Editorial note

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Editorial note

Water resource shortages and increasing insufficiency in water supply have been bottlenecks to the economic development of Shanxi Province. In this regard there has been a need to: (i) Study in-depth experience and advanced techniques on water resource management and irrigation modernization at home and abroad; (ii) explore fundamental measures to combat water shortages and analyse the future direction of irrigation modernization in Shanxi Province. To address these issues, the International Forum on Water Resources Management and Irrigation Modernization in Shanxi Province, co-sponsored by FAO's Regional Office for Asia and the Pacific and Shanxi Provincial People's Government was held in Taiyuan and Yuncheng Cities of Shanxi Province, China from 22 to 24 November 2006. It was organized by Shanxi Water Resources Department. Due to the significant outputs from the forum and the important decision to safeguard the status of local water resources taken by the Shanxi Provincial Committee of the Chinese Communist Party (CCP) and the Shanxi Provincial People's Government, a water development strategy is going to be implemented throughout Shanxi Province. A Mobilization Meeting for Implementing the Water Development Strategy in Shanxi Province was thus convened in March 2007, during which Mr Zhang Baoshun, Secretary of Shanxi Provincial Committee of the CCP and Mr Yu Youjun, Governor of Shanxi Provincial People's Government delivered two speeches, which outlined the main elements of the strategy and priority objectives and programmes. These speeches have been included in this publication.

Speech at the Mobilization Meeting for Implementing the Water Development Strategy in Shanxi Province

Zhang Baoshun
Secretary of Shanxi Provincial Committee of the CCP

Dear Colleagues,

This mobilization meeting has three major tasks. The first task is to carry out the instructions given by Mr Hu Jingtao, the Secretary-General of the CCP and the President of China, and Mr Wen Jiabao, the Prime Minister of the State Council, when they inspected Shanxi Province. The second task is to implement the water development strategy. This strategy was formulated according to the current status of the water sector in Shanxi Province with an eye to providing guarantees for developing the economy as rapidly and as successfully as possible. The strategy includes six key water projects. The third task is to motivate all concerned people throughout the province to work hard and generate an upswing in advancing water management. I have three particular topics that I would like to address.

1. Improve awareness about water shortages: Importance and urgency for implementing the water development strategy

Water is both a fundamental natural resource and a strategic economic resource and it plays an irreplaceable role in the development of human welfare. Former administrations in the past have attached considerable importance to the water issue, unremittingly encouraged people to develop water resources, expended much effort and achieved remarkable success. Systems related to flood control, irrigation and drainage, soil and water conservation and water supply for urban and rural area have been improved. The water utilization coefficient has been increased. The construction of large-scale water projects has supported economic development. On the behalf of the provincial party committee and the provincial people's government, I would like to pay my respect and express my thanks to everyone who has contributed to water development in Shanxi.

On inspecting the province, Mr Hu Jingtao said, "We should be persistent in the principle of both broadening new sources of income and reducing expenditure at the same time and giving priority to reducing expenditure, forming resource-saving patterns of production and consumption and accelerating the construction of a resource-saving and environmentally friendly society". Mr Wen Jiabao indicated, "As water shortage is the most serious constraint in Shanxi Province, we should investigate the fundamental measures for solving water shortages in the long term and place water resource development high on the agenda of economic development". In line with these instructions, we have conducted in-depth investigations on water shortage problems in Shanxi since last year. Mr Yu Youjun and Mr Liang Bin in particular have headed departmental in-situ surveys and from the results we have further heightened awareness on the current status of water shortage and on the urgent need to implement a water development strategy. This has resulted in the formation of key projects to address the issue.

Shanxi Province is located in a loess region where rainfall is low and water resources are scarce. In addition, local industries have exacerbated water shortages. Influenced by both natural conditions and industrial activity, groundwater has been overexploited, waterbodies have been seriously polluted and the gap between water supply and water demand has become increasingly wider. Water shortage has been the most serious constraint for the economic development of Shanxi Province. All departments at all levels throughout the whole province should be more informed about the following four aspects.

