China's water wars
GLO10 china water diversion project

To solve its water shortages, China is rerouting its rivers

China has a water problem. According to the World Bank, China's per capita water availability is about one-third of what's available to the rest of the world. Put another way: China has to accommodate one-fifth of the world's population on 1/20th of its water. With rapid growth and industrialization, the country needs to come up with a way to increase its supply.

And so China has taken another page out of its ambitious civil-engineering playbook. It is attempting to physically divert trillions of gallons of water from the relatively water-rich south to the parched north. The plan is broken up into three pieces, all bringing water from the Yangtze River northward: The first route, farthest east, is nearly finished and will pump water under the Yellow River to Tianjin. The central route should come online in 2015, and the western route is not likely to be completed before 2030. If the plan works, by the time it is completed, up to 10% of the flow of the country's largest river will have been diverted.

"This is a project that perfectly exemplifies the incredible bravado of the Chinese government," says John Minnich, an East Asia analyst for the research group Stratfor. "The enormity of what China is trying to pull off is mind-boggling."

The total price tag for the project is estimated at $62 billion, but the actual cost is likely to be much higher, says Scott Moore, a fellow at the Harvard Kennedy School of Government. Hundreds of thousands of residents have been displaced by the rerouting of the river. And environmental concerns over water quality and overall scarcity persist despite the construction.

Still, given China's massive growth, gargantuan projects can look downright pragmatic. "On one level, there's bound to be environmental impact," says KPMG's Stephen Ip. "On the other hand, we don't have enough water in the north. Where are we going to get it from?"

This story is from the June 10, 2013 issue of Fortune.
  @FortuneMagazine - Last updated May 23 2013 07:07 AM ET
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