As it seems the government's inability to appropriately prevent the extreme amounts of pollutants now present in the water ways is evident, the inefficiency of the market to adequately and effectively quantify the amount of water available for abstraction as well as create a proper pricing system is also at fault. Because of the way the Chinese government is structured, the regionally sectioned provinces are individually different from its neighbor, making it close to impossible to create efficient abstraction policies and marketing schemes. And because of the various levels of governance there is a lot of bureaucracy that creates divides between the different local governments and the central government. There is also lots of pressure for the committees in charge of environmental conservation to adhere to the demands and ideals of the local government.
In order to give a better understanding of how the government and market failures have allowed chaos to ensue, looking at various provinces as anecdotes will serve as examples. The Mayor Zhang Guangning of Guangzhou went swimming in the Pearl River in order to prove that the government was making progress in cleaning the water to meet the requirements of "Grade III."However, soon after this initial swim by the mayor, the committee in charge of water safety advised the public not to use the water for recreational use or drink from it. In order to understand what requirements "Grade III" meets, the bar graph above will help you understand just how bad the water quality has become. The grading system is based off of a scale from I to V: I and II are considered safe for drinking, III is considered "risky" but safe and is normally only used for agricultural or industrial purposes, and finally IV and V are considered dangerous for human health and "useless."
Another issue dealing with knowing the proper amount of water to withdraw has to deal with knowing how much water is available. Although something as simple as knowing how much water is available for consumption may seem like common sense, it is something that the Chinese government did not take into account. The logic behind a healthy level of water abstraction is often set on data from previous years and not on the current water levels, which means that it is possible for the numbers to not reflect the proper level that should be consumed.
As the legislation in place seems to have little or no true enforcement, there has become too much bureaucracy in place behind the environmental efforts, causing disorganization and corruption. Several examples can be pulled from the article: Market Failures vs. Government Failures. A few of them will be mentioned throughout the blog.
Another example of how the governmental bureaucracy has created issues is a fact that the local government puts lots of pressure on the local committees in charge of allocating licenses to companies to use the water ways and how much they are allowed to emit. Not only do they pressure the committees to increase the amount of licenses in order to not inhibit regional economic prosperity, but they also try to pull strings and get licenses for the companies or individuals that will benefit the governmental officials the best.
As of right now, China seems to be very far away from cleaning up its act and taking the environment seriously. The need for honest and effective governmental authority is the first start to solving the many issues pertaining to water quality and the abstraction process. By eliminating the bureaucracy, it will allow the government to effectively allocate the licenses out to the public and allow those licenses to actually curb pollution. Having a responsible government will also allow for the abstraction tolls to be collected and more revenue to be created, which will to better improve the system. Many studies have concluded that China may have reached a point of no return and that the situation will continue to get worse until the negative economic impacts completely hinder the entire nation's GDP.Both the government and the market are dually responsible for the levels of inefficiency, for example, the funding that the different provinces receive comes from financial bureaus that control the pursestrings of the government. However, it is up to the local government to collect the incentivized tolls to curb water dependency and enforce the abstraction policies. This establishes little incentive for the local governments to collect tolls because they know they will not receive any revenue created by the tolls. This results in millions and millions of Renminbi, or RMB, lost every year that could go towards improving the abstraction policies, establishing better monitoring systems, improving water treatment plants, etc. All of outcomes would greatly benefit the citizens, government and economy.
This map containing all the industrial relocation parks can also be seen in my first blog article that was a basic overview of China's Water Crisis.
As these industrial relocation parks produce large profit for the Chinese economy, the side effect of having so many factories is the overwhelming demand for water and power. As the industrial demand for water has tripled from 1980 to 2007, the demand for electricity has also skyrocketed to meet the demands of the factories and influx of people. However, the fact that the Guangdong has become a new focal point for energy consumption and production, the West-East Electricity Transfer Project (WEETP) relies on hydropower plants to produce over 60% of its electricity, the water shortage has caused lots of problems. The government's unreliable electricity programs are met with illegal citizen solutions(Civic Exchange Energy). In response to rolling power outages, citizens often start using electric generators that have been banned by the government because of the inefficiency and high CO2 emission. These families/individuals then start trading power amongst each other or paying for power from their neighbors, almost like a black market for electricity. All of this goes without governmental regulation.
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