Price System for Water Supply and its Economic Impact Analysis

Jing Zhao, Hongzhen Ni, Genfa Chen, Jifeng Li, Shujun Bao

In light of the actual economic circumstances and water price level, the CGE model to simulate the price policy for multiple water sources is modified and expanded. A water price reform plan is proposed to meet water-saving requirements and water resources allocation. The affected scale and scope for implementing the water price policy is evaluated on a quantitative basis. Research results indicate that a reasonable water price system in Tianjin in 2020 should be set up as follows: the comprehensive tap water price stands at 4$/m³, the tap water price for industrial, administrative and business service sectors is 2.4$/m³, and the tap water price for special industry and domestic use are 8.8$/m³ and 1.4$/m³ respectively. The adjusted water price will bring about tangible results to water resources allocation optimization and water conservation. Although most sectors are negatively affected to varying degrees after raising the water price, particularly the lodging and catering sectors, a 100% water price rising will produce only little impact on price index, and sectoral output and employment will not cause economic fluctuations or social instability. Water price adjustments, as long as it is reasonable, will be more positive than negative on the whole. Research outcomes will provide a scientific decision-making basis for formulating the local water price policy.

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