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PRICING OF IRRIGATION WATER IN CHINA

Zhou Yaozhou and Wei Bingcai

INTRODUCTION
Paper Outline
This paper gives brief introduction to Chinas water resources including both quantity and quality
of surface water and ground water. It also describes the irrigation development in China. It
provides a review of recent reforms in the water resources sector in China in the field of legal
and institutional aspect in China, particularly relating to irrigation water pricing.
The paper begins with a brief overview of past policy in the irrigation sector, and measures and
reforms related to irrigation water pricing in recent years. Chapter 2 provides a description of
physical aspects in water resources and the derived demand for irrigation water. Chapter 3
focuses on the main characteristics of the 1988 water law of China and modification will be
possibly made in the near future concerning water rights and management. Chapter 4 provides
an overview of existing institutions in the sector, and analysis possible reforms in institutional
restructuring at macro and micro level. Chapter 5 presents political aspects such as the impact
of reforms on major stakeholders. Chapter 6 examines current water pricing procedures, future
pricing reforms and its economic indication.
Past Policies
During the first 30 years after the establishment of the Peoples Republic of China, the Chinese
government adopted highly centralized planned economy system. The water sector implemented
the methodology of government invests, farmers input labor and the society uses free of charge.
Water resources development did not pay any attention to economic benefit and project
operation did not calculate costs at all. Thus the whole sector ate from the same big pot and the
society drank water from the same big pot too. Without adequate operation and maintenance,
aging and lack of repair of water projects became more and more serious, benefits began to
decrease. Since China adopted the policy of reform and opening-up to the outside world, water
resources development has turned a page. The financial channel was broadened, in particular,
loans from the World Bank and the Asian Development Bank were introduced; the legal system
with the focus on Water Law was established; water pricing system was initially set up; the
operation and maintenance of water projects were strengthened; the administrative system was
also reformed and improved continuously.
As for irrigation water, there was no uniform charging system in the whole country during the
first 30 years after new China was set up. But in many places, methods of charging irrigation
water were introduced with low standards. Only the expenditure of irrigation district managerial
personnel was covered by the water charge. The government revenue subsidized the operation
and maintenance of irrigation districts. In 1965, the State Council issued the first Water Tariff
Review, Calculation, Collection and Management Method of Water Projects and tried its
implementation in the whole country. But due to various reasons, the implementation in different
places varied and the charging standards were very low, so the water charge could not meet the
normal operation of water projects. In particular, rural water supply was actually free for a long

270

time. In order to change this situation, the State Council renewed the Water Tariff Review,
Calculation, Collection and Management Method of Water Projects (Water Tariff Method) in
1985, which stipulated that charge of agricultural water supply should be defined based on cost,
water charge for grain production should cover the water supply cost and water charge for cash
crops should not only cover the cost but also include minor profits. The Method also stipulated
that the provincial (municipal) government could formulate its implementation regulations based
on the actual situation. The regulations generally defined the pricing standards, water charge
collecting method and management requirement of different types of water use supplied by
different water projects, such as reservoir, irrigation district and pumping station, etc. in the
respective region. Although since 1985, water pricing standards have increased year by year,
the present water charge for agriculture is on the whole still relevantly low and can not meet the
supply cost. According to statistics, the national average water charge for agriculture is 0.026
yuan/m3. But the national average water supply cost is 0.0718 yuan/m3, which means that the
agricultural water charge is only 36% of the supply cost. According to 1998 statistics, the
agricultural irrigation water per hectare is 7320 m3 with 0.026 yuan per cubic meter. So the
water charge for irrigation per hectare is 190.32 yuan while the cost for grain production per
hectare is 3500 yuan. So water charge is only 5.4% of the total production cost.
In recent years, there has been strong reform of water pricing of water projects and obvious
results have been obtained. However, the price is still low, especially the water price for
agriculture. In most places, water supply cost has not been met. So improving water pricing
system is not only an important task for the further development of water resources, but also the
requirement of water sector to adapt to the market economy and sustainable development.

PHYSICAL ASPECTS
Water Supply
The mean annual runoff of rivers in China is 2711.5 billion m3 and the annual shallow ground
water is 828.8 billion m3. If the overlapping calculation is deducted, the total water resources in
China is 2821.4 billion m3. As the main source of water resources, river runoff accounts for
94.4% of the national total water resources. The annual precipitation is 6188.9 billion m3, 45%
of which is converted into surface and ground water and the rest 55% evaporates.
With respect to the distribution of water resources in China, the north lacks water while the
south has relevant abundant water resources. The Yangtze River basin and regions south to it
have 36.5% of the national territory and 80.9% of the national water resources. The area of the
northwest occupies 1/3 of the national total, but its water resources is only 4.6% of the national
total.
Rainfall
Located in the eastern part of Asia, China has a total territory of 9.6 million km2, out of which
mountain accounts for 33%, plateau 26%, hilly land 10%, basin 19% and plain 12%. The
topography is complicated with the land descending from the west to the east. Most parts of the

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country are located in temperate and sub-tropical climate zones. The national perennial average
precipitation is 6188.9 billion m3, which is equal to 648 mm precipitation in depth.
The rainfall decreases gradually from the coast in the southeast to the continent in the northwest.
The isohyetal line of 400mm precipitation crosses China from the northeast to the southwest.
According to the different precipitation, China can be divided into five regions as shown in Table
1 below:
Table 1: Distribution of Precipitation in China
Types

of

Precipitation

Annual

Drought index

Precipita-tion

( annual

(mm)

evaporation/annual

Region

precipitation)
Abundant

>1600

<0.5

Coastal areas in the southeast and south,

rainfall

west Yunnan, southeast Tibet and mid


Taiwan

Humid

800-1600

0.5-1.0

South to the Qing Mountain and Huai


River, the middle and downstream of the
Yangtze River, Yunnan, Guizhou and
Sichuan, most parts of Guangxi

Semi-humid

400-800

1-3

The

Huang-Huai-Hai

Plain,

Shaanxi,

Shanxi, most parts of the northeast,


northwest Sichuan, east Tibet
Semi-arid

200-400

3-7

Western part of the northeast, southern


part of Inner Mongolia and Ningxia,
eastern part of Gansu and Qinghai, west
and north Xinjiang

Arid

<200

>7

Western part of Inner Mongolia and


Gansu, Chaidamu Basin in Qinghai, Tarim
and Zhunge ?

