166
7 Water Pricing
In 1986, 720 million RMB in wastewater discharge fees was collected for standardexceeding discharge, 60.4% of the total pollutant fee. The total collected was 4.608
billion RMB in the first 10 years. However, the design of the 1982 Methods existed
the problems, such as a fee rate far lower than the treatment costs, single-pollutant
collection for multi-pollutant discharge, simple block design, higher unit standard
for lower concentration, and lower for higher concentration, among others (Wu and
Tang 1991).
In 1991, the calculation methods were adjusted by directly multiplying exceeding
times with the standard rate. However, the two-group rate design did not overcome
the problem of discharging more and charging less per unit (SEPA et al. 1991).
In 1993, the National Planning Commission and Ministry of Financing exempted
public welfare agencies (including schools, kindergartens, etc.) from fee collection, capped the rate at 0.05 RMB/m
3 , decentralized rate-formulating rights to the
provinces, which could decide to levy or not, and levied standard-exceeding discharge
but not pollutant discharge (National Planning Commission, Ministry of Financing
1993). This approach was strange because to some extent, it violated the 1984 Water
Pollution Control Law and encouraged pollution. However, it was probably driven by
the economic development priorities of this period. Consequently, further increases
in water pollution were inevitable in the late 1990s.
After 10 years, the Pollutant Discharge Fee Collection and Use Management
Regulation was issued by the State Council in 2003. The Regulation reformed the
standard-exceeding levy to cover both discharge and standard-exceeding discharge
levies, also altering the single-pollutant levy to a multi-pollutant levy. The Regulation also clarified rate-formulating rights, calculation methods, and the pollutant
reporting, verification, and re-verification procedure (State Council 2003). In the
same year, the Management Methods of Pollutant Discharge Fee Rate was issued.
This document stipulated that the wastewater pollutant discharge fee should be levied
according to pollutant equivalent at a rate of 0.7 RMB per equivalent. The equivalent
was calculated based on pollutant type and volume; the multi-pollutant discharge
was levied on the three highest pollutant equivalents. In cases of standard-exceeding
discharge, a one-time more pollutant discharge fee is collected as standard-exceeding
charge (NDPC et al. 2003).
However, revenue increased slowly. More importantly, it was too low given the
deteriorating water pollution following the 2003 reform. These shortcomings caused
extensive criticism. The revenue decrease after 2007 misled that water pollutant
discharge decreases.
Therefore, in 2014, the NDRC doubled the collection rate and changed the
methods and groups. Before June 2015, the NDRC required an increase to no less
than 1.4 RMB per equivalent for COD, ammonia and five key metals (P b , H g , C r ,
C d , arsenic), stipulating further that the five metal pollutants must be charged and
other pollutants should be charged on the three highest pollutant equivalents. At the
same time, provinces were permitted to regulate the rate and encouraged to formulate
a higher rate in key pollution control and economic development regions. In cases
of discharges exceeding standards or exceeding the enterprise allowable discharge
volume, one additional fee will be charged; if discharge exceeds both standard and
7 Water Pricing
In 1986, 720 million RMB in wastewater discharge fees was collected for standardexceeding discharge, 60.4% of the total pollutant fee. The total collected was 4.608
billion RMB in the first 10 years. However, the design of the 1982 Methods existed
the problems, such as a fee rate far lower than the treatment costs, single-pollutant
collection for multi-pollutant discharge, simple block design, higher unit standard
for lower concentration, and lower for higher concentration, among others (Wu and
Tang 1991).
In 1991, the calculation methods were adjusted by directly multiplying exceeding
times with the standard rate. However, the two-group rate design did not overcome
the problem of discharging more and charging less per unit (SEPA et al. 1991).
In 1993, the National Planning Commission and Ministry of Financing exempted
public welfare agencies (including schools, kindergartens, etc.) from fee collection, capped the rate at 0.05 RMB/m
3 , decentralized rate-formulating rights to the
provinces, which could decide to levy or not, and levied standard-exceeding discharge
but not pollutant discharge (National Planning Commission, Ministry of Financing
1993). This approach was strange because to some extent, it violated the 1984 Water
Pollution Control Law and encouraged pollution. However, it was probably driven by
the economic development priorities of this period. Consequently, further increases
in water pollution were inevitable in the late 1990s.
After 10 years, the Pollutant Discharge Fee Collection and Use Management
Regulation was issued by the State Council in 2003. The Regulation reformed the
standard-exceeding levy to cover both discharge and standard-exceeding discharge
levies, also altering the single-pollutant levy to a multi-pollutant levy. The Regulation also clarified rate-formulating rights, calculation methods, and the pollutant
reporting, verification, and re-verification procedure (State Council 2003). In the
same year, the Management Methods of Pollutant Discharge Fee Rate was issued.
This document stipulated that the wastewater pollutant discharge fee should be levied
according to pollutant equivalent at a rate of 0.7 RMB per equivalent. The equivalent
was calculated based on pollutant type and volume; the multi-pollutant discharge
was levied on the three highest pollutant equivalents. In cases of standard-exceeding
discharge, a one-time more pollutant discharge fee is collected as standard-exceeding
charge (NDPC et al. 2003).
However, revenue increased slowly. More importantly, it was too low given the
deteriorating water pollution following the 2003 reform. These shortcomings caused
extensive criticism. The revenue decrease after 2007 misled that water pollutant
discharge decreases.
Therefore, in 2014, the NDRC doubled the collection rate and changed the
methods and groups. Before June 2015, the NDRC required an increase to no less
than 1.4 RMB per equivalent for COD, ammonia and five key metals (P b , H g , C r ,
C d , arsenic), stipulating further that the five metal pollutants must be charged and
other pollutants should be charged on the three highest pollutant equivalents. At the
same time, provinces were permitted to regulate the rate and encouraged to formulate
a higher rate in key pollution control and economic development regions. In cases
of discharges exceeding standards or exceeding the enterprise allowable discharge
volume, one additional fee will be charged; if discharge exceeds both standard and