Current Water Price Research Articles

Does Residents’ Perception of Information Influence the Implementation Effect of Increasing-Block Water Pricing Policy?

Since the 1990s, China has gradually implemented price reform. The increasing-block pricing policy (referred to as “IBP”) began to be applied in different kinds of household resource-based products so as to produce resource-saving effect. However, when evaluating policy effects, the information factors are often ignored. This paper concentrates on evaluating the residential increasing-block water pricing policy (referred to as “IBWP”) and divides the information into two categories: policy information and bill information. Among them, policy information is divided into implementation information and rule information, and bill information is subdivided into three aspects: price, volume and fee. Based on the household data of the Chinese Household Water Use Behavior Survey 2019, this paper uses the propensity score matching (PSM) method to investigate the impact of households’ information cognition on water consumption. The results show that residents with policy information will increase their water consumption, while the availability of rule information will reduce the increase in water consumption; bill information encourages households to take behavioral water-saving measures more frequently, and among different types of bill information, residents are the most sensitive to water fee information. Through further analysis, the shadow price of household water is much higher than the current water price. Hence it can be considered that the current water price is distorted to a large extent, which leads to the deviation of the policy information received by consumers. Therefore, the water-saving effect of IBWP at the present stage is very limited. The policy implication shows that IBWP needs to further optimize its structure, the government should gradually increase the current residential water price; relevant departments ought to strengthen the policy publicity, and improve the acquisition rate of previous bills for residents.

Study on an Equilibrium Water Price System Based on Cooperative Game Technology

In this study, the theory of equilibrium water prices is constructed and practiced based on previous research on cooperative game technology and the water price system. The equilibrium water price utilized in this study emphasized solving the unbalanced and unsustainable water supply system, including the reclaimed water resources and the current water price used in numerous Chinese cities. Safety, affordability, and sustainability become the key factors of the equilibrium water price system, which is operated and analyzed in a typical city in southeastern China. The cooperative game model of equilibrium water price is solved by game technology, considering various factors such as the price strategy, the water supply quantity, and the local water demand. The practical application shows that the theoretical system can effectively solve the problem of water price formation mechanisms after the unified allocation of different types of water resources. It not only enhances the enthusiasm and initiative of the public in the utilization of reclaimed water, but also plays an important role in the rational utilization of multiple water resources for different purposes by introducing a reasonable water price ratio and local water resource allocation.

A water pricing model for urban areas based on water accessibility

Water resource, with properties of scarcity, is one of the vital resource endowments. Like land resources, the prices of these resource endowments should be correlated to their locations to follow fair and reasonable principles. The current water price systems are mainly policy-oriented fixed regimes. And the water use was charged according to the regional-average situation with scarce consideration of the fine-scale geographical water accessibility. With a combination of the water accessibility and the current water pricing regime, this paper first proposed a novel water pricing model, the Water Price at Grid-scale (WPG) model, to dynamically allocate water prices to fine grids for urban residents. The WPG model was examined in the case study of the Han River Basin in the Hubei province of China. The specific results were: (1) the Pgrid of Tier I is between 0.66 and 3.94 yuan/m³, the Pgrid of Tier II is between 0.57 and 5.44 yuan/m³, and the Pgrid of Tier III is between 0.47 and 6.94 yuan/m³ in the study area. (2) the grids with more water acquisition generally have lower water prices than others and vice versa. (3) the average water prices in tiers obtained by the WPG model are generally higher than that derived from the current water pricing system. The results proved that the proposed WPG model spatially allocates the three-tier water prices into grids of urban areas. The WPG framework can be adopted in any society by involving its water price regimes and adjusting the scale of grids and the pricing year. This study provided a new viewpoint of domestic water pricing involving fine-scale water accessibility. The WPG model has great potential to ease water shortage pressure in water-limited societies and can be utilized and loaded into the current smart-city network for efficient and fine-scale water resource management.

Development of a Water-Pricing Model for Domestic Water Uses in Dhaka City Using an IWRM Framework

Dhaka city is experiencing high water use and rapid declination of groundwater. The current water price in the city is low and based on a uniform rate. To arrest the resource degradation along with pursuing cost recovery and promoting social equity, this paper develops a new pricing model for domestic water uses using the integrated water resources management principles. The development is accomplished through estimation of domestic water usage, evaluation of current water prices, and assessment of groundwater degradation externalities in the Tejgaon area of the city using both primary and secondary data. Two economic and two environmental externalities are incorporated. The model is based on an increasing block tariff strategy, and the estimated unit prices for the first and second blocks are respectively 5% and 75% higher than the existing price. The model has the potential to reduce the domestic water use in the city by up to 27%, increase the revenue for the Dhaka Water Supply and Sewerage Authority by up to 75%, and reduce the water bill for poor households by up to 67%. The model has a great potential for practical deployment and the concept can also be applied to other cities and water uses.

