(May 5, 2011) Beijing’s water shortage is one of the main factors thwarting the region’s sustainable economic growth, say bankers who have joined environmentalists in sounding the alarm over the city’s “chronic water deficit.”

By Patricia Adams

Beijing’s water shortage is one of the main factors thwarting the region’s sustainable economic growth, say bankers who have joined environmentalists in sounding the alarm over the city’s “chronic water deficit.”

“There is no way the region’s water resources can support the population,” say environmental executives with HSBC Hong Kong.

In a presentation to the American Water Resources Association’s Spring Specialty Conference in Baltimore, MD, last month, Bank executives warned that Beijing’s “water withdrawals far outstripped sustainable supply,” and that the deficit is being met “via groundwater mining, which is occurring at around double the recharge rate.” This, in turn, they say, is causing the city’s water table to drop by 1.5 metres a year.

The Haihe River basin, containing both Beijing and Tianjin, is home to 92 million people, and is now in chronic water deficit.

To help turn the dire situation around, the Bank’s executives report a swift effort on the part of Beijing’s government is underway to institute planning and management changes “with a clear goal to become a more water sensitive, global city.” These changes include city-wide demand reduction, aggressive investment in water recycling infrastructure, stringent requirements on industrial users and sustainable runoff management.

Most controversially, Beijing has embraced large-scale, long distance inter-basin water transfers from southern river basins, such as the Yangtze. The middle leg of the $65 billion South–North Water Diversion Project, for example, is supposed to begin delivering 9.5 billion cubic metres of water from the Danjiangkou Dam on the Han River in 2014. The dam, built in the 1960s, is being raised by 10 metres in order to hold more water so it can be redirected nearly 1,000 km to Beijing. But, according to a recent report, the reservoir has close to 40% less water in it this year than last, throwing into doubt its ability to deliver the promised water to the capital city.

Chinese environmentalist Dai Qing and Probe International, who published the first comprehensive study about Beijing’s water crisis at the time of the Olympics, are less confident than HSBC bank executives that the current command and control policies will work. They argue that Beijing can live within its watershed, but only with economic incentives in the form of full cost pricing and tradable water rights, and with the rule of law to protect the watershed from pollution.

“Make the polluter pay, make the consumer pay, and enforce the laws on the books,” argues Dai Qing.

HSBC experts agree with the dire assessment of environmentalists, noting that Beijing has been plagued by bad planning that did not consider the long-term environmental viability of its policies. “The end result was a highly degraded environment and many failed projects,” say the Bank executives. “Beijing is a city in severe water deficit, with no simple answer to its water crisis.”

Environmentalists remain optimistic nonetheless and cite polls that show the public is on board to adopt tough-minded reforms, including higher water prices and putting an end to inter-basin water transfers. With markets, rights, and the rule of law, they say, Beijing’s water crisis today could become a turnaround success story tomorrow. HSBC’s advertising department is waiting.

Patricia Adams is Probe International’s Executive Director.

Read the HSBC report, “No Other Option – Major Changes to Water Management in the Chinese Capital”

Read Probe International’s report, Beijing’s Water Crisis 1949-2008: 2010 Update