Policy Dialogue for Managing Groundwater Overpumping in the North China Plain

Submitted by Richard Taylor | published 7th Mar 2022 | last updated 4th Oct 2022
Farmers in Zhangye

Farmers in Zhangye. Credit: Liyan Wang, SDC

Summary

This page introduces a policy brief series prepared by the Swiss Agency for Development and Cooperation (SDC). It is intended to inform dialogue between scientists and policy makers working on groundwater resources, sustainable agriculture and climate change. The authors invite experts from both China and the international community to consider sustainable solutions to groundwater overpumping.

The first publication* provides an overview of policies in managing groundwater over-pumping in the North China Plain. *Download this publication from the column on the right hand side. Please scroll down to access further policy briefs in the sections below.

Introduction

The agricultural sector increasingly relies on groundwater abstraction for irrigation in many regions of the world. Expansion of irrigated agriculture and groundwater use, on one side, contributes to increased food production and food security; on the other side, leads to over-pumping of groundwater resources, which has become a common challenge in key agricultural production areas across the world, threatening the sustainability of production. Over-pumping of aquifers causes ecological and environmental degradation of vegetation, wetlands and streams and reduces the ability of aquifers to serve as a buffer for extreme weathers exacerbated by climate change.

Project objectives and partners

Recognizing the groundwater over-exploitation issue in the North China Plain, the SDC and the Ministry of Water Resources of the People’s Republic of China co-launched the project “Rehabilitation and management strategies of over-pumped aquifers in a changing climate” in 2014, in partnership with the China Geological Survey.

The overall goal of the project is to test and implement groundwater management and water saving policies in order to strengthen the capacity for adaptation to climate variability and climate change. The project has proposed innovative solutions in monitoring groundwater pumping, developed cutting-edge real-time groundwater models, and has tested various groundwater management policies.

The leading project implementation partner on the Chinese side is the General Institute of Water Resources and Hydropower Planning Design (GIWP), and the leading project implementation partner on the Swiss side is the Swiss Federal Institute of Technology (ETH) Zurich.

Overview of policies

China has issued regulations and policy rules related to groundwater management and pumping control on both national and provincial levels. These policies include the requirement of permits for well drilling, a well spacing policy, pumping quota management, water resource fee collection, setting of irrigation water prices, a water rights system, water markets, and more.

Since 1980, China has been implementing a water fee system. This initially covered surface water supply for irrigation in certain provinces in northern China. Groundwater, on the other hand, was not paid for. In 2006 China’s central government issued new regulations which covered permits and fees for groundwater abstraction. The fee is collected by the water administration departments at the county level based on approved water abstraction permits. However, collecting groundwater resource fees in rural areas remains a major challenge for policymakers (Ch3, p50—51).

In 2007 the central government embarked on a pilot to reform pricing for agricultural water use. The aim was to recover water supply costs and promote water conservation. After ten years of piloting, in 2016 new regulations were published aiming at establishing water quotas and improving water use efficiency. The government also started the reform of water prices by levying water resource taxes instead of or on top of water fees for groundwater use for irrigation. Hebei province was selected as the first pilot province of this reform.

China also has the Regulation on implementing water rights trading, a further economic instrument which makes it possible for water users below the quota to receive payments and is thus helpful in encouraging water saving behaviours. In 2014, the government launched formal pilot projects in seven provinces but only a few pilot projects of water rights transfer have been considered successful so far (Ch3, p50—51).

Text from the overview policy brief and from Ch.3 of Real-time groundwater monitoring and modelling system in the North China Plain. Read the policy brief, which summarizes groundwater policies and instruments which have been tested in China, by  downloading from the column on the right hand side.

The next sections refer to analyses of solutions to groundwater overpumping using the Province of Hebei as case study example, which are summarised in other policy briefs.

Hebei

Hebei province plays an important role for the food security for China, being one of the main grain production areas. Its wheat production accounts for about 10% of national wheat production. It is also one of the water-constrained regions in the NCP, with a worsening groundwater depletion problem as well as significant surface water pollution. Thus, it is an important example for analysing the effectiveness of current groundwater management policies and for testing innovative solutions.