Basins in Xinjiang, Tang

region in Tibet
Souce: Mme. Qian Zhengying, Water Resources in China)

Influenced by continental monsoon, China has the most rainfall in summer. The consecutive 4
months with the most rainfall in a year are June to September in the north and April to July or
May to August in the south, the precipitation of which accounts for 80% and 60% of the annual
precipitation respectively. The precipitation varies greatly from year to year and often several
consecutive years have abundant rainfall followed by another several consecutive years with

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water shortage.

Surface Water
The river runoff in China lies on precipitation as its direct supplement source. The mean annual
river runoff in China is 2711.5 billion m3, which is equal to 284mm runoff in depth. The sources
for river runoff are: surface runoff caused directly by rainfall accounts for 71% of the total river
runoff; the rainfall entering into the ground aquifer and then coming into the river during the dry
season accounts for 27%; the precipitation continuously adding to mountain ice and snow and
then melted into water accounts for 2%.
Like the distribution of precipitation, the mean annual river runoff depth also decreases gradually
from the southeast to the northwest. The annual runoff depth in the southeast is as high as
1800mm while in the northwest is below 50 mm, and in between there are large areas without
runoff. The regional difference of runoff depth is even greater than precipitation. The surface
water resources are shown in Table 2 below:

Table 2: Water Resources in China


Name of river

Catchment

Annual

Surface water

Ground water

Total

basin

area ( 10,000

precipitation

resources(10

resources(10

resources

km2 )

(100

million

0 million m )

0 million m )

m)
Rivers in the

(100

m)

12485

6377

1653

625

1928

3182

1781

288

265

421

7974

3691

661

406

744

3292

2830

741

393

961

18085

19360

9513

2464

9613

5806

8967

4685

1116

4708

northwest
Hai and Luan
River basin
Yellow River
basin
Huai

River

basin

and

Shandong
Peninsula
Yangtze River
basin
Pearl

River

and rivers in
South China

273

water

million

Rivers in the

2398

4216

2557

613

2592

8514

5113

5853

1544

5853

Inland rivers

33744

9554

1164

862

1304

National total

95453

61889

27115

8288

28124

southeast
Rivers in the
southwest

Source: Brief History of irrigation and drainage in New China

Ground Water
Most of the runoff caused by precipitation enters into the river while the rest goes under the
ground to form ground water. The formation of ground water is influenced not only by such
natural and geographical conditions as climate, hydrology and topography, but also by the
geological formation, ground layer and nature of rock. So there are great differences in
recharge, runoff, storage and discharge of ground water in different regions.
The annual average ground water resources in China is around 828.8 billion m3, including 676.2
billion m3 in the hilly areas and 187.3 billion m3 in the plain areas. But the overlapping calculation
of 34.8 billion m3 should be deducted. In a general sense, the regional average ground recharge
decrease gradually from the southeast to the northwest, which is similar to the variation of annual
precipitation and annual river runoff in depth. Influenced by geological conditions, in areas with
rich precipitation, such as the Hainan island, Guangdong and Guangxi in the Pearl River basin,
Dongting Lake system, Yunnan, Wujiang River basin, Chengdu Plain, middle reaches of the
Yangtze River and the southeastern coastal areas, especially in the areas with developed karst
geography, the annual average ground recharge is the highest, around 200,000 to 250,000
m3/km2. In the Pearl River basin, it can reach 300,000 to 500,000 m3/km2. While in the Yellow
River, Huai River and Hai River region, it is 100,000 to 150,000 m3/km2, less than 50,000
m3/km2 in the Hesong River basin and upper and middle reaches of the Yellow River, less than
10,000 m3/km2 in the inland river basins and Loess Plateau.
The ground water resources in China is shown in Table 2 listed above.
Water Quality
The water quality of major rivers in China is shown in Table 3. In Northeast China, the rapid
urbanization and industrialization have resulted in serious water pollution. For the Hai River,
Yellow River and Huai River, the reduced river runoff and self-cleaning ability have made the
impact of urbanization on water quality more obvious. Comparatively speaking, the rivers in the
south have large runoff and strong self-cleaning ability, so water quality is much better. Although
water quality has been improved in the 1990s, the water pollution of rivers in the north,
eutrophication of major lakes and degradation of urban ground water quality are still main
problems.

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Table 3: Category of Surface Water Quality


River basin

Average runoff
(100 million m3)

Proportion of river distance( % )

Category IV, V & above


Category I and II Category III
Song-Liao River
1650
2.9
24.3
72.8
Hai-Luan River
290
17.6
31.2
51.2
Huai River
740
17.6
31.2
51.2
Yellow River
7460
8.2
33.7
27.5
Yangtze River
9510
38.8
33.7
27.5
Pearl River
4680
49.5
31.2
19.3
Rivers in the 2560
40.7
31.8
27.5
southeast
Rivers in the 5850
southwest
Inland rivers
1160
63.5
25.4
11.1
National total
27110
32.2
21.3
46.5
( Note: Category I, II and III: Human beings can have direct contact with it and it can serve as raw
water for drinking water; Category IV : Limited for industrial use and amusement use except
swimming; Category V: Only for irrigation.)
( Source: China Environment Yearbook 1997)

The main sources for water pollution in China are industrial and domestic waste water
discharge, fertilizer, pesticide, the erosion of organic fertilizer and spread of solid waste.
According to statistics, 80% of the domestic waste water is released into the water body
without proper treatment. In 1997, the total waste water discharge was 41.6 billion tons,
including 18.8 billion tons of industrial waste water and 18.9 billion tons of domestic waste
water.

