Water supply and sanitation in the People's Republic of China

People's Republic of China People's Republic of China China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres... : Water and Sanitation

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! style="text-align:center; background:lightblue;" colspan="3"|Data
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! style="text-align:left; vertical-align:top;"|Access to an improved water source

Improved water source

According to the Joint Monitoring Program for Water Supply and Sanitation by the World Health Organization and UNICEF the following are considered as "improved" water sources:* household connections* public standpipes* boreholes* protected dug wells...

|valign="top"| 89% (2008)
|-
! style="text-align:left; vertical-align:top;"|Access to improved sanitation

Improved sanitation

According to the Joint Monitoring Programme for Water Supply and Sanitation by the World Health Organization and UNICEF the following are considered as "improved" sanitation:* connection to a public sewer* connection to a septic system* pour-flush latrine...

Water metering

Water metering is the process of measuring water use through water meters.- Prevalence :Water metering is common for residential and commercial drinking water supply in many countries, as well as for industrial self-supply with water. However, it is less common in irrigated agriculture, which is...

|valign="top"| 90% (2004)
|-
! style="text-align:left; vertical-align:top;"|Share of collected wastewater treated
|valign="top"| 52% (2006)
|-
! style="text-align:left; vertical-align:top;"|Annual investment in WSS
|valign="top"| about US$ 10 / capita (2006) in urban areas.
|-
! style="text-align:left; vertical-align:top;"|Share of self-financing by utilities
|valign="top"| close to zero
|-
! style="text-align:left; vertical-align:top;"|Share of tax-financing
|valign="top"| about 35% (from city budgets)
|-
! style="text-align:left; vertical-align:top;"|Share of internal debt financing
|valign="top"| 55-60%
|-
! style="text-align:left; vertical-align:top;"|Share of foreign financing
|valign="top"| 5-10%
|-
! style="text-align:center; background:lightblue;" colspan="3"|Institutions
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! style="text-align:left; vertical-align:top;"|Decentralization to municipalities
|valign="top"| Full
|-
! style="text-align:left; vertical-align:top;"|National water and sanitation company
|valign="top"| No
|-
! style="text-align:left; vertical-align:top;"|Water and sanitation regulator
|valign="top"| No
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! style="text-align:left; vertical-align:top;"|Responsibility for policy setting
|valign="top"| The Ministry of Housing and Urban-Rural Development (until 2008 the Ministry of Construction) for urban water supply; Ministry of Health for rural water supply; Ministry of Water Resources for Water Resources Management
|-
! style="text-align:left; vertical-align:top;"|Sector law
|valign="top"| No
|-
! style="text-align:left; vertical-align:top;"|Number of urban service providers
|valign="top"| 41,663 (including small towns)
|-
! style="text-align:left; vertical-align:top;"|Number of rural service providers
|valign="top"| n/a
|}

Water supply

Water supply

Water supply is the provision of water by public utilities, commercial organisations, community endeavours or by individuals, usually via a system of pumps and pipes...

and sanitation

Sanitation

Sanitation is the hygienic means of promoting health through prevention of human contact with the hazards of wastes. Hazards can be either physical, microbiological, biological or chemical agents of disease. Wastes that can cause health problems are human and animal feces, solid wastes, domestic...

in China

People's Republic of China

China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

is undergoing a massive transition while facing numerous challenges such as rapid urbanization, a widening gap between rich and poor as well as urban and rural areas. Water scarcity, contamination and pollution also pose great challenges.

Much has been achieved during the past decades in terms of increased access to services, increased municipal wastewater treatment, the creation of water and wastewater utilities that are legally and financially separated from local governments, and increasing cost recovery as part of the transformation of the Chinese economy

Economy of the People's Republic of China

The People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...

to a more market-oriented system. The government quadrupled investments in the sector during the Eleventh Five-Year Plan (2006–10).

Nevertheless, much remains to be achieved. According to survey data analyzed by the Joint Monitoring Program for Water and Sanitation of WHO

Who

Who may refer to:* Who , an English-language pronoun* who , a Unix command* Who?, one of the Five Ws in journalism- Art and entertainment :* Who? , a 1958 novel by Algis Budrys...

and UNICEF, about 100 million Chinese still did not have access to an improved water source

Improved water source

in 2008, and about 460 million did not have access to improved sanitation

Improved sanitation

. Progress in rural areas appears to lag behind what has been achieved in urban areas.

