China’s economy growth during the last three decades has been most impressive. This growth, however, is achieved with considerable environmental cost, one of which is serious water pollution. With the rising of living standard, people have been aware of the impact of water pollution on their quality of life. In the area of water management, the priority of Chinese government should be on how to provide 1.35 billion people with clean and safe water, that is, water which could be drunk from the tap without any adverse health impact.?

My colleagues and I have regularly visited China and we have met few family that drink water from the tap. The distrust of the quality of the tap water can be seen at the sale of bottled water. In 2014, China was expected to overtake the United States as the largest market for bottled water in the world. Although it counts for near one fifth of the world population, China has only seven percent of the world’s fresh water. This means to ensure adequate water for drinking, industrial, agricultural and energy related uses, China’s needs to adopt a new mindset to manage its water, which is becoming increasingly more polluted and scarce.

What the country needs is a revolution in terms of the water governance, which means the increasing supply is not the automatic answer to the increased demand. One important option is to adjust water price, which is too cheap at present. Consequently, households and industries use too much water. This is also the case for agriculture, which is so far the largest user of water. Neither municipalities nor industries have historically considered extensive treatment and reuse of waste water.

At present, the water expenditure of an average Chinese household is about 0.5 percent of disposable income. This is one of the lowest in the world. The average price of 25 Chinese cities is only 0.46 US dollars per cubic meter, compared with a global average of 2 dollars and 3 cents per cubic meter. the Chinese government has called more efficient use of water and promised that market will play a greater role in setting prices. Accordingly by 2015, there will be a three tier pricing structure in all the cities and towns based on actual water use. The top 5 percent of water users will pay three times the base price. The next fifteen percent will pay 1.5 times the price. However, 80 percent will continue to pay the same cheap price.

While the new pricing structure is stepping in the right direction, it is not enough to manage demand. The water price has to increase significantly to manage demand. Our general view is that water price should be around 1.5 percent of disposable household incomes. Only those household where water use exceed their income level should receive targeted subsidies. Within the next five to ten years, the objective should be to ensure all cities with a population above a certain level would receive clear water which can be drunk safely from the tap. At the same time, public awareness campaigns such as those in Singapore should be considered. These campaigns are designed to draw public attention to the importance of water to people’s quality of life and the country’s continuous economic development. People should be made aware that the cost of substandard water supply and waste water treatment is probably around 2.5 to 3 percent of the country’s GDP.

With cheap pricing as has been the case historically, there can only be limited water conservation. This has also stopped companies, public and private from carrying out badly needed upgrades and proper and regular maintenance of their water supplying systems and applying the latest technology to improve water management. Water pricing is the one of the important tools available to ensure every Chinese has access to safe water in the foreseeable future. However, like any tool, water pricing has to be used sensitively and properly.