7.5 Wastewater Collection and Treatment Tariff
163
The NDPC notice was not effectively implemented, although the collection rate
was gradually increased. The average collection rate was only 0.2–0.3 RMB/m
3 in
1999, too low to support the operation of wastewater facilities. In 2000, all cities
were required to charge a wastewater tariff and to regulate the collection standard
to cover costs and generate profits (NDPC 2000). Dealing with deteriorating urban
water pollution, the State Council further required the tariff to be levied as soon
as possible in all cities and prioritized raising the tariff to cover costs and generate
profits to meet the emerging construction and operation demand of the facilities
(State Council 2000).
By the end of 2001, a little over 200 out of 663 cities in China were collecting
tariffs, which was not a good outcome for the policies introduced in 2000. The central
government had to require all cities to collect tariffs before the end of 2003 again.
Additionally, to develop the wastewater sector through industrialization, the NDPC
and others stipulated that the collected revenue should cover the operational costs
of treatment plants and have a reasonable investment return, considering network
construction expenditures if possible. All units in urban areas, including self-supply
sources, were required to be levied (NDPC et al. 2002a, b).
However, water pollution was not alleviated after tariff collection in most cities. In
2004, the State Council urged the following measures: increasing tariffs to cover costs
and generate profit or to formulate the lowest limit to guarantee normal operation
of facilities; starting collection within a specified time limit; and improving the
collection rate, particularly for self-supply sources (State Council 2004; Ministry of
Construction 2004).
In the subsequent years, almost all cities in China have levied wastewater tariffs.
However, as occurred with the urban water supply tariff and new round of water
pricing regulations in 2009, the government continuously emphasized a lower tariff
standard to promote healthy wastewater sector development. In lower tariff regions,
the regulation of wastewater tariffs was prioritized (NDRC and MOHURD 2009).
The 2013 Urban Drainage and Wastewater Treatment Regulation constitutes a
turning point. The Regulation stipulates that the tariff should not be lower than the
normal operation costs of an urban wastewater treatment facility; if the revenue
cannot cover the costs, the facility should be subsidized by local government. The
tariff is collected by an urban water supply company, transferred to government and
subsequently managed in the local financial system. The revenue is disbursed to the
wastewater treatment facility operation service providers according to the operation
contract and treated water quality and quantity (State Council 2013). The Regulation
changed the tariff from a service charge to a governmental administrative charge and
provides no requirement for generating profits. Evidently, the government recognized
the difficulties involved in realizing cost recovery through wastewater tariffs and
provided another option.
Following the Regulation, the 2014 Wastewater Treatment Tariff Collection and
Use Management Methods details the changes in collection and use. This document
reiterates that the wastewater treatment tariff is a fee levied on dischargers and used
specifically to fund urban wastewater treatment facility construction, operation, and
163
The NDPC notice was not effectively implemented, although the collection rate
was gradually increased. The average collection rate was only 0.2–0.3 RMB/m
3 in
1999, too low to support the operation of wastewater facilities. In 2000, all cities
were required to charge a wastewater tariff and to regulate the collection standard
to cover costs and generate profits (NDPC 2000). Dealing with deteriorating urban
water pollution, the State Council further required the tariff to be levied as soon
as possible in all cities and prioritized raising the tariff to cover costs and generate
profits to meet the emerging construction and operation demand of the facilities
(State Council 2000).
By the end of 2001, a little over 200 out of 663 cities in China were collecting
tariffs, which was not a good outcome for the policies introduced in 2000. The central
government had to require all cities to collect tariffs before the end of 2003 again.
Additionally, to develop the wastewater sector through industrialization, the NDPC
and others stipulated that the collected revenue should cover the operational costs
of treatment plants and have a reasonable investment return, considering network
construction expenditures if possible. All units in urban areas, including self-supply
sources, were required to be levied (NDPC et al. 2002a, b).
However, water pollution was not alleviated after tariff collection in most cities. In
2004, the State Council urged the following measures: increasing tariffs to cover costs
and generate profit or to formulate the lowest limit to guarantee normal operation
of facilities; starting collection within a specified time limit; and improving the
collection rate, particularly for self-supply sources (State Council 2004; Ministry of
Construction 2004).
In the subsequent years, almost all cities in China have levied wastewater tariffs.
However, as occurred with the urban water supply tariff and new round of water
pricing regulations in 2009, the government continuously emphasized a lower tariff
standard to promote healthy wastewater sector development. In lower tariff regions,
the regulation of wastewater tariffs was prioritized (NDRC and MOHURD 2009).
The 2013 Urban Drainage and Wastewater Treatment Regulation constitutes a
turning point. The Regulation stipulates that the tariff should not be lower than the
normal operation costs of an urban wastewater treatment facility; if the revenue
cannot cover the costs, the facility should be subsidized by local government. The
tariff is collected by an urban water supply company, transferred to government and
subsequently managed in the local financial system. The revenue is disbursed to the
wastewater treatment facility operation service providers according to the operation
contract and treated water quality and quantity (State Council 2013). The Regulation
changed the tariff from a service charge to a governmental administrative charge and
provides no requirement for generating profits. Evidently, the government recognized
the difficulties involved in realizing cost recovery through wastewater tariffs and
provided another option.
Following the Regulation, the 2014 Wastewater Treatment Tariff Collection and
Use Management Methods details the changes in collection and use. This document
reiterates that the wastewater treatment tariff is a fee levied on dischargers and used
specifically to fund urban wastewater treatment facility construction, operation, and