Access

Access to an improved water source

Improved water source

and improved sanitation

Improved sanitation

has increased significantly in China

People's Republic of China

over the past two decades in parallel with economic growth. Between 1990 and 2008 alone more than 450 million Chinese gained access to an improved water source, based on estimates by the Joint Monitoring Program for Water Supply and Sanitation of the WHO

Who

Who may refer to:* Who , an English-language pronoun* who , a Unix command* Who?, one of the Five Ws in journalism- Art and entertainment :* Who? , a 1958 novel by Algis Budrys...

and UNICEF that are based on household survey data. Access to an improved water source was 89% and access to improved sanitation was 55% in 2008. Having access to an improved water source, however, is not the same as having access to safe water. Many of those who have access to adequate infrastructure suffer from poor water quality due to fecal contamination; high levels of naturally occurring fluoride, arsenic, or salts; and growing industrial and agricultural chemical pollution. Furthermore, seasonal water shortages occur.

		Urban (43% of the population)	Rural (57% of the population)	Total
Water	Improved water source	98%	82%	89%
	House connections	96%	76%	83%
Sanitation	Improved sanitation	58%	52%	55%
	Sewerage	n/a	n/a	n/a

Source: WHO/UNICEF Joint Monitoring Program for Water and Sanitation 2008 estimates for China

According to these figures, about 100 million Chinese did not have access to an improved source of water supply, and about 460 million did not have access to improved sanitation. Moreover, as in many other developing countries, there is a significant gap between urban and rural areas. For example, in urban areas of China 96% have access to piped water supply, while the share in rural areas is only 76%. The magazine The Economist

The Economist

The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...

described the urban-rural gap in the following stark terms: "The reforms that Deng Xiaoping

Deng Xiaoping

Deng Xiaoping was a Chinese politician, statesman, and diplomat. As leader of the Communist Party of China, Deng was a reformer who led China towards a market economy...

first launched in China's countryside 30 years ago have now left its peasants in the ditch." It also observed that "the income disparity between China's richtest few and poorest many would make many a modern capitalist blush."

Water supply

According to the World Bank about 13% of urban water users receive water at inadequate pressure. Furthermore, 60% of China's 661 cities face seasonal water shortage, and over 100 cities have severe water constraints. Contamination of drinking water from feces

Feces

Feces, faeces, or fæces is a waste product from an animal's digestive tract expelled through the anus or cloaca during defecation.-Etymology:...

is a critical health problem in China, as in other developing countries, that causes serious illnesses such as diarrhea

Diarrhea

Diarrhea , also spelled diarrhoea, is the condition of having three or more loose or liquid bowel movements per day. It is a common cause of death in developing countries and the second most common cause of infant deaths worldwide. The loss of fluids through diarrhea can cause dehydration and...

and viral hepatitis

Hepatitis

Hepatitis is a medical condition defined by the inflammation of the liver and characterized by the presence of inflammatory cells in the tissue of the organ. The name is from the Greek hepar , the root being hepat- , meaning liver, and suffix -itis, meaning "inflammation"...

. A recent survey by UNICEF in 11 provinces found that over half of all drinking water samples contained unacceptably high levels of bacteria.

Wastewater treatment

It has been estimated that in 2006 there was sufficient capacity to treat 52% of municipal residential wastewater. By June 2010 there were 1519 municipal wastewater treatment plants in China and 18 plants were added each week. Many existing plants are being expanded and upgraded to include a tertiary treatment stage for nutrient removal to comply with more stringent discharge standards introduced in 2002. In terms of technologies, in 2007 the most commonly used technologies were various forms of activated sludge

Activated sludge

Activated sludge is a process for treating sewage and industrial wastewaters using air and a biological floc composed of bacteria and protozoans.-Purpose:...

, including oxidation ditches (24% of all plants), sequencing batch reactor

Sequencing batch reactor

Sequencing batch reactors or sequential batch reactors are industrial processing tanks for the treatment of wastewater. SBR reactors treat waste water such as sewage or output from anaerobic digesters or mechanical biological treatment facilities in batches...

s (11%), conventional activated sludge (5%) and membrane bioreactor

Membrane bioreactor

Membrane bioreactor is the combination of a membrane process like microfiltration or ultrafiltration with a suspended growth bioreactor, and is now widely used for municipal and industrial wastewater treatment with plant sizes up to 80,000 population equivalent Membrane bioreactor (MBR) is the...

s. In small communities plants using only primary treatment were still common (15% of all plants). An analysis by the Ministry of Construction in 2004 showed that, according to treatment plant records, most plants operated in compliance with discharge standards.

Links to water resources

Man-made pollution, natural contamination and water scarcity all affect the provision of drinking water. For more details see: Water resources of China

Water resources of China

The water resources of China are abundant on average, but are scarce in some regions. About 80% of all water resources are in one river basin, the Yangtze. Water is scarce around Beijing, where groundwater is overexploited. Agriculture is the major water user accounting for 78% of water use...

and China water crisis

China water crisis

The Chinese water crisis threatens the stability and prosperity not only in People's Republic of China but globally as well, according to John McAlister from the film Aquabiotronics. According to the World Bank forecast, Mainland China has only a per-capita share of 2700 cubic meters per annum,...

