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China’s Agricultural Water Policy Reforms

October 2012
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China’s Agricultural Water Policy Reforms

Bin Liu

Department of Water Resources, Ministry of Water Resources, China

The population, food, resources and the environment have been under high pressure for a long period of time in China. The water supply and demand situation is serious. It is estimated that China’s population will peak at 1.6 billion in 2030, and this will increase demand for agricultural products, and for agricultural water as well. Increasing industrial and domestic water use will further affect agricultural water supplies. So China’s agricultural water system is facing great challenges. In such a severe situation, the Chinese government actively tests agricultural water use policy reforms to guarantee the basic agricultural water supplies and farmers’ benefits, in order to support sustainable agricultural development and secure grain production with limited water resources.

1          China’s agricultural water circumstances

Water resources in China total 2800 billion cubic meters, but per capita consumption is only 2200 cubic meters and per hectare consumption 6200 cubic meters, which are 50% and one-third of world averages respectively. The per capita consumption will decrease to 1760 cubic meters in 2030, when China’s population reaches 1.6 billion. At the same time, the temporal and spatial distribution of water resources is uneven, and does not match with the distribution of industrial and other resources. Some 60%–80% of rainfall and runoff are concentrated in the flood season. The areas north of the Yangtze have 65.4% of the cultivated land, 46.1% of population and 45.8% of the GDP of the country, but only 19% of the water resources. The Yellow, Huai and Hai river basins especially, with 34% of the population and 33.3% of the GDP of China, have only 7.7% of the water resources.

These circumstances result in severe conflict between water supply and demand, heavy water pollution and water and soil erosion. It is estimated that, according to normal demand without over-drafting groundwater resources, the average water shortage in China is 30-40 billion cubic meters. A total of 400 cities out of 669 are short of water. Between 1980–2020, water usage was continuously increasing, resulting in water conflicts between industry and agriculture and urban and rural areas, and between regions, severely compromising of ecological water use.

1.1     Agriculture is the biggest water user in China

Agriculture has a significant role in China. At all times, more than two-thirds of total water use is agricultural water use. Water resources development has a very important role in China’s economy, especially in relation to agriculture. At present, agricultural water use is 400 billion cubic meters, with irrigation water use 360 billion cubic meters, 65% of the total water use of the country.

1.2       The high pressure of agricultural water supply to secure the grain production

Agricultural irrigation greatly contributes to China’s domestic grain supply. The irrigation area makes up one-third of total cultivated fields, providing two-thirds of total grain products. It is estimated that grain production must reach 575 million tons and 650 million tons in 2010 and 2030 respectively. Facing a decrease in cultivated land areas and current high unit output, in order to increase grain production to secure the supply of grain and other agricultural products, it is necessary to enlarge the effective irrigation areas and to strongly promote agricultural water saving.

It is projected that the total demand for agricultural water will be 418.6 billion cubic meters in 2010 and 463.4 billion cubic meters in 2030, while agricultural water availability will be 398 billion cubic meters in 2010 and 420 billion cubic meters in 2030, allowing for sustainable development, effective protection and efficient reuse of water resources. Thus, the shortfall in agricultural water would be 20.7 billion cubic meters in 2010 and 43.4 billion cubic meters in 2030. The irrigation water shortfall will be 15.9 billion cubic meters in 2010 and 39.1 billion cubic meters in 2030.

1.3       The intensified conflict between agriculture and industry, urban areas and the ecology

During rapid social and economic development, with increasing use of industrial and domestic water, many water sources of good quality and high security are diverted to industrial and domestic use, with a decrease in agricultural water supply security. At the same time, with the consumption of agricultural water, agriculture begins to encroach on ecological water use, which causes the environment to deteriorate in some regions. It is necessary to return water to the environment. Therefore, conflicts over water will be more and more severe.

1.4       Low efficiency of agricultural water use

The efficiency of agricultural water use is lower in China. The average efficiency of channel water use is 0.4–0.6. The efficiency of field water use is 0.6–0.7. Irrigation water production is about 1.0 kg/m3. In the 80 million hectares of fields without irrigation, the field water production ratio is about 0.6–0.75 kg/m3. The North China Plain is the area of higher agricultural water use in the country, but still with great variance between regions.

1.5       Unclear agricultural water use rights

According to the 2002 Water Law, water resources belong to the state. Due to the lack of integrated management, the definition of water resources rights is unclear. The water drawing permit system has been implemented since 1994. But the super-small scale of China’s farms would make it very costly to manage water resources on an individual farmer basis. So in China, agricultural water resources are public resources. Due to unclear water rights, it is easy to have a lack of a compensation mechanism when water use rights are violated.

1.6       The irrational agricultural water tariff structure

At present, there are three problems in agricultural water pricing: one is that the water tariff cannot reflect the water supply cost; the second is that there are too many collecting levels, with the accompanying risk of free-riders; the third is that the current water tariff level results in a financial burden on the government budget.

