By Li Shantong, Lu Zhongyuan, Hou Yongzhi, Liu Yong, Feng Jie

As a complicated and huge system engineering undertaking, the south-to-north water diversion project will generate profound and lasting impact on the economic and social development as well as on the ecological environment. To implement the project, it is imperative to correctly handle the relationship between water saving and water diversion, pollution control and water supply, environmental protection and water utilization, economic performance and social effects. It is also crucial to appropriately co-ordinate the interest relationship among water supply areas, water receiving areas and areas along the water diversion routes, as well as the relationship between market regulation and government rules and regulations. Based on the objective of sustainable utilization of water resource, efforts should be made to start water saving prior to water diversion, and change the situation of extensive utilization and serious waste of water resource as soon as possible.

I. There are serious wastes in water utilization in agriculture, industry and urban construction, which will fatally offset the economic and social effects of the water diversion project if no change is made as soon as possible.

First, water resource utilisation in agriculture remains especially extensive. At present, China's total water utilisation for agricultural field irrigation has reached 344 billion m³, which accounts for 66.5% of the total water utilisation in China. However, the effective utilisation rate of irrigation water is only 30-40%, while that of the developed countries stands at 70-80%. In China, grain production capacity per cubic meter of water is only around one kilogram, while it is generally 2 kilograms in the developed countries. Furrow irrigation still remains the main form of irrigation in 98% of the irrigated areas in China, this system leaks away 130 billion m³ of water each year, accounting for more than 70% of the total water loss.

Second, water utilisation in industry remains extensive and there is a serious water waste in urban living. In China, the output of one ton of steel uses 23-56 tons of water, while in the USA, Japan and Germany, it is less than 6 tons. Paper making in China consumes at least 450 tons of water for one ton of paper, while in the developed countries, it consumes 200 tons of water at most. In most of the cities in China, the rate of re-utilisation of industrial water is only 30-40%, while it is over 75% in countries like Japan and the US. The leaking rate of urban water supply pipes in China is generally 5-10%, and in some cities, it is as high as above 15%.

Faced with the short supply of water resource, the situation of extensive utilisation of water resource and serious waste requires earliest fundamental change. Otherwise, the south-to-north water diversion project will not be able to play its expected role.

It is imperative to make significant conceptional and institutional changes, so as to create sound conditions for the sustainable utilization of water resource.
The main reasons of China's extensive utilisation and serious waste of water resource include the outdated conceptions as well as the water resource management and operation systems formed under the planned economy. Therefore, it is necessary to complete the following six conception and institutional changes: (1) change the conception that regards water as inexhaustible, increase the awareness that fresh water resource is limited; (2) change the practice of only preventing the damage of water to human beings, prevent especially the damage of human beings to the water resource as well, so as to achieve harmonious co-existence of man and nature; (3) change the practice of focusing on water resource development, utilisation and control, strengthen the appropriate allocation, effective saving and reasonable utilisation of water resource on the premise of protecting and improving the ecological environment; (4) change the practice of water supply based on demand, increase water utilisation efficiency and guaranteed water supply, make national economic development plans and industrial distribution based on the demand and supply conditions of water resource; (5) change the practice of "giving equal priority lo opening tip more channels of supplies, water saving and pollution control" to "water saving first, pollution control must, and seeking more water supply from multiple channels"; and (6) change the water resource management dispersed its several departments in the planned economy to a centralized management that "covers both land and water areas" in the market economy.

II. Insisting on pollution control and environmental protection first, and water supply second

1. Effective measures should be adopted to prevent pollution to the water sources in the water diversion areas.

At present, pollution along the bank of the Yangtse River - the water source area of the eastern route of the south-to-north water diversion project - has aggravated. Due to low rate of urban waste water treatment, large volume of untreated urban waste water is directly discharged into the river, creating at least a 50-60 km of polluted belt close to the banks of major cities along the River. Apart from pollution by directly discharged industrial waste water and urban waster water, the water of the water source area also conceals potential problems of bio-pollution by specific organisms particularly found in the South, such as blood flukes. Therefore, relevant measures should be adopted as soon as possible to control pollution and effectively prevent the spread of diseases along with the water diversion. The water source of the western route of water diversion project is in Aba and Ganzi regions, which are the upper reaches of the Yangtse River. However, they suffer from serious soil erosion caused by degenerated grasslands, desertification and wild rats, which not only run against water conservancy at the source, but also seriously threaten the ecological protection belts at the upper reaches of the Yangtse River. They should deserve serious attention for precautious measures.