1.1 Developing water supply to expand industry and realize sustainable economic development

The traditional key industries of Shanxi Province are high water consumers. According to the 11 th Five-year Plan and the current level of water use, consumption by coal, electricity, coke and metallurgy industries after five years will be double the amount of 1.394 billion m3 in 2005. This will be a serious challenge for undersupplied Shanxi Province where annual groundwater overexploitation is 0.7 billion m3. Water scarcity also constrains the development of new key industries. As the goal is to transform a province dominated by coal production into a province with multiple industrial activity (e.g. coal–chemicals, new sectors), according to the 11 th Five-year Plan, 20 to 30 million tonnes of coal–chemical products will be produced every year. It is estimated that water consumption for each tonne of coal–chemical product will be approximately 10 m3; in toto , 0.2 to 0.3 billion m3 of water will be needed to support the development of the coal–chemical and other industries. Finally, owing to water deficits, a number of national coal–chemical projects are not established here and the agendas of some projects funded by foreign organizations are consequently constrained. Therefore, we cannot bypass the issue and need to find solutions. If this is not done, the 11 Five-year Plan will not be implemented effectively and the objective of building a new Shanxi will be difficult to accomplish.

1.2 Water development is essential for modern agriculture and building new rural areas

Water is the lifeblood of agriculture and water development is an important component for building new rural areas. Currently the irrigation area of the province encompasses 18 million mu but only 12 million mu are actually irrigated. Due to serious riverine water deficits groundwater is overexploited; consequently crops, livestock and the populace experience considerable trauma in times of drought. The aftermath is very difficult to conceive. Thus increasing comprehensive agricultural production capacity, accelerating agricultural modernization, fostering the "four reconstructions" in rural areas (reconstructing water supply, kitchens, pens and latrines) and enhancing inhabited environments have to be realized by constructing water storage infrastructure and developing water-saving agricultural techniques.

1.3 Water development is essential for rehabilitating the ecological environment

For many years water and soil losses have occurred over 34 million mu . On average, 0.118 billion tonnes of soil are eroded annually. Moreover the future of the ecological environment is bleak. Throughout the province, 69 percent of the land experiences soil and water loss and desertification degrades 10.4 percent. Forested area per capita and the proportion of forest to the entire area account for 0.5 and 38 percent only of the national average level, respectively. Meanwhile, owing to heavy industrial water consumption and insufficient utilities, a vicious circle forms between water shortage and environmental pollution. More serious is the fact that polluted water has penetrated groundwater and karst springs thus endangering urban water supplies. Out of 119 counties, 91 produce coal. Around the coal mines, wells and springs have been rendered useless forcing people to migrate from some sites. Therefore, relieving water shortages is the main agenda for enhancing ecological development in the province.

1.4 Water development is essential for enhancing welfare and promoting harmony

Although in recent years the supply of potable water for six million people has been achieved, two-thirds of the rural population does not have access to safe drinking water and still drink water that is contaminated by high fluorin, arsenic or salt concentrations. This is injurious to people's health, increases the farmers' burden and generates social problems. We must ensure that people in general drink clean and safe water in order to promote social stability.

2. Make principles clear, adopt focal points and implement the water development strategy firmly

To resolve the present water dilemma in Shanxi Province, the water development strategy should adopt a scientific approach. Thus there is a need to address the following five focal points.

2.1 Establish a scientific vision for water development

Exploitation of water has undergone three historical stages: (1) Sourcing river water and being at the river's command; (2) Sourcing river water and controlling floods; (3) Human transformation of the river.

Now, scientific practices and societal development have generated a fourth stage in which humans and nature can exist in harmony and we should foster this relationship. While we develop and exploit water resources, we should respect the natural balance, prioritize environmental management and rehabilitate ecological structure that has deteriorated. We should establish the sustainable development of water resources.

