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Chapter 13. Institutions and China's long-distance water transfer proposals
James E. Nickum
Department of Asian Studies and Agricultural Economics, Cornell University, New York
THE ENGINEERING aspect is the easiest part of long-distance interbasin water transfer projects such as the proposed mass diversions from the Chang Jiang (Yangtze River). The economic side is somewhat trickier since inter alia major distortions in factor prices make cost-benefit or cost-effectiveness analyses more unreliable than usual. Financial justification is even more difficult, especially during the current period of "readjustment of the national economy" in the People's Republic of China (hereinafter, PRC or China), when new commitments of funds to major investment projects are highly suspect.
The task most arduous of all, however, is that of designing or adapting the rules which are used by people at various levels in the system to allocate present and future water. The interdisciplinary and multitiered character of institutions such as law, administration and management usually leads to their preclusion from project analysis as separate and significant variables. Yet it has become increasingly clear from the experiences of major water projects both within and outside the PRC that how people behave once a project is operating is perhaps the most elusive factor in project design.
The purpose of this chapter is to survey the present state of China's water development and use, focusing on the North China Plain and on institutional problems which should be added to the already extensive agenda for preliminary research on the Chang Jiang diversion proposals: Topics covered are water rights, interprovincial relations and irrigation management.
The character of management depends critically on the formal structure of rules which govern it. The PRC is in the process of making some major institutional changes in its economy. In particular, greater scope is being given to market exchanges and to establishing the legal framework necessary for decentralized economic interchange. In the area of water, however, both the legal and the market mechanisms appear to be relatively weak. Article 6 of the Constitution of the PRC (adopted 5 March 1978) notes only that "water flows (shut liu). . . are the property of the whole people". The trial Environmental Protection Law promulgated in September 1976 calls for "strict management and economizing on industrial, agricultural and domestic water use and rational exploitation of groundwater to prevent the drying up of water sources and the sinking of the ground surface" (Article 1 1). It also provides for the use of economic means of enforcement (fines and rewards) but has no explicit right to redress by injured parties.
Apart from these provisions and a few sundry regulations on irrigation district management, there do not appear to be many legal guidelines to water resource development and use. He Zhi, in a 14 September 1979 article in the national newspaper Guangming Ribao, noted that "in China there is no unified management department governing water resources, nor are there any laws". In consequence, claimed He, the exploitation of China's water is in a state of "anarchy", with water resource management "in a mess, each doing things in his own way".
He Zhi may have overstated the matter, albeit slightly. In practice, China does appear to apply something akin to the appropriative doctrine of water rights ("first in time is first in right") of the western United States. Reports on individual projects indicate that the rights of prior developers and users are observed, although subject to the usual modification of giving priority to domestic water use in times of serious deficiency.
There are also numerous examples in Chinese practice, including the extant diversions from the Chang Jiang into the Lixia He area of Jiangsu Province and from the lower reaches of the Huang He via structures such as the People's Victory Canal, which show that the principle of interbasin transfer is well established. In terms of US legal doctrines this would accord with appropriative rights but would be excluded automatically if water rights were riparian, as m the eastern states.
The present underdeveloped status of water legislation in the PRC actually provides the nation's lawmakers with a great opportunity. Many countries elsewhere have a more developed body of water law, but because it was produced in a fragmented way and is based on multiple doctrines it leads to much confusion and litigation and has become a net hindrance to economic development. China can draw upon the rich experiences abroad, both positive and negative, to produce a more uniform and consistent code of law which is applicable to the economic and institutional conditions of the PRC.
Inasmuch as major interbasin transfers are likely to be a significant feature of China's future water resource development, any uniform doctrines adopted should take into account the necessity to specify the rights and duties of all involved in any such transfer, including the general public. Since water conditions vary considerably, different doctrines can lead to widely disparate economic results by apportioning varying degrees of risk among actual and potential appropriators (such as upstream versus downstream users, or basins of origin versus importing regions). Any assessment of economic benefits accruing to a potential interbasin transfer project must take full account of the likely apportionment of risk, and with it of waters of varying quantities and qualities, among those affected by the transfer.
The specifics of legal doctrine will not be dealt with here. The interested reader may consult the readings in the reference section for recent thinking on legal aspects of water transfers, especially those which are large in scale and affect more than one river basin.
The right of the Chinese central government to construct and direct major water control projects is well established, with historical precedents extending over two millenia. Both of the proposed headworks for Chang Jiang diversion-the Danjiangkou Reservoir in Hubei and the Jiangdu Pumping Stations in Jiangsu-were financed and built by the central government. In addition, there are basin commissions under the Ministry of Water Conservancy for all four basins (the Chang, the Huai, the Huang and the Hai) affected by the proposed diversions.
