Analysis & Reviews

2015 State of Environment Report Review

2015 State of Environment Report Review

The Year 2015 marked an important milestone for China’s “War on Pollution” and its path towards “blue skies, green land and clear running water”; it was the last year of the 12th Five Year Plan (12FYP) and the first year with the revised Environmental Protection Law in force. Also, the long-awaited “Water Ten Plan” was also issued (April 2015). With so much action during the year, there is much attention on whether the overall environment quality has improved.

2015 data shows that the War on Pollution will be a long battle

On 2 June 2016, the MEP’s 2015 State of Environment Report was issued. It stressed that environmental protection is high on the political agenda and that much effort has been made in this area over the past five years. However, as seen from the latest 2015 data the War on Pollution will not be won quickly, instead we can expect a protracted battle, perhaps with the exception of key lakes & reservoirs:

  • Groundwater – proportion of ‘excellent’ and ‘good’ has deteriorated, shrinking 6.2% over the past five years;
  • Key rivers – Overall proportion of China’s seven major rivers meeting Grade I-III level is 72.1%, but five rivers fall below this average; and
  • Key lakes & reservoirs – overall quality improving with breakthrough in Grade I-III water.

Groundwater pollution still deteriorating – ‘very bad’ groundwater at 18.8%

Compared with 2014, groundwater pollution in 2015 remained worrisome, according to the results of 5,118 monitoring points. Although the ‘bad’ & ‘very bad’ categories improved marginally from to 61.5% in 2014 to 61.3% in 2015, groundwater falling in the ‘very bad’ category rose from 16.1% to 18.8%. Meanwhile the proportion of ‘excellent’ and ‘good’ fell from 36.7% in 2014 down to 34.1% in 2015.

Overall Groundwater Quality - 2015 State of Environment

However, the declining data could be partly due to improved monitoring and new information disclosure. All of which helps form a better picture of the real status of  pollution in China’s groundwater.

 shallow groundwater is worse off  …  ‘very bad’ and ‘bad’ shallow groundwater is 66.2% compared to the overall average of 61.3%

For instance, the 2015 report includes the results of groundwater at different depths  - shallow groundwater which is primarily phreatic water, and mid/deep groundwater which is primarily confined groundwater. These details were not available in previous annual reports.

This additional data indicates shallow groundwater is worse off than the average groundwater quality. The proportion of ‘very bad’ and ‘bad’ shallow groundwater is 66.2% compared to the overall average of 61.3%.

2020 target for groundwater in the ‘very bad’ category = 15%

The National Groundwater Pollution Prevention and Control Plan (2011-2020) is at its halfway point but we have yet to see any improvement. The 18.8% of ‘very bad’ groundwater needs to be 15% by 2020 according to the Water Ten Plan.

As pollution exacerbates scarcity and also means higher treatment costs, monetary measures are being taken to control the use of groundwater. Several Chinese provincial governments are adjusting their groundwater resource fee. For instance, Guangxi Province doubled its groundwater resource fee to RMB0.2/m3 in December 2015 from RMB0.09/m3 in 2013. Liaoning Province also increased its groundwater resource fee to RMB1.65/m3 as of 1 June 2016.

Rivers – Overall water quality improved but Songhua, Huai, Hai & Liao River deteriorated

The overall water quality in major river basins improved slightly:

  • The proportion of monitoring sections with Grade I-III water quality in China’s major rivers increased from 71.2% in 2014 to 72.1% in 2015;
  • The proportion with water “unfit for human contact” (Grade IV-V+) has shrunk from 28.8% to 27.9%; and
  • The proportion with “unusable” Grade V+ water dropped 0.1%.

Overall Quality of Main Rivers - 2015 State of Environment

Overall river quality has improved during the 12FYP. However, when looking at individual rivers we can that this isn’t the case. The good news first…

The overall situation of the Yangtze & Yellow Rivers has improved and the Pearl River has stayed flat

CWR-MEP Joint Report - Water-Nomics Of The Yangtze River Economic Belt - June 2016

      • Yangtze River – Grade I-III water has slightly increased from 88.1% in 2014 to 89.4%  in 2015. Grade V+ water remained flat at 3.1%. However, a deeper dive into the Yangtze still reveals issues re Grade V+ water (see our co-authored report right)
      • Yellow River - Grade I-III water has slightly increased from 59.7% in 2014 to  61.2% in 2015. Grade V+ water remained flat 12.9%
      • Pearl River – The situation remained the same as 2014; Grade I-III, Grade IV-V and Grade V+ water representing 94.5%, 1.8% and 3.7%, respectively