The ground water pollution is also serious. Among 118 cities in China, 64% of which have
serious ground water pollution and 33% have minor ground water pollution. Out of the total
27.16 billion m3 ground water resources in the Hai River basin, 17.15 billion m3 have been
polluted, which is 62.3% of the total. The water quality of more than 2/3 of the 2015 ground
water wells monitored do not meet the standards of drinking water.
Irrigation Water Demand
According to different irrigation and drainage requirement of crops in different regions, the
whole country can also be divided into three zones, namely regular irrigation zone with prenerial
average precipitation below 400mm, unstable irrigation zone with precipitation between 400mm
and 1000mm and supplementary irrigation zone with precipitation above 1000mm.
The feature of precipitation and different irrigation requirement of the three zones are shown in
Table 4 and 5.

275

Table 4: The characteristics of precipitation for three irrigation zones


Irriga-tion
zone

Regions

Location
rainfall
station

of

Annual
precipitation
(mm)

Precipitation in diffirent periods


(mm)
June to Sept.

Mar
May

84

56

18

10

Middle reaches of Ynchuan


Yellow River
Huang-Huai-Hai Plain
Dezhou

202

146

36

20

573

446

73

54

Huaiyang
Northeast China
Harbin
Shengyang
Middle and lower Yichang
reaches of Yangtse
River

879
559
702
1145

514
431
509
509

203
75
110
286

162
53
83
186

Pearl River and Min Guangzhou


1648
River
Partial
Southwest Yibin
1169
China
(Source: Qian Zhengying, Water Resources in China)

902

508

238

777

206

186

Perennial
irrigation
zone

Unsteady
irrigation
zone

Supplement
ary
irrigation
zone

Northwest
inland

China

Jiuquan

Table 5: The irrigation requirements of the different irrigation zones (mm/YEAR)


Irrigation
Region
Crops
Dry year
zone
Total crop Irrigation
Irrigation
demand
Requirem.
index
Perennial
Northwest
Spring
450-525
300-450
0.7-0.9
irrigation
China inland wheat
zone
Corn
375-450
250-350
0.7-0.8
Cotton
600-750
450-500
0.6-0.7
Unsteady
HuangPaddy
1000-1200
600-800
0.6-0.7
irrigation
huai-hai
Winter
600-750
300-450
0.5-0.6
zone
Plain
wheat
Corn
450-600
300-450
0.7-0.8
Cotton
750-900
300-450
0.4-0.5
North-west
Paddy
900-1100
500-700
0.5-0.6
China
Spring
300-450
80-150
0.2-0.3
wheat
Corn
400-500
100-150
0.2-0.3
Supplementa
Middle and Early
675-825
300-450
0.4-0.5
ry irrigation Lower
paddy
zone
reaches of Late
825-1000
450-600
0.5-0.6
Yangtse
paddy
River
Winter
400-600
50-100
0.1-0.2
wheat
Cotton
750-975
150-300
0.2-0.3

276

to

Oct to Feb.

Wet year
Total
demand
300-450

Irrigation
requirem.
200-350

Irrig.
Index
0.7-0.8

375-450
600-750
850-1000
500-600

250-300
300-450
400-600
200-300

0.7-0.8
0.5-0.6
0.5-0.6
0.4-0.5

300-500
550-675
800-1000
225-375

100-200
100-200
300-500
0

0.3-0.4
0.2-0.3
0.4-0.5
0

300-400
450-600

0
100-150

0
0.3-0.4

750-900

150-300

0.2-0.3

225-375

575-700

0-100

0-0.1

Pearl R. &
Min R. and
Partial
Southwest
China

Early
paddy
Late
paddy
Winter
wheat

600-750

300-400

0.5-0.6

450-600

100-150

0.2-0.3

750-825

300-450

0.4-0.5

600-750

150-300

0.3-0.4

400-600

0-50

0-0.1

250-350

(Source: Qian Zhengying, Water Resources in China)

Irrigation water demand in the whole country is shown in Table 6.

Table 6: Forecast of Total Irrigation Water Demand


Year
National
Song-Liao
River
Hai-Luan
River
Huai River
Yellow
River
Yangtze
River
Pearl River
Rivers
in
southeast
Rivers
in
southwest
Inland
rivers

1993
3909.9
355.2

2000
3976.1
374.8

2010
4019.2
399.6

2020
4034.1
405.9

2030
4013.3
411.2

2040
4013.9
414.0

2050
3989.7
414.7

306.5

311.4

308.3

295.6

287.2

281.0

276.0

530.3
319.6

543.1
331.4

549.9
342.7

531.5
348.9

514.7
355.1

501.7
353.3

491.0
351.8

1246.0

1260.4

1263.4

1281.0

1272.0

1288.3

1288.7

478.1
220.3

453.4
208.0

439.4
201.2

432.0
193.4

432.6
184.7

430.3
180.6

426.9
177.7

57.7

66.5

71.1

74.3

76.6

76.9

77.7

396.3

427.1

443.5

471.5

479.3

487.9

485.2

(Source: Shen Zhengrong, Strategic Study on Agricultural Water Crisis in China)


Distribution of Farmland
China is a large agricultural country with over 100 million hectares of arable land, which includes
53 million hectares of effective irrigation land.
According to the State Statistics Bureau, the cultivated land in China is 94.97 million hectares,
which is 9.89% of the national territory. By 1996, the irrigated land had reached 54.7 million ha,
including 51.2 million ha farmland, 2.3 million ha orchard and forestry, 0.8 million ha pastry and
0.5 million ha other forms of irrigated land. The cultivated land area and effective irrigation area
are shown in Table 7.

Table 7: Cultivated Land Area and effective Irrigation Area

277

River basin

Area( 1000 Km2 Cultivated land(

Irrigated

(million ha)

million ha)

area Irrigation

water

(100 million m3
)

Rivers

in

1238.8

9.46

4.19

33.0

Hai-Luan River

318.2

10.84

6.8

27.2

Huai River

331.6

14.67

9.4

40.1

Yellow River

799.7

11.21

4.59

29.9

Yangtze River

1799.4

22.93

14.18

102.1

Pearl River

577.0

6.48

4.27

47.8

in

204.4

2.4

1.98

20.2

in

842.3

1.69

0.61

6.4

Inland rivers

3494.7

5.52

56.13.74

38.9

National total

9606.0

96.35

49.78

344.0

northeast

Rivers
southeast
Rivers
southwest

( Source: Brief History of Irrigation and Drainage in New China)

The Total potential irrigated land in China is 60 to 66.67 million ha. But due to water limitation,
the present effective irrigated land is only 50.67 million ha and actual irrigated land is 40 million
ha. According to the requirement of grain production, 6.67 million ha of effective irrigation land
should be added by the year 2015, most of which will be in the northeast, southwest and
northwest. The newly increased irrigation area will mainly be obtained through agricultural
water-saving. The distribution of optimal effective irrigation area is shown in Table 8 below.

