I’ve been writing recently about the struggles to set sane water rates for Albuquerque that take into account conservation goals as well as the need to maintain cash flow for for a largely fixed-cost operation. It’s a tough problem. But imagine sorting this out for an entire nation:
BEIJING—China will roll out wide-reaching reforms in how it prices water by the end of next year, the government said Friday, charging higher prices for the heaviest urban consumers to conserve diminishing resources and spur investment.
The Chinese approach that Brian Spegel and William Kazer report in the Wall Street Journal sounds a lot like an increasing block rate:
Under the plan, the heaviest consumers—or top 5% of households—will pay at least three times the base rate of water. The second tier will pay 1.5 times the base rate, while the lowest tier—roughly 80% of urban households—wouldn’t be affected by the changes….
For more in increasing block rates and the questions of equity that they raise, an interesting David Zetland discussion here.