The Study Of Finance For The Problem Of Rural Water Supply Project In China

Since the1980s, the infrastructure policy of our country in rural areas which is self-sufficient type is different from that of the city, leading to the rural infrastructure construction obviously fall behind, far from meeting the needs of rural development and farmers’welfare. At this stage the economy of our country has been achieving a rapid development, while a contradiction between growing demand for water in rural areas and shortage of water supply which has been experienced long-term stagnation of construction has been generated. In order to solve the water supply problem in rural areas, the central government joined the activities of "the International Drinking Water Supply and Sanitation Decade" as main suppliers, and began to develop government-led rural centralized water supply projects. In2005-2010, the national rural drinking water safety projects completed an investment of109.3billion yuan, the proportion of population who have centralized water supply increased from40%to58%, the penetration rate is still very low. Therefore, improving the investment and construction of water supply projects further in rural areas, offering safe drinking water for rural residents, and promoting the progress and development of the rural economy, has become urgent..Rural water supply project has public properties, private supply of public goods, however, only funded by the government cannot meet the needs of the rural community economy development. For a long term, Water supply industry has implemented the strategy of low-cost sales as a public welfare undertaking, relied on government subsidies to reproduce simply, lacked of profitability, and thus lost of financing capacity, at this stage,the water supply industry is still in a small profit or a deficit, as a result of heavy government regulation,it is difficult to attract foreign investment, whereas the investment of government is difficult to maintain a long-term nationwide subsidies. Current structural imbalance of financing, inefficient government investment, the absence of private investment, all these factors result in insufficient supply,low-quality, lack of profit of rural water supply project,. Therefore, the key point is to establish appropriate financing model and mechanisms to address the inefficiencies of the current rural water supply project and it is the important result of this paper.In this paper, the following issues are studied:1. According to the theory of public goods, natural monopoly theory, the principal-agent theory, this paper analysises economic property characteristics of the rural water supply project, finds out the fundamental crux of the market and government failure, proposes theoretical solution to the weakness and inefficient of current the private supply of the rural water supply project, that is to establish stimulating private economic cooperation mechanism which is encouraged by the public sectors.2.This paper summarizes the existing conditions of China’s rural water supply project investment and financing, analysises principal part and structure of financing, makes a comparison with the urban water supply project, and find out the problem of financing, including the high degree of unity of government and enterprise management system, water supply industry delegate-agent problem, deficient of nongovernmental financing and the incomplete of rural financial system.3.This paper Introduces the successful experience of British and French water supply project,and water pricing system and the management of water supply projects in US and New Zealand, draws on the key point of experience that in accordance with the state of their own country’s economic development, combined with focus on efficiency rather than the way, to provide a basis for the proposed rural water supply project financing mode.4.At the end of the article, provides the solutions to the financing problems of the rural water supply project, the way of a certain size of the rural water supply project and even regional centralized water supply. Makes model design which under the guidance of the government’s market-oriented financing, and finally aims at the rural water supply industry financing obstacles, proposes complementary measures of system, including the entry and exit mechanisms, return on investment compensation mechanism for price regulation mechanism and a furthering process of rural financial policy. Through reorganizing of the relevant economic theory, this paper Primarily arrivals at a conclusion of guidelines to the problem-solving of the rural water supply project financing, and combined with International Experience and China’s special existing conditions and system characteristics, builds a relatively feasible financing model in our country,finally in order to guarantee the smooth running of the financing model,provides some innovations to supplement the system so that assuring the problem of rural water supply financing to be solved and the project can get a long-term operation circularly.