8 Facts on China’s Wastewater

By Debra Tan, Feng Hu, Inna Lazareva 12 March, 2014

Don't know anything about wastewater in China? Check out our 8 facts on wastewater

China's wastewater volume is comparable to Yellow River's annual flow & pipes can circle the earth 10x
Domestic wastewater is rising with urbanisation whilst industrial wastewater is under-reported
Rural double whammy from low treatment rates & agri pollution; for industry, it still pays to pollute than treat

China needs to develop its wastewater sector to tackle worsening water pollution. Efforts to improve wastewater treatment infrastructure are obvious: investment in wastewater treatment stood at RMB14 billion in 20121 and under the 12th Five-Year Plan (12FYP), total investment in wastewater treatment and recycling infrastructure in urban areas is expected to reach RMB430 billion, a 20% increase from the previous FYP. Despite these efforts, significant investment is needed to increase treatment rates to reach the target build-out of wastewater treatment plants (WWTPs) for nearly 300 cities in China which currently do not have such facilities by 2015.

The outlook of for the wastewater industry is bullish; confirmed by Vice-Minister Zhou Jian of the Ministry of Environmental Protection (MEP) announcing in February 2014 that China will spend RMB 2 trillion to tackle water pollution. Here are 8 things you need to know about wastewater in China:

1.    China’s wastewater volume is comparable to the Yellow River’s annual flow

With the largest population in the world, China is easily the top ranked country by the amount of wastewater produced. In 2012, the total discharge of wastewater in the country amounted to 68.5 billion tonnes which is in volume terms comparable to the annual flow of the Yellow River of 58 billion m3 per annum. Discharged wastewater comprises of discharge from domestic use (e.g. human waste, washing water, urban runoff) and industrial wastewater. These are often labelled “point-source pollution” as there are specific points where the wastewater is discharged. Contrary to point-source wastewater, nonpoint-source wastewater comes from diffused sources such as agriculture, land runoff, precipitation, drainage and seepage, etc.

2.     China’s wastewater pipe network can circle the earth 10x

China’s wastewater pipe network totals more than 414,000 km in length2, equivalent to more than 10x the Earth’s Equator at 40,075 km. It is quality and not quantity that the pipe network is lacking. Unlike the water supply sector with better established pipes, the wastewater infrastructure is less developed due to lagging construction of wastewater and sewage pipelines3. Not surprising, expansion of the wastewater pipe network is on the cards as per the 12FYP. Last year, the Beijing Municipal government led the way and announced its plans to build 1,121 km of wastewater pipelines (see our review here). Given rising urbanization rates in China, it is important for the government to get municipal wastewater treatment right.

3.     Rising urbanization = rise in domestic wastewater

Total wastewater discharged has increased by 65% from 41.5 billion tonnes in 2000 to 68.5 billion tonnes in 2012, and is projected to keep growing with rising urbanisation and increasing affluence of the country. Indeed, the graph below shows a rising trend in domestic wastewater discharge that reflects a similar rise in urbanisation rates during 2000-2012:

Domestic & Industrial Wastewater Discharge vs Urbanisation Rate

The graph also clearly shows that the growth in domestic wastewater discharge has outpaced the growth in industrial wastewater discharge. By 2012 domestic wastewater discharge accounted for around 68% of the total wastewater discharge.

Meanwhile, China’s urbanisation rate has also grown at a fast pace: from 36% to 53% over the same period. Given an expected urbanization rate of 60% forecasted by the UN, by 2020, domestic wastewater volumes are expected to rise accordingly.  Industrial wastewater on the other hand appears under-reported…

4.     Industrial wastewater discharge appears to be under-reported!

Industrial water has been falling since 2008 despite rising contribution by industry to China’s GDP which points towards the fact that industrial water is likely under-reported (see graph).

Industrial Wastewater Discharge vs GDP from Secondary Industry

Also, low official records of industrial wastewater discharge could be due to the current mismatch in the environmental water quality standards and the wastewater discharge standards. Please see Professor Ma Zhong, the Dean of the Environmental School at Renmin University’s in-depth views on industrial wastewater standards and pricing here.