The sustainable development of water resources comprises the following elements:

2.2 Persist with overall planning and coordinate progress

Contingency planning should encompass:

  1. Addressing the relationship between the development of new water sources and water-saving activities:
    • Alleviating water shortages, expediting the construction of water infrastructure projects and building storage facilities next to river systems.
    • Strengthening water demand management, improving water conservancy plans and practising strict water-saving measures.
  2. Controlling the development and protection of water resources:
    • Exploit surface water carefully, strictly control groundwater use and effectively utilize air-borne moisture.
    • Determine the different functions of various rivers regionally and formulate corresponding development and protection measures.
    • Streamline economic behaviour.
    • Promote ecological rehabilitation.
  3. Understanding the water-use relationship for industrial and agricultural production, urban living and ecological sustainability:
    • Formulate scientific water resource development and a general scheme for water resource allocation.
    • Prioritize water allocation for human welfare, industrial and agricultural production and environmental needs.
  4. Resolve water pollution issues:
    • Improve the prevention and control of water pollution.
    • Accelerate the construction of water quality monitoring systems.
    • Ban the discharge of wastewater that exceeds safety standards.
    • Reverse the trend of deteriorating water quality and ensure that chemical oxygen demand decreases by 13 percent during the 11 th Five-year Plan.
    • Re-evaluate rapid economic development that comes at the cost of sacrificing the environment.

2.3 Constructing quality water projects

The six key projects in the water development strategy are: Water supply for emergency use; irrigation and drainage; damming for soil and water conservation; potable rural water supply; water conservancy in urban and rural areas; and protection of rivers and groundwater. All of the projects are closely connected. The following conditions apply to project implementation and quality:

  1. Strictly adhere to the mandate of the overall plan.
    • Make every effort to put the plan into effect according to stated requirements.
    • Ensure that each project starts on time and makes orderly and scientific progress.
    • Ensure each project is completed and put into effect within the time schedule.
    • Prioritize scientific and technological inputs, conduct technical research, popularize and apply modern and practical techniques.
  2. Remember that quality is the lifeline of water projects.
    • Improve monitoring systems and practices.
    • Impose strict monitoring and supervisory regulations.
    • Reject poor quality; avoid suboptimal — but nice appearance.

While we are building the six key projects, we should continue work on the Yellow River Diversion Project. We will start the North Main Line as soon as possible to try to increase water supply to Taiyuan, broaden the scope of water supply and decrease water costs and diminish groundwater exploitation.

2.4 Establishing water-saving patterns in production and consumption

Water conservancy is essential for resolving the water deficit in Shanxi. Water-saving activities should feature in daily departmental work, industrial development, project implementation, urban and rural construction and residential life. Moreover protection of the natural environment should figure prominently in the course of development activities. In these contexts the following activities should be carried out:

  1. Developing water-saving industries.
    • Popularize water-saving techniques and equipment in traditional industries.
    • Reconstruct or eliminate enterprises, equipment and techniques which have high energy consumption and manifest excessive pollution.
    • New industries should meet water-saving requirements.
    • Develop a sophisticated water-saving industry.
    • Decrease water consumption.
    • Encourage water-harvesting projects and limit projects that cannot meet water-saving requirements.
    • Assess conditions for water resource augmentation and environmental protection before new projects are started.
  2. Develop water-saving urban and rural areas.
    • Plan and build towns according to needs with water-saving facilities in place.
    • Enhance existing water-saving facilities.
    • Promote water-saving products and in some towns supply water of differing quality according to needs.
    • Improve wastewater treatment in towns. Build wastewater treatment plants in every county and ensure they operate efficiently to generate suitable recycling of waste.
    • Incorporate water conservancy strategies while building new rural areas and developing water-saving agricultural techniques.
    • Enhance the extension of water-saving techniques, reconstruct various irrigation districts, strengthen the regulation of large, medium and small rivers, develop small storage facilities such as rainfall collection points and further improve comprehensive agricultural production.
  3. Ensure potable water supply for every citizen.
    • In areas contaminated by fluorin, arsenic and salt concentrations, provide a clean and safe supply within three years.
    • Strictly protect the water quality of water sources, improve the water supply facilities in urban areas and ensure continuous supply of potable water to urban areas.
    • Establish provision of emergency water supply and over time resolve water availability issues and concomitant disputes.
  4. Develop a water-saving society.
    • Promote a water-saving province that employs innovative practices, a market economy and sustainable development of the coal industry.
    • Reverse water shortages by removing wastewater and pollution threats.
    • Improve local water regulations, encourage enterprises and people to develop water-saving products and techniques and enforce laws.
    • Raise awareness on water-saving and establish a water-saving culture by propagating the eventual benefits and the disgrace associated with water wastage.

