7.1 Water Pricing Framework in China
147
rate was copied from the pollution discharge fee with no initial change, similarly to
the water resources fee-to-tax reform. This measure was the beginning of pollution
discharge tax and the end of discharge fees in China.
In summary, China has developed a complicated water pricing system, covering
all aspects of the water resources development, use, and protection process and
involving all levels of agencies from the central, provincial, prefectural, and country
governments (Table 7.1). As discussed below, however, the inherent complexity of
the system generates many implementation problems, such as conflicting interests.
7.2 Water Resources Fee/Tax
In the late 1970s and early 1980s, national and regional governments promoted
water saving to deal with emerging water shortages in cities in northern China and
coastal regions. During this period, China used three water supply systems: the
urban tap water system, the supply system from hydraulic engineering, and the selfsupplying system. Among these, the self-supplying system for larger and mediumsized industrial and mining enterprises provided 50% more water than the tap system,
but was out of the management of water departments and easy to waste. Therefore,
the regional governments began collecting water resources fees for self-supplying
sources in some provinces in North China to improve water resources management.
In 1980, Shenyang City in Liaoning Province levied a water resources fee on
urban groundwater, the first such collection in China. Soon after, Beijing levied a
volumetric charge on self-supply wells at a rate of 0.02 RMB/m
3 under the water use
plan and 0.10 RMB/m
3 for exceeding the plan after April 1, 1981, using the revenue
generated in groundwater management and recharge and for water saving (Beijing
Municipal Government 1981). Hebei Province required the charging of a resources
development fee on non-agricultural self-supply wells (Hebei Provincial Government
1981). In 1982, Shanxi Province issued the Water Resources Management Regulation
of Shanxi Province and levied a water resources fee on self-suppliers according to
actual abstraction volume at a rate of 0.03–0.06 RMB/m
3 after 1983, with rural
domestic and livestock use and irrigation exempted (Standing Committee of Shanxi
Provincial People’s Congress 1982). Tianjin and Liaoning Provinces began adopting
similar measures in 1987 (Tianjin Municipal Government 1987; Liaoning Provincial
Government 1987). Over this period, these provinces in or around NCP all introduced
charges on self-supply sources, especially urban groundwater, under the name of a
water resources fee or another designation.
The 1988 Water Law stipulated that the water resources fee should be levied
on units directly abstracting groundwater in urban areas, while the fees for other
direct abstraction from aquifers, rivers, and lakes should be decided by the provincial
government. The law initiated a period of collecting water resources fees in China.
Many provinces in northern China launched collection policies, such as Shaanxi
(1992), Inner Mongolia (1992), Heilongjiang (1995), Qinghai (1995), and Gansu
(1997). Some provinces in southern China also began collecting these fees, such
147
rate was copied from the pollution discharge fee with no initial change, similarly to
the water resources fee-to-tax reform. This measure was the beginning of pollution
discharge tax and the end of discharge fees in China.
In summary, China has developed a complicated water pricing system, covering
all aspects of the water resources development, use, and protection process and
involving all levels of agencies from the central, provincial, prefectural, and country
governments (Table 7.1). As discussed below, however, the inherent complexity of
the system generates many implementation problems, such as conflicting interests.
7.2 Water Resources Fee/Tax
In the late 1970s and early 1980s, national and regional governments promoted
water saving to deal with emerging water shortages in cities in northern China and
coastal regions. During this period, China used three water supply systems: the
urban tap water system, the supply system from hydraulic engineering, and the selfsupplying system. Among these, the self-supplying system for larger and mediumsized industrial and mining enterprises provided 50% more water than the tap system,
but was out of the management of water departments and easy to waste. Therefore,
the regional governments began collecting water resources fees for self-supplying
sources in some provinces in North China to improve water resources management.
In 1980, Shenyang City in Liaoning Province levied a water resources fee on
urban groundwater, the first such collection in China. Soon after, Beijing levied a
volumetric charge on self-supply wells at a rate of 0.02 RMB/m
3 under the water use
plan and 0.10 RMB/m
3 for exceeding the plan after April 1, 1981, using the revenue
generated in groundwater management and recharge and for water saving (Beijing
Municipal Government 1981). Hebei Province required the charging of a resources
development fee on non-agricultural self-supply wells (Hebei Provincial Government
1981). In 1982, Shanxi Province issued the Water Resources Management Regulation
of Shanxi Province and levied a water resources fee on self-suppliers according to
actual abstraction volume at a rate of 0.03–0.06 RMB/m
3 after 1983, with rural
domestic and livestock use and irrigation exempted (Standing Committee of Shanxi
Provincial People’s Congress 1982). Tianjin and Liaoning Provinces began adopting
similar measures in 1987 (Tianjin Municipal Government 1987; Liaoning Provincial
Government 1987). Over this period, these provinces in or around NCP all introduced
charges on self-supply sources, especially urban groundwater, under the name of a
water resources fee or another designation.
The 1988 Water Law stipulated that the water resources fee should be levied
on units directly abstracting groundwater in urban areas, while the fees for other
direct abstraction from aquifers, rivers, and lakes should be decided by the provincial
government. The law initiated a period of collecting water resources fees in China.
Many provinces in northern China launched collection policies, such as Shaanxi
(1992), Inner Mongolia (1992), Heilongjiang (1995), Qinghai (1995), and Gansu
(1997). Some provinces in southern China also began collecting these fees, such