Water Pricing

Abstract

This chapter analyzes the water pricing framework, the reform process of pricing components, key issues, and suggestions. Water pricing reform in China after 1980 has been an exploration of various policy possibilities. In theory, China has developed a comprehensive, systematic, and advanced water pricing policy and framework. The framework establishes a variety of instruments that could, in principle, deal with various circumstances related to tariffs and their structure. In practice, however, the reform process in China has progressed hesitantly, through a series of trials and errors: in macro-policy, reform has wavered between economic, social, and environmental targets; in policy direction, tariff reform has gradually evolved from a service charge to a resources charge and finally an environmental charge, accompanied by increasing price levels. In future, under the decisive role of the market in the Chinese economy, it will be critical to develop a clear and sustainable water pricing formulation mechanism. Cost recovery should be redeveloped as a key principle for service charges.