2.5 Reforming the system for water resource development

There is a need for four structural reforms.

  1. Reform in the water resource management system by establishing administrative bureaus for water affairs to strengthen integrated catchment and regional water resource management.
  2. Reform in the investment system.
    • Encourage different sectors to invest in water projects and implement various investment modes according to the project type.
    • The government should increase investment in key projects and key fields such as potability, flood control and environmental protection as they are related to the national economy and people's livelihoods.
    • The government should be the main stockholder in these projects or fields.
    • Attract local funds for the construction of medium- and small-scale water projects that will have specific local beneficiaries.
  3. Reform in the management and operation of water projects.
    • Establish a new management system in which water rights management is highlighted and water resources are controlled, combined with water quota management.
    • Inculcate responsibility in the management of large-scale water projects and irrigation districts.
    • Transfer the operational rights of medium- and small-scale irrigation districts to water users by various fiscal means in order to recover the capital, then use the capital again to develop new water projects that are empowered by the users.
  4. Reform in the internal re-engineering of water management units.
    • Stabilize institutions that undertake fundamental and public tasks and provide some financial support. Enterprises and institutions that contribute to public welfare should enter the market step-wise.
    • Through township organization reform, we should further clarify the function of town water management stations and provide corresponding support to ensure normal operation.

3. Strengthen organization and leadership to provide firm support for promoting water issues

Starting the construction of the six key water resource projects at the same time is a test of our leadership and control capacity. Each level of the government and departments should conscientiously implement the strategy with confidence, enthusiasm and efficiency.

3.1 Imbuing importance and employing careful organization

Each government level should regard the water issue as critical to socio-economic development. Key government officials should be responsible for leading the implementation of the strategy, especially the six key projects and coordinate issues and solve problems promptly. The leaders who are assigned to take charge of strategy implementation should energetically work at project sites, have profound understanding of the situation and solve problems on the ground. We should strengthen the supervision and inspection of project implementation and consider progress as the main basis for evaluating leaders. Management teams should improve their technical knowledge and be bold in their approach by grasping the essential characteristics of water projects and progressively improve water development capacity.

3.1.1 All striving to form a united force

There are numerous departments involved in the strategy, each having a particular mandate:

3.1.2 Strengthening management and organizing team spirit

To achieve success we need first-class administrative and professional personnel and experienced market operators. Obviously we need to select the right candidates. We should optimize the talent structure in order to put appropriate people where they are needed most. Staff welfare should be addressed by improving their working conditions and helping them to handle stressful situations. We should improve the outputs of the water resource department and the overall quality of the whole group.

Speech at the Mobilization Meeting for Implementing the Water Development Strategy in Shanxi Province

Yu Youjun
The Governor of Shanxi Provincial People's Government, China

Dear Colleagues,

The major task of this mobilization meeting is to carry out the important instructions on coping with water scarcity given by Mr Hu Jingtao, the Secretary-General of the CCP and the President of China, and Mr Wen Jiabao, the Prime Minister of the State Council, when they inspected Shanxi Province. This includes implementing the water development strategy in Shanxi Province and its six key water projects in order to promote the water sector in Shanxi Province. It is hoped that this will lead to a historic breakthrough in water management and a leap forward in socio-economic development. I have four specific issues to consider:

1. The need for a water development strategy

The protection, development, utilization and control of water have always been associated with the progress of civilization. The twenty-first century is regarded as the "water century". The availability of water resources and concomitant development will be an important factor for influencing regional development. Currently we are entering an era of water scarcity and many international organizations and experts predict that water supplies in many regions in the world will diminish as the earth becomes warmer. Water is now an important strategic resource and owing to water shortages it is likely that conflicts over use will become increasingly more bitter in the future.

China is ranked sixth in world placings with regard to total water availability. However, average available water per capita remains low — statistically 121 in world rankings. China is listed as one of 13 countries in which water resources are in short supply. The distribution of water resources in China is very uneven. Eighty percent is distributed by the Yangtze River and to its south while northern China has a serious deficit. Shanxi Province is one of the provinces in which water supply is meager. Total available water amounts to only 12.38 billion m3 and per capita distribution is only 381 m3, which is only 17 percent; this is well below the world average and much lower than 500 m3, the threshold according to international standards. Therefore, addressing water conservancy and protection and achieving the sustainable development of water resources are urgent issues for Shanxi, China and the world.

