The next big war is supposed to be over water 1.

Tensions are already boiling over

the two biggest nations in Asia, India and China over the water sharing of the
Brahmaputra and the 3 dams that are planned to be built over it
The tensions arose in 2000 when China refused to share data on the flow of
Brahmaputra. An MoU was signed which mandated that China would inform India
over any and all large scale projects on the river 2.
Indias claims are not unwarranted as the construction of such huge dams would
lead to a decrease of water flow by approximately 60%, starving India and also
Bangladesh. This would also decrease the power generation capacity of the river.
China can leverage its String of Pearls strategy and the good relationship with
Pakistan to de-escalate the situation in their favor. China can use the bargaining
chip of demilitarizing the areas around Arunachal, the seas around Sri Lanka and
region around Leh if India would agree to a treaty which would be in the favor of
China. It could also claim to support India in all matters of diplomacy in Asia and
stick to Panchasheela agreements when it comes to all disputes with Pakistan.
Apart from these, China can propose a trading MOU where it would be
advantageous to India. It could propose to raise internal taxes to any and all
equipment being shipped to India and dissolve all taxes to shipments from India
as a favor for allowing to build dams.
India on the other hand can threaten to take it up with the International Court of
Justice. It can show instances where it has won, especially when it comes to the
Indus water sharing. It can claim riparian right and approach the court along with
Bangladesh as a petitioner as well. It can also approach the Intergovermental
Panel for Climate Change. Alerting NGOs like Greenpeace can be actively
pursued by India to restrict Chinas projects.
Furthermore, India can mount pressure using the amicable relations it has with
Russia and Mongolia. The Amur is an important river which can be diverted with
Russias help. India can offer help to Mongolia to construct a damn in Mongolia as
a counter to Chinas projects, thereby draining North China of precious water
resources.
India can also offer to stifle protests with respect to the Free Tibet Protests and
stop any acknowledgements of the Tibetan cause. It can also offer to bring about
peace in the South China Sea controversy, since all the nations involved have
amicable relationship status with India and has great respect towards it as an
arbiter.
Above all, India can accept the building of dams under the condition that cheap
power shall be sold to India from whatever the dams can generate. India can also
bargain about the trade practices and make the best of the situations by
imposing tax on Chinese products in return for signing a treaty.
The way forward for China is to open up and create transparency. Its claims
about dams not having impact on downstream flow is fabricated and not proved.
It is imperative that invitation must be given to concerned experts to examine
and gauge the impact the projects would have.

India needs to understand that although it has riparian rights, it does not control
the river absolutely. It must understand the shortage of quality water in China
and work amicably to share the river water.
A treaty must make sure that both the states problems are given the best
optimal solution through proper understanding between the countries with a
degree of fairness. It is also important that whatever projects are taken up by
China are environment friendly and sustainable in the long run. The agreements
have to make sure of that as well. Any and all diversion projects must be
disallowed voluntarily by China due to the severe environmental impacts and
also the damaging result on India and Bangladesh.
The way forward is honest talk and environmentally responsible measures.

1. http://bigthink.com/re-envision-toyota-blog/will-the-next-war-be-foughtover-water
2. http://wrmin.nic.in/forms/list.aspx?lid=349
3.