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China: Water Caps Could Force a Shift from Cotton to Food Production

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Water scarcity and pollution have plagued China for years and now a new report says the country may cut back on cotton production in favor of farming food products to protect its water resources.

HSBC’s Climate Change Center commissioned the “No Water, More Trade-offs” report from China Water Risk (CWR), an organization that promotes responsible and efficient use of China’s water resources, to uncover ways China can still manage economic growth with limited water.

“Tough trade-offs are on the horizon as China manages its water for economic development,” according to the report, and “Output may shift within China as cotton clashes with coal to ‘free up’ water.”

Water is essential for nearly all economic activity and China’s caps could limit its GDP growth, the report warned.

In China today, 93 percent of power generation is water-reliant, according to CWR, and though China’s per capita power generation installed capacity is far less that of the G20 countries’ average, the country could add up to 2 TeraWatts of installed capacity—more than the current installed capacities of the U.S., UK, France, Germany, Russia and Japan combined.

Which begs the question: Can China manage that kind of power expansion with a limited supply of water?

According to the HSBC/CWR report, China will need to explore trade-offs between commodities.

One way water can be managed is by importing more water-intensive products instead, and matching local water resources to output by shifting certain product production bases is another.

China could decide not to grow cotton and instead have more available land and water for cultivating other—namely edible—crops.

“Shifting cotton production from the North China Plain could ‘free up’ water equivalent to the entire capacity of Phase 1 of the South-to-North Water Diversion Project’s Middle Route,” the report noted. “Such shifts in production has implications for global trade and sectors which rely on these as inputs.”

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