Today we will talk about how water and environment is managed in China. China is the largest single country in the world, and whatever happens in China, it spills over to the rest of the world. We will talk especially of the No 1 Document. Every year since the founding of the People's Republic of China, the first document issued at the start of the year by Central Government and the Communist Party of China has concerned the well-being of the rural population, who are seen as the core of the party. This No 1 Document is usually rhetoric, support and appreciation of the hard work of the rural population. But the 2011 No 1 Document, which is called Accelerating Water Conservancy Reform and Development. It introduced actually a new era in this type of document. It was prepared by the Ministry of Water Resources and it reflects, of course, very much the tasks of the Ministry of Water Resources. But it outlines an ambitious ten-year strategy which breaks with the typical five-year planning that takes place in China. And it also is important because since 2011 it has been rolled out very well in all aspects. The No 1 Document wants to give the rural population water security. It wants to give them security from flooding, protect them against flooding. It wants to give them food security, not only to the rural population but to all of China. And this is main in China, very closely related to irrigation. And finally, it wants to give them water supply security. In many parts of China, especially rural China, the water supply has been very poor. But it is now being rapidly upgraded as a result of the No 1 Document. The No 1 Document is focused heavily on investment. The original version was mainly investment in major infrastructure on the medium-sized rivers. But when President Xi Jinping came into office in 2012, government focus shifted towards environmental protection and towards the well-being of the population, especially the rural population. So the government has now made 2015 the Year of Rural Water Supply and Water Quality. 2016 will be the Year of Air Pollution, and 2017 the Year of Combating Soil Pollution. But more on this later. Although it focuses on investment, it opens for important new policies and practices. It mentions what we call Water Resource Demand Management. It introduces ecological measures. It calls for administrative reform of irrigation, the larger participation of the population. And it makes government officials accountable for its implementation. One thing is that it will publish now the ten municipalities or cities who have the best performance in terms of the environmental goals, and it will also publish the ten who has the worst. And more importantly, it will make future finance dependent on the performance of the city or municipality. The first strategy that the Ministry of Water Resources rolled out in response to the No 1 Document is called the three red lines. It is three red lines which aim, number one, to control water use, and they will do so by allocation of water. It will control water use efficiency, especially in industry, where it will work on different norms for the use of water in different types of production. And finally it will work on water quality improvements in the rivers. They are all administrative tools, in line with China's tradition for working by administrative tools. Water allocation was first used successfully on the Yellow River, which in the 1980s ran dry for up to six months a year and up to 1,000 kilometers from the coast. So basically there was a dry river without water. And the problem was that when there was water, it would deposit all of the sediment that came from central China and gradually raise the river bed. So when there were big floods, the risk of flooding of the surrounding floodplain was increased dramatically. After allocation of water through the provinces along the upper part of the river and strictly enforcing it, water came back into the Yellow River. And after building of the Xiaolongdi Dam, it was possible to flush the river for sediment early every autumn so that it would not be deposited in the lower reaches of the river and would not raise the river bed. So this has successfully reduced the risk of flooding and also made it possible for the provinces downstream of the Xiaolongdi Dam to receive a part of the water from the river, their allocation of water from the river. The second thing was water use efficiency. As I said before, it was mainly aimed at industry but it also apples to irrigation. There is a term called the irrigation efficiency which is the amount of water from the river or from a dam that reaches the irrigation system that reaches the field and becomes beneficial for the farmers. And to achieve higher irrigation efficiency, vast sums are being invested in lining of canals. Canals run for hundreds of kilometers with total lining. And as a groundwater expert, I'm not really happy with this because I would rather see the water being allowed to infiltrate the groundwater, replenish the groundwater, and then be taken out from the groundwater where it is needed. Also, in my opinion, it would be much better to consider the cost and value of water and ensure that water is allocated according to its highest value in competing users instead of just supplying more and more water. Water quality is addressed in the perspective of the Ministry of Water Resources. And here we hit an institutional barrier in China because water quality is under the Ministry