The instructions of Mr Hu Jingtao, the General Secretary of the Communist Party of China and the Premier of the State Council Mr Wen Jiabao have already been elaborated by Mr Zhang Baoshun (Part 1) as well as the consequences of not developing water-saving measures or failing to build a water-saving society.

From April to September 2006, representatives from the provincial water resource department and from water resource bureaus in every city and county conducted an in-depth investigation of Shanxi's water resources and analysed historical data. From September to November 2006, Mr Liang Bin and I led a group of officers from various water resource departments and experts on a tour of 57 project sites including rivers, springs, reservoirs and irrigation districts that covered all 11 cities in Shanxi Province. We investigated water resource development, water-saving and protection measures, irrigation and drainage as well as soil and water conservation activities. Representatives from the academe, industry and rural/urban areas attended 15 symposiums at which various issues were addressed and concerns voiced. Consequently we have a much clearer perception on matters pertaining to water use/abuse in Shanxi.

1.1 Water resources in Shanxi Province are inadequate due to geographical and climatic factors

Shanxi Province lies in the east of the loess region; mountains and hilly areas account for over 80 percent of the total land area. Terraces, ravines and gullies that traverse the land make it difficult to exploit rainfall and river water. The arid climate and frequent droughts also exacerbate water shortages.

1.2 Slow infrastructure construction induces considerable surface water loss

Besides natural factors, slow infrastructure construction is another significant factor that results in water shortages. Since 1949, 730 reservoirs have been built, which constitute 0.9 percent of the 84 000 reservoirs nationwide. The total storage capacity is 4.5 billion m3, which is 0.8 percent of the total storage capacity of the whole country. In Shanxi, 63 large- and medium-scale reservoirs were built before 1976; only three reservoirs started construction in the last 30 years and none has been put to efficient use. The existing reservoirs are ageing. The sedimentation of reservoir storage capacity has reached 1.2 billion m3. If sedimentation and flood capacity are deducted, the effective reservoir storage capacity in a normal year is only 0.5 billion m3 for the whole province. Because the construction of headworks has lagged, the annual stored water amount is less than one-tenth of the runoff in the whole province. According to data, surface water resources available annually have amounted to 8.677 billion m3 in the last 50 years — even 7.2 billion m3 during the drought period after the 1980s. Runoff exiting from the province ranges from 4.88 billion m3 to 7.3 billion m3; two-thirds to three-quarters of the total surface water flows out of the province. Therefore, the water utilization rate in Shanxi Province is low. The exploitation of the Yellow River in Shanxi is also very low. According to the Yellow River water allocation scheme approved by the State Council, Shanxi can annually use 4.3 billion m3 water from the Yellow River, however in reality only 1 billion m3 are used, accounting for 23 percent of the total allocated water.

1.3 Groundwater is overexploited and the water supply structure is unconventional

The low utilization of surface water results in the overexploitation of groundwater. Since the 1970s, in order to meet water demands generated by economic development, groundwater exploitation has increased annually. In 1971, annual groundwater withdrawal in the whole province was 1.1 billion m3; currently this figure is 4.0 billion m3 or 60 percent of total water use. Hindered by insufficient infrastructure or influenced by low water price, many regions and enterprises meet water demands for development by overextracting groundwater. There are 22 seriously overexploited locations covering 11 000 km 2. The groundwater table level has fallen sharply in the last ten years; well depths in Yuncheng, Linfen, Taiyuan and Yangquan Cities are as deep as 700 to 800 m, some even exceed 1 000 m. Moreover, outflow from karst springs has been radically affected.

1.4 Coal mining degrades water resources and exacerbates problems

Undisciplined and excessive coal mining activities sever groundwater connections, damage the aquifer and induce seepage and pollution. It is said that for every tonne of coal mined, 2.48 m3 of groundwater are degraded in Shanxi. Groundwater losses generated by coal mining amount to 1.5 billion m3 annually. Furthermore, because of the serious damage to the aquifer, water seepage creates ground settlement, declines in groundwater water levels, abandonment of wells and cessation of karst spring flow near coal mines — consequently people have to carry drinking water from remoter areas.

