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Water

China’s New Opportunity: Water Funds

by

Daniel Shemie, Kari Vigerstol, Mu Quan, Wang Longzhu

The Nature Conservancy

April 2016

Rugged mountains, villages and farms along the valleys and tributaries that form the Yangtze River watershed in Yunnan province, southwestern China. Photo © Ami Vitale.
Rugged mountains, villages and farms along the valleys and tributaries that form the Yangtze River watershed in Yunnan province, southwestern China. Photo © Ami Vitale.

What do the Chinese cities of Harbin, Ningbo, Qingdao and Xuzhou have in common? They are all water stressed, but they are also perfectly positioned to lead the country towards a more sustainable water future.

While China accounts for almost 20 percent of the world’s population, the country contains only seven percent of the world’s freshwater, leaving it with much less annual freshwater available per capita than most other countries. In addition to the growing population, pollution further limits the amount of water available for use. China is unable to use least one-third of its lakes and rivers water resources for household consumption, and 73 percent of the watersheds that supply water to its 30 fast-growing cities face medium to high-pollution levels.

While industrial pollution is the most frequently discussed source of pollution, land use and degradation accounts for about half of the pollution found in China’s water. Fertilizers, pesticides and livestock waste are carried into lakes, rivers, wetlands and coastal waters. Aquifers are also impacted as rainfall and snowmelt carry pollutants underground.

For the past several years, The Nature Conservancy has been studying the state of water around the world. This year, we examined China’s water resources given the country’s challenges and importance to the global economy, environment and human development. In our latest report, the China Urban Water Blueprint, we analyzed the state of the 135 surface water sources tapped by China’s 30 largest and fastest growing cities, and we found opportunity.

The report shows that less than six percent of China’s land mass provides more than two-thirds (69 percent) of the country’s water supply. This means that by investing in natural solutions—such as reforestation and improved agricultural practices—small and medium-sized catchments of approximately 100,000 square kilometers have a great potential to secure a significant portion of water supplies for major cities.

Furthermore, by targeting natural solutions to roughly 1.4 million hectares, it could be possible to reduce sediment and nutrient pollution by at least 10 percent in these small to medium-sized water catchments. These natural solutions have the potential to improve water quality for more than 150 million people.

The study also shows how savings in water treatment could offset a significant portion of the catchment conservation costs. Over the last five years, China has spent $8 billion annually on its national eco-compensation programs. In comparison, investing in natural solutions that could improve water quality by 10 percent in China’s 30 fastest growing cities would cost about $300 million each year. In 50 percent of the cities analyzed in the report, savings in water treatment could offset a significant portion of the catchment conservation costs.

Collective action water funds provide one way for China to implement nature-based solutions at scale. This governance and financial tool is being used around the world, from Ecuador to Kenya. When designed properly, water funds enable public and private water users to invest in their water sources and play a key role in improving water quality. Water funds also provide a range of co-benefits to people and nature including protecting the environment, improving crop yields, providing more reliable energy generation by hydropower facilities and improving carbon sequestration. Water funds offer a mechanism to be responsible and protect our land, water and wildlife for future generations.

China is already putting wheels in motion to address its current water challenges. Let’s be sure that nature is part of the equation used to solve the problem.

Note: The Nature Conservancy recently released the China Urban Water Blueprint which analyzed the state of the 135 surface water sources tapped by China’s 30 largest and fastest growing cities, and found opportunity—opportunity for cities, businesses and communities to come together and protect the land around valuable water sources and play a role in improving water quality.


Originally Posted on United Nations Environment Programme

April 19, 2016