This report is aimed at helping governments and corporations gain a better understanding of water stress associated with local economic development and its impact on socio-economic development in Ningxia. It first analyzes water resources profiles, water resources management and current water use patterns in Ningxia, and applies the Aqueduct Water Risk Framework of the World Resources Institute to assess Ningxia’s baseline water stress focusing on the development of the local coal industry and its impact on water resources and provided suggestions for better management of Ningxia’s water resources.

Executive Summary

Ningxia Hui Autonomous Region is one of the most water stressed regions in China. Economic development, especially the rapid development of Ningxia’s coal industry, is exacerbating the stress on water resources. Though energy industry is an important pillar of Ningxia’s economic growth, such an industrial structure dominated by energy production is characterized by high carbon emissions and high water consumption, which exacts a huge burden on Ningxia’s water resources.

Through the analysis of Ningxia’s water resources and water management, key findings are shown below:

  1. The agricultural water use efficiency is low. Ningxia should prioritize the water saving, especially improving the water use efficiency in agriculture.
  2. Currently Ningxia government still fails to realize the close connection between water and coal. Ningxia should incorporate water resources into the energy/coal industry development plan as a restrictive factor to promote the sustainable development of the energy/coal industry and water resources.
  3. Ningxia should summarize the experience of water right transfer and promote the establishment of the water right trading mechanism.
  4. Currently the water prices and water resources fees are too low. Ningxia should accelerate the reform in water price, raise water resource fees and utilize the economic leverage to encourage water-saving.
  5. Ningxia should establish an ecological compensation system for mine exploitation and experiment on water environment compensation.