Links to poverty, health and hygiene

Health problems caused by the lack of safe water are exacerbated by poor sanitary conditions, especially in rural China. Traditionally, Chinese households collect human waste and transport it to the fields for use as fertilizer, often without further treatment. Latrine

Latrine

A latrine is a communal facility containing one or more commonly many toilets which may be simple pit toilets or in the case of the United States Armed Forces any toilet including modern flush toilets...

s are common in rural areas. Some are rudimentary, being unprotected from flies and other disease vectors, while others are odorless and insect-free. Composting toilet

Composting toilet

A composting toilet is a dry toilet that using a predominantly aerobic processing system that treats excreta, typically with no water or small volumes of flush water, via composting or managed aerobic decomposition...

s that promise high rates of pathogen

Pathogen

A pathogen gignomai "I give birth to") or infectious agent — colloquially, a germ — is a microbe or microorganism such as a virus, bacterium, prion, or fungus that causes disease in its animal or plant host...

destruction are common. The availability of public and school latrines in rural areas that met sanitary standards was low in the late 1990s.
The government has made a concerted effort to promote good health-related behaviors. In most rural areas, a network of National Patriotic Health Campaign Committee (NPHCC) workers, the All-China Women's Federation

All-China Women's Federation

The All-China Women's Federation is an organization of women established in China in March 1949. It was constructed as a mass organization supported by the Communist Party of China, and based on Marxist theory...

representatives, the Communist Youth League of China, local epidemic prevention stations, and schools have led health education

Health education

Health education is the profession of educating people about health. Areas within this profession encompass environmental health, physical health, social health, emotional health, intellectual health, and spiritual health...

campaigns encouraging a wide array of hygienic behaviors

Hygiene

Hygiene refers to the set of practices perceived by a community to be associated with the preservation of health and healthy living. While in modern medical sciences there is a set of standards of hygiene recommended for different situations, what is considered hygienic or not can vary between...

. That work, combined with a high literacy rate (even in poor areas), has led to widespread knowledge of many basic health behaviors, such as the importance of drinking boiled water. However, actual behavioral change has been slow to follow, especially in poor areas where fuel may be scarce and understanding of the link between raw water or unwashed hands and diarrhea

Diarrhea

is tenuous. Thus, the problem is more one of the effectiveness of health messages than of their dissemination: In the late 1990s health education in most rural areas provided little concrete information to link hygienic behavior to improved health, and most provinces still lacked specialized health education training. As a result, significant disparities exist between poorer and wealthier rural counties, both among and within provinces in China. While a number of wealthier and middle-income rural counties have experienced tremendous health-related benefits as a result of improvements in water supply and sanitation, poorer counties with more limited resources have yet to receive similar benefits.

Responsibility for water supply and sanitation

Responsibility for water supply and sanitation policies at the national level is shared between five Ministries. Provincial governments play a relatively limited role in the sector, providing some limited financing for rural water supply. Local government plays a major role, providing a substantial share of financing and owning water supply and sanitation companies that are the main service providers in urban areas. In smaller towns local government sometimes provides services directly. Village committees operate water systems in rural areas.

To a large extent the institutional structure of the sector has been inherited from the period of the planned economy before 1978. There are overlaps in responsibilities between public institutions at the central and local level, as well as between various Ministries. There are also no clear definitions of what terms like "supervision" and "management" that are mentioned in the legislation mean, so that "often the departments in charge cannot tell the differences themselves".

Policy and legal framework

The national government does not have a single policy document for water supply and sanitation. The two major laws in the water sector relate to water resources management: the Water Law of 2002 and the Water Pollution Prevention and Control Law of 1984.

The legal framework for water supply and sanitation at the national level is constituted by secondary legislation, of which the 1994 regulation of urban water supply, the 1996 administrative measures for the sanitary supervision of drinking water and the 2006 sanitary standards for drinking water are among the most important ones. It is complemented by numerous local regulations and administrative measures.

Water supply and sanitation

It is the government’s policy to fully recover costs for water supply and sanitation through user fees, and that water tariffs should be volumetric. The Ministry of Housing and Urban-Rural Development (until 2008 the Ministry of Construction) oversees financing for urban water and sanitation infrastructure as well as policies concerning the regulation of water and sanitation utilities. Some important policy papers it has issued are “Accelerating the Marketization of Public Utilities” (No.272 Policy Paper of the MOC, 2002), the “Measure on Public Utilities Concession Management” (No.126 Policy Paper of the MOC, 2004), and the “Opinions on Strengthening Regulation of Public Utilities” (No.154 Policy Paper of the MOC, 2005). However, there is no law concerning the regulation of public utilities or private sector participation in the sector. The Ministry of Health has attributions related to the promotion of rural water supply and sanitation.

