China’s national 12th Five-Year Plan (2011-2015) highlighted the need for ‘green development’ and committed to establish a resourcesaving and environmentally. Opportunities for improving water management in the coal power sector China is embarking upon a transition to a more balanced and sustainable economic growth model with an emphasis on sustainable resource management.This arrangement does not provide the coal power sector with incentives to adopt advanced watersaving technologies and improve their water use efficiencies (Zhang et al., 2016), which is aggravated by the fact that local water departments sometimes are not powerful enough to collect those fees (Fang et al., 2002). However, not only are water prices low in China compared to other countries, but many provinces also apply non-volumetric tariff rates to coal power plants’ water use, which means power plants’ water uses are charged according to the unit of electricity generated (RMB/KWh). As mentioned in the previous chapter, pricing water properly is able to incentivize water-saving practices. Last but not least, economic instruments are insufficient to reflect the importance of water resources. unsustainable development and over-exploitation of the shared water resources). Since energy planning and coal power construction are managed by provincial and local governments, lack of inter-provincial coordination within the same basin has resulted in the classic tragedy of the commons (i.e. Only a few water-stressed river basins, such as the Yellow River Basin, have formulated water allocation plans (World Bank, 2019). China’s current water allocations are administered by provinces instead of by river basins. The mismatched boundaries of energy planning and water management have potentials to result in tragedy of the commons. Lack of inter-provincial coordination or benefitsharing mechanisms have resulted in provinces that do not have abundant renewable resources, preferring to develop and use their own coal power plants instead of receiving electricity generated in wind or solar-abundant regions (Qi et al., 2019). The problem is no longer technical but institutional. There are currently many wind power and solar power assets in China’s northern regions that have been abandoned due to network congestion. However, its electricity grid and transmission systems have lagged behind. China has heavily subsidized its renewable energy sector, which has set up numerous wind farms and solar PV farms. It has also created barriers for the further development of renewable energies. There have been cases where power plants have been moving into construction before obtaining the water withdrawal permit. When SOEs reach agreements with local govermnents on constructing new power plants, the local water departments have very limited power to enforce sector regulations. For instance, Guangdong's electric power sector employed around 0.3 million people in 2014 (Caldecott et al., 2017).
Energy development and construction of new coal power plants often generate local economic and social benefits, including offering a large number of employment opportunities. Local protectionism impedes enforcement of water sector policies.
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