While the Chinese government has learned lessons from the experience with the massive Three Gorges Dam, which resulted in the displacement of 1.3 million people, a new study shows that serious problems remain with development for the South-North project.

This time authorities have relied on persuasion, instead of force, to carry out the relocation measures for South-North, the report from California environmental advocacy group International Rivers states. They also have involved elected resettlement committees.

But the resettlement budget is still "relatively low," International Rivers says, and the people affected by the resettlement don't have the freedom to choose among different resettlement options, nor were they involved in setting the resettlement policies.

The report calls for more government support for those affected, particularly after being resettled.

Three Gorges, the world's largest and most expensive dam, came at an official cost of $25 billion.

The South-North Water Transfer Project, by contrast, is expected to cost $62 million and is considered the biggest engineering endeavor in Chinese history. It is expected to supply 45 trillion gallons of water for hundreds of millions of people in Beijing and northern China by 2030.

China's current total water shortage is around 1.5 trillion gallons, which is equal to three times the annual water supply of New York City, says China's NDTV. Already, Beijing's two reservoirs have shrunk to 10 percent of their capacity and the city's annual water demand is expected to swell to 1.1 trillion gallons by 2020, city government estimates indicate.

Yet "the ecological cost impacts of the project are not really [acknowledged] by the government," said Peter Bosshard, policy director for International Rivers, National Geographic News reports.

The reduced flow of the Yangtze, for example, could restrict the river's ability to flush out pollutants, he said.

Three Gorges, for its part, revealed its shortcomings when flood waters raced into the dam's 400-mile-long reservoir last month, prompting a government official to admit that the dam's flood-control capacity "is not unlimited."

Thousands of tons of garbage also accumulated amid the heavy rains, threatening to block the locks of the dam.

Bosshard maintains that grand engineering schemes aren't the solution to China's water crisis. Instead, he says "efficiency improvements and conservation measures that can reduce the country's water demand."

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