Water resources management

The responsibility for water resources management is split between a number of entities at the national and local level. At the national level

the Ministry of Water Resources
Ministry of Water Resources
Ministry of Water Resources may refer to:* Ministry of Water Resources of the People's Republic of China, government department of China;* Ministry of Water Resources , a government department of Ethiopia;...

is responsible for surface water management, with a focus on quantitative aspects,
the Ministry of Environmental Protection
Ministry of Environmental Protection of the People's Republic of China
The Ministry of Environmental Protection of the People's Republic of China , formerly State Environmental Protection Administration , is a cabinet-level ministry in the executive branch of the Chinese Government . It replaced the SEPA during the March 2008 National People's Congress sessions in...

(formerly the State Environmental Protection Agency, SEPA) has the responsibility to manage the quality of water resources, and
groundwater falls within the realm of the Ministry of Land and Resources.

Nevertheless, the Ministry of Water Resources and its affiliated river basin commissions in all major river basins are key players in water resources management. The Water Law of 2002 emphasizes demand management and water quality protection and thus paves the way for a transition from a development phase focused almost exclusively on infrastructure development to a phase where more appropriate attention is being devoted to the management and protection of water resources.

In addition to water resources management, the Ministry of Water Resources is also in charge of the construction of some major water infrastructure such as dams, embankments, irrigation infrastructure and bulk conveyors for municipal and industrial water supply. According to its website it is also responsible for the “provision of recommendations on economic regulation of water pricing, taxation, credit and financial affairs” as well as “coordination of capital construction of (…) water supply for townships and villages”, although in practice these functions seem to be carried out by other entities.

Service provision

In order to understand the institutional responsibilities for water supply and sanitation in China, it may be helpful to provide a brief overview of the administrative divisions of China:

33 province-level (省级 shěngjí) divisions, including 22 provinces, five autonomous regions, four municipalities(Beijing
Beijing
Beijing , also known as Peking , is the capital of the People's Republic of China and one of the most populous cities in the world, with a population of 19,612,368 as of 2010. The city is the country's political, cultural, and educational center, and home to the headquarters for most of China's...

, Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...

, Tianjin
Tianjin
' is a metropolis in northern China and one of the five national central cities of the People's Republic of China. It is governed as a direct-controlled municipality, one of four such designations, and is, thus, under direct administration of the central government...

and Chongqing
Chongqing
Chongqing is a major city in Southwest China and one of the five national central cities of China. Administratively, it is one of the PRC's four direct-controlled municipalities , and the only such municipality in inland China.The municipality was created on 14 March 1997, succeeding the...

), and two special administrative regions.
333 prefecture-level divisions
Prefecture-level city
A prefectural level city , prefectural city or prefectural level municipality is an administrative division of the People's Republic of China, ranking below a province and above a county in China's administrative structure. Prefectural level cities form the second level of the administrative...

(地级 dìjí)
2872 county-level divisions
County-level city
A county-level city is a county-level administrative division of mainland China. County-level cities are usually governed by prefecture-level divisions, but a few are governed directly by province-level divisions....

(县级 xiànjí) (sometimes called “districts”)
41,636 township-level (乡级 xiāngjí) divisions

For details: Administrative divisions of the People's Republic of China

China also has 661 designated cities, which do not constitute separate administrative units. Each municipality, prefecture and county includes urban and rural areas. 4 cities are capitals of municipalities, 283 cities are capitals of prefectures

Prefecture-level city

A prefectural level city , prefectural city or prefectural level municipality is an administrative division of the People's Republic of China, ranking below a province and above a county in China's administrative structure. Prefectural level cities form the second level of the administrative...

, and 374 are capitals of counties

County-level city

A county-level city is a county-level administrative division of mainland China. County-level cities are usually governed by prefecture-level divisions, but a few are governed directly by province-level divisions....

. In 2005 340 million people, or about 25% of China's population, lived in designated cities, each of which had a population of at least 200,000. The remaining urban population of about 200 million, or about 15% of the total population, lives in smaller towns that are either among the smaller prefecture-level capitals (96 million) or townships (100 million).

In an article on rural China the magazine The Economist

The Economist

wrote that many Chinese experts believe that basic infrastructure should be funded by provinces or the central government: "That done, prefecture and township governments could be massively trimmed or eliminated altogether."

