Pollution: More Standards, Rubbish & Money?

By Debra Tan 12 June, 2012

Will China be able to clean up or will rubbish continue to pile up? Debra Tan takes a look at the new standards

New water standards & price hikes point to water remaining a top government priority
Standards have yet to filter down to grassroots, which bear the brunt of pollution
Right economic incentives could drive clean-up

Given the onslaught of research, articles and government edicts on this topic (see notices)  … I feel compelled to write about pollution this month …

New Water Drinking Standards

14 May 2012 – China announced updated drinking water standards to be applied throughout the country effective 1 July 2012 with a total of 21 toxicological indicators.  An improvement indeed as the last set of standards was introduced in 1985 with only 10 indicators. There is more good news … the new standard has 106 requirements on organic substances, microbes and purification levels – a huge increase from the previous 35. According to Zhang Lan, deputy director of the water office under the China Center for Disease Control and Prevention, the new standards will also have “stricter requirements on certain indicators as arsenic, chromium and lead”. These standards are expected to be enforced by 2015.
If you feel these new standards are going to short change you on your daily arsenic load, you can always get your daily dose of arsenic from a bottle of Fiji Water.

Groundwater woes continue

15 May 2012 – The Ministry of Land and Resources of China issues Communiqué on Land and Resources of China 2011. The report tested groundwater quality in 4,727 spots in 200 cities and found: 11% are of excellent quality, 29.3% good, 4.7% fair, 40.3% poor and 14.7% very poor quality; In general, the outlook for groundwater quality is not optimistic as 45% of spots are of fair to excellent quality, while 55% are of poor to very poor quality.
No surprises here but what can we do when government admits that currently there are no effective measures to address the risks posed by pollution in China? Officials highlight that this is due to the fact that most Chinese cities, particularly those in south China, rely on a single water supply source such as water from a river, lake or groundwater.
Falling water tables have resulted in sinking land the size of Florida (or four Netherlands, if you prefer a European comparison) in Northern China, according the Chinese Academy of Sciences . Still many of us think it is fine to extract groundwater for free. Any ideas?

China issued Water Pollution Prevention Plan on Key Basins (2011-2015)

17 May 2012 – Ministry of Environmental Protection (MEP), National Development and Reform Commission (NDRC), Ministry of Finance and the Ministry of Water Resources jointly issued Water Pollution Prevention Plan on Key Basins (2011-2015) which aims at improving overall water quality in key river basins from moderately polluted to slightly polluted. This involves increasing the Grade I – III section by 5% to 49.2% while reducing sections of river basins that fall into the worse than Grade V by 8%.
The plan emphasizes 6 major tasks:

  1. to strengthen the protection of drinking water
  2. to improve industrial pollution controls
  3. to enhance the urban sewage treatment systems
  4. to promote comprehensive environmental and ecological construction
  5. to enforce the coastal waters pollution prevention and control
  6. to enhance the watershed level of risk prevention

Zhao Hualin, head of MEP’s pollution prevention department under the Ministry of Environmental Protection, said that a total of 22 indicators will be used to evaluate river quality during the 12th Five-Year Plan (2011-15) period. According to Ling Jiang, deputy head of the department, additional indicators such as the new national heavy metal standards may mean that the water quality of some rivers may be downgraded for a certain period of time, “but stricter evaluation will be good in the long term.”

Guangzhou sets new standard with 50% & 500% water price hikes

21 May 2012 – Good news! Guangzhou raised the price of residential water by 50%  from RMB1.32/cu.m. to RMB1.98/cu.m. The progressive water tariffs increases, currently in public consultation, are expected to be implemented within 6 months. Still not convinced of the good news?  “Special Category” water users including car washes, nightclubs, saunas and spas face a ~500% increase from $3.38/cu.m. to $20/cu.m.
Yet water price skeptics still ask why would water price rise given that the government had capped energy prices? Simple, China is facing a water crisis, not an electricity crisis. It needs more water. Solutions like desalination and wastewater recycling to potable levels are only economically viable with a significant water tariff hike. Without water, they cannot generate electricity. Water, which has been previously ignored, must be fixed. Water price hikes are happening – Guangzhou is leading the way.

