China's Water Shortage Could Shake World Grain Markets

HOLD FOR RELEASE
12:00 noon EDT
Wednesday, April 22, 1998

by Lester R. Brown and Brian Halweil

"Emerging water shortages are threatening China's grain production as rivers are drained dry and aquifers are depleted by the country's soaring water needs," announced Lester Brown, president of the Worldwatch Institute, in a forthcoming article for WORLD WATCH magazine. This prospect is resulting in sleepless nights in Beijing, worry about rising grain prices in grain importing countries, and a deepening concern in the U.S. intelligence community about its effect on political stability in these countries.

Drawing on recent information from China and a newly unveiled report from the National Intelligence Council, Brown and co-author Brian Halweil emphasize the challenge facing the Chinese government: how to meet the needs of fast-growing cities and industry without shortchanging agriculture to the point where rising grain imports destabilize world grain markets.

The debate over China's food outlook picked up steam after the publication in 1995 of Brown's book Who Will Feed China?, which marshaled the existing evidence for the growing water shortages in China. Initially denounced by the Chinese government, the book stimulated an on-going reassessment of the issue in China and abroad. The National Intelligence Council (NIC) in Washington, D.C., the umbrella organization over all U.S. intelligence agencies, has just weighed in with its own exhaustive study. Using information not publicly available, it confirms the Worldwatch Institute's earlier projections.

"Because China's potential demand is so large, it cannot import the grain it needs without driving world grain prices up, leaving 1.3 billion people who subsist on $1 a day at risk," said Brown. "The goal for China is to be as self-sufficient in food as possible by fashioning an internal solution to the problem of water scarcity."

Smaller countries, such as Israel and Saudi Arabia, have already experienced severe water shortages, but China is the first major food producer to do so. These smaller countries typically divert irrigation water to cities and industry as needed, importing grain to offset irrigation losses. To import a ton of wheat is to import a thousand tons of water. Small countries, like Israel, Jordan, or Saudi Arabia, can import 70 to 90 percent of their grain without disrupting markets, but China cannot.

China's farmers now face strong competition for water from cities and industry. Residential demand for water is projected to increase from 31 billion tons in 1995 to 134 billion tons in 2030. The demand for water by industry is projected to grow even faster, from 52 billion tons to 269 billion tons.

Of China's 617 cities, 300 are facing water shortages. In many, these shortfalls can be filled only by diverting water from agriculture. In the spring of 1994, farmers in the region surrounding Beijing were denied access to reservoirs, their traditional source of irrigation water, because all the water was needed to satisfy the city's fast growing needs. Beijing is setting the precedent for other water-stressed cities.

Farmers cannot compete economically with industry for water in China or anywhere else. The arithmetic is stark. A thousand tons of water produces one ton of wheat, which has a market value of $200, while a thousand tons of water used in industry yields an estimated $14,000 of output, or 70 times as much.

The signs of water stress can be seen on every front. For millions of Chinese farmers, wells that are going dry as water tables fall provide painful evidence of scarcity. A recent Chinese survey reports that the water table beneath much of the North China Plain, a region that produces nearly 40 percent of China's grain, has fallen an average of 1.5 meters (roughly 5 feet) per year over the last five years.

Nothing demonstrates China's water challenge more than the failure of the Yellow River to reach the sea for part of each year. In 1972, the Yellow River, the northernmost of China's two major rivers ran dry for the first time in history. After not reaching the sea for some 15 days in 1972, the river ran dry intermittently over the next decade or so. Beginning in 1985, it has run dry each year, with the dry period becoming progressively longer. In 1997, a year exacerbated by drought, it failed to reach the sea for 226 days.

For some months in 1997, it failed even to reach Shandong, the last province the river flows through en route to the sea and the one that produces one fifth of China's wheat and one seventh of its corn. In 1996, the failure of the river, which supplies half of Shandong's irrigation water, to reach the province reduced grain output by 2.7 million tons, enough to feed 9 million Chinese. With literally hundreds of new upstream projects withdrawing water in the years ahead, ever less will reach the lower basin.

China wants to protect agriculture in the fertile downstream regions, but the need for water in upstream provinces for residences and to create jobs in industry is overwhelming. At the national level, the redistribution of income to the economically lagging interior is essential to maintain political stability and to prevent a massive exodus to cities in the coastal provinces.

For China, solving its water problems means more than adopting new water efficient technologies. "The Chinese will need to restructure their entire economy to make it more water efficient," said Brown. "In agriculture, they can shift to more water-efficient crops and livestock products. In energy, they can move to less water-intensive energy sources. And in industry, they can make big jumps in saving water."

One of the most frequently proposed responses to water scarcity is to reduce wastage by water pricing, charging users enough for water to ensure that it is used efficiently. Higher water prices that lead to the use of more efficient technologies, such as sprinklers or drip irrigation, can sharply cut water use.

The potential for saving water in industry is also promising. For example, China uses from 23 to 56 tons of water to produce a ton of steel, whereas the United States, Japan, and Germany use less than 6 tons. Restructuring the energy sector will involve shifting from hydropower, with its large evaporating reservoirs, to wind power.

Even with an all-out effort to build a water-efficient economy, irrigation water losses and a steep rise in grain imports seem inevitable. The NIC study cited earlier, which modeled China's key river basins, concluded that in the most likely scenario, China will need to import 175 million tons of grain by 2025. But world grain exports, after tripling between 1960 and 1980, have leveled off and thus may not be able to satisfy this additional need.

The NIC study recommends establishing a permanent U.S.-China agricultural forum to develop complementary agricultural strategies and to share technology in such areas as production and irrigation efficiency. The authors strongly concur with these recommendations. If the world's two leading food producers can work closely together to raise water use efficiency, while the entire world works to stabilize population, it will not only benefit each of them, but the rest of the world as well.