Table Of ContentGlobal Issues in Water Policy 18
Min Jiang
Towards
Tradable
Water Rights
Water Law and Policy Reform in China
Global Issues in Water Policy
Volume 18
Editor-in-chief
Ariel Dinar, Department of Environmental Sciences, University of California,
Riverside, California, USA
Series editors
José Albiac-Murillo, Zaragoza, Spain
Stefano Farolfi, CIRAD UMR G-EAU, Montpellier, France
Rathinasamy Maria Saleth, Chennai, India
More information about this series at http://www.springer.com/series/8877
Min Jiang
Towards Tradable Water
Rights
Water Law and Policy Reform in China
Min Jiang
College of Business
Victoria University
Melbourne, VIC, Australia
ISSN 2211-0631 ISSN 2211-0658 (electronic)
Global Issues in Water Policy
ISBN 978-3-319-67085-0 ISBN 978-3-319-67087-4 (eBook)
DOI 10.1007/978-3-319-67087-4
Library of Congress Control Number: 2017952349
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Preface
Coming from a water abundant city in South China, I did not realise how water
presents an immense challenge for China until I had lived in the extremely water
scarce capital city, Beijing, for my postgraduate study at Tsinghua Law School. The
first spring that I spent in Beijing remarked my first life experience in yellow dusty
sandstorms, which later I learnt were mainly caused by aggravating desertification
as a result of overexploitation of water resources in China’s second largest inland
river basin, the Hei River Basin. In 2005, when I had the opportunity to undertake a
PhD in environmental law at Macquarie University in Australia, I was inspired to
focus my study on water law and policy reform.
Freshwater resources in many countries around the world are increasingly pres-
sured by population growth, economic development, urbanisation, rising standards
of living, changing values of the environment, and on top of all these stresses, cli-
mate change. While governments confront major issues in sustainable water use,
how water governance responds to water scarcity, variability and uncertainty has
become a key global policy challenge. Water reforms have been observed globally,
delivering mixed outcomes. The roles of government and market in water allocation
lie at the centre of the water reform debate, reflecting different values of water as
both a public/social and economic good. China’s current water reform aims to
explore the application of market-based water allocation mechanisms, for which it
is recognised that learning from international experiences is important. Against this
backdrop, my PhD project provided a first comprehensive legal examination of
water rights arrangements and water rights trading in China by reflecting on experi-
ences from overseas jurisdictions, and particularly Australia and the United States.
My PhD thesis forms the foundation of this book.
My interest in water governance continues into my post-doctoral research. As
water reforms in both Australia and China deepen, I see the need for an up-to-date
reflection on the recent progress in the development of water markets in the two
countries. In 2015, as the chief investigator, I led a research project which focused
on what and how China can benefit from the Australian experiences to address its
water governance challenges in developing functioning water markets. This book is
also informed by the research findings of this project.
v
vi Preface
The central question that the book attempts to explore is how law and policy can
facilitate China’s transformation in its approach to water allocation from an extreme
government-based mechanism towards increased application of market mecha-
nisms. Based on in-depth reviews of China’s current legal and policy frameworks
for water rights arrangements and trading comparative to international experiences,
this book proposes potential solutions for China’s water law and policy reform to
move towards tradable water rights. It is hoped that the book will add important
components to the existing body of knowledge in water rights and trading by reflect-
ing on not only China’s water reform but also the international trends in water gov-
ernance. To this end, this book is for readers who are interested in the growing
theoretical and policy challenges around water governance in general, and develop-
ment of water markets in particular. Although the book takes a legal and policy
perspective, it may be of interest to readers across a range of disciplines, including
environmental (water) law and policy, environmental studies, water resources man-
agement, public policy, and Asian (Chinese) studies. China has become the centre
of the world’s attention as its actions in sustainable development have significant
implications for the rest of the world. It is expected that the insightful examination
of water law and policy reform in China in this book will help international audi-
ences to better understand China in transition.
I would like to acknowledge the financial support that helped me undertake
research related to this book. My PhD project was funded by an International
Postgraduate Research Scholarship (IPRS) and International Macquarie University
Research Scholarship (iMURS). In addition, an International Collaborative
Research Grant between Victoria University (VU) (Australia) and Central University
of Finance and Economics (CUFE) (China) supported me to lead a joint research
project entitled “Developing functioning water markets for sustainable water use:
Australian experiences and implications for China’s water reform”.
I am indebted to my PhD supervisors, Professor Michael Jeffery QC and
Professor Donna Graig, for their valuable guidance and support during my study at
the Centre for Environmental Law, Macquarie University. I am also truly apprecia-
tive of the contributions that my colleagues have made to the VU-CUFE joint
research project. At the VU side, Professor Elisabeth Wilson-Evered and Dr. Shah
Miah have brought their expertise in leadership and information systems to the proj-
ect, and Ms Li He has contributed to the project management and data analysis as a
research assistant. At the CUFE side, Associate Professor Qian Liu and Dr. Yinshuo
Xu have played an instrumental role in interview data collection and organisation of
the focus group. My gratitude extends to those who participated in my PhD field-
work as well as the VU-CUFE project. For confidentiality reasons, I am unable to
list their names here, but their contributions are greatly appreciated.
