Over the last 50 years, China has constructed a vast and complex bureaucracy to manage its water resources. To understand the functioning of this system, it is important to first understand that, until recently, neither groundwater use nor water conservation has ever been of major concern to policymakers. Instead, the system was designed to construct and manage surface water to prevent floods, which have historically devastated the areas surrounding major rivers, and to effectively divert and exploit water resources for agricultural and industrial development. Historically, when attention was paid to water conservation, the emphasis was on surface water canal networks. Therefore, many of the most severe groundwater problems have not been directly addressed.
Water policy is ultimately created and theoretically executed by the MWR. The MWR has run most aspects of water management since China's first comprehensive Water Law was enacted in 1988, taking over the duties from its predecessor, the Ministry of Water Resources and Electrical Power. The policy role of the MWR is to create and implement national price and allocation policy, and to oversee water conservancy investments by providing technical guidance and issuing laws and regulations to the subnational agencies (Lohmar et al., 2003).
In fact, officials in the MWR and in other ministries have spent time and effort in passing laws and regulations concerning groundwater management in rural areas. For example, according to China's national 1988 Water Law, the property rights of all underground water resources belong to the state. This means that the rights to use, sell and/or charge for water ultimately rest with the government. The law does not allow extraction if the pumping of groundwater is harmful to the long-term sustainability of the use of the resource.
Beyond formal laws, there have also been many policy measures set up in part to rationally manage use of the nation's resources. In most provinces, prefectures and counties there are formal regulations controlling the right to drill tube wells, the spacing of wells and the price of water when sold. The national government has also set up the necessary regulatory apparatus to allow for the charging of a water extraction fee (surface water and groundwater in urban areas).
Despite the plethora of laws and policy measures that have been created by officials, there has not been an equal effort put out in implementing them. Certainly, part of the problem is one of historic neglect. In fact, the delegation of groundwater management at the ministerial level is still relatively small. There are far fewer officials working on this division than in other divisions, such as flood control, managing surface water systems and water transfer. Moreover, unlike the case of surface water management (Lohmar et a/., 2003), there has been no effort to bring management of aquifers that span jurisdictional boundaries under the ultimate control of an authority that can control the government and private entities that use water extracted from different parts of the aquifer. According to Negri (1989), when there is no single body controlling the entire resource, it becomes difficult to implement policies that attempt to manage the resource in a long-term, sustainable, more optimal manner.
Whether for lack of personnel or other difficulties in implementing the measures, inside China's villages few regulations have had any affect. For example, despite the nearly universal regulation that requires the use of a permit for drilling a well, less than 10% of the well owners surveyed obtained one before drilling. Only 5% of villages surveyed believed their drilling decisions needed to consider spacing decisions. Although price bureaus in every county were supposed to regulate the price for which groundwater was sold from one farmer to another, in only 8% of villages did this occur. Even more telling was that water extraction was not charged in any village; there were no physical limits put on well owners. In fact, it is safe to say that in most villages in China, groundwater resources are almost completely unregulated.
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