JOURNAL OF NATURAL RESOURCES ›› 2014, Vol. 29 ›› Issue (4): 719-725.doi: 10.11849/zrzyxb.2014.04.016

• Resources Research Methods • Previous Articles     Next Articles

Study on the Independent Pricing Problem and Method of Urban Recycled Water

DUAN Tao   

  1. School of Management, Henan University of Technology, Zhengzhou 450001, China
  • Received:2012-12-20 Revised:2013-07-17 Online:2014-04-20 Published:2014-04-20
  • About author:10.11849/zrzyxb.2014.04.016


Utilization of urban recycled water is an effective approach to alleviate the crisis of water resource scarcity in China. However, the utilization rate of China's recycled water is very low, partly due to the unreasonable water price. In this paper, the defects of recycled water pricing theories are analyzed. The traditional pricing theories are mainly transplanted from pricing theories of quasi public products, based on cost accounting. They ignore the important factor of demand and can't rationalize the relationship between tap water prices and recycled water prices. Moreover, the current situation of China's urban recycled water utilization is summarized and the blindly and arbitrarily problem of urban recycled water pricing is analyzed. In this paper,the viewpoint that recycled water can be independently priced by suppliers is presented, according to the features of recycled water including alternative of tap water and dispensability of monopoly regulation. Some hypotheses are put forward including indifference of water quality, permanence of specific investment and necessary and sufficient condition of recycled water acceptance. A theoretical model of independent recycled water pricing is built, based on comprehensive consideration of cost and demand. The workable pricing method is given as well. Firstly, the formula of consumers'reserve price is deduced based on the hypothesis about the necessary and sufficient condition that recycled water will be used by consumers. Afterward, the current price of tap water was given by taking a price of recycled water and calculating the total profit of water supply. The price which can maximize the total supplying profits can be found by multiple calculations of the supplying revenue and cost under each given price of recycled water. This price is regarded as the optimal price under independent pricing. In consideration of the pricing practice of tap water, the prices of recycled water should be set according to the different categories of users. For illustrative purposes, the pricing method is illustrated with a virtual example. Finally, the practical significances and implementing conditions of recycled water pricing are summarized. The implementation of the independent pricing models and method requires some support conditions. Firstly, recycled water can be generally accepted by users. It needs to break down the psychological resistance of recycled water under the guidance of government and media. Secondly, the supplying profit of main users should be greater than zero through government subsidies. Therefore, the range of application is relatively limited. It needs to be piloted in a few cities at first and popularized afterward.

Key words: recycled water price, pricing theory, independent pricing, water supplying cost

CLC Number: 

  • F062.1