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In addition to further scientific investigation of the various potential impacts of the proposed diversion projects on environmental components discussed in the first section of the paper, the development of improved information to facilitate rural project selection of all sorts is an essential basic tool. A key element would be typical production and cost data for a crosssection of representative rural localities. Although considerable data have for some time been generated via standardized reporting forms of the State Statistical Bureau and various government ministries, insufficient priority and lack of resources have combined to prevent prompt verification, aggregation and analysis of materials. Important independent work in this regard has been initiated by researchers under Dr. Wu Chuanchun at the Institute of Geography and is exemplified by the material presented by Guo Huancheng at the Water Transfer Symposium. Such work should be awarded high priority and might be expanded to include estimates of opportunity costs of peasant labour. This network is important not only to efficient rural development project selection, but to the knowledgeable formation of rural policy in general. It is instrumental in avoiding the wasteful idle capacity of basic projects left incomplete at the local level.

Measurement of water actually applied to fields is an integral part of local production function information. Monitoring of water at various stages of the distribution system as well as quantities of groundwater pumped from operating wells and up-to-date analysis of groundwater level data collected from observation wells, are also important information components to include.

Among other uses, local level production and cost function approximations can be used to estimate in a more realistic fashion what the benefits of various rural development projects are likely to be. Projections of operating costs and environmental costs, as well as basic and estimated costs of additional inputs and labour required to achieve expected benefits, may be incorporated together into a cost-benefit framework. The framework should incorporate a system for comparing projects with different gestation periods, opportunity costs of transferred water and peasant labour, and risks associated with increased costs and benefits. Secondary costs and benefits must be critically considered, not ignored or added outright. Questions of reversibility and divisibility may be addressed either within or outside the framework of calculation.

It is often suggested that cost-benefit or internal rate of return calculations in China are not useful in view of the "irrational" Chinese pricing system. But the principal irrationality is between farm and non-farm prices. To the extent that benefits are exclusively a function of farm goods producible and costs are strictly a function of industrial goods and labour, there is less problem if an appropriate shadow price for labour is included. The calculation will not be an absolute measure of the internal rate of return of the project, but that cannot be exactly ascertained anyway in view of arbitrary parameters in the calculation and the longterm non-quantifiable benefits and costs associated with particular development schemes. Such a procedure is thus more valuable as an informative index than as a decision rule. But the calculation may still be useful in ranking projects which benefit agriculture relative to each other and in forcing a conscious consideration of various "side effects" to a project, and a unified articulation of low cost methods of ameliorating them.


It does not appear that hasty completion of the Chang Jiang diversion project will be required to avoid large ex ante gaps between supply of and demand for food in China during the current decade. The mentioned costs of the projects are very large and may well be underestimated. The implied environmental damage and associated economic loss is very substantial at current levels of technical and administrative preparedness (particularly in the area of local water management). This loss may occur quickly after water transfer. Projected economic benefit to agriculture will also be great and fairly rapidly achieved, but will continue to be realized only if the very serious risk of widespread salinization can be eliminated. The secondary benefits of the project to the economy of the North China Plain via rapid agricultural growth can be even greater in the more distant future but may not be realized if agriculture is crippled by acute soil deterioration. Large and immediate state allocations for hasty completion of either of the full diversion schemes, therefore, seem ill-advised.

However, rapid agricultural growth on the North China Plain will probably continue to be important to meeting the projected demand in the following two decades. By sometime in the 1990s, the possibilities of maintaining a brisk production growth rate on the plain may be restricted to a sizeable introduction of complementary water via a major initiative in tubewell development, an aggressive Huang He development, or a major water transfer from the Chang Jiang.

It seems advisable that immediate research priority be given to more accurately and unequivocally determining the limitations and interdependence of the North China Plain aquifers; to resolving the major technical difficulties with Huang He diversion, especially silt buildup; to resolving the remaining engineering problems with Chang Jiang diversion along the two routes, especially along the Middle Route for which the environmental hazards seem less severe; and to exploring alternatives for ameliorating the environmental problems that are apt to be exacerbated by interbasin transfers, several of which have already become increasingly troublesome even without diversion. Immediate administrative priorities should include a primary emphasis on water management to stem the existing trend toward salinization in current irrigation districts and to prepare for possible future introduction of massive quantities of water. Another logical priority would be strengthening existing machinery or establishing new machinery to foster mutually productive cooperation and resolve intergroup conflicts equitably at various levels (e.g., between production units, counties, provinces or governmental institutions). These are not simple tasks, and the world provides few cases of exemplary performance. They will require a concerted and long-term effort.

Current administrative efforts to upgrade the statistical system and machinery for collecting, checking, aggregating and analyzing information need continual support and intensification. In addition to production and cost information at the farm level, in terms of quantities and values, peasant labour opportunity costs and volumetric water measurement at various steps of the distribution system may be important to develop. Data from observation wells and from the desalinization project experiments need prompt analysis.

Massive interbasin transfer currently seems a very expensive and risky means of increasing farm production on the North China Plain. In the future there may be few alternatives. While developing existing alternatives and exploring possible future ones, careful preparation must be pursued immediately to reduce the risk of rapid environmental damage and economic loss should interbasin diversions become the appropriate choice at a later date and, regardless of future transfer, to reduce current trends toward soil salinization, salt and other water pollution, limnological deterioration and general loss of aquatic life.


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