Urban areas

Overview Urban water supply in China is the responsibility of "cities" under complex arrangements that differ substantially from one city to the other. The term "City" has a dual and confusing meaning in China. It is used here to refer to the main urban area of a municipality, prefecture or county. Cities are governed by a "leading group" under the leadership of a mayor, who is assisted by various "bureaus", or departments. Services are usually provided by municipally-owned water companies and wastewater companies (sometimes referred to as utilities

Public utility

A public utility is an organization that maintains the infrastructure for a public service . Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies...

despite the relatively limited autonomy that these companies enjoy). Water and wastewater companies are typically separate from each other. In larger cities, services are further unbundled: There may be a separate raw water company that transports water from far-away sources and sell it to the municipal water company for distribution. Likewise on the wastewater side, larger cities may have several district drainage companies in charge of parts of the city, a wastewater company in charge of the main collectors, and a third company in charge of wastewater treatment.

In some cities the various companies are under the same "parent bureau", which may be the construction bureau or a water bureau, while in other cities the water company and the wastewater company report to different bureaus. In 2006 88% of the urban population was served by "utilities", up from 50% in 1990. Especially in smaller cities the county administration provides services directly.

Examples To take an example of a very large city, in Shanghai

Shanghai

Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...

the Water Division of the Shanghai Urban Construction Investment Development Corporation provides services. The Water Division includes a raw water company, five water companies, one sewage management company, three engineering companies and two construction companies. It serves 12 million people. In Tianjin

Tianjin

' is a metropolis in northern China and one of the five national central cities of the People's Republic of China. It is governed as a direct-controlled municipality, one of four such designations, and is, thus, under direct administration of the central government...

the Tianjin Water Supply Group provides services. It recently divested itself from numerous side businesses to focus on its core business. Since 1997 it has cooperated with international companies such as Vivendi

Vivendi

Vivendi SA is a French international media conglomerate with activities in music, television and film, publishing, telecommunications, the Internet, and video games. It is headquartered in Paris.- History :...

in a bulk water supply Build-Operate-Transfer

Build-Operate-Transfer

Build-own-operate-transfer or build-operate-transfer is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract...

(BOT) contract.

Private sector participation

Private sector participation in financing infrastructure and managing services is widespread. In 2007 there are over 50 water projects and well over 100 wastewater projects in China with private sector participation.

BOT contracts. Its most common form are Build-Operate-Transfer

Build-Operate-Transfer

(BOT) contracts where the private sector is in charge of large upstream or downstream infrastructure without being directly involved in serving users. Experience with BOT contracts has been mixed. For example, the local government of Lianjiang

Lianjiang

Lianjiang is a suburban county of Fuzhou on the coast of Fujian Province, China. Most of the county is controlled by the People's Republic of China , while a number of outlying islands, collectively referred to as the Matsu Islands, are administered as a separate Lienchiang County by the Republic...

had the 100,000 m3/day Tangshan water treatment plant built by SUEZ

SUEZ

Suez S.A. was a leading French-based multinational corporation headquartered in the 8th arrondissement of Paris, with operations primarily in water, electricity and natural gas supply, and waste management. Suez was result of a 1997 merger between the Compagnie de Suez and Lyonnaise des Eaux, a...

under a BOT contract in 1999. However, the water demand had been grossly overestimated, so that the plant lay idle while the local government had to pay for substantial minimum volumes without using them, which evidently pushed up tariffs. After lengthy negotiations the local government finally bought back the plant in 2009.

Shenzhen concession. According to a study by the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

, the city of Shenzhen

Shenzhen

Shenzhen is a major city in the south of Southern China's Guangdong Province, situated immediately north of Hong Kong. The area became China's first—and one of the most successful—Special Economic Zones...

is leading the reform of local water management in China. Inspired by the experience of the water utility in nearby Hongkong, it was one of the first cities in the country that has combined all water-related government functions into one government agency in 2001. Furthermore regulatory and operative functions were separated. In 2003 the first concession for municipal public utilities in China was bid out in Shenzhen. The 30-year concession was won by the French firm Veolia and its Chinese partner Capital Water. Together with the State Council Committee for the Regulation and Management of State owned property, which holds 55% of the shares of a newly created Joint Venture

Joint venture

A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...

called Shenzhen Water, Veolia holds 25% and Capital Water 20% of the shares. The Joint Venture was approved at the national level by the Ministry of Commerce. In 2009 Shenzhen Water was the largest water supply and sanitation enterprise in the country. The wastewater treatment sector in Shenzhen has developed rapidly since the reform of 2001. The sewage treatment rate in the Shenzhen Special Economic Zone

Shenzhen Special Economic Zone

Shenzhen Special Economic Zone , established in May 1980, is the first special economic zone in the People's Republic of China...

has increased from 56% during pre-integration to over 88% in 2008, ranking first among large and medium-sized cities in China. The Asian Development Bank called the Shenzhen case "a model for market-oriented reform in the urban water sector". In 2008 the Shenzhen Water Group had expanded and invested in 17 water projects in 7 provinces. The $40 million equity stake of Veolia is covered by a 15-year MIGA guarantee to protect against the risk of expropriation.

