Regionally differential water pricing strategy: An example from Karst region of China

Abstract

Abstract The study objective is to analyze the water expenditure of 4315 rural households in the Karst region of China. The empirical results have been analyzed by using the extended linear expenditure system model. The study has been based on water expenditure, which provides a feasible differential water pricing strategy in the karst region of China. The result shows that (1) the coefficient for water expenditure has been examined as low. The coefficient of water expenditure in the Karst region ranges from 0.534 to 1.025%, the average value is 0.723%, and the modified coefficient ranges from 0.814 to 1.508%, with an average value of 1.070%. (2) The marginal consumption propensity of rural residents in the Karst region is 0.2%, and the marginal consumption propensity in each province ranges from 0.1 to 1%. (3) The per capita basic water demand has 3 m3. In this scenario, the study recommended that basic water prices range from CNY 2.091 to CNY 3.468 per cubic meter. If the water consumption exceeds basic demand (3 m3 per month), then the bearing water price shall not be lower than CNY 2.091 to CNY 3.468 per cubic meter and not higher than CNY 7.122 per cubic meter.