China dominates rising investment in protecting water supply

A man stretches his leg on the bank of the Han River as a ship passes by amid thick haze in Wuhan, Hubei province June 15, 2012.

WASHINGTON (Reuters) - The annual global investment in forests, wetlands and other ecosystems that help keep human water supplies clean jumped by a third over four years to more than $8 billion, with China accounting for about 90 percent of that, according to a report released on Wednesday.

China accounted for more than $7.46 billion of spending in 2011 on natural water protection, known as watershed payments, according to Forest Trends' Ecosystem Marketplace, a Washington, D.C.-based environmental advocacy group. U.S. investment that year was $360.5 million.

Other projects were mounted by beverage companies in Uganda and France, focusing on environmental protection of the water sources that fuel their businesses, the report said.

These projects are considered separate from conventional investments in dams, pumps, treatment plants or pipelines to move water from one place to another, according to report author Genevieve Bennett, a researcher for Forest Trends, which focuses on forest and water conservation.

Most times, Bennett said that investing in what she called natural water infrastructure is far cheaper, adding that the value is likely to increase as the world's supply of clean water becomes scarcer.

The Organization for Economic Cooperation and Development estimates world investment in water infrastructure will reach $1 trillion by 2025. Current spending is around $80 billion, 10 times the total natural infrastructure investment for 2011.

China is the world leader in offering compensation for ecological restoration and protection, the report said. One Chinese program provided health insurance benefits to 108,000 people upstream from the coastal city of Zhuhai in exchange for adopting land use practices meant to improve drinking water for the region.

NEW YORK AND SUPERSTORM SANDY

The impact of Superstorm Sandy on the New York metropolitan area offers one example of the benefits of natural infrastructure investment, Bennett said.

Sandy had scant impact on New York City's drinking water, despite long-running power outages in the region, because the drinking water supply is fed by gravity, not electricity. The water remained drinkable because it is drawn from supplies in the state's pristine Catskill Mountain region, set aside in the late 1990s by working with upstate landowners to keep pollutants out of the water, Bennett said.

That preservation project cost about $1 billion, far less than a $4 billion water treatment plant proposed at the time by the U.S. Environmental Protection Agency, she said.

In San Antonio, Texas, a drought-prone area where drinking water comes from the vast Edwards Aquifer, taxpayers voted for a 1/8 percent rise in sales taxes to pay for easements and outright purchase of land that sits over the aquifer to prevent it from ever being developed.

John Hoyt of the Edwards Aquifer Authority said by telephone that the project has been very popular with citizens, whose efforts have preserved over 105,000 acres (42,000 hectares) for grazing and hunting, but not for paving, which would shunt rain water away from the aquifer.

The report is available through the Forest Trends website at www.forest-trends.org/

(Reporting By Deborah Zabarenko; Editing by Leslie Adler)