1.5 Water pollution is serious and the level of wastewater recycling is low

Currently 0.8 billion m3 of wastewater is emptied into rivers annually throughout the province, accounting for 10 percent of the total runoff and one-third of the runoff in non-flood periods. Among the 103 river cross-sections monitored, 88 percent had been polluted to varying degrees and 62 percent had been polluted heavily. More worrying, polluted water has penetrated groundwater and karst springs, thus endangering urban water supply. However, the construction of wastewater treatment facilities continues to lag. This causes low operational efficiency and wastes valuable water resources.

Other problems caused by water deficits in Shanxi are outlined hereunder:

We should hasten to formulate and implement a water development strategy that features the rational development, efficient use, conservancy and protection of water resources as its key components. Each stratum of society should understand the significance and far-reaching influence of this strategy.

2. Overall implementation of the water development strategy

The water development strategy will be implemented through six key water resource projects. By the end of the 11 th Five-year Plan provincial water storage capacity will have increased to 7.5 billion m3 to meet water demands generated by industries, cities and agriculture. We will increase the actual irrigated area of four million mu to create an effective irrigated area of up to 20 million mu . We will build 10 000 new storage facilities for silt and add 0.8 million mu of farmland. We will ensure potable water for ten million people. We will progress in the construction of the water-saving society. We will reverse the trend of urban abuse of the rural water environment and water quality in rivers will meet approved standards.

2.1 Strive to build projects for emergency water use

The most fundamental and effective measure to increase water supply capacity and to avoid groundwater overexploitation is to build dams along rivers. This will also help to mitigate the effects of floods and droughts and protect human lives. It is also the hardest task of the water development strategy in Shanxi Province. All departments must pool their resources to complete the construction of 35 large- and medium-scale dams and various large diversion projects within three to five years. The main elements of these projects are outlined hereunder:

These developments can increase annual surface water supply by 1 to 1.5 billion m3 and recharge groundwater supply by 0.2 to 0.3 billion m3; this will create a storage capacity (surface water) of up to 3.5 billion m3 for the whole province. The exploitation of groundwater will also decline. Together with water from the Yellow River Diversion Project, total water supply is predicted to meet annual water demand of 7.5 billion m3.

In addition, we should try to rehabilitate damaged reservoirs within two to three years. Cities and counties should be motivated to build small reservoirs, ponds and dams to collect rainfall.

When we design reservoirs upstream, we should consider downstream water demand. We should control the water diverted or stored to 40 percent of the runoff to balance water demand between upstream and downstream users.

Project design should strive for efficient use and consider water supply benefit and practical allocation as important factors in the water source "scale". We will ensure that 20 to 25 projects start this year, while remaining projects will start in the first half of next year.

2.2 Strive to build irrigation and drainage projects

Irrigation and drainage measures are effective for enhancing agricultural production and increasing farmers' income. The economic benefit in the irrigated area is considerably higher than the rain-fed area. Nationwide, per capita irrigated area is 0.64 mu . In neighbouring areas, this figure is 1 mu in Hebei Province, 1.09 mu in Inner Mongolia and 0.76 mu in Henan Province. However, it is only 0.42 mu in Shanxi Province. In recent years, influenced by decreasing river inflow and the ageing of water infrastructure, water diversion for irrigation has become increasingly difficult, the cost of irrigation has become higher and the actual irrigated area has decreased. This situation has constrained increases in crop yield and economic benefits. Therefore improving agricultural irrigation and increasing the irrigated area are important components of the water development strategy. During the 11 th Five-year Plan, the main tasks for irrigation and drainage in the whole province are:

By adopting these measures and promoting water-saving agricultural techniques, by the end of the 11 th Five-year Plan, the effective irrigated area of Shanxi will be approximately 20 million mu and the target of providing each farmer with 1 mu (irrigation field) and 0.85 mu (effective irrigated field) will be accomplished, thus stimulating agricultural production in the whole province.

