China’s Growing Water Crisis

Dried-up riverbed of Jialing river, a Yangtze tributary, China, August 2022. Thomas Peter / Reuters
Dried-up riverbed of Jialing river, a Yangtze tributary, China, August 2022. Thomas Peter / Reuters

China is on the brink of a water catastrophe. A multiyear drought could push the country into an outright water crisis. Such an outcome would not only have a significant effect on China’s grain and electricity production; it could also induce global food and industrial materials shortages on a far greater scale than those wrought by the COVID-19 pandemic and the war in Ukraine. Given the country’s overriding importance to the global economy, potential water-driven disruptions beginning in China would rapidly reverberate through food, energy, and materials markets around the world and create economic and political turbulence for years to come.

Unlike other commodities, water does not have any viable substitutes. It is essential for growing food, generating energy, and sustaining humanity. For China, water has also been crucial to the country’s rapid development: currently, China consumes ten billion barrels of water per day—about 700 times its daily oil consumption. Four decades of explosive economic growth, combined with food security policies that aim at national self-sufficiency, have pushed northern China’s water system beyond a sustainable level, and they threaten to do the same in parts of southern China as well. As of 2020, the per capita available water supply around the North China Plain was 253 cubic meters or nearly 50 percent below the UN definition of acute water scarcity. Beijing, Shanghai, Tianjin, and other major cities are at similar—or lower—levels. So scarce are Hong Kong’s freshwater resources that the city has for decades used seawater to flush toilets. For reference, as of 2019, even severely water-stressed Egypt had per capita freshwater resources of 570 cubic meters per capita, and it does not have to support a large manufacturing base like China’s.

Moreover, a significant portion of China’s water supply is not fit for human consumption. A 2018 analysis of surface water by China’s Ministry of Ecology and Environment found that although the quality had improved from previous years, 19 percent was still classified as unfit for human consumption and roughly seven percent was unfit for any use at all. The quality of groundwater—which is critical for ensuring water supplies during drought—was worse, with approximately 30 percent being deemed unfit for human consumption and 16 percent deemed unfit for any use. China may be able to use impaired water resources in the future, but only with major additional investment in treatment infrastructure and a significant increase in electricity use to power water treatment processes. Meanwhile, farm and industrial chemicals continue to contaminate the country’s groundwater, setting the stage for potentially decades of additional water supply impairments. Data from the UN Food and Agriculture Organization indicate that China uses nearly two and a half times as much fertilizer and four times as much pesticide as the United States does despite having 25 percent less arable land.

For decades, Beijing has generally chosen to conceal the full extent of China’s environmental problems to limit potential public backlash and to avoid questions about the competence and capacity of the Chinese Communist Party (CCP). This lack of transparency suggests that an escalation to acute water distress could be far closer than most outside observers realize—increasing the chances that the world will be ill prepared for such a calamity.


The overpumping of aquifers under the Northern China Plain is a core driver of China’s looming water crisis. According to data from NASA GRACE satellites, the North China Plain’s groundwater reserves are even more overdrawn than those of the Ogallala Aquifer under the Great Plains of the United States, one of the world’s most imperiled critical agricultural water sources. These data further suggest that the most populous portion of China north of the Yangtze River—an area from eastern Sichuan to southern Jilin that is home to more than a billion people—has for much of the past 15 years seen steady declines in the amount of water in the region’s lakes, rivers, and aquifers.

In parts of North China, groundwater levels have declined by a meter per year, causing naturally occurring underground water storage aquifers to collapse, which has triggered land subsidence and compromised the aquifers’ potential for future recharge. Recognizing the urgency of the problem, China’s government in 2003 launched the $60 billion South-to-North Water Transfer Project, which draws water from tributaries of the Yangtze River to replenish the dry north. To boost rainfall (and sometimes engineer better weather, for example, for Olympics ceremonies and party anniversary events), China has also deployed aircraft and rockets to lace clouds with silver iodide or liquid nitrogen, a process known as cloud seeding. It has also relocated heavy industry away from the most water-stressed regions and is investing massively in water management infrastructure, with Vice Minister of Water Resources Wei Shanzhong estimating in April 2022 that annual investment in water-related projects could hit $100 billion annually.

Still, these efforts may be insufficient to forestall a crisis. Despite highly innovative programs to improve water availability, some scholars estimate that water supply could fall short of demand by 25 percent by 2030—a situation that would by definition force major adjustments in society. Experiences to date on the North China Plain enhance concern and illustrate the scale of additional needed hydraulic intervention. Despite nearly a decade of importing Yangtze valley water supplies to high-stress areas such as Beijing, large-scale depletion of stored groundwater continues in other nearby areas, such as Hebei and Tianjin.


