Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Water Scarcity Water China’s Addressing Water Resource Management Issues Water Recommendations forSelected Addressing China’s Water Scarcity Addressing China’s Water Scarcity Recommendations for Selected Water Resource Management Issues Jian Xie with Andres Liebenthal, Jeremy J. Warford, John A. Dixon, Manchuan Wang, Shiji Gao, Shuilin Wang, Yong Jiang, and Zhong Ma © 2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved. 1 2 3 4 5 11 12 10 09 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. 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Table of Contents FOREWORD xi ACKNOWLEDGMENTS xiii ABBREVIATIONS xv EXECUTIVE SUMMARY xix 1 Introduction1 Background1 Objectives and Scope2 Conceptual Framework and Approach3 Outline of the Report6 2 Water Scarcity in China: Current Situation9 Spatial and Temporal Disparities9 Water Pollution 11 Environmental and Social Impacts and Economic Loss 14 External Driving Forces of Water Problems 21 3 Water Resources Management in China: An Overview of Determinant Variables 25 Technical Solutions Are Available and Economically Feasible 25 Government Commitments, Plans, and Implementation 27 Excessive Fragmentation of the Water Management System 29 Policy Failures in Water Management 34 Summary 40 ADDRESSING CHINA’S WATER SCARCITY v CONTENTS 4 Improving Water Governance 41 The Concept of Water Governance 42 The Legal Environment for Water Management 42 Institutional Arrangements for Water Resource Management 47 Transparency and Information Disclosure 52 Public Participation in Water Management 55 Summary 59 5 Deepening Water Rights Administration and Developing Water Markets 61 Theory of Water Rights and International Practice 61 Development of Water Rights in China 67 Water Rights Reform in China: Case Studies and Project Insights 69 Basics of Water Market and Trading 71 International Experience with Water Markets 73 Emerging Experience of Water Trading in China: Case Studies 74 Challenges and Lessons for China 77 Recommendations 80 6 Improving Efficiency and Equity in Water Pricing 83 Water Pricing in China: Policy and Practice 83 Pricing for Environment and Depletion 86 Social Impact and Affordability 88 Protecting the Poor 91 Other Implementation Issues 94 Recommendations 95 7 Protecting Ecosystems in River Basins through Market-Oriented Eco-Compensation Instruments 97 Ecological Compensation Mechanisms in China 98 Concept and Methodology of Payment for Ecosystem Services (PES) 100 The Growing International Experience with PES Systems 103 Potential Use of PES in China 105 Recommendations 109 8 Controlling Water Pollution 111 Seriousness of Water Pollution 111 Causes of Pollution and Key Challenges for Pollution Control 112 International Experience 119 Emerging Institutional and Policy Issues 121 Recommendations 123 9 Preventing Water Pollution Disasters 127 Water Pollution Incidents in China 127 Concept and Framework for Pollution Emergency Prevention and Response 128 International Experience 129 Environmental Emergency Prevention and Response in China 132 Recommendations 135 vi ADDRESSING CHINA’S WATER SCARCITY CONTENTS 10 Summary, Action Plan, and Issues for the Future 137 Summary 137 Action Plan 140 Issues for the Future 140 Concluding Remarks 143 APPENDIX: BACKGROUND PAPERS TO THIS REPORT 145 REFERENCES 147 INDEX 153 BOXES 1.1 The World Bank’s Analytical and Advisory Assistance Program— “Addressing China’s Water Scarcity: From Analysis to Action”3 1.2 Recent Water Resource Management Studies at the World Bank4 2.1 Water Crisis in Wuxi in 2007 21 3.1 China’s 11th FYP for Water Resources Development 28 3.2 Case Study: Evaluating the Implementation of the Water Pollution Prevention and Control Plans for the Huai River Basin 30 3.3 River Basin Agencies in France 33 3.4 Planning Scarce Water Resources Using