Effect of Rapid Economic Growth on the Water Resource in Western China


The paper discusses the negative situation connected with the water resources in the Western China and its influence on the economic growth in this region. This paper analyzes numerous studies on the issue and concludes that water scarcity in China is an urgent issue. It affects the Chinese economic growth in general and has a negative influence on the western regions of China, in particular. To prove this claim, the paper incorporates numerous statistical data and provides analysis of the governmental documents and organizations, which are directly responsible for the water situation in the country and economic development of particular sectors of Western China. In addition, the paper discusses the access of ordinary people to the drinking water in the Western China.

The total volume of water resources in the Western China is 2.8 trillion cubic meters, a considerable part of which has already gone unusable, lacking a significant investment in the purification and the development of new sources. At the same time, the country’s water resources are very unevenly distributed between the needs of industries and private consumers. In addition, floods account for 60 to 80% of the rainfall and runoff, the areas of the Yangtze River accumulate to 65.4% of arable land, 46.1% of the population produce approximately 45.8% of GDP, but the water that the region uses constitutes only 19% of the national total. The basins of the Yellow River, Kwai, and High, where the population is 34% and produces 33.3% of GDP, has access to only 7.7% of the country’s water resources.

It is estimated that under the existing demand for water without exceeding the groundwater withdrawals, in the Western China the average level of 30-40 billion cubic meters of water is not sufficient. In 400 out of 669 cities, there is a lack of water. In the period from 1980 to 2010, the Western part of the country had been experiencing a dramatic increase in water consumption. As a result, the conflicts on the water issue have arisen between industry and agriculture, urban and rural areas and between different regions. Therefore, this paper will focus on the connection between the economic growth and development of the Western China and its water supply level, their effect and influence on each other.

China’s Economic Model and the Role of Water Resources

China, as a large country, has set a goal to build an economic model that will ensure growth of the region despite limited natural resources. The country, which is a home for 22% of the world population, has only 6.4% of land and 7.4% of the arable land, where 1/5 of the territory actually suffers from the process of desertification, while more than half the country’s population live near the three rivers.

China took a sixth place in the world according to its water reserves, what comprises 2.8 trillion cubic meters. Regardless of this promising figure, there are 2500 cubic meters per capita in the Western China, what is about one-fourth of the world average rate according to the National Bureau of Statistics in the six provinces of China (Beijing, Tianjin, Hebei, Shanxi, Shanghai, Ningxia). Consequently, a person has less than 500 cubic meters of water per year. Given the continued growth of the population, this figure decreases from year to year.

Many experts believe that the lack of water slows down economic development, especially the growth of large enterprises, whose production cycle is associated with the use of the water resources, and whose actions significantly reduce the standard of living of the population especially in the Western part of the country. Moreover, water scarcity threatens the development of agriculture in the north of the country and can lead to grave consequences in the form of food shortages, which play a negative role on the economic growth of the Western China.

It should be noted that water resources in China are distributed very unevenly, since 82% of the surface and 70% of all groundwater is concentrated in the Yangtze River valley and to the south of it. At the same time, nearly a half of the country located in the western part of China can access 18% and 30% of the surface of groundwater.

Irrigation and industrial water withdrawals are so significant that in the last 20 years, the drying riverbed in the lower reaches of the Yellow River is annually celebrated. In fact, its record was achieved in 2007, when it lasted for 226 days covering the 704 km.

The Western China obtains poor water resources. The total annual deficit of fresh water in the region has reached 70 billion cubic meters. Most of the water sources are located in the south of the country. However, the demand for water in the northern and western parts of China, where most of the population resides, is much greater than the demand in the south. Four northern river basins provide only 20% of national water resources. However, this area accounts for 2/3 of all rural businesses and 45% of GDP. In comparison, the southeastern part contains 21.3% of water resources, but it accounts for only 8.3% of GDP.

Reducing the water consumption below the level that is needed for households, industry, and agriculture is called ‘suppression of demand’ for water resources and is a consequence of the experienced deficiency. Depressed demand is calculated as the difference between the planned indicators of demand (defined by the Ministry of water resources) and the sustainable supply. For example, in Shanxi, the depressed demand is 0.76 billion cubic meters. Fifteen western provinces are characterized by the fact that the water consumption is less than 40% of the planned demand.

Another indicator of the lack of water is groundwater depletion, which also has severe consequences on the environment and causes the delays in the economic growth of the Western China. In 2009, 24 billion cubic meters of water costed 92 billion yuan for the state. Drinking water analysis revealed 118 cities that experienced groundwater pollution in various degrees in 97% of the towns.