Table 8 Distribution of Potential Effective Irrigation Area (1,000 ha)


Region

The

potential Irrigation area

maximum

in 1996

irrigation area

National total

Irrigation area
to

The proportion

be of increase in

increased

different

since 1996

regions

63980

51161

6153

67

Huang-Huai-Hai

Region, 35733

29446

6287

33

Middle

of

reach

the

Yellow River, inland areas


in the northwest

278

Middle

reach

of

the 22780

18213

4569

24

3503

1963

10

Yantze River, Pearl and


Ming River basin, the
southwest
Three provinces in the 5467
northeast
(Source: Shen Zhengrong, Strategic Study on Agricultural Water Crisis in China)

Crop patterns
China is a country with varieties of crops thanks to the different climate conditions. In the
meantime, China is also the country with most rotation and repeat cropping in the world and the
national average rotation index is over 1.6. The crops have very distinctive regional
characteristics. Corn and bean are concentrated in the northeast where the non-frost period is
short and there is usually one harvest a year. The North China is the main production base for
such dry-land crops as wheat, corn, edible oil and cotton and there are two harvests a year or
three harvests in two years. Rice in the main crop in the middle and downstream of the Yangtze
River and regions even south and there are two or three harvests a year. Since the northwest is
dry and lacks rain, the main crops are spring wheat, corn and cereal and there is mostly one
harvest a year.
According to statistics, the total area for grain production in 1996 was 112.548 million hectares
and the total grain yield was 504.535 million tons. The total area for cotton production was
4.722 million hectares and the total yield was 4.203 million tons. The total area for oil
production was 12.555 million hectares and the total yield was 22.106 million tons. The total
area for sugar production was 1.923 million hectares and the total yield was 93.86 million tons.
The area and yield of different crops are shown in Table 9 and the crop composition in terms of
irrigation area is listed in Table 10.

Table 9: Types of crops and their cultivation area


Type of crop

Cultivation area (1,000

Total yield (10,000

hectares)

tons)

112548

50453.5

Rice

31407

19310.3

Wheat

29611

11059.9

Corn

24498

12747.1

Oil plant

12555

2210.6

Cotton

4722

420.3

Grain
Of which

279

(Source: Shen Zhengrong, Strategic Study on Agricultural Water Crisis in China)

Table 10 Cropping structure in terms of irrigation area and the proportion in total cultivation area
Irrigation area( 1,000 hectares)

Song-Liao
River
Hai-Luan
River
Huai
River
Yellow
River
Yangtze
River
Pearl
River
Rivers in
the
southeast
Rivers in
the
southwest
Inland
rivers
National
total

Wheat

Corn

rice

Others

orchard

total

375

1242

1098

820

131

3666

Proportion
of
irrigation
area
cultivation area( % )
wheat
corn
rice
oth
orcha
ers
rd
27
20
63
12
22

2813

1663

258

4035

890

9659

73

46

100

60

73

62

6658

2484

1913

7825

1357

20237

73

56

100

84

100

77

3039

881

303

2272

570

7065

63

39

100

35

46

47

5596

1605

16315

12029

1283

36828

80

44

100

64

100

78

451

310

7887

4231

769

13648

72

23

100

54

43

70

252

58

3030

1556

411

5307

100

100

100

82

72

91

232

55

320

435

50

1092

88

16

100

50

100

59

1311

573

98

1619

192

3793

82

70

100

61

80

70

20727

8871

31222

34822

5653

101295

72

39

98

57

68

66

(Source: Shen Zhengrong, Strategic Study on Agricultural Water Crisis in China; Qian Zhengying,
Water Resources in China)

2.2.1

Yield-water response relationships

The irrigation area and irrigation water of typical years in different periods are shown in Table
11.

280

in
tot
al
22

Table 11 Relationship between Irrigation Area, Irrigation Water and Grain Yield
Year

Effective

Irrigation

Proportion of

Populatio

Cultivated

Total grain

irrigation

water( 100

irrigation

n (100

area

yield( 100

area million

million m3 )

water in

million)

(million

million kg)

ha)

national total

ha)

water
consumption
( % )
1949

16

956

92

5.4

97.9

1132

1957

25

1853

90

6.46

111.8

1950

1965

32

2350

85

7.25

103.6

1945

1980

49

3574

80.5

9.87

99.3

3206

1988

48

3874

10.96

95.6

3941

1993

50

3440

11.85

95.1

4565

66.5

(Source: Department of Irrigation, Drainage and Rural Water Supply, MWR)

Irrigation Technologies
The Chinese traditional irrigation mostly adopt flood irrigation. But with the population increase
and social, economic development, there is increasing demand of water resources. So as the
large water consumer, irrigation has attracted more and more attention from the whole society
and the pressure on saving irrigation water and applying affordable water-saving irrigation
technology has become more and more prevailing. During the past 30 years or so, China has
done lots of work and achieved great results in such areas as developing irrigation technology to
save water, the development and manufacture of water-saving irrigation equipment, the
construction of pilot water-saving projects and the establishment of water-saving irrigation
service system, etc. In 1970s, canal seepage treatment and farmland rehabilitation were carried
out on a large scale; in 1980s, the application of low-pressure piped irrigation was promoted
and pilot projects with such advanced water-saving irrigation technologies as sprinkler irrigation,
drip irrigation and micro irrigation were set up; in 1990s, water-saving irrigation was
popularized, the water-saving irrigation technologies were more and more advanced and the
engineering standards became higher and higher. By the end of 1998, altogether 15.2 million ha
of various water-saving irrigation projects were constructed, including 1.7 million ha sprinkler
irrigation, drip irrigation and micro irrigation, 5.2 million ha piped irrigation and 8.3 million ha
with canal seepage treatment. Besides, there are another 13.3 million ha with such non-structure
measures as shallow irrigation for rice paddies, dry-land cropping of rice, film covering and
over-film irrigation, etc.
Canals are the main methods for water transfer in agricultural irrigation in China. But the

