihe River Valley, Hebei Province's Haihe River Valley, and Jilin Province and the Inner Mongolia Autonomous Region's Liaohe River Valley, have invested only one-fifth of the funding planned, according to the SEPA figures.

Liu Jiang, vice-minister of the State Development and Reform Commission, said about 16 per cent of cities at prefecture level and most county-level cities have not yet started charging fees for discharge of waste water, and while most cities in major river valleys have done so, the charges are too low.

This has led to the slow progress in construction of waste water projects, and some waste water treatment facilities are not yet operating at the capacity they should be, said the official.

But Jiangsu Province, which borders on Shanghai in East China is an exception. In 2002, the provincial government raised the rate on discharge of waste water to 1.1 yuan (US$0.13) per cubic metre in the Taihu Lake Basin, a little higher than the actual cost, making it possible for waste water plants to be profitable.

The move spurred private investment in the waste water treatment sector in the area.

Shi Zhenhua, director of the Environmental Protection Department of the Jiangsu provincial government, said it is estimated that waste water treatment capacity in the valley will surpass the 2005 target set by the central government for the region.

In Qianyang Village near the lake, a prosperous area and source of waste water, seven private investors built a waste water plant at a cost of 30 million yuan (US$3.6 million) in 2003.

Wu Wenhua, one of the seven investors and owner of a manufacturing firm, said the plant has treated all the waste water discharged from the village, including the waste water from his own firm, and the investors are making a small but promising profit on their investment.

Wu said his own company now saves waste water treatment costs of about 700,000 yuan (US$85,000) a year, overcharges that would have been incurred if the company had had to build a specialized waste water treatment plant.

The director said construction of 92 per cent of the waste water projects planned for the 2001-05 period in the Jiangsu section of the Taihu Lake Basin has begun.

Taihu Lake, one of the country's biggest freshwater lakes, is set in an area bounded by Shanghai, Jiangsu Province and Zhejiang Province.

"We are achieving the five-year targets as a whole," said the director.

The situation with the country's programme to cut sulfur dioxide emissions and acid rain is similar to that of water pollution projects.

China's programmes to cut down industrial air pollution allow no room for optimism, a senior SEPA official told a news conference.

China's total emission of sulfur dioxide grew to about 22.2 million tons last year, up 2.9 million tons year-on-year, according to SEPA.

The administration cited slow progress in sulfur dioxide control projects and growing consumption of coal as major reasons behind the increase.

Only 61 of the country's 279 major projects listed by the central government for 2001-05 have been completed, or about 22 per cent. And construction of more than half of the 279 projects has yet to be started.

SEPA officials said it is urgent that China set up a sound system for setting rates on discharge of waste water and creating conditions for non-State investment in the environmental protection sector, so as to make waste water treatment plants a viable business.

(China Daily 05/13/2004 page5)