5.     Key wastewater pollutants measured in the 12FYP

The government keeps tabs on the following key pollution emissions in wastewater: Chemical Oxygen Demand (COD), Ammonia Nitrogen (NH4), Total Nitrogen, Total Phosphorus, Petroleum, Volatile Phenol, Lead, Mercury, Cadmium, Hexavalent Chromium, Total Chromium and Arsenic.  However, only 7 of these have target reduction levels in the 12FYP:

12FYP Main Water Quality Indicators Monitored

Heavy metal pollution is primarily from industry (although some are from run-offs from landfill and agriculture); whilst agriculture accounts for the largest portion of COD and NH4 emissions. Last year, the government officially linked heavy metal pollution to cancer villages (more on this here).

To tackle water pollution, the government is trying to increase penalties for violations, name & shame SOEs, introduce Water & Soil Pollution Prevention & Control Work Plans as well as add the following industry-specific standards in 2013 (for the full list of government policy review during 2013-2014, see here):

      • Discharge Standard of Water Pollutants for Ammonia Industry (Mar 2013)
      • Effluent Standards of Water Pollutants for Citric Acid Industry (Mar 2013)
      • Prevention & Control of Pollution from Large-scale Breeding of Livestock & Poultry (Nov 2013)
      • Standard for Pollution Control on Co-processing Solid Wastes in Cement Kiln (Dec 2013)
      • Emission Standard of Pollutants for the Battery Industry (Dec 2013)
      • Discharge Standard of Water Pollutants for Leather & Fur Making Industry (Dec 2013)

Some standards are even more stringent than the ones in developed countries, whereas some high polluting industries have yet to establish their industry-specific discharge standards. Some regions have also established their own local discharge standards for water pollutants (e.g. Beijing, Guangdong and Liaoning), or special discharge limits to water pollutants in certain environmentally sensitive water bodies such as the troubled Lake Tai Basin.

6.     Rural double whammy: lower water treatment rates & prone to agri pollution

Agriculture is a major contributor to nonpoint-source pollution. Indeed, agriculture has been widely acknowledged by officials as the largest single contributing sector to pollution. Since 2007, the Ministry of Land Resources, Ministry of Agriculture & the Ministry of Environmental Protection have been conducting joint surveys on pollution. This first national survey on pollution sources showed that agriculture accounted for around 50% of water pollution. As can be seen from the charts below, agriculture is the single largest sector contributing to COD and NH4 pollution:

2012 COD & NH4 Discharge by Sector

Agricultural water pollution in rural areas is compounded by low treatment rates of wastewater domestic households. Rural wastewater infrastructure is even more underdeveloped than their urban counterparts and access to centralized wastewater treatment is mostly unavailable. A World Bank study shows that rural wastewater treatment rate is far behind that of urban wastewater treatment, and that typically wastewater is simply dumped into farmland and rivers. According to local news, the current rural treatment rate is reported to be as low as 6%4, while the rate in urban areas is 77.5% for cities. As per the 12FYP, the wastewater treatment rate is expected to reach 85% for cities, 70% for counties and 30% for townships. In addition, as Premier Li Keqiang said on 5 March 2014, the government will also “solve the safe drinking water issue for more than 63 million people in rural areas”.

….solve the safe drinking water issue for more than 63 million people in rural areas.

Premier Li Keqiang

7.     A 101 on wastewater treatment technologies used in China

The predominant treatment processes in China are Conventional Activated Sludge Process (CASP) and treatments based on CASP, namely Oxidation Ditch (OD), Sequencing Batch Reactors (SBR), Anaerobic/Anoxic/Oxic (AAO), Anoxic-Oxic (AO) processes (the listing order is descending in popularity). Less widely used are biofilm processes, membrane bioreactors (MBR), natural biologic treatment systems (e.g. constructed wetland) and anaerobic biologic treatment systems.5

“A particular treatment technology is chosen depending on wastewater composition, affordability and other factors.”

A particular treatment technology is chosen depending on wastewater composition, affordability and other factors. For example, OD is resistant to shock loadings and excess sludge production, AAO and AO are a technology of choice for high performance of nutrient removal whereas SBR is preferred for the treatment of domestic wastewater in rural areas and wastewater from industrial enterprises.

Another issue is sludge disposal. Most municipal WWTPs don’t have excess sludge stabilization systems. The excess sludge is only treated through dewatering and/or thickening and is mainly disposed in landfills. Only a small portion of WWTPs actually reuse sludge in agriculture and other industries(read our review on sludge here).