Nevertheless, the basic administrative unit involved in large-scale water resource development is the province (including the municipalities of Shanghai, Beijing and Tianjin). Provincial autonomy is even stronger in management than in construction. For example, the Jiangdu Project Management Office is under Jiangsu Province, even though the project was built by the centre.
The importance of the province in management is evident in the extremely limited number of interprovincial irrigation districts. The only major district which crosses provincial boundaries is the Bishihang Irrigation District on the upper reaches of the Huai River. Even here, the vast majority of the primary storage and delivery works are in one province, Anhui. The district is directed by a melange of Anhui's provincial and prefectural organs (see below).
In the course of the field tour associated with the East China Water Transfer Symposium, it appeared that divisiveness or mutual separation rather than harmony is the norm in the use of waters affecting more than one province. Tianjin has received an increasingly smaller share of the waters of the Hai River and an increasingly larger share of its pollution. The water delivery systems at Weishan Lake (Shandong and Jiangsu) and Danjiangkou Reservoir (Henan and Hubei) are kept separate even though the main components are shared. The recent controversy over operating procedures at Danjiangkou appears to be linked to a conflict between Hubei, which prefers a low water level for flood control, and Henan, which requires a high water level for its irrigation diversion.
Major interprovincial disputes may be resolved or at least mitigated, much as in the United States, by means of central intervention or by interprovincial compact. Some US economists also advocate the sale and purchase of water and water rights as a means of resolving interstate conflicts (Hirschleifer et al., 1969; Burness and Quirk, 1980). In the past, however, interprovincial pacts have not always been very enforceable in the PRC. For example, with the construction of the Yucheng Reservoir on their shared border in 1960, Henan and Hebei agreed upon a division of the waters of the impounded Zhang River. Following this, Lin County in Henan diverted half of the Zhang River upstream from the reservoir. Hebei responded by constructing a diversion still further upstream. The implication of this incident is that Hebei's rights could not be enforced under the original agreement. This may have been due to the special circumstances of Lin County's diversion, but what guarantees are there that other "special circumstances" will not lead in the future to excessive and antagonistic upstream diversions along an interprovincial water transfer route?
The difficulty of interprovincial coordination must be taken into account in the proposed Chang Jiang transfers, either of which involves several provinces. A few helpful insights into the possible interjurisdictional problems confronting a major Chang Jiang diversion can be gained, however, from the experience of the United States. Although there are transfers between basins as well as between states, there are as yet no interbasin transfers into a state lying entirely outside the basin of origin. There are many proposals for such transfers, including the Pacific Southwest Water Plan, the North American Water and Power Alliance and the Texas Water Plan. None of these, though, is likely to be built in the foreseeable future. One major reason for this is that "because the out-of-basin state has no 'legal' claim to a river beyond its borders, its bargaining position in apportionment compact negotiations with basin states is weakened" (Johnson, 1971).
If the diversions from the Chang Jiang of 1,000 to 2,000 cubic metres per second are sufficient to satisfy all demands in the benefited area but not enough to alter water use or water quality (e.g., through seawater intrusion) in the Chang Jiang basin of origin, the above problems of allocation will not arise to any significant degree. That level of abundance is unlikely to occur, however, especially if present levels of farmland water application are maintained. This brings us to the final and perhaps most important institutional topic.
A close investigation of the sources of any deficiencies in irrigation management should be an intergral part of the preparatory work for any future water transfer project, for the following reasons:
(1) An examination of the present state of management and of
institutionbased blockages to good management is necessary in
order to assess the desirability of new construction over
improvements in existing technical, organizational and incentive
(2) Many very complex management problems will confront a project as large as either proposed diversion. It will be especially difficult to forge harmonious linkages between the operation of the primary structures and that of the secondary and tertiary systems. The total management structure will depend heavily upon the existing water-allocating institutions and on the overall design of the project, including the ancillaries, down to the field level. At the same time, the project design should take into account the nature of the management structure at all levels which will be used in its operation.
(3) A realistic assessment should be made of the likely deleterious impacts of the introduction of a large amount of new water-in particular, the spread of secondary salinization due to excess application and improper drainage- and the management reforms necessary to mitigate such harmful side-effects.
