;
China Rural Water and Hydropower. 2009, (11):
130-132.
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Water price is a basic tool in water management, and the key point is how to “get the price right”. In this paper, we analyses the formation of water price under different water demand and supply. And found that different pricing methods have different performance in cost compensation, social benefit and benefit distribution.
The results show, when water market is equilibrium, the water suppliers’ benefit and users’ benefit is maximum as long as the water price is equal to marginal cost, which is also equal to marginal benefit of water. If the water market is unequilibrium, the price be tween the marginal cost and marginal benefit would achieve social benefit maximum, but the benefit distribution between suppliers and users would be different as price changing. When come to the cost compensation, things are different, when the demand for the water is low, or the water market is unequilibrium, the price, which could achieve the social benefit maximum, may not compensate the cost of water supply. Without regard to the government regulation, the cost of water supply must be compensated, or there is no water supplier, and also the suppliers want to maximize their own benefit. From this perspective, the final price of water is equal to the marginal benefit of water when the implementation cost is not considered.