China’s leadership is keenly aware that famines precipitated by drought helped topple at least five of China’s 17 dynasties. Thus, for centuries, the country’s leaders have emphasized maximizing grain production to ensure food security, a policy that the CCP’s development agenda has continued. The policy has become especially important since the early years of the twenty-first century as strategic competition between China and the United States prewar production.

But to sustain these harvests, farms and cities are pumping water far faster than nature can replenish it. Satellite data suggest that each year between 2003 and 2010, North China lost an amount of groundwater equal to more than twice what Beijing consumes annually. As groundwater levels fall, many farmers are struggling to find new sources. Some are digging larger, deeper wells, often at great cost; but continual overdraws may render water physically inaccessible regardless of pumpers’ willingness to spend on deeper wells and new pumping technology.

If the North China Plain were to suffer a 33 percent crop loss because of water insufficiency, China would potentially need to compensate by importing approximately 20 percent of the world’s internationally traded corn and 13 percent of its traded wheat. Such a scenario is not out of the realm of possibility. Consider that a drought in early 2022 slashed Argentina’s expected corn crop by 33 percent. Further, if a drought were to curtail rice yields in southern China or Heilongjiang (in China’s fertile Northeast), that could create even larger market shocks given China’s disproportionate share of rice consumption. All three major staple grains are critical for hundreds of millions of lower-income consumers worldwide, with corn as a staple in Latin America, wheat vital in the Middle East and North Africa, and rice essential across Asia.

Although China has stockpiled the world’s largest grain reserves, the country is not immune to a multiyear yield shortfall. This would likely force China’s food traders, including large state-owned enterprises such as COFCO and Sinograin, into global markets on an emergency basis to secure additional supplies. This in turn could trigger food price spikes in high-income countries, while rendering key food items economically inaccessible to hundreds of millions of people in poorer countries. The impacts of this water-driven food shortage could be far worse than the food-related unrest that swept across lower- and middle-income countries in 2007 and 2008 and would drive migration and exacerbate political polarization already present in Europe and the United States.


China’s water problems go well beyond its agricultural sector. China’s energy sector—the world’s largest—also faces significant water risks. Despite major investments in renewable energy, nearly 90 percent of China’s electricity supply still requires extensive water resources, particularly hydro, coal, and even nuclear generation, which needs large and steady water supplies for steam condensers and to cool reactor cores and used fuel rods. (It is worth noting that all Chinese power reactors currently operating or under active construction are sited near the coast and can use seawater for cooling.)

Managing the cascading effects of a shortfall from any given power source is daunting. If China lost 15 percent of its hydropower production in a year because of low water levels behind dams—a plausible scenario based on real-world experiences in Brazil—it would have to increase electricity output by an amount equal to what Egypt generates in a year. In China’s energy system, only coal-fired plants could potentially boost output by hundreds of terawatt-hours on short notice.

Unfortunately, the coal mining and preparation process is often highly water intensive, and if China were compelled to ramp up coal production, it would further strain local groundwater supplies. Moreover, while seawater can be used for cooling in coastal regions, many of China’s coal-fired plants are located inland and rely on rivers, lakes, or groundwater. Power plants could be forced to curtail operations if cooling water runs short or if farmers and cities are given priority access to remaining supplies. Our analysis of approximately 2,000 utility-scale (300 megawatts or larger capacity) Chinese coal-fired power generation units and their known or likely modes of cooling suggests that about 500 gigawatts of capacity—more than the combined coal power capacity of India and the United States—face elevated risks from a prolonged drought.

Reduced river-borne coal transport capacity could also limit electricity production. In the United States’ Ohio and Mississippi River systems, losing even an inch of river level can reduce a barge convoy’s carrying capacity by hundreds of tons. China’s water systems likely suffer from similar limitations. Multiplied over a region with hundreds of coal plants and thousands of waterway miles, lower water levels could rapidly strain coal availability. If plants along some of these waterways needed to increase their electricity output to compensate for hydro output losses elsewhere, there is a real risk that coal could not reach where it was needed in time, and in sufficient quantity, to maintain stable electricity supplies.

China’s power shortfalls would directly affect global supply chains, as industrial facilities account for over 65 percent of electricity use in China. To minimize the immediate human impact of broad, uncontrolled blackouts, party officials would likely have to shut down industrial facilities to ease the grid load—as they did during power shortfalls in 2021.

