Does Residents’ Perception of Information Influence the Implementation Effect of Increasing-Block Water Pricing Policy?

Abstract

Since the 1990s, China has gradually implemented price reform. The increasing-block pricing policy (referred to as “IBP”) began to be applied in different kinds of household resource-based products so as to produce resource-saving effect. However, when evaluating policy effects, the information factors are often ignored. This paper concentrates on evaluating the residential increasing-block water pricing policy (referred to as “IBWP”) and divides the information into two categories: policy information and bill information. Among them, policy information is divided into implementation information and rule information, and bill information is subdivided into three aspects: price, volume and fee. Based on the household data of the Chinese Household Water Use Behavior Survey 2019, this paper uses the propensity score matching (PSM) method to investigate the impact of households’ information cognition on water consumption. The results show that residents with policy information will increase their water consumption, while the availability of rule information will reduce the increase in water consumption; bill information encourages households to take behavioral water-saving measures more frequently, and among different types of bill information, residents are the most sensitive to water fee information. Through further analysis, the shadow price of household water is much higher than the current water price. Hence it can be considered that the current water price is distorted to a large extent, which leads to the deviation of the policy information received by consumers. Therefore, the water-saving effect of IBWP at the present stage is very limited. The policy implication shows that IBWP needs to further optimize its structure, the government should gradually increase the current residential water price; relevant departments ought to strengthen the policy publicity, and improve the acquisition rate of previous bills for residents.