shifting from government command to a market-based mechanism, which could ultimately reflect the relative scarcity of water and help address water-energy problems in the future. Over the past ten years, a number of Chinese cities have significantly increased their water price through market-based reforms, with special rates designed to help low-income consumers. Meanwhile, block pricing has been implemented to different extents and with varying degrees of success across China. After the amendment of the Chinese Water Law in 2002, all industrial and municipal water users were required to pay a water resources fee. However, the price is generally low and has not been leveraged as an economic incentive for improving water use efficiency. Current water resources fees for cooling water vary from province to province but normally range from 0.001 to 0.008 CNY/kWh for open-loop units and hydropower units (but are even lower for closed-loop units), a price that accounts for just 1-3 percent of electricity generation costs2.
PJZ: In theory, water pricing matters but we also see that in Beijing municipality, the city with the highest income levels in China and where the water price has been high, water demand continues to increase. Again, this is a matter of degree. If the price is very high then generally the end user will want to save water but this also depends on income level and awareness. Pricing is only one measure to change water demand. Command and control is the other, so planning is also important. For some cities with water stress, municipalities should avoid introducing investments that involve high water consumption. This is a matter of spatial planning for economies and cities.
CWR: The extraction, transportation, purification, and distribution of water, as well as the treatment of wastewater, are energy-intensive processes. As water issues grow, desalination will also be more firmly on the Chinese radar. Yet these all use more energy and thus more water. What do you see as the future here?
CWT: It is true that desalination consumes more energy and bears a much higher price tag. However, the unit water cost of desalination is actually cheaper than that of the South-to-North Water Diversion project. Many coastal cities, including Tianjin, Qingdao, and Dalian, have integrated desalination into their middle-to-long term blueprints as an alternative water resource.
Carbon footprint of desalinization depends on the type of energy source used to power the distillation or reverse osmosis process. Lower carbon footprint could be achieved with wind, solar PV, and nuclear power.
PJZ: Cities in northern China should consider looking beyond water diversion. Long transportation of water has a lot of risk in terms of water quality, the unknown ecological impact but we would need more analysis to compare the options.
CWR: What do you see as the trend in China around any reforms in water governance and potentially institutional capacity around managing water allocations among various regions and uses?
PJZ: I am not an expert in this area, but the direction should be toward stakeholder participation, with all end users, suppliers, officials, civil society involved in any decisions.
CWT: Our research to date has focused on the water/greenhouse gas implications of power generation technologies. We have not tackled issues relating to water governance. However, given China’s rapid urbanization, our future interests will be centered around water/energy issues in the urban context. In many emerging middle-sized cities, a considerable amount of electricity is used to purify and transport potable water, and to treat wastewater at wastewater treatment plants. Better energy and water management will be crucial to meet this increasing demand