The general consensus in China appears to be that the level of irrigation management is seriously inadequate. There has been a standing criticism in the literature of "emphasizing construction to the neglect of management"(zhong jian, qing guan) and "only grasping construction without regard for effectiveness" (zhi zhua jianshe, bu wen xinoyi). A Readmit Ribao (People's Daily) editorial on 13 December 1963 estimated that as much as 6.7 million hectares could be added to the area irrigated and drained by existing projects. More recently, agronomists in Henan claimed that the necessary ancillary projects had not been added to 10 large reservoirs built in the 1950s or to the more recently installed 110,000 tubewells, leaving the province's irrigated acreage 2.7 million hectares below its potential (FBIS, 12 March 1979).
A number of the problems of managing a large irrigation district on the North China Plain are touched upon in a particularly revealing recent glimpse into the Bishihang Irrigation District. With a designed control area of 730,000 hectares, this district is one of the largest in the PRC, although it covers only about one-sixth the area to be irrigated by either proposed transfer route. At present, just 530,000 hectares receive any water from the project and only half the designated area is considered to have guaranteed irrigation. The reasons for this underperformance are cited as follows:
Because the ancillary projects have not been completed in a long time, the masses, anxious to use water, have opened "indigenous cuts in the banks" (tu kouzi) to divert water and they convey water by means of "indigenous drops" and "indigenous chutes". The action of the water broadens these indigenous bank cuts and the water intake becomes greater and greater. A large amount of unused water flows from field to field over the levees and is totally wasted. The communes and brigades have privately added to some of the ancillary projects which have already been built in a way which is quite irrational and has damaged some projects....
Another important factor inhibiting the full development of irrigation is improper management .... The management system of the irrigation district has changed numerous times. . . At present, the Longhekou Reservoir is managed by the Provincial Water Conservancy Department, four (other) major reservoirs. . . are managed by the Provincial Office of Electrical Power, the right to release water from the reservoirs is in the hands of the Provincial Flood and Drought Prevention Headquarters, and the irrigation district is managed by the Bishihang Irrigation District General Management Office but actual management is done by Linan Prefecture on behalf of the general management office. Clearly, there is no unified, authoritative, sound management for the irrigation district as a whole, making it impossible to do a good job of managing this kind of large-scale irrigation district. Technical personnel are lacking and some canal structures and projects have no one to manage them once they have been brought into service. The people who do manage some of the projects actually damage them because they do not understand their technology (Li and Zhang, 1980).
More general symptoms of management deficiencies, focusing on the East Route but not exclusive to it, cited by our colleagues at the East China Water Transfer Symposium and in the literature we acquired in the course of our investigations, include the following:
(1) Those in the upper reaches use too much water, while those
in the lower reaches do not receive enough.
(2) Good results are achieved in experimental areas, but the peasants do not adopt the methods developed there. In particular, they tend to feel that field drainage facilities are too expensive.
(3) There are too few irrigation management personnel for the area covered, and they are inadequately funded. Technical capabilities are weak at the county and village level. Repairs are frequently not made in time.
(4) Human actions and inactions have led to the spread of secondary salinization in some parts of the North China Plain due to the raising of the water table. Among factors involved are the following:
(a) Because of the lack of ancillaries, improper design, poor
construction, uneven land, flood irrigating techniques and
seepage, the effective rate of utilization of canal systems is
very low, usually below 0.4 for a new irrigation district.
Seepage along the main and branch canals is particularly serious,
although field losses are also significant (IFI, 1977; Shandong,
1979). Among the sites we visited, seepage rates are 45 per cent
in the long-established People's Victory Canal system, which is
large and flows through sandy soil; and over 50 per cent in the
channels of the Shijin Canal system.
(b) The area watered by each cubic metre is too vast, up to 2,000 hectares. This means that water is in the main canals for up to 300 days a year, keeping the nearby water table high (IFI, 1977).
(c) Some places irrigate too heavily and too often, applying up to twice as much water per season as is necessary for high yields (Zhu and Zheng, 1980).
(d) Irrigation is emphasized to the neglect of drainage. Sometimes canals even cut off the natural drainage routes (IFI, 1977).
(e) Secondary and tertiary delivery systems are lacking. In Shandong's Dezhou Prefecture along the proposed eastern route, for example, only 10 per cent of the irrigated acreage is served by a four-level canal system (main, branch, subbranch and field).
(f) Cropping plans do not match water availabilities (Shandong, 1979).
