Water pricing towards sustainability of water resources: a case study in Beijing

The role of water pricing for managing water resources is widely recognized in many areas of the world because of the increasing scarcity of water resources, a high competition between water uses and environmental degradation. Based on the analysis of cost of water, this paper explores which types of cost should be reflected in the water pricing enhancing the sustainability of water resources. The principle of full cost pricing in which the cost should include supply cost, opportunity cost and externalities is proposed as a means to achieve the sustainability of water resources. In a case study of Beijing, low water price is analyzed as one reason for unsustainable water consumption. Thus water pricing justified is necessary and pressing. It is proposed to justify water price in phased manner and eventually towards full cost pricing. The assessment of impacts on water resources by raising water price shows water pricing could alleviate the conflict between water supply and demand. This paper concludes that water pricing can play an effective role in enhancing the sustainability of water resources in Beijing.