Water Quality of Yangtze & Yellow & Pearl Rivers - 2015 State of Environment

Mixed news for the Songhua, Hai & Huai Rivers

      • Songhua River – Although Grade I-III water improved from 62.1% in 2014 to 65.1% in 2015, the proportion of Grade V+ water also increased to from 4.6% to 5.8%.
      • Huai River – Grade I-III water worsened from 56.4% to 54.3%, but Grade V+ water improved from 14.9% to 9.6%. So the overall increase in water that is “unfit for human contact” from 43.6% to 45.7% is driven by an increase in Grade IV-V water.
      • Hai River – Grade I-III water improved from 39.1% to 42.2% in 2015, but Grade V+ water worsened to 39.1%, the highest among China’s seven major rivers.

Water Quality of Songhua & Huai & Hai Rivers - 2015 State of Environment

Liao River continues to deteriorate

The chart below clearly shows that the water quality of the Liao River has continued to deteriorate since 2013.

In 2015, not only did Grade I-III water drop to 40.0%, the lowest among China’s seven major rivers, but the proportion of Grade V+ doubled from 7.3% to 14.5%. This means that water “unfit for human contact” rose from 58.2% to 60.0%,

Liao River has highest amount of water, 60%, “unfit for human contact”

Water Quality of Liao River - 2015 State of Environment

    Five of the seven major rivers in the North – still far from 2020 water quality target

Differences between water reserves in the North & South are clear with a glance across the water quality of China’s seven major rivers in 2015.

Northern Rivers – Yellow, Songhua, Huai, Hai & Liao still far from 2020 Water Ten Plan target

Although on average the seven rivers have met the 2020 Water Ten target of 70% meeting Grade III or above, a look at the rivers individually reveals a different story. Five of the seven rivers (Yellow, Songhua, Huai, Hai & Liao) are still far from meeting the target, all of which are located in Northern China.

The Liao and Hai Rivers are particularly far, with less than 50% meeting Grade III or above.

Water Quality of 7 Major River Basins 2015

Lakes & Reservoirs’ water quality saw improvement

After three years of the flat performance in Grade I-III water of around 60%, key lakes & reservoirs saw a marked improvement in 2015 at 69.4%. Grade IV-V water thus shrunk from 30.6% in 2014 to 22.6% in 2015, while Grade V+ water held flat at 8.1%.

This means that  the water quality of lakes and reservoirs has improved considerably during the 12FYP. As shown in the below chart, nearly 60% of the lakes and reservoirs were “unfit for human contact” in 2011, but by 2015 this has pretty much halved to just 30.6%.

Water quality of lakes & reservoirs improved greatly during 12FYP

In 2011 ~60%  of water was “unfit for human contact”; by 2015 it halved to 30.6%

Water Quality of Key Lakes & Reservoirs Improved 2011-2015

Despite this great progress, we still need to pay attention to heavily polluted Grade V+ water, which rose from 7.7% in 2011 to 8.1% in 2015. This is especially true for the severely polluted Dian Lake in Yunnan, where 90% of water is in Grade V+ condition. Billions of RMB have been spent to tackle the pollution here but it still prevails.

This high expenditure with little if any improvement highlights the importance of protecting water bodies that are currently in good condition – it is easier to maintain a good quality body then treat and remediate poor quality bodies.

2015: the year when China gets serious about pollution

The revised Environmental Protection Law coming into effect on 1 January 2015, meant that the War on Pollution could be stepped up a notch. As detailed in the 2015 State of Environment report, since the law’s enforcement, there have been:

  • Over 8,000 cases of daily fines, assets detained or production restriction;
  • Nearly 3,800 pollution related cases that led to administrative detention or criminal charges;
  • 97,000 sanctions issued and RMB4.25 billion fines given out (up by 34% y-o-y); and
  • 1.77 million inspections conducted across the country which resulted in 191,000 companies investigated. Around 20,000 were shut down, 34,000 had their operations halted and 89,000 had to conduct rectification actions.

The govt needs to look beyond pollution prevention & control…to manage trade-offs

As we have said many times, ‘Business As Usual’ no longer works in China with its limited resources, especially water, and its rampant pollution. China’s circular economy policy and ‘Made in China 2025’ mean industrial upgrading and innovation.

