Update on China’s South-North Water Transfer Project
A June 2003 report from Embassy Beijing.
China’s South-North Water Transfer (SNWT) Project proposes to move 44 billion cubic meters of water per year through three canals (Eastern, Central and Western) from the Yangtze River Basin to parched areas of northern China. Unlike the immense Three Gorges Dam project, SNWT addresses a unique need with a practical and logical (although only partial) solution. The Eastern and Central Routes will have moderate environmental impact, while the potentially devastating Western Route may never be built. Relocation of residents for the Central Route’s intake reservoir is a problem. Numerous organizational and financial issues remain unresolved, but the project is underway.
The South-North Water Transfer Project envisions three main lines -- Eastern, Central and Western -- linking the well-endowed Yangtze River Basin with water-short North China. Each differs greatly in terms of design, impact, cost, schedule, and goals. Earlier this year, we visited the Phase I Section of the Eastern Line -- from Jiangdu through Jiangsu Province up to the Yellow River crossing -- to get a better feel for the project’s construction.
Eastern Route: Shandong Today, Tianjin Tomorrow
The 722-mile Eastern Route is the least expensive and least complex segment of the overall SNWT project. The construction effort can be considered in three parts:
· Phase I will upgrade and extend the Grand Canal and other existing water resources infrastructure in Jiangsu Province, in order to pump water from the Jiangdu City on the Yangtze River as far north as Dezhou City in northern Shandong Province by 2008. The water will be pumped along a 300-mile series of canals, rivers and lakes, most of which already exist. The Eastern Route reaches its highest point -- 40 meters higher than Jiangdu -- at Dongping Lake in Dezhou City, just a few miles south of the Yellow River;
· Phase II construction will enable that water to flow downhill, underneath the Yellow River, to Tianjin and Beijing by 2012. The special tunnel under the Yellow River will perhaps be the most technically challenging part of the Route;
· Finally, a 430-mile branch line will transfer water from Dongping Lake eastward to Jinan, the capital city of Shandong Province, and onward to Yantai and Weihai on the Shandong Peninsula.
Piggybacking on Existing Infrastructure
Construction on the Eastern Route officially began on December 27, 2002. Compared to the immense organizational and financial challenges of the project, the physical construction process of Eastern Route appears relatively straightforward. The water transfer canal piggybacks on the impressive existing irrigation and water transportation infrastructure of Jiangsu Province, including the Grand Canal. The Grand Canal, first built starting around 470 AD during the Qi Dynasty, is in fact a system of man-made canals and natural rivers that forms a continuous waterway through Jiangsu, Shandong and Hebei Provinces, with the original purpose being the shipping of grain (taxes) from the Yangtze River valley to Beijing. Much of the Grand Canal has decayed significantly over the centuries, but large sections of it are still in use, and the basic waterway still exists.
In addition to the Grand Canal itself, Jiangsu has a sizeable existing network of canals, pumps, dams, gates, locks and aqueducts to facilitate the movement of water and goods within Jiangsu Province. An earlier infrastructure coordination project called “Water Transfer from Southern Jiangsu to the North” (jiang shui bei diao), which was started in the 1960’s, now governs water transfer facilities encompassing virtually the entire province. This infrastructure is in fact multi-functional. It can transfer water from the Yangtze River for use in irrigation in northern Jiangsu Province, or conversely can be used to drain floodwaters from the north to the south. It also represents an extensive water-borne transportation network. The SNWT Eastern Route project will mainly refurbish, expand and upgrade this infrastructure.
The prior existence of a coordinated water resource management system in Jiangsu is important, because it means that China already has 40 years of experience in managing large-scale water transfer systems in the region. The new management challenge will be transporting a new, voluminous load of fresh water through the midst of a system with competing uses and needs. The pre-existing infrastructure also means that there will be relatively little forced migration required to construct the Eastern Route, mainly localized disruption for the construction of water gates and pumping stations. In total, fewer than 10,000 persons are expected to be relocated.
