China’s water shortage is so bad it could turn out the lights

January 16, 2014 Leave a comment

China’s water shortage is so bad it could turn out the lights

By Adam Pasick @adampasick January 13, 2014

China has lost more than an entire Netherlands-worth of wetlands in the last decade—340,000 sq. km, or 9% of China’s total land—to agriculture, development, and climate change, according to new figures from its State Forestry Administration. It’s the latest in a long line of ominous warnings about the water supply in China, which has one-fifth of the world’s population but only 6% of its freshwater.“This will add to the pressure and increase competition for water going forward,” Debra Tan, director of Hong Kong-based non-profit China Water Risk, told Reuters. “China will be looking to grow more food, and more food in wetlands, as urbanization continues.”

A worrying trend line. China Water Risk

The problems go far beyond China’s people not having enough to drink. The country’s electricity comes almost exclusively from water-intensive power sources—mostly coal, but also nuclear and hydro power—so that a water shortage could easily lead to a power shortage. Mining coal and turning it into electricity already consumes 17% of China’s water supply. And a plan to expand coal production in provinces such as Inner Mongolia—designed to ease air pollution in the country’s heavily populated eastern seaboard—is expected to increase demand for water there by more than double.

China Water Risk has the breakdown:

If you drill down into the specific regions that are going to get very thirsty, it gets even worse. China Water Risk has identified China’s “Dry 11″ provinces—a cluster surrounding Beijing and Shanghai, along with two interior provinces to the west. In total, the Dry 11 are home to more than 510 million people, and they contribute nearly half of China’s GDP:

Policymakers in Beijing are certainly aware of the challenges: They are moving toprotect wetlands, increase water fees (paywall) and embark on gigantic engineering schemes to route water from the fertile south to the arid north. But as long as China requires enormous amounts of water to keep the lights on, it may be facing a very dry future—and possibly a dark one as well.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment