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China Water Risk

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China Water Risk (Non-Profit Initiative)

China Water Risk
Formation2010
TypeNon-Profit Initiative
FocusWater, China
HeadquartersHong Kong
Location
Websitehttp://chinawaterrisk.org

China Water Risk (simplified Chinese: 中国水务危机; traditional Chinese: 中國水務危機) is a non-profit initiative based in Hong Kong dedicated to highlighting and addressing business and environmental risk arising from the country’s urgent water crisis. Their stated aim is "to foster efficient and responsible use of China’s water resources by engaging the global investment and business communities, civil society and individuals in understanding and managing China’s water risk” [1]. Its innovative information portal www.chinawaterrisk.org provides a platform to share expert views, research, interviews and analysis from industry leaders. Users can access the most relevant and critical information to help make informed investment decisions as well as remain on top of opportunities to invest in a changing environment[2]. China Water Risk is often quoted by business and industry news [3][4][5][6][7] and also invited to give talks, participate in panel discussions and moderate in various investor and business conferences and forums[8][9][10].

According to the National Bureau of Statistics of China, 11 of the 31 regions of mainland China provinces, autonomous regions and municipalities (including Jiangsu, Shandong, Henan, Hebei, Shanxi, Beijing, Shanghai and Tianjin) have renewable water resources per capita per annum below 1,000 cubic meters [11], a water poverty level considered by experts to pose a severe constraint on food production, economic development and protection of natural systems [12].

These 11 regions accounted for 45 per cent of the mainland’s GDP, 40 per cent of its agricultural output and more than half of its industrial production. Another eight provinces including Guangdong were near the water poverty line. [3][11].

Background

China Water Risk’s panel of experts include water, industry experts and investment experts and their network partners range from water related NGOs to think-tanks and business & investor driven initiatives. [13] It is funded by Hong Kong based ADM Capital Foundation (US 501(c)(3) charitable status and a registered charitable institution under Sec. 88 of the IRD in Hong Kong) [14] ADM Capital Foundation was established in 2006 by Asia Debt Management Hong Kong Limited (ADM Capital)[14].

China Water Risk developed in collaboration in its pilot stage as The Asia Water Project, with Civic Exchange{思汇/思匯}, the Association for Social and Responsible Investing in Asia (ASrIA), Business for Social Responsibility (BSR), the Institute of Public and Environmental Affairs (IPE), and Responsible Research [15][16] [17].

The Asia Water Project was rebranded as China Water Risk in an effort to make the vast amounts of information more accessible during 2011 by incorporating heavy use of info-graphics and interactive web-graphics to reach a wider audience and is available to public free of charge. The new portal www.chinawaterrisk.org website was open to public on Oct 27th, 2011 [2][18].

The site gives access to a consolidated library of knowledge and research on water issues; real-time relevant facts and news; expert opinions and interviews from captains of industry, investors, academia and water experts; benchmarks key industries and best-in-class examples; provides access to a network of opinion leaders, consultants and experts[1].

Key Water Risks in China

“Regardless of whether we care for the environment, we have come to a point where water risks affect us all as the economy runs on water” said Debra Tan, director of China Water Risk[2][10].

Below are some key water risks that China is encountering as highlighted on the China Water Risk’s website:

  • China has 20% of the world’s population but only 7% of its freshwater reserves[19][20].
  • 11 regions (“Dry 11”) in China are water scarce with water resources comparable to the Middle East[3][11][20][12].
  • The economy runs on water - 85% of water use in China by agriculture and industry; experts project that demand for water may not be met by 2030[3][12].
  • The Dry 11 regions' total Gross Regional Product contribution to China's GDP = 45%.[3][12][21].
  • Food security - The Dry 11 regions account for RMB2.4 trillion or 40% of the total agricultural output value of China [12].
  • Industrial disruption – The Dry 11 regions account for RMB28.7 trillion or 52% of the total industrial output value of China [12].
  • Energy issues – 96% of power in China requires water to generate[22].
  • Pollution exacerbates scarcity. 77% of the 26 key lakes and reservoirs and 43% of the 7 major river basins monitored are unfit for human contact[23]. Already, 19% of rivers and basins and 35% of key lakes and reservoirs are essentially useless for both agriculture and industrial useCite error: A <ref> tag is missing the closing </ref> (see the help page)..

