A banner hanging above a closed guesthouse reads, "Protect Erhai Lake, love our home." Chen Liang / For China Daily

"The local government didn't communicate with us at all before they ordered the suspension," he said. He estimated his direct loss so far to be about 300,000 yuan, "and that's not to mention the 500,000 yuan my business can easily make every year".

In 2015, the authorities required him to install an underground tank that cost more than 70,000 yuan to filter his wastewater before it flowed into the lake so he could pass an environmental assessment, he said.

"We did everything as requested," Zhai said, but he added: "Tourism has been developing too fast. The government has failed to invest properly in infrastructure, including sewage pipelines. This is poor planning by the local government. We (businesses) are paying for this mistake."

Qiao Xiaolin, 37, until recently ran a guesthouse near Dali old town, about 5 km from Erhai Lake. When she first visited the lake, in 2012, she said there were few places to stay nearby, suggesting a gap in the market. It only required an investment of 300,000 yuan, and hotels could charge up to 2,000 yuan a night in the peak season, she said.

Yet she decided against it. "I had the money to open a guesthouse near the lake," Qiao said, "but I didn't want to do that because the money would be made at the cost of the natural environment, which is a valuable resource and can be impossible to restore once damaged."

Duan Shusheng, a man in his 30s from Zhoucheng village, just north of Caicun, was among the many residents who said they welcomed the government's cleanup mission.

"When I was young, the rivers that connected with the lake were so clean that you could see the bottom. We could drink from nature directly," he said. "We used to swim in the lake, but now the oil contamination that can be easily seen on the shore puts people off.

"I strongly support the cleanup work," Duan added. "We live on tourism, but only if the lake is clean will we see more tourists."

Contact the writers at houliqiang@chinadaily.com.cn