of Environmental Protection, which is responsible for limiting wastewater discharges to the river. And under those conditions it's very difficult for the Ministry of Water Resources to maintain the water quality. Therefore, Ministry of Water Resources has invented the term carrying capacity, which describes how much pollutant load a river can carry without violating its water quality objective. This means the Ministry of Water Resources can allocate pollution quotas in the same way as they allocate water to the provinces along the rivers. And these provinces then are responsible to distribute the pollution quota among the different types of industry in the catchment. This approach turns rivers into a hydraulic system for discharge of pollutants. And it's obviously very far away from the EU and European practice of requiring industry to apply the best available technology and the associated descriptions of what to do best. The next strategy which has been rolled out is called Water 10. It is ten commandments that the water users must adhere to in order to obtain a better water quality in rivers and lakes in China. It focuses on industry, urban and rural water, and it bans ten types of small enterprises which typically are highly pollutant. From the Big Leap Forward, under Chairman Mao, China has inherited abundant small factories scattered across the rural areas. And these small factories, they cannot afford to invest in clean technology, so they will be closed. And many Chinese see this as a hidden support to the big state-owned enterprises in the same branch. Ten key industries, they will be required to introduce new clean technology because they can afford. The use of coal will be cut back significantly to reduce air pollution. Coal-heated power plants, which today use cooling towers for dissipating the heat from their production, they will be required to recover excess heat and make beneficial use of it so that additional heating sources, coal-fired heating sources, can be reduced. One case is the Anshan Steelworks in northern China, which is the biggest steelworks in China. And here two Danish companies, from Danfoss and Cowi, are in the process of designing a heat recovery system which can feed the district heating of the city. And it's estimated that the factory alone can replace two big combined heat and power plants and nine small boilers around the city which used to supply hot water to district heating. And of course, the environmental benefits of this will be enormous. In terms of soil pollution, which also is a new focus for the ministry, Denmark is in the process of a pilot project at a big coal and gas plant in Wuxi. Urban sewage and wastewater treatment remains a high priority in order to cope with the rapid urbanization. In 1996 I led a World Bank project in Sichuan and Chongqing to upgrade wastewater management in 15 big cities upstream of the Three Gorges Reservoir. And the fear, public opinion prevented the World Bank to invest in the building of the Three Gorges Dam, but in order to get a piece of the cake they could invest in better water and wastewater facilities in the cities upstream. And the hidden agenda, of course, was to protect the Three Gorges Reservoir from eutrophication. But later eutrophication of Chinese rivers and lakes came to the forefront of the debate in 2009 when an algae bloom in the Tai Lake, upstream of Shanghai and in the Shanghai area, was so severe that the city of Wuxi, another million city, had to stop its water intake and close the water plant for up to one week. The focus turned towards diffuse pollution in the rural areas in order to control it, both from large scale pig and dairy farms, and also from the excessive use of mineral fertilizer. China has by far the highest use of mineral fertilizer and a surprisingly small use of animal manure as fertilizer. So there are huge savings for China, for the farmers, by cutting back on mineral fertilizer, improving the use of animal manure, and in that way reduce diffuse pollution of groundwater and surface water. Finally I should talk about water pricing. In the EU perspective, it is important or noticeable that the No 1 Document, it mentions water pricing, it mentions progressive tariffs to be introduced. But at the time, it doesn't elaborate much on what to do. Until now, water supply has been heavily subsidized by government so that people in urban areas paid perhaps one-third of the actual cost of producing drinking water, and in rural areas they paid nothing at all. In 2004 the National Development and Reform Committee, which sets national policies for China, it advised provinces to stop charging for water for irrigation, as one measure to increase food production. In 2012, after the No 1 Document came into force, this recommendation was reversed when the Ministry of Water Resources and the National Development and Reform Committee introduced payment for bulk water delivered from rivers and reservoirs. And noticeably this was based on the scarcity and value of water. It means that in the southern part of China, where there's abundant water, the water prices are very low. Whereas in the northern part of China, where there is a scarcity of water, the price of raw water, or bulk water, is correspondingly high. And very notable is that groundwater always is allocated a higher value than surface water. And of course, being from Denmark, where we rely on groundwater for all our uses and look well after it, this is a policy that we fully agree with.