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China’s Water Crisis Made Worse by Policy Failures

On Friday, the National Development and Reform Commission announced that China will, by the end of 2015, put in place a three-tier pricing structure for water. Heavy users will pay more under the new system, which will cover all cities but not all towns. The Wall Street Journal called it “the first stab at actual resource-sector reform” after November’s Third Plenum.

Technically, it’s the first announcement of a future stab because it remains to be seen whether significantly higher charges, which will surely be unpopular, will in fact be imposed. If there were political will, the NDRC would likely have put the new and urgently needed price restructuring system in place much sooner.

In any event, if the new pricing structure were to be implemented tomorrow, it would not be a moment too soon. The People’s Republic, with 19 percent of the world’s population but only 7 percent of its freshwater, is a country that often defines itself by the scarcity of this resource. As Wang Shucheng, a former water minister, tells us, “To fight for every drop of water or die: that is the challenge facing China.”  Where “blue gold” is so precious, it is anomalous that Chinese water charges are less than a fourth of the global average.

Using the market to achieve conservation—the big idea behind the NDRC’s announcement—is certainly the right approach, but this move is decades late, coming after every other policy proved ineffective, unworkable, or inadequate.

Before this, Chinese leaders tried to solve their water problems by announcing—and failing to meet—water-efficiency targets. Then they decided to transport the commodity from the middle regions of the country, where it is plentiful, to the north, where it is not, with the South-to-North Water Diversion Project.

The first phase of the project’s eastern channel—one of three planned waterways—officially opened December 10th, and it now carries Yangtze River water to Dezhou in Shandong Province. The central channel will start delivering water this year from a Yangtze tributary in Hubei Province to Beijing, Tianjin, and nearby cities. The western channel is still in the planning stages and, if built, will take water from the frail Himalayan plateau.

As the New York Times reported, there was only “subdued resignation” at the eastern channel’s official opening last month, and that is unusual for construction-crazy Chinese officials. Yet the reason for their lack of enthusiasm is obvious. “It’s not a moment for celebration,” said Ma Jun, often described as China’s most famous environmental activist. “There should be a sobering review of how we cornered ourselves so that we had to undertake a project with so much social and environmental impact.”

The project, from all accounts, is already causing irreversible damage to the Yangtze, it will spread pollution by transporting goopy water from one part of the country to another, and it will displace hundreds of thousands of the poorest Chinese. And the cost has been exceedingly high. Estimates have now risen to $79.4 billion, and the most challenging part—the western channel—has not even gotten off the drawing board. The South-to-North project could end up, apart from the International Space Station, the most expensive civil engineering undertaking in history.

And if all this were not bad enough, the gargantuan project has actually made China’s water problems worse. As Ma explains, “To some extent, the north has subjected water resources to unsustainable exploitation because they’ve known that one day they’d get this water.”

If China’s technocratic leaders were so skilled, as many seem to think, they would have implemented the pricing solution two decades ago. What they have in done in the interim is despoil their environment and spend tens of billions, having apparently made matters much worse.

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