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traditional earthen canals suffer serious seepage loss, which is 50-60% of the total water
transferred. So canal seepage treatment has been the major technical solution for developing
effective irrigation in China. There are many methods of canal seepage treatment. According to
the material used for seepage treatment, there are such types of seepage treatment as earth
pressurized, protected by three kinds of material mixed, lining with stone, lining with concrete,
covered by film, protected by asphalt, etc, among which lining with concrete is mostly adopted,
in particular, U-shaped canal concrete lining can also raise water velocity and improve sediment
transport capability.
Low-pressure piped irrigation was developed in the well-irrigated areas in the northern plains in
the 1980s. At present, there are ready optimal design theory and methodology of pipe network
and different kinds of pipes, construction technique. Pipes include double-wall waved plastic
pipe, thin-wall PVC pipe, cement pipe, etc.
Sprinkler and drip irrigation have been developed very rapidly in China, especially popular with
some cash crops. Now China is able to manufacture various types of sprinkler and drip
irrigation equipment and machine.
The water-saving irrigation system is to achieve optimal allocation of limited irrigation water in
the different growing periods of crops so as to improve the conversion from irrigation water to
water stored in the root system to be absorbed by the crops, and also raise the efficiency of
photosynthesis converted into economic production. Since the 1950s, China has set up over
400 irrigation experiment stations throughout the country to carry out long-term experiment and
study of water demand and demand law of the crops and irrigation system. As a result, the
irrigation system of local major crops have been obtained, and combined with meteorological
data, the isogram of water demand of crops in the whole country has been drawn. Based on
this, the study on water-saving irrigation system was conducted, which proposed such
technologies as conserving rain for irrigation, insufficient irrigation, anti-drought irrigation and
low-quota irrigation, etc. All the technologies restrict the water supply for crops, irrigate at the
most critical moment, make full use of the rain and improve the regulating and storage capacity
of soil.
With years of practice, different places have summed up their own suitable water-saving
irrigation technology and methods. For example, for such large farmland crops as wheat and
corn, pipe, reel sprinkler irrigation, central pivots and traditional land leveling and furrow
irrigation are suitable; for such cash crops as cotton, vegetables and fruit trees, drip irriation,
micro irrigation and infiltration irrigation are adopted; for rice paddies in the south, controlled
irrigation and gardenization are developed; for crops in arid and semi-arid areas in the
northwest, rain collection and drip irrigation from the water collecting basin are effective.
Population and Population Increase
China is a country with large population. It is forecasted that the population in China will reach
1.3 billion in 2000, 1.4 billion in 2010 and 1.60 billion in 2030, which is the peak. After that, the
population will decrease gradually. Between 2020 and 2050, the population will be above 1.5
billion. The forecast of population increase in shown in the table below. On one hand, the per

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capita water resources will decrease with the population increase. On the other hand, the
population increase will result in increased demand of domestic water use and industrial water
use.
Table 12 Population Growth (In thousand)
Year

1993

2000

2010

2020

2030

2040

2050

Population

1167330

1275430

1400000

1497000

1600000

1550830

1514430

(Source: Shen Zhengrong, Strategic Study on Agricultural Water Crisis in China)

LEGAL ASPECTS
The Water Law is the basic law in the water sector, which regulates various water issues.
Besides, specific laws, regulations and policies have been formulated subject to the actual need.
By now, laws on water passed and implemented include Water and Soil Conservation Law,
Flood Control Law, Water Pollution Prevention and Control Law and Environmental Protection
Law, etc. Besides these laws, central, provincial and local governments have also formulated
many regulations. For instance, the State Council has issued 16 regulations on water resources
and the Ministry of Water Resources has issued over 50 ministerial regulations after the Water
Law was issued.
Existing Water Right Structures
As the basic law in water resources management, the Water Law has stipulated the general
structure of such rights as development, utilization and protection of water resources, river
regulation, flood and drought disaster prevention and reduction, water ecology and water
allocation, the centralized management of water resources. In brief, water resources (both
surface and ground water) belong to the state, water in the ponds and reservoirs owned by the
agricultural collectives belongs to the collective; the state adopts effective measures to protect
water resources and ecology; from the central level to the county level, centralized and
integrated water resources management system is adopted, and water-drawing permit system is
applied for drawing water directly from the ground, rivers and lakes; water use is charged; flood
control measures, standards, planning and post-flood rehabilitation are paid great attention, etc.
As the administrative organ for water of the State Council, the Ministry of Water Resources is
responsible for the implementation of the Water Law.
Water-drawing permit system is an important measure for the state to strengthen water
resources management. The basic principle is that the units and individuals drawing water
directly from the rivers, lakes and ground with water project or mechanized equipment should
obtain water-drawing permit in line with the Implementation Method of Water-Drawing Permit
System issued by the State Council and Procedures of Application and Approval of WaterDrawing Permit System issued by the Ministry of Water Resources. But for water drawn for
living and poultry and other little amount of water, water transferred by water supply companies,

283

navigation and fish farming in the rivers and lakes, no water-drawing permit is required. For new
projects and expanded or rehabilitated projects, the project owner should submit written
approval of relevant authorities on the water-drawing application together with the design
report.
The Ministry of Water Resources is responsible for implementation, supervision and
management of the water-drawing permit system. Authorized by the Ministry of Water
Resources, the river basin commissions are responsible for approving and allocating waterdrawing permit in the designated river course, and also supervision and management. After the
State Council issued the Implementation Method of Water-Drawing Permit System in 1993, the
Ministry of Water Resources issued Procedures of Application and Approval of Water-Drawing
Permit System issued and Notice on Authorization of River Basin Commissions in the
Management of Water-Drawing Permit. Most provinces (municipalities) formulated their
respective Details on Implementation and Management Method of Water-Drawing Permit
System.
Propsed reforms to existing water right structures
The Water Law is a very sound law, but due to the limitation of historical conditions when the
law was formulated, some problems have emerged during the implementation. The most crucial
ones are as follows: the imperfect integrated water resources management system; the lack of
laws and regulations governing river basin management; it can no longer adapt to the improving
socialist market economy system; the regulations on water resources conservation and
protection are too simple, etc. So the Water Law should be amended, including:
1.

