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Environment

Chinese companies seal country's first rainwater trading deal

Move could boost 'sponge city' initiative to combat droughts and floods

SHANGHAI -- Two Chinese companies have started trading in rainwater, the first commercialization of an unconventional resource in a move that authorities hope could support the country's "sponge city" projects.

Yuchuang Environment Engineering, a rainwater treatment company in Hunan Province, signed a deal to buy 4,000 cu. meters of water collected annually by Gaoxin Real Estate, another Hunan-based company, China Water Exchange announced on Dec. 16.

Under the three-year deal, Yuchuang will pay 0.70 yuan (10 cents) per cubic meter for the raw water, which it will treat and sell to Changsha Gaoxin Holding at 3.85 yuan per cubic meter, 20% cheaper than the local water supply in the city of Changsha.

Both the volume of water involved -- equivalent to 1.6 Olympic swimming pools -- and the 15,400 yuan value of the deal may be minor, but they provide a practical pricing level for the country's rainwater management.

"The deal has realized the optimal use of water resources and trade," said Shi Yubo, chairman of China Water Exchange. "It also provides a new path for the sustainable operations of our state-sponsored sponge cities."

The exchange, formed by a consortium of 12 water management institutions in the country, is in charge of the government's water rights and market strategy deployment.

China's State Council, its government cabinet, identified 30 cities in 2015 under a sponge city pilot project to tackle water-related issues, which include drought and flooding brought on by the loss of natural wetlands to rapid urbanization.

The project's aim is to reuse at least 70% of rainwater across 80% of urban areas by 2030. The exchange, however, said many of the facilities built within sponge cities to catch rainwater have remained dormant.

Yuchuang says its rainwater management involves several stages. Rainwater is collected through a network of piping installed on rooftops, which is then channeled to a storage site for processing before being used by Changsha Gaoxin for landscaping and sanitation. 

Yuchuang says it has treated 500,000 cu. meters of rainwater since 2014, but that only accounts for 2% of the total rainfall in Changsha, indicating "a lot of room" for future development.

"It makes economic sense if the party who is going to purchase the water will obtain a bigger benefit from it than the price it is paying," said Cecilia Tortajada, a senior research fellow at the Institute of Water Policy in Singapore.

Managing resources in a more environmentally sustainability way is one of the key priorities of President Xi Jinping's government, which is aiming for carbon neutrality by 2060.

The country has also grappled with numerous natural disasters over the years, the latest being the worst flooding since 1960 along the Yangtze River this past summer.

China's sponge cities are concentrated around the rainfall-rich lower reaches of the Yangtze basin, an area of 2,300 sq. km.

Other parts of the country, especially the northeast and west, are usually drier. Such rainwater management projects could also contribute to drought mitigation there, said Tortajada. 

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