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Institutions and policies for improving water allocation and management in the Yellow River Basin, China
Project ID
LWR/2000/120
Project Country
Commissioned Organisation
Australian Bureau for Agricultural and Resource Economics, Australia
Project Leader
Dr Steve Beare
sbeare@abare.gov.au
Phone:
(02) 6272 2040
Fax:
(02) 6272 2318
Project Budget
$763,191.00
Start Date
01/01/2003
Finish Date
31/12/2005
Extension Start Date
01/01/2006
Extension Finish Date
31/08/2006
ACIAR Research Program Manager
Dr Christian Roth
Related publications
Overview Objectives
The project aimed to establish equitable institutional arrangements in the Yellow River Basin (YRB) that promote more efficient water allocations and management, in order to increase the productivity and sustainability of the water resource.
Project Background and Objectives
China is poorly resourced with water, presenting a major threat to long-term food security. Predictions indicate that by 2020 grain requirements will exceed current consumption by more than 40 per cent, with livestock demand expected to double. Arable land, however, is almost fully allocated. Increasing urbanisation, industrial demand and upward income mobility are increasing water consumption. Many of these factors are also resulting in rising levels of water pollution which, coupled with deteriorating irrigation systems and water misallocation, threatens supplies. Imbalances in water resources between regions (the north is arid while further south is comparatively water-rich) further complicate water supply and equity.
Water shortages have been considered from both technical and engineering perspectives, with the Government using innovative delivery technologies to try to increase efficiency. Despite this approach little has changed. Conflicts, and shortcomings of scarce incentive schemes, demonstrate the continuing pressure on water resources.
Institutional limitations, including a lack of integrated, multi-regional approaches or national coordination, are the main factors behind continued water resource pressure. This becomes particularly so given the sectoral approach, with activities in one area often causing shortages downstream. The conflicting needs of industrial, agricultural and urban users further fragment approaches to water allocation.
Progress Reports (Year 1, 2, 3 etc)
Year 1:
A workshop was held in Australia to discuss preliminary project requirements and the model specification. This was followed up with a workshop in China where all project collaborators, including a representative from the Ministry for Water Resources, participated. A field trip to irrigation areas in Inner Mongolia highlighted many of the issues to be investigated in the project and some of the data requirements and potential sources necessary to meet the objectives.
The World Bank Basin Level Model (BLM) was used as a template for the ABARE-CCAP joint YRB modeling effort. The BLM was redeveloped using a simulation software package more suited to 'what if' scenario analysis. At present, the model is based on the database contained in the BLM and this will be expanded as the basin profile is completed. ABARE has critiqued the BLM and identified areas for further development and improvement. Further meetings were held in China to finalise the methodology of the agronomic component and to ensure that data collected in the field was consistent with the data requirements for that component of the model.
A profile of the hydrological, physical, agronomic and socioeconomic conditions in the basin is currently being undertaken. This includes field survey work to be undertaken by CCAP in the 2004 calendar year. Further investigation of potential secondary data sources is being undertaken by CCAP and IWMI.
Year 2:
Data availability and analytical methodology were discussed extensively in meetings with representatives from ABARE, CCAP, USDA-ERS and UC Davis in 2003 and a framework was agreed in January 2004. The framework covered:
Primary and secondary data collection and the construction of a basin level database of agricultural production and returns
A hydrological database drawing on the structure of the World Bank basin level model of the Yellow River Basin
Future industrial and urban demand requirements
A soil water balance model to facilitate the estimation of total crop water requirements in determining the crop yield response to irrigation
Water demand modelling and the construction of an integrated hydrological and economic model of the surface water use in the basin
The databases of agricultural production and returns, surface water hydrology and soil moisture balance are now mostly complete and the water demand modelling is scheduled to commence in May 2005.
The agricultural production database contains county level data on dryland and irrigated production, surface and groundwater irrigation water use, yields, revenue and production costs.
The data was derived from county level production statistics and both village and farm surveys conducted by CCAP.
The database is spatially linked to GIS coverage of the Yellow River Basin that allows the specification of regional estimates that align with catchment boundaries.
The hydrological database includes a monthly time series of river flows at key gauging stations and reservoirs, as well daily pan evaporation and rainfall data from all the available weather stations within catchments of the Yellow River Basin.
The soil moisture balance model has been constructed at the county level and can be linked to the GIS coverage of the Yellow River Basin.
