China Water: June 6, 2008: Chinese economy from American cattle viewpoint.

Another "big picture" article, this one from a United States cattle industry publication.

Worth reading.

Peter Huston
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http://www.cattlenetwork.com/Content.asp?ContentID=226895

6/4/2008 2:39:00 PM

China Agriculture: Signs Of Stress To Land & Water


Land and water are key inputs to agriculture and are the main constraints to China’s continued production growth. Chinese farmers farm not only the most productive land in plains and valleys in the eastern third of the country but also steep hillsides, arid grasslands, drained lakes, and dry riverbeds that are generally not cultivated in more land-abundant regions like North America or Australia. While southern China has relatively abundant water that facilitates water-intensive flooding of rice paddies, the per capita water endowment in the North China Plain is roughly one-tenth the world average and is well below conventional measures of water scarcity. Yet, this region produces a large share of China’s wheat, corn, cotton, and other crops that rely heavily on irrigation.

China’s current exploitation of land and water resources is either at or beyond sustainable levels. The cultivation of steep hillsides is causing massive sedimentation loss estimated at over 2 billion tons per year, decreasing productivity in areas losing topsoil, reducing water storage capacity in reservoirs, and increasing the likelihood of floods. Agricultural practices, both crop cultivation and animal husbandry, on sensitive arid grasslands are partly to blame for the desertification of these areas. In the North China Plain, the groundwater table is falling rapidly in some areas, and several surface-water sources periodically dry up before reaching the sea. The Yellow River, for example, ran dry for long periods of the year in the 1990s.

Policy measures instituted in 2000, however, have ensured the river’s continued flow to the ocean.

Industrial and urban growth is increasing the competition for China’s limited land and water. China’s nonfarm economic boom means that housing complexes, industrial parks, power stations, and other projects, are being built on land converted from agriculture.

Competition for land within agriculture is also intense. Increasing production of meat, dairy products, vegetables, fruit, and farm-raised fish competes with grain cultivation for area. Given the gradual shrinkage of the agricultural land base, expansion of one agricultural activity generally means that land must be diverted from another. Efforts to develop saline or other marginal lands for limited agricultural activities have yet to result in significant expansion of agricultural production onto such land.

As with land, water resources face increasing demand from nonfarm users. In 1980, industrial and domestic consumers used only 13 percent of the water consumed in China, with agriculture accounting for the remainder. By 2000, agriculture use was roughly two-thirds of water consumed in China, and industry and domestic users have raised their share to one-third. On the productive North China Plain, water diversions for human use are well over 60 percent of renewable water resources, and nearly 90 percent in the Hai River Basin in Hebei Province.

While China intensively uses its land and water resources in agriculture, there is potential to manage both resources more efficiently. Land in China is allocated to farm households but remains collectively owned and subject to redistribution to other households or sale to nonagricultural interests by local leaders. This system reduces incentives for households to invest in land improvement and raises the cost of land transfers. It also results in small, fragmented household land holdings that confound farmers’ capacity to specialize or take advantage of economies of scale and size. Additionally, farmers rarely allow land to be fallow and recover from intensive production, a practice that could have negative long-term implications for land productivity. Until the 1990s, water management in China was geared to exploiting water as a cheap resource to boost agricultural and industrial production without considering the opportunity costs. Efforts to encourage water saving are just beginning to take hold.

Reforming land and water management policies and practices in China may help improve the efficiency of resource allocation and could bring about more sustainable practices and contribute to future production growth. However, such reforms are likely to confront ideological and other resistance. Moreover, the gains may not have a large net effect on agricultural production since more efficient allocation may lead to a reduction in the levels of land and water allocated to agriculture. This is particularly true for grains, since the value of these resources in grain production is lower than in horticultural production and nonagricultural uses.

Source: USDA, ARS, Amber Waves