BEIJING, July 24 China has picked seven
provinces to host pilot markets for trade in water rights, as
the government battles a spreading water crisis that threatens
to curtail economic growth and hurt food production.
The move is the latest sign that China aims to use
market-based mechanisms to handle growing environmental
problems. It has already launched seven pilot markets to cut
emissions of climate-changing greenhouse gases, and plans to
roll out a national scheme later in the decade.
The provinces of Gansu, Guangdong, Henan, Hubei, Inner
Mongolia, Jiangxi and Ningxia will draw up rules for their water
markets and have them approved by October, the Ministry of Water
Resources said on its website.
"We will attempt to make progress in ... policy framework
building in the next two to three years, and use the experiences
to model a national trading system," the ministry said.
The provincial governments will issue water rights under the
scheme, and recipients who use less than they receive can sell
the surplus in the market. It remains unclear whether rights
will be issued to companies or local governments.
The pilot regions will study how water rights can be
distributed and how to register usage rights.
But the legal basis for the scheme could prove
controversial, with one expert saying a water trading system
could infringe the law.
"China's water is owned by the state, and only the central
government can decide how much water is allocated to regions,"
said Song Guojun, dean of the Environmental Policy and Planning
Research Institute at Renmin University in the capital.
"If local authorities trade water it would be a violation of
Keeping track of water use rights could also prove tough,
another expert said.
"Because water resources are mobile and uncertain,
registering water use rights is going to be very difficult,"
Wang Yahua, a professor at Tsinghua University told local
newspaper 21st Century Business Herald.
Water is rapidly emerging as one of the most pressing
environmental concerns for China, which is naturally water
scarce, and where each citizen's access to freshwater stands at
around a fifth that of the United States.
Decades of pollution have left large swathes of rivers,
lakes and groundwater too dirty to use.
Food production in some parts of China is threatened by the
crisis, which also causes challenges for a manufacturing
industry that mostly relies on water-intensive coal-fired power.
The government has launched a $62-billion project to divert
some southern rivers to the dry north, and in May the State
Council, or cabinet, approved more than 170 schemes to boost
Water-stressed Beijing in April hiked prices for industrial
users of water in a bid to stem demand.
In March, the Ministry of Finance said it would launch a
national air pollution market to halt China's smog crisis, which
prematurely ends half a million lives annually.
(Reporting by Kathy Chen and Stian Reklev; Editing by Clarence