150
7 Water Pricing
as Guizhou (1992), Guangxi (1992), Sichuan (1993), Guangdong (1995), Anhui
(1993), and Jiangxi (1997). Most provinces only levied direct urban groundwater
abstraction, which represented a very small percentage of water use. Urban water
supply companies, which were the largest groundwater abstractors in northern China,
were excluded. For other sources and purposes, almost all provinces did not collect
fees, particularly after 1995 (Office of the State Council 1995).
The 1997 Water Sector Industrialization Policy aimed to develop the water sector
by increasing investment through industrialization (National Planning Commission
1997). As such, the policy required the state to implement a system of payment for
water resources use and levy a water resources fee on direct abstraction from aquifers,
rivers, and lakes. The revenue generated was regarded as a special fund for specific
uses. Therefore, the fee collection coverage was extended to all water abstractions,
including urban and rural areas, surface water, and groundwater.
The revised 2002 Water Law incorporated the 1997 Water Sector Industrialization Policy. The law prescribed the collection scope and exemption, together with
the terms of the water abstraction permit. Water resources management institutions
reformed from “hierarchical management and departmental management” under
the 1988 Water Law to a “combination of river basin management and jurisdictional management” under the 2002 Water Law, through measures implemented
after the 1998 governmental restructuring. Consequently, the WAD was defined as
the only agency with collection responsibilities, ending the previous involvement of
the Ministry of Construction.
To establish rules for water resources fee collection and management, almost
20 years after the 1988 Water Law, the State Council issued the Regulation on the
Management of Water Abstraction Permits and Water Resources Fee Collection in
2006, as the national policy to implement the fee system. The Regulation clarifies
the collection scope; develops the overcharge system for plan-exceeding abstraction;
and also specifies the fee standard formulation principle, management agency and
procedures, and revenue sharing and use between central and local governments.
Most importantly, the Regulation develops the linkage with the water abstraction
permit system (State Council 2006). In 2008, the NDRC, Ministry of Financing and
MWR issued the Water Resources Fee Collection and Use Management Methods
(NDRC et al. 2008). To implement and detail the national legislation, all provinces
issued local legislation or policies. Following the implementation of the Regulation,
with Tibet starting collection in 2009, all provinces now levy water resources fees.
As for the collection standard, a gradual increase was promoted by the NDPC in
2000 to deal with a too low standard, which is unhelpful for promoting water saving
and protection (NDPC 2000). The State Council advocated similar measures in 2004,
along with enlarging collecting regions, particularly groundwater overdraft zones
(Office of the State Council 2004). In 2013, more problems were identified, including
inconsistent fee grouping, lower collection standards (particularly for groundwater),
substantial fee differences among regions with similar water resources circumstances
and socio-economic development, and ineffective implementation of the overcharge
system for plan/quota-exceeding abstraction. In response, the NDRC re-clarified the
fee standard formulation principles, including measures reflecting regional water
7 Water Pricing
as Guizhou (1992), Guangxi (1992), Sichuan (1993), Guangdong (1995), Anhui
(1993), and Jiangxi (1997). Most provinces only levied direct urban groundwater
abstraction, which represented a very small percentage of water use. Urban water
supply companies, which were the largest groundwater abstractors in northern China,
were excluded. For other sources and purposes, almost all provinces did not collect
fees, particularly after 1995 (Office of the State Council 1995).
The 1997 Water Sector Industrialization Policy aimed to develop the water sector
by increasing investment through industrialization (National Planning Commission
1997). As such, the policy required the state to implement a system of payment for
water resources use and levy a water resources fee on direct abstraction from aquifers,
rivers, and lakes. The revenue generated was regarded as a special fund for specific
uses. Therefore, the fee collection coverage was extended to all water abstractions,
including urban and rural areas, surface water, and groundwater.
The revised 2002 Water Law incorporated the 1997 Water Sector Industrialization Policy. The law prescribed the collection scope and exemption, together with
the terms of the water abstraction permit. Water resources management institutions
reformed from “hierarchical management and departmental management” under
the 1988 Water Law to a “combination of river basin management and jurisdictional management” under the 2002 Water Law, through measures implemented
after the 1998 governmental restructuring. Consequently, the WAD was defined as
the only agency with collection responsibilities, ending the previous involvement of
the Ministry of Construction.
To establish rules for water resources fee collection and management, almost
20 years after the 1988 Water Law, the State Council issued the Regulation on the
Management of Water Abstraction Permits and Water Resources Fee Collection in
2006, as the national policy to implement the fee system. The Regulation clarifies
the collection scope; develops the overcharge system for plan-exceeding abstraction;
and also specifies the fee standard formulation principle, management agency and
procedures, and revenue sharing and use between central and local governments.
Most importantly, the Regulation develops the linkage with the water abstraction
permit system (State Council 2006). In 2008, the NDRC, Ministry of Financing and
MWR issued the Water Resources Fee Collection and Use Management Methods
(NDRC et al. 2008). To implement and detail the national legislation, all provinces
issued local legislation or policies. Following the implementation of the Regulation,
with Tibet starting collection in 2009, all provinces now levy water resources fees.
As for the collection standard, a gradual increase was promoted by the NDPC in
2000 to deal with a too low standard, which is unhelpful for promoting water saving
and protection (NDPC 2000). The State Council advocated similar measures in 2004,
along with enlarging collecting regions, particularly groundwater overdraft zones
(Office of the State Council 2004). In 2013, more problems were identified, including
inconsistent fee grouping, lower collection standards (particularly for groundwater),
substantial fee differences among regions with similar water resources circumstances
and socio-economic development, and ineffective implementation of the overcharge
system for plan/quota-exceeding abstraction. In response, the NDRC re-clarified the
fee standard formulation principles, including measures reflecting regional water