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A Step Toward Water Markets In China

I've blogged before about the need to create an integrated, functioning market for water rights in the American West. Yingling Liu has an op-ed that illustrates why it might be an even more pressing need in China:

The need for better delineation of water rights in China has become increasingly urgent. Water demands within shared river basins are frequently at conflict due to industrial expansion and urbanization. During a drought in 2006, Chongqing municipality in western China saw a dramatic decline in flows from the Jialing River, the city's main water source, despite the fact that the river's upper reaches had received plenty of rain. The shortage was triggered by the more than 50 dams upstream from the city, which had retained the water for power generation. Such competing claims are prevalent in nearly all of China's major river basins.

As water demands keep rising, water waste remains pervasive due to the current "open-access" nature of China's water resources. According to statistics, in 2003 China's utilization coefficient for agricultural irrigation water was only 0.4-0.5, compared to 0.7-0.8 in industrial countries. Water use per unit of gross domestic product was as high as 413 cubic meters, four times the world average, while water use per value added of industry was 218 cubic meters, 5 to 10 times the level in industrial countries. China's industrial water-recycling rate was only 50 percent,compared to 85 percent in industrial countries.

The good news here is that there's a lot of room for improvement. China's water situation can easily seem dire--and on one level it is. But, much as James Fallows noted in this month's Atlantic that China's dirty industrial practices offer a huge opportunity to make the country significantly greener even absent technological breakthroughs, China could make substantially better use of its existing water resources just by deploying the same techniques currently used in other industrialized countries. Better developed water markets could help, by providing a way for major users to make money by conserving water and selling it to increasingly prosperous and thirsty cities.

--Josh Patashnik