2.3 Strive to build infrastructure for soil and water conservation

Silt storage facilities for expanding farmland area have many functions such as silt control, flood control and combating drought. Crop yields in the expanded area are six to ten times higher than that of cultivated sloping land. Therefore their construction can move agricultural pressure away from sloping lands and their forests, help farmers increase income and improve the ecological environment of the loess.

Shanxi counties along the Yellow River experience serious soil and water loss and silt draining into the Yellow River has been recorded at 0.4 billon tonnes. But this natural condition has become an asset for expanding arable area. Currently, over 40 000 silt storage facilities have been built throughout the province and 1.57 million mu of farmland have been added. During the 11 th Five-year Plan, we will build a further 10 000 facilities and supplement 0.8 million arable mu ; this will enhance agricultural production in mountainous areas over 19 600 km 2 in 48 counties along the branch rivers of the Yellow River — the Pianguan, Xianchuan, Zhujiachuan and Lanyi Rivers. After completion of these projects, each farmer will have 0.3 mu of farmland, or 0.5 mu of farmland in some areas; silt drained into the Yellow River will be reduced to 0.15 billion tonnes and 0.2 billion m3 water will be recharged to groundwater. In coming years, the administrations of provinces, cities and counties should increase financial inputs and use money from land lease and landownership fees for the construction of silt storage facilities. Meanwhile, we will seek to move sloping land cultivation practices onto newly generated farmland and plant trees and grass on the "vacant" sloping land.

2.4 Strive to build rural water drinking projects

Recently, Mr Wen Jiabao said, "We should regard the treatment of water with high fluorin concentration as an important task and must absolutely prevent people from drinking water which endangers their health," when he inspected Shanxi Province. The 11 th Five-year Plan stipulates that drinking water safety for ten million people will be assured within the next five years.

The next four years is the key stage for resolving the problem of rural drinking water. Every department should organize suitable projects and promote public welfare. This should be accomplished through the following activities:

2.5 Strive to build urban and rural water-saving projects

A number of measures should be introduced to conserve water in urban areas:

With regard to agricultural water conservancy objectives include:

By implementing these measures, during the 11 th Five-year Plan, the rise of water use in Shanxi should be contained to 10 percent. Total water use (per 10 000 yuan GDP) will decrease from 155 m3 to 100 m3 and re-use of industrial water should reach 85 percent. By the end of the Plan, the irrigation water utilization coefficient for the province will increase from 0.47 to 0.56; this means that approximately 0.4 billion m3 will have been conserved from agricultural activities. By 2015, water use efficiency and conservancy will have reached an advanced level.

2.6 Strive to protect groundwater and river sources

In the overall development of the national economy (e.g. urban planning, project inception and adjustment of industrial structure) there are various water protection measures that can be taken:

While we implement the six key projects, we will continue to improve the South Main Line of the Wanjiazhai Yellow River Diversion Project and seek approval for the North Main Line of the Yellow River Diversion Project from the central government. The Yellow River Diversion Project is an important decision which will help to solve water shortages in Shanxi. We should improve the General Main Line and the South Main Line (already completed) to increase efficiency, decrease operational cost, ensure water quality, enlarge the water diversion scale and optimize project benefits. With respect to future socio-economic and environmental benefits, we should carefully prepare the North Main Line of the Yellow River Diversion Project and seek approval from the central government for implementing the project as soon as possible.

3. The water development strategy in the context of liberalization and the need for progress

In the past, funding for water resource projects was mainly provided by government departments or obtained through mass campaigns. However liberalization has opened up new ways to explore the development of water projects.

According to plans, total investment for implementing the water development strategy amounts to 20 billion yuan. If we follow the existing approach, i.e. by relying on investment from government departments, it is will be impossible to acquire the needed funds. Therefore, we should relinquish old ideas, update our approach, broaden our vision, be innovative and explore new investment opportunities that have been generated by liberalization.

3.1 Reform the fund-raising system to attract sectoral interest for water project development

We need to scale investment for water projects with different functions, i.e. support local funding for public goods such as flood control and combating drought (such as large reservoirs). Government and local funding could be combined for water projects that benefit human welfare and the economy and are thus a quasi public good. Foreign and state-owned enterprise investment should be encouraged for major projects that have a stable return on investment.

