By Alan Wheatley, Global Economics Correspondent
JINGHONG, China, Oct 11 (Reuters) - Framed by banana and eucalyptus trees, the caramel-coloured Mekong river rolls through this lush corner of Yunnan province in southwestern China with an unerring rhythm that is reassuring in its seeming timelessness.
Yet as recently as April, a fearsome drought had shrivelled the Mekong to its narrowest in 50 years. Water levels were so low that at Guanlei, a river town not far from here, dozens of boats were laid up for more than three months.
Alarmed at the drying up of the world's largest inland fishery, the four members of the Mekong River Commission -- Thailand, Laos, Cambodia and Vietnam -- called a special summit.
"Without good and careful management of the Mekong river as well as its natural resources, this great river will not survive," Thai Prime Minister Abhisit Vejjajiva warned.
The commission's political leaders suspected that China was hoarding water behind the dams it has built on the Mekong, exacerbating the impact of the drought.
China presented data to allay these fears. Finally, the rains returned and the tensions dissipated.
But the incident highlighted the strains that are being generated as Asia's unslakeable thirst for water collides with the reality of a supply that is limited and, if climate change projections are borne out, may shrink sharply.
The Asian Development Bank speaks of a looming crisis that threatens access to water and sanitation needs for millions of households and industries.
The bank is holding a high-level conference at its headquarters in Manila this week to chart solutions and canvass greater regional cooperation.
"In the next five to 10 years, if the initiatives to secure greater efficiencies in water are not put in place, you really are at risk," said Arjun Thapan, the ADB's special senior adviser for infrastructure and water, told Reuters. [ID:nSGE699014]
MIND THE GAP
Projections last year by the Water Resources Group (WRG), a consortium of private-sector companies formed to tackle water scarcity, point to a global gap of 40 percent between the supply and demand for water by 2030 under a business-as-usual scenario.
The imbalance is particularly daunting in India, where the trend towards a middle-class diet will increase demand for meat, sugar and wheat, which require a lot of water to produce.
Agriculture uses almost 90 percent of India's water.
By 2030, demand will grow to almost 1.5 trillion cubic metres, compared with today's supply of about 740 billion cubic metres, according to a report for the WRG by consultants McKinsey.
As a result, in the absence of concerted action, most of India's river basins could face a severe water deficit by 2030.
China's likely water deficit is more manageable on paper -- a shortfall of 200 billion cubic metres -- but 21 percent of the country's surface water resources are unfit even for farming, which consumes about 70 percent of the country's water.
See the McKinsey report at http://r.reuters.com/wuq57p
What makes such forecasts even more daunting is evidence that global warming is already eroding the Himalayan glaciers covering the Tibetan plateau, which feed neighbours including India and Pakistan as well as China itself.
More than 80 percent of glaciers in western China are now in retreat, according to a study by a group of mainly Chinese climate-change scientists in the September issue of 'Nature'.
Overall, 5 percent to 27 percent of China's glacial area is forecast to disappear by 2050, the study said.
"Even though the exact timing and magnitude of the 'tipping point' of each glacier is still uncertain, the projected long-term exhaustion of glacial water supply should have a considerable impact on the availability of water for both agricultural and human consumption," the scientists wrote.
Because 60 percent of the run-off from China's glaciers flows out of the country, this can spell only trouble.
China's plans for more dams on the Mekong and on other major rivers that tumble down from the Tibetan plateau already have its southern neighbours on edge.
"As far as transboundary management of water is concerned, I think certainly the Himalayas are likely to be a flashpoint," said the ADB's Thapan.
THE NEW OIL
The risk of conflict over water rights is magnified because China and India are home to over a third of the world's population yet have to make do with less than 10 percent of its water.
"Although both nations are seeking to become the superpowers of the 21st century, their weak point is water," according to Yoichi Funabashi, a prominent foreign-affairs commentator and editor-in-chief of the Asahi Shimbun, a Japanese newspaper.
India and Pakistan are another potential point of friction.
The Indus Waters Treaty, which parcelled out river use rights after India's partition in 1947, has survived three wars between the two neighbours since it was signed in 1960. But the pact is under strain from Indian plans for more upstream dams and water diversion schemes.
So what is to be done? Given that agriculture accounts for almost 70 percent of global water use, it will be critical to increase "crop per drop" via improved irrigation techniques and growing food that needs less water.
In the words of the Water Resources Group, "While the gap between supply and demand WILL be closed, the question is HOW."
As Funabashi puts it, oil can ultimately be replaced by other resources, but the same is not true for water. Water is also closely tied to food, energy and climate change.
"In that sense, water is a key component of national security. If the 20th century witnessed the rise and fall of nations over oil, the 21st century could be one in which the rise and fall of nations is determined by water," he wrote last month. (Additional reporting by John Mair in Manila; Editing by Richard Pullin)
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