Economy Runs on Water

Since the economy runs on water and water is used differently by each sector, China Water Risk adopts an innovative sector approach to water risk[2]. Intelligence by sector, including sector peer group benchmarking, help businesses and investors navigate and mitigate these specific risks. Sectors covered by China Water Risk are:

  • Agriculture: As the largest user of water, accounting for 62% of Water Use in China in 2009[11], it is key in water resource management. Since China is an important producer of agriculture products globally – a top producer of all key meats and crops[24], any disruption will have an impact on the pricing of agricultural goods globally.
  • Power: 96% of power in China requires water to generate[22]. With installed capacity projected to almost double in by 2020 and 47% of electricity consumed by the Dry 11[11], does China have enough water to power her economy?
  • Food & Beverage: 15 F&B companies have signed the United Nations CEO Water Mandate, recognising water as a key risk[25]. China is set to overtake the US as the largest grocery market in the world by 2014 with a projected market size of EUR761 billion [26]
  • Metals & Mining: China is a key producer and consumer of ores and metals globally. Mines cannot be relocated, making the sector susceptible to water scarcity. 41-62% of the ensured reserves of coal, iron and bauxite are located in water scarce regions[11]
  • Textiles: China is one of the largest clothing manufacturers in the world, is a large user of hazardous and persistent chemicals, and is reported to be a major source of water pollution[27]. 17 to 20% of industrial water pollution is from textile dyeing and treatment[28]; 72 toxic chemicals in China’s water originate solely from dyeing – 30 cannot be removed[28].
  • Electronics: As the bulk of the water footprint is with manufacturing activities of suppliers, a false sense of security about water risk exposure is created for most electronic companies with components manufactured across China. China generates 2.3 million tones of electronic wastes domestically every year[29] and much of United States’ 3 million tones ends up being “recycled” in China.

Yet, according to the 2011 EIRIS Water Risk Report, only 36% of companies have acknowledged that water is a real risk they understand they must address[30].

References

  1. ^ a b [1] "China Water Risk". Retrieved on 2011-11-22.
  2. ^ a b c d [2] "November 2011 Newsletter: ADM Capital Foundation Launches China Water Risk Web Portal for Investors and Companies"
  3. ^ a b c d e [3] "Business caught in grip of mainland water crisis", South China Morning Post, 14 November 2011.
  4. ^ [4] “12 Scary Facts about China’s Water Crisis”, Financial Post, 2011-11-08. Retrieved 2011-11-21.
  5. ^ [5] "Weekly Water Report International Water and Development Weekly", Ooska News, 9 November 2011. Retrieved on 2011-11-24.
  6. ^ [6] “Money for Nothing”, 11 November 2011. Retrieved on 2011-11-22.
  7. ^ [7] "HSBC Global Research Report: Climate Investment Update: Throwing the coffee out with the bathwater in China" 3 November 2011. Retrieved on 2011-11-21.
  8. ^ [8] "Guest speakers:HSBC Global Resources Conference", Singapore 27 September 2011. Retrieved 2011-11-22.
  9. ^ [9] "BNP China Conference", Qingdao. 14 October 2011.
  10. ^ a b [10] "Liquidity Crunch Forum – Investment Business Water & Climate Change", 9 November 2011. Retrieved on 2011-11-22.
  11. ^ a b c d e f National Bureau of Statistics of China, China Statistical Yearbook 2010
  12. ^ a b c d e f [11] “Addressing China’s Water Scarcity: Recommendations for Selected Water Management Issues, "World Bank", 2009"
  13. ^ [12] "China Water Risk – Network". Retrieved 2011-11-21.
  14. ^ a b [13] “ADM Capital Foundation”. Retrieved 2011-11-22.
  15. ^ [14] "Responding to China’s Water Crisis, China", Retrieved 2011-11-21.
  16. ^ [15] "Water In China: Issues for Responsible Investors" , Responsible Research, The Asia Water Project, ADM Capital Foundation & SynTao, 2010-2. Retrieved on 2011-11-23.
  17. ^ [16] "Hong Kong’s Role in Mending the Disclosure Gap", 2010-3. Retrieved on 2011-11-24.
  18. ^ [17] “Civic Exchange Newsletter”, Chinese version. Retrieved 2011-11-28.
  19. ^ "UN Population Division of the department of Economic and Social Affairs 2010"
  20. ^ a b FAO AQUASTAT 2003-2007
  21. ^ [18]"China's Rising Climate Risk". HSBC Global Research. 6 October 2011.
  22. ^ a b China Electricity Council 2010.
  23. ^ "2009 State of Environment Report". Ministry of Environmental Protection.
  24. ^ [19]United Nations CEO Water Mandate. Retrieved on 2011-12-12.
  25. ^ FAOSTAT 2008
  26. ^ [20]"China Water Risk Sectors-Food & Beverages." Retrieved 2011-11-24.
  27. ^ [21]"Dirty Laundry: Unravelling the corporate connections to toxic water pollution in China." 13 July 2011. Retrieved on 2011-12-12.
  28. ^ a b [22]"The Environmental Cost of Clothes". Retrieved on 2011-12-12.
  29. ^ [23]"Urgent Need to Prepare Developing Countries for Surge in E-Wastes". UNEP. 2010-02-22. Retrieved on 2011-11-21.
  30. ^ [24]"A Drought in your portfolio: are global companies responding to water scarcity?". Eiris Water Risk Report. June 2011. Retrieved 2011-11-21.
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