How does China matter Water, Other things and its Impact on the Rest of the World

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How does China matter?Water, Other things and
its Impact on the Rest of the World
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Northern Chinas Water Shortage

• Falling Supply
• Rapidly falling groundwater levels
• Historically low surface supplies
• Rising Demand
• Urban and Industrial
• Agricultural

Saving Water, Saves Lives
3
Changing Trends in Water use

1978

• Nationally more and more water being allocated
  to urban and industrial uses
• National policy
• Water use priorities
• Urban residential
• Industry
• Rural residential
• Irrigation (is last)

2001
4
Projected Water use, 2020

2020
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Hai River Basin Surface Water Flows 1980 to 2003
Billions meter3
Between 1985 and 1995, the Yellow River had
between 30 to 180 days of flow interruptions in
the lower reaches of the basin
6
Increase of Groundwater Irrigation in China
Percent of Irrigated Area, Irrigated by
Groundwater in Northern China
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Increase of Tubewells in China
Millions
C
B
A
A number of wells reported in MWR statistical
yearbook B number of tubewells in India C
number of tubewells in the Rest of the World,
including India
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Hebei Falling Shallow GW Table
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Data set 1 collected by CCAP and University of
California, Davis 2004 North China Water Resource
Survey (NCWRS) 400 communities 50 counties, 6
provinces National Representative (of North China)
Inner Mongolia
Liaoning
Shanxi
Hebei
Henan
Shaanxi
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I. Characteristics of Aquifer

• Types of aquifers
• Most pumping from shallow

Depth to Water in GW Using Villages
.04 .03 .02 .01 0
Estimated Density of villages
Average depth 2004 28 m Average depth 1995 21 m
Depth (m) 0 50
100 150
1995
2004
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Groundwater Levels are Falling, but varies across
Northern China

• Change in Average Water Level 1995-2004
• Increased 16
• No Change 18
• Decreased lt ¼ m/year 17
• Decreasing ¼ to 1/5 m/year 40
• Decreasing gt 1.5 m/year 8

52
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There are problems but not everywhere of
course, in some places, the problems are serious
Where there is a problem, is there a response
by the government?
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Water Law and Policies of MWR

• Wells drilled by permit only
• Regulation on pump spacing
• In areas that are seriously over-extracted,
  control volume of pumping
• Water extraction fee can be assessed
• Control price of water charged by farmers that
  sell water
• Moving towards pricing policies

Less than 5 of villages
Less than 7 of villages
2 out of 400 villages
Zero
Less than 10 actually try to control price
Not very fast
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Response by farmers?
Elasticity of response is low 0.3 to 0.4 this
means to get a large response, need to double the
price of water 75 of farmers would lose money
at current prices
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Farmers response at the intensive margin
Reduction in water use per unit of land
Why so much water savings? Changes on the
extensive margin i.e., high water users,
abandon farming.

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Farmers response at the extensive margin
Changing cropping pattern
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Summary

• In many places there is a water problem
• It is very difficult to regulate
• Price policy will work (tax electricity / diesel)
  but there will be equity issues AND food
  security
• What happens to Chinas food economy in a
  rapidly growing / free trade world?

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Nominal Protection Rates (NPR) for cereal and
soybean (Pd-Pw)/Pw x 100
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Agri. Trade Balance by Factor Intensity (mil US)
Labor intensive (competitive)
Fruits vegetables livestock and aquaculture
commodities
Net Exports US Dollars, Billions
exports
imports
Land intensive (uncompetitive)
Grains Oilseeds Fiber Hides Sugar Milk
Powder etc.
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Rise of Supermarkets Increasing Store Units
Number of Stores
20 to 30 percent annual growth between 1998 and
2002
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Increasing Sown Areas of Vegetablesin China and
California (1000 ha)
Producer response
China
California
Every 2 years, 1 California
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Trends of Cultivated Areas of Fruits and Nuts in
China and California (1000 ha)
California
China
Campaign to upgrade quality
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Selection of sample towns 10 times (once for each
of 10 wedges making up the circle)
36o
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
40
x
x
x
Total Town Sample Size 5 circles x 10 towns per
circle 50 towns (or Nt 50)
x
x
x
x
x
x
x
x
x
60
x
x
x
x
x
x
80
x
x
x
100
x
x
x
140
x
Also need to get populations of ALL towns in each
strata for weighting
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Where are they being grown?Inside Ring / Outside
Ring
Share of Cultivate Area
140
Mostly here
40
Area / Village (acres)
These figures for vegetables in 2000 / same for
FNs
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Who are growing them?Rich or Poor?
Share of Cultivate Area

• Per capita income
• Rich -- 7.28/day
• Poor -- 1.25/day
• Fruits / Nuts / Vegetables are being increasing
  grown by poor farmers in relatively remote
  communities!

Area / Village (acres)
They do
These figures for vegetables in 2000/ same for
FNs
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Domestic policy interventions
Trade liberalization GTAP
CAPSiM
Aggregate impacts by commodity at national
level
Based on 80,000 household, disaggregated hh
dataset
Price transmission models
Impacts by region Production Consumption
Income .
Impacts on poor/richer Production
Consumption Income ....
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Impacts of Chinas Trade LiberalizationChang in
agricultural production between 2005 and 2010
(compared with baseline, )
of production
Competitive commodities
Uncompetitive commodities
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Self-sufficient levels () of food, feed and fiber
Uncompetitive Feed grains,
oilseeds, fiber
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Self-sufficient levels () of food, feed and
fiberWill China Starve the World?
Food grains
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Self-sufficient levels () of food, feed and fiber
Competitive
Fruits / vegetables and processed foods
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Impacts of WTO on agri. output for average farm
by province in China, 2005 ()
lose
losers
Although on average agricultural sector is a
winner, there are regional impacts
winners
gain
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WTO????????????,,2005?Impacts on fertilizer use
in 2005,
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WTO????????????,,2005?Impacts on pesticide use
in 2005,
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Baseline Net export in 2001 and 2020 (billion
USD)
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Baseline Percentage of Chinas net export in
world total export in 2001 and 2020
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Impacts of high GDP growth scenario Welfare
change () in different regions in 2020
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Final Word

• In worrying about number 1, 2 and 3 countries
• China matters
• In the case of China, itself
• and in the case of its impact on the rest of the
  world