Water Resource Pricing And Its Practice

Water is the source of life, the element of production, and the foundation of eco-system. With the increase of water demand in social-economic activities, the competiton between social-economic system and eco-system is more and more serious. For the potential of water-saving driven by the improving water usage pattern and technical progress is being limited, water pricing policy is gradually attractive in water resources management. It is stated in the2011State Council No.1Document that the most strict water resources management system will be implemented and market function will be enforced to optimize allocation of water resources; water pricing reform will be actively promoted to enhance the role of water price adjustment to industrial structure for both efficiency and fairness. The document clearly points out the importance of the role of water pricing adjustment in water resources management.In China, it is still long way to go in water price formulation procedure and in water price management system. The water resources fee and water price is still lower than they should be, that makes water price can not play the role of adjusting water supply and demand as a market control measure. Important tasks and inevitable challengers in water resources management are:1) how to determine the reasonable and various water prices based on regional water condition, economic activities and water user’s intentions in the point of view of fairness;2) how to draw up a perfect water supply price system to make water price play the role of regulating effect, to guide and optimize the water consumption structure coordination with industrial structure; and3) how to promote each kind of water resources rational allocation and sustainable utilization, and to alleviate the contradiction between water resources supply and demand.Considering the deficiency of current water pricing system, and combined with the practical needs of water resources management, this paper carrys out the study on water resources pricing and its practice, to promote the water pricing methodology, to guide the reasonable water price standard formulation, to optimate allocation of water resources and sustainable utilization, and to serve for the construction of ecological civilization. The main contents are shown as follow:(1) Improvement of the theory of water resources value. Based on systematic analysis on value theories of the eastern and western philosophy, the modern bourgeois school, and the Marxism philosophy, this paper proposes the summary of that value has different connotation in different historical stage. Considering the characteristics of water in resources scarcity, property ownership and use utility, it is put forward that the connotation of water resources value in commercial economy. That is, water resources value has its own intrinsic characteristics and various attribute in natural cycling and social-economic using process. Water shows its different attribute when it goes in different processes of initiative right distribution, synthesized exploitation, rational utilization and effective protection. These attribute is reflected as property value, the labor value, use value and compensation value. In commercial economy, they can be synthetically represented by the equilibrium price.(2) Definition of the connotation of the water resources pricing mechanism. The paper analyzes the process of water pricing, and represents the consists of water price, the pricing subjects, pricing principles, pricing models, and water price adjustment mechanism, etc. It defines the water price forming mechanism connotation. It means that water as economic element should be taken into the state’s macroeconomic regulation and control system, aiming at fair water usage and water protection., while water price consists, pricing subjects, pricing process and water price adjustment are taken as the measures for rational water resources allocation and water industry sustainable development, and for conducting effective water production, circulation and consumption.(3) Development of the methodology for calculating water resources fee. In view of the difficulties in determining water resources fee in present, this paper puts forward a methodology to calculate water resources fee. It is clear that water price is composed of water resources fee, production cost and water environment compensation tax. In non-market economy, water price can be evaluated by the shadow price. According to the equilibrium relationship, it is inducted in this paper that water resources fee is the rest part of shadow price after deduction of production cost and environmental compensation tax.(4) Building of water pricing model. Based on water resource value theory and supply price and demand price balance relationship, this paper represents the water pricing model which include supply price evaluation module, demand price evaluation module and equilibrium price evaluation module. The model was applied in Beijing to analyze water price calculation and helps to determine water price standard for household, agriculture and industries. The model not only considers the investment cost and reasonable profits of water production supply and sewage treatment, but also reflects the water user’s paying ability and bear ability.(5) Development of the general equilibrium model of analysis and simulation for water price (WaGE). Based on the general equilibrium principle, water as economic element is taken into the elements supply system, and the water supply enterprise is separated from whole production enterprise, so that the General Equilibrium Model of Analysis and Simulation for Water Price Policy (WaGE) could be constructed focusing on water pricing issues. As policy analysis tool, the model could represent the suggestions of the macro economic influences of water resources price adjustment, government subsidies to water enterprises, etc, and the further suggestions for water resources price simulation, water related transfer payments and tax issues.