Current pricing framework for China's urban household water service is non-full cost pricing, which embodies the quasi-public goods property of urban water supplying. Public finance should cover part of urban household water cost for three reasons: (1) the basic need of the public for water has to be satisfied; (2) urban water service is natural monopoly for its asset specificity and capital specificity; (3) the public own the right to access urban household water when they pay taxes. Compared with other public goods, China's urban water supplying cost is less covered by public finance while water shortage and water pollution are deteriorated. At the same time, the increase in urban water price has been unevenly loaded by the public. To form a more accurate signal for saving water and controlling water pollution, public demand and private needs have to be identified in China's urban water supplying cost, and water price should be adjusted to local conditions rather than determined uniformly.
Keywords: Urban household water; Pricing; Public Finance
Biography: Prof. Zhong MA, the dean of School of Evironment and Natural Resources, Renmin University, is majored in environmental economics and environmental policy. By his efforts, the Population, Resource and Environmental Econoimcs discipline of Renmin University of China became the first national key discipline. Since 2008, he has been the leading researcher of the project group on “Pricing and taxing policy designation and demonstration research for aquatic environment protection”, which is a project of National Water Pollution Control and Management Major Projects. For his prominent achievements in the researches and education in the field of environmental economics, he has been elected as Green China Person of The Year 2009.