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Water Policy Vol 10 No S1 pp 51–65 © IWA Publishing 2008 doi:10.2166/wp.2008.052

China's water–energy nexus

Fredrich Kahrl and David Roland-Holst*

Energy and Resources Group and Department of Agricultural & Resource Economics, University of California at Berkeley, 337 Giannini Hall, Berkeley, CA 94720, USA . *Corresponding author. E-mail: dwrh@are.berkeley.edu


ABSTRACT

As China continues to sustain high rates of economic growth, it is important to better understand patterns of resource use within the Chinese economy and the vulnerability of its growth to resource scarcity. This paper examines relationships between two of China's scarcest resources—energy and water—focusing on the energy implications of water use. Based on an analysis of economy-wide resource flows using China's input-output tables, we draw three overarching conclusions: First, the energy used both directly and indirectly in providing non-agricultural water currently represents only a small fraction of China's total energy consumption. However, this share is set to increase as the country expands its water treatment capacity and hydraulic infrastructure. A lifecycle assessment framework for evaluating these projects would aid policymakers as they choose between more and less energy-intensive modes of water provision. Second, energy-water price interactions are currently of little relevance to policymakers because water prices are low, but the high electricity-intensity of water treatment facilities and their need to recover costs may change this situation. Third, water “migration” from agriculture to non-agricultural uses will have important energy dimensions, which will be important for policymakers to bear in mind as they design water pricing and conservation efforts.

Keywords: China; Energy policy; Input-output analysis; Water policy


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