Rural areas

In rural areas, village committees which are community-based organizations, provide services. Its members operate the systems without remuneration. In terms of rural sanitation, human excreta are systematically used as manure for fertilising crops and vegetables. In many houses, the excreta of all family members are collected in buckets over the course of five to seven days, and then taken to the field and applied raw in the crops. The practice is an age old tradition and of enormous economic value in terms of agricultural production.

NGOs

There is little information on activities by NGOs in water supply and sanitation in China. An Association for Rural Water Supply and Sanitation provides training, information exchange, technical assistance and undertakes research. In terms of foreign NGOs, the NGO Plan

Plan (aid organisation)

Plan is a global children’s charity which operates in 48 countries across Africa, Asia and the Americas. It is made up of 21 national organisations responsible for raising funds and awareness in their respective countries...

, for example, works in China. It is known for having introduced for the first time the concept of Community Led Total Sanitation in China in Puchang County in Shaanxi

Shaanxi

' is a province in the central part of Mainland China, and it includes portions of the Loess Plateau on the middle reaches of the Yellow River in addition to the Qinling Mountains across the southern part of this province...

in 2005.

Massive investment program for wastewater treatment

Over the past 20 years China has engaged in what is possibly the largest program to build wastewater treatment

Wastewater Treatment

Wastewater treatment may refer to:* Sewage treatment* Industrial wastewater treatment...

plants in history. Despite the substantial achievements of this program, many challenges remain.

Achievements Until the early 1980s there was no single municipal wastewater treatment plant in China. Only then the country’s first municipal wastewater treatment plant was built in the city of Nanjing

Nanjing

' is the capital of Jiangsu province in China and has a prominent place in Chinese history and culture, having been the capital of China on several occasions...

. Subsequently China engaged in what possibly is the largest wastewater treatment

Wastewater Treatment

Wastewater treatment may refer to:* Sewage treatment* Industrial wastewater treatment...

investment program in history. It has been estimated that in 2006 there was sufficient capacity to treat 52% of municipal residential wastewater. According to the State Environmental Protection Agency the rate of urban wastewater treatment even reached 57% in the same year. In any case, the government's goal to achieve a level of 60% for treatment of municipal wastewater by 2010 will probably be reached even earlier. Between 2001 and 2004 the number of cities that charge wastewater tariffs has increased from 300 to 475 out of 661 cities.

Remaining challenges However, in the rush to construct planning mistakes were made. Demand was overestimated, the construction of sewerage

Sanitary sewer

A sanitary sewer is a separate underground carriage system specifically for transporting sewage from houses and commercial buildings to treatment or disposal. Sanitary sewers serving industrial areas also carry industrial wastewater...

lagged behind the construction of treatment plants, designs were sometimes inappropriate, there was no requirement for pre-treatment of industrial effluents thus affecting the effectiveness of treatment processes, and the sites chosen for the first priority investments within a river basin were not always those where the highest impact could have been achieved in terms of improving river water quality. As a result, many plants are underutilized or poorly functioning. According to the Ministry of Construction, more than 50 wastewater treatment plants in more than 30 cities operated at only 30 percent of their capacity or did not even come into operation. Consequently, the impact of the investment program on the water quality in rivers and coastal waters has been limited.

During the 1990s municipal and industrial water use actually declined because of low increases of connection rates to utilities because of underestimation of the importance of small-scale water providers, increased tariffs, increased metering, industrial restructuring, measures to increase the efficiency of water use in industries, as well as due to water scarcity and drought. Many Chinese water and wastewater companies have overcapacities and are in financial difficulties because the revenues are insufficient to cover the servicing of the debt contracted to build the oversized infrastructure.

Transition to commercial utilities

In 2002 the Ministry of Construction issued a policy paper on the commercialization of public utilities. Subsequently, in October 2003 the central government decided that state-owned enterprises had to separated from Ministries and/or provincial governments and had to be commercialized. Competitive bidding for contracts, private sector participation and commercial financing are important element in the transition to a market economy. In the 1990s the first BOT

Build-Operate-Transfer

contracts were signed for wastewater treatment plants. More than 200 wastewater treatment plants were built with some form of private sector participation in their financing and/or management, usually using the BOT formula. Early BOTs saw governments implementing the process without the benefit of financial, legal, and technical advisers, finding to their chagrin that the process becomes more complex in the absence of expert knowledge. Learning from the experience of past BOTs in the sector, local governments sought expert advice on bidding and public tender. In about 2000 for the first time a BOT water project (Chengdu

Chengdu

Chengdu , formerly transliterated Chengtu, is the capital of Sichuan province in Southwest China. It holds sub-provincial administrative status...