2. Solutions should be found as soon as possible to the problems of serious pollution and ecological damages in the areas along the diversion routes and the areas that receive the water.

The problems of pollution and environmental protection are similarly grim along the middle and eastern routes of the water diversion project as well as in the water receiving areas. At present, the proportion of water with quality below fifth-class in Huai River has reached 73.6%. In 2001, eight ministries and government departments, including the State Environmental Protection Administration and the State Development and Planning Comrnission, carried out an inspection, which discovered that there was no fundamental change in the structural pollution along the Huai River, and it was especially difficult to bring under control the more than 400 paper-making plants along the river valley. According to plan, 52 sewage disposal plants should be constructed in the river valley, but only 11 had ever been built then. The conclusion of the inspection is that Huai River has lost self-cleaning capacity.

                                                         
III. Strengthening appropriate planning along the water diversion routes and promoting co-ordinated economic and sustainable development in the areas along the water diversion routes        

1. Effectively planning and constructing the ecological protection zones along the water diversion routes

As a huge cross-valley and long-distance project, the south-to-north water diversion project may involve state-level ecological protection zones or areas with extremely vulnerable ecological environment along its routes. The water supply may improve the quality of water and the ecological status of these areas, as well as bring certain negative impacts as a result of human activities. Therefore, efforts should be made to bring benefit rather than harm to the areas, effectively maintain the ecological protection zones and speed up the construction and restoration of the vulnerable ecological environment.

2. Coping with the relationship between the flood discharge and flood storage areas and the construction of small towns, resettlement and development of township and village enterprises along the water diversion routes

China has suffered frequent floods in recent years. Apart from natural reasons, the major causes of the disaster include disrepair of the water conservancy projects and the construction of township and village enterprise and private premises inside the flood discharge and flood storage areas, which further increased economic losses caused by floods. Such lessons should be well learned, while efforts should be made to effectively plan and protect the flood discharge and storage areas, relocate the private and the township and village enterprise premises from the areas, and incorporate the effort of constructing small towns with that of accelerating the development of the township and village enterprises in concentrated and adjoining areas. Meanwhile, efforts should be made to protect the immediate interests of immigrants and ensure that they are content with their new housing and jobs to prevent them from returning to native places.

3. Appropriately distributing and effectively controlling large water consuming manufacturing and service industries in the water diversion areas and the water receiving cities

Water diversion does not mean that the areas along the water diversion routes and the water receiving cities may develop large water consuming industries and service sector at their own will. The State should direct large water consuming industries to the coastal areas to fully utilise seawater as industrial cooling agent. At present, the volume of seawater utilisation is very small, and there is still large potential in this aspect. Cities should not blindly develop large water consuming service sectors such as automobile washing stations, luxurious bathrooms and golf courts, as well as large water-consuming artificial sights. The water-scarce cities should adopt tight control over such practices in particular.

4. Making great efforts to promote the adoption of water saving agricultural technology in water-scarce areas and changing the situation of extensive water utilisation in agriculture

Efforts should be made to alter the traditional land irrigation to crop irrigation, increase necessary input, continue the researches on and promote the use of water saving irrigation technology and equipment, develop water saving agriculture, and minimise water loss caused by leaking and volatilisation in the traditional irrigation method.

IV. Carefully studying the influence upon mater resource and water diversion project caused by the economic restructuring, opening up and the successful bidding for the Olympic Games, and adopting countermeasures as early as possible

1. Effective efforts should be made to avoid negative impact on water resource caused by industrial resettlement as a result of restructuring.

In the process of national industrial restructuring and the overall development of the western regions, some high-polluting and large water-consuming enterprises and projects are moving or continue to move westwards. This will not only worsen water resources pollution in the water-rich southwestern regions and threaten the already extremely vulnerable ecological environment in the west, but may also create great pressure on the extremely water-scarce regions in the north-west. Therefore, the project incoming areas should make careful choices, while the project outgoing areas should control or eliminate high-polluting projects according to relevant state stipulations.

