From Nation, page 9, issue no. 364, Apr 21, 2008
Translated by Zuo Maohong, Liu Peng
Original article: [Chinese]

As water-scarce Beijing has intensified efforts to tap a web of reservoirs in nearby Hebei province to ensure supplies during the Olympic Games, calls for building a compensation mechanism for those affected have also heightened. 

A water diversion project to bring supplies from four reservoirs in Hebei to Beijing is scheduled to be completed by the end of April. The project is part of the northern stretches of the massive South-to-North Water Diversion Plan's Central Route venture (see map below).

Even before the latest water diversion materialized, Hebei residents living in the upper streams of Miyun reservoirs – the largest source of water for Beijing – have compromised their way of life in the name of safeguarding water supplies for the capital.

To prevent water pollution, soil erosion and to save supplies, mining activities in Hebei's Luanping County have ceased, and farmers have switched from planting water-intensive paddy rice to other crops like corn. In fact, Hebei too is facing water shortages and needs to buy supplies from nearby Shandong province.

After years of sacrifices, talks of seeking compensation for economic and ecological losses have intensified in the affected provinces, including Hebei and Shaanxi. This focus series looks into a case in Luanping County and summarized suggestions raised by various parties on eco-compensation.



The Story of Hongqi Village
Since the beginning of April, Yao Qiuyun has been preoccupied with one task--leveling off his land. The farmer puffed deeply into his cigarette on a timeworn sofa while relating his latest activities to the EO.

In another room, four women were playing majiang while another four were indulging in Zhaijinhua (a poker game), with several others standing by to watch and chat.

Killing her time on this April day, traditionally the busiest farming season in Hongqi village, one of them couldn't resist in raising her voice when talking about the leveling of land. "It (the farmland) was all ruined thanks to their reform," she said.

The reform referred to a recent project by the local Land and Resources Administration to introduce water-saving irrigation for farmers to switch from water-intensive crops to irrigated dry crops.

In recent years, Hongqi villagers have undergone changes to guarantee water supply for Beijing. Luanping County, where the village is located, is a major water source for Beijing as the Chao River flows by it. Flows from the river made up 39.5% of the water in Miyun Reservoir, the water lifeline for the capital.

Sacrifice for the Olympics
Last March, like all farmers in Luanping and two other nearby counties Fengning and Chicheng, Hongqi villagers were asked to give up growing rice and replacing it with water-saving crops such as corn and potatoes.

That was in accordance with the Economical and Social Development Memo signed by Beijing and Hebei in October 2006. According to the Memo, Beijing would make a "profit loss" compensation of 450 yuan for each mu (1/15 of hectare) of crops changed.

Between 2005 and 2009, Beijing would be spending a total of 100 million yuan to control water pollution and develop water-saving industries in Chengde and Zhangjiakou, two upstream cities of Miyun and Guanting Reservoirs.

To Yao, the compensation offered by the Beijing government was acceptable. “If there weren't any, we would still have to quit growing rice. Besides, it's for the benefit of the Olympics, isn't it?” he said.

"We heard our place is going to be governed by Beijing. Is this true?" another woman asked while playing majiang. She and her companions seemed a bit disappointed to hear an ambiguous answer from the reporter.

The wish to become associated with the capital might explain why many people here were willing to sacrifice their interests though having minor complaints. As a local government official said, "most of them have a sense of capital consciousness."

Controversial Compensation Rule
Compared to the previously obligatory administrative orders, the compensation plan for water-saving was exciting news to many locals.  

However, after careful calculation, they found the compensation rate was too low. If rice was replaced by corn, the yearly yield of every mu of land would drop by at least 753 yuan, but the compensation offered was only 450 yuan.

Luanping Water Affairs Bureau deputy director Lu Jijun said, "the rate we previously submitted to Beijing was between 600 and 700 yuan, but it was refused."

For this, 40 Hongqi villagers paid a visit to the local government last year.

"The officials tried solacing them. The county's general secretary even gave them 700 yuan for traveling expenses, so they came back," the villagers laughed as they related the story to the EO. They emphasized the "700", meaning it was a considerable amount.

To the farmers, some compensation was better than none, and growing corn would still make money. However, the problem for many farmers was that their fields were unsuitable for corn, as the land was waterlogged as had been required for rice planting.

"It (the waterlogged land) doesn't produce corn at all. The plant grows only this tall," Yao said, stretching two of his fingers to indicate about 10 centimeters long.

A Vanishing Village of Rice
Only 500 meters away from the Hongqi village center, the Chao River oozed by. For decades, farmers directed water from the river to irrigate their rice.

"In the old times there was plenty of water. People didn't worry about irrigation. We also generated electricity ourselves using water in the river," Yao recalled.  

After 2000, however, the river stopped flowing in every April and May, when the rice fields needed water most. The villagers would therefore guard by the ditches of their own fields for fear that the water would flow into others, he said.  

As a highly water-consuming crop, each mu of rice would cost 1,200 cubic meters of water a year, triple the water demand of other dry-field crops. After changing to water-saving crops, villagers would only need to irrigate the fields four times every season instead of 150, said the village's general secretary Zhu Fenghe. "Less fertilizer is needed too," he added.  

According to the agreement between Beijing and Chengde, compensation would be extended to farmers in two grants. The first having been paid off in 2007, the second would be available soon. "Nobody knows whether the project would continue after the agreement terminates in 2009," Zhu said.  

Moreover, whether the land would still fit for rice in the future remained a question. Maybe it would, but surely to revert back to rice would take more labor and costs, as the ditches for irrigation had been leveled off and filled up, Zhu explained.

Feedback: Building up an Eco-Compensation Mechanism
Eco-compensation mechanism refers to environmental economic policies aimed at balancing ecological benefits and economic benefits of all stakeholders involved, leading to equitable development between rural and urban, regional and social development.

The practice of eco-compensation in China dates back to the early 1990s--mostly spontaneous experiments by local governments. In September 2007, the State Environmental Protection Administration issued a guideline on eco-compensation trial work, urging local environmental watchdogs to carry out eco-compensation in the fields of water, mining, important eco-function areas and nature reserves. However, a clear, nation-wide compensation mechanism had yet to be established. 

On April 10th, government officials, international NGO workers, and ecological experts gathered in Hanzhong of Shaanxi and discussed eco-compensation to source water areas under the South-to-North Water Diversion Plan's central route project. Below were some of the views expressed:

Li Huai'en, professor of Xi' an Univesity of Technology
Li suggested a water rights transfer mechanism between the source and destination points. He said water prices and waste water treatment fees at beneficiary points should be raised in order to subsidize the losses experienced at the water sources, where traditional economic activities were jeopardized. In addition, the central government and local governments in beneficiary areas should support technology transfers to water source areas, developing alternative industries, or subsidizing locals there to enter green industries. The governments should set down favorable credit policies to support eco-construction at water source areas.

Zhang Qinling, director of Shanxi Water and Soil Conservation Bureau
Zhang believed water should be treated as a commodity, just as coal, oil and natural gas were. He added as a commodity, the beneficiary should pay for it. He was in favor of a market driven mechanism to determine the rate of compensation, adding all interest parties should voluntarily come to gather and co-ordinate by the government to decide on the rates. In addition, permanent grain subsidies should be included.

An Qiyuan, former secretary of Shaanxi Provincial Party Committee
An proposed that the state establish a long-term water protection fund. In addition, the beneficiaries under the water diversion project should fork out compensation to the sources. He said the compensation would help to ensure water quality at the sources, where in order to stop polluting economic activities, replacement job opportunities and alternatives must be made available.