The issue of water right system and water market: Water rights are the basis for
formulating various legal documents, and also the starting point of defining rights and
obligations in water issues. Water rights include the ownership and use of water. The
ownership is stipulated in the Water Law. But after the citizens, legal person or other
organizations obtain legally the right of water use, i.e. water-drawing right, what kind of
allocation right they have and whether they can transfer the right according to law should
be studied carefully according to the requirement of socialist market economy. In order
to establish a balance between water resources development and water environment
protection, it is vital to set up a water market system and fully utilize the function of
market in water allocation.

2.

The reform of water resources management system: It is necessary to upgrade the


management system of combining integrated management and different-level
management, river basin management and regional management, and dividing right
management and development management to a legal status.

3.

The issue of river basin management: The river basin commissions enjoy unreplaceable
positions and functions in right management, macro management, rational allocation,
development, utilization and protection of water resources, the legal status and mandates
of which should be specified in the Water Law.

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4.

Water-saving and water resources protection: With the social and economic
development, water shortage and water pollution have become two major barriers of
sustainable development of water resources in China. The Water Law should be
amended to improve laws and regulations on water protection and water-saving so as to
ensure sustainable development.

INSTITUTIONAL ASPECTS
Existing water institutions
As the administrative organ for water of the State Council, the Ministry of Water Resources has
such mandates: implementation of the Water Law and issuing of relevant regulations, integrated
management and long-term planning of water resources in the whole country, regulation large
rivers and lakes, overall planning of urban water resources, water and soil conservation,
agricultural irrigation, organizing and management of the construction of large national water
projects, organizing of flood control and drought relief of major rivers across provinces, rural
hydro power development, etc. Under the Ministry, there are seven river basin commissions and
a batch of scientific research institutes, universities, specialized institutions, design institutes and
water and hydro power construction companies (bureaus), etc.
At the six large rivers across provinces (Songhua River-Liao River, Hai River, Yellow River,
Huai River, Yangtze River and Pearl River) and the Taihu Lake, river basin commissions
(authority) have been set up under the Ministry of Water Resources. The river basin
commissions carry out the functions authorized and entrusted by the Ministry. Quite several river
basin commissions have carried out functions beyond the river basin. So in fact, there are like
the regional offices of the Ministry of Water Resources. At present, the river basin commissions
are not commissions in the real sense since they do not have board of directors and
representatives from the provinces.
Water resources department or bureau has been set up at the provincial level, which is a part of
the provincial government, responsible for implementation of water laws and regulations, and
receives professional guidance from the Ministry of Water Resources. The mandates are similar
to those of the Ministry of Water Resources, including planning, development and utilization of
water resources, planning, design, construction and management of agricultural irrigation and
drainage, flood control, etc. in the respective province. At the prefecture and county levels,
there are similar water resources bureaus responsible for water resources management within
their own territory.
The irrigation management in China is divided into three types, i.e. government management,
collective management and individual management. Large and medium projects are managed by
special organization set up by the water department of governments at various levels; small
projects are managed by the water department of the local government; some wells, ponds and
pumping stations supplying water only for one or several farm households are managed by
individual. As for large and medium irrigation districts, the canals above branches are managed,
operated and maintained by the special management team, and the rest is operated and

285

maintained by individuals or groups designated by the village.

Proposed new water institutions


In a macro sense, the Ministry of Water Resources has been restructured and reorganized
according to the government-restructuring requirement. The essence is to further transform
government function, enhance macro control function of the government in the market economy,
and emphasize on policy formulation and planning of water resources management and
development, and supervision of the implementation of water laws and regulations. The Ministry
will no longer directly interfere operation and management of water companies.
River basin management will be strengthened and the function and authority of current river
basin commissions will be improved. In the near future, some river basins will be selected to try
river basin management reform, during which real river basin commissions will be set up with
representatives from the central government (the Ministry of Water Resources) and provinces,
municipalities within the river basin.
In irrigation district management, some irrigation districts will adopt the model of self-reliance. In
fact, China has carried out the reform in some irrigation districts. In particular, in the World
Bank financed Yangtze River Water Resources Development Project and Irrigated Agriculture
Project (second phase), the model of economically independent irrigation districts has been tried
and water supply companies and agricultural users association have been set up, which has
established a buy-sell relationship between the two. The water supply company is responsible
for the operation and maintenance of main canals and branches. The users association is
responsible for the operation and maintenance within its own system and paying water fee to the
company. The experiences gained will be extended to other irrigation districts, which is in the
same direction as the reform of the water sector. But at present, there will be difficulties in
adopting such model in irrigation districts in China on a large scale.

POLITIC ASPECTS
Profile of key interested groups
For large and medium irrigation districts, the central government (the Ministry of Water
Resources, the State Development Planning Commission and the Ministry of Finance, etc.), the
provincial government (the Department of Agriculture, the Department of Finance, the Provincial
Development Planning Commission, Pricing Bureau, etc.), irrigation district management
organization, the village and agricultural water users are all key benefit groups.
In the past, the central and provincial governments were major investor of irrigation projects and
the decision-maker of such projects. The special irrigation district management organization was
usually set up by the provincial water department, which is the superior organization of irrigation
district management organization and also the administrative organ for water of the provincial
government. The provincial agriculture department is responsible for planning of agricultural

