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Demand for Energy Tests Water Supply and Economic Stability in China and the U.S.

Year-long Choke Point project concludes with warning about energy prices and stability in two largest economies

Demand for Energy Tests Water Supply and Economic Stability in China and the U.S.

Year-long Choke Point project concludes with warning about energy prices and stability in two largest economies

Published 06-22-11

Submitted by Circle of Blue

When these two tunnels beneath the Yellow River are completed, more than 35 million cubic meters (9 billion gallons) of water a day will be transported from southern China to thirsty cities in the north. Photo ©Aaron Jaffe/Circle of Blue

One of the top U.S. scholars on energy demand trends in the world's two largest economies cautioned today that rising fossil fuel prices -- caused, in part, by competition for scarce freshwater supplies -- is challenging the economic stability of China and the United States.

"To what degree is China taking into account the rising cost of energy as a factor in rising overall prices in their economy?" said David Fridley, a staff scientist in the China Energy Group at Lawrence Berkeley National Laboratory, in an article published by Circle of Blue, the nonpartisan organization that covers water issues globally. "What level of aggregate energy cost increases can China sustain before they tip over?

"That's where China's next decade is heading -- accommodating rising energy costs," Fridley added. "We're already there in the United States. When energy costs reach 8 to 9 percent of the GDP, as they have in 2011, the economy is pushed into recession within a year."

Fridley's warning came in an interview with Circle of Blue, which today published the final article in its year-long Choke Point project that intensively explores the confrontation between rising energy demand and declining freshwater reserves in China and the U.S. The collaborative project, published in two parts -- Choke Point: China and Choke Point: U.S. -- was undertaken in partnership with the China Environment Forum of the Woodrow Wilson International Center for Scholars, and a team of graphic design students from Ball State University's Department of Journalism. Major funding for the project was provided by the Energy Foundation with additional support from the Alpern Foundation and Vermont Law School.

Choke Point: China and Choke Point: U.S. found clear evidence that both nations view energy production as the top national priority and that declining fresh water reserves impede energy development. The reports found that the water needs of Chinese and American coal, oil and gas producers take precedence over any other economic sector.

Moreover, by insisting on developing new sources of carbon-based fuels, drawn from the desert in China, and from the dry Great Plains and the Rocky Mountain West in the United States, both nations are testing the limits of their national water reserves. They also challenge the capacity of other important economic sectors -- agriculture, large metropolitan regions, major manufacturers -- to use much less water.

The Choke Point project prompted scientists and water managers in China to expand their research priorities. And it alerted U.S. policymakers and media to the enormous hydrocarbon development occurring at the center of the North American continent.

Scholars enthusiastically viewed the project as a valuable and urgent assessment of economic and environmental risks.

"China's continued growth and stability hinge on it finding a more sustainable strategy to cope with its water and energy demand," said Parag Khanna, an author, global strategist, and senior research fellow at the Washington, D.C.-based New America Foundation. "There would be no better way for China to demonstrate its global leadership than by heeding the important lessons of the Choke Point report."

"We shined a light on China's greatest challenge," added Jennifer Turner, the director of the China Environment Forum. "China has to be better than any other country in dealing with the energy-water choke points because as our reporting showed, they have no wiggle room."

Circle of Blue, the China Environment Forum, and several other partners in China and the U.S. are now planning the next phases of Choke Point.

Included is an experts survey, and an assessment for business executives and policy leaders of the consequences of the energy-water choke points -- a project that Circle of Blue is undertaking with SustainAbility and GlobeScan. (Learn more about how to participate in this program: china@circleofblue.org)

"Perhaps the biggest untold story with global ramifications is that of the fast-emerging struggle between energy and water," said J. Carl Ganter, director and co-founder of Circle of Blue, and a member of the World Economic Forum's Global Agenda Council on Water Security. "The energy-water collision is already affecting energy and food markets, and global trade. The era of intersecting challenges merits this kind of analytical, on-the-ground research and thinking. Reasoned response requires deep understanding of the consequences, as well as collaborative problem-solving at the highest levels."

Full Choke Point: coverage
Choke Point: China | Circle of Blue WaterNews
http://www.circleofblue.org/waternews/featured-water-stories/choke-point-china/

Choke Point: US | Circle of Blue WaterNews
http://www.circleofblue.org/waternews/featured-water-stories/choke-point-us/

About Circle of Blue
Circle of Blue is the international, nonpartisan network of leading journalists, scientists and communications design experts that reports and presents the information necessary to respond to the global fresh water crisis. It is a nonprofit affiliate of the international water, climate and policy think tank, the Pacific Institute, and publishes WaterNews, the daily go-to source for global water news and data.

About the China Environment Forum
For 13 years, the Woodrow Wilson Center's China Environment Forum has implemented projects, workshops, and exchanges that bring together U.S., Chinese, and other Asian environmental policy experts. CEF provides forums and guidance to explore the most imperative environmental and sustainable development issues in China and to examine opportunities for business, governmental, and nongovernmental communities to collaboratively address these issues.

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Circle of Blue

Circle of Blue

Founded by leading journalists and scholars, Circle of Blue covers the global freshwater crisis with original front-line reporting, dynamic data spaces and engaging social media, using pioneering communications and information technologies to inform decision-making. Circle of Blue is a nonprofit independent journalism project of the Pacific Institute. It was featured recently at the Aspen Ideas Festival and the Clinton Global Initiative, and received initial development funding from the Ford Foundation.

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