There is still plenty of room for further water price increases, despite a series of hikes in charges by local governments over the last few years, said Yang Xiangping, a senior engineer with the Beijing Sewage Company - the city's largest sewage company.

The latest increase hit Beijing on January 20.

The price for residential use in the city rose to 2.9 yuan (35 US cents) per cubic meter, including 0.6 yuan (7 US cents) for waste water treatment, which was up 0.4 yuan (5 US cents).

Prices for commercial and industrial use climbed to 4.4 yuan (53 US cents) per cubic meter, including 1.2 yuan (14 US cents) for waste water treatment, up 0.5 yuan (6 US cents) from the previous price.

In addition, the Beijing municipal government plans to raise the residential price to 4 yuan (48 US cents) per cubic meter by the end of 2005.

"Higher water prices will trigger public awareness of the scarcity of water and promote water-saving," Yang said. "At present, price levels are not high enough to meet actual costs and enterprises involved in the business still find it hard to support themselves."

The Ministry of Water Resources has promised to increase rates across the country gradually over the next few years to encourage water-saving efforts and take some of the strain off the supply of the precious resource.

The reform of the water pricing system needs to be enhanced in four ways in the coming years, said Wang Shucheng, water resources minister, at a conference in Beijing in January.

First, enhancing reforms of the water pricing management system and establishing a flexible water pricing system.

Second, introducing a water ration system and establishing a two-level pricing system - one for standard use and another for excessive use.

Third, further promoting water price reform on irrigation.

And finally, upgrading irrigation water measurement equipment and enhancing measurement.

"People still regard water as government welfare work, but many water users should pay more," Wang said at the time. "Price levels should reflect the full cost of supply, including distribution, management and waste treatment."

To get through the water crisis, many cities across the country have raised the prices of water for different users.

For example, the pricing authorities of Nanning, capital of South China's Guangxi Zhuang Autonomous Region, raised fees earlier this month.

Prices for special service industries including car washes, night clubs, hair dressers, beauty saloons and bath houses doubled to 2.5 yuan (30 US cents) per cubic meter.

Nanjing, capital of East China's Jiangsu Province and Shijiazhuang, capital of North China's Hebei Province, both raised water prices late last year.

The government should change from being a water provider to a regulator, said James Gao, chief representative in Beijing of the Paris-based Suez Group, one of the world's biggest water service providers.

Gao said the involvement of private firms will greatly help ease the financial burden on the government and increase efficiency.

(China Daily March 24, 2003)