Research on Impact of Equity Costs and Environmental Costs on Supply-Side Classified Water Pricing

The classified water pricing system is an effective measure for promoting the rational utilization of water resources under market mechanisms. Studying the water prices of three different types of water sources, including reservoir water, river water, and wastewater treatment plant effluent, is the basis for promoting the use of reclaimed water. However, there remains a spectrum of viewpoints on how to establish a pricing mechanism for reclaimed water at present. This study primarily focuses on the multi-level quality-separated water supply system in Yiwu City, China. It analyzes the limitations of the current water pricing formation mechanism and the externality of integrating reclaimed water into the unified allocation of multiple water sources. Based on the principles of full-cost water pricing and externality theory, a supply-side classified water pricing permit cost and pricing calculation model, covering the entire process of the social water cycle, is proposed. It focuses on the analysis of the impact of equity costs and environmental costs on supply-side classified water pricing. The Shapley value method is used for the technology of cost allocation among stakeholders to reasonably distribute the calculated water pricing of reclaimed water. The price of reclaimed water varies depending on the user type, with residential users paying 2.93 CNY/t, industrial users 4.00 CNY/t, and government allocations at 8.52 CNY/t. Compared with the classified water prices of various stakeholders on the user side of reservoir water, reclaimed water has a significant price advantage. This research demonstrates that the supply-side classified water pricing model, which includes a permit cost and pricing calculation framework, can encourage the supply of higher-quality water at corresponding higher prices, while also providing the internalization of external costs. Furthermore, the Shapley value method of cost allocation can realize the fair burden of stakeholders on the calculated water price and maintain the competitive advantage of reclaimed water prices.