Do increasing block tariffs lead to water conservation in Hangzhou, China?

This study aims to study the effects of water tariff structure on consumption behavior, by exploiting a unique policy change that was recently implemented in Hangzhou, China. Before a recent tariff change, water rates in Hangzhou had not been changed since 2005. On January 1, 2015, Increasing Block Tariffs (IBTs) were first phased in to cover 52% of all residential households. All other households continue with a uniform water rate. This status will persist so long as these households’ consumption is monitored using sub-meters administered by their specific communities (and not by the utility).

The aims of the project are two-fold:

  1. The first aim is to evaluate the effects of IBT adoption on water consumption and water conservation in a major Chinese city (Hangzhou). To the best of our knowledge, this will be the first empirical study of IBT implementation using panel data in China.
  2. The second aim is to better understand households water use practices, and specifically whether they trust that network water is safe to drink, relative to other more expensive options such as bottled water. While some literature has discussed the public perception of drinking water quality, there has been limited research to date in the context of China.

Main research collaborators:

  • Li Li (National University of Singapore)