Efficiency, valuation, and pricing of irrigation water in northeastern Tunisia

This study examines the effects of irrigation water use efficiency improvements and citrus price fluctuations on water values in the tree production systems of northeastern Tunisia. It also aims to compare water values with the real price of water as currently paid by farmers and determine the optimal price. Cross-sectional data of a selected sample of 42 citrus farms located in the main producing region of this commodity was used for the analysis. To do so, we used the stochastic frontier production function approach. Empirical findings show that significant inefficiencies do exist in the studied sample of farms. Overall mean technical efficiency and water use efficiency are 78.4% and 44.3%, respectively. Based on these values, simulation analysis indicates that an improvement in water use efficiency combined with an increase in citrus prices could shift the water marginal value curve upwards, which will result in higher water valuation. Results also show that the current water price paid by farmers is much lower than the water value estimated at the level of “theoretical” citrus irrigation requirements. Application of higher irrigation water fees is definitely feasible for the studied production system, however, they need to be accompanied by increased incentives for water use efficiency in addition to better market integration of farmers.

Research on water resources pricing model under the water resources–economic high-quality development coupling system: a case study of Hubei Province, China

Abstract Achieving high-quality economic development under the new development pattern has become an inevitable requirement for China's economic development. Correctly calculating the value of water resources and optimizing the price mechanism of water resources is one of the important guarantees for promoting the high-quality development of the regional economy. Based on this fact, this paper takes Hubei Province as an example to construct a coupling relationship model between water resources and economic high-quality development and to evaluate the coupling coordination between the two. And then, the fuzzy comprehensive evaluation model is used to evaluate the value of water resources in Hubei Province, and recalculate its water price. The results show that Hubei province now is a lagging development of water resources, and the current water price is far lower than assessed. The government should improve the mechanism of water price which should be driven by innovation to adjust the water use structure, finally achieve high-quality economic development of Hubei Province.

Strategic decision-support modeling for robust management of the food–energy–water nexus under uncertainty

Food, energy, and water (FEW) are interconnected pillars that underpin the security of people’s livelihoods. In this paper, we propose a decision-support model to better understand and aid management of regional FEW nexus systems under uncertainty. We apply the model to a case study focusing on fluctuations in water supply, which significantly affect production in the agriculture and energy sectors in Shanxi Province, China. We use a two-stage, stochastic, chance-constrained programming approach to the proposed spatially detailed cost-minimizing FEW nexus model under demand and natural resource (land and water) constraints. This approach translates the target reliability level (i.e., the probability that the devised solution can satisfy all constraints) into a penalty that has to be paid in the case of their non-fulfillment. On this basis, robust decisions (i.e., production options suitable for a broad variation in certainty of water supply) are derived. Using this approach, we estimate the penalties required to achieve given levels of reliability by incentivizing the deployment of water-saving technologies. For example, our model predicts that water storage would become cost-effective if the penalty for exceeding the available water supply were 2.5 times higher than the current price for industrial water; this would enable at least 40% reliability compared to 18% if the penalty were at the current water price level. Taking advantage of the differences in water intensity of crops in different sites, our model optimizes the reservoir location, which allows water withdrawal by agriculture to be reduced by 1.23%. We also evaluate the benefits of incorporating uncertainty and missed opportunity due to a lack of perfect information. In the case study, we show that the benefits of including uncertainty in the form of the two-stage stochastic programming approach appear to be quite significant, reaching 4% of the total solution costs. Water-importing costs, taxes, and subsidies are instruments that translate into the penalty in this model; the modeling approach presented here can thus be used to inform cost-effective and robust management of the FEW nexus in Shanxi Province, China, and other water-scarce regions around the world.

Assessing the impact of water price reform on farmers’ willingness to pay for agricultural water in northwest China

A water price increase has been used as an effective method to guarantee national water security and maintain national food security in China. The reasonableness of the water price has a direct influence on people's attitude, behavioural decision regarding willingness to pay, and motivation for water conservation. A double-bounded dichotomous choice contingent valuation method was used to assess the impact of integrated agricultural water price reform on farmers' willingness to pay for irrigation water in northwest China. The estimated mean willingness to pay in the study area was 0.144 RMB/m3. A comparison showed that higher education and longer experience in farming were likely to result in a higher willingness to pay in the study area. Participants who had a higher awareness of water price reform showed a higher likelihood of agreeing to higher bidding. Those who thought the current water price was lower had a higher willingness to pay for irrigation water. Participants who considered agricultural water resources to be scarce in the area also had a higher willingness to pay. In contrast, the bidding variables were negative and significant at the 1% level, showing that participants were more inclined to reject a higher bid. Meanwhile, the older the participant, the less they were willing to pay. An unintended finding was that participants' willingness to pay decreased if they chose to use water-saving technology. One possible explanation was that the investment in the construction of the infrastructure (such as pipes and pumps) may have exacerbated farmers' burden and may not have resulted in any benefits to them. Based on the results of this paper, a related optimization policy was presented for water price reform.