The construction market in water projects provides many corporate opportunities. Major water users, local government, foreign- and state-owned enterprises should be encouraged to enter the construction and management of water projects through joint stock businesses. Stock preferences for reservoirs of different size are:

The government could provide support in the form of subsidies or government purchase of public services provided. Investors' rights needed to be protected legally.

Government investment needs to be increased. Each level of the government should increase investment in water projects through various modes. The property rights system should be reformed in order to provide returns to investment which will be used to build new water projects. Provinces and cities may establish fund-raising measures for water project construction.

We should strengthen the planning and management of water projects. All water projects should follow the overall plan for the whole province; project sites must not be selected arbitrarily and construction must be carried out carefully under proper supervision. Water projects should also be inspected regularly to ascertain whether they are promoting, inter alia , long-term development of the regional economy, rational development of water resources and protection of the environment.

3.2 Improving the "water user pays" system to promote water saving and to optimize water resource allocation

All WUAs should pay fees to the government according to provisions made by the law. The water resources belong to the state and levying fees is an expression of the state's proprietal rights over water resources. As there is serious water shortage in Shanxi and groundwater is overexploited, economic levers can be exercised to control extraction. This should encourage the use of surface water, restrict extraction of groundwater and create a water-saving society. Except for cases when the central government clearly approves the absence of water fees or the provincial government postpones collection, all organizations and people who extract water from rivers, lakes, springs and groundwater should pay fees to water bureaus. This includes investors and managers of water facilities. All other levels of government cannot exempt or reduce fees arbitrarily.

Due to diminishing supplies, groundwater extraction fees should be increased. We should formulate different water fees for industrial water users, agricultural water users and residential water users.

If these water tariffs are not charged, then it will not be possible to recover costs for the construction and operation of water projects and investment will not be rewarded. Consequently no one will be prepared to invest further. Therefore, while implementing the water development strategy we must strengthen awareness that water is a commodity — this can be accomplished via awareness campaigns and legislation.

At present, the water price is low and the water pricing system is not rational. Therefore we should reform and rationalize the water price system as soon as possible:

Based on the principle that water resources belong to the state and water should be paid for, we should launch pilot projects on water property rights. Pilot projects will help to: Summarize experiences, gradually find measures and regulations for determining initial water rights, explore trading facets of water property rights, formulate rules for water rights trading and develop a water rights trading market to allow the legal owner to transfer surplus water or saved water to other water users. We should popularize water ticket trading among agricultural water users, encourage industrial water users to invest in agricultural water-saving facilities to obtain water property rights from agricultural water users in return, launch pilot projects on water property trading between regions and establish a compensation system between upstream and downstream water users.

We should strengthen supervision of the water market and uphold the legal rights on water supply and water demand. Therefore, in order to set up a payment system for water resources and water commodities, we must improve the pattern and regulation of government supervision. Government departments should hasten to issue regulations on water market supervision and improve technical standards, management and services.

4. Consolidate water resource management to improve efficiency and protection

The water resource management system directly influences water allocation and water use efficiency. There are many human and physical barriers in the water resource systems in our province. These problems aggravate water shortages to some extent.

The General Secretary of the Communist Party, Mr Hu Jingtao said at the National Conference on Population, Resources and Environment, "We should strengthen the integrated catchment of water resources and build authoritative, efficient and concerted water resource management systems". The Premier of the State Council, Mr Wen Jiabao clearly pointed out on different occasions that we should coordinate the protection, development and use of water resources. To conduct the water development strategy properly, we must conform with the law and the provincial situation. Therefore we must attach importance to law formulation. According to the Water Law of the People's Republic of China and the situation in Shanxi Province, we should expedite the drafting of regulations related to water management. These include:

Drafts were submitted at the aforementioned conference and will be forwarded to the provincial congress and provincial government for issuance.

We should also build a law enforcement agency to form a composite force to combat illegal activities related to water, deal with water disputes and provide a safe environment for implementing the water development strategy.

Lastly the development of an inter-regional water management group that addresses infrastructure construction, water supply, drainage, wastewater treatment and water recycling for both urban and rural areas will serve to encourage operational consistency, promote investment and protect areas that are especially vulnerable to water deficits.

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