In 1998, devastating floods on the Yangtze - Asia's largest river with a length of 6,300 kilometres - affected an area of 25.78 million square kilometres, killing 3,656 people. The floods swept away 5.7 million homes and damaged a further seven million, led to the relocation of nearly 14 million people and cost up to $31 billion in economic losses to industries such as agriculture. UNEP identified three key environmental factors that significantly aggravated the impacts of heavy rains: sharp declines in the water retaining capacity of forests and grasslands due to deforestation and overgrazing; decreases in water storing capacity in the middle and lower reaches of the river due to loss of lakes and wetlands; and silting up of the rivers and wetlands in the Yangtze basin as a result of rising rates of erosion.

A $10 million project, coordinated by the China State Environmental Protection Administration (SEPA) and UNEP, aims to restore thousands of lost lakes and natural drainage systems so that the river, whose banks and basins are home to 400 million people, can cope better during times of heavy and prolonged rains. The project, which has completed its pilot phase and will enter its main phase in mid-2003, also plans to restore natural forests, grasslands and other key habitats in the upper and middle reaches of the Yangtze to reduce soil erosion and soil sweeping into the river. Experts believe such schemes will not only increase the volume of water the Yangtze can hold, but may help fight global warming by absorbing carbon dioxide from the atmosphere.

Some important actions have also been taken since the floods of 1998. In Sichuan Province a logging ban was introduced and loggers were re-employed to plant trees and cultivate forests. The scheme has targeted land degraded by deforestation and inappropriate agriculture on steep mountain slopes that are most prone to erosion. Farmers have been compensated for loss of income.