If wastewater discharge standards are tightened and wastewater treatment and discharge fees are raised, then more advanced wastewater treatment technologies (e.g. membrane reverse osmosis application to industrial wastewater reused onsite) and possibly for the very costly zero liquid discharge (ZLD) systems for industrial wastewater sector will become economically viable.

In the meantime, there is also the prevailing problem of underutilization of WWTPs in the country…

8.     More waste & cheaper to pollute = time for regulatory reform?

As of 2012, there are 3,836 wastewater treatment facilities in urban areas with a total operational capacity of 0.149 billion m3/day7. This is a vast improvement over the last three decades when wastewater was just dumped back into nature untreated – in 1980, there were only about 20 small capacity wastewater treatment facilities in China8. Treatment rates improved dramatically and have reached 77.5% in the cities, 60.1% for counties to < 20% for townships by the end of 2010. 12FYP targets expect treatment rates to increase to 85% in urban areas, 70% for counties and 30% for townships by 2015.

Although the wastewater treatment rate has been increasing, it is hard to tell the real treatment rate given the fact that some WWTPs do not fully operate or even do not operate at all after completion, and some also suffer from under-developed supporting infrastructure such as incomplete sewage pipelines. Some plants are simply not turned on as electricity costs are high. Under-utilisation has been officially recognized by some provinces which have targets for improving utilization rates of existing wastewater plants as well as building new ones.

“The stark truth is that it is cheaper to pollute than to clean up. This is a result of systemic issues in wastewater pricing and discharge standards.”

The stark truth is that it is cheaper to pollute than to clean up. This is a result of systemic issues in wastewater pricing and discharge standards. So despite a high number of recorded pollution violations (see our previous notice here), companies will still continue to pollute not only because the fines imposed for pollution are still relatively low, but because it is currently cheaper to discharge untreated wastewater than to install & use the wastewater treatment equipment. Inadequacies in industrial water pricing, inconsistencies in discharge and water quality standards as well as inefficient tariff collection system are all discussed at length with Professor Ma Zhong, the Dean of the Environmental School at Renmin University here.

Inadequate wastewater pricing also means that some WWTPs are operating at a loss. In 2012, 25% of WWTPs operated at a financial loss and had to rely on government subsidies. Although, there has been recent announcements by the NDRC indicating guidance at a national level on tariff reforms of the Water Resource Fee including the implementation of tiered urban tariff systems, indication at a national level regarding wastewater treatment and/or discharge fees is yet to be seen – more on this in War on Pollution.

There are clearly significant challenges ahead in wastewater pricing and discharge standards reform if the government is indeed serious about cleaning up water pollution. Indeed if wastewater pricing and standards were comprehensively revised, not only will the upside to the wastewater treatment sector be significant, China’s water quality will also materially improve. Watch this space!

Further reading

  • The War on Water Pollution – Premier Li has just declared war on pollution. Tan expands on the government’s stratagems & offensives and fundamental changes required to shore up the MEP’s arsenal in order to wage a successful war
  • 2013-2014 Key Water Policies Review Haven’t been following China’s Three Red Lines strategy to protect water? Check out our summary of key water policies from 2013 to 2014
  • Fundamental Issues in Industrial Water – Professor Ma Zhong, dean of the School of Environment of Renmin University gives his in-depth views on the industrial wastewater standards & pricing. Is it cheaper to pollute than to treat?
  • China Water Risk’s 5 Trends for 2014 With environmental risk cited as one of the top risks most likely to derail economic growth, check out our top 5 trends in water for the year of the Green Horse
  • What is “Treated” Water BASF’s Magali Simon APAC Head Water Solutions, walks us step by step through the process of wastewater treatment
  • Water: Beijing Leads The Way Beijing takes the lead announcing a RMB500 billion Energy Savings & Environmental Protection industry days after the national plan, with more water treatment, recycling, harvesting and pipes plus stricter monitoring of pollution
  • The Money in Sludge  As China struggle to cope with an increasing mountain of sewage sludge, we explore whether China could follow international best practice and turn it into a new revenue stream
  • Groundwater Crackdown – Hope Springs The economy slows down but the Chinese government speeds up groundwater crackdown with increased transparency, blacklists at both central and provincial levels
  • Environmental Law Amendment: 40 Year Set Back? Will the proposed amendment set back China’s environmental development by forty years? Or will it be shelved?

