The Price Formation Mechanism Of Household Water-consumption In Urban China

Water in China is decreasing year after year and the waste and pollution of water is serious, and most of water companies are in a loss, which is closely related with the recent water price. Therefore, it’s imperative to look at current water price again and establish reasonable water price formation mechanism.On the basis of stairs water price theory, the paper will take full cost pricing method, considering the influence of seasonal factors of supply and demand, to construct theoretical model of making seasonal each step’s quantity of water and corresponding stepped price. Scientific and reasonable running water price should include four parts:internal cost of water resources (consists of the water resource fee and the additional value of the water processing), external cost and opportunity cost. The formed seasonal stepped water price should get adjusted according to every year’s inflation rate and enterprises’ productivity to make it adapt to economic environment of enterprises. After that, I apply this model with taking Chongqing as an example and determine the area’s stepped quantity and seasonal stepped price.In order to solve the problem of water resources shortage much more better, this paper takes reclaimed water that is the poor substitute of tap water into the scope of the study. The reclaimed water has two supply modes:centralized supply mode and decentralized supply mode. Through the analysis, franchise of decentralized supply mode is more suitable for the current situation development of reclaimed water and the characteristic of household-consumption water. On this basis, the author discusses the scientific reclaimed water price formation mechanism. On the one hand, to ensure reclaimed water enterprises can operate sustainably, the price of reclaimed water must at least cover the whole supply cost. And considering environmental, social and economic benefits of reclaimed water, the reclaimed water price should be deduced the external cost in the tap water price and the government should give it some tax and fee relief. On the other hand, to ensue citizens are able to and willing to accept reclaimed water, the gap between reclaimed water price and tap water price must be enough big, and the price can not exceed the first seasonal stepped price of tap water. In addition, the development of reclaimed water market is still in the initial stage, which faces more risks and uncertainties. Thus, on the basis of reclaimed water price fonned above, the price should get adjusted appropriately accord to franchise risks.Lastly, aimed at possible problems in the formation process of household-consumption water price, the paper puts forward some suggestions from the water supply enterprise, government and consumer three subjects.