Resources Science ›› 2016, Vol. 38 ›› Issue (10): 1935-1947.doi: 10.18402/resci.2016.10.11

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The impact of increasing block water tariffs on residential water usage and the welfare of low income families in Chinese cities

LIAO Xianchun1, XIA Enlong2, WANG Zifeng3   

  1. 1. School of Business and Institute of Green Development,University of Jinan,Jinan 250022,China;
    2. International Center for Bamboo and Rattan,State Forestry Bureau,Beijing 100102,China;
    3. College of Economics,Nankai University,Tianjin 300071,China)
  • Received:2015-11-23 Revised:2016-08-26 Online:2016-10-25 Published:2016-10-25

Abstract: Water resource shortages in cities have become one of the most severe environmental problems in China. Under climate change,the rapid development of the social economy has resulted in an exacerbation of water resource shortages. Here,we examine the impact of increasing block water tariffs (IBWT)on residential water usage in Chinese cities using econometric models with a panel dataset (285 prefectures and above cities) spanning 2002 to 2012. The results of econometric analysis show that under a uniform pricing system (UP),increasing water price can really reduce residential water shortage in Chinese cities,however,the welfare of low income families is impacted as water prices increase. Cities with IBWT reduce water consumption by 16.58%,compared to cities with UP. Except for the water price factor,family disposable income per person on average,family total population on average,the ratio of the number of employees to total population in a city,annual rainfall on average,and annual temperature on average tend to increase residential water usage in Chinese cities,while education attainment and population concentration tend to reduce residential water consumption in Chinese cities. Based on these approaches,we designed an IBWT system with a four-tier structure. Through welfare analysis we found that the new IBWT system with a four-tier structure not only increases water use efficiency,but improves the welfare of low income families by 107.6 yuan with a prediction,compared to the three-tier structure proposed by the National Development and Reform Commission (NDRC). This work provides policy recommendations with a new IBWT system and four-tier structure by constructing household models under nonlinear budget constraints and welfare analysis.

Key words: econometric model, increasing block water tariff, residential water usage, water shortage, welfare analysis