ABSTRACT
Introduction Although the People’s Republic of China (PRC) has sustained an average of 10 percent annual economic growth between 1978 and 2006, it had been clear for some time that this has come at the expense of environmental integrity. Water pollution and water scarcity are perhaps the most pervasive problems that have emerged, ranging from point-source municipal and industrial pollution to nonpoint agricultural pollution. Pollution accidents and environmental disasters, such as the benzene spill which contaminated the Songhua River in 2005 leading to the temporary loss of drinking water in downstream Harbin, and the toxic algal blooms which affected Lake Tai in 2007, are high profile, albeit extreme, examples of a general trend in the state of the aquatic environment in the PRC. These trends in water quality and environmental accidents, of which there are over 500 every year, are the consequences not only of the underlying technologies employed in the PRC, but also the inadequacies of the current institutional structure and policy environment and associated weaknesses in the regulation of industrial and agricultural water pollution (Palmer 2007; Woo 2007). Water shortages are also extremely common in parts of the PRC and are widely regarded to represent an important constraint to economic development. At present, the PRC uses around 70 percent of its available water resources and around 400 of the PRC’s 660 cities face water shortages (Woo 2007; Economy 2007). In the north of the PRC, in particular, this has led to the unsustainable mining of groundwater with all the attendant problems of land subsidence. Similarly, water resource management in the PRC is undertaken within an institutional framework which evolved during a time when the development of water resources, rather than their efficient allocation or conservation, was the primary objective (Maria Saleth and Dinar 2006; Woo 2007). The tendency remains to approach water resource scarcity from the perspective of supply augmentation rather than demand management, as evidenced by the advance of the recent south-north conveyor project in parallel with continued subsidies for water consumption to industry, agriculture and households, and major losses from reticulation systems (Tsur and Dinar 1995; Cook 2007).