No. 6 Water Supply Plant) was awarded on the basis of transparent international competitive bidding, with support from the ADB

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

. In 2004 a landmark international competitive bid for the entire water supply and sanitation system of Shenzhen was won by a joint venture including the French firm Veolia.

Efficiency

There are many different indicators for utility efficiency. In the case of China some indicators, such as labor productivity, suggest a low level of operational efficiency, while other indicators - such as non-revenue water - suggest a high level of operational efficiency.

Labor productivity Most water and sanitation utilities in China have a low labor productivity and are overstaffed. For example, many utilities in small towns in Henan province have more than 20 employees per 1000 connections, while international good practice is less than 4 employees per 1000 connections. In Chengdu

Chengdu

Chengdu , formerly transliterated Chengtu, is the capital of Sichuan province in Southwest China. It holds sub-provincial administrative status...

the utility employed 34 employees per 1000 connections, while in Shanghai the ratio was less than 6 employees per 1000 connections.

Non-revenue water Non-revenue water

Non-revenue water

Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses or apparent losses . High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself...

(NRW) - consisting mainly leakage losses in the distribution network - are estimated by the Chinese Waterworks Association to be only 20% on average and less than 10% for the best utilities, which is very low by international standards. The International Benchmarking Network for Water and Sanitation Utilities estimated the non-revenue water for a sample of Chinese water utilities at 27% in 2006 and 21% in 2001.

One explanation for the relatively low level of NRW may be that most Chinese live in dense apartment complexes, which results in compact distribution systems. In some smaller cities non-revenue water remains relatively high. For example, average non revenue water in small towns in Henan province is 38%.

Tariffs and cost recovery

Cost recovery for water and sanitation services paradoxically is lower in urban areas, while it is higher in rural areas, despite the lower incomes of rural residents.

Urban areas

Overview Many urban water and wastewater utilities in China experience financial stress, because user fees are set well below cost recovery levels and government subsidies are insufficient to cover the resulting gap. In 2004 60% of urban water utilities reported negative net incomes. The financial situation of wastewater utilities is expected to be even more precarious. Tariffs have increased by 50% since 1998 and now stand at 1.5 RMB/m3 or US$ 0.20/m3. These rates are insufficient to cover costs.

Until the 1980s urban water tariffs in China were very low and sewer tariffs were practically unknown. This has changed substantially since the adoption of National Guidelines on Urban Water Tariffs in 1988, which called for increased cost recovery and for the introduction of sewer tariffs. Subsequently water tariffs have been increased substantially in many Chinese cities, particularly in the north where water is scarcest. However, according to the Ministry of Construction, water tariff reforms have not been effective enough to offer the necessary incentives to save water. While many cities now have sewer tariffs, in 2005 there were more than 150 cities across the country where no wastewater treatment fee was collected.

China has a policy of universal metering, including metering of individual households in apartment complexes, where most urban residents live. Metering in urban areas is now relatively widespread with an average of 90% connections being metered. Some cities are experimenting with pre-paid debit cards that residents must put into their meters in order to receive service.

Tariff structure are complex, with different tariffs for different categories of users and higher tariffs charged to industrial and commercial users than to residential users. Most water tariffs are linear, i.e. there is a single price per unit of water, although there are some increasing-block tariffs where the unit price increases with consumption. Urban tariffs are approved by Price Bureaus of cities, after considerable prior negotiation. Tariffs do not require approval from a higher level of government.

Examples In Tianjin

Tianjin

, where water tariffs had not been raised once between 1949 and 1985, they have been raised eight times until 2006. As a result, cost recovery has improved significantly. In Chengdu

Chengdu

Chengdu , formerly transliterated Chengtu, is the capital of Sichuan province in Southwest China. It holds sub-provincial administrative status...

the average water tariff was US$ 0.14/m3 in 2001. Despite the relatively low water tariff the utility's revenues were twice as high as recurrent costs, allowing for a significant share of self-financing. In Shanghai the average water tariff was only US$ 0.10/m3 in 2001. The utility did not even recover its recurrent cost and had an operating loss.

Rural areas

In rural areas, according to the World Bank users pay about 75% of investment costs and 100% of operation and maintenance costs. Rural tariffs do not need to be approved.

Investment level and breakdown

Investments in the sector have than tripled over the past years. Accodring to the World Bank, in 1991–2005 a total of US$ 54bn was invested in urban water supply and sanitation, equivalent to only US$ 3.7bn per year. During the 11th Five Year Plan in 2006–10 almost almost US$ 11bn per year are expected to be invested in the sector, thus investing in five years as much as had been invested in the previous fifteen years. More than 60% of these investments are targeted at sanitation, reflecting the backlog in that sector. Figures for rural areas are not available.