286

production and providing guidance for the farmers. The provincial development planning
commission is responsible for pricing policy formulation and water charge approval. The
irrigation district management organization is responsible for the construction, operation and
management of the district on behalf of the government, and also responsible for cost calculation
and water charging. Farmers are the end-user of irrigation projects. At that time, the government
decided whether an irrigation project should be constructed and how large the scale was.
Seldom were the farmers consulted and their functions and requirement were ignored. Now it
has been changed. The farmers can air their views in planning, design, implementation, operation
and maintenance of the irrigation projects.
Stakeholder response to reform initiatives
Key interested groups represent different groups and benefits, they have different attitudes
towards pricing reform. Central and provincial governments hope that the irrigation water price
can recover its cost or cost plus minor profits based on the Water Tariff Method and other
regulations and rules and thus irrigation projects realized good development. However, the
increase of water tariff may cause farmers increase in agricultural production cost. On the one
hand, farmers are not positive to the pricing reform; on the other hand, they are will to accept
higher water tariff within their affordability if they can get better and timely service. Irrigation
management agencies are very keen to water pricing reform in order to get adequate financing
for operation and maintenance of irrigation facilities and self-development of the agency. In
provincial governments, Water Resources Department supports tariff reforms for the sake of
irrigation facilities and its management agencies sustainable development; Financial Department,
as the comprehensive management organization, is unwilling to provide any more subsidiaries
and hope to guarantee the normal expenditures of the project through increasing water tariff on
one hand, and worries the additional burden to farmers on the other hand, therefore it is neutral
to the pricing reform; Pricing Department, as the tariff approval agency, is positive towards
pricing reform, but it concerns not only water supply cost but also affordability of farmers when
actually performing approval authorities.

ECONOMIC ASPECTS
Prevailing irrigation water allocation and pricing procedures
The Water Law stipulates that the priorities of water allocation are as follows: The development
and utilization of water resources should first satisfy the domestic water demand of rural and
urban citizens, then incorporate the needs of agricultural, industrial water use and navigation. In
areas with water shortage, it is necessary of restrict urbanization and the development of high
water-consuming industry and agriculture. Water allocation is defined by the superior water
department and implemented after being approved by the government at the same level. In the
irrigation field, the irrigation district managers can coordinate water use among farmers, such as
towards high economic crops.
Present water pricing administration and procedures for determining water tariff are as follows.

287

Generally, Chinese Central government i.e. State Council issues water pricing method and
principles, and specific tariff standards are issued by relevant administrative authorities.
1.

As for large water projects bordering several provinces, water tariff is proposed
through consultation among the provinces, and subject to approval by State
Development Planning Commission (SDPC); If the project is directly under the
administration of Ministry of Water Resources (MWR), water tariff is proposed by
relevant river basin commission, and subject to MWRs review and SDPCs
approval.

2.

As for the project under the administration of Province, the project management
agency proposes water tariff plan, which is subject to the review and approval of
Provincial Water Department and Pricing Department;

3.

As for other projects rather than above, water tariff is proposed by project
management agency and subject to review and approval of Water Resources
Department and Pricing Department at the same level where the project belongs.

After issuing of Water Tariff Method by State Council in 1985, provincial governments have
worked out implementation regulations of Water Tariff Method in line with local conditions. The
implementation regulations generally stipulate water tariff, collection method and management
requirement of different water uses for various type of water projects such as reservoir,
irrigation district and pumping stations in certain regions. At present water tariff is based on
administrative regions and different water uses, or unified water tariff for each water use is
applied in the same administrative regions if the project scale, water resource conditions and
economic situation are similar. So is irrigation water tariff. Some provinces have started to
specify water tariff based on the calculation of single project in 1990s. Pricing principles for
different water uses can be seen in table 13.

Table 13: Pricing principles for different water uses


Water uses
Agriculture

Pricing principle
Grain crops
Water supply cost
Cash crops
Slightly higher than supply cost
Industry
Supply cost plus 4 to 6% profit
Domestic
Supply cost plus mini-small profit
(Source: Water Tariff Method, State Council, 1985)
Although several water pricing reforms have been carried out and irrigation water tariff
commonly has been increased since 1985, irrigation water tariff is still far below the supply cost
in most areas. According to statistics, the average national irrigation water tariff is 0.026 yuan/m3
in 1997, while the average water supply cost is 0.0718 yuan/ m3, the water tariff accounts for
only 36% of the supply cost. Water tariff in the north is normally higher than that in south of
China since there are much more rainfall in south than in north. Development of water resources
and water supply cost are in great difference.
288

Table 14: Average water supply cost in the south and north of China (yuan/ m3)
Agriculture
Industry
North part
0.045
0.15
South part
0.012
0.04
(Source: Wang & Huang, Water project pricing and cost recovery,
1999)

Domestic
0.10
0.03
China Water Resources,

Dalian City has the highest irrigation water tariff, 0.155 yuan/ m3, which meets water supply
cost; irrigation water tariff in Shanxi province comes the second, 0.14 yuan/ m3 which is about
50 to 60% of water supply cost; water tariff in several large scale irrigation schemes of Shaanxi
province is 0.116 yuan/ m3, 45% of the supply cost; water tariff in Hebei province is 0.075
yuan/ m3, only 25% of the cost. Table 15 shows water tariff and supply cost in some provinces
and cities.

Table 15: Irrigation water tariff and supply cost in some provinces and cities
Region

Agricultural water tariff (yuan/ m3)

Grain crops
Cash crops
Beijing
0.02
0.04
Liaonin Province
0.04
Shanxi Province
0.14
0.14
Jilin Province
0.03
Jiangxi Province
0.02
0.02
Shandong Province
0.05
0.05
Henan Province
0.04
0.04
Hubei Province
0.033
0.033
Guangdong Province
0.02
0.02
Hainan Province
0.036
0.12
Yunnan Province
0.025
0.04
Gansu Province
0.068
0.10
Chongqin
0.02
0.03
Dalian
0.155
(Source: Department of Economic Regulation, MWR)

Water supply cost


(yuan/ m3)

0.079
0.23-0.28
0.053
0.07
0.13
0.12
0.045
0.06
0.10
0.08
0.11
0.13
0.159

Future Water Pricing Reform


The objectives of future water pricing reform are: to promote high efficiency of water use and to
realize water saving and proper allocation of water resources; to guarantee steady and
sustainable development of water supply projects. The specific measures are as follows.
289

1.