Techno-Economic and Sensitivity Analysis of Rainwater Harvesting System as Alternative Water Source

This paper formulates a rainwater harvesting model, with system and economic measures to determine the feasibility of a rainwater harvesting system, which uses water from the mains to complement the system. Although local meteorological and market data were used to demonstrate the model, it can also be easily adapted for analysis of other localities. Analysis has shown that an optimum tank size exists, which minimizes the cost per unit volume of water. Economic performance measures have indicated that rainwater harvesting system is currently infeasible to be implemented in Brunei; with capital cost and water price being shown to be among the prohibiting factors. To improve feasibility, a combination of rebate scheme on capital cost and raising the current water price has been proposed. It has also been shown that the system is more viable for households with high water demand.

Economic analysis and risk-based assessment of the financial losses of domestic rainwater harvesting systems

The considerable potential for rainwater harvesting (RWH) opens the door for the study of economic viability and risk indicators in this kind of system. The aim of this paper was to present economic and risk analyses of three RWH systems intended for water supply to single-family residences. The systems were analyzed based on water demand, degree of treatment and distribution arrangement. Economic, sensitivity and risk analyses were performed. The system with the basic treatment of rainwater and distribution by pressure (BX Pressure) was the most economically viable. The Net Present Value and the Intern Return Rate of the BX Pressure system was 480.36 USD and 6.85%, respectively. In the sensitivity analysis, both basic treatment systems were viable at any considered discount rate (0.00%–10.00%) and at a water price ranging from 1.58 USD to 2.72 USD for BX Pressure. In the risk analysis, BX Pressure was also the most viable system, presenting a risk probability of viability of 95.9% at current water prices. Water price, demand, lower discount rates and initial investment costs determined the greater economic viability and lower economic risk associated with domestic RWH systems.

Calculation of Water Resource Value in Nanjing Based on a Fuzzy Mathematical Model

In view of the complexity and uncertainty of water resources, this paper chooses an evaluation index system of 13 indicators based on the fuzzy mathematics model in three aspects: water resources, water quality and socioeconomic status. The entropy method was used to determine the weight of the index, and the water resource value of Nanjing in 2011–2015 was dynamically evaluated. The results show that the price of water resources in Nanjing from 2011 to 2015 rose from 3.43 yuan/m3 to 5.94 yuan/m3, showing a clear upward trend, but the corresponding price of water expenditure accounted for a proportion of disposable income from 2.27% to 1.87% during the same time period. This counterfactual trend proves that the current water price in Nanjing is relatively low and is not conducive to the efficient use of water resources. Given the fact that water prices have larger room for growth, the city government could initiate the reform of water pricing system and re-enact the water fee collection standards to achieve optimal allocation of water resources and sustainable development.

Rainwater utilization from roof catchments in arid regions: A case study for Australia

Water is a scarce resource in arid regions, and hence water harvesting is critically important in these regions for which many different means are adopted including groundwater and rainwater harvesting. This paper examines the feasibility of rainwater harvesting from roof catchments in arid regions of Australia. For this, ten representative locations in the arid regions of Australia are selected. Also, ten different sizes of rainwater tanks ranging from 5 kL to 50 kL and three different combinations of water uses are considered. A model is developed to simulate the performance of a rainwater harvesting (RWH) system. It is found that the reliability of a RWH system is highly dependent on mean annual rainfall at the location of interest. It is found that a 20 kL tank can provide a reliability of 61%–97% for toilet and laundry use depending on the location within the Australian arid regions. At the current water price, RWH system is not financially viable in the Australian arid regions. The methodology adopted in this paper can be adapted to other similar arid regions of the world.