The Water Resources Problem, Governmental Control and Economic Growth in the Western China

There are two types of ground waters, including renewable surface aquifer and a deep layer of non-renewable. Both of these types of water resources are important to consider when analyzing their impact on the economic development of the country. The surface layer is renewed through precipitation and surface water sources (rivers, lakes). For the deep aquifer to fill, hundreds of years are required, and its depletion can be equated with the development of non-renewable resources. Due to the excessive development of groundwater, a serious problem with the salinity of the soil and groundwater appears. This issue arose in 2007 in the delta of the Fujian river. After an extended period of decline in rainfalls (30% below the standard rate), the delta has undergone severe salinization. This process led to the fact that all the activities of industry and agriculture in the region had stopped for 170 days. More than 5 million people suffered to varying degrees. In addition, the state of the economic growth had been negatively impacted.

The production processes by increasing the degree of reused water had reduced the water consumption per unit of output. For the purpose of water conservation, the government decided to set l on the use of water in all industries and implement a nationwide system of quotas.

In the fight for the reduction of pollutants in industrial wastewater, meaningful fruit retooling was borne. In 2009, in the Western China, the degree of purification of industrial wastewater reached 97.7% of the national average (in comparison: in 1997 this figure did not exceed 79%).

According to the 2009 statistics, the security performance of the water treatment plants of the Chinese cities located in the Western China was three times lower comparing to the developed Western countries. However, during the period 2008-2009, the level of municipal wastewater treatment increased from 62 to 66%. In 2009, according to the assessment of the PRC Ministry of Health, only 30% of the Chinese population consumed ‘safe’ drinking water, i.e. the water that has passed through treatment plants and met the required standards. In rural areas, only one in seven residents has access to the sources of ‘safe’ drinking water. According to the World Resources Institute, in 2008, less than half of the Western China’s population – that is 500 million people – was deprived of a clean water supply.

The problem of water shortage is believed to be caused by water pollution. Since the early 1990s, in the Western China, it has been carrying not only scientific but also social significance. The volume of wastewater and sewage (including municipal wastewater) in the Western China was 53.7 billion tons in 2006, and it increased to 56.1 billion tons by 2007. Then the situation has somewhat stabilized: 57.2 billion tons – in 2008, in 2009, the growth of wastewater emissions was marked by 2% and was equal to 58.3 billion tons. This data is paramount when it comes to the economic growth in the region.

In the Western China, the production of 1 ton of steel requires 60 tons of water. In addition, from 3 to 5 tons of water are needed to produce 1 ton of paper in the country, while the global average requires 20 tons, emphasizing that the industry is made for accelerated reconstruction of structures and equipment to stimulate the development of economy and water-saving.

Water Resources and Agricultural Development

Agriculture is the main water consumer in the Western China, which requires more than two-thirds of the water. Currently, agricultural water use is 400 billion cubic meters of water, while 360 billion cubic meters are consumed for irrigation, i.e. 65% of the total volume of water are consumed in the country.

The benefits of the water are mostly enjoyed by grain farming. Irrigation makes a great contribution to the development of China’s seed production. Districts irrigation in the Western China accounts for one-third of all arable land, however, they provide two-thirds of the gross output of grain farming. According to forecasts for 2030, the cereal production is expected to reach 650 million tons.

Given the problem of reduction of arable land and the high level of gross output per unit, there is a need to increase the number of sectors with irrigation efficiency and promote austerity consumption of water to provide a stable supply of grain and other types of agricultural products. These aspects assume a negative role in economic development of the region. In 2010, the total demand of water for agriculture has reached 418.6 billion cubic meters, and by 2030, it is estimated to increase to 463 billion cubic meters; while the availability of water resources in the agricultural sector amount to 420 billion cubic meters respectively. It determines the need for sustainable development, adequate protection and reuse of water resources, since water used in agriculture lacks more than 43 billion cubic meters, while 39 billion cubic meters are required for irrigation.

In a period of rapid social and economic development of the Western China, with the increase in water consumption of industry and households, new levels of environmental safety of water are increasingly used by companies and private homes. Thus, reducing the required provision of water for agriculture is an important step. At the same time, with an increase in demand for food, agriculture began the leading consumer of water, thus significantly impairing the overall environmental situation in the country.

According to the 2002 Law on Water Management, all water resources belong to the state. Due to the lack of integrated management in the Western part of China, the definition of water rights is unclear. Since 1994, there is a system of permits for water withdrawal. However, for Chinese midget farms the individual water use is very expensive. Hence, China’s water resources for agriculture are public. The absence of an effective legal and regulatory basis for water use leads to growing conflicts between the users of water resources, especially in rural areas.

Currently, there are three essential problems in the pricing of water for agricultural purposes. This aspect is an economic compound of the China’s economic growth. Firstly, water tariffs do not cover the cost of water supply; secondly, the situation is complicated by the multilevel revenue collection; and, thirdly, the current level of tariffs on water places a financial burden on the state budget.

The Article 35 of the Law on Water Management states that the implementation of projects, which require the use of water sources for irrigation and irrigation systems, creates a strain on the reclamation system. Hence, the appropriate compensation should be provided. The China Water Resources Management is actively engaged in clarifying the rights on the use of agricultural water. According to the theory of water and the water market, as well as the development of new water management institutions, there has been significant progress in the clarification of rights on the use of the agricultural water. These explanations ensure the rational allocation of water resources among sectors and guarantee the fundamental rights of water use for agriculture and farmers.