Water-nomics - Trade-offs Along the Yangtze  Going forward the government needs to look beyond pollution prevention & control, and look into how to manage trade-offs in balancing environment and economic development. Such holistic approaches are being considered along the Yangtze River. China Water Risk co-authored a brief on this with the Foreign Economic Cooperation Office of China’s Ministry of Environmental Protection (MEP FECO). For the full joint brief click here and its review here.

It’s not just water pollution that needs to be tackled, so does soil pollution. The two are closely linked – untreated wastewater can contaminate soil and conversely pollutants in soil can in turn be leached into surface & groundwater sources.

China's Soil Ten

The Chinese government finally released the ‘Soil Ten Plan’ in early June 2016. The plan states that heavy metals will be one of the key monitored pollutants; as will industrial waste control and agricultural pollution.

With the three pollution prevention & control action plans: Air Ten, Water Ten  & now the Soil Ten all issued, we expect to see a more holistic approach in tackling pollution and real improvement of the environment in the coming 5 to 15 years. More on the Water Ten here and the Soil Ten here.


CWR-MEP Joint Report - Water-Nomics Of The Yangtze River Economic Belt - June 2016


Further Reading

  • Yangtze Flows: Pollution & Heavy Metals – Areas along the Yangtze River dominate Chinese production but at what cost? With Grade V water in its tributaries, rapid growth in upstream wastewater plus concerns over a disproportionately large share of the nation’s heavy metals discharge, can the Yangtze River Economic Belt still flourish? CWR’s Hu takes a closer look
  • Water-nomics: Trade-offs Along The Yangtze – With significant economic, water use and pollution disparities along the Yangtze River, China Water Risk & the Foreign Economic Cooperation Office of the Ministry of Environmental Protection, publish a joint brief to explore strategies to find the right development mix. Check out some of the key findings in this review
  • China’s Soil Ten – With close to a fifth of China’s farmland surveyed polluted, the Soil Ten Plan could not come sooner. Find out what’s in store for China’s “Hateful Eight” polluting industries and get the distilled version of the 231 actions in China Water Risk’s Soil Ten review
  • Plastic, China & The Circular Economy – Can we avoid more plastics than fish by 2050? Only around 10% of plastics gets recycled, but this is where opportunities lie. Woodring, founder of Plasticity Forum, shares key points from the 5th annual forum on the circular future of plastic
  • Floating Solar: A Solution for China? – Floating solar appears to be well-suited to China’s hunger for power and its limited water and land resources. So will it embrace the technology? CWR’s Thieriot & Xu expand on the status quo in China, its benefits and future considerations
  • Can The Water Ten Protect Water Sources? – Some 40% of urban residents drink bottled water. This could change with the Water Ten Plan which aims to eventually deliver safe drinking water from the tap. Are the water source protection targets tough enough or will the bottle water market proliferate? CWR’s Liu & McGregor expand
  • Water Ten: Comply or Else - China’s new Water Ten Plan sets tough action on pollution prevention & control. While this is good for the water sector, less obvious is who or which sectors will be impacted. China Water Risk’s Tan on why China is serious about its fast & furious pollution reforms to propel China to a new norm

Past State Of Environment Reviews

  • 2014 State of Environment Report Review - China’s overall environmental quality in 2014 was “average”, but with polluters tampering with monitoring, can we even believe this data? We take a closer look at the mixed news
  • 2013 State of Environment Report Review – MEP’s 2013 State of Environment Report says the ‘overall environmental quality was average’ but a closer look reveals mixed news, whilst discrepancies found in sets of pollution data add uncertainty of the real state of the environment

Other

  • China Water Risk’s 5 Trends for 2016 – Prioritizing environment alongside employment signals a reshuffle. To show it’s serious, China will “kill a chicken to warn the monkey”. The Year of the Monkey brings with it wild swings, so check out our top 5 trends in water for 2016 for it is better to be in a position to disrupt than be disrupted
  • Made in China 2025: Are You On The List? – How does the new Made in China 2025 Action Plan fit with other ‘Future China’ plans? Are the ten industries in Made in China 2025 the same as the Circular Economy Ten? Find out why which list matters
China Water Risk

About China Water Risk

We believe regardless of whether we care for the environment that water risks affect us all – as investors, businesses and individuals. Water risks are fundamental to future decision making and growth patterns in global economies. Water scarcity has emerged as a critical sustainability issue for China's economy and since water powers the economy, we aim to highlight these risks inherent in each sector. In addition, we write about current trends in the global water industry, analyze changes occurring both regionally and globally, as well as providing explanations on the new technologies that are revolutionizing this industry.

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