Follow the UK & Import Water

Follow the UK: Import Water

There are obvious solutions to a water crisis, such as desalination, fully potable water recycling, building dams & reservoirs, water diversion projects and so on and then there are the less obvious solutions like following the UK and “importing water”.

Back in October, I wrote about China’s water crisis shaping china’s food & energy choices (read here) and touched on this topic briefly. In case you missed that, here is the expanded version …

The premise

  • The economy runs on water – even if you don’t use that much water, you will use electricity which requires water to generate on a daily basis. So water literally powers the economy
  • China’s per capita GDP is at USD8,500 (2011 World Bank) and hopes to quadruple this to that of developed countries in Asia such as Japan (USD34,314) & Korea (USD30,286)
  • To grow the economy and GDP, China needs to increase its total water consumption
  • Under the current water use caps, China can only raise its total water consumption by 16.3% from 602 billion m3 in 2010 to 700 billion m3 in 2030

Question: How can China manage to grow it’s GDP by 4x when it can only raise its water consumption by 16.3%?

Answer: A solution could be to follow the UK.

Here’s how …

  • The UK has similar GDP per capita to Japan at USD35,657
  • But has managed to reach these levels with similar water resources to China

And there’s a bonus, the UK actually uses almost half the amount of water that China currently uses.

So the UK must be doing something right…

The answer lies in trade – see graph below. 75% of the UK’s water footprint is external compared to China where 90% of its water footprint is internal. In short, the UK is “importing water” through the products it buys from other countries whilst China which doesn’t rely on imports from overseas is largely reliant on and using its own water.

The UK only uses 210m3 of water per capita because it is using water from other countries embedded in the products it imports. If this external water footprint or “imported water through products” is included, the UK “real” usage of water is ~4x that of China’s. Note that this would be in line with the UK’s GDP which is also ~4x that of China.

China currently uses 62% of its water in agriculture and is largely self-sufficient on the production of food.  No single country dominates China’s food imports. As competition for water resources from industry and municipal use grows due to a more affluent population, importing water through food could be a solution. Bearing in mind that an 8oz steak has 17 bathtubs full of water embedded in it, importing food would free up water for usage in industry; and industry is a larger contributor to GDP than agriculture, therefore allowing China to grow its GDP.

So China could follow the UK and “import water through products” OR it could just stop exporting its water through all the products manufactured in China that can be found in the UK to Africa and Alaska. All of us wearing something made-in-China are using up China’s water. Made-in-China exports form a large part of the 90% internal water footprint of China.

Either way, (China importing water through food or stopping export of water through products) global prices will rise.

Yes, China like the UK could just use someone else’s water… of course this does not solve the root of the problem which is an ever-growing population with ever-growing affluence and ever-growing water demand. In following the UK and growing its external water footprint, China will just have “passed” the problem to someone else. The bad news here is that this pass-the-parcel game has to stop sometime – the question is what happens then?

Debra Tan

About Debra Tan

Debra heads the China Water Risk team and spearheaded the development and build out of the China Water Risk brand and website in 2011. Since then, she has written extensively about the water-energy-food nexus as well as reports analyzing the impact of water risks on certain sectors for financial institutions and corporates. She has also given numerous keynotes, moderated and participated in panel discussions and conferences around water issues to investors and corporates. Debra started her career in finance, spending over a decade as a chartered accountant and investment banker specializing in mergers & acquisitions and strategic advisory. She has lived and worked in Beijing, HK, KL, London, New York and Singapore. Debra left banking to explore her creative side pursuing her interest in photography resulting in her first solo exhibition within a year. She also ran and organized hands-on philanthropic and luxury holidays for a small but global private members travel network and applied her auditing, financing and photography skills in the field for various charitable organizations and foundations.

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