Ecological Impact of Eastern Route Largely Positive
The Eastern Route will bring 15 billion cubic meters of water to North China each year. This huge transfer will impact the ecology of the source area, the transit area and the destination area in various ways:
· Withdrawing 15 billion cubic meters of water from the Yangtze, even though it represents only 2-3% of the Yangtze’s annual flow, will still affect downstream ecosystems along the Yangtze to some extent. There will be less of the sediment needed to maintain riparian and coastal wetlands. Also, pollutants will be marginally less diluted, raising their concentration in the Yangtze River’s lower reaches;
· As water flows north along the Eastern Route, it will be temporarily impounded in any of four lakes (Hongze, Luoma, Nansi, and Dongping). The introduction of chemicals and biota from different ecosystems may affect these lakes and their surrounding ecosystems, including wildlife. On the other hand, more abundant water for wetlands and for recharging the groundwater table in Jiangsu Province should help support the local ecosystem;
· At the destination end, SNWT will increase the water available for recharging groundwater tables. It may also increase the size and speed of existing rivers, and perhaps even expand their existing boundaries.
SNWT may also, to some extent, smooth out the peaks and valleys of annual flow in some North China rivers. While this might seem at first glance to be positive, it is not necessarily so. Natural ecosystems have developed around cycles of high and low water, with their accompanying change in water temperature and chemistry. Fish breeding cycles and bird nesting seasons can be heavily dependent on the river’s flow. Changes to the natural cycle can have destructive effects on wildlife.
The most important environmental impact of the SNWT Eastern Route project, however, will also be the most positive -- the forced clean-up of the watersheds through which the water will travel. Agricultural run-off, sewage, factory waste, river transport pollution, and intensive aquaculture already heavily pollute the existing waterways along the Route. Pulp and paper factories are the biggest point source polluters, but agricultural run-off is also quite severe. The worst pollution is in the Hai River basin, north of the Yellow River, where virtually every river and stream is either gone dry or polluted to Level 4 or Level 5. (Level 1 is the cleanest, Level 5 the worst; national standards call for Level 2 or better for residential and industrial use.)
Because the SNWT Eastern Route will flow through existing channels, mixing with existing water, the current heavy pollution load along the Eastern Route means that SNWT will require the investment of huge sums of money in the construction of new, much-needed water treatment facilities. At least 13 major new facilities will be built, according to the State Environmental Protection Administration, at a cost close to that which will be spent on the re-routing of waterways and construction of pumping stations. Shandong Province alone will spend over $1 billion on SNWT-related wastewater treatment plants as part of an overall projected project cost of $8-10 billion. Also, local authorities along the Route will be required to enforce water pollution regulations more strictly.
Central Route: Big Construction Challenge
Construction of the 775-mile Central Route is also due to start within 2003. The Route is planned for completion by 2012. Unlike the pump-fed Eastern Route, the $10 billion Central Route will be a brand-new facility from the start, and will also be an entirely gravity-fed canal, moving 14 billion cubic meters of water per year from the Danjiangkou Reservoir on the Han River in Hubei Province all the way north to Beijing. The engineering challenges of the Central Route are considerable, including the tunnel under the Yellow River and keeping water moving along the long, gentle gradient.
The chief non-engineering obstacle related to the Central Route project is the required resettlement of approximately 320,000 persons -- 300,000 due to an increase in the size of the Danjiangkou Reservoir at the intake for the Route and about 20,000 along the Route itself. Although each resident is supposed to receive $5000 in compensation -- roughly equivalent to about six year’s wages for a central China farmer -- the Danjiangkou relocation is still likely become the most controversial aspect of the entire SNWT project. Another key problem Central Route planners face, however, is how to regulate water intake so as to minimize the disruption of water transport, agriculture and industry downstream from the diversion site on the Han River (a Yangtze tributary).
