1 The 12 provinces are: Heilongjiang, Jilin, Liaoning, Inner Mongolia, Hebei, Shandong, Shanxi, Henan, Shaanxi, Qinghai, Ningxia and Gansu. The two municipalities are Beijing and Tianjin. In this analysis, because of the lack of information on provinces in the extreme western areas of China, we do not include Tibet or Xinjiang in northern China.

2 Groundwater is also very important in urban water supply in northern China.

3 In Hebei province, where county-level groundwater overdraft statistics are available, the scarcity categories were defined according to a Ministry of Water Resource publication that categorized provinces by scarcity (which almost certainly is related to the degree of annual overdraft). In the remaining provinces, all four scarcity indices were defined according to the percentage of irrigated area as follows: very scarce (between 21% and 40%), somewhat scarce (between 41% and 60%), normal (more than 61%) and mountain and desert (less than 20%). Within each of the scarcity strata, we sampled two or three counties; of all the counties in the mountainous and desert areas, we chose one county.

4 The information that we collected comes from estimates provided to enumerators from village leaders based on their experience during the survey. For some technical data (data on water levels, water quality, soil salinity, etc.), although the village leaders do not have access to scientific measurements, they are readily able to state their perceptions on these issues. We believe, in many cases, that the information is fairly accurate. Even in the cases when information on the level of a variable for a given year may not be absolutely accurate (e.g. the salinity level of the water), due to the fact that they have been living and working in the village for many years, we believe that they are able to provide accurate estimates on the trends of these variables. Because these are based on the experience of village leaders, their response rates were high. In fact, for most variables the response rate was 100%, meaning our data are not subject to dropout bias.

5 In north China, almost all provinces have both mountainous areas and flat plains; therefore, it is hard to describe which regions are mountainous and which flat.

6 Although we have not asked the reason that why farmers only extract groundwater from deep aquifers, based on our experience in the field, it should be due to exhausted or unusable shallow aquifers.

7 We need more investigation to explore the reason in the future.

8 One of the important characteristics of the rural economic reforms in China is that land was distributed evenly to individual farm households. After the rural reforms, although land ownership was still collective, land use and income rights were transferred to individual farm households. Before the rural reforms, communes and brigades/teams (i.e. village collectives) financed most tube wells. After reform, the fiscal revenue position of many villages declined. More importantly, after the early 1980s the policy constraints that originally limited the scope of private activities were gradually relaxed and this resulted in the development of private tube wells.

9 Compared with the allocation of total water use to non-agricultural sectors, groundwater allocation to these sectors appears to have increased more rapidly. In 1997, non-agricultural sectors used 46% of total groundwater resources, while they only used 31% of total water resources (see Table 3.1, row 4).

10 Although maize is grown during the rainy season, and so the crop generally does not require as much irrigation as wheat (which is grown mostly during the dry season), irrigation can still play an important role in increasing maize productivity (Huang et a/., 2006). In North China, irrigation is supplementary.

11 According to Wang et a/. (2006), the expansion of tube wells does not necessarily mean that there is an expansion in water consumption. However, according to our data, a significant share of the new wells is located in areas that are allowing for the expansion of cropping area, increased intensity of cropping and rising yields. Hence, while not all of the rise in wells will result in increased consumption of water, a part of it will.

12 This indicates that due to the decline in the groundwater table, it requires more power to extract water.

13 There are also several other minor types of aquifers that are being overdrafted, which account for about 7000 km2.

14 The definition of overdraft here is from MWR in China. It is important to note, however, that there are other definitions. For example, Kendy points out that the MWR does not accurately define 'overdraft'. In a sustainable system, groundwater recharge should equal discharge over time. Extraction (groundwater pumping) is only a small part of total discharge from an aquifer. Other parts include natural discharge to rivers (which explains why rivers flow even long after rain and snow stop falling), and natural discharge to wetlands, lakes and plants. If extraction (groundwater pumping) exceeds recharge, all those other components of groundwater discharge would cease. Overdraft is better defined by long-term water level declines.

15 According to a comprehensive survey completed by the Ministry of Water Resource in 1996, groundwater overdrafting is a widespread problem and may be getting worse.

16 In our survey we asked village leaders about the average level of groundwater depth during the year and the 'static' level of the groundwater. We explained that the static level of the water table is the level that exists immediately prior to the irrigation season (e.g. in the North China Plain this would be around the month of March). According to our respondents, there were differences in the statistics on the changes in the groundwater table when using average or static groundwater levels. According to our data, the static level produced numbers that suggested there were fewer villages in which the groundwater table was falling.

17 Land subsidence mainly occurs in urban areas.

18 Salinization is caused by different factors, and responds to different solutions in different settings. Over time, continued groundwater use is likely to increase soil and water salinization. Each time groundwater is 'recycled' through the pumping and reinfiltration process, it becomes more saline.

19 We define groundwater markets as localized, village-level arrangements through which owners of tube wells sell pump irrigation services to other farmers of the village (i.e. they sell water to other farmers from their wells for use on crops). In this chapter, we are only going to examine 'private' water markets. In other words, we will examine the nature of groundwater markets that are being driven by individuals and groups of individuals that sink wells. In making such a definition, we are assuming that when village leaders (the collective owners) provide water to villagers, this is being done under non-market conditions.

20 Groundwater markets in northern China are not necessarily 'competitive' and may be more accurately characterized by captive selling. When farmers buy water through groundwater markets, they not only pay for operating costs, but also pay a little service cost that contributes to profit for the operators or owners.

21 Here 'highly divisible' means that individual farmers can adopt the technology by themselves.

22 Some researchers (Kendy et a/., 2004) argue that farmers are figuring out ways to reduce pumping without reducing crop production. Thus, they are conserving electricity, but not water.

23 Some researchers (Kendy et a/., 2004) argue that policies must ensure that water is actually saved (i.e. irrigated area decreases). So long as crop production stays the same, no water will be saved and any 'transfers' will only exacerbate the problem.

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