Christopher S. Tang
Source: “All Dried Up,” Economist, October 12, 2013.
As reservoirs in California are running low in the midst of a drought in 2014, reducing water consumption is an important measure when supply is severely limited. Instead of calling for mandatory water rationing, Governor Jerry Brown is calling for voluntary cutbacks.
On the other side of the Pacific Ocean, Chinese government developed a different plan to increase water supply in the North. After completing the “Three Gorges dam” project in 2008, China has begun one of the most expensive project in the world that is called the South-North Water Diversion Project (南水北调工程). The goal of this project is to link the Yangzi River (in the South) with the Yellow River (in the North) via tunnels and canals. This way, the parched north can tap the water from the humid south. However, because Yangzi River is seriously polluted, the water pumped to the north required special water treatment process. Even if this project works out, it can only increase water supply by 7%.
Partly due to rapid economic growth, the current water consumption rate in China is unsustainable. Instead of spending a lot of money to increase water supply in the north, I wonder if it would be more effective for the Chinese government to develop ways to reduce water consumption. Specifically, instead of having the government bearing the cost of the subsidy,[1] shouldn’t the government charge a higher rate for industrial users? By doing so, it should create a stronger incentive for these companies to reduce water usage and increase water recycling. Perhaps this is something Governor Brown should consider doing in California as well.
[1] Residential consumers in Beijing pay 4 yuan (US$0.66) per cubic meter of water in 2011, which is much lower than other developing countries such as Mexico.
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