Western Route: Engineer’s Pipe Dream
The Western Route is unlikely to ever be built. One clue about the project’s fate is that even the most optimistic forecasts show work starting on the Western Route only in 2010. This is not surprising: the Western Route concept is an incredibly audacious -- even foolhardy -- plan to erect mega-dams and delve 100-kilometer tunnels through remote and desolate mountains in Western China, at altitudes in excess of 4,000 meters (13,000 feet) in areas that are frozen much of the year. The idea is to move 20 billion cubic meters of water per year from upstream Yangtze River tributaries into the upper Yellow River, but even preliminary cost estimates exceed $37 billion -- twice the price tag of the Three Gorges Dam project.
While the Eastern and Central Routes are aimed directly at supporting China’s future, as represented by the country’s burgeoning and prospering eastern cities, the Western Route would direct very expensive resources to the amelioration of past development mistakes, by further subsidizing the hard-pressed grain farmers of China’s Middle West. Farmers in that region already draw large amounts of water at low prices from the Yellow River in Gansu, Ningxia, Inner Mongolia and Shaanxi, in order to produce distinctly low-value crops. The main justification for the Western Route, in fact, is not economic but rather regional political pressures, compelling central planners to continue to promise construction of the Western Route, probably without ever intending to deliver on the promise.
SNWT Organizational Structure Still Coming Together
Even though the Ministry of Water Resources (MWR) has already kicked off project construction, lines of management authority for the SNWT project remain somewhat murky. The Government is still in the process of creating a special Steering Committee at the State Council level, which will assume control of SNWT from MWR. The Premier is expected to chair the Committee, while the Vice Premier in charge of agricultural issues will be a key member. Minister-level officials from 20 ministries and bureaus, and 7 provinces and municipalities with a stake in SNWT will also have seats. Once the structure at the national level is set, the provinces are expected to fall into line with a parallel structure at their level.
Below the Steering Committee, but still within the State Council, a larger, working-level coordinating group called the SNWT Office will be established with about 100 officials. The SNWT Office will in turn control and coordinate the work of the SNWT Bureau at the MWR, as well as related efforts at other relevant ministries. As is often the case with cross-cutting efforts, the staffing of this Office -- which bureau supplies the personnel -- will be critical to determining which part of the Chinese government actually maintains control over the SNWT project. Our bet is that MWR will provide the key people.
Officials say that once the infrastructure is complete, the Eastern Route will be turned over to “companies” to run, with one located in each province. As with the formal government structure, the structure of these “companies” is still under discussion, although it is clear that the government will be calling all the shots.
Financing the Project: 20% Government, 35% Fees, 45% Loans
Although the Central Government plays the key role in planning the SNWT, it will only provide a 20% financial stake. The general plan, according to official documents and SNWT specialists, is for the Government to supply 20% of the capital costs, while another 35% is supposed to come from special water fees pre-assessed in locations that will benefit from SNWT. The final 45% will come from bank loans, to be repaid using the fee income.
Predictably, much of the costing data available for the SNWT project is vague, and some self-contradictory, but as currently planned the Eastern and Central Routes appear to have a total budget cost of about $19 billion. Dividing that amount by the proportions above would imply a government contribution of $3.8 billion, fee income of $6.7 billion, and bank loans of $8.6 billion. These numbers should be considered only rough estimates, however.
Experts agree that the financial and institutional structures established for elaborate water deals like SNWT are critical to the long-term viability of the project, and are also very tricky to arrange. This, in fact, seems to be where China is encountering the most difficulty. Digging canals is “dirt simple” compared to negotiating multi-year contracts for water delivery, and maintenance of canal systems linking multiple users, across numerous stubborn and somewhat autonomous political jurisdictions.
Comment: Software, Not Hardware, Will Make the Difference
Inspired by the Los Angeles aqueduct and the resulting rapid economic growth seen in postwar Southern California, China decided long ago to undertake a large-scale south-to-north water transfer project to rectify its own water resource disparities. Like the California project, however, China looks set to experience some turbulent internal water politics. The engineering issues of SNWT represent a modest challenge for China, but the institutional challenges are staggering. The ultimate success or failure of SNWT, in fact, may depend on China’s ability to fashion the necessary legal, financial and institutional framework to make the project work for everyone involved.
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