If any country should follow Israel’s lead, it is China. Open a Chinese newspaper on a summer day and you’ll read, often on the same page, about both flooding and drought. It’s a conundrum for China that has vexed the country’s rulers for millennia: the South suffers from a surfeit of water, while the North is perennially parched.

China’s annual monsoons deposit most of their moisture by the time they reach the QinlingMountains and the HuaiRiver, the traditional line bifurcating the wheat- and corn-growing North from the rice-growing South. Travel southward across that line and the contrast is striking: the arid, yellow loess soil of the Yellow River’s alluvial plain gives way quickly to the lush, jade-green rice paddies of the Yangtze Delta.

China’s water resources availability ranks among the lowest in the world, at only one quarter of the world average. And given its naturally lopsided distribution of surface water, in North China—home to the sprawling, thirsty metropolises of Beijing and Tianjin—current levels of water usage are simply unsustainable.

Resource-intensive industries like steel, aluminum, and concrete, and a growing urban middle class—with its washing machines, more frequent showers, flushing toilets, and car washes—compete with irrigated agriculture for fast-dwindling supplies. Increasingly, farmers and city-dwellers alike have turned to groundwater to meet their needs. The result: Beijing’s water tables are falling at the alarming rate of nearly two meters a year, and the city itself has been sinking at four inches a year in the last decade.

But in a country ruled by engineers, where there’s a will, there’s a way. The ambitious scheme that China’s technocrats have dreamt up, dubbed the South-North Water Diversion Project (SNWDP), is as dramatically simple in concept as it is unfathomably complex in execution: bring the water from where it is to where it isn’t. A series of three extensive canal systems—one in East China, which broke ground in 2002 and will supply Tianjin and the Shandong Peninsula – one in Central China, which will supply Beijing and began construction in December 2003; and a third in the West, not slated to begin until 2010 – will carry water from the Yangtze basin to the arid North. When completed, the project is expected to be able to transfer 45 billion cubic meters, or 1.6 trillion cubic feet, of water per year.

The SNWDP is said to be the brainchild of late leader Mao Zedong, who proposed it in an offhand remark made during a 1952 inspection tour to the Yellow River. But China’s penchant for preposterously large hydraulic engineering projects didn’t begin with Mao: in the early 7th century A.D., the Sui dynasty emperor Yang Di commissioned the Grand Canal, a massive waterway stretching from the Yangtze Delta to Tianjin and on to Beijing. Significant parts of it are still in use 1,300 years later, stretching over a total of 1,100 miles, 200 miles longer than the 911 mile length of the SNWDP’s eastern route.

Although the Yangtze water is intended primarily for urban industrial and residential use, it will theoretically take some of the competitive pressure from those sectors off agriculture. However, Huang Jianliang, coordinator of a comprehensive impact study of the eastern route sponsored by the Chinese Academy of Social Sciences (CASS) and the Italian Ministry for Environment and Territory (IMET), says that under current pricing plans, water delivered to the North by SNWDP will be nearly twice the current price of $0.45 per metric ton—far too expensive for farmers, who may well continue to draw essentially free groundwater for irrigation. “It’s a paradox. The supply of water will increase, but so will the price. Water isn’t something subject to simple economic laws,” says Mr. Huang.

That is not the only challenge for China’s water architects. The eastern route passes through the most populous and developed region of China, and also traverses its most polluted sections. China’s Ministry of Water Resources released a report in January that said that more than 53 percent of water in major river systems is undrinkable, with half the water in 52 lakes surveyed as well as 35 percent of groundwater too polluted to drink. “It is imperative that the SNWDP canals be kept free of contamination from the polluted waterways, some of which it must cross,” says Mr. Huang.

Zhang Jiyao, director of the SNWDP Construction Committee under the State Council, China’s cabinet, estimated that as many as 400,000 people will need to be relocated.

China’s central government has said it will foot the bill for 30 percent of the project, which will reach an estimated $60 billion before completion, still some 50 years away. The rest of the funding will come from local and municipal governments and Chinese banks. The project has its share of critics, both within and outside of government.

There are alternatives, adds Mr. Huang. “If we even learned half of what Israel already knows, we wouldn’t even need the South-North Diversion project,” he says. “There’s enough water, it’s just not being used wisely.”