Evaluating China's residential water tariffs through constructing an urban water sustainability index

Purpose: To measure the equity and efficiency of the current water tariff levels and evaluate the legitimacy of the tariff rise in a certain city in China. Originality: Under what circumstances Chinese local water sectors should increase water tariffs and to what extent water tariffs should increase remain unclear in the literature. Key literature/theoretical perspective: Studies on water tariffs in China mainly focus on their structures and levels as well as the improvement of water authorities’ efficiency. Due to governmental subsidies and the application of linear volumetric rate systems in most cities, some argue that, the current tariffs are often too low to indicate water scarcity and provide insufficient economic incentives for users to save water. Other scholars suggest privatizing water sectors to correct institutional failures, so that water tariffs can be more transparent and accountable. Design/methodology/approach: In this paper, an index is composed in order to compare water stress and the level of socio-economic capacity that enable cities to cope with this stress across 46 cities. Based on the analysis of social water scarcity, an urban water sustainability index (WSI) is proposed and presented. Findings: The results suggest that while some cities’ current tariffs are not high enough, raising the tariffs is not a panacea for solving urban water supply problems in urban China. Research limitations/implications: The study indicates the complexity and diversity of social water scarcity and its management at the local level and should affect the way that a water policy is designed. Practical and social implications: We offer advice for achieving higher water sustainability in urban China.