Investigation shows that the current water tariff level is less than 50% of water supply cost. Due to the lower price level of agricultural products, and the heavy burden on and limited affordability for farmers, the regulation of an agricultural water tariff is very difficult. At the same time, due to the lack of a constraining mechanism on revenue collecting and too many management levels, the real revenue of the water supply unit was much less than the supply cost.

2          Policy reforms in China’s agricultural water use

In the last 20 years, with 9% of the cultivated land and 6% of the fresh water resources of the world, as well as uneven spatial and temporal distribution and lack of correlation with land resources, China supports 22% of the population of the world. With the decrease in the percentage of irrigation water use in total water use, the effective irrigation area continues increasing, to support agricultural and economic development. In the new century, under a market economy, agricultural water use must be reformed to achieve the state’s agricultural development aims, and to support sustainable social and economic development with sustainable use of water resources.

2.1       Clarifying and guaranteeing basic agricultural water rights

Article 35 of the Water Law states that construction projects which utilize agricultural irrigation water sources and irrigation facilities, or have a bad effect on original irrigation water and water supply sources, should implement relevant compensation methods. Those who suffer loss shall be compensated according to law.

The water administrative department in China is actively pushing for the clarification of agricultural water use rights. According to the water rights and water market theory, with the development of a new water resources management institution, significant progress has been achieved in clarification of agricultural water use rights, which guarantees the rational allocation of water resources among sectors together with basic agricultural water use rights and farmers’ benefits.

As a result of the water rights reform in Zhangye, Gansu province, each farmer has a water right card, which clearly indicates the annual water usage for the farmer. This legally protects the farmer’s water use rights and relevant benefits while, at the same time, limiting the farmer’s water use. In the water rights transfer pilot case study area in the Inner Mongolia Autonomous Region, the government defines the agricultural water use rights with legal documents, and allocates agricultural water use rights to the water user associations (WUAs) in the irrigation zone. Under the guarantee of agricultural water use rights, water rights were transferred through compensation from industry to agriculture.

2.2       Strongly promoting agricultural water saving

In order to secure grain production under circumstances of increasing population, it is necessary to develop irrigation areas rationally. Under conditions of increasing water demand and increasing industrial and domestic water use, the Chinese government keeps agricultural water usage rates unchanged to stabilize agricultural production. So promoting agricultural water saving to increase overall agricultural production capacity is a long-term task.

Under conditions of severe water shortage and with a high percentage total water usage being for irrigation, there is great scope for saving irrigation water. So irrigation water conservation must be considered a revolutionary development. A sustainable irrigation water saving mechanism, with reforms in irrigation management systems, the application of economic techniques and legal, administrative and technological methods, must be developed.

Since 1998, the central government has arranged special capital to maintain and build water saving facilities in major irrigation districts. Until 2004, 255 of a total of 402 major irrigation districts have implemented water saving structures, which increased, recovered and improved an irrigation area of 3.87 million hectares. Irrigation efficiency increased from 0.42 to 0.48, and water saving capacity increased by 7 billion cubic meters.

2.3       Encouraging agricultural water users to participate in irrigation management, to strengthen agricultural water use management.

The WUA is an effective organizational method to enable water users to participate in irrigation management and coordinate water use. Due to an emphasis by governments, a push by the water administrative departments, support by the relevant agencies and active participation by the farmers, the WUA system is rapidly developing in China. At present, there are more than 7000 WUAs in China. The WUAs implement democratic negotiation and self-management, with good results.

The characteristics of participatory irrigation management in China are as follows:

  • Participation improves water use management. The decentralization of field water use decision rights and rights to use irrigation facilities fully encourage the farmers to maintain irrigation facilities, collect water tariffs and reasonably allocate water.
  • The participation strengthens farmers’ self-management and promotes agricultural water saving. The WUA development clarifies the relationship between water supply and use. The irrigation management units are based on voluntary service by the water users. At the same time, the farmers value the water and promote agricultural water saving.
  • Negotiation on an equal basis reduces conflict over water use. Previously, the government spent too much time resolving water use conflict. Now WUAs can deal with this issue and reduce the burden on the governments.

2.4       Trialling market mechanisms to improve water use efficiency.

During the implementation of several agricultural water use policy reforms, the Chinese government trialled a market mechanism to improve water use efficiency and promote efficient allocation of water resources, while increasing the agricultural water use level.

In Zhangye, Gansu Province, after receiving water rights, the farmers can buy water tickets from water departments. The tickets could be traded. This form of water rights trading stimulated the development of an agricultural economic structure and irrigation pattern reforms.

In the cross-sector water transfer in the Inner Mongolia Autonomous Region with the characteristic of “investing in water saving and transferring water rights”, the water market and water rights institution realized the optimal allocation of water resources, and increased the efficiency of the use of water resources.

China is promoting and improving agricultural pricing mechanisms too. In the consideration of affordability to farmers, and through the development of a scientific and rational water pricing mechanism, the reforms are implementing field water tariff structures and increasing farmers’ water-saving awareness, while promoting changes in the irrigation pattern to save water. At the same time, a public notice mechanism is implemented to publicize water tariffs and water usage, in order to reduce the number of collecting levels and abuses, and to reduce the burdens on farmers.


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