Higher water tariffs for less river pollution—evidence from Min River and Fuzhou City, People’s Republic of China
AbstractUpstream nonpoint source pollution has become a significant threat to urban drinking water safety in the People’s Republic of China. Payment for environmental services (PES) is seen as a promising mechanism to deal with the situation. In designing a sound PES, it is crucial to determine the willingness to pay (WTP) of urban beneficiaries for upstream water pollution controls. An analysis of household data from a contingent valuation survey conducted in Fuzhou in 2009 reveals that household income is the most important factor in determining respondents’ positions on water tariff increases as well as WTP under a PES scheme. Mean WTP varies from Yuan (CNY) –0.45 per cubic meter to CNY0.86 for different income groups. The overall mean WTP is estimated to be CNY0.21, which is equivalent to a 10% increase in the current tariff, with the 95% confidence interval at (CNY0.12, CNY0.31). The point estimate implies a total annual WTP of Fuzhou City equal to CNY22 million, which is 27% less than the contribution of Fuzhou to an ongoing government-financed PES. However, with continuous water tariff increases, affordability among low-income households might arise as an issue. This calls for subsidies targeting low-income households to be incorporated in water tariff reform.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24992.
Date of creation: May 2010
Date of revision:
water tariff; river pollution; upstream nonpoint source pollution; payment for environmental services; willingness to pay; Min River; Fuzhou City; China;
Other versions of this item:
- Jiang, Yi & Jin, Leshan & Lin, Tun, 2010. "Higher Water Tariffs for Less River Pollution—Evidence from Min River and Fuzhou City, People’s Republic of China," ADB Economics Working Paper Series 201, Asian Development Bank.
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
- NEP-ENV-2010-09-25 (Environmental Economics)
- NEP-TRA-2010-09-25 (Transition Economics)
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