Asia Water Project: China

The ADM Capital Foundation and Civic Exchange today launched in beta the Asia Water Project: China and AWP’s first piece of commissioned research, Water in China: Issues for Responsible Investors, authored by the independent research company Responsible Research, which is Singapore based.

Feels great to get the water portal birthed and visible, even if it’s only in testing phase ahead of the official launch on March 18 in Hong Kong. That will happen with IPE’s Ma Jun, who was the inspiration behind the water portal. It was a desire to translate Ma Jun’s data from the IPE website that names and shames water and air polluters in China, (see Jan. blog) that first inspired ADMCF to create AWP. Ma Jun, who wrote the first major book on China’s water crisis in 2000, uses only government emissions and penalties data on his site and in that way has been allowed to work relatively unimpeded in China.

ADMCF saw there was space to fill a lacuna in information relating to China’s water supply, management and pollution and at the same time better inform investors. We see there are both risks and opportunities in China’s growing crisis. Informed investors can help shape how companies respond to water challenges. Ina Pozon, who has built and manages AWP and ADMCF environment director, Sophie Le Clue,  have worked tirelessly in recent weeks with freelance writer, Pua Mench, to get the site in shape. Still work to do but today we are a big step closer!

Bloomberg sponsored today’s event, which featured Christine Loh of the CE, Lucy Carmody of RR and Guo Peiyuan of Beijing’s SynTao, an AWP partner and participant in the RR water research.

The research, found here: http://www.asiawaterproject.org, showed that China may be looking at trade-offs between access to clean water and economic growth. At the national level, China’s water shortages are thought responsible for direct economic losses of US$35 billion every year.  This is 2.5 times the average annual losses due to floods.

The report points out that sectors where China dominates globally, such as in steel, textile, paper and forest products, are heavily water intensive. Fluctuations in quantity and quality of water supply in these industries carry significant potential risks to earnings.

The new report draws on case studies from ten industries that have the most impact on water in China including agriculture, forest products, textiles and beverages. As water becomes increasingly material to investors in China, they will need to be more pro-active in looking at how listed companies are addressing supply issues.

While there is some understanding of water-related risks to companies and investors, “a key barrier is the lack of reliable, comprehensive information on water issues in China,” according to Ina. “The Asia Water Project has a unique role to play in fast-tracking this trend, through its commissioned research and its new web-based information portal.”

Earlier this month, the Chinese government released the findings of a pollution survey that show water pollution levels in 2007 were more than twice the official estimate, in part because previous reporting had failed to take agricultural contamination of water supplies into account.

Christine Loh reads this as good news that the Chinese government has done its homework and now understands that “the problem is as big as it is urgent.” She anticipates that “there will be more dialogue and debate in China this year” as government plans require reductions in wastewater pollution that are not easy.

The new investor report  also highlights some shocking statistics: 70 percent of China’s rivers and lakes are “significantly” contaminated, 50 percent of the country’s cities have polluted groundwater and over 30 percent of China is affected by acid rain.