China also promotes the development and improvement of pricing mechanisms in agricultural sector. When considering the possibility of their application for farmers as well as the development of science-based and rational pricing mechanism for water reforms, it is important to take into account the structure of tariffs on water and increase of the farmers’ interest in saving water. At the same time, they should be aware of the ways to contribute to the changes in irrigation schemes in order to save water.

Over the past 20 years, with 9% of arable land and 6% of the world’s freshwater resources, as well as uneven distribution and absence of correlation with the area, China has been able to provide food to 22% of the world population. By reducing the percentage of water used for irrigation in general, the water consumption continues to increase the area of the effective irrigation to support agriculture and economic development. In the 21st century, in a market economy of China, agricultural water use must be reformed to achieve national goals in agricultural development and sustainable socio-economic development conditions of limited water resources.

Water Shortages in China

The deficit of water resources in China has led to the fact that massive amounts of contaminated water are allowed to produce and support water supply process. This water is used by households, industry, and, in particular, by agriculture. Water for domestic and industry use is cleaned in most cases, while agriculture uses untreated contaminated water.

About 50 billion cubic meters of water that does not meet pollution standards have been used annually in the period of 2006-2009, amounting to about 9% of the country’s water supply. It was equal to 566 billion cubic meters. Moreover, the share of agriculture accounts for 2/3 of the contaminated water, while industry amounts to 20%.

Currently, most of the western part of the country’s water consumption goes to agriculture (80% of the total). The average annual water deficit is as high as 30 billion cubic meters. As a result, every year, 20 million hectares of agricultural land suffer from the lack of moisture, causing considerable damage to the national economy.

Another negative consequence of water scarcity for the economic development of Western China is the frequency and duration of droughts in the region. For example, according to the Ministry of Water Resources of China, in 2007, 218 million hectares of sown land were affected by the drought, which led to a loss of 19.9 million tons of grain, resulting in economic losses of 24.7 billion yuan. In addition, 23.4 million people had temporarily lost access to water.

The growing demand for agricultural products and access to contaminated water led to the fact that the volume of wastewater used for irrigation of agricultural land had been increasing from year to year. Land areas irrigated by sewage increased by 1.87 times during 1986-2008. In 2009, such agricultural locations equaled 4.45 million hectares. According to various estimates, the economic costs of wastewater irrigation of four major crops (rice, maize, wheat and vegetables) amount to 7 billion yuan annually. This figure was obtained by evaluating the influence of wastewater quantity and quality of the harvest, including the assessment of suitable use and the quality of the products themselves (the content of nutrients in them). This estimation does not include investigation on the effect of polluted water used for irrigation on the ecosystem and human health, which implies a significant increase in the economic costs of wastewater irrigation.

When covering the economic growth and water resources, it is significant to pay attention to the following. There are two types of irrigation wastewater, such as combined irrigation and purified waste water (which is classified as CSMI) and irrigation only contaminated water (which is abbreviated to as PSI). Certainly, the combined irrigation is less damaging than irrigation with contaminated water, but in many cases, the ratio of clean to dirty water allows to conclude that the combined irrigation has the same adverse effects on the crop.

The highest level of a harvest that does not meet quality standards is observed in rice irrigation method with CSMI equal 42% and the PSI being 51%. For other crops (wheat, corn, and vegetables), the CSMI by this parameter varies between 16-27%, while the PSI method within 18-29%.

The sewage pollution in agriculture depends on the level of fertilizer use. According to the number of synthetic nitrogen fertilizer annually applied, Western China ranks the first place in the world with an average of about 200 kg per 1 hectare. In those provinces of the Western China, where the soil is subjected to intensive cultivation, this figure exceeds 500 kg per 1 hectare. Despite the fact that the damage caused by wastewater agriculture is considered a relatively common phenomenon, there have been few studies on this topic.

China adheres to the chosen national model of sustainable development, which is recognized as a main component of economic growth. At the same time, budgetary allocations for the purpose of Nature Conservation within a relatively short period (1993-1999-2010) have increased to 0.7, 1.1 to 2.82% of GDP, respectively. According to this index, China overtook the developed world, where 1-2% of GDP is spent on the environment. This number seems to be unsuitable for the proper functioning of the West China’s economy.


Rapidly developing China’s economy requires a proportional increase in the resource supply. This becomes one of the most important problems of the country’s economic development. At the same time, the greatest concern of policy makers is a rapidly growing shortage of water resources, especially in the agricultural sector in the Western China.

The numerous studies show that the current level of water tariffs is lower by 50% than the water costs. Low prices for agricultural products and limited farmers’ incomes make it difficult to increase the water tariffs, due to the lack of an efficient mechanism of the accumulation of assets and many levels of government. Consequently, the real income of the enterprises of water supply is much lower than their costs. Hence, it is possible to claim that the Western China’s rapid economic growth is tightly connected with the water resources and is currently impacted by this aspect.