Hebei has adopted both the water use limit and water right to calculate the water abstraction amount. In 2016 Hebei Province was selected as the pilot province for the ‘fee to tax’ transformation - ie the introduction of groundwater tax on any consumption above the water use limit.  Moreover the Winter wheat fallow policy was also piloted in Hebei with high government subsidies, as well as the “Electricity-to-Water” method (see below).

Analyses of solutions

Groundwater metering through transforming electricity consumption to water pumped

Groundwater metering is a precondition for volumetric pricing of groundwater, and can be an important tool for piloting, testing and improving groundwater monitoring and management. However, it is technically difficult and also costly to install modern metering devices on most existing wells in the NCP. This study assesses an alternative solution where electricity consumption is used as a proxy for groundwater use - termed the “Electricity-to-Water” method. It finds that consumption can be convenient under some circumstances and has the advantage that the method can be quickly replicated.

For further information see the Metering policy brief (Policy brief 3)

Groundwater quota system

Under China’s water quota system, all water users are issued withdrawal permits from water management authorities (of both surface and groundwater). The quota is determined based on the available water resources, the water needs and the size of the arable land.

In Hebei, one of only 7 provinces under severe water stress where water fees are collected, the system is helpful to limit the total amount of water abstraction.  Hebei additionally adopted the water use limit for levying water resource taxes and additional fees above the basic price (for water use above the quota). Although there have been problems in implementation,  the system has increased farmers’ awareness of water saving. The quota system is also important for establishing water trading /transfer. The case study found that farmers changed their irrigation behaviour so that the saved water can generate profit through trading.

Groundwater resource taxes and fees

In 2016, the Chinese government began reforming water pricing and taxation, by levying water resource taxes instead of or on top of water fees. Hebei province was selected as the first pilot province of this reform and a three-tiered pricing system was proposed.

  1. There is no charge for withdrawals within the water use quota.
  2. Above the quota, a water fee is payable
  3. Above the water use limit, the permit holder is obliged to pay tax on water uses and an increased fee

In such a system, water prices are meant to improve distributive efficiency among water users. However, as mentioned above there are implementation barriers of technical (eg. the need for metering), socio-political (ensuring acceptance by farmers) and administrative nature. This system is implemented according to available water resources, location, water use efficiency, the crops grown etc. Review of groundwater taxation policies in other countries showed that they do not always achieve economically efficient use of groundwater and/or have other impacts eg. increase inequality. Future use of pricing and taxation may need to consider regulatory and capacity issues as well as complementary policy interventions.

The fiscal benefits have been significant: since the enforcement of water tax in 2016, the revenue of Hebei province increased by 65% compared to 2015 (see overview policy brief).

For further information see the groundwater pricing policy brief (Policy brief 2).

Winter wheat fallow policy

Fallow policy is mostly used on land that is over-cultivated causing soil erosion, nutrient depletion and soil pollution – but it is also a water resources saving measure. Hebei has used program of rotation and fallow, “one season fallow, one season rain-fed” farming to reduce the irrigation of winter wheat. Although this has a high subsidization cost to the government and has not always helped improve soil health, it has been successful in reducing groundwater abstraction and has had ecological gains. The authors recommend considering the design of the subsidy system and supporting farmers with guidance on farming appropriate rain-fed crops and other agricultural products.

For further information see the winter wheat fallowing policy brief (Policy brief 4) (2022)

Application of water conservation technologies

China lacks comprehensive long-term water saving mechanisms and technologies to help farmers comply with the new framework of laws and regulations relating to water, and this challenges the feasibility and prospects for compliance. Various technologies have been tested such as drip and sprinkler irrigation, pipe irrigation, channel lining and furrow bed irrigation. It is also suggested to breed drought-resistant and high-yielding crop varieties, as well as increasing the use of ground cover by mulch or straws. However, the highest water use efficiency in agriculture production is only possible when the production reaches certain scale, therefore in parallel the Chinese government is exploring various land reforms including land transferring, land subcontracting, land shareholding etc.  to help achieve economies of scale in irrigation water conservation.

For further information see the optimizing planting structure policy brief (Policy brief 5) (2022)

This study on Real-time groundwater monitoring and modelling system in the North China Plain reviews various water saving policies and technologies (p62-65); they also describe water conservation technologies’ suitability for a transition to large scale farming in China  (p153-155).