Evapotranspiration (ET) Quotas 35 3.5 Distorted Economic Incentive for Pollution Discharge 39 4.1 The U.S. Experience in Promoting Law Enforcement 44 4.2 River Basin Management Legislation in the United States: the Case of the Susquehanna River Basin 47 4.3 Three Models of Water Resource Institutions in Europe 48 4.4 The EU Water Framework Directive 49 4.5 Integrated River Basin Management 50 4.6 EU Directive on the Freedom of Access to Information on the Environment 54 5.1 Water Rights in New Mexico 63 5.2 From Formal Rights to Contracts and Claims 63 5.3 Water Allocation Priorities in the Middle East: the Case of Israel 65 5.4 Registering and Monitoring Users: International Comparisons with Groundwater Management 65 5.5 Determining and Defining Environmental Flows 66 5.6 From River to Farm: Water Rights and Allocation in Inner Mongolia Water Resources Allocation Plan for the Yellow River 70 5.7 Defining and Allocating Consumptive Water Rights in the Hai Basin 71 5.8 The Colorado–Big Thompson (C-BT) Project 73 5.9 Idaho Water Supply Bank 74 5.10 Water Markets in the Murray Darling Basin, Australia 75 5.11 Channel Lining and Water Transfer: Experience from Hangjin Irrigation District, Inner Mongolia 76 5.12 Defining, Allocating, and Trading Rights in the Heihe Basin 77 ADDRESSING CHINA’S WATER SCARCITY vii CONTENTS 6.1 The Marginal User Cost of Water in the Hai River Basin 88 6.2 Making Price Increases Acceptable: the Case of Chongqing 93 7.1 Additional Examples of Payments for Ecological and Environmental Services (PES) 104 8.1 Implementation of Water Pollution Control Plans for the Huai River Basin 114 8.2 Public Participation and Compliance with Environmental Standards: the Case of Japan 120 9.1 Water Pollution Incident in the Songhua River 128 9.2 The Sandoz Chemical Spill in Switzerland and Extending down the Rhine 130 9.3 Examples of National Legislative Systems 130 9.4 The Buncefield Incident, U.K. 131 FIGURES 1.1 Water Resource Management5 2.1 Spatial Distribution of Annual per Capita Water Resources in China 10 2.2 Industrial Wastewater Discharge, 1995–2005 12 2.3 Industrial COD Discharge, 1995–2005 13 2.4 Trends in Water Quality at Monitored River Sections in China, 1991–2005 15 2.5 Trends in Water Quality Changes at Monitored River Sections in North and South China, 1991–2005 16 2.6 Surface Water Quality, 2000 and 2004 16 2.7 Groundwater Depletion by Province 18 2.8 Polluted Water Supplies in China 19 2.9 Rural Households with No Access to Piped Water and Diarrhea Incidence 20 2.10 Mortality Rate for Cancer Associated with Water Pollution in China, 2003 20 3.1 Ministries and Authorities Involved in Water Resource Management 31 3.2 MEP and MWR Water Quality Data for Huai River, 1998–2004 32 3.3 Integrated Economic Values of Water and Water Withdrawals in the Primary, Industrial, and Service Sectors in Eight Regions 38 6.1 Municipal Water Tariffs and Wastewater Charges by City 85 6.2 Share of Water and Wastewater Services Expenses for Average and Low-Income Households 90 7.1 Main Ecological and Environmental Services by Type of Service 101 7.2 The Simple Economics of Payments for Environmental Services 102 7.3 The Flow of Compensation from Beneficiaries to Land Users in a PES System 102 8.1 Water Quality in Chinese Rivers, 1991–2006 112 8.2 Percentage of Sections with Water Quality Grade IV to Grade V+, 2001 and 2005 113 8.3 Provincial Sewage Treatment Investments in Yellow River Watershed 117 8.4 Centralized Sewage Treatment Rates and per Capita GDP in 14 Provinces in Northern China, 2003 118 8.5 Centralized Sewage Treatment Rates by City Size in 2003 118 9.1 Common Elements of an Emergency Response System 128 viii ADDRESSING CHINA’S WATER SCARCITY CONTENTS TABLES 2.1 Spatial Distribution of China’s Water Resources and Other Social Variables 11 2.2 Wastewater and Pollutant Discharges, 2000–05 13 2.3 Current