China’s war on water scarcity

In China, government planners and foreign investors alike are wrestling with the implications of water scarcity. China has 21% of the world’s population, but only 6% of its freshwater.

Infrastructure investments boost Chinese economy

Read full interview with Gabriel Wong, PwC China's Corporate Finance Leader

"European and American companies already have a presence in China’s major coastal cities and provinces. However, very few foreign companies—if any—are operating in our secondary markets."

Beijing’s chronic water shortage is emblematic of the broader challenge facing China — and, indeed, facing many water-scarce developing nations such as India, South Africa, Brazil and Turkey. China provides the perfect example of a developing nation grappling with these urgent issues. The United Nations, which lists China as one of 13 countries contending with serious water scarcity, says it has 21% of the world’s population, but only 6% of its freshwater. Overall, China’s per capita availability of water is just 25% of the world’s average, and more than 400 Chinese cities are short of water. Severe pollution has compromised the quality of the limited water supplies in these and many other emerging nations. And climate change only intensifies the uncertainty, not least by making rainfall patterns increasingly unpredictable.

Government planners and foreign investors alike are wrestling with the implications of these shortfalls. A 2011 HSBC report entitled China’s Rising Climate Risk warns that nine Chinese provinces “suffer from extreme water scarcity.” It cautions that 14 out of 31 provincial economies “could be at risk from water stress,” since they rely heavily on water for everything from power generation to manufacturing.

What measures will help? It starts with infrastructure. The most ambitious mega project under way is a scheme to build over 2,500 kilometers of canals to carry trillions of gallons of water from the wet south to the arid north. It’s ultimately expected to be the biggest construction project in history and to cost at least $60 billion.

Aware of the mounting need to reduce pollution and use water more efficiently, the government is also investing heavily in infrastructure projects such as sewage networks and waste water treatment plants. In their quest for greater efficiency, energy companies and utilities are also building advanced power plants that require less water to produce more electricity — an illustration of the critical role that technology must play in any country that is battling water shortages. There is also a growing awareness in China of the need for other solutions such as public education campaigns, better practices among farmers, reducing the amount of water lost through leakage, development of eco cities, improving building performance, and development of desalination plants.