170
7 Water Pricing
cannot operate on behalf of service providers, it cannot refuse rational cost-recovery
requirements from enterprises due to the social pressure on tariff increases either.
Implementing and realizing cost-recovery principle for water services
Cost recovery is the basis for pricing water services. Although China has defined
cost recovery as the basic principle in all legislation, there are no data indicating that
this principle has been realized in any types of water services. This shortcoming is
the main barrier to a breakthrough in water pricing reform in China.
It is difficult to realize cost recovery, but stepwise implementation plans should
be formulated and conducted. Additionally, the scope of the costs could be gradually
expanded from basic operational and management costs to capital costs, and finally
to ecological and environmental costs.
Water pricing management institutional reform
The present water pricing management institution in China is highly complex. Water
pricing policies are developed by several administrative levels and departments. In
theory, a county-level water pricing regulation could be involved with management
agencies from central, provincial, prefectural, and county levels, as well as various
departments, such as water, construction, and financial, under the leadership of the
pricing department. Therefore, water pricing reform and management is the result
of multi-level and multi-department coordination and collaboration.
After the formulation of the water pricing mechanism, it is suggested that the
water pricing management power be decentralized. At present, some central power
could be decentralized to the province level. The national pricing department would
be responsible for the macro-pricing policy and water pricing reform target, but
not for detailing reform. The province would be in charge of detailed planning and
implementation, according to its level of water resources and water sector development. Additionally, the province could allocate its pricing management powers in
the province.
Improving implementation of management methods of water supply tariff from
hydraulic engineering
The water supply tariff from hydraulic engineering is part of the user’s bill. Due
to influences from many factors, the definition in the 2003 Methods has not been
realized. Thus, the emphasis of water supply tariff reform should be on fully
implementing the Methods.
The water supply tariff from hydraulic engineering to industrial and urban
domestic purposes should follow the principles of “cost recovery, rational benefits,
higher price for better water service, and fair affording” and be regulated periodically according to changes in supply costs and expenditures and market supply and
demand. The profit rate should be accounted according to the net water supply asset.
7 Water Pricing
cannot operate on behalf of service providers, it cannot refuse rational cost-recovery
requirements from enterprises due to the social pressure on tariff increases either.
Implementing and realizing cost-recovery principle for water services
Cost recovery is the basis for pricing water services. Although China has defined
cost recovery as the basic principle in all legislation, there are no data indicating that
this principle has been realized in any types of water services. This shortcoming is
the main barrier to a breakthrough in water pricing reform in China.
It is difficult to realize cost recovery, but stepwise implementation plans should
be formulated and conducted. Additionally, the scope of the costs could be gradually
expanded from basic operational and management costs to capital costs, and finally
to ecological and environmental costs.
Water pricing management institutional reform
The present water pricing management institution in China is highly complex. Water
pricing policies are developed by several administrative levels and departments. In
theory, a county-level water pricing regulation could be involved with management
agencies from central, provincial, prefectural, and county levels, as well as various
departments, such as water, construction, and financial, under the leadership of the
pricing department. Therefore, water pricing reform and management is the result
of multi-level and multi-department coordination and collaboration.
After the formulation of the water pricing mechanism, it is suggested that the
water pricing management power be decentralized. At present, some central power
could be decentralized to the province level. The national pricing department would
be responsible for the macro-pricing policy and water pricing reform target, but
not for detailing reform. The province would be in charge of detailed planning and
implementation, according to its level of water resources and water sector development. Additionally, the province could allocate its pricing management powers in
the province.
Improving implementation of management methods of water supply tariff from
hydraulic engineering
The water supply tariff from hydraulic engineering is part of the user’s bill. Due
to influences from many factors, the definition in the 2003 Methods has not been
realized. Thus, the emphasis of water supply tariff reform should be on fully
implementing the Methods.
The water supply tariff from hydraulic engineering to industrial and urban
domestic purposes should follow the principles of “cost recovery, rational benefits,
higher price for better water service, and fair affording” and be regulated periodically according to changes in supply costs and expenditures and market supply and
demand. The profit rate should be accounted according to the net water supply asset.