Reliability and Cost Analysis of a Rainwater Harvesting System in Peri-Urban Regions of Greater Sydney, Australia

In large cities, rainwater tanks are used to save mains water, but in peri-urban and rural areas, rainwater tanks are used as a sole water supply for many households, as these regions often do not have any other means of water supply. This paper investigates the performance of a rainwater harvesting system (RWHS) in peri-urban regions of Greater Sydney, Australia. Considering the daily rainfall data over the entire period of record at ten different locations, it has been found that a 5 kL tank can meet 96% to 99% of the demand for toilet and laundry use depending on the location in Greater Sydney regions. However, in the driest year, a 5 kL tank can meet 69% to 99% of toilet and laundry demand depending on the location. Based on the results of life cycle cost analysis, it has been found that a 5 kL tank has the highest benefit–cost ratio (ranging from 0.86 to 0.97) among the eight possible tank sizes examined in this study. Interestingly, for a 5 kL tank, with a combined use (i.e., toilet, laundry and irrigation), the current water price in Sydney needs to be increased by 3% to 16% to achieve a benefit–cost ratio exceeding one. A set of regression equations are developed which can be used to estimate reliability using the average annual rainfall data at any arbitrary location in the peri-urban regions of Greater Sydney. The method presented in this paper can also be applied to other Australian states and other countries to estimate water savings and reliability of a RWHS using daily rainfall data.

Hydrological benefits in the context of Brazilian environmental services program

The Brazilian program of payment for environmental services (PES) is based on ranges of potential erosion decrease (ED) from soil and water conservation proposals estimated from the Universal Soil Loss Equation. Changes in land use and land cover (LULC) result in many alterations of the basin water balance. Therefore, to contribute to the methodological development of Brazilian PES, this paper proposes a quantification of hydrological benefits based on conservation measures. We propose basing the PES program on adding the potential water storage increase (WSI) parameter estimated from the runoff curve number model. Two LULC change scenarios were run considering conservation measures on degraded areas. We found that indicators of ED and WSI were compatible tools for driving the eligibility of soil and water conservation measures. However, the water storage parameter seems to be better at managing the PES mechanism because it is based on water prices and can contribute to appreciation of the efforts performed by the rural producers. The use of the SCS-CN method presents greater feasibility as a tool for the implementation of PES programs in ungauged basins. Thus, an analysis of the success of the innovation proposal of the Brazilian PES program allows inferences to be made about the quantification and financial valuation of hydrological benefits of the potential storage increase and current water price.

Cost-efficiency of rainwater harvesting strategies in dense Mediterranean neighbourhoods

Rainwater harvesting (RWH) presents many benefits for urban sustainability and it is emerging as a key strategy in order to cope with water scarcity in cities. However, there is still a lack of knowledge regarding the most adequate scale in financial terms for RWH infrastructures particularly in dense areas. The aim of this research is to answer this question by analysing the cost-efficiency of several RWH strategies in urban environments. The research is based on a case study consisting of a neighbourhood of dense social housing (600 inhabitants/ha) with multi-storey buildings. The neighbourhood is located in the city of Granollers (Spain), which has a Mediterranean climate (average rainfall 650 mm/year). Four strategies are defined according to the spatial scale of implementation and the moment of RWH infrastructure construction (building/neighbourhood scale and retrofit action vs. new construction). Two scenarios of water prices have been considered (current water prices and future increased water prices under the EU Water Framework Directive). In order to evaluate the cost-efficiency of these strategies, the necessary rainwater conveyance, storage and distribution systems have been designed and assessed in economic terms through the Net Present Value within a Life Cycle Costing approach. The pipe water price that makes RWH cost-efficient for each strategy has been obtained, ranging from 1.86 to 6.42€/m 3. The results indicate that RWH strategies in dense urban areas under Mediterranean conditions appear to be economically advantageous only if carried out at the appropriate scale in order to enable economies of scale, and considering the expected evolution of water prices. However, not all strategies are considered cost-efficient. Thus, it is necessary to choose the appropriate scale for rainwater infrastructures in order to make them economically feasible.

Efficiency and Economy of a New Agricultural Rainwater Harvesting System

Abstract Shortage of water is the key limiting factor for agricultural development of Beijing. Rainwater harvesting (RWH) could provide an alternative water source for greenhouse agriculture, but local natural and socioeconomic conditions challenge the application of the technology. This article analyses the advantages and disadvantages of different types of greenhouse RWH in Beijing, and describes a new greenhouse RWH system demonstrated in 2008 in Huairou, a suburb district of Beijing. It analyses the efficiency, cost-benefit ratios and limiting factors of the new system. The results show that with the new system, RWH efficiency can be as high as 66% (of total rainfall) and the rainwater usage rate can reach 69% of total water usage. The ratio of benefit to cost of government investment can be 1.84, and the ratio of benefit to cost of a farmer’s investment could be 1.68 provided the project is designed to save water and also increase income. However, the price of groundwater for agriculture directly influences the potential for applying and scaling up the project. If the RWH system does not increase the farmers’ incomes at the current water price, they will not use it until the water price rises to a critical point, which is determined by external factors. This article also suggests a number of measures to increase the efficiency of the system in order to apply it on a large scale.