Grassroots: Polluted and becoming more aware … but do they care?

Sweeping Pollution Under the Rug” was the title of a piece in Caixin this month. The piece focuses on a recent report published by Professor Li Dun of Tsinghua University’s Research Center for Contemporary China. The main thrust of the report is that villages, not cities, are at the heart of China’s pollution woes.
Rural areas have borne the brunt of urbanization and industrialization. Poor enforcement also has led to more polluting industries such as chemicals and smelting relocating from cities to remote areas where there is less likelihood of public protests. Local village enterprises have grown, drawing excessively on natural resources and these include water. All types of waste were sent to the villages to be treated or “simply piled up or buried.”
Su Liu of the Civic Exchange echoed this view in her presentation on Dongjiang: Dirty & Thirsty” on 30 May 2012. She said that 24 out of the 36 provincial level industrial parks have no industrial wastewater treatment, let alone the industrial parks at the county level, or rural enterprises.

“Longchuan County: The mountains are high and the emperor is far away, so let’s go crazy over rare earth metals?”

Liquid Asssets IIIB: A photographic report of the Dongjiang Expedition

She also highlighted instances where economics outsmarts enforcement, using rare-earth mining as an example. Despite the national clamp down on rare-earth mining, the proliferation of a black market for these minerals has resulted in what she calls “the wild wild east”. Here, locals find ingenious ways to circumvent the ban with non-compliant highly polluting methods to extract the minerals and selling to buyers in cars with no number plates. You can read all about this in the chapter titled “Longchuan County: The mountains are high and the emperor is far away, so let’s go crazy over rare earth metals?” in “Liquid Asssets IIIB: A photographic report of the Dongjiang Expedition”.
Professor Li believes that the traditional land rights system, has resulted in villagers side-stepping responsibility. As the long-term interest of protecting the land is not aligned with the people’s interest; it’s-not-my-problem-as-it’s-not-my-land attitude will continue. Land reform is never fast nor easy so perhaps in the meantime, there should be interim incentives and none speak louder than economic incentives…

Seeing potential in rubbish

When Su Liu was talking about the precarious future of the Dongjiang, she showed pictures of piles of rubbish heaped around villages. As I imagined the foul smells wafting from them, I also saw $ signs rising from the rubbish pile. There is money to be made by starting a rubbish collection business. She then said that in the beginning of her expedition, she took pictures documenting each pile of rubbish but then stopped as they were prolific. Depressing yes, but at this point, my business case was strengthened and I imagined my rubbish collecting business growing at least tenfold. Now that was just along a small stretch of the river!
There is money to be made cleaning up/ dealing with waste. Evan Li from Standard Chartered Bank says that growth prospects in solid waste treatment look brighter than those in wastewater treatment in their latest report. Newly published solid waste and wastewater target 12FYP numbers by the State Council implies an underlying CAGR of 13.8% for solid waste versus 6.4% for wastewater treatment. The trend doesn’t stop here … There is CAGR of 8% in landfill and Waste-to-energy, a method of treating solid waste, is estimated to have a 2011-2015 CAGR of 28%, with economic powerhouse provinces like Guangdong and Shandong aiming for 29% and 30% respectively.
According to the same report, the Government has earmarked RMB264bn to solid waste treatment, a 134% rise over the amount invested in 2006-2010. Indeed, that makes it worth wading through crap AND it eases water pollution. To top it off, the Water Pollution Prevention Plan on Key Basins (2011-2015) estimates RMB500 billion will be spent to ease the pollution in 10 major rivers and lakes monitored by the central government. Go forth… make money, clean up.

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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