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Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

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China Heading Towards an Unavoidable Water Crisis

China is a huge producer and consumer of commodities. Not only is it the largest global producer of key crops and meat, it has the largest appetite for goods that cover the gamut from rice to rubber, from cotton to copper. But one of its largest addictions has become one of its biggest problems, as it has an unquenchable thirst……for water.

Let’s zoom out here for a second. Only 2.5% of the earth’s water is freshwater. And 70% of that is locked up in glaciers, ice caps, and permafrost. A mere 0.4% of the world’s freshwater is in the form of lakes and wetlands (76%), in the soil (13%), and in the atmosphere (9.5%).

Although China is home to 7% of the world’s freshwater reserves…it is also home to 20% of the world’s population. To put this in perspective, China has over four times the population of the US, but only about a fifth of the water availability.

Water usage in China has quintupled since 1949. One key driver has been The Communist Party, which has always encouraged grain self-sufficiency. This has meant that rural areas have persisted in growing highly-water intensive crops, rather than focusing on agriculture which is better suited to its environment.

This situation was exacerbated after Chairman Mao’s death, as economic reforms led to a farming renaissance. This meant a ramp up in agricultural production, ergo…….a ramp up in water use.
Agriculture makes up the lion’s share of water consumption in China, and when combined with industry, this number reaches 85%:

Water Usage in China

But here’s the main problem facing agriculture in China: only 15% of China’s land is arable, but 60% of this lies in the North – where there is a lack of water availability. The North China Plain is home to over 200 million people, but only receives limited rainfall. At current levels, it will be drained of all its groundwater within 30 years.

Also, agriculture is not just the largest user of water in China, but it is also the biggest polluter. 912 kilograms of chemical fertilizer is used for an area the size of a soccer pitch. According to the World Bank, 300 million rural Chinese lack access to safe drinking water.

Related Article: China's Coming Energy Crisis

This scenario is only expected to worsen. By 2020, 30 million Chinese are expected to be displaced by water stress. The 2030 Water Resources Group – a consortium of consultants – predict there will be a huge shortfall in water by 2030:

Water Demand by Sector

Problems not only persist in rural areas and agricultural use, but for cities and industries alike. More than two-thirds of China’s cities have water shortages, with some city wells more than 600 feet deep. Meanwhile, not only is 52% of industrial output produced in water scarce regions, but inefficient water use is rife. Dependent upon the product, 3 to 10 times more water is used to produce goods than the equivalent industries in developed nations.

Related Article: EXCLUSIVE: Beijing Sinking Teeth into Western Turf in Asia

So what is being done to address this behemoth of an issue? The solution underway dates back to Chairman Mao. Called the South-to-North Water Transfer Project, it took decades of debating by engineers and scientists before finally being approved in 2002. It is a plan to funnel more than 12 trillion gallons northward every year from the Yangtze River basin to where it is needed most (as an aside, approximately 41% of China’s waste water is dumped into the Yangtze, often untreated).

Annual Agricultural Production

To complicate the water situation further, China is the home to half of the world’s dams. The most prominent, The Three Gorges Dam, is the world’s most powerful and largest hydroelectric dam. It generates 11x more power than the Hoover Dam, and the same amount of power as fifteen nuclear reactors.


But this is just the start. In August of this year, the Chinese government announced its aim to cut carbon emissions 17% by 2015 from 2010 levels. And one of the key ways it is going to do this is through strong focus on hydropower. It intends to add 120GW of new conventional hydropower capacity by 2015, which is the equivalent to building one Three Gorges Dam each year for five years.

Is there any way China can avoid a water crisis? The South-to-North Water Transfer Project is not expected to be completed until 2050, by which time areas of Northern China may have run out of water already. Pollution laws would help to clean up the water, but given the widespread nature of the pollution it would be hard to enforce.

As for new supplies, several coastal cities are building desalination projects, but these are extremely expensive (to epitomize this, Saudi Arabia is home to 25% of desalination facilities given its wealth), as well as requiring significant power to run (…and ironically, power generation is exceedingly water intensive…). All the while, a number of other countries are dependent on China and the rivers that flow through it. Unless China ramps up its efforts to address both its pollution and regional water shortages, it is going to end up parched.

By. Matt Smith

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Leave a comment
  • myint thein on May 01 2013 said:
    And so, how to think? One-day China may look the water from Myanmar. Myanmar water usages is 10%+ of their resources. And how India also?

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