This is an impressive compendium of problems, all the more impressive in that they are revealed so frankly. Such management difficulties are not unique to China. They should all be familiar to those who are acquainted with large irrigation schemes elsewhere in the world. Indeed, there is a burgeoning literature outside the PRC on the problems of "managing those who manage the water" (Chambers, 1980) (see reference section for a sample of this literature). While much refinement remains to be done on the problem of how specifically to improve the management of existing projects or to set up a wellfunctioning management body for a new district, there is broad general agreement on the characteristics of a well-managed irrigation district.
Abel (1976) summarizes these characteristics in his list of
the four factors underlying the success of Taiwan's irrigation
(1) the recognition that water is a scarce factor in agricultural production;
(2) the legal administrative basis for centralized planning of irrigation investments but decentralized management of irrigation systems;
(3) the information systems which permit the exchange of agronomic and engineering information between the users of water and the managers of a system; and
(4) the use of incentive structures for both the managers of irrigation systems and the users of water that appear to be compatible with the efficient use of water within the irrigation system.
The "legal administrative basis" (Factor 2) is clearly present in the PRC, subject to the previously mentioned qualifications regarding the legal system. The other three factors are much less in evidence, at least in the North China Plain.
Factor 1, the recognition of the scarcity value of water, is commonly manifested in the water charge system. To encourage frugality on the part of the water users (in the PRC, the basic water using unit is usually a production brigade), the water fee schedule should ideally be based at least in part on the volume of water actually used. In addition, charges should be sufficiently high to recoup the costs of current operations, maintenance and repair. Fees would more truly reflect the scarcity value of water if they also covered the repayment of capital costs incurred by the state, but this is rarely done and is not important to the economical operation of a project once built.
These economic and financial principles are well understood by decisionmakers in China. In descriptions published in the PRC of model water management organizations, one criterion of success is the attainment of selfsufficiency or surplus in funds. When the main focus of a project is irrigation, these funds are raised principally through water fees. Although even the literature on model units indicates a variety of bases for water fee schedules in practice, the superiority of volumetric water fees has been accepted in principle since at least the early 1960s.
Nonetheless, at present water fees are not applied along the proposed transfer routes in a way which is conducive to good management if any power of decision making on water allocation is in the hands of the water users. Some places, such as the Jiangdu Pumping Stations, rely entirely on state subsidy and do not charge for water. In other places, fees are charged only for the electricity or fuel oil consumed in pumping. When charged, water fee levels appear to be low to moderate-we were given figures varying from 7.5 yuan to 75 yuan ($5 to $50) per hectare per annum (usually, two crops).
In all the cases we investigated, water fees, if levied, were based on expected benefited acreage. This provides no financial incentive to those in the upper reaches to be sparing in water use or to seek alternative sources of supply (e.g., groundwater). It may also require those, especially in the tail reaches, who receive uncertain and inadequate supplies to pay the same fees as those more favourably situated who receive as much as they want and with good timing.
We found no instances of the use of volumetric charges, although we were told at the Ying He Dam in Henan that they would be levied soon to save water. Charges for the pumped water of the Nansi Lake in Shandong are based on acreage "because they include drainage".
It would be tempting, especially from an economist's point of view, to point to improvements in the water charge structure as a cure-all for the on-field management problems in the North China Plain. Yet the evidence indicates that water fee inadequacies are more a symptom than the cause of management difficulties, especially inasmuch as the use of volumetric charges and self-sufficient funding have been espoused in China's management literature for two decades or so.
The more fundamental problems undoubtedly lie in the information systems and management incentive structures (Factors 3 and 4). It should be noted that these problems become increasingly difficult to deal with in larger projects (Bottrall, 1978). Even here, the Chinese literature on instances of good water management indicates that in specific cases information systems and incentive structures have operated satisfactorily.
The problem then is to uncover why management systems that work well in some instances in the PRC have not been generalized to a wider area, and especially why they are not more in evidence along the proposed water transfer routes. The answer must come out of in-depth field investigations and analysis, necessarily interdisciplinary, focusing on the human and organizational sides of water management. Guidelines to carrying out this sort of research may be found in the works cited in the reference section under irrigation management (especially Bottrall, 1981).
In sum, it seems that there are considerable short-term benefits which would accrue to detailed socioeconomic institutional studies of water management deficiencies on the North China Plain, followed by the targeting of funds and manpower towards solving the technical, funding and motivational problems, especially, but not exclusively, at the secondary and tertiary system levels. In light of the implicitly high social rate of discount given in current national financial and investment policies, a marshalling of resources in these directions would likely yield far more benefit than a near-term commitment to a long-distance water transfer scheme. The nature of water rights and interprovincial relations must be considered as well in making plans for future water resource development. All of this work is an essential prerequisite to making a realistic assessment of the likely deleterious impact of the introduction of new water via a mass transfer and to drawing up the institutional reforms necessary to mitigate such harmful side-effects, most notably the spread of secondary salinization due to excess application and improper drainage.
