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Tackling the Chinese Water Crisis

By Craig Moran

In 2014, the Chinese province of Shandong suffered the worst drought it had experienced in half a century, leaving reservoir beds chapped and the peanut crop (which is typically drought resistant) withering on the vine. This dry spell wasn’t just one more offshoot of global warming; instead, it was the result of booming industrial activity that had been sapping Shandong’s notoriously thin water supply. A recent study revealed that average annual water availability per capita in Shandong is only 11,300 cubic feet (320 cubic meters), less than one-sixth of China’s average or about one twenty-sixth of the global average.

As the country’s third richest province, Shandong is in some ways a victim of its own success. It is at the epicenter of China’s industrial sector, where businesses like Hongqiao—the world’s largest aluminum company—are headquartered. State-owned behemoths like these have a voracious appetite for natural resources, especially water—so much so that parts of Shandong have sunk three feet as groundwater is depleted.

The solution so far has been to essentially manufacture water through desalination. However, this proved to be a half-baked idea: desalinization plants use 10 times more energy than extracting water from local rivers, upping Shandong’s energy demand and expanding the market for dirty-but-cheap coal. In spite of this, Qingdao, the region’s largest city, plans to triple its daily desalinization output to 14 million cubic feet (400,000 cubic meters).

The irony of Shandong’s predicament is that, according to Greenpeace, consumption of dirty coal is what exacerbates China’s water shortages in the first place. In a recent report analyzing the link between water depletion and coal use, Greenpeace shows that China’s coal-fired power plants use more water in areas where water is scarce than plants in any other country. This is unfortunate, given that the success of Hongqiao and many other Chinese industrial champions relies exclusively on coal-fired power plants. Greenpeace’s conclusions are echoed by the Sierra Club, which blames a group of 21 business owners for 10 percent of China’s carbon dioxide emissions. Indeed, as a result of its reliance on coal, Hongqiao spews out 1.1 million tons of carbon dioxide every year—the equivalent of driving 2.3 billion miles in an average car.

Looking further afield, the situation in Shandong is a microcosm of the water scarcity situation across China. Beijing’s 2012 consumption levels were 70 percent greater than the total water supply, a number only expected to grow in the coming years. To address this, China built the largest water pipeline system in the world—the South-North Water Diversion Project—to allow water to flow some 620 miles from the Yangtze River to Beijing. However, even this massive canal cannot solve the underlying issue of overuse. According to the United Nations, China is home to 21 percent of the world’s population but contains only 7 percent of the world’s freshwater supplies. Even as Beijing imports water supplies from the south, the city’s water volume will still be just 5,300 cubic feet (150 cubic meters) per person. As a point of reference, the U.N. considers a region “water-stressed” when the annual water supply dips below 60,000 cubic feet (1,700 cubic meters) per person.

In short, throwing billions of dollars at the issue (as the Chinese have done) will still only make only a marginal difference. If China is to address its water problem in a sustainable way, real change is needed. Moving water around can only accomplish so much. Desalination using dirty coal may satisfy demand, but it boosts noxious emissions and essentially quenches China’s thirst while shutting off its air supply. There is no silver bullet that will allow China to conjure the water it needs. If it is to address this problem, it needs to deal with reality and pivot away from its reckless industrial policies.

At the heart of the China’s water crisis is the government’s role as both entrepreneur and regulator. Since the desire for growth largely outweighs the desire to control pollution and limit extraction, environmental laws are generally toothless. China needs to focus its efforts on slowing industrial expansion and increasing the rate at which it implements reforms. Industrial overcapacity needs to be reduced as a matter of urgency. Turning back to Hongqiao as an example, the company is currently producing far more aluminum than already-saturated markets require, pumping out unnecessary carbon dioxide in the process. While this and other firms proceed with overproduction, both companies and the state studiously avoid the difficult reforms Chinese industry needs.

While ditching old ways will not be easy, the inevitable humanitarian crisis that will result from inaction could undo nearly half a century of development. No state-owned company is worth that.

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Craig Moran is an independent geopolitical consultant. He has almost two decades of experience advising on and facilitating geopolitical strategies in various fields such as energy and natural resources planning, tourism development, assessing and advising on political and security risks, and handling constitutional and legislative issues across multiple territories.

[Photo courtesy of J. Aaron Farr]

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