China will give local governments across the nation a free hand to set water rates and implement tiered pricing to encourage users to cut back on the essential resource.
China, with 19 percent of the world’s population but only 7 percent of its fresh water, can ill-afford to waste the resource and the new approach to pricing shows the official determination to curb water use for future economic development.
The National Reform and Development Commission, which oversees the nation’s economic policy, said all cities in China should introduce staggered rates for household use by the end of 2015.
Under the NDRC’s three-tiered structure, households that use more will be charged at a higher rate. The rates will be based on average monthly household water consumption, with the base rate applying to the lowest 80 percent of household users. The heaviest consumers, or top 5 percent of households, will pay at least three times the base rate for water, while the remainder will be charged at 1.5 times the base rate.
The price differential between the three tiers should be no less than 2:3:6, and greater in areas where water is in shorter supply.
The new pricing mechanism will not only encourage people to save water but also support government investment in water treatment to improve drinking water quality. There are already some initial signs of success. Some cities that have introduced tiered pricing say water usage fell last year.
Hong Kong-based advocacy group China Water Risk said last month that water quality can only improve when tariffs are thoroughly overhauled.
China faces an uphill task to improve supplies, with tests showing that the quality of nearly three-fifths of all water supplies is poor or worse. And almost half of all rural residents lack access to drinking water that meets international standards.
Water will emerge as a key issue in the nation’s urban push. As the campaign draws about 300 million rural residents into cities in the next 20 years, the demand for water in urban areas will only escalate. Supplies have already failed to keep up with growth and the shortages are increasingly becoming a constraint on the country’s economic development and social progress. The implementation of tiered water pricing should help to educate people about conserving water as city fringes expand ever outwards.
Tiered rates might also be a boon for water meter makers. Analysts estimated that China has about 200 million water meters, of which more than 90 percent are mechanical. The implementation of tiered pricing could require new intelligent meters to be installed to check usage. At about 250 yuan (US$41) for one intelligent water meter, the replacement market would reach 50 billion yuan.
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