Strict execution of principles for determination of water tariff, i.e. pricing according to supply
cost for grain crops and supply cost plus minor profit for cash crops, thus ensuring financing of
operation, maintenance and rehabilitation of irrigation projects.

2.

Adopting basic pricing and water volume pricing. Basic price is to ensuring normal operation
and maintenance in any operation conditions, water volume pricing is to set tariff based on the
water supplied, which is aiming at cover the depreciation and overhaul cost.

3.

Set water quota and supply water according to it, higher pricing for any water using exceeding
the quota.

4.

Adopting different tariff for different seasons or fluctuate pricing based on relationship of supply
and demand. Higher pricing when supply smaller than demand, lower pricing when supply larger
than demand.

5.

Properly decentralizing pricing approval authority. Pricing authority stipulated in Water Tariff
Method is too concentrated and adjustment procedure is too complicated. The Power for
water pricing and adjustment should decentralized to County or above Pricing Department
according to jurisdiction of projects.
The Possible Economic Impact Brought of the Reform Proposals
As discussed above the current water tariff is commonly low and can not cover its cost,
operation and maintenance of irrigation facilities can not be ensured, resulting in benefit decrease
of irrigation projects. Water pricing reform requires covering of total cost, which is of
advantages to cost recovery of irrigation projects, ensuring timely and adequate maintenance for
the projects and facilities. In the mean time, irrigation project management agencies can have
further and sustainable development and provide better service to farmers. The increase of
water tariff will reduce governments subsidies and burden.
Water pricing reform will also promote water saving and better use of water resources, and
encourage farmers to adopt new water-saving irrigation techniques. Although it may require
increased initial input to adopt new water saving techniques, it will save the cost for the long run,
especially in the serious water shortage west China and coast areas. Saved water can be used
for other economic development.
The increase of irrigation water tariff may affect some farmers, but farmers have certain potential
ability for the increase since the water tariff contributes lower portion in the agricultural
production cost. Increase of water tariff will enhance farmers participation in irrigation
management, which is favorable to the establishment of water user associations and operate and
manage the irrigation facilities by themselves, and finally reduce the cost and water tariff.
Increase of water pricing will promote farmers strengthen of water use management and reduce
waste of water, and it will also reduce agricultural production cost.

CONCLUSION
Since the adoption of Chinas opening up and reform policy in past 20 years, water is no longer

290

regarded as the gift of God and pricing system has been initially established in China. Water
Tariff Method issued by State Council in 1985 and China Water Law in 1988 provide the legal
basis for water pricing, which are the milestones in water pricing history. The Water Tariff
Method stipulates the principle, criteria and standard, and management method for pricing water
from water projects. Local governments then have issued the implementation regulations
according to their local conditions. Although several water pricing reforms have been carried out
and irrigation water tariff commonly has been increased since the implementation of Water Tariff
Method in 1985, irrigation water tariff is still far below the supply cost in most areas. According
to statistics, the average national irrigation water tariff is 0.026 yuan/m3 in 1997, while the
average water supply cost is 0.0718 yuan/ m3, the water tariff accounts for only 36% of the
supply cost. Therefore, the major issue in near future is to further increase the irrigation water
tariff to fully cover the supply cost. The increase of water tariff is in line with the current reform
program and it is also the requirement of adapting to market economy concept, and it also
reduce the burden of governments subsidies at all levels. While the increase of water tariff is
somehow conflict to present Chinese governments effort of reducing farmers financial burden.
A big leap of increase is not possible at present, but gradually increase of irrigation water tariff is
feasible. According to statistics, water charges accounts for only small portion of agricultural
product cost. In 1998, the average water charges is about 190 yuan/ha, which accounts for
5.4% of average production cost of 3500 yuan/ha. So farmers have certain potential ability for
the increase since the water tariff contributes lower portion in the agricultural production cost.
Increase of water tariff will enhance farmers participation in irrigation management, which is
favorable to the establishment of water user associations and operate and manage the irrigation
facilities by themselves, and finally reduce the cost and water tariff. Increase of water pricing will
promote farmer? strengthen of water use management and reduce waste of water, and it will
also reduce agricultural production cost.
The deepening of pricing reform and revision of water pricing regulations is necessary. The
objectives of future water pricing reform are: to promote high efficiency of water use and to
realize water saving and proper allocation of water resources; to guarantee steady and
sustainable development of water supply projects. Some pricing measures are required, such as
adopting basic pricing and water volume pricing, setting water quota and higher price for extra
use, fluctuating water tariff according to supply and demand, and decentralizing pricing approval
authority.

291

References

China Environment Pretection Administration, China Environment Yearbook 1997

Department of Irrigation, Drainage and Rural Water Supply, MWR (1999), Brief History of
Irrigation and Drainage in New China, China Water Resources and Electric Power Press,
Beijing

Feng Huangzhi (1998), Overall Strategy for Chinas Water-saving Irrigation Development,
China Rural Water Resources & Hydropower (Issue 11, 1998)

Ministry of Agriculture, Agriculture Yearbook 1998, Beijing

Ministry of Water Resources (MWR) (1999), 50 Years Development in Water Resources


Sector in China, China Water Resources and Electric Power Press, Beijing

MWR and ADB (1999), Strategic Options for the Water Sector, ADB TA NO2817-PRC

Qian Zhengying (ed, 1991), Water Resources in China, China Water Resources and Electric
Power Press, Beijing

Shen Zhengrong & Su Renqiong (ed, 1998), Strategic Study on Agriculture Water Crisis in
China, China Agricultural Science and Technology Press, Beijing

Song Zhiqiang (1999), Principles for Water Pricing Adjustment, Water Resources
Economics (Issue 3, 1999)

Wang Wenke and Huang Qiuhong (1999), Water Project Pricing and Cost Recovery in
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Other unpublished references

Staff Appraisal Report of World Bank financied Yangtze Water Resources Project

292

Progress Report Of WB fnancied yangtze Water Resources Project and Xiaolangdi


Multipurpose Dam Project (Institutional Component for MWRs Capacity Building)

Other statistics and summary reports by MWRs Departments

293