2. Efforts should be made to prevent blind introduction of high-polluting, large water consuming projects in the course of attracting foreign direct investment.

China's expansion of opening up and its accession into the WTO will inevitably attract more foreign investment into China, which may in turn introduce some high-polluting, large water consuming projects and products to China. Therefore, relevant state departments should complete the guiding list for foreign investment and other laws and regulations based on the requirements of sustainable development, and increase the transparency. Meanwhile, localities should screen foreign investment projects according to the standard set by state laws and regulations, and prevent damages to water resource and environment caused by blind introduction of foreign direct investment.

3. The successful bidding for the Olympic Games will make Beijing, an already extremely water-scarce city, demand for high-standard water in large amount as well as create new demand for the progress in water diversion project.

Beijing suffers grave water shortage. Its per capita water resource is less than 400 m³, which is only 1/30 of the average per capita level in the world. Since the mid-20th century, Beijing has experienced three water supply crisis. Based on the forecast by experts, Beijing is under the threat of the fourth water resource crisis due to several reasons. First, the demand for water has exceeded the capacity of water resource of the area. Second, the increase in water consumption in the upper reaches has sharply reduced the volume of water coming into the area. Third, the over exploitation of water resources has deteriorated the ecological environment. Fourth,  worsening of water pollution has intensified the scarcity of water resource. Although it has adopted various measures to save water and tap the potential of the resource, Beijing will still suffer a water shortage of 490-770 million m³ by 2010, if it runs into years of medium or particular drought. The successful bidding for the Olympic Games will intensify the conflict between water supply and water demand in Beijing. Therefore, the acceleration of the south-to-north water diversion project to guarantee the supply of sufficient and standard clean water will be of great importance to Beijing's successful conduct of the Olympic Games.

V. Speeding up the research on and actively exploring the water resource management and the water price management systems in the market economy

1. Strengthening the research and exploration for the construction of a centralised, standardised and effective water resource management system

As a long-distance water diversion project, the south-to-north water diversion project will inevitably touch many unsettled and difficult issues of water resource management system and the modernisation of water conservancy. Such issues include, for example, the centralised allocation and management of water resources of various large river valleys; the property ownership and incomes from property operation in the process of water resource development and utilisation; water distribution, transfer and pricing; water market development; and improvement of government macro-regulatory control. More efforts should be made to explore these issues.

2. Efforts should be made to accelerate research on the water price management system that is in line with the rules of the market economy.

To benefit fully from the functions and results of the water diversion project under the market economy, efforts should be made to carefully study the water ownership and water market. The water pricing should not only reflect the scarcity of water resource, but also meet the demand for the healthy and steady economic and social development. Water resource is a special commodity that has the nature of essential goods and public goods. Appropriate allocation of water resource affects not only the sustainable development of the economy and the competitiveness of manufactured products, but also the political unification and social stability of the country. Therefore, efforts should be made to study the ways to distinguish water utilisation for public interests and business interests, so as to protect the interests of low-income groups, reflect the orientation of the state industrial policies, and enable water price to play the role of encouraging water saving and restricting the blind development of water-consuming sectors. VI. Effectively co-coordinating the interest relationship between water diversion areas and water receiving areas.

The south-to-north water diversion project is a huge project. It will change the water resource distribution status of various provinces along the routes, which will inevitably generate significant impact on local economic growth, people's daily life, social development and ecological environment. The original interest pattern is very much likely to be altered accordingly, and will be in need of necessary adjustments. In particular, the middle and eastern routes of the water diversion project stretch much longer; their construction scales are much larger, and they cover more provinces and cities along the routes. Therefore, the various impacts and corresponding interest adjustments as a result of the water diversion will be broader and deeper. In general, the water receiving areas are the major beneficiaries of the project, while the water diversion areas are the major contributors. The water diversion may cause certain interest losses in the local economies, which should be avoided as much as possible, or compensated as necessary.

(Wang Huijiong and Li Boxi also provided modification comments for this article.)

Development Strategy and Regional Economy Research Department

April 2002