Foreign Broadcast Information Service (FBIS), Daily Report, Vol. 1.
He Zhi, 14 September 1979, "The problem of rational exploitation and use of water resources urgently needs to be solved", Guangming Ribao, p. 4.
Hirschleifer, J., DeHaven, J.C., and Milliman, J.W., 1969, Water Supply, University of Chicago Press, Chicago.
Institute of Farmland Irrigation of the Chinese Academy of Agricultural Sciences (IFI), October 1977, "Improvement of saline land in the Huang-Huai-Hai plain," Nongye Chubanshe, Beijing.
Li Changfang and Zhang Yichang, October 28, 1980, "A magnificent project which has changed water damage into water benefits," Guangming Ribao, p. 2.
Shandong Provincial Water Science Institute, January 1979, "Improvement of saline land," revised ea., Shandong kexue jishu chubanshe, Jinan.
Zhu Yanhua and Zheng Xianglin, October 1980, "Shallow Groundwater Resources of the Huang-Huai-Hai Plain". See Chapter 18 of this book.
Burness, H. S., and Quirk, J. P., April 1980, "Water Law, Water Transfers and Economic Efficiency: The Colorado River", The Journal of Law & Economics, Vol.23,pp.111-134
Cano, G. J., 1978, "Water Law and Legislation: How to Use Them to Obtain Optimum Results from Water Resources." In United Nations Water Conference Mar del Plata, 1977, Water Development and Management, Vol. 1, Part 3, Pergamon Press, Oxford.
Johnson, R.W., July 26, 1971, "Major Interbasin Transfers: Legal Aspects." Legal Study No. 7, National Water Commission, Arlington, VA.
Weatherford, G.D., September 1968, "Legal Aspects of Interregional Water Diversion," UCLA Law Review, pp. 1299- 1346.
Abel, M. E., June 1976, "Irrigation Systems in Taiwan: Management of a Decentralized Public Enterprise", Water Resources Research, Vol. 12, pp. 341-348.
Asian Regional Irrigation Communication Network, Newsletter, Agricultural Development Council, Inc., P.O. Box 11-1172, Bangkok 11, Thailand.
Bottrall, A., 1978, "The Management and Operation of Irrigation Schemes in Less Developed Countries", Water Supply & Management, Vol. 2, pp. 309-332.
Bottrall, A., 1980, "More on Evaluating Organization and Management", Irrigation Management Network Paper 1/80/1, Overseas Development Institute, London.
Bottrall, A., 1980, "New Irrigation Schemes: Planning, Design and Social Impact", Irrigation Management Network Paper 1/80/2, Overseas Development Institute, London.
Bottrall, A., May 1981, Comparative Study of the Management and Organization of Irrigation Projects, World Bank Staff Working paper No.458, The World Bank, Washington, D.C.
Bromley, D. W., Taylor, D. C. and Parker, D. E., January 1980, "Water Reform and Economic Development: Institutional Aspects of Water Management in the Developing Countries", Economic Development and Cultural Change, Vol. 28, pp. 365-387.
Caponera, D. A., "Institutional and Organizational Requirements for Water Development and Management," Food and Agricultural Organization (FAO), Farm Water Management Seminar, Manila, Irrigation and Drainage Paper No. 12, FAO, Rome, pp. 219-229.
Chambers, R., 1977, "Men and Water: The Organization and Operation of Irrigation", In Green Revolution?, Editor B.H. Farmer, Westview Press, Boulder, Colorado, pp.340-363; reprinted as "Basic Concepts in the Organization of Irrigation". In Irrigation and Agricultural Development in Asia, Editor E.W. Coward, Jr., Cornell University Press, Ithaca, New York, pp. 28-50.
Coward, E., Jr., ed., 1980, Irrigation and Agricultural Development in Asia. Cornell University Press, Ithaca, New York.
Howe, C. W., 1978, "The Design and Evaluation of Institutional Arrangements for Water Planning and Management". In United Nations Water Conference, Mar del Plata, 1977, Water Development and Management Vol. 1, Part 3, Pergamon Press, Oxford, pp. 1063- 1103.
"Strengthen the Management of irrigation districts and drainage Stations", December 13,1963, Renmin Ribao, editorial, p.2.
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