7.4 Urban Water Supply Tariff
161
tariffs was developed to protect low-income households, although the previous aim
had been to save water. In reality, however, the stepwise regulation was not realized
either due to high inflation rates during 2010–2012, as was the case in 2004.
At the end of 2013, the NDRC and MOHURD again required the implementation
of the block tariff structure before the end of 2015 in all cities and towns able to
comply. It was stipulated that the block volumes should clarify the basic requirement
and non-basic requirement, with the first block covering 80% of household water
use, the second covering 95% of household use, and the third block covering the
remainder. The block tariff rate was 1:1.5:3, and the charge period could be monthly,
seasonal, or annual. Additionally, accelerating the “one household, one meter” policy
that began in the 1980s was urged (NDRC and MOHURD 2013). More recently, many
cities have introduced the block tariff, such as Beijing and Shanghai in 2014.
In 2018, to promote green development, the urban tariff formulation and dynamic
regulation mechanism to reflect water supply cost and promote water supply quality
improvement were required to be developed through increasing the residential tariff
to a level not lower than costs, while raising the non-residential tariff to cover costs
and secure benefits. At the same time, the quota-exceeding overcharge system was
to be fully implemented for urban non-residential use (NDRC 2018).
After over 30 years of regulation, the urban water supply has been shifted from
a welfare to a commodity basis with profit. In 1999, the average residential water
tariff in 36 large- and medium-sized cities was 1.14 RMB/m
3 , basically covering the
costs but resulting in deficits in some cities (NDPC 2000). The urban water tariff in
most cities has realized cost recovery, and the average water tariff increase is more
than 20% in recent years (Ji 2009). At the end of 2008, the average urban water tariff
for 36 large- and medium-sized cities was 1.50 RMB/m
3 (Zhou 2010). In 2018, the
average residential tariff was 2.19 RMB/m
3 , with individual tariffs ranging from 1.63
to 4.00 RMB/m
3 .
Taking Beijing as an example, since 1990 the urban water supply tariff has
been regulated on 10 occasions, increasing from 0.12 to 2.07 RMB/m
3 . In terms
of timings and increases, the tariff was adjusted frequently, about once every 2 years.
Additionally, the tariff structure has been reformed from single tariff to block tariff
(Fig. 7.1).
The urban water supply tariff has been a service charge over the entire period
considered, with over 30 years of reforms focusing on tariff structure and level.
The structure reforms included shifts from a flat charge to a volumetric charge in the
1980s, together with “one household, one meter” implementation; further volumetric
charge alterations in the 1990s; and the introduction of a block tariff in the late 1990s.
However, the block tariff has not yet been fully implemented after more than 20 years
of promotion. In the meantime, water tariffs have increased constantly. Additionally,
the market-oriented reforms of water supply enterprises have affected pricing.
During this process, the following two issues have significantly impacted reform:
Cost recovery. Cost recovery is the basic principle for service pricing. But after over
30 years of reforms, it appears that urban water supply has not achieved cost recovery
or cannot realize it from tariff revenue in China. In Beijing, for example, the urban
161
tariffs was developed to protect low-income households, although the previous aim
had been to save water. In reality, however, the stepwise regulation was not realized
either due to high inflation rates during 2010–2012, as was the case in 2004.
At the end of 2013, the NDRC and MOHURD again required the implementation
of the block tariff structure before the end of 2015 in all cities and towns able to
comply. It was stipulated that the block volumes should clarify the basic requirement
and non-basic requirement, with the first block covering 80% of household water
use, the second covering 95% of household use, and the third block covering the
remainder. The block tariff rate was 1:1.5:3, and the charge period could be monthly,
seasonal, or annual. Additionally, accelerating the “one household, one meter” policy
that began in the 1980s was urged (NDRC and MOHURD 2013). More recently, many
cities have introduced the block tariff, such as Beijing and Shanghai in 2014.
In 2018, to promote green development, the urban tariff formulation and dynamic
regulation mechanism to reflect water supply cost and promote water supply quality
improvement were required to be developed through increasing the residential tariff
to a level not lower than costs, while raising the non-residential tariff to cover costs
and secure benefits. At the same time, the quota-exceeding overcharge system was
to be fully implemented for urban non-residential use (NDRC 2018).
After over 30 years of regulation, the urban water supply has been shifted from
a welfare to a commodity basis with profit. In 1999, the average residential water
tariff in 36 large- and medium-sized cities was 1.14 RMB/m
3 , basically covering the
costs but resulting in deficits in some cities (NDPC 2000). The urban water tariff in
most cities has realized cost recovery, and the average water tariff increase is more
than 20% in recent years (Ji 2009). At the end of 2008, the average urban water tariff
for 36 large- and medium-sized cities was 1.50 RMB/m
3 (Zhou 2010). In 2018, the
average residential tariff was 2.19 RMB/m
3 , with individual tariffs ranging from 1.63
to 4.00 RMB/m
3 .
Taking Beijing as an example, since 1990 the urban water supply tariff has
been regulated on 10 occasions, increasing from 0.12 to 2.07 RMB/m
3 . In terms
of timings and increases, the tariff was adjusted frequently, about once every 2 years.
Additionally, the tariff structure has been reformed from single tariff to block tariff
(Fig. 7.1).
The urban water supply tariff has been a service charge over the entire period
considered, with over 30 years of reforms focusing on tariff structure and level.
The structure reforms included shifts from a flat charge to a volumetric charge in the
1980s, together with “one household, one meter” implementation; further volumetric
charge alterations in the 1990s; and the introduction of a block tariff in the late 1990s.
However, the block tariff has not yet been fully implemented after more than 20 years
of promotion. In the meantime, water tariffs have increased constantly. Additionally,
the market-oriented reforms of water supply enterprises have affected pricing.
During this process, the following two issues have significantly impacted reform:
Cost recovery. Cost recovery is the basic principle for service pricing. But after over
30 years of reforms, it appears that urban water supply has not achieved cost recovery
or cannot realize it from tariff revenue in China. In Beijing, for example, the urban