Lin Chuntian's livelihood has been cast into doubt since his village was relocated uphill to make way for an expanding reservoir designed to feed China's south-to-north water diversion project.

The 51-year-old and his fellow villagers had to quit growing citrus fruit -- their main source of income for decades -- because the orchard will be submerged as the Danjiangkou Reservoir in centra China begins to rise dramatically in the coming flood season. Near their new homes, each family was given a small plot to grow less profitable vegetables instead.

"We're worried," Lin says. "Selling vegetables can barely cover our living expenses."

Beginning in October this year, water stored in the reservoir, which is in the upper section of the Han River, the largest tributary of the Yangtze River, will flow along channels stretching more than 1,200 km to the country's dry north, including Beijing.

The ambitious project is set to benefit the whole country in the long term, but for now it is testing the government's ability to manage the effects on the central region's population, industry and economy. While individuals like Lin have been caught in the winds of change, the upheaval has stalled local industry.

The relocation of around 340,000 people around the reservoir, including 180,000 in Hubei Province and 160,000 in Henan Province, was completed by the end of 2012. However, the task of ensuring the immigrants settle into their new homes remains arduous.

They have now entered a "sensitive period" and are having difficulty adapting to their new environments, according to the Hubei Immigration Bureau, which worries about the destabilizing effect of the immigrants on local communities.

The number of petitions is growing as resettled villagers like Lin and laid-off workers seek to air grievances over compensation and lost jobs.

In 2012 and 2013, Danjiangkou City authorities handled 1,012 petitions filed by 2,553 immigrants who complained about land loss, unemployment, housing quality and lack of infrastructure, to name but a few topics, according to a report published on the city's official website.

The report says Danjiangkou is under heavy pressure from increasing petitions, although it provides no comparable figures from the past and no information about immigrants appealing to provincial and central authorities for help.

To maintain stability, government officials have been sent to live and work in communities. In Danjiangkou City, more than 500 officials were placed in 165 resettlement villages to direct local economic development and handle complaints.

The solution to stabilize immigrants is to improve their living standards, officials have realized. The resettlement of those in the path of the rising water is just the first stage, says E Jingping, director of the South-North Water Diversion Office of the State Council, China's cabinet. "The key is to help them become prosperous."

However, improving the livelihood of tens of thousands of immigrants isn't easy for these cash-strapped cities, which are listed as the poorest places in China.

To start with, officials complain of a missed "golden opportunity" to develop the local economy. Parts of this area thrown into chaos by the water diversion scheme have been prevented from joining China's overall strong economic growth in the past decade.

In one case, to prepare for population resettlement and the water diversion project, the State Council called a halt to construction of Danjiangkou City's infrastructure in 2003.

Hundreds of factories were shut down, and many of them have been reluctant to build new sites because China's new anti-pollution measures mean they have to bear the extra costs of operating pollution control facilities. Also lacking skilled personnel, the city, listed as one of the country's poorest, finds it difficult to attract non-polluting industries.

As a result, farming is the only means of livelihood for many residents in the vicinity of the reservoir in Shiyan City, which administers Danjiangkou City. But most of the fertile farmland is situated in the low-lying area and will be submerged after the water level rises. Farming will pollute the water too if fertilizers are widely used.

Since 2005, Danjiangkou City has lost 682 million yuan (109 million U.S. dollars)in financial revenues, official statistics show. The city government estimates it will incur another annual loss of 113 million yuan in fiscal revenue after the completion of the project.

And the economic development of Shiyan City has been set back about three to five years, officials from the city estimate.

Danjiangkou City, which used to be one of the top 20 county-level economies in Hubei, saw its ranking decline to 34th in 2012.

Despite all the challenges, the provincial government of Hubei has pledged to raise the living standards of immigrants to average levels within three years, and to exceed the average in a further two years.

On a broader scale, provincial authorities are seeking financial help from the central government and from downstream provinces and cities which stand to benefit from the water project.

The central government has also approved projects worth tens of millions of dollars in Hubei and Henan to transport fertile soil from farmland that is going to be submerged to higher ground, where immigrants will be able to grow more crops.

In August 2013, Hubei and Beijing signed an agreement on strategic cooperation. Guo Jinlong, Beijing's Party chief, pledged full financial and technological support to the headwater region.

In Hubei, many cities around the reservoir have encouraged farmers to develop eco-agriculture and grow lucrative crops such as flowers and ingredients for herbal medicine.

At Wudang Mountain, a tourist spot known for its Taoist culture, resettled farmers were urged to cash in on tourism by starting small businesses. Government authorities also offer farmers free training courses and counseling to help them gain working skills.

The number of tourists heading to Wudang Mountain has kept Pan Faqun, an immigrant to Shijiazhuang Village, busy all year round since he opened a family inn last year.

Key members of the inn include his son-in-law, who became its chef after receiving training provided by the local government, and his wife, who learned to manage a family business via a government-sponsored program.

Family earnings have amounted to tens of thousands of yuan a year, putting Pan at ease with his new life after the resettlement. "I didn't expect this, but it happened anyway. I am a lucky man," he says.