7.3 Water Supply Tariff from Hydraulic Engineering
157
However, in October 2014, the NDRC piloted a new concept of comprehensive
agricultural water pricing reform to define tariffs according to supply cost, water
shortage, and affordability. The tariff for large- and medium-sized irrigation projects
was intended to at least cover O&M expenditures, while attempting to cover other
costs. The tariff for end-canal systems in large-, medium-, and small-sized projects
was intended to cover costs, while generating profit if possible. The reduced payment
from water saving in canal system improvement was intended to be used in tariff
increases. The differentiated tariff system was intended to be implemented according
to specific purposes (e.g., grain, cash crops, fishing, etc.) and sources (e.g., surface
water and groundwater). The increasing tariff system was required to be applied to
quota-exceeding use. Additionally, an accurate subsidizing mechanism and incentive fund were developed for water saving. With pricing reform, water rights clarification and the transfer and improvement of WUA were conducted (NDRC et al.
2014a). Furthermore, in 2017, a comprehensive pricing reform was promoted, under
the precondition of not increasing the farmers’ burden, to coordinate the agricultural
water pricing mechanism, the accurate subsidizing and water-saving incentive mechanism, the irrigation engineering management and maintenance mechanism, and the
water use management mechanism (NDRC et al. 2017).
In over 30 years, the water supply tariff from hydraulic engineering has experienced several transitions: from a charge on user’s expenditures in the early 1980s
to a charge on supply cost; from an administrative charge before 2000 to a service
charge; from radical and simple cost recovery and profits in the 1990s to functionbased cost recovery in 2000, and then to cost recovery and resources shortage after
2013. The process reflects the fluctuation of tariff reforms among social, economic,
and resources targets.
In 1980, according to investigations and calculations of 256 large-scale hydraulic
engineering projects, the theoretical (calculated) price was 0.022 RMB/m
3 , ranging
from 0.012 to 0.048 RMB/m
3 ; if reducing farmers’ labor and material inputs, the
government investment accounted for 0.016 RMB/m
3 , from 0.009 to 0.043 RMB/m
3
(MWR, China Water Economy Research Society 1981). In 2007, the average tariff
was 0.1442 RMB/m
3 (MWR 2008). In 2012, water supply for agricultural irrigation cost 0.2589 RMB/m
3 , among which the estimated cost of water supplied by
state-owned enterprises (which normally operate large-scale and key projects) was
0.1751 RMB/m
3 , while the cost at the end-canal system was 0.0838 RMB/m
3 . The
agricultural water charge was 0.0919 RMB/m
3 , 35.5% of the cost, among which the
charge by state-owned enterprises was 0.0621 RMB/m
3 and that for the end-canal
system was 0.0298 RMB/m
3 . The average collection rate was 75.97% (MWR 2013).
Thus, the cost-recovery target has not been met for agricultural water supply since
1980.
Unlike the water resources fee, which involves many departmental interests, the
water supply tariff from hydraulic engineering is relatively simple. However, the
following perplexing issues have accompanied the reform process for more than
30 years:
157
However, in October 2014, the NDRC piloted a new concept of comprehensive
agricultural water pricing reform to define tariffs according to supply cost, water
shortage, and affordability. The tariff for large- and medium-sized irrigation projects
was intended to at least cover O&M expenditures, while attempting to cover other
costs. The tariff for end-canal systems in large-, medium-, and small-sized projects
was intended to cover costs, while generating profit if possible. The reduced payment
from water saving in canal system improvement was intended to be used in tariff
increases. The differentiated tariff system was intended to be implemented according
to specific purposes (e.g., grain, cash crops, fishing, etc.) and sources (e.g., surface
water and groundwater). The increasing tariff system was required to be applied to
quota-exceeding use. Additionally, an accurate subsidizing mechanism and incentive fund were developed for water saving. With pricing reform, water rights clarification and the transfer and improvement of WUA were conducted (NDRC et al.
2014a). Furthermore, in 2017, a comprehensive pricing reform was promoted, under
the precondition of not increasing the farmers’ burden, to coordinate the agricultural
water pricing mechanism, the accurate subsidizing and water-saving incentive mechanism, the irrigation engineering management and maintenance mechanism, and the
water use management mechanism (NDRC et al. 2017).
In over 30 years, the water supply tariff from hydraulic engineering has experienced several transitions: from a charge on user’s expenditures in the early 1980s
to a charge on supply cost; from an administrative charge before 2000 to a service
charge; from radical and simple cost recovery and profits in the 1990s to functionbased cost recovery in 2000, and then to cost recovery and resources shortage after
2013. The process reflects the fluctuation of tariff reforms among social, economic,
and resources targets.
In 1980, according to investigations and calculations of 256 large-scale hydraulic
engineering projects, the theoretical (calculated) price was 0.022 RMB/m
3 , ranging
from 0.012 to 0.048 RMB/m
3 ; if reducing farmers’ labor and material inputs, the
government investment accounted for 0.016 RMB/m
3 , from 0.009 to 0.043 RMB/m
3
(MWR, China Water Economy Research Society 1981). In 2007, the average tariff
was 0.1442 RMB/m
3 (MWR 2008). In 2012, water supply for agricultural irrigation cost 0.2589 RMB/m
3 , among which the estimated cost of water supplied by
state-owned enterprises (which normally operate large-scale and key projects) was
0.1751 RMB/m
3 , while the cost at the end-canal system was 0.0838 RMB/m
3 . The
agricultural water charge was 0.0919 RMB/m
3 , 35.5% of the cost, among which the
charge by state-owned enterprises was 0.0621 RMB/m
3 and that for the end-canal
system was 0.0298 RMB/m
3 . The average collection rate was 75.97% (MWR 2013).
Thus, the cost-recovery target has not been met for agricultural water supply since
1980.
Unlike the water resources fee, which involves many departmental interests, the
water supply tariff from hydraulic engineering is relatively simple. However, the
following perplexing issues have accompanied the reform process for more than
30 years: