On Friday afternoon, China quietly inaugurated one of the biggest engineering projects of all time: the South-North Water Diversion, a £48bn, 2,400km network of canals and tunnels, designed to divert 44.8bn cubic metres of water annually from China’s humid south to its parched, industrialised north.

At 2.32pm, the project’s “middle line” officially began carrying water from the Danjiangkou reservoir in central China’s Hubei province to Beijing – the distance from Corsica to London. The project, officials say, will save China from a water crisis that could set its development back years.

It has also destroyed Wang Yanhe’s life. Wang was born near the Danjiangkou reservoir in 1979, married young and had two children – the family lived between a small stream and a leafy hillside, and grew a variety of grains. In 2009, seven years after the project was approved, officials informed him that the reservoir’s water levels were rising and that his village would be submerged. About 345,000 villagers have been displaced by the project to date, and Wang soon became one of them. The government gave him a home in the Heba New Migrant Village by a dusty highway in rural Pingdingshan, a coal-rich municipality in neighbouring Henan province whose name translates to “flat mountain”.

Then came the drought. This summer was Pingdingshan’s driest in 63 years – Wang’s corn crop only grew to knee-height, forcing him to abandon his harvest. “Nothing is as good as before,” he said, chain-smoking cigarettes in his concrete-floored living room. His roof leaks; he can’t speak the local dialect. Officials promised him 0.2 acres of land, but only gave him 0.15. “After we arrived, we realised that the land was all dry,” he said. “So it doesn’t even matter what they promised us.”

The Henan Daily newspaper announced the line’s inauguration in a pithy microblog post on Friday. “Being a peoples’ engineering project, in keeping with a frugal and pragmatic working style, celebratory activities will be kept as simple as possible,” it said. “No officials will take part in the ceremonies.”

China’s booming economy over the past three decades, coupled with a long-held mandate to “grow first, clean up later”, has been cataclysmic for the country’s once-bountiful lakes, rivers and aquifers. More than half of China’s 50,000 rivers have vanished over the past two decades, according to China’s first national census of water, published last year. About 70% of its remaining fresh water is polluted. “If we continue with our business-as-usual model, China will basically run out of water,” said Feng Hu, a water analyst with the Hong Kong-based research group China Water Risk. “It won’t have enough water to power its economy.”

The project has roots in an offhand comment by Mao Zedong who, on an inspection tour in the early 1950s, said: “The south has plenty of water, but the north is dry. If we could borrow some, that would be good.” The project has three sections: a 1,150km eastern line, which runs from the lower Yangtze River to Tianjin; the middle line, from Danjiangkou to Beijing; and a western line, which could some day link the headwaters of the Yangtze and Yellow rivers across the high-altitude Qinghai-Tibetan Plateau. The eastern line began delivering water to coastal Shandong province last winter. The western line remains largely conceptual, so grand in scale that it may ultimately prove impossible to build.

While the project could provide some much-needed relief, it “will never solve north China’s water problem”, said Jennifer Turner, director of the China Environment Forum at the Wilson Center in Washington DC. She called the project a “Band-Aid” rather than a long-term solution. “The challenge in the water sector, writ large, is that it is so hooked into supply-side management,” she said. “It’s like the engineers in China have a special tattoo that says ‘nothing is too big’ – they’ll move water massive distances rather than get deep and dirty into the mess of pushing effective water conservation.”

In February, Qiu Baoxing, vice-minister of the Ministry of Housing and Urban-Rural Development, called the project unsustainable. “As the scale of the project gets bigger and the distance gets longer, it is more and more difficult to divert water,” he wrote. “Recycled water could replace diverted water. Most Chinese cities are capable of finding more water if we develop water desalination technology and collect more rain water.”

Experts say the south may no longer have enough water to spare. They say the project could decimate the Han River, an important tributary of the Yangtze – about 40% of the river’s water will eventually be diverted north, despite acute water shortages that already plague the cities along its banks. In 2011, five months of drought in Hubei province left 315,000 people short of drinking water. The Danjiangkou reservoir dropped to four metres below “dead water” level, rendering it unusable. Speculation that the South-North Water Diversion project caused this year’s drought grew so heated that state media issued a denial. “Henan province is the recipient of benefits from the [project],” Yang Biantong, a spokesman for Henan’s flood control and drought relief department, told the People’s Daily in late August. “Not only has it not had a negative effect, the [project] has also been extremely helpful.”

Christine Boyle, founder of Blue Horizon Insight and an expert on China’s water issues, said the issue boils down to how one defines a drought. In addition to crippling weather droughts – periods of little rainfall – China is also suffering from economic droughts, which occur when the demand for water outstrips supply. “You can’t say the South-North Water Diversion is causing a weather drought,” she said. “But you can say it’s intensifying an economic drought.” Many Chinese farmers are already economically squeezed, and increasingly erratic weather patterns, perhaps related to climate change – freezing winters, blistering summers, floods and droughts – are now pushing them into a state of emergency.

The South-North Water Diversion project began sending emergency water supplies to Pingdingshan in mid-August and, according to the official newswire Xinhua, the diversion was a success. The middle line delivered more than 50m cubic metres of water to the city’s Baiguishan reservoir over a month and a half, it said, “effectively relieving the scarce water supply of Pingdingshan city’s one million-plus residents”.

While that water has flowed into the taps of Pingdingshan’s urbanites and the cooling systems of its coal-fired power plants, farmers on the city outskirts have been left to fend for themselves. Chang Xiangdang, 40, lives with his family of six in Malou Village, population 1,000, a dense cluster of cinderblock houses only a few hundred metres from the project’s main channel. From his small patch of radish and cabbage, high concrete embankments stretch to the horizon and an arch-like sluice rises like a mirage. “The channel runs through our town, but there’s no way to get the water, no gap in the wall,” he said. Villagers rely on groundwater for bathing and cooking. In previous years, they could dig 20 metres to reach the aquifer. This year, even 80-metre wells are running dry.

Chang said the lack of water has thrown his life into flux. Like Wang, the displaced farmer, he has given up on this year’s corn harvest. His family has been subsisting on a compensation package that project officials gave him four years ago, when they requisitioned much of his farmland. Another dry summer, he says, would leave him destitute. He has considered taking a construction job in the city. “There’s no more water here,” he said. “I’ll do what it takes to survive.”