5.2 Water Resource Regulation in China
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volume is widely applied in Northern China because of a shortage of water, including
in the Yellow River Basin, the Hei River Basin, the Tarim River Basin, and the Shiyang
River Basin. In these river basins, a portion of water used downstream comes from
the return flow of the upstream users. The use volume is applied at the user level,
including for industrial enterprises and farmers. Such use occurs at the end of the
supply and allocation system. To some extent, it is costly and unnecessary to manage
in terms of abstraction or consumption.
5.3 Water Trade
Within the China’s water resources allocation framework, water resources can be
traded. Article 27 of the 2006 Regulation on the Management of Water Abstraction
Permits and Water Resources Fee Collection provides that where a permit holder
reduces water use through, for example, “adjustments to production or industrial
structure, innovation in technologies or the promotion of water-saving measures,”
the holder can transfer the saved water and receive compensation. The requirements
of this kind of transfer are as follows:
(1) The sale party must be the entity applying for the water permit and paying the
water resource fee according to law, and they must obtain the water abstraction
rights.
(2) The transferred water resources must be water resources saved by adjusting
product and industrial structure, reforming processes, and saving water. Such
measures should comply with relevant national policies and standards.
(3) The transfer must occur within the validity period of the water abstraction permit
and the water withdrawal limit. The water abstractor will have the abstraction
rights only to the water resources within the validity period of the water permit
and the water withdrawal limit.
(4) The trade, as well as the water abstraction rights change and water abstraction
permit change, shall be approved by the original water abstraction approval
authority. Due to changes in abstraction permit holders, separation volumes,
and water withdrawal methods, the trade should be approved by the original
water abstraction approval agency.
(5) It can be transferred with payment or compensation. The payment or compensation for transferred water should reflect the value of water resources and
encourage parties to save water. The payment or compensation is a voluntary
transaction between two parties and not the water resource fee. The buyer must
pay the water resource fee.
In 2016, extensive trades were encouraged. The 2016 Interim Methods for Water
Rights Trade Management by MWR clarifies that water rights trade refers to behaviors processing water use rights transfer between regions, river basins, upstream and
downstream, sectors and users by market mechanisms and is based on rationally
clarifying and allocating water resources use rights (Article 2). Therefore, according
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volume is widely applied in Northern China because of a shortage of water, including
in the Yellow River Basin, the Hei River Basin, the Tarim River Basin, and the Shiyang
River Basin. In these river basins, a portion of water used downstream comes from
the return flow of the upstream users. The use volume is applied at the user level,
including for industrial enterprises and farmers. Such use occurs at the end of the
supply and allocation system. To some extent, it is costly and unnecessary to manage
in terms of abstraction or consumption.
5.3 Water Trade
Within the China’s water resources allocation framework, water resources can be
traded. Article 27 of the 2006 Regulation on the Management of Water Abstraction
Permits and Water Resources Fee Collection provides that where a permit holder
reduces water use through, for example, “adjustments to production or industrial
structure, innovation in technologies or the promotion of water-saving measures,”
the holder can transfer the saved water and receive compensation. The requirements
of this kind of transfer are as follows:
(1) The sale party must be the entity applying for the water permit and paying the
water resource fee according to law, and they must obtain the water abstraction
rights.
(2) The transferred water resources must be water resources saved by adjusting
product and industrial structure, reforming processes, and saving water. Such
measures should comply with relevant national policies and standards.
(3) The transfer must occur within the validity period of the water abstraction permit
and the water withdrawal limit. The water abstractor will have the abstraction
rights only to the water resources within the validity period of the water permit
and the water withdrawal limit.
(4) The trade, as well as the water abstraction rights change and water abstraction
permit change, shall be approved by the original water abstraction approval
authority. Due to changes in abstraction permit holders, separation volumes,
and water withdrawal methods, the trade should be approved by the original
water abstraction approval agency.
(5) It can be transferred with payment or compensation. The payment or compensation for transferred water should reflect the value of water resources and
encourage parties to save water. The payment or compensation is a voluntary
transaction between two parties and not the water resource fee. The buyer must
pay the water resource fee.
In 2016, extensive trades were encouraged. The 2016 Interim Methods for Water
Rights Trade Management by MWR clarifies that water rights trade refers to behaviors processing water use rights transfer between regions, river basins, upstream and
downstream, sectors and users by market mechanisms and is based on rationally
clarifying and allocating water resources use rights (Article 2). Therefore, according