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Price Hike Promotes Resource Efficiency

Beijing will further raise the price of water for both public and industrial use this year, according to the municipal development and reform commission.

The price of water for household use may rise from 3.7 yuan (45 US cents) to 4.5 yuan (54 US cents) for each cubic meter.

The price hike may sound morally unconstructive since there are a large number of low-income earners living in this prosperous city.

But it is the most effective way to tackle the chronic problem of water shortages in the city.

The capital city began to feel the pinch in the early 1980s when for the first time some factories had restricted access to the water supply.

The situation has worsened in recent years. Now the Miyun Reservoir, the major source of Beijing's drinking water, can only sustain the city for one and a half months.

Authorities have taken various measures, some of which are expensive, to increase the water supply.

The municipal government is negotiating with neighboring governments to tap their rivers. The central government has, from a wider perspective, started the marvelous south-north water diversion project to quench the thirst of the dry northern regions, where Beijing is located.

Such supply-side solutions do work, but are costly. The construction and management of water diversion projects will push up prices.

A more efficient solution may lie on the demand side.

The shortage of water and excessive consumption are actually two sides of one coin.

Industrial production and agricultural irrigation use significantly more water than in developed economies, where water efficient technologies are widely adopted.

Inefficient household apparatuses also cause serious waste of the precious resource. Besides, public awareness about water saving has yet to be improved.

Experts, governments and the public have come to a consensus that businesses should be restructured to make them more water efficient. Farmers need to shift to more water-efficient crops, livestock products, and irrigation methods, such as sprinklers or drip irrigation. And the country should use fewer water-intensive energy sources.

But how?

The government has long touted the use of water efficient technologies and equipment. Numerous official circulars and orders have been issued that require enterprises and the public to save water. Various campaigns have been launched to enhance public awareness about saving water. And new regulations have been promulgated to punish water wastage.

The measures do help a lot. The current situation, however, is far from being satisfactory.

Pricing seems the last straw - and it will probably be the most effective solution. It will encourage businesses, farmers, and the general public to use water in a more economical way.

Last summer, the Beijing municipal government raised the price of water for civil use by 0.9 yuan (1 US cent) per cubic meter. A survey of 2,022 Beijing residents showed that the majority of respondents thought the price hike enhanced public awareness about saving water.

Of course people, especially low-income earners, are sensitive about price rises. But given the limited supply of water and the harsh situation we face, we have no other choice to ensure the wellbeing of the people as a whole.

To alleviate the impact of the price hike on the city's low-income earners, the government should subsidize water for poor people to ensure their basic living standards.

(China Daily May 19, 2005)

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