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November 19th, 2013
Courtesy of STRATFOR, an interesting video on China’s water water scarcity and the inevitable competition growing between economic sectors. Transcript is as follows:
Yu the Great controls the waters. This ancient Chinese idiom perhaps best captures the almost primordial relationship between political legitimacy and the ability to manage water in China. From the beginnings of state formation along the banks of the Yellow River — the fabled days of semi-mythical kings like Yu, who according to legend built China’s first dams — right up to the present, water management has been a fundamental element of social and political control in China.
The Communist Party of China is no exception. Over the coming years, rising population and per capita food and energy demand will bring increased competition over this naturally scarce resource. Where water management in the old days consisted primarily of maintaining irrigation systems for agriculture, which employed virtually all of the country’s population, water now plays a much more varied and complex role.
Agriculture is still the primary user of water in China, consuming 60-70 percent of China’s renewable freshwater resources annually. The rise of a Chinese middle class and attendant shifts in diet have only further intensified water supply-demand imbalances in many agricultural regions over the last two decades. Meanwhile, urbanization has expanded municipal drinking and wastewater needs and the burdens of urbanization on national freshwater supply will only grow as Beijing carries out its plan to shift another 250 million farmers to cities by 2020.
Another major source of competition for water resources will be ongoing growth in Chinese energy production. Water plays an essential role in the energy sector. It is critical to every step of the fossil fuel supply chain, from mining and drilling and fracturing to washing and refining to power generation and chemicals production.
Between 2000 and 2010, China’s total energy output doubled, driving the sector’s share of national water use up to nearly 13% — making it the second highest source of water demand after agriculture. Water scarcity has implications for future energy output across China, but the problem is most acute in the country’s water-scarce north and northwest regions, where energy production is particularly intensive.
Almost 40 percent of China’s population lives in the provinces of the North China Plain, Bohai Rim and Loess Plateau regions. Likewise, these provinces account for well over half of China’s output and consumption of coal, by far the country’s most important primary energy source. Throw nearby Inner Mongolia into the mix and the region’s share of coal production and demand rises to over 75 percent. In addition to coal, these provinces are key sources of oil, natural gas, steel and cement output, as well as some of the largest consumers of thermal power and — to top it off — huge grain producers.
On average, North China boasts per capita water resources well below 1000 cubic meters — the widely accepted threshold for water poverty. Some provinces, like Hebei and Shanxi provinces, run outright water deficits most years as a result of decades of overexploitation of local water reservoirs to meet the combined needs of industry, agriculture and city dwellers.
China faces acute discrepancies in the geographic distribution of water and energy. Simply put, the water is not where it is most needed for China’s current development goals. Over the past decade, this mismatch has compelled the government to embark on ever-larger waterworks infrastructure projects, most notably the ongoing South-North Water Transfer project.
These undertakings are only the most visible reminders that geography and the environment still constrain Chinese policymaking. It is impossible to say exactly how water will affect Chinese political and economic stability in the coming years, but growing competition between major economic sectors within China over water is a certainty.