Study On Ladder Pricing And Its Welfare Effect In Beijing Water Supply Enterprises

Water is not only the basic elements of human life, but also the foundational resource which guarantees the existence and development of human society as well as the development of the city. The increasing water resources shortage in Beijing is restraining the sustainable development of the city. However, under the circumstances of the contradiction between supply and demand of water resources becoming more serious in Beijing is facing a serious waste and pollution situation, Beijing is facing a serious situation of water waste and pollution, so it is a trend for Beijing to raise the existing water price, and implement the increasing block pricing(IBP), which will bring the water price’s role of optimum distribution of resources into full play as well as improve the water-use efficiency of residents. The main purpose of this study is to provide a theoretical and practical basis for the smooth implementation of the IBP has launched in Beijing, and to analyze the impact of IBP may bring to the welfare of urban residents.After discussing the relevant researches on water prices mechanism and water price policies, this paper compare several kinds of water pricing model and conduct a theoretical analysis of economic characteristics of household water-consumption, then concluded that increasing block pricing under full-cost pricing method is a reasonable and effective pricing method. Followed this paper make an empirical research on the unitary tariff structures which have been carried out for a long time in Beijing, and calculate the affordability of Beijing residents in different income groups. On this basis, by taking empirical analysis on the influences of residential water demand and the affordability of different income groups, I construct a concrete model of block tariff, and accordingly evaluate the structure of IBP has been implemented in Beijing. Furthermore, based on the utility function, I make an empirical research on the IBP, and analyze the effect of residents’ basic consuming expenditure have on their water demand. And accordingly this paper gives a theoretical and empirical study on the effect that this reform of water prices in Beijing may bring to the welfare of urban residents, especially the living standards of low-income groups. At last, some conclusions are obtained.