1 National Bureau of Statistics of China, China Statistical Yearbook 2013
2 National Bureau of Statistics 2011
3 https://www.globalwaterintel.com/archive/11/8/general/flooding-exposes-chinese-infrastructure-woes.html
4 https://www.chinanews.com/gn/2013/12-16/5620868.shtml
5 Guo Jingbo et al. Systematical strategies for wastewater treatment and the generated wastes and greenhouse gases in China. Frontiers of Environmental Science & Engineering, 2012, 6(2): 271–279
6 Li Wen-Wei et al. China’s wastewater discharge standards in urbanization. Environmental Science and Pollution Research, 2012, 19: 1422–1431
7 MEP, Notice on list of urban wastewater treatment infrastructure for Year 2012, 24 April 2013, https://www.mep.gov.cn/gkml/hbb/bgg/201305/t20130508_251788.htm
8 Dana Medianu and John Whalley. Water availability as a constraint on China’s future growth, June 2012, https://www.nber.org/papers/w18124.pdf
Debra Tan
Author: Debra Tan
Debra heads the CWR team and has steered the CWR brand from idea to a leader in the water risk conversation globally. Reports she has written for and with financial institutions analyzing the impact of water risks on the Power, Mining, Agricultural and Textiles industries have been considered groundbreaking and instrumental in understanding not just China’s but future global water challenges. One of these led the fashion industry to nominate CWR as a finalist for the Global Leadership Awards in Sustainable Apparel; another is helping to build consensus toward water risk valuation. Debra is a prolific speaker on water risk delivering keynotes, participating in panel discussions at water prize seminars, numerous investor & industry conferences as well as G2G and academic forums. Before venturing into “water”, she worked in finance, spending over a decade as a chartered accountant and investment banker specializing in M&A and strategic advisory. Debra left banking to pursue her interest in photography and also ran and organized philanthropic and luxury holidays for a small but global private members travel network She has lived and worked in Beijing, HK, KL, London, New York and Singapore and spends her spare time exploring glaciers in Asia.
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Feng Hu
Author: Feng Hu
Having previously led CWR’s work on water-nomics, Feng now sits on our advisory panel to help us push the conversation on integrating water considerations in planning sustainable transition and mobilising finance toward climate and water resilience. Feng currently works on ESG advisory at a regional financial institution. Prior to that, Feng worked as Sustainable Finance Research Manager APAC at V.E, part of Moody’s ESG Solutions. During his time at CWR, he initiated and led projects for CWR including the joint policy briefs with China’s Foreign Economic Cooperation Office of the Ministry of Environmental Protection on the water-nomics of the Yangtze River Economic Belt. Feng expanded the water-nomics conversation beyond China by co-authoring CWR’s seminal report “No Water No Growth – Does Asia Have Enough Water To Develop?”. He has given talks on water-nomics and other water issues at international conferences, academic symposiums, corporate trainings and investor forums. Previously, Feng also sat on the Technical Working Group of the Initiative for Climate Action Transparency (ICAT) and worked as a senior carbon auditor on various types of climate change mitigation projects across Asia and Africa. Feng holds two MSc degrees – one in Finance (Economic Policy) from SOAS University of London and the other in Sustainable Resource Management from Technical University of Munich – and a BSc degree in Environmental Science from Zhejiang University.
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Inna Lazareva
Author: Inna Lazareva
Inna, originally from Buryatia, Russia, has a BA in Chinese and Burmese Philology and an MA in Chinese Philology from St. Petersburg State University. She is currently completing her Master’s research on Burmese at the University of Oxford, where she works for the university’s Project Southeast Asia as the Chief coordinator of the organising committee at the Oxford Southeast Asian Studies Symposium 2013 & the coordinator of the Roundtable on Burma at the Symposium. She also contributes to Global Water Intelligence where she has conducted research on water markets in China and Russia as well as China’s water strategy, policies and regulations, water sector financing, water tariffs & water in power. Her interests are water–related issues with focus on China & Southeast Asia . She is fluent in Chinese, Burmese, Russian (native) and English.
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