China is looking to rework nature with a gargantuan project to divert water from its lush south to the parched and populous north which will take half a century and tens of billions of dollars to achieve.

But when test runs began this year, villagers along the route said the inflow polluted their lake, leaving it teeming with silvery rotting fish carcasses and killing their livelihood.

Officials in the eastern province of Shandong rejected their account, but the incident feeds into concerns that the behemoth South-to-North Water Diversion plan may be creating more problems than it solves.

The hugely complex geo-engineering project, officially began in 2002, is scheduled to take 50 years and 500 billion yuan ($A87.5 billion) to build, and requires feats including blasting channels through mountains in earthquake zones on the Tibetan plateau.

If it works, its three separate routes from different points on the Yangtze river will deliver 45 billion cubic metres of water a year across 4350 kilometres of canals and tunnels to the Beijing area and vast swathes of the north.

The region needs the water. With just a fifth of the country’s total supply, northern China supports nearly half the population and economy and two-thirds of the arable land, according to a 2009 World Bank report.

Grand Canel China

Grand Canel

China already boasts a long history of water megaprojects, with the Grand Canal stretching from near Shanghai to Beijing first dug 2500 years ago and extended over the centuries.

The directive for the expanded South-to-North network came from Mao Zedong himself, the project’s official website says.

The leader known for big – and often counter-productive – ideas remarked in 1952: “The south has a lot of water. The north has little. If possible, lending some water would be OK.”

But troubles abound. Pollution could render the water unusable, long, uphill sections will require tremendous energy for pumping, and reservoir construction has displaced communities.

Even if the full supply arrives as promised, rising demand in the still growing country could quickly render it insufficient.

The greatest pollution threat lies with the eastern route, set to begin carrying water at the end of this year from Jiangsu province to Shandong and a little further north.

Built upon existing waterways in China’s highly-developed seaboard, including the Grand Canal, it risks picking up tainted supplies from start to finish.

“A focal point of the first phase of the project is to strengthen pollution control,” the official website says.

But in Gupang, a stretch of ramshackle concrete homes, villagers say the water dumped into Dongping lake during a month of test-runs was deadly.

The channel itself is picturesque, flanked by walkways and trees, and a billboard proclaims the project will “benefit the country and the people”.

But a retired fish farmer surnamed Pang, 72, says: “The water’s surface was full of fish and they started to stink. Then they rotted and sank.”

Now, the family farms – underwater nets tied to poles that jut out toward the sky – sit unattended. Creaky wooden boats bob nearby, one using a brick as an anchor.

Villagers said they had just poured in their annual 50,000 yuan ($A8750) of fish fry when the wipeout hit in June. Unable to afford replacements, many younger men left to find work in the cities.

Residents said local authorities dismissed their version of events but gave them 5000 yuan ($A875) as compensation – then warned people not to talk about what happened and detained three fish farmers considered ringleaders.

“They won’t let us see him,” the 25-year-old daughter of one of them says, her eyes welling up.

The central section – set to start sending water from Hubei province to the Beijing area next year – has forced 350,000 people to relocate.

Five rivers feeding that route’s main source, the Danjiangkou reservoir, are “unlikely” to meet cleanliness standards because anti-pollution projects lack funding, the state news agency Xinhua reported in July.

The western element traverses the Tibetan plateau and aims to channel water from the Yangtze’s upper reaches to the Yellow River, but poses the biggest construction challenge and will not be finished for nearly four decades.

Experts argue the real solution should be to contain China’s growing thirst, not encourage it.

“It’s actually a very prolonged, very tortuous process that probably should have been killed off a long time ago,” says Harvard research fellow Scott Moore.

“It would be more effective in the long run to try to tackle the demand side rather than just to try to increase the supply.”

But that would require authorities to force industries and the populace to curb both demand and waste.

China is inefficient in its use of water, the World Bank says, with two-thirds of supply going to agriculture, where irrigation systems have “extensive” losses.

The rest largely goes to industry, which recycles only 40 per cent, half as much as in developed countries, while urban distribution networks are among the world’s leakiest.

The north might have learned to conserve better if it had not anticipated receiving diverted water, says Ma Jun, a prominent Beijing environmentalist.

He stresses that authorities should view the back-up supply as only a stop-gap measure to “buy some time”.

“I hope this time will be used well,” he says. “Because it won’t last particularly long.”