This study by the Asian Development Bank explores the difficulties that China will face in supplying its cities with water and in managing more frequent and longer droughts in the face of climate change. A case study of the Guiyang Municipality in the Guizhou Province is presented to illustrate how demand management can be used to manage and prevent droughts and provide sustainable water supplies. The study looks at optimal infrastructure for management and sustainable supply, as well as ecosystem management. It proposes a three-pronged approach for reducing the impacts from drought: strengthening disaster preparedness, including risk monitoring and early warning systems; managing demand through water savings, building better capture and storage facilities, re-evaluating tariffs, and boosting water efficiencies in agriculture, industry and cities; and implementing an integrated approach to water management at the municipal level based on water allocation schemes and monitoring.