I would like to acknowledge assistance that I received from Fritz Schmuhl,
Senior Editor, and Joseph Daniel, Project Co-ordinator from Springer. They have
been extremely supportive and understanding, and assisted me to eventually deliver
this book after an extended delay due to my maternity break. I would also like to
thank Ms. Jeanne Enslin for her superb proofreading service for the book.
Preface vii
I dedicate this book to my family. My 21-month-old son, Brian, brings me end-
less joy every day. Snuggle time before bed at night was the most recharging break
off my book writing. My husband, David, has fully supported me by sharing many
baby duties and freeing me from chores. My parents accompanied me in the last and
the most difficult months of my PhD study. This book is a result of the lasting com-
mitment, patience, and encouragement of my family. It would not have been possi-
ble without their unconditional support and sacrifice.
Melbourne, Australia Min Jiang
May 2017
Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Problem Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 The International Perspective . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.2 The Chinese Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Aim and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2.1 Research Aim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2.2 Research Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Overview of the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2 W ater Governance in a Changing World: China and Beyond . . . . . . . 13
2.1 Water Scarcity in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Challenges Around Water and Water Governance . . . . . . . . . . . . . . . 19
2.2.1 U nderstanding Basics of Water and Water Governance . . . . . 19
2.2.2 W ater as a Human Right vs. Water
as an Economic Good . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.3 A lternative Property Regimes as a Water Policy
Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2.4 The Water Allocation Mechanisms Debate . . . . . . . . . . . . . . . 26
2.2.5 Climate Change Adaptation and Integrated
Water Resources Management (IWRM) . . . . . . . . . . . . . . . . . 31
2.3 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3 C hina’s Water Law and Policy Reform: How Far
Have We Travelled? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.1 C hina’s Legal Framework for Water Governance . . . . . . . . . . . . . . . . 43
3.2 I nstitutional Framework of Water Governance in China . . . . . . . . . . 49
3.2.1 R egulatory Organisations of Water Governance . . . . . . . . . . . 49
3.2.2 E nvironmental Non-Governmental Organisations (NGOs) . . . 54
ix
x Contents
3.3 C hina’s Ongoing Water Policy Reform . . . . . . . . . . . . . . . . . . . . . . . . 57
3.3.1 B uilding a Water Saving Society . . . . . . . . . . . . . . . . . . . . . . . 57
3.3.2 E stablishing a Water Rights System . . . . . . . . . . . . . . . . . . . . 59
3.3.3 Implementing the Strictest Water Resources
Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.3.4 Nationwide Water Rights Piloting . . . . . . . . . . . . . . . . . . . . . . 62
3.4 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4 A lternative Water Governance Mechanisms in China:
Examination of Current Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.1 S upply-Side Approaches to Water Management and Allocation . . . . 69
4.2 T he Administrative Approach to Water Allocation . . . . . . . . . . . . . . . 73
4.2.1 Beijing: Paramount Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
4.2.2 Ecological Emergency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.2.3 Less Favoured Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.3 O ther Economic Instruments: Water Pricing,
Water Resources Fees, and Sewage Treatment Fees . . . . . . . . . . . . . . 78
4.3.1 F rom Free Water Use to Administrative Fee Collection
to Government-Set or Government-Guided Water Prices . . . . 79
4.3.2 Climbing Water Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.3.3 W ater Resources Fees and Sewage Treatment Fees . . . . . . . . 83
4.4 Water Rights Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
4.4.1 W ater Trading Between Dongyang and Yiwu . . . . . . . . . . . . . 85
4.4.2 Zhangye “Water Notes” Transfer . . . . . . . . . . . . . . . . . . . . . . . 88
4.4.3 Paid Water Transfer from Agriculture
to Industry in the Yellow River Basin . . . . . . . . . . . . . . . . . . . 91
4.5 M ajor Governance Gaps for Water Rights Trading in China . . . . . . . 94
4.5.1 Ill-Defined Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
4.5.2 Underperformed Water Rights Administration . . . . . . . . . . . . 96
4.5.3 F ailure in Monitoring and Enforcing Water Rights . . . . . . . . . 101
4.6 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
5 Initialising Tradable Water Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
5.1 A pplication of the Concept of Water Rights . . . . . . . . . . . . . . . . . . . . 109
5.2 T he Changing Philosophy of Water Use:
Towards Sustainable Water Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
5.3 T hree Steps of Water Rights Initialisation . . . . . . . . . . . . . . . . . . . . . 115
5.3.1 Water Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
5.3.2 Water Quantity Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.3.3 Water Abstraction Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