Blackouts by decree would disrupt a number of key materials supplies. China is by far the world’s largest producer of aluminum, ferro-silicon, lead, manganese, magnesium, zinc, most rare earth metals, and many other specialty metals and materials. Power outages in even a single region can move global markets—as European carmakers discovered in late 2021 when power shortages curtailed magnesium smelter operations in Shaanxi Province, responsible for about 50 percent of global output. As magnesium inventories plummeted, prices spiked to seven times their level at the beginning of the year and European industrial consumers called for government action to ensure supplies.

Sustained water and electricity problems in China could also impede the global transition to clean energy. China produces an overwhelming portion of the polysilicon used for solar cells and the rare earth metals used in wind turbines around the world. The country also dominates raw materials refining and cell production for electric vehicle batteries.


As former British diplomat and China expert Charlie Parton noted in 2018: “China can print money, but it cannot print water”. China’s potential way out of this predicament is bounded by harsh economic, physical, and political realities. Perhaps the most dramatic and comprehensive reform would be to encourage efficiency by making water more expensive. But this will not be easy, as China’s input-intensive heavy industrial base and its rural farmers are accustomed to cheap water. Although agriculture accounts for over 60 percent of China’s water consumption, the vast majority of farms are under three acres. Small and midsize farms operating on thin margins may not be able to afford water-saving equipment such as drip irrigation. Moreover, consolidation of farm holdings is politically sensitive and would likely still prove insufficient; the default response of northern Chinese farmers faced with declining water tables has been to simply dig deeper wells and install more powerful pumps—responses that would only accelerate a crisis.

The government could also work to shift consumer habits through persuasion. As far back as 2016, Beijing was encouraging citizens to switch from eating water-intensive rice, the country’s traditional staple, to potatoes, which require less water to produce. But officials have done little to enforce such campaigns, which belie the CCP’s preferred narrative of economic progress and increasing living standards reflected through rising consumption of goods and services. It is also true that it is easier for the government to prevent citizens from doing things it deems undesirable than to compel them to do things it wants, such as having more children, pursuing consumerist ambitions, and eating more water-efficient potatoes.

China’s central and local leaders may gravitate toward supply-side solutions, but these may be insufficient to tackle the country’s daunting water challenge. The still functioning 2,200-year-old Dujiangyan Irrigation Works in Sichuan is a testament to China’s long history as a global hydraulic engineering superpower and suggests a likely focus on supply-side measures to address structural water shortages. The South-to-North Water Diversion Project aims to transfer up to 21 billion cubic meters of water annually from the Yangtze River Basin by 2030 and is projected to ultimately move over twice that volume. Yet this project does not come close to resolving the supply gap in northern China, as evidenced by recent announced plans to divert water from the Three Gorges Dam in Hubei province to Beijing. Likewise, shifting water from farther afield, such as the Tibetan Plateau or Lake Baikal in Russia, appears to be geologically difficult, prohibitively costly, and politically infeasible.

Desalination is another potential supply-side solution. But scaling desalination up to the level needed to close China’s water supply gap would be a gargantuan task. The roughly 20,000 desalination plants in operation worldwide can produce about 36.5 billion cubic meters of water per year. This amounts to merely six percent of China’s annual water consumption, highlighting the difficulty of relying on desalination to close China’s estimated 25 percent water supply gap. Moreover, desalination is highly energy intensive—at a time when China’s electric grid is already straining to maintain output. The high energy intensity of desalination also means that desalinated water would be far more expensive than other supplies, potentially by a factor of 10. Party officials would then face a choice of either subsidizing water rates or accepting major (and likely, politically disruptive) adjustments to decades-old industrial and consumer expectations founded on access to low-cost water.

China-centric supply chains took decades to build and cannot be easily or quickly moved elsewhere. This is all the more reason for governments to act now to prepare key global markets for an extended water crisis in China. Nor is past experience much of a guide: when China suffered widespread multiyear droughts in 1876 and 1928, it was not the “factory floor of the world”. Today’s global supply chains are woefully unprepared for a Chinese drought that could disrupt grain trade patterns and key industrial materials production across multiple continents. As China continues overexploiting groundwater amid intensified weather volatility, it moves closer each year to a catastrophic water event, and forceful steps must be taken while there is still time.

Gabriel Collins is theBaker Botts Fellow in Energy and Environmental Regulatory Affairs at Rice University’s Baker Institute for Public Policy and a Senior Visiting Research Fellow at the Oxford Institute for Energy Studies.
Gopal Reddy is thefounder of Ready for Climate, a research platform focused on the national security and economic risks stemming from climate change. He was also the founder of Chakra Capital Partners.

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