New Groundwater Management System - China Style

WaterWired (AKA Michael Campana) just did a blog article on a new groundwater management system instituted in Qinxu, a County in Shanxi Province in China - called the Qinxu Groundwater System.  His is a very good article, complete with a video spot from the Water Channel.  I recommend you take a look at these materials before reading the rest of this article, which will be a few comments on the new China approach.

Several things hit me as I was reading about the new management system.  First, as I've said since I became manager of GMD 4 in 1977 - Groundwater management is easy - just don't pump it.   If GMD 4 had full control of all the groundwater, we could have easily had a quota system set up many years ago. The sum of all quotas could have been set to achieve any outcome desired - all the way from restoring historic groundwater levels to increasing the current decline rates as much as we wanted to.  Our problem is that in Kansas, water rights are real property rights to the use of the State's water.  I can see where the government of China can at any time allot, reallocate or adjust any or all water, but not so in Kansas.  Of course, this doesn't make either system "right" or "wrong". 

Secondly, the story from Frank van Steenbergen (that was reported on by WaterWired) states the huge dependence China has on irrigation water currently being used - half the country's wheat and one third of its corn.  His conclusion is what a disaster it would be if this area of China were to run out of water and have to replace all that production on the world grain markets.  Well, if the new Qinxu quotas are correctly sized to achieve groundwater sustainability (so they never run out of water), some percentage of that production will be lost.  My point is that nowhere in the articles does anyone talk about the total quotas relative to the amount of water having been used before the new system.  This could be nothing more than a fancy accounting system to continue the current overdrafts.  I don't think it is, but then without this information, how can I agree that it is "the solution" they say it is?

Thirdly, the system clearly tries to use price to discourage overpumping ones quota, but it doesn't seem to prohibit over use.  As grain prices rise, the incentive to over use ones allocation (to increase production) goes up as well.  As more water is used, the quotas must be reduced further.  Yes, its the tragedy of the commons again.  I have no idea what .05 Euro per unit of water really means, and the fact that everyone's units can vary between 500 and 5000 liters per unit renders these values very hazy.  Of course, all these numbers and values can be adjusted to make them highly relevant - if there is the political will, or the outright power, to do so.  I should do the math to quantify the relevance of the price to the quotas - maybe tomorrow.

Fourthly, the marketability of the units is a great feature, but it'd be even more relevant if there was a prohibition to exceeding ones' quota. Also, with groundwater, I'm thinking that trades need to be spatially restricted to some degree.  Otherwise an inappropriate amount of groundwater could be used in too small an area - causing excessive declines or impairments.  Maybe this system addresses this, but it wasn't stated.    

Fifthly, there is mention of 60 telemetry observation wells that track groundwater levels, but no mention of how these are used.  Presumably the quotas would be adjusted periodically to reflect the water table responses shown by these 60 wells to the previous years pumpage??  It is awfully hard to efficiently operate production agriculture without knowing what all your inputs are.  Here in NW Kansas cropping rotations are often used to take advantage of nutrient inputs, fallowing periods and marketing plans, and they plan 3 to 5 years out.  Water quotas that might change within this time period would reduce the overall efficiency of these operations.  Of course, the quota system could be designed over longer periods to accommodate these needs - it's just not covered.

In conclusion, it might sound like I'm being critical of the new system, but I'm really not.  It could work, but it could easily fail as well.  As usual, the devil, and the real impacts, are always in the details.  The bottom line is that to slow the decline rates, consumptive water use must be reduced, and that reduction will mean less economic opportunity - always a touchy issue to attempt.  Comments?

Update (November 12, 2012):  I did the math on the prices and they are:  at .44 Yuan (the base rate per unit (.05 Euro / .06 $US) and the largest unit at 5000 liters, an AF of water will cost the user $14.81.  For the highest rate of .55 Yuan (assessed for those exceeding a quota) that same AF will cost $22.14.  Has price been appropriately applied in this system?

P.S.  If anyone would like to double check my prices math, please let me know if you find a different answer.