Further north of Chicheng is the Bashang Area. It is known as the "water tower" for Beijing, and its neighbouring municipality Tianjin, because several rivers originate from there and serve as drinking water sources for the two cities. The waterways drop up to 1,500 meters between the area and Beijing.

Half a century ago, the area boasted more than 10,000 lakes, covering more than 900,000 mu. It also had 4 million mu of wetlands.

Today, the area only has about 200 lakes covering 210,000 mu. Its wetlands now cover 2.41 million mu, the Hebei Provincial Department of Forestry statistics reveal.

"Climate changes, population growth and overuse of underground water are to blame for the reduction of lakes and water," said wetland expert Wu.

Despite beautiful scenery, the people in four counties of the area -- Shangyi, Guyuan, Kangbao and Zhangbei, all in Zhangjiakou -- live in poverty. Since the 1990s local governments have called on farmers to develop irrigable croplands and plant vegetables to boost income. An area totaling 600,000 mu of vegetable has been planted in the counties since then and more than 60,000 wells have been drilled.

"Because farmers used the most primitive way of flooding cropland and had no economic knowledge, they consumed too much water in irrigation," Wu said.

Statistics showed that 348 million cubic meters of water are used annually in this regard, accounting for more than 70 percent of the total underground water.

"The ecological deterioration of this area means a cut-off of the water supply to Beijing," Wu added.

To conserve lakes and water in the Bashang Area, the Zhangjiakou Municipal Government issued a ban at the beginning of 2007 on any new wells. Meanwhile, The government has told farmers to strictly limit the planting area of vegetables and to develop water-saving irrigation methods. This includes an advanced drip irrigation technology that was applied in the Shangyi County last year.

In Guyuan, the local government launched a "grass for vegetables" project last year that returned 5,000 mu of agricultural land to grass. It plans to plant 20,000 additional mu of grassland over the next three years. The move is expected to save 15 million cubic meters of water for consumption in areas in the lower reaches.

Wu said the provincial forestry department was working to build three wetland nature reserves in the Bashang Area. They will cover 110,000 hectares when completed in 2010. He would not provide a figure for the investment.

"We have suffered economic losses too, since we're not allowed to drill new wells and plant more vegetables," said Zhang Lixin, head of the Xiaohezi Township in Guyuan. "But we must ensure the water supply for the capital and the Olympics.

"We hope the Beijing Municipal Government, together with the Hebei Provincial Government, will take that into consideration and help us farmers seek other ways to increase income, such as in developing tourism," he said.