China’s Water Crisis

Posted on June 6, 2011. Filed under: News | Tags: , , , |

Chinese worker cleaning polluted river

Chinese history is filled with environmental disasters. This stems from a myriad of sources, one being that the country maximized its usage of arable land as early as 1800. Environmental problems have been such a major issue in China that one of the key indicators of the fall of a dynasty was the inability of the emperor and his dynasty to prevent famine. Once famine became rampant, an emperor was said to be losing the “mandate of heaven,” social unrest would ensue, and a revolution would most likely oust the existing from power. The leader of the revolution would assume the roll of the Emperor and obtain the “mandate of heaven” by making sure his people did not starve. To this day, uprisings have been the key method of regime change in China. For example, after the Tiananmen Square protests in 1989, the Chinese Communist Party (CCP) was completely ¬†reshuffled. For this reason, there is nothing that those in power in the CCP fear more than social unrest.

Linfen, China

Astonishing economic growth has helped China become a leading player on the global level, but there has been dire consequences. Rampant pollution as a result of immense foreign direct investment has caused serious environmental problems. The most pressing environmental issue for the CCP at the moment is the Yellow River. The Yellow River is called the birthplace of Chinese Civilization, but it has become so polluted because of poor regulation of industrial standards that the water is no longer safe for drinking. The river also happens to be the main source of water for most of northern China. The Chinese Government, however,has come up with a solution. It plans to redirect one third of the water from China’s largest river, the Yangtze river, 800 miles to connect with the Yellow river to essentially save the 440 million people living in northern China from dying of thirst.


The plan is elaborate, lucrative, and insanely expensive. However, the $62 billion dollar price tag (twice that of the Three Gorges Dam) does not come with a guarantee. The 800 mile canal that would have to be built would run through several industrial zones and some Beijing officials have voiced skepticism as to whether the water redirected from the Yangtze would be safe for drinking when it reached northern China anyway.

Along with these problems, several hundreds of thousands of people have begun to be displaced by the Government to build the canal. This has caused several protest and uprisings since the compensation received for the requisition of land by the CCP has been, more often than not, inadequate. However, the Chinese government hopes that these protests will be less severe than the millions that would most likely rise against the government if northern China does not find a rapid solution to its water crisis.

There are several things to be taken away from this situation. Most importantly, almost everything in life is based on incentives. Local officials have a motive to bring in foreign companies and allow them to pollute, even though there are strict standards set by the central government. This happens for several reasons; 1) local officials are not paid directly by the central government, 2) local officials are rarely ousted from power, and 3) up to 70% of a local officials income can comes from selling foreign companies land. To attract more foreign companies, a official will provide more slack in terms of pollution so the companies can cut more costs. China will have to change this incentive structure if they ever want to combat pollution that continues to be unregulated.

This system has allowed for incredible amounts of foreign direct investment and bolstered China to become an economic power that may soon rival the U.S., but the Chinese governments shortsightedness in terms of the environmental impact of its economic policies may very well be the CCP’s downfall. The short term economic value of something may, in the long term, be much more expensive as a social cost. As the Chinese government is finding out very quickly, social costs do add up, and they can become very expensive. Unfortunately the impact of some policies are measured not only in dollars or RMB, but also in lives.

Doing the right thing and paying more for something that adds social value can be much less expensive in the long term. Clean wind power is and example of a product that does not harm the environment through practices such as mountain top removal. To not end up like the Chinese in terms of pollution, we have to remember that the incentive to purchase a product or run a business a certain way has to have more than monetary value, it also has to take into account the social good.

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