162
7 Water Pricing
water supply cost was 3.08 RMB/m
3 (Beijing Development and Reform Commission
2014), 1.5 times more than the tariff. But under this deficit, supply capacity and
population in Beijing have increased several times, which raises questions concerning
the causes of this perplexing situation: Is cost recovery not a principle applicable to
tariff reform? If not, why has this principle constantly been used as a guide to reform
policies?
Block tariff. The block tariff is more efficient and promotes saving if designed appropriately and with a metering facility. Although the block tariff has been discussed
and implemented for almost 20 years in China, many cities have not yet introduced it.
Several controversial issues are discussed in the Chinese context. First, water savings
and implementation costs: given the low urban household water use in China (no
outdoor water use in urban China) and improving living conditions, how much water
could be saved? Moreover, what is the unit cost compared to the implementation
costs? Second, metering and improvement costs: in the 1990s and 2000s, the “one
household, one meter” goal was not realized. Since most meters must be installed
in apartments, improving metering to meet the requirements of the block tariff is a
substantial cost and will be burdened upon the user. Third, block design: given the
large first block coverage of 90% water users, it is doubtful that the block tariff could
promote water saving.
7.5 Wastewater Collection and Treatment Tariff
In the 1980s, wastewater discharge in China increased slowly, but the government introduced requirements for saving water and reducing wastewater discharge
(State Council 1984). In the 1990s, rapid economic development brought increasing
discharge into water bodies and caused serious pollution. The pollution was exacerbated further by lagged urban wastewater collection and treatment infrastructures.
The 1996 Water Pollution Control Law prescribed the building of an urban centralized wastewater treatment facility, charges for wastewater collection, and a treatment
tariff. The 1998 Urban Water Supply Pricing Management Method specified that the
wastewater tariff should be formulated based on the operation, maintenance, and
construction costs of urban wastewater collection networks and plants (National
Planning Commission, Ministry of Construction 1998).
In the 1990s, some cities began to collect a wastewater treatment tariff and used it
to fund the construction and operation of centralized treatment facilities. However,
the low collection standard and rate combined with poor management meant that
the revenue generated could not cover the maintenance and operation costs and
expenditures. Therefore, in 1999, the NDPC and other organizations demanded the
step-by-step regulation of the tariff according to principles of affordability, covering
the O&M costs of the drainage network and treatment facilities, and reasonable profit.
Cities in heavily polluted regions were also required to cover the O&M costs of the
network and treatment facilities in 1999 (NDPC et al. 1999).
7 Water Pricing
water supply cost was 3.08 RMB/m
3 (Beijing Development and Reform Commission
2014), 1.5 times more than the tariff. But under this deficit, supply capacity and
population in Beijing have increased several times, which raises questions concerning
the causes of this perplexing situation: Is cost recovery not a principle applicable to
tariff reform? If not, why has this principle constantly been used as a guide to reform
policies?
Block tariff. The block tariff is more efficient and promotes saving if designed appropriately and with a metering facility. Although the block tariff has been discussed
and implemented for almost 20 years in China, many cities have not yet introduced it.
Several controversial issues are discussed in the Chinese context. First, water savings
and implementation costs: given the low urban household water use in China (no
outdoor water use in urban China) and improving living conditions, how much water
could be saved? Moreover, what is the unit cost compared to the implementation
costs? Second, metering and improvement costs: in the 1990s and 2000s, the “one
household, one meter” goal was not realized. Since most meters must be installed
in apartments, improving metering to meet the requirements of the block tariff is a
substantial cost and will be burdened upon the user. Third, block design: given the
large first block coverage of 90% water users, it is doubtful that the block tariff could
promote water saving.
7.5 Wastewater Collection and Treatment Tariff
In the 1980s, wastewater discharge in China increased slowly, but the government introduced requirements for saving water and reducing wastewater discharge
(State Council 1984). In the 1990s, rapid economic development brought increasing
discharge into water bodies and caused serious pollution. The pollution was exacerbated further by lagged urban wastewater collection and treatment infrastructures.
The 1996 Water Pollution Control Law prescribed the building of an urban centralized wastewater treatment facility, charges for wastewater collection, and a treatment
tariff. The 1998 Urban Water Supply Pricing Management Method specified that the
wastewater tariff should be formulated based on the operation, maintenance, and
construction costs of urban wastewater collection networks and plants (National
Planning Commission, Ministry of Construction 1998).
In the 1990s, some cities began to collect a wastewater treatment tariff and used it
to fund the construction and operation of centralized treatment facilities. However,
the low collection standard and rate combined with poor management meant that
the revenue generated could not cover the maintenance and operation costs and
expenditures. Therefore, in 1999, the NDPC and other organizations demanded the
step-by-step regulation of the tariff according to principles of affordability, covering
the O&M costs of the drainage network and treatment facilities, and reasonable profit.
Cities in heavily polluted regions were also required to cover the O&M costs of the
network and treatment facilities in 1999 (NDPC et al. 1999).