Financing

Urban areas The World Bank estimates that urban water and wastewater infrastructure in China has been financed from the following sources in 1991–2005:

	Water	Wastewater
Municipal governments	20-30%	40-50%
Domestic banks	20-30%	10-20%
State bond program	10-20%	20-30%
Private sector	10-20%	10-20%
China Development Bank China Development Bank The China Development Bank is a financial institution in the People's Republic of China under the direct jurisdiction of the State Council. It is the only bank in China whose governor is a full minister...	10%	5%
International Financial Institutions	5%	10%

Source: World Bank

World Bank

The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

:Stepping up - Improving the performance of China's urban water utilities, by Greg Browder et al., 2007, p. 108

Municipal governments provide their financing in the form of equity that typically is not remunerated. The other forms of financing require a remuneration either in the form of interests on loans or profits on private equity. It should be noted that local governments in China are not allowed to borrow directly. Municipally owned utility companies, however, are allowed to borrow from the China Development Bank

China Development Bank

The China Development Bank is a financial institution in the People's Republic of China under the direct jurisdiction of the State Council. It is the only bank in China whose governor is a full minister...

, other Chinese banks, the state bond program and international financial institutions. The State bond program is geared at less economically developed regions. The bonds are issued by the Ministry of Finance, and then distributed by the National Development and Reform Commission

National Development and Reform Commission

The National Development and Reform Commission , formerly State Planning Commission and State Development Planning Commission, is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy...

as long maturity, low-interest loans, which in some cases may be converted to grants. The major international financial institutions engaged in the sector are the World Bank

World Bank

The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

and the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

, complemented by bilateral donors such as the Japan International Cooperation Agency

Japan International Cooperation Agency

The Japan International Cooperation Agency is an independent governmental agency that coordinates official development assistance for the government of Japan...

(JICA) and the German KfW.

Implicitly, according to this estimate, the level of self-financing by water and wastewater utilities is zero. Nevertheless there clearly will be an upward pressure on tariffs, since 70-80% of water infrastructure and 50-60% of wastewater infrastructure is financed either through debt or private equity that requires a remuneration. The remainder is financed through municipal equity, which typically requires no remuneration and thus helps to keep tariffs low.

Another mechanism to use debt finance are BOTs which are a popular financing mechanism for water and wastewater treatment plants and bulk water supply systems in China. Under BOT

Bot

Bot or BOT may refer to:-Computing:* Bot, another also name for a Web crawler* Bots , an open-source EDI software* BOTS, a computer game* Internet bot, a computer program that does automated tasks...

s private entities undertake investments and recover their costs through fees for bulk water sale or wastewater treatment charged to the utilities. While the local government or utilities are formally not indebted through a BOT, the charges for the services are de facto similar to debt service charges.

Rural areas In terms of rural and small town infrastructure, channeling funds to the final users through the various layers of local government remains a challenge. According to the World Bank, China differs from many other developing countries in that there is not a history of the central government providing large subsidies for the financing of rural water supply and sanitation. Instead, there is greater emphasis on self-reliance with rural people using their own contributions and resources to improve their water supply. This financing structure causes poor rural areas to "accurately match their ability to pay with the proper type of systems and level of service", i.e. to choose sanitation solutions that they can afford. According to the World Bank, as a result, "China is held up as a model for other developing countries". Support for capital costs for water supply is partially provided by the local and/or provincial government. Beneficiaries have to provide upfront capital contributions. Through World Bank financing and central government counterpart financing these upfront capital contributions were reduced, thus making sanitation more affordable to the poor. According to the magazine The Economist

The Economist

"some provinces are now bypassing both the prefectural- and township-level governments in order to get funds more directly to rural areas."

External links

Key sources and further reading

World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

:Stepping up - Improving the performance of China's urban water utilities, by Greg Browder et al., 2007
Fu, Tao, Miao Chang and Lijin Zhong: Reform of China's Urban Water Sector, International Water Association and Water Policy Research Center of Tsinghua University 2008, ISBN 1843391430
World Bank Country Water Resources Assistance Strategy 2002

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Access

Water supply

Wastewater treatment

Links to water resources

Links to poverty, health and hygiene

Responsibility for water supply and sanitation

Policy and legal framework

Water supply and sanitation

Water resources management

Service provision

Urban areas

Private sector participation

Rural areas

NGOs

Massive investment program for wastewater treatment

Transition to commercial utilities

Efficiency

Tariffs and cost recovery

Urban areas

Rural areas

Investment level and breakdown

Financing

See also

External links

Key sources and further reading