Water demand estimation procedures have been developed and implemented in GAMS to match the information in the agricultural production database and soil moisture balance models.
In October, 2004, representatives from ABARE, ERS and IWMI met with representatives from the MWR and the YRCC (Shang Hongqi, Gao Zhanyi and Li Ge) to discuss potential collaboration. The parties agreed to seek support to pursue collaborative research on a variety of issues including the development of water rights to facilitate water transfers, water saving through adoption of irrigation technology and practices, the impact of soil and water conservation practices on sedimentation, water quality and ecosystem protection. It was also agreed that the research would focus on the interrelationships between hydrology, agronomic practices, economic returns and environmental outcomes. Further, the research will assist in the development of a policy evaluation model based on existing ABARE modelling frameworks. The modelling framework may be extended to incorporate water quality, supported by an existing program to monitor water quality in collaboration with USDA and ecosystems research being done at YRCC.
The meeting with the YRCC led to visits by the President of the YRCC in late October 2004, a deputy Minister of the MWR and a number of division directors. They came to Canberra to visit ABARE to discuss both water policy issues in Australia and how our work in the Murrumbidgee would be extended to the YRB.
Key tasks for the second half of 2004-5 include:
Estimation of surface water demands for catchment areas in the Yellow River Basin
Design of an initial set of surface water reallocation policies to evaluate using the integrated hydrological and economic model.
Preliminary results from the model are scheduled to be presented at the 2nd International Yellow River Forum in October 2005.
Project Outcomes
Theoretical gains from water trading were demonstrated for the YRB. Traditional technical and engineering analysis of irrigation is not enough in the 'mature phase' of water use in China. With total abstractions of water for irrigation, domestic and industrial use running ahead of sustainable yield and acute economic and environmental problems in some areas, the research emphasis should now be on socioeconomic and institutional analysis.
The project team identified a range of institutional impediments to dealing with water scarcity in Northern China. Irrigation infrastructure for surface water was often in poor shape. Land and labour constraints needed to be considered in the agenda of reform for surface and groundwater irrigation.
Current impediments to replacing administrative allocation of water in the YRB with water trading include the lack of defined property rights to water, and concomitantly, the absence of any mechanisms to transfer revenue from water sales to potentially exporting regions and/or, at the local level, make transfers to those irrigators most affected by water trade. It was recommended that property rights for water in China be considered at the provincial, county and village levels. Property rights to land also need to be accounted for. Any changes in property rights to water could not occur quickly, suggesting an experimental approach with trials of water trading at the village level. As revealed in the groundwater studies, active water trading is already taking place in villages dependent on groundwater in Northern China.
Resistance to change was hardly surprising given the drastic effects of water transfers on rural incomes (if uncompensated), and the fear and uncertainty that attaches to major policy changes. Even after 15 years' experience of water trading in Australia, commitment to water trade is not as strong at the local level as official rhetoric would have it. In similar vein, the project reviewers anticipated many complex issues in the establishment of China's water rights market.
Perhaps the project's most important conclusion arising from the studies of groundwater in Northern China were that local solutions to water scarcity need to be developed, based on economic and technical assessments of the local situation.
Substantial differences were identified between groundwater areas in the extent of overdraft (water scarcity), implying that any government controls and regulations should be based on metering and monitoring of water levels. Project reviewers noted that remote sensing was a feasible option for enriching the information base available to policy makers on groundwater at potentially lower cost.
An instinctive reaction to emerging water scarcity in Northern China has been to emphasise water saving technology for both surface and groundwater. This approach has been unsuccessful for predictable reasons. Much the same conclusion has applied in Australia where the concept of water use efficiency (WUE) has also been abused.
It was recommended that a more constructive approach to water scarcity would be to consider water use by crop. Straightforward economics of transport and location suggest that high-valued perishable products should be grown close to urban centres. Less water would be required if production of summer crops like maize and cotton were concentrated in wetter parts of China or imported, taking pressure of scarce water supplies.
China has a long history of aiming for self-sufficiency in grain production. While arguments about self-sufficiency and food security are well rehearsed, there are important new ingredients in the risks facing the Chinese economy. China now has a lot of its economy tied to the outside world through imports of industrial raw materials (energy and minerals) and exports of manufactures. Greater reliance on imports of grain, especially feed grain, would now not make as much difference to the political and economic risks facing China as long thought.
Location
There are no project locations defined for this project.
